America’s Real Fiscal Problem: Federal Goverment Has Become a Gigantic Wealth-Transfer Machine

“Our long-term fiscal problems won’t be fixed until we address what might be our nation’s most serious fiscal-related problem: we’re increasingly becoming a European-style ‘entitlement nation,’ with ‘payments to individuals’ increasing both in absolute dollar amounts and as a share of total federal spending, while at the same time the share of Americans who face a zero or negative federal income tax liability is above 40 percent and rising,” wrote  Dr. Mark J. Perry, professor of economics and finance in the School of Management at the University of Michigan. “In other words, a declining share of American taxpayers is being forced to finance the rising cost of the federal government, which is increasingly being spent on payments to individuals.”

“When you put these two trends together, what you find is that the federal government has over the years essentially turned into a gigantic wealth-transfer machine — taking money from a shrinking pool of taxpayers and giving it out to a growing list of favored groups,” wrote John Merline in  “This situation will make getting the federal budget under control increasingly difficult, since it will invariably involve pitting those writing checks against those cashing them.”

“Within living memory, the federal government has become an entitlements machine,” wrote Nicholas Eberstaadt in the Wall Street Journal. “As a day-to-day operation, it devotes more attention and resources to the public transfer of money, goods and services to individual citizens than to any other objective, spending more than for all other ends combined.”

“That’s the long-term fiscal cliff that should have us all very concerned – the fact that the federal government over time has turned into a gigantic entitlements and wealth-transfer machine,” concluded Professor Perry.
Carpe Diem
Dr. Mark J. Perry
September 5, 2012
John Merline
February 19, 2011
Wall Street Journal
Nicholas Eberstadt
August 31, 2012