At the local level, this fact benefits Republicans, although state-level Democrats tend to be more fiscally responsible as well. (Rahm Emanuel is far more fiscally responsible as Chicago's mayor than he ever was as Obama's chief of staff.)
Meanwhile, what gets Republicans elected at the local level gets them in trouble at the federal level. Again, there are many reasons for this. But I think one of them is that we've come to see the federal government as some sort of mystical entity empowered to right all of the wrongs in society. If there's a problem, there "should" be a federal response, the costs or feasibility of that response be damned.
While Romney's infamous riff about the "47 percent" was profoundly flawed, the simple reality is that millions of people who do, in fact, pay federal income taxes do not care about those tax dollars the same way. This is true of people who get more from the federal government than they pay in, but it's also true for millions of affluent voters as well.
Our presidents, Republican and Democrat alike, talk about their "visions" for America, as if being a president requires you to impose some quasi-religious vision on the country.
But the Democrats are simply better at talking about government in spiritual terms. Indeed, such testifying is Obama's one indisputable gift. They talk about the federal government doing things we'd want God to do if God dabbled in public policy. They use the logic of religion, which holds that there is a unitary and seamless nature to all good things, and therefore no good thing government does should come at the expense of some other good thing government might do. And, worst of all, they castigate anyone who opposes more spending on, say, "the children" or "the environment" as morally retrograde and "against children" and "against the environment."
The challenge for Republicans is to convince the American people that the government isn't magic, and that all of its money is your money, its debts your debts. I don't think the GOP is doomed, but America might be if Americans remained unconvinced too much longer.