Do people have panic attacks because they don't produce enough GABA or because the GABA receptors are "lazy"?

You've asked a very complex question.

To begin with the aetiology (British spelling - I'm from Australia) of panic disorders is unknown but appears to involve a genetic predisposition, altered autonomic responsivity (the autonomic nervous system deals with overall control of the human body - so the rate your heart beats, the rate you breathe etc. it tries to keep your body reasonably balanced) and social learning. Panic attacks appear to be associated with increased release of noradrenaline (a neurotransmitter which causes excitation) in a certain part of the brain. They are also associated with reduced total GABA levels (which you know to be one of the main inhibitory neurotransmitters).

Alprazolam (Xanax) - which belongs to a larger class of drugs called benzodiazepines, binds benzodiazepine receptors. When it does this, it enhances the inhibitory effect of GABA (which through a mechanism involving membrane permeability to chloride ions) causes a less excitable state and stabilisation. Xanax does not open the chloride channels themselves, but rather augments the capacity of GABA to do so. So, you are right with what you said - "Xanax seems to make GABA receptors in the brain more receptive".

I cannot answer with certainty your question about whether it is the receptors which are "faulty" or simply an inadequate supply of GABA... I am leaning towards the latter, although both (plus other factors) are probably involved. You would need to do a literature review to check what the latest evidence is indicating.

As I said previously, your question is quite complicated. I'm sorry if this answer isn't satisfactory. A qualified neuropsyhiatrist/neuropharmacologist could provide you with a more succinct (and possibly accurate) explanation.

As the above author mentioned quite astutely, we just don't know the whole story about what causes panic disorder.  There are some theories that suggest that the CNS centers that involved in regulated of serum pH, and oxygenation are somehow more sensitive in patients with Panic Disorder.  Indeed, in the lab we can generate classic symptoms of panic disorder by decreasing the the fraction of inspired oxygen.  But beyond this, we really don't have a good sense of what's happening at the molecular/neuronal level.

We know that Xanax and all benzodiazepines work because they are GABA-ergic agonists and are inhibitory and lead to anxioloysis (they calm you down).  But exactly what derangement may or may not exist with the GABA receptor remains a mystery.  We do know, however, that benzodiazepines, like Xanax are extremely effective in aborting panic attacks.

Negative emotions (like sadness, stress, anger, etc.) causes your Serotonin production to be low; when your Serotonin level is low, you are more prone to getting Anxiety, Panic Attacks, Depression, etc.

Medication like Antidepressants (SSRI - Selective Serotonin Reuptake Inhibitor) helps to boost Serotonin level.
But there are natural ways to do it without medication. There's this strange herb called "St John's Wort" - it is said to be more effective than Prozac. No, it is not for mild depression only and ignore those sayings. In fact, it does help anxiety and panic-attacks as St John's Wort works like prozac. Other natural ways will be exercise, diet, more exposure to light, etc.

The problem is that, even if your Serotonin is balanced... you have that "learned behavior" in your mind. You need to break that initial cycle to destroy that learned behavior - Cognitive Behavior Therapy (CBT) does this. A technique that you can use without CBT will be Distraction... There are several other techniques to help cope them!
Ok, to use Distraction: Firstly, try to....

Extracted from Source.