Senator KERR. You mean the comparison of primary benefits?

Mr. BENSON. No; this little colored chart. Well, the part colored in blue is what it does for the man's family if he dies and what it does for him and his wife if they retire. Then, if you were to add that up, that would come up to a pretty good-sized amount of total benefits. Well, the contribution has been $30, and now it is $45 on his part, and he isn't too worried about the employer's part. And he says, all of a sudden, "Well, if I get all this much for $45 from the Government, how does it come that it costs so much more to get what you are selling me?" Whereupon, we have to stop and spend a long time explaining to him the difference between the Social Security Act and private insurance.

Now, maybe this will save time. We are suggesting that instead of the Social Security Insurance Act it should be called the Federal Retirement and Dependents Benefit Act of 1950. We say, in the statement:

The Congress acted very wisely when the Pure Food and Drugs Act was enacted. Among other things, that act provided that all articles of food and drugs should be clearly and correctly labeled in order that the public will in no wise be deceived. We hold that it is equally important that the public should in no wise be deceived in the matter of social security. We suggest that the word "retirement" is more significant than the words "old age" due to the fact that the act, in reality, contemplates that workers will retire before benefits are paid and the mere attainment of so-called old age in no wise assures a worker of benefits. We also believe that the words "dependents' benefits" more accurately describes the class of beneficiaries who will actually receive benefits than does the rather allinclusive word "survivors," as the term is generally understood.

Senator MILLIKIN. Why do you not just call it the Federal Benefit Act of 1950?

Mr. BENSON. I will buy that.

Senator MILLIKIN. Why all this other monkey business?

Mr. BENSON. It suits me.

Senator MILLIKIN. That is what it is.

Mr. BENSON. That is right.

Senator MILLIKIN. This system we have is not an insurance act, is it? Mr. BENSON. That is my point. And I would like to leave the idea with the committee, though, that we aren't willing to quibble over words. I do want to leave the impression here that it creates practical difficulties for us. And they are really practical.

I have done this much, just looking into it; and I can't find a definition in any lawbook of insurance that doesn't have three elements in it that I can find, first of all, that it is a contract; and second, that it does have a specific premium, and that the insured is obligated and the insurer is obligated to do something definitely in consideration of that premium, and then what is to happen is spelled out. Well, social security is not a contract. Nobody knows what the premium is going to be, or what the contribution or tax or anything else is going to be, and there is no relationship between the amount of tax paid and what a man may get. A fellow 30 years old, unmarried, pays $45. If he dies, little or nothing is paid. "If a man has three small children and dies, it can end up at fifteen or twenty thousand dollars-with which we have no quarrel.

Senator TAFT. You said it has no relation. It has some relation, but not much.

Mr. BENSON. Not much. Thank you, Senator. There is not a direct relation.

Senator TAFT. Yes; I agree with you.

Mr. BENSON. Now, we are not quarreling about the fellow getting the money, but we don't want to call it insurance, because our premiums look a little out of line compared to this tax proposition.

Senator KERR. Do you suppose if we changed the title a little you would change your premiums a little?

Mr. BENSON. Well, Senator, in my particular position I would not have any objections.

Senator MILLIKIN. Let me ask you this, Mr. Benson. And I take no position on it. I am just groping for information. Why do we not cut out all this monkey business and cut out the fiction of reserve fund and start right out and pay the benefits that we decide should be paid to people of a certain age and collect the taxes necessary to do it as we go?

Mr. BENSON. Well, of course, it isn't without merit, is it?

Senator MILLIKIN. I would like to have somebody tear big holes in it.

Mr. BENSON. I don't think I am that smart.

Senator MILLIKIN. Right off the bat, I cannot see any reason why we go through all this hocus-pocus. Why do we not start right in and decide that people of a certain age are going to receive so much benefit and that we are going to tax people currently, people who have to produce the things anyway to pay the benefits, a sufficient amount to do the job? The reserve fund is phony. It is a swindle. Mr. BENSON. Well, at least it is a phony. But here is what I think is wrong with it, in three points: The first one is that I do believe a system would work better if there is a relationship between total earnings and ultimate benefits. Because I believe if we were to suddenly agree on the fact, just to take a figure out of the air, that the correct amount is $60 a month, for the sake of argument, then, Senator, some people would have their income improved considerably by that $60. And I think you would immediately have a difficult situation. And there would be places were $60 would be too much and other places where it is not enough. So I think there should be some relation, there.

