Money also comes from international loans. Just ask China (whose holding a hefty chunk of our debt). Not to mention that strategic increases in taxation, or lowering of corporate subsidies, does not destroy the private sectors ability to respond to demand. If this were true then the new deal should have destroyed the economy instead of saving it (if your an economist) or delaying the recovery (if your an idealogue).
It is self-evident that in order for government takings to destroy the private sector’s resources we would have to be talking about full scale command economics ala the soviet union and not the moderate tax policy of modern neoliberal democrats. Not even european social-democrats or american progressivism represent any significant threat to the ability of the private sector from functioning. These policies might have been detrimental to pre-industrial revolution europe (Smith and Bastiat) but modern economics is a far different landscape.
