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By Masayoshi Nagata

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Still, the ongoing debate would be immeasurably clarified if we shared a common comprehension of the facts of our governmental division of responsi- Page viii bility and financing. Perhaps the most important contribution of the pages that follow is that they provide significant elements of that factual context. Paul Peterson, Henry Lee Shattuck Professor of Government at Harvard University, demonstrates that the lion's share of the federal government's domestic resources is directed toward redistributioncaring for sick, poor, and needy Americansrather than education, infrastructure, and other investments intended to enhance the nation's economy.

By Old World standards, we also have limited old age, retirement, health, and unemployment benefits. But a man from Mars arriving in the midst of the current debate in Washington might well imagine that a great revolution was necessary to reverse the excesses of some uniquely powerful and oppressive central state mechanism. The charge in Washington is to roll back just about every area of public activity. Even moderates fret that unless we do so the nation will be bankrupt at some point early in the next century.

Any state that provides effective programs for the needy becomes a welfare magnet that attracts more poor people from other parts of the country. To avoid becoming a magnet, each state is forced to cut its welfare benefits, inducing among the states a race to the bottom. Pessimists might think that the federal system is becoming increasingly misaligned. Since members of Congress have an incentive to take credit for pork barrel projects, one might expect inappropriate national funding of developmental projects to increase.

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