If costs continue to rise, can a worker "insure himself and his wife in Congress will be faced with a serious dilemma on this score, if these confident predictions of a "5 to 10 per cent annual increase in hospital costs indefinitely" materialize. On the one hand Congress could continue health care benefits in Social Security despite rising costs, if it were to engage seriously in controlling wages and salaries of personnel in the health and medical care field and by firm price control of supplies, medicines, etc. This would, however, promote a serious deteriouration in the quality of health care for everybody. It could also continue these services with no more taxes by increasing the deductibles called for in the bill, and introducing new ones. 19/ This is what Great Britain has been compelled to do. Or, Congress could reduce the amount of protection provided. This course of action, however, would be self-defeating. It would seem obvious that Congress could not buck any trend of rising costs and prices for health and medical care except by reducing quality and/or quantity of services provided. Its only alternative would be to increase tax and hence a worker would not be able to protect himself and his wife in later years for only one-quarter per cent more in taxes. Apparently many workers have been misled on this score. rates Will workers willingly bear the costs of this proposal in addition to tax cost increases required for the present Social Security benefits? The attitude of workers toward further Social Security tax costs may well be different in the 1960s than in the 1950s. It may be recalled that every tax increase from 1950 through 1960 was accompanied immediately or within a few months by expansion in Social Security protection in one form or another. Cash benefits were increased, protection was extended to additional groups of people, conditions of eligibility were liberalized, or a new kind of protection was initiated. Workers, obviously, could see something in connection with the additional taxes they were required to pay. In the next seven years, however, there will be four separate tax increases called for according to existing law. These additional tax costs will be required merely to continue existing cash benefit. Nothing new will be added. 19/ See Wall Street Journal, July 14, 1961. The chart on the next page shows the tax cost increases in dollars in the 1950s and in the 1960s. As may be seen from the chart, the maximum taxes payable by an employee have increased from $45 in 1950 to $144 in 1961. Beginning in 1962 the maximum payable will rise to $222 under existing law. It is, of course, a moot question what the reaction of workers will be. It is interesting to note, however, in current contract negotiations between the UAW and the motor industry, the union is demanding that the employer "must assume the full cost of the hospital-surgical-medical program for all employees and all retirees and their respective dependents Throughout the country the increasing cost of health insurance is resulting in a major ... drain on the take-home pay of workers. "20/ If there is any validity to this - contention, how willing will the workers be to absorb a 54 per cent increase in Social Security taxes for the present program let alone an additional increase required for H.R. 4222. And how about further tax cost increases that will be inevitable under H.R. 4222, with expansion of the services provided, and with any further rise in costs for health and medical care. If they can no longer afford to pay part of their own health insurance premiums, will they be able to afford further Social Security tax cost increases? What will be the impact of Social Security tax cost increases on job-making by private enterprise? Continued payment of Social Security cash benefits provided in the present law depends entirely on a vigorous expanding economy with high level employment of a growing labor force, and on a 54 per cent increase in the social taxes on workers and on covered payrolls. Social Security has been expanded several times during the past decade, with short run cost increases financed immediately by additional taxes on workers and on business. Longer run costs are to be financed by future tax increases. Thus, the integrity of Social Security has still to be tested both by the willingness of workers to pay more taxes with no more Social Security benefit protection, and by the ability of business to provide many more new jobs and to absorb the additional tax costs on employing them. The chart shows the maximum additional tax cost burden on an employee. It also reflects the additional tax costs on employers. We must not forget that in 1962-63 all employers covered by state unemployment compensation programs will have added UC tax costs for the Federal Temporary Extended See Wall Street Journal, July 13, 1961. 76123 O-61-pt. 2--5 MAXIMUM SOCIAL SECURITY TAXES, 1950-1968 PAID OR PAYABLE BY EMPLOYEE AND BY HIS EMPLOYER Unemployment Benefits. Incidentally, there is a bill now before your Committee which would make this temporary program permanent, including the additional 4/10 per cent federal UC tax, levied on a wage base of $4,800 rather than the present $3,000. The ability of the economy to afford these tax cost increases may be substantially different in the 1960s than in the 1950s. American business is finding it increasingly difficult to compete with goods from other countries, not only in world markets, but also in domestic markets. Added costs to all employers, without regard for the ability of the individual business to absorb them through rising productivity or to pass them along in higher prices, will intensify the prevailing profit squeeze between prices and rising costs. American businesses are continuing to lose sales here and abroad to foreign competition. And this means jobs! - And The most outstanding difference between these two decades is the number of additional jobs new jobs which must be created if we are to have high level employment and a vigorous economy. In the 1950s the number of new jobs needed for high level employment averaged 700,000 annually. this was achieved. In the 1960s, we will need to provide roughly 1.4 million more jobs annually and, as in the past, for these we must look chiefly to private enterprise. Tax cost increases on job-making can serve only to intensify efforts to provide more jobs for machines not for people. The years ahead of us are indeed critical ones. An unprecedented number of young people will enter the labor force looking to private enterprise chiefly to provide job opportunities. A vigorous expanding economy with high - level employment is indispensable for making good on the Social Security benefit promises Congress has made. And a dynamic private enterprise economy is fundamental to our national Security in these trying times. With so much of the future costs of Social Security put on "the cuff," so to speak, we believe further tax burdens should not be put on job making private enterprise. Is this proposal compatible with the principles of the existing Social The American people have supported Social Security in large part because of three principles. First, benefits have been paid only to those who have had a loss of job-income due to old-age, premature death of the family breadwinner, or total and permanent disability. Second, benefits bear some relation although not a directly proportional one --to the earnings on which a worker and his employers, or the self-employed, were compelled - to pay Social Security taxes. Those who earned more, got more. Third, benefits have always been paid in cash. Only in this manner can the freedom of each individual be preserved to decide how best to spend this and his other income. Only in this manner can human dignity and self-respect be preserved. H.R. 4222 would initiate completely new principles entirely contradictory to those basic to Social Security by providing health care service benefits to those who are still working full-time. Congress would initiate Social Security protection to those who have experienced no loss of job income. We see no possible justification in taxing workers and business to provide any kind of Social Security protection to those who have had no such job-income loss either from retirement or from premature death of the family breadwinner. Under this bill, some workers and their employers will pay no more than $12 in a working lifetime while others will be compelled to pay as much as $1372. Since this health care protection does not materialize until age 65, allowance for interest over these years should be made. At 3 per cent these amounts would become about $14 and $2,778 respectively. Monthly earnings for those at the minimum would average no more than $12.50 for other $450. Since the health care protection provided would be the same for all at 65, the fundamental principle in Social Security of wage relationship of benefits will be completely ignored. Finally, the initiation of benefits in the form of services rather than in cash is a complete denial of individual freedom of choice. Under this bill Social Security taxes will be raised and the wage base increased in order to get more benefit money. However, none of this will be paid out to a single beneficiary in the form of larger cash benefits so that each can decide how best to use this income together with his other income and resources in determining what goods and services, including health insurance, best meet his needs. Recently, R. A. Hohaus, a member of several Government Advisory "During most of the past 25 years, a major task was to ... |