statutory in nature and may be altered or abolished at any time by Congress. Thus, those persons contributing to Social Security are not paying for their own future benefit but are paying for someone else's current benefit.

In turn, the current contributor hopes that future generations will also provide him with Social Security benefits upon retirement.

The vast majority of present beneficiaries of the OASDI system receive a great deal more in terms of benefits than they ever contributed through taxes. In 1954, for example, each Social Security beneficiary was receiving an average of $30 in benefits for each 50 cents paid in taxes. Twenty-nine dollars and fifty cents of that was paid by younger workers. This ratio has undoubtedly increased for existing beneficiaries since the extension of benefits in 1956 and 1958 and again this year with the enactment of P.L. 87-64.

Thus, those presently retired with OASDI coverage are receiving a considerable subsidy from the younger generation. And further increases in Social Security benefits simply increase the tax load on the younger worker.

It is argued that we must also consider the concept of social adequacy. In other words, the retirement income of the aged must be substantially more than simply adequate: the floor of protection must also be carpeted.

But as pointed out by Ray M. Peterson, Vice President of the Equitable Life Assurance Society of the United States, "The pendulum swings the other way for the youngest members and for all new entrants. Social adequacy for some means individual inequity for others."

Since 1939, the concept of individual equity has gradually given way to the concept of social adequacy. This has been the result, at one time or another, of deferring scheduled tax increases, extending coverage to new groups, and increasing benefits for both retired and non-retired groups without imposing new tax increases to cover their cost.

Estimates by competent actuaries of the accrued liabilities resulting from the Social Security program range from $289 billion to more than $600 billion. The size of this obligation depends upon several guesses concerning the future, even including the level of interest rates and the longevity of our senior citizens.

We do not, of course, expect that Congress will, at any time in the foreseeable future, deny the aged the benefits promised in Title II, even though no contractual obligation exists. Such an expectation would not only go against our belief in the integrity of this government but also against political realism, since, at almost any given point in time from now on, half or more of the voters will have been

paying into the Social Security system for twenty years or more. On the other hand, we also believe that Congress would do well to avoid being entrapped into a change which can only lead to a more and more arduous schedule of taxation on employer and employee alike.

I am suggesting, Mr. Chairman, that there is a limit to the size of the tax burden that future generations will be willing to accept, just as there is a limit to their capacity for carrying this inherited debt. By the same token, there is a limit to the number and size of benefits that can be added to the Social Security mechanism, social adequacy notwithstanding.

Of this I am convinced: when we talk about placing the health care of the aged under Social Security, we are talking about a staggering potential addition to the program. In another section of this testimony I have pointed out the difficulty of estimating the costs of H. R. 4222. It is enough here to say that costs are unpredictable, but staggeringly high. As the program expanded--and it undoubtedly would--the entire Social Security system would either be placed in jeopardy or Congress would be required to augment Social Security revenues with general revenue funds.

The danger of either course is too obvious to the Committee

to require any further elaboration from me.

However, presently scheduled increases in the Social Security tax will reach nine and one-quarter per cent of payroll by 1968. ΤΟ increase the rate even further, as H. R. 4222 proposes, and to raise the tax base from $4,800 to $5,200 as well, should, simply on the basis of cost, give Congress pause.

Again, there is the contributory principle theoretically inherent in the Social Security system which requires that benefits will not be paid unless the worker has contributed to the system for a minimum period of time. Introducing so-called "free" medical care for all persons now receiving OASI benefits quickly junks this principle. In addition, millions of active workers and their employers would pay in taxes only a fraction of the benefit costs by the time those workers reached retirement.

Thus, another category of unearned benefits would be added to the permanent Social Security debt with which future generations must cope. It has been estimated that this addition to the permanent Social Security debt would run from $15 billion to $20 billion.

How long would the benefits proposed under H. R. 4222 be 11mited to the aged?

How long will the original intention of providing a basic floor of protection survive?

How inflationary is this entire method of financing?

Will scheduled tax increases and newly legislated benefits diminish the capacity and willingness of workers to save?

Will coming generations pay the high taxes required, or will they demand substantially increased benefits so that they, in turn, will enjoy bargains similar to the ones which our own generation has voted for itself?

What is the overall impact of the social insurance program on capital accumulation, investment, and economic growth?

Once the principle of service benefits has been established, what other service benefits will be added to the Social Security program?

