Evening star., 1939-07-16
Ruinous Revision


amending legislation to the Social
Security Act voted by the Senate
during the past week is much less
desirable than that approved earlier
by the House.
One such inadvisable change is the
amendment by which the Federal
Government would match State
funds 50 for 81 up to the first SIS
of monthly old-age assistance. OBJ
viously designed to help the poorer
States, this formula has no element
Of f1exibility and would apply the
same ratio to all States, increasing
Federal costs by an estimated $780,
100000 annually. AS with all funds
involved in the old-age assistance
program, any extra costs would come
from general tax revenue or in
creased Federal borrowing.
A second Senate revision lacking
in merit is the amendment requiring
that States contribute a minimum of
$40 monthly to old-age assistance if
they are to receive Federal aid. With
some thirty States not now spending
this amount on its needy aged, the
proposed requirement would force
them either to surrender hopes of
Federal aid or to increase their own
assistance appropria tions materially.
If the latter course should be fol-
lowed, the Federal costs automatically
would rise on the basis of the match
ing formula.
But purely in the interests of the
District of Columbia, none of the
Senate changes is as regrettable as
one dealing with the Employment
compensation reserve funds.
After studying records of benefit
payments of revenues accruing to
the States in this program the House
decided to permit Statewide reduc-
tions in the unemployment COM
pensation tax where and whenever
the reserve fund reached certain
minimum levels. AS long as benefit
requirements were fully protected,
1t was reasoned, no convincing argu-
ment could be found for opposing
tax relief on this contingent basis.
In studying this relation between
revenues and benefit demands, the
House received statistics from the
Social Security Board showing a 26.1
per cent net increase in the Nation
wide reserves during 1898. Since
1888 was year of relatively heavy
unemployment, and all but two States
were paying benefits throughout the
year, the margin by which income
exceeded expenditures was consid-
cred significant
Particularly significant, as far as
the District is concerned, is the fact
that the net accumulation here
amounted to lis per cent, highest for
any single Jurisdiction in the coun-
try. On a dollar basis there was
available last April 30 in the Districts
reserve account $12,674,0OO, repre-
senting net gain of nearly $4,000 900
in the 16 months since benefit pay
ments began on January /, 1888.
With benefit payments here running
below S2,000,00O yearly, there is an
obviously excessive margin by which
the tax liability might be safely re-
duced.
Justifying their action only with
the statement that there has not
been sufficient experience with un-
employment compensation to afford
basis for decision, the Senate Finance
Committee struck the tax reduction
provision from the House bill and
no substantial effort was made to
restore it on the floor.
In the interests of perfecting the
social security system rather than
introducing new inequities and per-
petuating old ones, it is to be hoped
that House and Senate conferees will
agree on elimination of each of these
three Senate revisions.