Social Insecurity

Ever since Social Security was instituted by New Deal economists in 1937, the nation has regarded it as sacrosanct, above the heaving floor of the political arena. Both parties bless it in their platforms an invariably call for increased benefits. Week after week, year after year the working man sees one and a half percent deducted from his pay check and is fully confident that, come 65, he will retire on a guaranteed income. Social Security is untouched by the ebb and flow of economic and political tides because its payments come entirely from a trust fund maintained by scaled payroll taxes. At the present time, this fund contains over 17 billion dollars, more than enough for current benefit expenses. Further, the Administration plans legislation to include farmers and professional men, the only groups not already covered.

But the influential U.S. Chamber of Commerce and Nebraska's Republican Representative Carl Curtis, Chairman of the House Ways and Means Committee, fear that the nation's sharply reduced death rate, will, within fifteen years, make us a nation of old people living on government insurance. The fund would soon be exhausted they feel, and the subsequent drain on national income would be catastrophic. Their answer is a sharp reduction in benefits.

Chamber of Commerce planners first want to extend old age insurance to all people over 65, not just those who have made payments into the fund. They would cut benefits, however, from the present minimum of 55 and maximum of 85 dollars a month to a flat 25 dollars given without consideration of past salary or length of employment. Money to pay the benefits would be drawn from the trust fund until it was dray, then obtained by general taxation. But 25 dollars is a ridiculously small amount--hardly enough for subsistence; more important, the blanket extension covering all the aged, destroys one of Social Security's basic principles: you don't get something for nothing, and the more you produce, the more you will receive when you retire.

Confidence Destroyed

In addition, the Chamber of Commerce wants a flat contribution instead of the present payments scaled according to income, thus substituting an admittedly regressive tax--hard on lower income groups--for progressive taxes. Such a step would only weaken the relationship of benefits to past wages which is essential to the maintenance of a contributory social insurance system. Since no money would flow into the fund, it would be empty in a matter of a few years. In place of the fund, the Chamber of Commerce wants a "pay as you go" plan, in which the government annually would collect the amount it estimates must be expended that year on benefit payments. Both tax rates and insurance coverage would be subject to annual revision by Congress--revision necessary because the stabilizing influence of the fund would be gone.

Such a step could serve only to completely destroy public confidence in the Social Security system. Workers now plan both their life insurance and their retirement savings with knowledge that they will get a sizable sum from the Social Security system. With the system subject to change at the whim of legislators like Representative Curtis--men convinced that each person is morally responsible for his own welfare--there could be only social insecurity.

To further pare government expenditures, the Chamber of Commerce wants to climinate all grants to the states for old age and public welfare assistance and unemployment compensation. Under the present system, federal aid is given the state program in proportion to the per capita wealth of the states, the poorer receiving more aid than the richer. Discontinuing federal support would probably have no serious effect on the richer states, but the poorer states would be forced either to give up their social insurance programs completely, or at least to curtail them drastically.

Adoption by Congress of the Chamber of Commerce plan would mean the virtual destruction of effective federal social insurance. But such a step is necessary neither for economics nor political expediency. There is nothing wrong with our present Social Security system. Its supporters plan gradual increases every five years in the amounts paid by both employers and their employees until 1970 when each party will pay three and a quarter percent. These increases would keep the present fund completely stable and autonomous despite the predicted sharp rise in the number of aged people. The Chamber of Commerce calls three and a quarter percent a staggering tax burden to place on the individual. But it fails to consider that the national income will be much higher in 1970 than now: there is an annual rise of around five percent and economists expect the trend to continue. The projected slight tax hikes thus will have little or not effect.

Our present system of Social Security rests on the philosophy that the worst personal economic misfortunes arise from circumstances over which the individual has little control. To be effective, such a system must be completely removed from the insecurity of legislative machination, and its benefits must be sizable. Stripped of the stabilizing fund, linked to the yearly whims of Congressional budget makers, and providing only token benefits, the system proposed by the Chamber of Commerce is worthless.