Senator MILLIKIN. Mr. Benson, in the end the very fact that we are sitting here now shows that politically we are going to adjust these benefits to what we consider to be the realities of the day and age in which we, again, sit here.

Mr. BENSON. I think that is right.

Senator MILLIKIN. So it all comes to the same thing.

Senator TAFT. But Mr. Benson, is there not this one thing? I mean, I agree with Senator Millikin, but it seems to me this is a system of taxation and not insurance, as you suggest.

Mr. BENSON. That is right.

Senator TAFT. But should not the benefits bear some relation, again, to the taxes paid? Or, putting it another way, some relation to what the man has earned, the work he has done for the community, during his life? In other words, could you not accept the general theory of universal overage and taxation and still grade the benefits with some relation to what a man has earned and, consequently, what he has probably paid?

Mr. BENSON. We prefer the earning notion. Senator, when we get to it, if we do, here, today, we are suggesting a benefit formula of 60 percent of the first $50 of average wages. Now, frankly, what we are attempting to do is to preserve the integrity of this system and establish thereby a floor, upon the theory that everybody that had credits would earn $50, on the average. And we are honestly attempting to establish a floor of $30. As a matter of fact, we would like to see in there that anybody that is getting benefits would get $30. Because we do not believe there is very much realism in the thing without that.

Senator TAFT. As compared to $25 under this H. R. 6000; the higher benefits in the lower grade? Is that right?

Mr. BENSON. Yes. We think it is a little more realistic. Now, then, on top of that we want to establish, on top of the minimum, and additional benefit definitely related to earnings.

Senator MILLIKIN. The fact remains, though, that we have been jiggling around with this thing since 1934 or 1935. People that went into that system paid 100-cent dollars in those days. Now we are getting an average, those who are getting benefits, of how much, Mr. Cohen? $26 a month? And it is worth $13. Is it not perfectly obvious that we have got to meet here again and again and again to bring this thing into relation to reality?

Mr. BENSON. Senator, that would impress me, except that I would worry about one thing, and that is that the great danger in this, as I see it, is that if we get that benefit too high, somewhere along the line, I am not impressed that when we get back to the 100-cent dollar the Congress will meet and bring the benefits back down.

Senator MILLIKIN. I think you can be dead sure that it will not. Mr. BENSON. Frankly, I am, too, but I was being cautious. Senator MILLIKIN. Why not remove the problem that exists in that situation?

Mr. BENSON. Senator, maybe I should not say this, but I will anyway: That we have the whole thing under consideration, and we are meeting in Oklahoma City on the 20th of March-and if we change our mind, we will advise the committee-as to the very problem you bring up here.

I know another gentleman is going to talk about the lump-sim death benefit, and then I am willing to close on the subject of total and permanent disability, which I know is rather a perplexing thing

now.

We are flatly opposed to including any total and permanent disability benefits in the act. And the reason we are is that we believe that it introduces a completely new concept of administration, moving from objective decisions over to discretionary decisions.

Senator MYERS. Has that always been your opinion, Mr. Benson? Mr. BENSON. Yes.

Then I would like to base it on this further premise: That we are of the opinion that adding total and permanent disability benefits to the act would create many administrative problems and solve very few problems of people who are disabled.

Now, may I amplify that in this way: The disabled range all the way from the man who is ill, who has to have a doctor, to the man who has to be hospitalized, with, perhaps, nursing care and expensive

medicines, and a primary insurance benefit has nothing to do with his problem. It won't solve it. He will still be a problem. Then down here is a man who needs to be rehabilitated, maybe to do a job with one hand that he used to have two to do it with.

So since I have prepared this thing, I have come across the most interesting material I have found in a Government bureau. I was put in touch with the office of vocational rehabilitation people. Do each of you have these "brass tacks" books? I don't know if I am bringing to your attention something that you already know all about, but I think it is tremendously interesting. Will you look on page 15? I believe the pages are numbered. You will observe there, and I have checked it with the people down there at this bureau, that for $460, cooperatively with the States, something over 220,000 people have been rehabilitated.

