Evening star., 1936-12-27
Social Security Problems
just Beginning
BY OVEN L. ScoTT.

Every worker in the land, with the
exception Of domestic servants, farm
hands, professional people and casual
laborers, is likely to find few pennies
deducted from his next pay envelope.
Every employer In the land, except
those hiring the type Of workers listed,
will be compelled to set aside these
pennies and add an equal number to
them. with the total to be turned over
to the Federal Government for safe
keeping. In addition, every employer of
eight or more persons faces q further
assessment on his pay roll.
These accumulated deductions-ex-
pected to total 81 ,000, 900 900 before the
new year Is out-will represent 1 per
cent OF the affected pay roll Of the
Nations business enterprises. One per
cent will be deducted from the employe,
3 per cent from the employer.
Together, they represent q vast system
of forced saving In the interest OF future
security. Workers are forced. by taxa
ton. to save against the time when they
will be old. Employers, similarly by
taxation. are forced to help their workers
build up old-age accounts and to build
reserves OF their own against unemploy-
ment.
Federal Government calculations for
the future revolve more and more around
these savings. Through them there Is
the prospect that the Treasury will be
relieved Of the need for further borrow
ing from bankers, insurance companies
and individual investors. This means
that pay roll deductions will bring a
cash balance to the national budget
although adding to the debt owed to
millions of workers in the future. 1t
means, too, that, by lessening the need
for the Government to borrow from the
investment market after next July the
danger Of a future imitation Is checked.
What actually becomes Of the pennies
from the 25.0O0.00 workers and the
dollars from the $500 900 employers after
they are paid into the Treasury?
Money taken from the pay rolls of
workers. supplemented by money con-
tributed by employers under the old-age
insurance plan. comes to washington,
where 1t goes into the general fund Of
the Treasury. But the Government Is
setting up individual accounts for every
contributing worker, and an entry will
be made in those accounts for all Of the
pennies paid over by the worker and by
his employer. Thus the cash will 60 into
the Golfers of the Government, while q
bookkeeping entry will be made to show
that the Government owes this money
to the individual.
H&A +
The course Of money taken from en-
ployers to support unemployment in
surance systems is less direct. but the
effect is much the same. Where there
are State unemployment insurance sys-
TENS the States collect the tax and turn
the money over to the Government for
safekeeping, to be drawn upon later as
workers lose jobs and become eligible for
insurance payments Where there are
no State systems the Federal Govern
ment collects the money and keeps 1t.
However, the accumulating pay roll tax
dollars are not going to be piled up in a
corner of the Treasury to lie unused
until each individual draws out the par
ticular dollars that he has contributed.
Rather the dollars come In and 60 i'm
mediately to work paying bills for Uncle
Sam. while the individual is assured that
the Governments debt to him Is entered
on the books.
For example, John Smith, at his next
pay day. finds that IS cents is deducted
from his $25 weekly wage. That Is
cents is matched by the employer and
goes to the Treasury in Washington.
There, together with millions Of other
contributions, 1t Is available to meet
current bills. John Smiths pennies may
60 to pay wages to Bill Jones, at work
on the w. p. A.. or to pay for armor
r, cnI
States Steel Corp. for battleship build
ing, or for any of the multitude of things
that the Federal Government spends
money to do.
But the Government acknowledges its
debt to John Smith and all the other
millions Of contributing workers by set
ting aside bonds to represent this obli-
cation and by entering his contribution
in the individual account he is to have
at the Social Security Board.
Since about 81 ,000, 100000 will flow in
from pay roll taxes during 1937-unless
collection is stopped by the courts-and
since no important payments will be
made under the old-age insurance law
until 1912. and. under the unemployment
insurance law until 1888. this huge
amount Of cash is going to be available
to the Government. BY using this cash
rather than money borrowed from the
investment markets the Treasury can
arrange what amounts to a cash balance
Of the Federal budget.
Pay roll tax collections are scheduled
to increase year by year until they reach
approximately 100000, 900. They are
scheduled to accumulate until, by 1880,
they amount to $4,000, 900 900 available
to support the old-age insurance system
alone. The Federal Government will
need to find use for that total of dollars,
representing the debt it will owe to
workers forced to save against old age.
To find use for that much money, 1t
would need not only to buy in all the
present debt. but to create an additional
$13,000. 100000 Of debt.
+ X -
Such is the eventual effect of the
accumulation of pay roll tax pennies now
starting If that accumulation continues
as called for by law.
Actually, however, q large number Of
complications are ahead. These COM
plications are becoming apparent enough
to cause predictions from officials on the
inside Of the picture that the whole
plan will need to be revamped before
many seasons have gone by.
Thus the Federal Government is pre-
pairing to hire thousands of employees and
to spend millions of dollars in an at