In terms of the approach taken by H.R. 4222, I should like to conclude this discussion by making one final point:

This is not a prepayment system for health care in the retirement years, and it will not be until it matures 45 years from now, when the 20-year-old worker, just beginning to pay his gross payroll taxes, reaches the age of retirement. For those now eligible for benefits under the bill, this is simply a dole to which they have made no financial contribution.

The proponents of H. R. 4222 speak of this proposed benefit as a "right." I seriously doubt that the younger working members of our population, who will foot the bill to help millions of people who don't need help, will consider their enforced contribution to be anything more than it really is: a costly tax subsidy.

The Social Security machinery was developed, at least partially, to remove from the shoulders of the young the financial burden sometimes imposed by the old. We are nearing the point where the mechanism for attaining this praiseworthy objective will become as burdensome as the load it undertook to lighten.

workers?

How much further can we mortgage the future of our younger

Mr. Chairman, the statement of Mr. Peterson used earlier in this section, was from his article entitled, "The Coming Din of Inequity." In my opinion, it is a document worthy of close study.

SECTION VIII

EFFECT OF H. R. 4222 ON PRIVATE, VOLUNTARY EFFORTS

In any discussion concerning H. R. 4222, it is easy to ignore voluntary contributions made at the local level by private citizens toward solving the problems of the elderly. Franklin Roosevelt obviously remembered these contributions and had faith in their continuance in 1936 when he said:

I believe those words are equally true today, and I have every sincere reason to think that members of this Committee share my belief.

Later in my testimony, I will discuss broad public and private welfare programs. It is my aim now to examine the efforts of individual citizens on the local level and to see what effect the passage of H.R. 4222 would have on such efforts.

The range of private voluntary efforts is tremendous--from community "meals on wheels" programs to the construction of great hospitals through philanthropic grants. It includes the contribution you give to your Community Chest, as well as the work you do in your home town for a national program on, say, heart disease. For these activities, although general in nature, certainly include the elderly.

The private citizen, working at the local level, is the very backbone of our humanitarian yet realistic system of helping those who need help.

Perhaps we would only realize the full impact of voluntary, private, unselfish efforts on the local level, if suddenly they were to stop. We would be hard put to replace them, if, indeed, we even could.

Through cooperation at the community level, new chronic disease centers and referral centers are being built in substantial numbers,

as are retirement villages and new nursing homes. Recreational facilities are being set up, home care activities are expanding, and research programs are becoming more extensive and more intensive. As the importance of rehabilitation becomes more evident, such plans are expanding rapidly.

Contributions to the health of the aged, made by private citizens through their religious, fraternal, civic, and philanthropic groups are immeasurable. I understand that this Committee has heard or will hear direct testimony on these activities from other witnesses, so I shall leave the details and most of the statistics to them.

However, I would like to point out that the Roman Catholic Church--with more than 39 million members--alone has established 314 homes for the aged which care for some 28,000 persons. And the Protestant Episcopal Church operates or is associated with 74 homes for the elderly, caring for 2,250 persons. These are but two of many examples.

As I indicated earlier, there are many efforts not designed especially for the aged, which nonetheless benefit them greatly--sometimes more so than they benefit the general population.

I am talking about such diverse programs as housing and recreation center developments; our ever-expanding corps of hospital volunteers; Community Chests and United Funds; and broad campaigns like those for mental health which carry special significance for the aged who occupy so much space in our mental institutions--often on a custodial care basis.

Imagination is at work, too, on the local level. New approaches in hospitals and nursing homes are emerging, such as progressive patient care, which moves the patient through successive stages of increasing self-help as his ailment improves. Thus, the hospital or nursing home can effect a financial savings while giving the patient better care, in this case a program of rehabilitation.

Another new technique is "hospital-in-the-round," which provides better patient supervision with less personnel. This is accomplished by constructing circular floors or wards and placing a supervising nurse at the hub.

And so, one quite properly asks whether passage of H. R. 4222 will damage private voluntary efforts to help the elderly, One also asks whether H. R. 4222 will hamper the motivation for charitable contributions, whether it will discourage citizens from giving of their time and talent, whether it will stunt imagination in devising new ways of helping our elderly.

We believe it will--in every case mentioned above.

In short, we believe--and have so stated before--that legislation such as H. R. 4222 has many ill effects going beyond the intrinsic