Medicine is the latest welfare field in which the role of govern- ment has been exploding. State and local governments, and to a lesser extent the federal government, have long had a role in public health (sanitation, contagious diseases, etc.) and in provi- sion of hospital facilities.

From small beginnings in the New Deal years, government pro- grams to provide housing have expanded rapidly. A new Cabinet department, the Department of Housing and Urban Development, was created in 1965. It now has a staff of nearly 20,000 persons that disburses more than $10 billion a year. Federal housing pro- grams have been supplemented by state and city government programs, especially in New York State and New York City.

Public Assistance 15 We can be far briefer in discussing the “welfare mess” than in dis- cussing Social Security—because on this question there is more agreement. The defects of our present system of welfare have be- come widely recognized. The relief rolls grow despite growing affluence. A vast bureaucracy is largely devoted to shuffling pa- [...]

Workers paying taxes today can derive no assurance from trust funds that they will receive benefits when they retire. Any assur- ance derives solely from the willingness of future taxpayers to impose taxes on themselves to pay for benefits that present tax- payers are promising themselves. This one-sided “compact be- tween the generations,” foisted on generations that cannot give their consent, is a very different thing from a 

The major welfare-state program in the United States on the fed- eral level is Social Security—old age, survivors, disability, and health insurance. On the one hand, it is a sacred cow that no politician can question—as Barry Goldwater discovered in 1964.

Britain and Sweden, long the two countries most frequently pointed to as successful welfare states, have had increasing dif- ficulties. Dissatisfaction has mounted in both countries.

Social Security expenditures have skyrocketed, and the system is in deep financial trouble. Public housing and urban renewal pro- grams have subtracted from rather than added to the housing available to the poor. Public assistance rolls mount despite grow- ing employment. By general agreement, the welfare program is a “mess” saturated with fraud and corruption.

The war’s effect on public attitudes was the mirror image of the depression’s. The depression convinced the public that capitalism was defective; the war, that centralized government was efficient.

From the founding of the Republic to 1929, spending by govern- ments at all levels, federal, state, and local, never exceeded 12 percent of the national income except in time of major war, and two-thirds of that was state and local spending. Federal spending typically amounted to 3 percent or less of the national income.

One symbol of the change was the transfer of the Federal Re- serve Board from modest offices in the U.S. Treasury Building to a magnificent Greek temple of its own on Constitution Avenue (since supplemented by a massive additional structure).