Problem With Government Revenue

It is generally thought that government spending is counter-cyclical. That is, when the economy slows down tax revenues go down and government spending goes up. This is thought to be a good thing because it takes up some of the slack in the economy. For example, the public is borrowing less lately and the government is borrowing more.

But there are big problems with this approach and the problems are filling the headlines. All over the world governments have already taken on enormous debt even while economies were healthy. Now that there is a recession the government sectors are looking like economy killers rather than healers.

I see two main problem areas with government debt.
Interest on this debt is becoming very large.
Government spending is less efficient than private spending.

Solution

Change gears

Assumptions about economic growth have been made that are very false. Economies cannot grow as rapidly as has been thought without creating inflation or bubbles. Maximum good growth is probably only 1% to 2%, not 4% to 5%.
The natural rate of unemployment is higher than we are told. It is closer to 8% than to %5.
When governments make budgets they need to plan for less growth and higher unemployment and have balanced budgets at those lower levels. Trying to get back the bubble economy of the last 50 years is very foolish and counterproductive and will continue to give bad results.