Evening star., 1935-02-02
SOCIAL SECURITY
FUNDS FACE CUT
"Unearned Annuities" Hit
in Proposed Federal
Expenditures.
By the Associated Press,

By the Associated Press.
While critics of President Roose.
velt's social security program sought
higher benefits, administration officials
were reported today to be drawing a
plan to cut proposed Federal expendi-
lures by several hundred million
dollars year.
The recommendations were not In
| final shape. but one informed Capitol
source understood they would call,
among other things, for elimination
of Federal donations for ''unearned
annuities."
Under the administration plan, as
now before Congress, a man Of As
could begin providing against his old
age by paying into the old-age pension
fund. At IS, he would start getting
the money back, plus payments from
the Federal Government equal to the
additional sum he would have con-
tr1buted had be started paying when
he was 81. These payments from the
Government are called "unearned
annuities" Actuarial calculations
showed, officials said, that they would
cost huge sums.
Declared Unfair Competition.
Another reason for the proposed
change, members Of Congress said.
is an objection raised by some legis-
lators who argue the annuities would
be unfair competition with insurance
companies.
Another change considered in ad-
ministration circles, it was said. Is a
transfer Of the unemployment insur-
ance fund from a social insurance
board to the Treasury. Witnesses
had told congressional committees
| that If the board administered the
, money. it might seem like charity.
Word also reached Capitol Hill that
| administration officials might urge the
| exemption of farmers, domestics and
casual workers from the pensions and
job insurance provisions on the ground
that to administer the plan for them
would be too difficult. 1t was en-
phasized that this change had not
finally been decided upon. and that
the others might be modified.
President Opposed.
, In the face Of continuing drives for
the Townsend plan and other pro-
posals to boost the administration
ante" the President took a stand
last night against any increase in the
SIS month the Government pro-
poses to contribute to old-age pen
sions. The White House attitude is
that this should be the limit because
payments will reach $685., 5000 q
year by 1880. The President en-
phasized the States could contribute
more than their SIS share.
A survey of various estimates
showed today that, under the security
plan now before Congress, more than
SIS .000, 900, 900 eventually will be col
lected or appropriated in the United
States every year for old-age pen
sions and unemployment insurance.
Administration spokeSmen, EXPLAIN
ing the bill to congressional commit
tees, have not estimated the total cost,
but the $4,000 .0o0, 900 figure is reached
by adding their estimates Of various
items. The total would include pay
ments by the Federal Government. the
States, employers employees and others.
OuleL NEltlCISm.
Despite the size of the sum involved.
chief criticism of the program has
come from those who did not consider
1t liberal enough, rather than those
who felt it was too expensive.
Actually, the plan would not reach
| full size in the matter of benefits and
cost until about 1880, when the young
persons who would begin to contribute
in 1887 would reach the retirement
age.
The plan calls for a gradual start.
The payroll tax to support unem-
ployment insurance would begin in
1886 at l per cent and rise to per
cent by 1888. or earlier, If business
conditions warranted.
The taxes for old-age insurance
would begin at per cent in 1897 and
| rise gradually to per cent by 1857.
Federal appropriations would total
only about 100000 900 the first year,
but would reach about $4,000. .ooo, 600
by 1880.
Plan to Raise Money. =
Here is the way the money would
be raised by 1880 if the plan Is
adopted and carried forward as now
drawn:
Non-contributory old age pensions:
For those who cannot come under the
contributory system. It is estimated
the Federal Government will by then
be contributing about s50o,000, 900
' annually, which will be at least
matched by the States.
ContributOry old age pensions. A
tax of per cent on pay rolls will be
levied by the Federal Government.
half on employers and half on en-
ployeS, estimated to yield $2,000,000,-
600 in good times. To this, it is esti-
! mated, the Federal Government will
have to add $500 ,000, 900, making a
total of $500, 100000.
Unemployment insurance: The
Government will levy a per cent
pay roll tax on all employers OF more
than four workers, which is designed
to induce the States to set up systems
Of insurance with this tax as a mini
mum. 1t is estimated that in good
times this would yield 81 200, ,0oo, 900
a year.
These are the three major features.
In addition Federal appropriations are
| proposed for dependent children, de-
pendent mothers and others, and
there is voluntary annuity plan.
|