Personal current transfer receipts are income payments to individuals for which no current services are performed, such as retirement benefits, disability insurance, medical benefits, and unemployment compensation. They are a component of personal income and include payments from government (federal, state, and local) and from businesses.
Retirement, disability, medical benefits (Medicare, Medicaid), income maintenance, unemployment insurance, veteran’s benefits, education/training assistance are all included. It doesn’t matter whether the recipient “paid” for the benefit in earlier years (such as Social Security).
According to David Stockman, half the U.S. population receives some form of transfer payment.
US Transfer Payment Recipients, 1980 Versus 2023 (millions)
During the Covid stimulus of 2020 and 2021 the government sent helicopter money to everyone. This shows up as the double peak. Even after the pandemic ended transfer receipts grew. The total is now $5 Trillion per year. (Compared with about $3 Trillion in 2020.) This compares with $15 Trillion of employee compensation. A person could receive both (for example, an elderly worker receiving Social Security at the same time).
Anything that significantly impacts either of these categories would have a significant impact on the Macro economy. The most obvious example is the inflation that followed the Covid fiscal stimulus. If transfer payments were to be reduced the economy would be slowed.
U.S. GDP is around $30 Trillion. This includes business-to-business economic activity as well as consumer spending.
This is a political statement. Those who believe in supply side economics claim that tax cuts will stimulate business activity and increase GDP. Evidence shows this is NOT true but politics is based on claims not on evidence. The current budget includes massive tax cuts based on this claim.
Just for clarity my statement is economics. It can be backed up. Just look at the 1950s, 60s, and into the 70s at our real GDP growth, R&D spending, and labor pay rates. Look further at the lowest debt to real GDP ratio in 1980 off the post war peak in 1946.
Corporate tax rates of 50% made all of that possible. But we do not collect that money. We need the top income bracket to power our societal needs.
It seems like we are taking better care of our population in 2023 than we were in 1980.
Not necessarily in the most efficient or fairest way, but 50% sharing in the wealth of our country is an improvement over 32%.
It seems the medical line items are way up, but the technology available in that field is costly for sure and more effective.
Dad a doctor would say of his medical insurance during his career, “Taxes here in the US are lower than in Europe for me. But if you factor in education and healthcare costs it is a wash”.
That was looking at his career in the 1980s and 1990s.
The point is people have fewer benefits now. There is a very real cost whether you pay taxes or not. That cost is higher now in relative terms.
