if they take 33% of our income and only give back 16%... there are only a few options:
1. they are saving the difference
2. they are keeping it themselves in personal bank accounts
3. they are giving it to foreign countries
4. paying off debt (to foreign countries)
i’m not sure how many other options there would be.
Only thing that varies is on what, and at what level of government.
There are something like 20 million direct employees of government at all levels. That is about 14% of the whole workforce.
They buy military equipment, pay for roads and bridges, put up public buildings. Procurement is something like $70 billion a year and public construction something over $200 billion, so combined that capital spending is a few percent of GDP.
About 3% of GDP is paid out as interest to bondholders, most of them domestic pensions and retirees. Another couple of percent is tax free interest to rich families on municipal bonds, which funds everything from hospitals to airports etc.
And the balance, easily the largest item and comparable to direct payrolls, are paid out to millions of individual beneficiaries as entitlements. The biggest line items being medical payments for retirees and the poor, retirement, veterans' pensions and other benefits, and public sector pensions for retireed government workers.
Money doesn't disappear. It circulates.