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May 23, 2007

Transfer spending

Government spends money in two categories: It can provide services like roads and schools, public safety and garbage collection. And it can provide financial resources to people. The latter category is called transfer spending. N.C. State University economist Mike Walden explains what this includes and how it's changed in the last 30 years.

"It's the largest single category now of government spending, and it's grown immensely," says Dr. Walden, a professor of agricultural and resource economics. "Its share of total government spending here in North Carolina, for example, has doubled in the 30 last years.

"Now in terms of what we include in transfer spending -- many categories. But the big parts would be Social Security, assistance with medical programs (payments like Medicare, Medicaid), cash welfare and food stamps. Indeed in some counties in North Carolina transfers now account for over 20 percent of the local income," he adds.

"The fastest growing part of transfer spending, I think -- and people won't be surprised by this –- is medical assistance," he concludes. "And it really represents a big challenge for government at all levels because it is taking more of total resources we provide to government."

Posted by deeshore at May 23, 2007 10:27 AM

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