STATEMENT OF HON. CARL T. CURTIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

Representative CURTIS. Mr. Chairman, the distinguished Senator who just testified was an outstanding Cornhusker football player, and I can commend anything he might say to you.

The CHAIRMAN. He does not need any character witnesses before

this committee.

Representative CURTIS. I am fully aware of that.

Mr. Chairman, I am opposed to our social security system. It is unsound. Furthermore, it does not meet the needs of today's aged.

My remarks will be directed primarily at the old age and survivors insurance usually referred to as OASI. The bill before you is a $12,000,000,000 a year program. It will cost that much when it matures before the close of this century, even if the benefits are never again increased. It is actuarily unsound and I know of no actuary who is not in the employ of the Social Security Administration who approves or endorses it. Improving it is not the answer. We need a new system.

It is not necessary to argue that our social security system is not taking care of this generation of old people. Although the program has been in force 13 years, we have 8,400,000 men and women over 65 who are ineligible for its benefits. Apologists for the program promptly assert this is because the program is new. This argument cannot stand when we consider the admission of the Social Security Administration's head actuary that under H. R. 6000, 10 years from now there will still be 7,200,000 men and women over 65 ineligible for its benefits. This results from certain basic defects in the program.

Our present social security law is not only unfair, it is harsh and cruel. The benefits that are now paid are not equitably distributed. Individuals who are already out of the labor market; widows, who were widows when the law went into effect; orphans, whose fathers were not in covered employment; as well as countless millions who make their contribution to society without earned income are not helped by mere extension of coverage to all the occupations. They are outside the so-called insurance part of the social security law. Yet, in a social program these are the groups that should have first claim on whatever the American taxpayers can pay out for these purposes. The program is geared to give advantage to the high-salaried and to discriminate against the low-paid. For instance, the man retiring on an average wage of $250 a month draws $16 a month more in OASI benefits than the man whose average wage was $100. Yet, he has only paid for $2.47 more protection in his social security taxes.

The present program as well as H. R. 6000 fails most of our aged. but offers attractive windfalls to the privileged few. A banker or a corporation officer whose salary has been $3,000 or more, who retires at 65 this year can, with his wife draw about $100 a month. The man's life expectancy is 12 years; his wife's is 14 years. He has paid into the social security system a total of $390, or less than 4 months' benefits. Across the street there may be an aged individuad who has toiled and produced for years, but if he were taken out of the labor market before he became fully insured, he either gets nothing or is subject to a needs-test for relief. This means that he has to declare himself a

personal bankrupt and turn his life over to a case worker. Socialsecurity advocates attempt to point out that the corporation executive has paid for his retirement and the other man has not. Mr. Chairman, the people know more about social security than you realize. They know that the individuals drawing the benefits have not paid for them. They have made a very small token payment only.

Of the primary beneficiaries now on the rolls, virtually none has paid more than $400 in employee contributions; some have paid less than $10, and the average total employee contributions for these benefits have been less than $150. For this average contribution of $150, each beneficiary will receive retirement payments totalling $3,000. If allowance were made for the value of a wife's and other benefits, the value would be much greater.

Further, Mr. Chairman, I believe that if the American taxpayers are to help orphans they should treat all orphans alike. The survivor benefits under OASI are as discriminatory as the retirement benefits. A family of children of a deceased father who earned $50 a quarter in covered employment over a period of six quarters is eligible for the minimum benefits. This deceased father had paid in taxes for these benefits the total sum of $3. How can you say to another widow and her fatherless children that they are not entitled to anything and that the first-mentioned family paid for their benefits? This program constitutes neither sound insurance nor a fair social program.

Our system of social security lacks flexibility. Who can say that 65 will be the proper retirement age toward the end of this century? Benefits cannot be tied to past wage records and still do the job in any particular year. H. R. 6000 is an admission of this.

For 13 years our Government has been paying for the keeping of voluminous and detailed wage records allegedly because they were needed to figure benefits, yet in the bill before you benefits were revised to meet present-day need.

Flexibility in a program is desirable. The wage-record system prohibits flexibility besides being a costly procedure.

May I say there that as long as you try to tie a social-security system to a wage-record system, you will not only do a bad job in taking care of the people who never have a wage record but you will always have this troublesome question of who is an employee-all for nothing. It does not add to the soundness of the program.

