Imperial Valley press., 1937-11-29
News Behind the News
= Spending AS You Go

WASHINGTON You'll have to decide the
rightness or the wrongpeSs of this issue for
yourself, but the people who are administering
the Social Security Act insist that the principle
of the Old-Age Reserve Account, under which
SO 100000 persons now have insurance policies
with the government. is both honest and sound.
If you have confidence in your government
its future solvency and honesty. they say, you
shouldn't worry about old-age benefits and the
method being used to finance them.
The s6.oo0000 employees now pay one per cent
of their incomes (up to the first $4,000 and
their employers pay a tax of the same amount
which is collected by the Treasury. This will
be graduated to eventual combined tax OF
six per cent. Employers also pay two per cent
of payrolls as unemployment compensation
tax The Treasury puts the money in its gen.
eral fund and spends 1t along with other re-
ceipts, meanwhile deposting government bonds
to a corresponding amount in the old-age re-
serve ant unemployment trust fund.
Lately from many directions have come
charges: /. That the government is spending
social security tax money as fast as 1t gets 1t to
finance deficits. .. That the scheme is really
new income tax and corporation tax 8. That the
result is merely more debt, which will have
to be paid by more taxes 4. That the anticipat-
ed peak size of the old-age reserve fund (47 bill
lions by 1980) is a potential menace. D. That
instead of a cash reserve or an investment earn
ing money for the government, the reserve fund
is merely collection of IOUs.
But Chairman Arthur j, Altmeyer of the
Social Security Board asks why should the gov
any more than bank or insurance company
does? Social Security tax money isn't being
used to pay this fiscal years s700000000 deficit
by more than any other tax receipts.
Since the reserve plan contenpates gradual
purchase Of all outstanding government bonds
for the reserve fund.- the results look better when
the budget is balanced. With balanced budget
and security tax collection of billion dollars
the amount of government debt now held in
private hands would be reduced a billion-say
from 35 billions to 34-and federal promise
.o-pay OF billion would go into the reserve
fund With half-billion dollar deficit the
outstanding debt could be cut by but $780,
900 OO0 while a billion in bonds still being
credited TO the reserve fund.
The reserve is being built up TO meet future
cumulative obligations and since private life
insurance reserves now amount to 26 billions,
private companies probably will have a 47-bil-
lion dollar sooner than the Ssh. Nor
do officials see why, when the pre-war floating
debt of around a billion dollars has jumped to
35 billion in twenty years there should be undue
fear of the dislocating effects OF an increase
from 35 to AZ billions in twice that length of
time.
BY 1880 annual payment OF old-age benefits
would reach peak of three billion year. which
would be paid $3.50 from government interest
on the reserve bonds and payroll tax collec-
tions The policy-holders would have taken
over the government debt and interest on the
debt would be paid out in benefits rather than
to coupon clippers.
A pay-as-you go plan, Altmeyer says, would
require maximum 10 per cent payroll tax in
There would be no reserve steadily accumulat-
ing INTEREST,". 1t would also call on the general
taxpayer to subsdize a by-no-means all inclusive
group of beneficiaries