Thursday, October 27, 2011

Unsustainable... Transfer Payments

Transfer payments are defined simply as:
Money given by the government to its citizens.
As long-time readers know, I am all for government involvement / income distribution for projects / policies that attempt to provide:
  • Everyone (specifically youth) with the same chance
  • A needed shared service
  • A positive return on investment (education, security, infrastructure, etc...)
In addition, I do believe that a safety net (such as unemployment benefits) provides additional security that allows the broader system (in the case of unemployment benefits, the labor market) to work more efficiently.

BUT, many of these projects / policies have been extremely neglected (education, infrastructure are two easy examples) and/or are being threatened with further cuts, as a way to put off answering tough questions. Tough questions such as "should we be spending our national wealth on programs that will provide for the betterment of society in the future or should we use it to allow individuals to retire while they are still productive / to extend the life of a sick elder by another six months?".



As unfortunate as it may be... does anyone really think the chart above looks sustainable?

Source: BEA

9 comments:

Anonymous said...

I'd be interested in seeing this data presented as a Rate of Change over the same time span. What I'm afraid we'll see is an acceleration of certain categories. I would like to be based on data instead of my bias though before commenting further :)

Is that possible to show the same data as a Year-toYear Rate of Change graph?

Anonymous said...

Nice post. Transfer payment growth looks unsustainable.

Here is a look at federal outlays a percent of federal receipts.

http://www.valeofinancial.com/2011/07/what-if-the-federal-government-did-not-borrow-to-help-fund-obligations/

Anonymous said...

Sure. Why not? Looking at the chart tells you nothing that might answer your question. Economies for thousands of years have siphoned off greater amounts than that to transfer to certain classes of persons. In fact, ours still does today.

Anonymous said...

You forgot to add to your chart, the perchentage of GDP spent on the Pentagon.

Anonymous said...

The social net must be voluntary. As a nation, we already give more private charity than the rest of the world put together. Not because of, but in spite of the government. Supporting the centralization of power is always a vote for tyranny.

Anonymous said...

I don't believe that either Social Security or Medicare should be counted in this chart. Afterall, every American who has held down any job(s) throughout our lives have all been FORCED BY LAW to pay into both SS- Medicare; we never had the freedom to choose for ourselves. Meanwhile the CONgress has helped themselves to trillions of dollars in the SS Trust Fund over the years and has left worthless IOU's promising to repay the money they stole without our awareness or our consent as the payee(s)! They have allowed former U.S. corporations to relocate their industries overseas where cheap slave labor is abundant creating a job vacuum here so that very few people can even work and fewer still can even locate a job so our national economy has more money going out to pay back the SS-Medicare Trust Fund and unemployment insurance that ever before. This system is broke. The US declared bankruptcy in 1929, FDR fascillitated the bankruptcy by stealing all of our gold as a nation and gave it to the 'rich men of the earth' (13 Illuminati families) who own all of the corporations and banks and, in return, they gave us worthless fiat paper currency to start this scam in the first place. Currently the US Treasury, the collection arm of the NWO bankers fiat currency system continues to print more and more fiat currency causing extreme devaluation thereof and causing prices to rise, especially for food and fuel. They continue to manipulate the fraudulent stock markets so they appear to be 'fiscally sound' until one day we wake up to the final bankruptcy of this nation leading to complete social unrest which will result in nationally declared martial law. When America is at her lowest point and appear to be the most vulnerable, America be invaded by CHINESE and RUSSIAN led international military troops and then, it will all be over here in Babylon and it will rise no more!

And there followed another angel, saying, Babylon is fallen, is fallen, that great city, because she made all nations drink of the wine of the wrath of her fornication. Rev 14:8
And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird. Rev 18:2

eh said...

Maybe to be fair you ought to show a graph of the "transfer payments" in the form of, e.g., social security withholding tax that the government has sucked out of paychecks over the previous decades.

Eric said...

Here's the problem on the medicare / medicaid side that is costing us tax payers so much.

The foods people eat are CRAP and add to that most people are overweight and LAZY. This causes EVERYBODY to be "disabled" or just too damn ill to work.

We are going to fall, that's it. I have taken the time to acquire self sustaining power, water, and protection for my family for generations to come. That should last for a bit....

Kosta said...

Nice chart, and very good point that continued growth in transfer is not sustainable over the long-term.

It is, however, still sustainable over the short- to medium-term. By this I mean transfer payments are at 27% GDP. Is that too high? Or is that too low? What is the correct level of transfer payments? What level is sustained by other countries? What level do Americans want to sustain? We agree that transfer payments can't increase as a percentage of GDP forever, but what is the correct level?

One last quick point. Do you think the 3% of GDP jump in transfer payments over the last two years of the chart is the start of a new trend in increased spending? Or is it reflective of the recession in 2008 shrinking the denominator? As the economy recovers, one would expect that transfer payments as a percentage of GDP will drop. But then again, to what level?

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