How do bonds "destroy" money they represent? Do you mean they mathematically "cancel" or are the additive inverse of their denominations? Bonds are just a loan, aren't they? If you give somebody an IOU for cash received and a promise of interest, it doesn't normally mean that you then burn the cash.
One has to keep in mind the purpose of bonds, which was to defend the gold reserve, and ignore all accepted use of the term "borrow" because they are not a funding mechanism. The US dollar is self funding when it is created in the private sector by Constitutional authority given to Congress. Bonds draw down excess reserves in the system and give the Fed a tool to set interest rates.
The instant any revenue enters the Treasury's sector of accounting it encounters the debt that created it and is cancelled by that as a first order accounting function. Treasury cannot hold "money". To the government, which has no need for its own unit of measure back, money is a tax credit and once it is used, like a theater ticket, it is no longer valid. It can't be recycled to be spent again.
I thought the point was that the money (i.e. liquidity, M1) , became available for the government to spend in other ways, presumably on projects and programs. This doesn't "destroy" M1 either, because in theory, that same M1 circulates back into the economy when the government spends it. Unless it's being taken from circulation and sequestered in some overseas bank, which is perfectly possible.
The proper order of operations is dollars have to be first created before they can be available to purchase bonds or pay taxes. Dollars are created when Congress spends them into the private sector to provision itself. It is far more accurate to say "spending" funds bond sales and taxes than the reverse. Both serve valid purposes, but neither fund our government at the federal level. Bonds are far less useful since we no longer have a gold reserve to defend.
All federal spending is via new money creation, not recycled money. Our government is the monopoly issuer of a sovereign fiat currency and doesn't need our money to spend since it has an infinite amount available at all times. There is no "infinite+1" in accounting or math that would make it easier for the government to spend if it has some of our money. It needs us to "need" its money (taxes) and to occasionally have less of it (taxes and bonds).
The government might have to print money to cover the bond on maturity
Printing isn't part of the operation any longer, but yes, bonds are converted to reserves in the owner's account when they mature with a simple keystroke operation on a computer at the Fed that marks up the owner's reserve account for the face value of the bond which was discounted by the interest rate when it was sold. At that time, it again becomes part of the M1 money supply and the debt.
