Well, relatively speaking the wealthiest people were paying much higher taxes back then. In the 1950's 90% was the highest bracket. Now it's what 38%? Revenue is important to government work. Add to that the fact that the government can't funnel money fast enough back to the richest of the rich, with bailouts, etc.... Well, the math is easy.
I will agree that pensions for cops, etc. are way to fat. Retire after 20 years? Overtime counts towards retirement? If the cops are working that much overtime, it would probably save money to hire enough cops.
As far as democrats spending more:
http://www.nytimes.com/2010/10/11/op...gman.html?_r=1