There are some issues that I would take with this framing by looking at this with Scott Sumner's monetary offset point of view and also with Arnold Kling's "patterns of sustainable specialization and trade". First, it seems that many of the effects of deficit spending can be better achieved through monetary policy. Second, to the extent that counter-cyclical policy is based on temporary spending increases, it seems like these may frequently be an impediment to the adjustments that will pull us into future expansion rather than an aid.
But, leaving all that aside, with regard to automatic stabilizers - ways in which the budget naturally goes into deficit during a downturn - I think there may be more here than meets the eye - or less, as it were. Here is a graph posted by Taylor, showing automatic stabilizers on the revenue side:
The fall in national income leads to proportionately larger falls in federal revenues.
So, what we are really seeing in the automatic stabilizer of federal revenues is the excess volatility of corporate profits. Corporate assets are forced by competitive pressures to target, via both operating and financial leverage, expected revenue levels. When there is a shock to national spending, the disequilibrium created by the mismatch of this leverage with actual revenues pushes profits down sharply as a proportion of revenues.
The non-deductibility of corporate losses is pro-cyclical fiscal policy. At the beginning of economic contractions, when the incentives for investment and the stability of corporate incomes are most important, our effective corporate tax rates are arranged to rise to cyclical peaks. Then, after trends have recovered and the process of new expansion is in place, corporate tax rates are arranged to fall to cyclical lows.
We don't have automatic stabilizers. We have automatic destabilizers.