General Discussion
In reply to the discussion: Why is the "private sector" better than the "public sector"? [View all]girl gone mad
(20,634 posts)Let's just start with the basics.
When you talk about government "operating at a profit", that profit represents money taken out of the private sector (a net loss of private sector financial assets). Keep in mind that a government deficit represents a private sector surplus.
Taxes don't fund the federal government. The government could still spend even if it ceased collecting taxes. That's the reality of fiat currency, issued by the government and not convertible to commodities or hard assets. Federal taxes serve the important function of controlling inflation and creating stable demand for our fiat currency.
The government can purchase goods and services from the private sector using its fiat money. Often this spending generates significant value. Think of all of the money the government spent in WWII and how this spending greatly expanded our productive capacity. The planes and bombs and ships we built during the war were real. After the war, many of the additional factories the government had spent money building were converted and used to manufacture consumer products.