This brings me down to the conclusions which we have, and I would just like to summarize what I have said here about the chamber's position.

We believe, first, in universal coverage, that all occupations not now covered should be included in the insurance program.

Second, that we shouldn't have this new definition of "employee" as defined in H. R. 6000.

Third, that assuming wide extension of coverage we should use the advisory council's formula for benefits of 50 percent on the first $75 of monthly average wage and 15 percent on the excess, with no increment.

Fourth, that we should retain the $3,000 tax base and the present method of determining average wage for benefit purposes.

Fifth, that the present over-all limit of $85 on family benefits be increased, but to not more than approximately $120.

Sixth, that the eligibility formula proposed by your advisory council be adopted. This would result in insured status at an earlier date for older persons not previously covered.

Seventh, that the provision for lump-sum death benefits on all insured deaths be deleted.

Eighth, that the best approach to the problem of the totally and permanently disabled lies in the rehabilitation and assistance programs of voluntary organizations and public-assistance agencies at the State and local levels.

Ninth, that in view of the recent increase in the tax rate supporting OASI, which is sufficient to take account, for the time being, of our recommendations to increase benefits, the situation should be carefully reviewed to determine when any increase in the actual tax should be effective.

And tenth, that Federal grants to States be recognized as temporary expedients; that the States, in the face of growing Federal burdens, assume an increased proportion of the cost of public assistance as the OASI program is expanded; and that, finally, the entire cost of such assistance be borne by the States and their local subdivisions.

Now, I have presented here as completely as time would permit the chamber's position with respect to these changes in the Social Security Act. But before concluding, I just want to reemphasize the hope that you will recognize that our objectives coincide with yours. And we believe that these objectives can best be accomplished by a simple system, based upon contributory principles of social insurance, easy to administer, easy for the participants and the public to understand, and uncomplicated by diversion of funds for other social purposes. Mr. Chairman, that concludes the statement of the chamber's position on H. R. 6000. But with your permission, I would like to make a supplemental statement with respect to this whole problem.

The CHAIRMAN. Well, sir, you may do so. We have some other witnesses this morning, Mr. Marshall, but I see your statement is not very long.

Mr. MARSHALL. It is rather short.

My remarks heretofore, as I said, have been directed to the consideration of established chamber policies in relation to the specific legislative proposal before you.

However, since the original adoption and subsequent reaffirmation. of chamber policy, an increasing number of people are of the opinion

that one of the underlying premises of the present system is perhaps wrong and should be thoroughly reexamined at the present time.

In essence, this thinking would provide for an immediate maturity of our social-security program, as contrasted with the present ap proach, wherein the full impact of the cost of the obligations which we are now legislating do not mature for at least another working generation.

It seems to us that we should be willing to provide for our present aged the minimum benefits that we now, by legislation, are asking our children to provide for us.

I may say that I thoroughly share this view, and further that many of my fellow committee members are also in accord with it. It seems elementary that in the last analysis the support of an aged population is the responsibility of the generation then at work. No one has yet been able to devise a scheme under which a government can save in advance for all the aged in its population.

With this basic principle in mind, it seems that the most favorable method of attacking this problem before us is to immediately extend benefits under the insurance plan to all persons now 65 and over not working. This in effect is doing what an industrial concern does in extending past service credits to all its workers, and granting any increase in pension credits to its already retired workers.

This would give all eligible persons a minimum amount provided in the insurance law, and those with wage credits would receive the additional amount to which such wage credits would entitle them under the formula. Those benefits, together with the other benefits under the insurance program, should be financed by us now on a contributory basis. However, a primary advantage would attach, in that current. tax collections could be proportioned to the total amount of benefit payments to be made in the current year. Thus, we would be on a realistic pay-as-you-go basis.

Now, there are some immediate and obvious advantages to such a program. First, it provides universal coverage. Second, it would take the Federal Government immediately out of the public-assistance programs and would relieve the States of enough of the burden of caring for the aged so that they could make any needed supplements on a needs basis.

Of tremendous significance, in my estimate, is the fact that it would require us and all succeeding generations to face squarely up to the over-all cost of the program. Also, a safety factor or balance is provided against any unreasonable extensions, in that the Congress, which votes for increased benefits, must make provisions for increased revenue at the same time.

