Evening star., 1953-11-29
Retirement
Social Security Neors
Historic Crossroads
By Richord FrykIund

W NtSHoiO tIyNtuUu
The tenor Of current hearings
before House subcommittee indi-
Gates that the social security pro-
gram may be approaching historic
crossroads.
The path ahead actually can go
one of three ways: Along the present
direction, keeping the semi-insur-
ance, Semi-welfare concept of the
social security program; off to the
right, making it strict insurance
plan; or to the left, where it would
be frankly and openly a national
welfare program.
Congress may not make its choice
next year-elections are coming.
But Ways and Means subcommit-
tee is laying the groundwork now
for a complete re-evaluation OF
social security.
Here Is the problem:
Social security, or, to be more
exact, Old-Age and Survivors In
surance, was conceived in the early
'3Os as an actuarially sound insurance
program. All persons gradually
would be brought in; large trust
fund would be built up until by 1880.
when the population was expected
to level of at about 154 million. A
SAT billion fund would be available.
Interest on the fund plus current
taxes would pay all the bills.
But that plan rapidly evaporated.
Population jumped unexpectedly
it is past the 100 million mark now
planned benefits began to look
much too meager and the ultimate
size of the trust fund began to soar
out Of sight.
Chonge in 1889
So the concept was changed in
1899. A more modest trust tuno
was decided upon, one about three
times the largest annual disburse-
ments expected to be made. Bene-
fits were increased and extended 10
the families of persons covered.
When World War II came, plan
ming was thrown off again. The old
folks got defense jobs instead OF
drawing their social security, and
payments out of the fund were far
under expectations. At the same
time the larger working force put
more money into the kitty. Planned
increases in the social security tax
rate were postponed.
Then in 1850 benefits were in
creased to keep pace with imitation
and more persons were brought into
the program. A new schedule of
tax increases was set.
Now more changes are in
prospect. The White House has
asked for a one-year delay in the
tax hike from 112 to 2 per cent for
both employer and employe set for
January /, 1854. This would mean
a 81 billion loss in revenue. And the
House subcommittee. under new Re
publican leadership, is apparently
toying with fundamental changes in
the law.
A possible change is return to the
original concept and little beyond,
that is, get social security on a
sound insurance basis and run it
as a private company would run its
annuity program. But the subcom-
mittee has heard few serious argu-
ments for this. The trust fund
would have to be enormous, perhaps
$3.50 billion, and the program would
be too rigid. Congress seems to
want something it can change every
few years to fit changing circum-
stances.
Clio Proposal
Another alternative, one advocated
by the Congress of Industrial Or
ganizationS, would be to keep the
present broad plan, but extend COW
erage and increase benefits. The
trust fund would be steadily en-
larged as now planned.
The third alternative would be
some form of pay-as-you-go. The
Townsend plan is pure pay-as-you-
go. There would be no trust fund.
The Chamber of Commerce of the
United States has another pay-as-
you-go plan, one which seems to ap-
peal to some subcommittee men,
bers. The chamber wants to recog-
nize frankly that the Government
is in the welfare business insofar
as social security is concerned and
give up the pretense of carrying on
an insurance" program. All per-
sons over IS would receive benefits
under the chambers scheme,
whether or not they had contributed
during their working days. Every
one would get a minimum of $50 a
month (existing minimum for the
four out of five persons in the
Nation now covered is $25). Maxi
NUNS would vary, as they do now,
with the persons past earnings.
A trust fund of the present size
($18 billion) would be kept for
emergencies, under the chamber
plan, but not enlarged. Benefits
would be paid out of current tax
money, and taxes would be adjusted
to fit desired payments. The present
tax system would be continued.
At the same time, the chamber
would take the Federal Government
out of the State and local admins
tered old-age assistance programs.
Presidents Recommendations
President Eisenhower also has
urged that Congress put Social Sc
curity more nearly on a pay-as-
you-go basis" His request that
Congress postpone the tax increase
scheduled for the end of this year
would make for another step away
from the growing trust fund concept
and bring disbursements closer to
current tax receipts. And some Dem
ocrats claim that influential Repub-
licans want to postpone the increase
indefinitely.
Significant debate over social Sc
curity will come next year when
Congress returns. There will be
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