If politicians get money to spend and don't have to be responsible for taxation, then of course that will bias their attitude toward more spending as opposed to cutting back on spending.

How would the US be different today if people coming off the boat were greeted with a welfare check instead of a shovel?

Politicians and bureaucrats are no different from the rest of us. They will maximize their incentives just like everybody else.

People share a universal behavioural trait: if there are profits to be made, the effort to get that money will attract investment. This is true in the private sector, the market sector, as well as the public sector.

If politicians get money to spend and don't have to be responsible for taxation, then of course that will bias their attitude toward more spending as opposed to cutting back on spending.

You have to have a government to provide you with legal order, with stability, enforcement of property rights, enforcement of contracts, definition of rules and regulations - the rules of the game, so to speak - and to provide certain shared goods and services, public services. Several people have tried to estimate this and they come out with figures like government spending at 15% of GDP. In the modern world it has gone to 40% or above. So we are way beyond the optimal, and that is easier to say than what the optimum is.

Once you have an equalization instrument in place, as you have in Canada, there arise tremendous bureaucratic values - bureaucratic rent so to speak - in maintaining the system that you have. To shift to a system that paid the transfers directly to individuals, by having differential rates of federal income tax levied to adjust to provincial fiscal capacities, which would be my preference, you would have huge bureaucratic opposition. People would try to protect the rents they have in the current system of institutions.