I would like to urge upon you gentlemen serious consideration at this opportune time of this new approach to the old-age insurance problem.

I want it also understood that this is not established chamber policy. It represents my views and those of many of the committee who have been studying this problem for many months.

I thank you, sir.

The CHAIRMAN. Thank you very much.

I would like to make this suggestion. You are assuming that we are going to abandon deficit spending when you make this last recommendation?

Mr. MARSHALL. I trust you will, sir.
The CHAIRMAN. Senator Millikin?

Senator MILLIKIN. Here is a young fellow who enters the labor force, 20 years old today. He has 45 years ahead of him before he becomes 65. How would he feel about paying full cost of that system for 45 years before he would get benefit from it?

Mr. MARSHALL. We have found under our contributory pension plan-we have a contributory pension plan in our company-that the situation is that we are forced to explain the program to that young man before we can get him to contribute; that we have to sell it to him, explain it; and that because he is contributing to the program, he understands it and is much more interested in it and appreciative of it from the age of, say, 20 to 40, than he ever was before. When we had a noncontributory plan, as we did for some 40 years, I for one was under it, and I don't remember knowing that we had a pension plan until I was 30 years old. But today I get questions in our office from people who are 25 or 30 years old. Why? Because they take out their pay checks and see something taken out of it for pension. They want to know about it. When we explain it to them, and explain that it is a fair system and a just one, we think, they are glad they are under it. Senator KERR. They are glad, are they not, because they feel they are contributing to a pension system that will be for their individual benefit.

Mr. MARSHALL. That is right.

Senator KERR. Now, under the suggestion you have just made, he would become aware of the fact that he was contributing to a pension system for the benefit of others, and that no part of it was being kept for a system that would be for his benefit, and that he must make these contributions himself and gather such happiness as he can from the knowledge that he is paying for it for others and the hope he may have that others will be able to pay for it when his turn comes.

Mr. MARSHALL. Of course, Senator, I recognize that problem. It is largely a matter of presentation.

Senator KERR. Could a rose by some other name be presented so as to smell less sweet, or any more?

Mr. MARSHALL. On the other hand, Senator, the amount that this young man at age 20 who works for 45 years is going to get under the legislation in effect at the time will be determined by whether he does contribute for 45 years to the program or whether, during a 5year period, he decides not to work, and goes to Florida. The ultimate benefits will be determined by the number of years which he does contribute to the program, assuming, as we all have to assume, that this program will remain in effect for the 40-year period.

Senator MILLIKIN. Well, how will you sell this: He says, "Looky, Mister. I have got to contribute 45 years to get my retirement, if I live that long. But some old Jakes 65 years of age are going into this system tomorrow at 65 years of age without contributing anything. Why should I have to contribute to keep those old fuddy-duddies enjoying Florida?"

pen

Mr. MARSHALL. Of course, you have now that problem on the sion system. Those usually have not been on a contributory basis. The past service credits that have been granted have usually been

granted on a noncontributory basis. So the problem doesn't come up as acutely as you posed it.

But it does seem to me that I am willing to take a little bit of issue with you on whether or not even under this proposed system it cannot be truly called an insurance plan. I will admit that there is one major difference between that and what we normally think of as an insurance plan, namely, that it has no accumulated reserves. But I submit, from conversations with my friends, the actuaries, again, that a system that is based upon the credit and taxing power of the United States Government needs no reserves. That is one point. The second point is that the Federal Government cannot really have real

reserves.

So, because you do not need them, and secondly because you cannot have them, I believe that you can truly call this program that we are proposing an insurance program, without a funded reserve.

Senator MILLIKIN. All right. Let us call it an insurance program. Assuming it without conceding it, let us call it that. What do you say to this young fellow that come bustling into your office and says, "Looky, Mister, do you mean to tell me that I am going to have to contribute 5 percent of my wages from now until I am 65 years old to take care of a lot of old fuddy-duddies that have been in this system 4 or 5 years and are now 65 and are commencing to get all this dough?" What do you say to him? How do you inspire him? How do you do this salesmanship job that you are talking about? Mr. MARSHALL. No. 1, I would say to him, "Of course, that is your father and your mother and your uncle."

