@YARNLADY even if we assume that every penny of tax money gets recycled back into “our” economy (whatever that is, because a lot of foreign investment in this country is also ‘our economy’ and a lot of US-owned investments overseas also constitute ‘our’ economy), there are still other factors to consider.
1. Typically ‘government’ outlays are not as well-timed, or planned, or targeted as individual ones. (Which is not to say that every individual payment is “best ever”—but you and I have a lot more incentive to save our own money and spend it wisely than some bureaucrat who has to spend the rest of his budget before the end of the fiscal year, or it gets cut next year.) So to the extent that payments for goods and services are inefficient, the economy is not helped, even if some people get rich from that.
2. Government is not typically very innovative. Again, bureaucrats like to keep their jobs, so their tendency is to “follow the safe route” and do what has always been done before. (Military spending and planning is a wonderful example of that. Look at all of the wars that have been lost or nearly lost because today’s admirals and generals are still planning to fight the last war they studied.) This is not to say that every private or public company is filled with entrepreneurs and risk-takers; no, bureaucrats seem to proliferate everywhere. But the executives who run most companies are generally not voted into those positions as winners of beauty and popularity contests, either.
3. Where do you think the money comes from to run the government in the first place? It’s not there because “the government” prints it; it exists as a taxed byproduct of the productivity and free exchange of buyers and sellers in markets. To the extent that buyers and sellers have less of their own money to work with, there is less wealth produced. It’s really that simple.
I’m not saying that there’s no place for government—if I do that then someone will suggest that I can move to Somalia—but government spending represents a loss to the productive economy. It’s a necessary evil; it’s not a good thing to have a rich government.