The Chronicle-star combined with the Moss Point advertiser., 1949-05-06
Cost OF
Social
Security
BY CLARKE A

WASHINGTON What
would President Truman's So
cial security proposals cost?
Estimates are difficult, but there
is in existence another govern
ment system that furnishes some
clues for rough comparisons. 1t
is the railroad retirement sys-
tenn.
Railroad workers retirement
and unemployment insurance
systems provide all the bene-
fits which the administration
has proposed to extend to most
of the rest of the workers. But
the proposed social security
taxes would be bargain prices
compared to what the railroad
people pay.
The administration plan is to
raise social security taxes from
the present one per cent of pay
roll to one and one-half per cent
this July. The tax would be
raised to two per cent on Jan.
l, 1850. AS the tax is paid by
both employer and employee,
this would make the total tax
at each rate two, three and four
per cent. In the railroad bust
ness, both employee and man
agement now pay a tax of six
per cent of payroll, making a
total of IL per cent. In 1852, the
tax will be boosted to 6 ia per
cent each.
The railroad men believe
there will be plenty of money
to pay the bills without addi-
tional taxes. They don't expect
to ask the government for mon
ey. The government pays them
nothing now except to keep
war veterans retirement cred
its equal to those who were not
in the armed forces.
The social security plan, how
ever, as now proposed, looks to-
ward a time, in five to 10 years,
when it will be necessary either
to raise the social security taxes
above two per cent or get a SUBJ
sidy. One reason that railroad
taxes are so high is that rail-
road workers with 80 years
service can retire with full an
nuity benefits, although the sys-
tenn has been in effect only IL
years. These workers get a lot
more out of it than they put
into it. The system took over
the old railroad retirement plan,
under which the railroad COM
panies guaranteed pensions to
30-year men.
The Social Security system
has a parallel problem. 1t is
defined by the Advisory Coun-
Gil on Social Security, headed
by Edward R. Stettinius, Jr.
Under our recommendations,
the full rate of benefits will be
paid to those who retire during
the first two or three decades
of operation even though they
pay only a fraction of the cost
of their benefits.
I'm a social insurance system,
it would be inequitable to ask
either employers or employees
to finance the entire cost of liza
bilities arising primarily be-
cause the act had not been
passed earlier than it was.
Hence, it is desirable for
the Federal Government, as
sponsor of the program, to as
sumo at least part of these ac-
crued liabilities based on the
prior service of early retirants.
A government contribution
would be a recognition of the
interest of the nation as a whole
in the welfare of the aged and
the widows and children"
The proposed social security
taxes would not be quite so low
as they seem in comparison to
the railroad retirement tax.
They would be levied on wages
up to $500 a month compared
to $3.50 a month under the pres
ent law The railroad retire
ment tax is levied on wages up
to $500 a month. Benefits would
be about equal. The maximum
monthly benefit a railroad man
and his family can draw is $144.
The new Old Age and Surviv-
ors' Social Security Insurance
maximum would be $3.50. (The
present maximum for Socity Sc
curity is $3.50
A retired railroad employee,
however, has one very substan-
tial advantage over social Sc
curity participants. If he wants
to get a job paying any amount
of money outside the railroad
industry to supplement his re-
tirement annuity, he can do so.
Under the proposed social Sc
curity amendments, a retired
person cannot earn more than
$50 a month in employment of
a type covered by old age in
surance and still draw his re-
tirement benefit. Cat present he