The federal govt doesn't pay for stuff with taxes.  They pay for stuff with debt which can be conjured up at will.  Taxes at the federal level are mostly just a means of implementing social policy.  Specifically, re-distribution of wealth.

Public finance at the state and local levels are a whole different ballgame because these entities don't have a Federal Reserve.  They've got a poor second-cousin in raising bonds and such, but these are much less powerful since there is a higher expectation that they'll need to be paid back.  Nobody who is clued in has any expectation that the the Federal debt will be re-paid.

(My read of course.)