Business: Plump Payments

The biggest single expenditure in the federal budget last year, $170 billion, went not for defense or education or interest on the national debt, but for transfer payments−that is, tax money Washington takes from working Americans and gives to citizens who are retired, ill or poor. Daniel H. Brill, an Assistant Secretary of the Treasury, reports that transfer payments (Medicare, unemployment insurance, veterans and other federal pensions and the like) have risen from 6.5% or 7% of the national income in the early 1960s to 13% or 14% in recent years.

Social Security is the largest transfer; last year's payments were...

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