A Check-Writing, Wealth Redistribution Machine

When you think of all the ways that the U.S. government spends money, which of its functions do you think tops the list?

USA Today‘s John Merline reviewed several decades of the U.S. government’s annual budgets, including the latest budget proposal from President Trump, and has arrived at an inescapable conclusion:

What is the government’s primary function? If you look at the debates that rage each year when the president’s budget comes out, you’d think it was defense spending. Or food stamps. Or cancer research. Or student loans….

But if you look beyond the headlines at the actual budget document, you learn that those are all squabbles over crumbs. Today, the one thing the federal government does above all else is write checks. Lots of checks. Nearly $3.2 trillion worth of checks. Each and every year.

Buried in a separate volume of the annual budget are “Historical Tables,” which provide rich detail on how the government has spent taxpayers’ money going back as far as 1789. Three of these tables track “payment for individuals,” defined as “federal government spending programs designed to transfer income (in cash or in kind) to individuals or families.” It doesn’t include things like salaries paid to federal workers or services rendered.

According to the Trump budget, the government will hand out $2.6 trillion — that’s trillion with a “t” — directly to individuals or paid for services on their behalf this year. An additional $568 billion will go out as “grants to states,” which then pay the money in the same way.

In other words, 70 percent of everything the federal government will spend this year will amount to writing checks to benefit individuals. That’s up from 28 percent in 1968 and 50 percent in 1991. At $3.2 trillion, these federal money transfers will equal the entire economies of Canada and Mexico combined.

Even more perversely, much of that money is simply recycled through the U.S. government’s coffers as an intergenerational transfer from today’s middle and upper class income earners to the former middle and upper class income earners of the retired population.

For all practical purposes, the U.S. government is little more than “a check-writing, redistribution machine that costs trillions”—one that Merline observes is horribly inefficient because in practice, “much of what the federal government does today is rob Peter to pay…Peter.”

Only a politician or a bureaucrat would ever want more of such a nonsensical system!