Altmeyer Replies to Campbell

To the Editors of the CRIMSON:

. . . I regret that I do not have the time to discuss in detail all of the miscellaneous attacks that are made on social security. However, I may say that my general reaction is that the basic points made in your editorial are sound and that to the extent that Mr. Campbell has attempted to meet them he has failed.

As I read your editorial, you are defending the Old Age and Survivors Insurance System as a social insurance system that provides benefits related to previous wages, payable to workers meeting the minimum eligibility requirements, and financed out of contributions of employers and workers. Mr. Campbell, following the United States Chamber of Commerce line, alleges this system is not "a bona fide insurance system" because each insured worker does not have an individual contract.

It is obvious that Mr. Campbell is confusing social insurance with private insurance. Anyone who is familiar with the development of social insurance abroad and in this country is aware of the fact that the benefit rights under social insurance are always established by specific statutory provisions and are not dependent on an individual contract. Thus, we have had workmen's compensation in this country for more than 40 years. This is a well-recognized form of social insurance which provides benefits to injured workers as a statutory right, enforceable by law, and not dependent on any individual insurance contract whatsoever.

In criticizing the Trust Fund as being too small, Mr. Campbell again mistakenly applies a private insurance concept to social insurance, but even worse he creates the impression that this social insurance system is not financially sound. The truth is that it is fully self-sustaining for all time to come. This allegation comes with singular ill-grace from a spokesman for a so-called pay-as-you-go plan which of course would completely abolish any long-range financing and make benefits dependent upon year to year appropriations.

Mr. Campbell contends that the Trust Fund would not be raided to pay benefits to the millions of persons who do not meet the minimum eligibility requirements of the Old age and Survivors Insurance System, but he does admit that the payroll contributions of employers and workers would be used to finance these benefits. Incidentally, the original U.S. Chamber of Commerce proposal certainly led social security experts outside the government and persons such as Senator Byrd of Virginia to believe that it did contemplate raiding this Trust Fund.

In any event, it is lear that the U.S. Chamber of Commerce proposal boils down to paying the Federal government's share of the cost of old age assistance (which is based on need) out of payroll taxes instead of general taxes. Moreover, contrary to what Mr. Campbell alleges, the poorer States would suffer greatly, if the present Federal grants for old age assistance were abolished. The official data show that the States as a whole would lose about $284,000,000 and the poorer States about $110,000,000 a year under the U.S. Chamber of Commerce original proposal (which according to its cost estimates contemplated a Federal payment of $25. a month per aged person). Subsequently, the U.S. Chamber of Commerce boosted the amount to $30. month, but even so the States as a whole would still lose $170,000,000 a year and the poorer States $42,000,000.

In summary, I believe that the U.S. Chamber of Commerce proposal promises too much, under-estimates the cost, specifies an inequitable method for financing the cost, jeopardizes the security of the Old Age and Survivors Insurance System and weankens when it should strengthen, the relationship between benefits and past wages, so essential to the maintenance of a contributory social insurance system. Arthur J. Altmeyer,   Chairman,   United States   Social Security Board   1937-1953