Another objection to a program in which the number of beneficiaries is much smaller in early years than in later is that, regardless of what financing method is adopted, there will be an uncontrollable tendency toward undue liberalization of individual benefit amounts. With only relatively few beneficiaries on the rolls now and in the immediate future, it is too easy to propose individual benefit rates to be approximately doubled; that primary benefit amounts in excess of $100 a month be promised, as well as the combined husband-and-wife amounts of $150 a month. With a relatively small number of beneficiaries now and with present benefit disbursements far below contribution receipts, the ability to fulfill these promises over the next few years seems to be all that matters. The tremendous future cost that will result when there are many more to whom we have made these commitments is too easily ignored.

In our population over 65, only 1 out of 5 is now eligible for benefits. On this basis we are fixing benefits so high that when the time arrives

that 5 out of 5 become eligible the program will be an impossible financial burden.

I have repeatedly stated that H. R. 6000, 40 years from now, will cost $12,000,000,000. This is a very conservative estimate. Compared with the life of our Republic, that is not a long period of time. Mr. Chairman, I feel very keenly about this. I have a son 10 years old. Adopting this program means that when he is 50, the taxpayers then must pay $12,000,000,000 a year for old-age and survivors insurance alone. The taxpayers of that day will have no voice in determining the amount of payment for it is in the nature of a contractual agreement. We have no right to force such a program upon our children. The workers today have no right to expect a retirement benefit for themselves that today they are unwilling to provide for their parents.

Someone may suggest that when these benefits are to be paid 40 or 50 years from now, they will be paid from an accumulated trust fund adequate to meet these benefits. This is a fantasy. It is a myth. In the first place, we have no assurance that the progressive tax rates will go into effect and that any such fund will be accumulated. If the sum could be collected, how could it be managed? Should these many billions in the so-called trust fund be retained in cash by the Treasury? The effect of such a procedure on the economy is well known to you gentlemen.

Should these funds be invested in securities other than Government securities? If this were done, the Social Security Administrator would soon control all the Nation's major business enterprises.

That leaves only Government bonds as an investment. I maintain the Government cannot carry a trust fund in its own Government bonds.

When a recipient is to receive his benefits, this year or 40 years from now, he wants them in dollars. There are only three ways to get dollars. These ways are:

1. Current taxation;

2. Issue of more bonds to borrow the people's money;

3. Inflation through printing press money or devaluation.

It matters not, so far as our economy is concerned, whether there or three warehouses of Government bonds in the trust fund or 40 warehouses of Government bonds. The people have to provide the money when the benefits must be paid.

What is the answer? We should adopt a pay-as-you-go program. We should make these benefits available now for all our aged, and all our widows and orphans. We should collect the money now. I submit that in any given year, those individuals who are so blessed as to have a job and good health should carry the load for those unable to provide for themselves in that particular year. The full cost should be paid each year, and when that year closes nothing is owed and nothing is promised. That is the only way we can be fair and honest with our children.

If this basic change is impossible at this time, then I suggest that no legislation be passed or that a stop-gap measure be approved providing additional money for the country's needy.

Senator MILLIKIN. What sort of impossibility do you see?

Representative CURTIS. Largely political. Social security has been sold to the people as something that was untouchable, that people paid

for. There has never been any real searching investigation of it on a broad scale. And politically you might not be able to make such broad, sweeping changes without a little more build-up and perhaps an investigation, which I will come to in my closing paragraph, that is, selling the idea to the American people.

Senator MILLIKIN. In your judgment, what would it cost to put a pay-as-you-go system into effect, giving the amounts of benefits that you have in mind?

Representative CURTIS. Senator Millikin, I do not want the responsibility of saying how much of a payment should be made to our old people. If it is X dollars or Y dollars, I do not want my criticism of social security to be identified as a certain price pension proposal.

I can tell you this: That the only way we can preserve the long-time solvency of this country is to pay them all-all our old and all our orphans now, and pay the bill and let the American people know that if they want to raise that 20 percent, there is a tax raised.

Senator MILLIKIN. I am very much taken with the notion of payas-you go, but I would like to know what mechanics and money are involved.

