I just had the most bizzare game ever (on challenging).
I was an evil race, and I drove my economy into the ground (to a point where it was not able to recover). Yet, by a series of stratigic alliances, a race surrendering to me, declaring wars on people who would later opt for peace, and excessivve tech trading (I led the galaxy in tech despite only researching 29 by myself), I managed a dipomatic win. By end game I was -70,000 bc, with -120 bc a turn (with full taxes and zero spending), and 80% approval (I did lose two planets to revolutions, but I got one back).
I didn't think it was possible to win, but I guess that goes to show what can happen if you stick to it.