Senator MILLIKIN. "No," he says, "I am an orphan."

Mr. MARSHALL. And No. 2, I would say to him, "If you do that for these people, the next generation will do it for you.”

Senator MILLIKIN. But he says, "Mister, listen. Where do you get this nice magic globe of yours that can enable you to say what some Congress is going to do 45 years from now for me?" What do you say to that? "Or even next year?"

Mr. MARSHALL. Well, I would present it to this fellow in this way: This is an insurance program with no funded reserve. Now, you have this situation as to pensions, under such a program, even under an industrial pension plan. I think Mr. Lattimer testified before the steel panel that with a corporation of the size and strength of the United States Steel Corp., a funded reserve was not necessary for a pension plan and all you needed to do was to pay in the interest that such a fund would have earned, plus the current contributions of the em ployees and the employer, and that would be sufficient for all time to come to meet the pension outgo.

Now, I submit that if it is true in the case of the United States Steel Corp. it is much more true as to the United States that you don't need a funded reserve, that no matter what you call it the cost of the pension is the interest on the funded reserve that you would otherwise have, plus the current contributions by the employer and the employee. And those must be equal to your current outgo, to your current pension payments.

So to my young man friend I would say: "Whatever you do, this is what each generation has got to pay to meet the cost of the aged who are not working."

Senator MILLIKIN. Are there not perhaps two answers? One, taking the Railroad Retirement System, the young fellow who goes into that system is paying-how much, Mr. Fauri?

Mr. FAURI. Six percent.

Senator MILLIKIN. Six percent. And he will continue to pay that until he reaches retirement. So it has been sold there.

Mr. MARSHALL. That is true.

Senator MILLIKIN. No. 2, his union representatives, who are very smart salesmen, say, "Listen, brother. You do not need to worry about that. Your boss is going to pay for it." Is that not right? Mr. MARSHALL. That is right.

Senator MILLIKIN. And that is what will happen, is it not?

Mr. MARSHALL. Of course, that would bother me if it did happen. Senator MILLIKIN. Of course, it is going to happen.

Mr. MARSHALL. Because I think one of the big safeguards of a program of this kind to prevent its running away into a British plan is the fact that it is contributory on the first increment, and I think it is very important that we keep it so.

Senator MILLIKIN. Of course it is going to happen. It is the business of the union to see that it does happen. That is how all “deducts" are sold: "We have 'deducts' for the taxes. And so you don't have to worry about that. That is one of our bargaining points. We are working to get you a net take-home pay that is satisfactory, and you don't have to worry about the additions. We bargain that out. That is what we are here for." And they do a good job at it.

Mr. MARSHALL. Of course, I frankly am hopeful that in the long run we will develop a generation of labor statesmen in the labor field who will really look to the long term best interests of their constituents, as you gentlemen do for our Nation, so that we will get some real statesmanship in that field, and not the crisis type of thing that we have been seeing during the past few years.

Senator MILLIKIN. I respectfully suggest to you that the job of the labor leader is to try to pass on these costs to the employer. And he does. And that is another way of saying that the public pays the bill.

The CHAIRMAN. Thank you very much, Mr. Marshall, for your contribution.

Mr. MARSHALL. Thank you. I am delighted to have had the opportunity, Senator.

(The exhibit attached to Mr. Marshall's statement follows:)

POLICY DECLARATIONS OF THE CHAMBER OF COMMERCE OF THE UNITED STATES

ON SOCIAL SECURITY

Following are the applicable policy declarations of the Chamber of Commerce of the United States on social security as revised and readopted by the membership at the thirty-seventh annual meeting in May 1949. These declarations are in full force and effect and supersede all previous declarations:

Employment a prerequisite. However desirable and necessary social security may be, it is no substitute for productive employment and, therefore, every effort should be made by business and other groups to encourage high levels of production and steady employment.

Hazards to be covered. Protection against periods of job and income losses should be provided either by voluntary or by governmental action. Social security provided by governmental action should be restricted to those major hazards of life concerning which individual effort has been demonstrated to be substantially inadequate or impractical.