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Senator MILLIKIN. Under your system, how would you adjust according to the coverage of the present system? How can you bring that in in relation to the time of coverage, the amount of coverage, the length of coverage of those who have been in the system?

Dr. MERIAM. If you move over to a flat-benefit system, either with or without a means test, you have eliminated that type of difficulty. Senator MILLIKIN. From then on.

Dr. MERIAM. From then on.

Now you have returned to the employees who are under the existing system the amount of money which they themselves have contributed, according to my point of view. Or according to your point of view; you have returned them the money they have paid in and you returned them the amount of money that their employer paid on their account. Now they are on the square. From here on you pay them the benefit under the new system.

Now my belief has been that the people now on benefit will get about as much under a new system as they are now getting. That is one reason why I should like very much to see your committee adjust your system and get it on what looks to me as a sound financial basis while those benefits are still low.

Senator MILLIKIN. Doctor, if your plan does not give more benefits than those that are now being paid on the basis of the 100-cent dollar put in by those of the employees with longer coverage, I do not know whether there is much reason for us to be here.

Dr. MERIAM. My expectation is that the benefits would be substantially larger than the benefits which are now being paid.

Senator MILLIKIN. I did not understand you to say that.

Dr. MERIAM. But I would not look forward to the benefits piling up as thy will under the present system from the result of your lengthof-service increment, and as the result of changing the benefit formula. It is that long-time piling, sir, that gives me the great concern from the standpoint of public finance and the public welfare, and one of my major concerns has been that we will find ourselves in the position that in order to meet those heavy commitments we will have to take action which results in an increase in prices and destroys the very thing which we started out to do.

Senator MILLIKIN. I am almost in complete agreement with your analysis of the phony nature of the present system and the analysis of the inequities involved in it and your analysis of our inability, our possible inability, to make good the promises we are now making for the future.

Dr. MERIAM. I should like to make one more statement, if I may, Senator. I have always hoped that the Congress would establish a commission or a committee or something to go thoroughly into this whole problem under its own auspices and direction, to see whether this thing could be worked out. I am a member of the staff of Brook. ings Institution. We are not a wealthy institution, we do not have great resources. We cannot do many of the things which ought to be done in studying this problem. We frequently find ourselves under compulsion to adopt the best that we have. I think it would be thoroughly worth while for the creation of a competent committee or commission under your direction, not to see how you are going to tinker with the existing social-security legislation, but to go seriously

into this question of how we can establish a system that will operate on the pay-as-you-go basis, give protection to all our people, and be so designed that we run the minimum chance of getting that thing into our price structure so that we destroy the very thing we are attempting to do.

Senator MILLIKIN. We have been here in session since January 17 listening to the best men in the country on this thing and prior to that time we had our own advisory council set up consisting of a lot of good men and women. Does there not come a time when you have to make a decision rather than continue to stir the same mush all the time?

Dr. MERIAM. My answer there would be that it would be a different kind of thing. It would be not a calling in of people who are engaged in other things and are busy with other things to give you the best they have on the basis of what I call a superficial sort of study; you have a great deal of straight-out analytical work to be done. It has not been done. I do not know of anybody who can do it. I should like very much to see these problems and these questions raised and answered through the employment of, shall I say, an actuarial and statistical staff so that you really have the information.

Now I have handed up a chart here in asking the kind of question to which we need the answer. I cannot tell you whether that is a good chart or not. I have seen actuarial work turned out by Government which did not look to me like first-class actuarial work. It is not the kind of information on which I would like to base a decision. That was in the case of the initial stages of the railroad retirement system. Now we do not have resources to do that actuarial work. You cannot get people in here to testify who have done the work that is required. Senator MILLIKIN. We attempted to set up the advisory council with people of the type you are describing. In the last analysis we found no one in the insurance field or any other field who could come up with independent statistics and a rounded knowledge of the whole subject except finally they would have to go to the Social Security Agency which is the one involved here.

Dr. MERIAM. Yes, sir. Years ago when I first got interested in this field, when I was working with retirement systems for Government employees, I worked intimately with the actuary, George Burton Buck, who is regarded as a leading pension actuary in the country. He was the actuary for the Mayors' Pension Commission and I know the amount of work involved in studying these things. It seems to me it is not something that could be done in a few weeks, could not possibly be done through an organization such as your advisory committee.

Senator MILLIKIN. It had an excellent staff but in the last analysis they had to go to Social Security for the data.

Dr. MERIAM. Yes, in the last analysis they will have to go to Social Security.

Senator MILLIKIN. They would have to go for information out of that accumulation of stuff that you have been condemning.

Doctor, let me ask you this question. Have you any knowledge of the viewpoint of the President's Economic Council on this question of the trust fund?

Dr. MERIAM. I think I have somewhere a statement from the President's Economic Committee. I will read you, sir, what I have here

covering what they said. I think that is the safest thing for me to do rather than to attempt my own interpretation of the meaning of the words they use.

Senator MILLIKIN. May I interrupt you to ask when this was said and what the source is? Where does this appear?

Dr. MERIAM. The Fourth Annual Report to the President by the Council of Economic Advisers, December 1949.

Senator MILLIKIN. Thank you.