Inciden

Now, if you will turn to page 24, there is the most interesting statement I have ever seen. And these people insist it is true. tally, this is a Social Security Board publication. Senator MILLIKIN. Pretty fancy, too, is it not? Mr. BENSON. It is a beautiful job. It says:

The record shows that most

now I am interested in the word "most"

most disabled persons can be rehabilitated.

And those people stand on that word.

When rehabilitated they make safe, steady, productive workers.

The total cost of rehabilitation is repaid many times over in increased incometax payments alone.

And this very well bears that out.

So I would like, if I may, based upon this and the interviews which I have had with these people, to make these observations relative to total and permanent disability.

First of all, it seems to me that here is an opportunity for the Congress to save literally billions of dollars. Because the high estimate, the ultimate estimate, is a billion and a quarter for total and permanent disability, and the low estimate is $500,000,000, which only explains one thing, that nobody knows what it will be. I think that is all we can make out of that.

But here is, I believe, about the first Government agency that I have ever found that could honestly make the Government a profit, really. Senator MARTIN. Mr. Chairman, I wanted to ask Mr. Benson whether or not he has gone into the statements made on page 24 of this statement, as to what it is that that is based on. There must be some figures. They just make statements there. I want to know, Mr. Benson, whether you have gone into the figures that they base those state

ments on.

Mr. BENSON. Let me put it this way, Senator. We have visited a bit. And, Mr. Chairman, if I may make this suggestion, and I make it most respectfully, it would seem that this committee would be tremendously interested in having a first-hand story from the people who actually do this work. It is the most fascinating story I have ever seen. I am completely impressed by the fact that we are going to spend $1,100,000,000-odd, according to the budget that you are going to consider, for conserving our natural resources.

60805-50-pt. 3- -7

Senator MILLIKIN. Who is the man who knows more about it than anybody else?

Mr. BENSON. Mr. Michael J. Shortley.

Senator MARTIN. Mr. Chairman, I think Mr. Benson's suggestion is probably a very good one, but, of course, this hearing would be rather long drawn out. I would like to see those figures that those state

ments are based on.

Now, I believe very much in what is stated on page 24, from my own experience as a governor, because we did an awful lot of work along that line. I can testify, myself, that as it relates to the blind we have done wonders on a pretty small appropriation. But I am very much for getting everybody self-supporting if we possibly can, even if it costs more money than you get back in taxes. I would like to have the figures on that.

Mr. BENSON. Well, Senator, I don't like to beg your question. That isn't a good thing. But it seems somewhat inappropriate for me. Senator MARTIN. The reason I asked is that I thought you had probably investigated that.

Mr. BENSON. I visited with Mr. Shortley, met Mr. McEldowney, and Mr. Kincannon, who are the three top men down there. And, Senator, I think they would be hard put, if I may express this as an opinion, to completely document the word "most." Because I have tried to pin them down. I said, "What does 'most' mean? Does it mean 51 percent? Does it mean 80 percent? What does it mean?” Well, they talked in round figures, 60 or 70 percent, or something like that. But, gentlemen, I think the thing goes deeper than that, and I will give you this experience, from my own company, on this total and permanent disability thing, when we were in it. And that is that we discovered that most people who become disabled and start getting a little money, even if it is a little money, become very frightened. And unless they are encouraged and shown how they can get back on a proper basis, they become afraid to get off the disability payment. They are more scared than they are disabled, for fear that if they do a little work, they can't get back on the claim. Honestly, much of it is mental, and you need understanding people. It is really a sales job. And we found when we went out to these people and talked to them, we found out a lot of things. We said, "Let's explore what you can do. Instead of getting $50 a month the rest of your life, wouldn't it be better if we would settle with you for $4,000, set you up in business?" And that actually happened. And we discovered a lot of things.

Now, I would like to say this: If the rehabilitation program can accomplish what we believe it can accomplish, it seems to me it goes. right to the heart of this whole disability question. I am sure that is the most perplexting thing in this whole matter.

Senator MYERS. Is there not such a thing as the Life Insurance Association of America?

Mr. BENSON. Yes.

Senator MYERS. And the social-security committee of that association?

Mr. BENSON. Yes.

Senator MYERS. And did not that committee, in 1945, recommend total and permanent disability insurance benefits under social security?