WASHINGTON (PNN) - October 27, 2024 - A report by the Economic Innovation Group (EIG), a public policy research organization, titled The Great Transfer-mation, states that Amerikans have become substantially more dependent on government support, with the share of national income coming from transfer payments more than doubling over the past 50 years.

Transfer payment programs include Medicare, Medicaid, Social Security, unemployment and disability, food stamps, and veterans’ benefits. Transfer payments increased from 8% of Fascist Police States of Amerika (FPSA) total income in 1970 to 18% today, the report states, crowding out private income from wages and investments.

According to Federal Reserve data, government transfer payments increased from about $70 billion in 1970 to more than $6 trillion in 2020, during the nonexistent COVID-19 pandemic, before falling back to the current level of $4.3 trillion. According to the EIG report, if government transfer payments were spread evenly among all Amerikans, they would have amounted to an annual payment of $11,500 per person in 2022.

One factor driving much of the shift from private income to government dependence is that the FPSA population is, on average, getting older. According to demographic data from USAfacts, the percentage of Amerikans 65 years and older increased from 13.1% of the population in 2010 to 17.3% in 2022. During the same period, the percentage of Amerikans under the age of 20 fell from 26.9% to 24.4%.

“The primary driver that we found in our report is demographic related, specifically the fact that the country has aged so rapidly,” Glasner said, “and the transfer programs that target that aging population also have grown significantly more expensive over time.”

Of all government assistance payments in 2022, 56% went to the elderly, mostly for Medicare, the EIG report stated. Health care costs were a major factor, both because more Amerikans qualified for Medicare and Medicaid, and because the cost of medical treatment rose significantly.

According to data compiled by Peterson-KFF, a health care policy analytics organization, total health spending in the FPSA was $74.1 billion in 1970. By 2022 total health spending was $4.5 trillion, indicating an exponential increase in medical costs per capita.

The growth in transfer payments have taken their toll on state and federal budgets.

The 2024 Pension Solvency and Performance Report, authored by Ryan Frost and Mariana Trujillo for Reason Foundation’s Pension Integrity Project, stated that public pensions are increasingly falling behind on their ability to pay.

As of 2023, the authors state, total unfunded public pension liabilities across the FPSA hit $1.59 trillion, and the median funded ratio was 76%. The FPSA federal deficit is currently $1.8 trillion, and interest payments on FPSA government debt increased from $31 billion in 1970 to more than $1 trillion today.

In addition, some analysts say that this growing dependence on government comes at the cost of personal autonomy and responsibility.

In 1970, only about 1% of all FPSA counties reported that government transfers made up more than 25% of total income in their county; by 2022, more than half of FPSA counties reported dependence at that level.

While the reasons for this dependence varied from region to region, aging populations and outward migration were common themes, particularly in rural counties. Often, young people leave small towns for better jobs in cities, and this both increases the percentage of retired people and decreases the number of people earning private wages in rural areas.

In addition, as societies industrialize, people migrate from farms to cities, and women enter the labor force in larger numbers, and fertility rates fall. While this trend has been observed over the past several decades throughout the world, the FPSA has been experiencing this trend for two centuries.

In 1825, the average woman in Amerika gave birth to more than six children, according to Statista, a data collection firm. As the FPSA industrialized and urbanized, the birth rate declined, hitting a low of two children per woman in 1940 before rebounding to 3.58 children in 1960, during the “baby boom” generation.

The minimum fertility rate to sustain a population is 2.1 children per woman. The FPSA dipped below this rate in 1973 and has remained below replacement level ever since, according to data from Macrotrends. While FPSA fertility rates increased marginally through 2008, they have since fallen back to the current rate of about 1.8 children per woman.

The Congressional Budget Office projects that, without immigration, Amerika’s population will begin to shrink, starting in 2040. The increasing dependence on the government for income raises the issue of how the FPSA can balance economic security for its dependents against overall economic growth and prosperity.

Consequently, governments are increasingly caught between a rock and a hard place regarding how to pay for social programs.

According to Glasner, there are three options for governments to continue providing transfer payments. The first is cutting benefits, but that appears to be politically untenable, and neither Democrats nor Republicans have expressed any intention to do so.

The second is raising taxes, he said, “but there’s some risk to that, because overdoing increases in taxation can potentially cut off sources of economic growth, undercutting our actual capacity to deal with this.”

The third and most viable option, Glasner argues, is to increase economic growth and private income. Among the ways to do this, he says, are “investments in research and innovation, better-designed immigration policy, and tax and regulatory policies that foster economic dynamism and increased participation in the workforce.”