Evening star., 1937-07-18
Pennies of the Millions
Swell Treasury Funds
BY OWEN l.. SCOTT,


100000 American workers to take few
pennies from each. Matched with an
equal number from the tils of 5000 900
employers. these pennies are flowing to
Washington to build individual reserves
against the time when old-age benefits
will be paid
Treasury officials now are beginning to
receive letters from taxpayers asking, In
effect:
Just what is being done with my
money? Is it true that the income am
forced to forego is being used to pay the
running expenses of the Government.
when my understanding was that this
money would go into reserve against
the time when l will want to draw on 1t
IN my old age? II the money is used up
now, how can I be sure there will be a
reserve Wnen the time comes to make
payment?"
Answers returned to inquirers asking
questions OF this kind are not very en-
nghtenlng. But, as the pennies from
millions OF workers continue to accumu-
late. amounting even now to hundreds Of
millions OF dollars, they play an increas-
lngly important part in the calculations
OF government that must live on bor-
rOWed money.
The fact Is the pay roll tax dollars
which millions Of individuals think of as
going into an individual strong box to be
accumulated for their future uSe-look
exactly like any other tax dollars to the
Treasury.
once these dollars reach the Golfers Of
the Government they quickly are drained
on TO pay relief workers, or to buy silver
IRON Cinnamon, or to pay Frenchmen
Tor lot OF gold to bury in the ground at
Fort Knox, or to provide farmers with
cash subsidies, or to build battleships, or
to pay salaries to Congressman, or to do
any OF the multitude Of things for which
Federal Government money is spent
In other words, the actual cash that
comes out OF the millions of pay en-
Velopes IS not-as most Of the contribu-
tors seem to think-placed in twenty FIVE
million separate piles in a Trea sury vault
to be added to as interest and tax pay
mentS accumulate. Rather the cash Is
put to work, just as dollars placed in
bank are put to work doing variety of
things of which the individual depositor
knows nothing
But what does the individual have to
show for the hard money he is being
forced TO set aside each week In the name
OF old-age protection
All he really has is number, issued
by the Social Security Board This
number represents title to a bookkeeping
entry known as an account" on the
Social Security Board books The entry,
or account, is an obligation on the part
of the Federal Government which Con-
gress is expected to fulfill by making an
nual appropriations sufficient to cover
principal and interest These appropri-
ations, approximately equal to the
amount of the millions OF contributors,
are set up as a reserve" in the Treas
ury.
It's all pretty much of bookkeeping
operation.
All, that is. except the real dollars that
keep flowing into the Government pocket
from the millions of pay envelopes These
dollars are Of the hard cash variety
much needed by President Roosevelt
these days. They come from masses of
individuals who must forego their imme-
diate use in order to build projection
against old age.
But much to the relief of the Treas
ury. few of these dollars are to be paid
back to their contributors until many
years have elapsed No old-age benefits
are scheduled to be paid until 1912, five
years from now. For many years after
that date. the payments will be much
smaller than the growing receipts from
pay roll taxes
This means that Mr. Roosevelt and
Henry Moreenthau. jr., his Secretary of
the Treasury, will have at least $3.50 OOO,-
900 each year to use in paying current
bills that otherwise might have to be paid
with money obtained from rather hard
hearted leaders. In addition. State un-
employment insurance systems are re-
qulred to deposit their funds with the
Treasury. adding other hundreds of mil
lions to the available cash.
No such windfall ever in the past has
come to financially hard pressed gov
ernment
And this windfall comes directly out
of the pay rolls of the Nations workers.
Its effect is similar to that of nat sales
tax, levied at the rate of two per cent on
nearly all of the pay rolls of the Nation.
The levy has come in spite OF President
Roosevelts off-reiterated opposition to
sales taxes. 1t is referred to by the ex-
perts as "regressive' tax-one that
bears most heavily on those least able
to pay.
Is all that as intended?
Hardly The basic thought of the
social security planners had been that
the Government, in agreeing to deal
with the problem of old-age retirement,
assumed a staggering future burden
That burden within fifty years will
amount to more than 50 500 600, 900 each
year or half as much as the whole New
Deal budget in year of emergency
spending.
If this burden were to be undertaken,
the experts decided, then the full import
should be recognized at once and prep
aration should begin for its fulflllment
This meant taxing at present to meet ex-
penses that will come in the years ahead.
The Congress approved this idea and the
Supreme Court accepted the conclusion
of the congressman.
X A*
The idea essentially. was that the
workers Of this country gradually would
come into ownership Of the huge national
debt now held in large part by banks
and insurance companies and industrial
corporations. Instead of paying interest
to the bankers and the insurance policy
holders of the corporations, the Govern
ment would pay the interest on its debt
to the Nations workers.
But, in practice, pay roll tax revenues
are being spent on operating expenses
and their spending has only gone to add