The total paper recovery of all paper is now up to 57%. That means 43% is still going in the landfill. In the early 90's only 40% of the paper was recycled.
US Environmental Protection Agency

Over 73% of all newspapers are recovered for recycling. About 30% of recycled newsprint is remade into more newspriint. The rest is made into tissue, paperboard, insulation and exported.
Keep America Beautiful, 2006

Recycled paper is made into construction products. Approximately 1.5 million tons of construction products are made each year from paper, including insulation, gypsum wallboard, roofing paper, flooring, padding and sound-absorbing materials.
American Forest and Paper Association, 2002

Recycled paper can also be made into paper towels, notebook paper, envelopes, copy paper and other paper products, as well as boxes, hydro-mulch, molded packaging, compost, and even kitty litter.
EPA, 2008