Probably one of the most insightful articles on why governments have such a hard time during recessions: http://online.wsj.com/article/SB10001424052748704604704576220491592684626.html
The summary is that they have relied too much on the rich to provide too much of their revenue base. Since the rich have the most volatile incomes of anyone in the nation, during a recession, their incomes are likely to drop much, much more than those who are not rich. Since many now don’t even pay income taxes, when the rich lose their incomes, governments are left hurting for income. The solution, in part, is to expand the revenue base into those groups who have traditionally not paid income taxes.