inequities that will inevitably follow that sort of thing. But we do not have yet the economic basis for going your route.

Representative CURTIS. What I want to do is to escape the future consequences of this so-called insurance program. It is the German system. It did not work there, and I know that if we go on with this we will get a burden that we cannot carry.

Senator MILLIKIN. It might be called the germ system.

Representative CURTIS. Yes. As long as we are fixing benefits on the basis that 1 out of 5 over 65 will get the benefits, then we do not need to worry how high they are. But there will come a time when our kids will pay on the same rate for 5 out of 5.

Senator MILLIKIN. What you are saying is, "Cut out making promises that we do not know we can keep, and probably will not. and pay as we go so we know the size of it and we know what it is costing."

Representative CURTIS. Yes, sir. It may be as we look into this that we cannot pay many of our aged anything if we are going to save ourselves from bankruptcy. But, for goodness sakes, let us stop making a contractual relationship where our future generations of taxpayers will have to pay that. I think my estimate of $12,000,000,000 a year for this program before this century closes, if we do not raise the benefits again, is very conservative.

Senator MILLIKIN. It would be $12,000,000,000 right now if you gave all those 65 or older $75 a month.

Senator TAFT. That would not be so big if you had a gross income of a trillion dollars, as suggested by the President, at the end of the century.

Representative CURTIS. You know, Senator Taft, a farmer in my district figured out that if taxes increase in the same rate they have in the first half of the twentieth century that by the time the income reaches a trillion dollars our tax will be 2.7 trillion.

Senator TAFT. I think that is probably right.

Senator MILLIKIN. Well, all you need is bigger and faster printing

presses.

The CHAIRMAN. May I say, Congressman, supplementing what Senator Millikin has said, that since the House passed this bill-since you passed it over in the House-and sent it to us last October 6, I have been endeavoring to find, even in the rather restricted field of actuaries, some outside actuary of real ability, real character, who could help. I have been told by several men that I have consulted, that they could not be of real help beyond this-they would be compelled to go into the Social Security Agency for their basic data, and based upon that data, they would come out with the same conclusion that any ordinary actuary would probably reach.

Representative CURTIS. I am aware of the limitation on the sources of information and how few people there are who specialize in this field. But I hate to come to the conclusion that when we take our pencils and figure out something and it points to danger for us, to say that there is not anyone smart enough to figure it out and change it.

The CHAIRMAN. I can understand that you could see the danger all right. I agree with you on that point. These actuaries with whom I have conferred have stated beyond that basic assumption that they would have to make, the data they got out of social security

would permit them then only to proceed in a helpful way upon assumptions. They could take a given assumption and, of course, work out to some end result.

Representative CURTIS. Let us analyze that a little bit, Mr. Chair

man.

The CHAIRMAN. But I do not know how that would be helpful. Representative CURTIS. Do you not think that we could get accurate figures on population?

The CHAIRMAN. Yes.

Representative CURTIS. And also life expectancy, how many old people we are going to have 30, 40, and 50 years from now. The thing that has been overlooked by these advisory councils is certain basic questions about trust funds and other things that can be determined by competent men if they have enough time.

The CHAIRMAN. Undoubtedly they can be helpful. On your own figures of taking $30 per month pension for all of the aged and the widows and dependent children, I believe you figured that would cost about $4,300,000,000 at this time?

Representative CURTIS. Yes.

The CHAIRMAN. Now, projecting that for the remainder of the century, about 40 years, you think it would reach about $12,000,000,000 ? Representative CURTIS. No, Mr. Chairman. I said the program proposed in H. R. 6000 will cost $12,000,000,000 a year.

The CHAIRMAN. Have you projected it on the basis of the $30 per month pension?

Representative CURTIS. That is the beauty of a pay-as-you-go system, Mr. Chairman. We let the taxpayers of 1960 and 1970 and the year 2000 decide how much they are going to pay for the aged in any given year, and we do not legislate now for them.

Again let me say, Senator, I am not here proposing $30 or any other figure.

The CHAIRMAN. I understand.

Representative CURTIS. I do not want to be identified with a pricetag-pension program. The people I represent want the solvency of this country maintained, and I am thoroughly convinced that it cannot be if you go on with this present social-security system.

The CHAIRMAN. I do not know where we are headed with this socialsecurity system plus private pension systems.

