The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1938-02-24
SOCIAL SECURITY"

In The Charlotte Observer, under the
caption, ''The Social Security Swlndle'
Frank Kent discusses this problem and
from his article we quote a few para
graphs:
What is happening is simple. When the money
from the payroll taxes comes in, the Secretary OF
the Treasury does not put it in the Social Security
reserve 1t never goes there at ALL 1t goes directly
into the general Treasury cash drawer and t is the
o US which goes into the reserve. The cash Is
spent on current expenses for relief, governmental
agencies of one kind and another 1t is true the
law, compels the Treasury to invest these Social
Securitv funds, which pour in now in a steady and
increasing flood from employees and employers, IN
Government securities a. 2 Z per cent interest
but it does not compel it to spend the money The
defense of the Treasury Is il it Ill not meet its
running expenses with this money it would have to
borrow money on Government securities, thus in
creasing the national debt and paying the interest
to the banks or individuals subscribing to the Sc
curites.
Actually what the Treasury is dong Is spend
ing the money intrusted to it for the purpose for
quite different purposes, substituting for the cash
its uomissory notes This undoubtedly is legal un-
der the act. And it isn't fair to blame Mr.. Nor
genthau, who probably knows the risks of what he
is doing as well as anyone and wishes he did not
have to- Actually, the act practically compels the
Treasury to do what is being done. There is no
question that the slick gentlemen who drafted this
law thought they had done a singularly clever
thing which would enable the New Deal to con-
tinue it's expenditures indefinitely and ultimately
ayoff the whole national debt And so it might if
the money were used to buy up outstanding Gov
eminent securities and corral them IN the reserve
fund Even then, eventually there would arise q
fantastic fiscal problem. But that isn't being done
at all. 1t isn't the existing promises to pay which
are being put in place of cash, but new issued
for the special purpose.
at is legal, all right, but if it were done by an
individual or corporation it would be called mis-
appropriation of trust funds, or by even ugheI
name The whole dizzy scheme is typical of New
Deal finance and its dangers are obvious. At the
moment, the Treasury is enabled to get away with
it because the fund has just started and it is not
nearly as big as it will lie. Up to January l, S440
100000 in unemployment insurance taxes had been
collected and spent. It is planned to meet the
Treasury notes given L. this amount with new
notes to be issued this summer when the first notes
mature.
"But the fund sitEs all the time and does
the demand for money from the states, from those
other benefciaries under the law. When these de.
mands reach certain point, it is clear the Treas
ury is not going to have the cash to meet them
and there is but one way to get ito w.t. more
taxes. The present policy does three rather shock
ing thngs-hrSt it conceals large and steady in
crease in the national debt due to the new Gov
renment securities issued but not sold to the pub
lie; second, it makes the imposition of new and
heavier taxes inevitable; third it accelerates oul
tendency toward the cruder form of initiation BY
the unrestrained and unchecked printing of money
which, in effect, is what these new issues of note:
amount to.
at is reasonable to SIlink that Il and when the
millions of wage earners whose weekly paw is being
pnched to go into this Social Security fund realize
thait isn't being held in rust for them at all anC
that soon late they have got to be taxed all ove
again to pay the old-age pensions-it is REASONABLY
to think that the resentment viii be very great"
In. the foregoing Kent emphasizes Ger
tain facts to which this newspaper direct
ed attention months ago and which hav,
since been written about and talked abou
Throughout the country.
A basic fact in this connection is tina
the so-called social security law does no
provide for reserve fund to pay off vas
acoumulations of old age pensions IN III
ture years. The money collected from EN-
pldyers and employees is spent as fast as i
reaches the United States treasury and il
place of the cash there is deposited to tn
credit of the fund certain pieces of paper
or government promises to pay.
the law; provided for the investmea
of these funds ID outstanding goRernmen
bonds that would be course IN aceor