Evening star., 1937-10-31

BY ]. A. FOX.
@HE first effort toward thor.
ough appraisal of the Social
Security Act since passage
L more than two years ago will
be made here this week at the initial
meeting of the Advisory Council on
Social Security.
Created last spring by the Senate
Finance Committee and the Social Sc
curity Board as the result of criti-
cism of the old-age benefit set-up in
the act by Senator Vandenberg. Re-
publican, of Michigan. the council,
composed of representatives of en-
plcyer, employe and public, will center
attention on that phase of the welfare
program in two-day session starting
Friday. The council, however. was
designed to be the source of recon-
mendations for any changes in the
law which experience may be held to
have justified, so it is possible for its
entire scope to be brought under re-
view.
Reserves Center of Controversy.
At the outset the conferees will be
confronted with an issue that has be-
come a major controversy. namely,
the cash reserves being built up for
old-age benefit payments. 1t was this
item which drew the fire of Senator
Vandenberg, and there has been
mounting volume of criticism from
other sources. particularly business.
Looking to the day when-by mathe-
matical certainty these reserves will
amount to billions of dollars, critics
who otherwise are wholly in accord
with the law and its purposes declare
the creation of such huge fund is
both unwise and unnecessary, stress
the possibility of political pressure per-
verting its uses, and argue for substi-
tuition of a pay-as-you-go basis for
the benefits.
In support of the contention as to
likelihood of diversion, it is pointed
out that right now the monthly old-age
benefit taxes levied on employers and
employees are financing the Govern
ment and are represented in the Treas
ury only by I. o. us in the form of
3 per cent notes and that the same
use is being made of the trust fund
set up by State tax collections for un-
employment compensation, with the
notes in this instance calling for 2l2
per cent interest.
Actuarial Soundness Stressed.
The administration, however, stead
fastly has stuck to the reserve prin-
ciple, declaring it prerequisite to &C
tuarial soundness. which, 1t is insisted,
is just as necessary for Federal as
for a private pension plan.
Tied in with the reserve issue will
be proposal to increase less rapidly
the tax creating this fund. At pres
ent the levy, which started January
1 last, is l per cent each on employe
wage and employer pay roll, up to
$4,000 for each individual worker.
The rate is to increase one-half of l
per cent every three years until in
1e49, the maximum of per cent from
each source is reached.
Other Issues.
Other points to be discussed in
clude the advisability Of
Commencing monthly payments
prior to the present effective date of
January /, 1912.
Extending benefits to persons be-
coming incapacitated before reach
ing the minimum beneficiary age
of IS.
Extending benefits to survivors of
those persons entitled to benefits.
Covering classes now excluded from
benefits, which take in agriculture and
domestic labor; employees of Federal,
State and municipal governments;
seamen, and employees of organiza-
tons not formed for profit.
Increasing monthly benefit pay
ments to those retiring in the early
years in which the plan is operative.
The theory behind the controver-
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