There is some merit to the "spending out of a recession" theory.  Of course it won't work in bankruptcy because the spending does nothing for the debtor's income position.  However, when government does it, the spending could stimulate growth in the economy and expand the tax base.  That would actually increase revenue for the government in the long run.

The real consideration is... does the government spending we are seeing now actually contribute to economic growth.  I think the jury is still out on that one.

Best,
Robert A. Franco
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