Representative CURTIS. I can give you some figures. I will start out with about four figures as to the present program as provided in H. R. 6000. The Federal Government at the present time is making in grants to the States in this program 1.2 billion dollars. We will collect in taxes in fiscal 1951-that is, social security taxes-3.5 billion dollars. That is a burden on the Federal taxpayers of 4.7 billion dollars.

Now, the States are spending, in matching that-and this is an old figure, the year ending July 1, 1949-eight-tenths of a billion dollars, or $800,000,000. That is a grand total cost of 5.5 billion dollars.

I want to be fair about this. This is the social-security tax plus what we are paying out in grants and what the States are paying out. It is not figured on the benefits paid out. It is the levy on the American people I am talking about.

Now, by way of illustration-and again, let me say I am not going to assume the responsibility to say whether each old person should get $30, $40, or $80

Senator MILLIKIN. We have to have as much instruction as we can get on this subject.

Representative CURTIS. Yes. The cost of a flat payment of the Federal Government of $30 per month to each individual over 65, each widowed mother with a child under 18, and so forth-and there are 11.4 million individuals over 65, 3 million widows and orphans, a total of 14.4 million-and $360 a year takes 5.1 billion dollars.

Now, if all other Federal subsidized pensions, such as military, veterans, civil-service, and railroad retirement, are offset, and if the benefits under this plan are made taxable, and allowing for the refusal of benefits by a small portion of the potential recipients, I estimate that this can be reduced by eight-tenths of a billion dollars, or $800,000,000.

This would leave a net cost of 4.3 billion dollars as compared to my figure with regard to the present program of 5.5 billion dollars. Now, the Federal savings would be four-tenths of a billion dollars. This is based upon the Federal Government ending its grants to the

States, which will end a lot of abuses and bureaucracy besides saving dollars. It will be a savings to the States of $800,000,000.

Now, my estimates are high on this; perhaps more people would refuse it than I have estimated. I do not want to be in the position of advancing something and then underestimating what it would cost. Since you have asked the question-I do not want to take too much of your time-but I must point this out. In taking just and kindly care of our old people, there are some things that count besides dollars, and our present method of doing takes the most dollars. If here is an old lady who has a modest sum of money coming in as a matter of right, without need tests, without a case worker going around, who can live where she wants to, grandma will be a welcome guest in somebody's home-a grandchild, a daughter, a niece, or somebody-because she can pay part of the way. Those good, honest people might not be able to take her in if she had no income whatever.

But under our OAA program, she must declare herself a bankrupt, usually maintain her own living quarters, have a case worker come in and make out a budget for heat and light and medicines, and all the rest, and if the family are honest and the case workers find out that some relative gave this dear old lady $3, they cut down her allowance that much.

They end up by spending a lot more money, and they still make life miserable for many of these old people.

Senator MILLIKIN. As I figure, Congressman, if you have 14,000,000 people 65 or older now, and you give them $75 a month each, you have an annual tax bill of 12.6 billion dollars.

Representative CURTIS. Senator Millikin, I am not suggesting any dollar amount. What I am pointing out here is the dishonesty of legislating a program that will eventually take in all our old people, for our children to pay for, and we do the legislating now.

Now, if we cannot afford to do this, all right. I think I have a very conservative record in voting in Congress. I am concerned about the financial solvency of this country, not only now, but in the years to lie ahead. We are legislating day after day, adding to the cost of the Federal budget for the years to come, which is probably a greater sin right now than the amount of money we are appropriating, and I think we are appropriating far too much money.

Mr. Chairman, it would take a tax rate on the first $3,000 of net income of individuals after deductions and before personal exemption and credits for dependents, to produce 4.4 billion dollars. That would carry your $30-a-month program. But you would free these old people. They could make a little money without violating the law, Relatives could help them. Others may turn it down. I do not think it would cost that much-and again, I am not saying that no one should have more than $30 a month. The States would still be in the picture. We would forever get rid of this terrible system of matching money with the States.

Now, I agree with you that we just cannot pay all these recipients $75 a month. All right; I submit that we have no right to legislate so that the children in the country have to make such payments in the years that lie ahead.

Senator MILLIKIN. I think you are rendering a very constructive service when you point that out. I do not think there is any question about that.