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 $90.4 billion. In all, reckons Economist William Lawrence of Pace University, whose definition of the payments is broader, 1977 transfer payments were equal to 69% of all federal tax receipts.

Not only have the number of payments proliferated, but they increase in size with rising inflation -and they contribute to inflation by pumping out money to people who do not produce goods and services. Moreover, any effort to curb them is regarded as political poison. Yet until some way is found to reduce the growth of transfer payments, the chances of containing Government spending are slight.

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