Sorry just to point out - it is absolutely true what several PPs have said: government debt is not the same as household debt (someone described it as the difference between micro & macro economics), but that does not mean that when private spending is reduced it's necessarily worthwhile increasing public spending.
Public spending is heavily influenced by politics and therefore often wastes a great deal of money. In the aftermath of the GFC and the collapse of financial institutions in the US, Kevin Rudd instituted a MASSIVE spending programme in australia called 'building the education revolution' which in short gave every school the opportunity to select one of 4 different buildings (a school hall, a library, and I can't remember the others now). The school could then have that built funded by the federal government.
The result was: every school (obviously!) took up the opportunity to have a new piece of educational infrastructure (gvt spending on education! good! good!) - but unfortunately they were paying MASSIVELY over the odds for the works to be done. Public schools were only allowed to use the gvt. approved construction companies and were paying upwards of $1,000,000 for a school hall.
Private schools and religious schools who were allowed to source labour locally and plan with a local architect etc. were getting them in for around $250,000. That means that government spending to stimulate economic activity in a time of private contraction ended up pouring more than 3/4 of a million dollars, per school hall, into large construction company coffers. With more than 4,000 public schools across aus that's more than $4,000,000,000 spent on padding company coffers.
Trusting in the Keynesian formula is, ESPECIALLY in times of highly politicised crisis, begging for money to get pissed away. This is often expressed by the four maxims of Hayek:
- when i spend my money on myself i maximise value and quality
- when i spend someone else's money on myself i maximise quality and minimise value
- when i spend my money on someone else i maximise value and minimise quality
- when i spend someone else's money on someone else i minimise value and minimise quality.
Number 4 is what government spending is. I'm not saying government's shouldn't spend on anything because, as others have rightly pointed out, there are some things that it is most efficient for governments to build (railways etc.) as the benefit is accrued over more than the life of any one generation. But that needs to be carefully monitored and carefully evaluated because when you spend someone else's money on someone else you tend not to care what you're spending it on, especially if there is HUGE political pressure and potentially huge political gain to make sweeping promises to get elected.