Representative CURTIS. I think one other thing we should not lose sight of in this legislation is this: Among federally sponsored pensions, a man can draw four or five of them at the present time.

The CHAIRMAN. You can draw more than one. Yes, one could draw several; you are right.

Representative CURTIS. He can qualify for social security, railroad retirement, military, perhaps veterans, and civil service. There is no charge off. It is somewhat unfair to the 4 out of 5 over 65 who draw nothing. But I am not here with my first plea that you pay anybody a sum of money now for the sake of attracting attention of those people. I think the vast majority need some attention. But what I am devoted to, from the little I have studied this on the Committee on Ways and Means for the last 6 years, is that I think the socalled insurance program is basically unsound and it is not fair to the people who will follow us on the scene.

The CHAIRMAN. Thank you very, very much.

Representative CURTIS. I thank you, gentlemen.

The CHAIRMAN. Hon. N. M. Mason, will you come forward, please? We will be very glad to have your assistance in solving this difficult problem.

STATEMENT OF HON. NOAH M. MASON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Representative MASON. Mr. Chairman, to begin with, I want to say that I approve and subscribe to the constructive outline that Mr. Curtis, my colleague, has made. I also want to say that I am not an expert in the social-security field and so I want to present in very brief time what might be called a bird's-eye picture of the problem as I see it, because I have collaborated with Mr. Curtis in the report that was prepared by the Ways and Means Committee and subscribe to that. Mr. Curtis has gone into the ramifications of this problem much more completely than I have, and so he has treated it in detail, where I am expected to treat it only as a kind of general outline.

With that as a preliminary, Mr. Chairman and members of the committee, I want to read my short statement and then subject myself to questions.

The CHAIRMAN. We will be very glad to hear you, sir.

Representative MASON. Mr. Chairman and members of the committee, I am one of the three members of the Ways and Means Committee that voted against H. R. 6000 when it was approved in committee. I was alone 1 of the 14 Members in the House that voted "no" when the bill was up for final passage in the House.

And right here I want to interject this: that in my opinion if that had been a secret vote it never would have passed the House, because if one Member of the House came to me at least two or three dozen came to me and said: "Noah, I know that thing is unsound; I know it stinks, but I felt I had to vote for it because of the pressure that was brought upon me."

I feel, therefore, that it is my duty and responsibility to make a statement before the distinguished members of this committee giving very briefly my reasons for opposing the bill.

In my opinion the weight of the testimony during the 312 months of open hearings before the Ways and Means Committee on our present social security set-up was to the effect that it was unsound and dishonest, a Ponzi-type shell game that has been sold to the American worker as a plan to provide security in his old age. It is a program which if practiced by a private insurance company would land every director and every officer of that company in jail for misappropriation and misuse of trust funds. The program is characterized by the Brookings Institute report on our present social-security set-up as a plan whereby "We (the present generation) do the promising; you (all future generations) do the paying."

The future burden of H. R. 6000 is described on pages 168 and 169 of that same report as an enlarged old-age insurance system that would ease the cash position of the Federal Government today because the excess of revenues collected today through the social-security tax goes to meet the ordinary expenses of the Government, and that means

that a substantial part of future social-security costs will have to be met out of future tax revenues. The report estimates that the cost of H. R. 6000 pus the veterans program will be between 19 and 25 billion dollars by the year 1970. Personally, I think that is probably a little high, but it will be somewhere in that position because of the $12,000,000,000 that is usually estimated, and the $5,000,000,000 that we are now paying out, would make it $17,000,000,000.

Senator MILLIKIN. It would be twice as much if the value of the dollar continued to slide.

Representative MASON. Yes.

Gentlemen, can our economy carry this tremendous additional burden?

Perhaps at this point a concrete illustration to demonstrate how unsound and dishonest our present social-security program is would be in order; therefore I offer the following hypothetical case:

John Smith decides to establish his own social-security program, so he meticulously deducts a certain percent of each pay check he receives and places the cash regularly in his safety deposit box. After doing this for several years and having thus set aside, say, $5,000, to insure security in his old age, John Smith starts to spend each month more than he earns-as Uncle Sam does now. Then John Smith hits upon the plan of taking so much cash out of his lock box to spend each month and placing in the box, in lieu of the cash extracted, promissory notes to himself. If John Smith keeps this up, when he retires he will have only promissory notes to himself to live on-which he has no way of changing into cash for groceries.

