Evening star., 1949-06-17
Entire Social Security
Plan Could Lih Cost
To 70 Pct. Of Payroll
Third OF a SeriesJ
by Gould Lincoln

Security Act, increasing coverage
and almost doubling the benefits,
lis an important item in the
administration cradle-to-the-
grave paternalistic and socialistic
program. The House Ways and
Means Committee is expected TO
report the measure. with modtf1ca.
tions, at an early date.
This Is the old-age and sur
vivors insurance part OF the pro-
gram, including permanent dis
ability.
other parts of the program in
clude temporary disability and
maternity benefits, unemployment
insurance. public assistance to the
needy and, finally, national health
insurance.
While this series of articles has
dealt almost entirely with the
pending bill to extend the system
of retirement benefits. the others
must be considered In any esti-
mate Of the total cost Of the pro-
gram and its impact on the people
and their economic institutions
and whether the people can al
ford it.
Rising Percentage Of Payroll:
The cost of the program divides
itself into dollar costs and I'M
ponderables. .,.sI
Taking first the dollar costs. the
old-age and survivors insurance,
including permanent disability.
has q high estimate OF 4.92 per
cent of the payroll. If all workers
and the self-employed are in
Guided, rising to 1874 per cent OF
the payroll in the year 1000.
The level premium cost In terms
of payroll (that is, the amount
that would be necessary to make
the program self-sustaining) Is
els per cent of the payroll. The
disability cost estimate is 9S one
hundredths Of 1 per cent. An es-
innate of one-half of per cent
has been made for disability and
maternity benefits. Unemploy-
ment compensation Is estimated
to cost ~ per cent.
This figure does not take into
consideration depletion OF State
reserves necessary to finance ben
efits at Ia per cent rate. In 10
years this depletion may amount
to an additional "a per cent OF
pay roll. |
Public assistance-aid to the
needy-is not financed through
payroll taxes. but through con-
tributions by the Federal Govern
ment and State governments. In
terms Of payroll. however, 1t is
estimated at 2 per cent.
Health Insurance Additional.
The national health insurance
program, 1t has been estimated
by Federal Security Administrator
oscar Ewing, can be financed by
q 5 per cent payroll tax divided
between employers and employees.
An aggregate Of these per-
centage figures brings total OF
nearly 20 per cent. A Federal
Security Agency estimate OF
covered" payroll was $187,000.-
o00,000 in the year 1000. Twenty
per cent of that total payroll
estimate is $37.40e ,000. 900, or
close to the Governments entire |.
budget today.
It is something for the people
as q whole to think about when
they consider the probable costs
of the entire social security pro-
gram. II the taxable payroll re-
manned at $125, ,00o. 100000 (to-
days estimate) the total cost of
the program would be $25.00o,-
900, 600.
The social security system for
old age assistance retirement
pay and survivors benef1ts) has In
the past been operated on the
pay-as-we-go plan. The starting
rate of payroll tax has remained
at per cent, contributed by the
employer and the employe. Under
a pay-as-we-go plan. the system
started off by assessing payroll |
taxes sufficient to meet annual
disbursements and to maintain
relatively small contingent re-
serve.
Under such q system. with the
benefit payments bound to mount
year by year, it is obvious that
the payroll taxes would have to
be increased and increased
eventually to a point where the
costs to the individual would be