Dr. MERIAM. I am reading from page 22. My colleague, Mr. Schlotterbeck, prepared this. I had hoped that he was going to be here to take care of this question.

On page 22 they state:

*

** *

The true nature of the social-security problem being what it is, the concept of saving "for social security" is in one sense useful and in another sense misleading. It is useful to recognize that we must save in order to enlarge our productive equipment but it is misleading to assume that through any process of bookkeeping, either personal or national, millions of people can save "for food and clothing, the medical care and recreational allowances" which they will be consuming 30 years from now when they retire. What they consume when they retire will be produced not by themselves but by the working force at that time.

The Council strongly favors the national system of social security which involves contributions from employers and from workers on a systematic basis and which also involves contribution by Government. * * Yet our discussion of the social-security problem implies that gradual efforts should be made to improve the contributor system so that at least part of the contributions would be more nearly on a pay-as-you-go basis. By this we mean the gradual development of a closer balance between social-security receipts and payments from year to year.

** * **

The ultimate objectives should be toward making withdrawals from the economy for the purposes of social security roughly balancing the contemporary cost of benefits. We also believe that as coverage becomes more general, the larger part of the social-security receipts should be obtained through general revenues rather than through payroll taxes.

Then there is a new paragraph:

This gradual development would be sound economics for the reasons already given and it would also provide a better gauge as to the magnitude of socialsecurity benefits which we can afford to enact into present legislation.

Senator MILLIKIN. Thank you very much.

The CHAIRMAN. Thank you, Dr. Meriam. Did you make a mental note of the requests that have been made of you?

Dr. MERIAM. I should like to make one sort of personal statement, if I may.

The CHAIRMAN. Yes, sir.

Dr. MERIAM. As I said a few moments ago, I started working on this subject back in 1905 to 1910 in the Census Bureau. In 1915 I went to the New York Bureau of Municipal Research to do the research work on principles governing the retirement of public employees. I was forced as a young fellow, somewhere about 32 at the time, to give a lot of thought, which a young fellow would not ordinarily give to retirement and the retirement age. I had the feeling at 32 that I did not want to retire, that I wanted to say in harness. Now I am on the other side of the retirement age, I am past the compulsory retirement age established by the Brookings Institution. I am de lighted that the president and the board of trustees have given me the opportunity to stay in harness.

We are going to have a greatly increased body of people past 65. They need, as I need, an opportunity to continue to work and make

a contribution to our society. My life has been spent, in part, giving thought to the future of a child and grandchildren, one of the things that I would like very much to continue. I hate to think of being in a position where a child and grandchildren of mine or somebody else are making provision for me. I think it is contrary to the interest of the people themselves, it is contrary to the interest of society that we should be pursuing the mirage of pensions with the idea that everybody ought to be entitled to a pension when they get to the age of 65 years. I should like to see a whole lot more attention given to increasing the opportunities for gainful work for the people who are 65 or over.

I remember very vividly when I was doing that research work for the retirement systems reading what the Germans were doing. That was the old Kaiser Germany before the First World War. They recognized certain positions which were reserved for people who had reached the age when they were no longer active enough for their particular job. They did not give those positions to anyone.

I would like to see a whole lot more attention given to the effective utilization of the people who are past.65 in the interest of society and in the interest of those people themselves, so that for as long as possible we can have the feeling that we are still in harness, we have not been turned out to pasture.

That may be a personal point of view but I know most men of my age or older have exactly that same point of view. I am very much afraid that we will go on with this idea of making heavy financial commitments, large benefits for people when they are 65 and over, and I do not think we ought to do it; we ought to give them limited provision for benefits and the largest possible provision for constructive effort.

Senator MILLIKIN. Has the Brookings Institution made any studies on the continuation of elderly people in productive work?

Dr. MERIAM. Sir, we have under consideration at the present time a further study with respect to the pension problem as a whole. We have not started that yet. I expect it is going to be started in the near future.

I will say personally I shall probably be a member of the advisory committee on that study but it is not proposed that I do that myself. We are planning to give some consideration to that which is extremely important. From the standpoint of mental health of old people I think it is extremely important.

Senator MILLIKIN. Do you see at the present time any legitimate role of the Government in helping along a thing of that kind?

Dr. MERIAM. If you think of the Government as three levels of government, Federal, State, and local, I am pretty sure that there is a role for government. I would expect, however, that we will have to do as the American people have done in the past, do a good deal of experimental work to find out what is the right way of doing it. I cannot quite conceive of anybody right at this moment sitting down and mapping you out a Federal program. I think it has to grow and develop.

Senator MILLIKIN. Of course primarily it is a problem of industry, is it not?

Dr. MERIAM. Yes, sir; industry and local activities.

Senator MILLIKIN. The activities of the Government would have to be a sort of background, an incentive role?

Dr. MERIAM. Yes, sir.

The CHAIRMAN. If there are no further questions, Doctor, we want to thank you for your appearance and thank the Institution.

Dr. MERIAM. Sir, we are very grateful for this opportunity to be heard.

The CHAIRMAN. I do not know whether this chart can be put in the record. If it can, it should be noted that it is a graphic factual chart from the Institute of Life Insurance, division of statistics and research. The facts stated there as to the revenue which people 65 years and over are drawing for their support of course can be placed. (The chart referred to is as follows:)

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