That, gentlemen, is exactly what Uncle Sam is doing with the socialsecurity receipts-the only difference being that Uncle Sam has the taxing power to invoke in order to change his IOU's into cash to meet his future social-security obligations. But that involves new taxes, additional taxes, to meet obligations that are supposed to have been paid for already by the beneficiaries. I wonder if that scheme of taxing the children and grandchildren of the social-security beneficiary for something he and his employer are supposed to have paid for-but Uncle Sam has spent the receipts from the social-security tax for other things-can be called anything but dishonest and immoral, "a Ponzi-type shell game that has been sold to the American worker as a plan to provide security in his old age.”

On page 176 of the Brookings Institute report the authors recommend that the present social-security set-up be abandoned entirely and a genuine pay-as-you-go system be established in its place. This would do away with all need for reserves, all need for level premiums, all need for costly and elaborate bookkeeping systems, et cetera. This would mean, as the authors of the report point out, "Our generation would care for its own and trust future generations to do likewise." Senator MILLIKIN. Congressman, did you get the impression from their report that they would raise the pay-as-you-go money by general taxation?

Representative MASON. I did. A very sensible and practical and wise conclusion for them to reach, it seems to me.

Senator MILLIKIN. That is what it amounts to anyhow, because when you make good these bonds that you are talking about that are piling up under the swindle that you referred to, they will be paid out of general taxation.

Representative MASON. Yes, sir.

In discussing the social-security problem on the floor of the House, I said:

Mr. Speaker, the action of the House on H. R. 6000, the social-security bill, has impelled me to do something that I have steadfastly refused to do for over 12 years; namely, to sign the Townsend plan petition now at the Speaker's desk. I signed that petition because when I compare the two programs for social security-the one contained in H. R. 6000 and the one contained in the Townsend plan-I am convinced that the Townsend plan is to be preferred to H .R. 6000. In my opinion, after careful consideration, the Townsend plan is more equitable, more practical, more just, much easier and cheaper to administer, and less costly in the long run.

The social-security plan contained in H. R. 6000 when fully matured will require the payment of something like $1,000,000,000 per year in interest alone, in addition to the hundreds of millions of dollars each year for administrative costs. The Townsend plan will do away with both the interest on the socialsecurity fund and the heavy administrative costs.

The social-security plan contained in H. R. 6000 proposes that the Federal Government shall collect up to eight or ten billions of dollars per year and spend the same for current Government expenses. The Townsend plan proposes that the Federal Government shall collect six or eight billions of dollars per year and hand it out immediately on a monthly basis to the old people of the Nation for them to spend for the necessities of life. I ask, which is the better plan? Which will bring more happiness to more people? Which can spend the money to a better advantage, the Federal Government or our worthy old people?

In my opinion the social-security program as set up and amended in H. R 6000 is both unsound and dishonest. I shall do what I can hereafter to substitute the Townsend plan, or some modification of it, for the administration's socialsecurity program.

That is all, Mr. Chairman.

The CHAIRMAN. Are there any questions?

If not, thank you very much, Congressman.

Representative MASON. Thank you, Mr. Chairman and gentlemen. The CHAIRMAN. Is Congressman Clair Engle in the room?

I do not believe he is present. I shall call him later.

We will now hear from Mrs. Abraham Epstein, vice president of the American Association for Social Security, New York City.

STATEMENT OF MRS. ABRAHAM EPSTEIN, VICE PRESIDENT, AMERICAN ASSOCIATION FOR SOCIAL SECURITY, NEW YORK, N. Y.

Mrs. EPSTEIN. First I want to thank you, gentlemen, for wanting me to be here today. I have been for many years connected with the American Association for Social Security, and many of you probably remember my husband, Abraham Epstein.

Our association started in 1927, and we have done a good deal of work in the field of social security for many years.

I am also here to represent the League for Industrial Democracy of New York City, which is a national organization. Mr. Epstein used to come to hearings very often during his life, and I still remember that in 1939 when the amendments to the Social Security Act were being discussed, he said, "Being responsible for the term 'social security-and, as you know, we really started this term going, way back in 1927-Mr. Epstein said, "I do not have to proclaim my faith in social security. I believe and I continue to believe in social security," and so do I, gentlemen. And not because social security is a good political slogan, and not because it is a cure-all