Economics

Ultimately, it is the working class who funds the government because it is the class which does all work.

Not the American working class. The global working class which subsidizes the living standards of the American worker while also lining the pocketbooks of the American bourgeoisie.

Also it must be understood that the US government because of dollar reserve currency status, because of the levers it has can functionally print as much money as it wants and other counties have no choice but to pay for it. Thus there is no real correlation to how much tax money is raised off of workers in the US and how much the US government can spend. Especially on important matters like war.

And we know that capitalists want to slash government spending wherever possible.

They don't though. Many of them want to cut streams of money to the poor to as low as possible an amount, but they don't want to slash for example spending on Pentagon contacts for Raytheon. They don't want to slash the FBI, the CIA, etc. They don't want to slash government spending that amounts to contracts and awards that dumps money in their pockets to provide services that could be done by public entities for less if the goal was not turning a profit but providing a service.

while it is cheaper to house them in existing empty housing

I've already explained why this isn't the case. Let me leave you with a Steinbeck quote from a hundred years ago that encapsulates part of the issue here.

The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground. The people came for miles to take the fruit, but this could not be. How would they buy oranges at twenty cents a dozen if they could drive out and pick them up?

And men with hoses squirt kerosene on the oranges, and they are angry at the crime, angry at the people who have come to take the fruit. A million people hungry, needing the fruit- and kerosene sprayed over the golden mountains. And the smell of rot fills the country. Burn coffee for fuel in the ships. Burn corn to keep warm, it makes a hot fire. Dump potatoes in the rivers and place guards along the banks to keep the hungry people from fishing them out. Slaughter the pigs and bury them, and let the putrescence drip down into the earth.

There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. The fertile earth, the straight tree rows, the sturdy trunks, and the ripe fruit. And children dying of pellagra must die because a profit cannot be taken from an orange. And coroners must fill in the certificate- died of malnutrition- because the food must rot, must be forced to rot.

The people come with nets to fish for potatoes in the river, and the guards hold them back; they come in rattling cars to get the dumped oranges, but the kerosene is sprayed. And they stand still and watch the potatoes float by, listen to the screaming pigs being killed in a ditch and covered with quick-lime, watch the mountains of oranges slop down to a putrefying ooze; and in the eyes of the people there is the failure; and in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.

• The Grapes of Wrath