SOCIAL SECURITY: TWO VIEWS

To the Editors of the CRIMSON:

. . . Virtually all your statements (in your editorial of December 7) about the social security program of the Chamber of Commerce of the United States are entirely without foundation in fact. I shall select only a few for purposes of illustration.

You state that the Chamber of Commerce "would cut benefits, however, from the present minimum of 55 and maximum of 35 dollars a month to a flat 25 dollars given without consideration of past salary or length of employment." First, the present minimum primary benefit is $25 not $55. Second, the Chamber of Commerce strongly favors the existing sliding-scale benefit system whereby benefits are related to past earnings. Third, the only recommendation for a change in benefits that the Chamber has made is to favor an increase in the minimum benefit from $25 to $30 a month.

You state that "the Chamber of Commerce wants a flat contribution instead of the present payments sealed according to income." The Chamber of Commerce favors the present social security tax system whereby taxes are imposed on the first $3600 of income and are shared equally between employer and employee. We are unalterably opposed to what you accuse us of favoring--the payment of social security benefits from general taxation. You may be interested to know that we have not opposed the increase in the social security tax from 1 1/2 to 2% on January 1, 1954. Incidentally, Congressman Curtis has also taken a strong position against the so-called social security tax freeze. In a speech at Omaha on December 9 Congressman Curtis said that any saving the social security tax freeze would effect in overall federal taxes on individual incomes should not be achieved "at the expense of a sound social security system."

This brings me to your statement that under the Chamber of Commerce plan "money to pay the benefits would be drawn from the trust fund until it was dry." We have never proposed that the social security trust fund should be used up (a raid on the trust fund). Rather our proposal is that the trust fund should be recognized for what it really is--a contingency fund--and that it be used to provide automatic flexibility in the social security program during periods of recession. As payrolls decrease, the contingency could be drawn upon in lieu of tax increases to cover increased benefit disbursements. As the economy recovered and payrolls increased, the contingency fund could be built up again. Thus, the fund would tend to exert a stabilizing influence on the economy. The present 19 billion dollar contingency fund under such an arrangement might be permitted to rise somewhat in line with the growth in the economy.

It is true that the Chamber of Commerce has recommended the elimination of federal grants to the states for old-age assistance, but you have completely missed our reasons for this recommendation. It should be considered together with our recommendation that basic old-age and survivors' insurance benefits be paid to all of today's retired aged. When this is taken into account, it is difficult to see in what sense the poor states would be worse off under our proposal as you allege. According to my calculations the reverse situation would be more likely to hold.

Throughout the whole editorial, the impression is created that in some sense or other, the present social security system is an insurance system under which benefits have been bought and paid for. Apparently the editors of the CRIMSON do not know that under the present OASI system the individual has no contract with the United States Government as would be necessary if this were a bona fide insurance system. Former Commissioner Altmeyer admitted this in the recent hearings conducted by the Social Security Subcommittee of the House Ways and Means Committee. Thus, the present system is already one which, to use the words of the Harvard CRIMSON, is "subject to change at the whim of legislators." However, this does not concern me because I apparently have more faith in the Congress of the United States than the editors of the CRIMSON.

If the present social security system were on an insurance basis, the trust fund would have to be about $200 billion instead of the $19 billion now credited to the fund. Furthermore as a group, individuals covered during 1937-1950 have received sufficient value in survivors' benefit protection to at least off-set their own contributions. In other words they did not contribute anything net towards their retirement. Also the trust fund is not now large enough to cover the benefit payments that will have to be made to those currently on the benefit rolls, to say nothing of the tens of millions now contributing and who will be on the benefit rolls in future years. All these estimates are not mine; rather, they are those of Mr. Robert Meyers, the Actuary of the Social Security Administration and an appointee of the New Deal.

Perhaps the readers of the CRIMSON would be interested in the facts about the Chamber program. Briefly, it consists of four major proposals:

1--Pay basic Old Age and Survivors Insurance benefits to all of today's retired aged. This would end the discrimination against the almost five million persons over 65 who are presently left out of the system for no good reason.

2--Extend social security coverage to all employed persons, some 12 million of whom are not now covered.

3--Withdraw the federal government from the old age assistance program, leaving it entirely to the states.

4--Finance OASI benefits on a pay-as-you-go basis so that we can all see the true cost of social security in terms we can understand. Incidentally, some official coal estimates show that the present system is already almost on a pay-as-you-go basis.  W. Glenn Campbell,  Economist,  Chamber of Commerce  of the United States,  Washington, D.C.