Americans Grow Increasingly Dependent on Government Payments
An old saying has it that he who takes the king’s coin becomes the king’s man. The idea is that rulers expect obedience in return for money disbursed. That has important implications in a country founded on the ideal of independence from intrusive government but whose citizens are increasingly dependent on the public teat. With taxes collected from some repurposed as transfer payments to other members of the public, a growing share of Americans are becoming the king’s men.
Soaring Dependency in Recent Decades
“Income from government transfers is the fastest-growing major component of Americans’ personal income,” according to a September report from the bipartisan Economic Innovation Group (EIG). “Nationally, Americans received $3.8 trillion in government transfers in 2022, accounting for 18 percent of all personal income in the United States. That share has more than doubled since 1970.”
As of 1970, the report’s authors found, people in less than 1 percent of counties in the United States received a quarter or more of personal incomes from transfers. “These were the country’s most economically distressed corners.” That number rose to 5 percent by 1990, 10 percent in 2000, and then soared. In 2022, a majority of counties—53 percent—received a quarter or more of personal incomes from transfers. Nine percent of counties received less than 15 percent of income from transfers in 2022—down from 86 percent in 1970.
The significant rise in the share of personal income represented by government payments occurred because they are no longer targeted at just the “most economically distressed.” The biggest growth in transfer payments comes in the form of entitlement programs linked to old age and retirement.
An Older Population Fuels Reliance on Government
“Aging is an especially important driver of the accelerated growth of the transfer share since the Great Recession,” note report authors Kenan Fikri, Sarah Eckhardt, and Benjamin Glasner. “In percentage point terms, the 65 and over share of the population rose as much in the 10 years from 2010 to 2020 as it did in the 50 years from 1960 to 2010.” Whereas 9.8 percent of the population was 65 and over in 1970, seniors made up 17.3 percent of the population as of 2022.
As a result, the largest category of transfer payments is Social Security, followed by Medicare. But economic downturns continue to fuel growth i
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