The Waterbury Democrat., 1938-12-05
FALLACY IN OLD AGE PENSION PLANS SPEEDILY
 APPARENT.

Editor, Waterbury Democrat:
 The problem of dependency in old age has always been 8 bitter one; and now the fierce competition for jobs, forcing more older people out of employment, has two new factors behind it-one temporary, the de- precision, and the other permanent, the advancing length of life.
 Cost of Pensions
 In 1880 there were 6,631, 900 n- dividualS over 65 years of age and two thirds of these were not gain- fully employed. In 1850, allowing for the natural rate of increase, there will be 8 population of 1884, 300,000 in the United States. Twelve million five hundred sixty five thousand will be over 65 and if two thirds of these are not employed, as in 1890, 8,310,000 will be without work and eligible for pensions. If federal pensions were available, al- most certainly an even larger num- Der would be idle, bringing the total to approximately 9,000,000.
 If granted pensions of $50 a month (one-fourth of the Townsend plan) the cost would approximate five and one-half billion dollars a year. This is nearly two-thirds of the total amount of our present fed eral expenses and about double what they were in 1892. If the age were dropped to 60 and the amount ot pension increased to $130 8 month, as proposed in the California "ham and eggs" plan, the cost would be more than trebled and would ex- ceed 1T billion dollars 8 year. One fourth of our national income would go to 6% of the population.
 California and Colorado Plans
 Though the proposal of such a plan may seem an abSurdity, we would remind you that the grant, ing of pensions of $50 every Thurs day, to those over 60 years of age and in residence over 5 years, was the predominant issue in the last campaign in California. While a proposed Constitutional amendment making this plan possible in Cali fornia was defeated, one proponent was elected U. s. senator and an- other governor of the state. Some very marked increase in the pen- sions available Is likely to be un- dertaken.
 The state of Colorado, which two years ago embarked upon a plan on the basis of pensions of $45 per week at age 60-65, has not been able tc meet pension payments out of taxes collected for this purpose. Now pen Sions must be reduced or greatly in- creased taxes imposed to meet the cost. In the meantime, other re- lief plans. and services have been cut drastically.-
 Sources of Pensions
 Economists are agreed that still higher income taxes on persons and corporations will affect prices and output only as they reduce the amount of new capital flowing into business and industry, thus affect ing the efficiency of capital equip ment and the amount of goods pro- duced.
 On the other hand, economists agree that sales taxes, as proposed Colorado pension plans. are passed on to the consumer. From a prac- tical point of view it appears cer- tain that most of the tax burden to support increased pensions would be levied on industry, but collected from the people in the form of ex- else or sales taxes. The resulting increase in prices would inevitably result in a lower volume of con- sumption and thus directly increase unemployment. Even if business ultimately absorbed some of these increased costs by increased efi- ciency, in the long run they would be accompanied by a failure to ad- vance wage rates as they might otherwise have been advanced had the tax burden not been present; or wages might actually be reduced.
 Pensions and Purchasing Power
 The fallacy connected. with the proposals for old age pensions of the Townsend and California type is the assumption that the paying of these huge sums will so increase the aggregate purchasing power of the community as to automatically raise the demand for goods and inc