Why are goblins so tough?! Im a level 34 and playing on default difficulty. Anyone else have the same problem?

Enemies scale with you

Enemies are constantly having their health and strength adjusted to match your own. Essentially, every time you level up, the world levels up with you.

Not all enemies scale with your character. But several higher level goblins do scale. Specifically

Beserker's health is 18 times your level
Shaman's health is 11 times your level
Warlord's health is 30 times your level.

So at level 34 a warlord will have 1020 health points!

There are mods that make this much more reasonable. In particular the OOO mod puts level caps on many enemies. That way you can feel like your making progress when you increase levels, vs getting weaker by increasing levels.

Bethesda apparently did this because there were many complaints about Morrowind getting too easy at higher levels. So this was there way of keeping the game challenging at higher levels. However, it does seem to break immersion when the world adjusts to your character, and you don't necessarily feel that you are progressing when increasing character levels.

More info on Goblins:

http://www.uesp.net/wiki/Oblivion:Goblins

By Goblin I presume you mean to say Goblin Warlord or Goblin Shaman. If you do, the answers given by undeaddragon and Thomas Kaira are correct. These two variations of Goblins scale with the player.

However, most Goblins do not. Goblin Ambushers, Goblin Berzerkers, Goblin Netherboss, Goblin Skirmishers and Goblins themselves do not scale with the player. They remain at a fixed level no matter what level the player is.

::EDIT:: Ninja'd by Savlian

Don't get me wrong, I like how enemies scale with me. Gives me a challenge. But my lord are these goblins tough. And I have a sword thats a daedric longsword and has damage health 7 points, fire damage 5 points, frost damage 5 points and shock damage 5 points. AND Im wearing armor that increases my strength by 34 points!! You think that would make things easy.

If you stay with the Vanilla system it is not going to get easier unless you cheat or just decrease the difficulty. This atrocious system is broken.

Level 34? You have gone past "The" level, lower your difficulty slider, enemies level with you.