sure it does. what do you think the government program of building the interstate highway system did for economic productivity?
If you were talking about the "privatization" programs where KBR does the Army's laundry badly and at twice the price, or Haliburten, or Blackwater, or the way the NAVY is not allowed to overhaul it's own ships but has to pay twice the price for half the overhaul, then I agree with you that the un-economic consequences have nothing to do with the program's continuation,. But in general, the transfer in this country has ALWAYS been from public development to private capital. The public pays for R&D or construction that private capital would not touch with a 10 foot pole, then the government gives it away. Most great fortunes in this country trace to a government contract, or a government subsidy. Tiffany, DuPont, Rockefeller, Boeing, GE's jet engine business the CFM56 which is directly based on the F101 military engine etc. Etc.
I don't think it really matters (to the politicos) in the short run. It's just money pushed into the economy and spent... => boost to GDP, => "looks better" (to those who don't bother to look below the surface) => increases incumbents' chances of getting re-elected.
What you forget is almost every economic trend/force has a tendency to be self-reinforcing in an exponential sort of fashion (ie deflation sends a signal to producers to cut back, which reduces size of the economy and labor force, which reduces demand, which sends continued signal to producers to keep cutting back, etc. etc). The whole point of stimulus and monetary policy control is to mute this amplification effect and lessen the damage. In the end, deflation amplifies the worth of existing debts, so in real terms a government budget may be even worse off than (necessitating more firings) without stimulus that causes future borrowing. In the end, the value of the underlying currency falls victim to this sort of policy. The bright side is you have diversification options. Another point to be made... the compounding effects/benefits of saving and lending money (at risk free rates) are in the long run entirely offset by the loss of the buying power, at least empirically if you look at US data the last 40 years or so. In the end, holding cash/debt and getting paid interest is a break-even proposition vs holding a diversified group of 'assets.' I mean cash, not as in the green paper, but as in debt instruments that earn interest. That said, US Keynesian or any other wealth transfer policy is not -wealth destroying-, it is merely -wealth transferring-.