SOCIAL SECURITY REVISION WEDNESDAY, JANUARY 18, 1950 UNITED STATES SENATE, The committee met at 10 a. m., pursuant to recess, in room 312, Senate Office Building, Senator Walter F. George (chairman) presiding. PRESENT: Senators George, Johnson of Colorado, Hoey, Millikin, Taft, and Butler. Also present: Mrs. Elizabeth B. Springer, acting clerk, and F. F. Fauri, Legislative Reference Service, Library of Congress. The CHAIRMAN. We will proceed now. Doctor, you may take up where you left off in your prepared statement. STATEMENT OF ARTHUR J. ALTMEYER, COMMISSIONER FOR SOCIAL SECURITY, SOCIAL SECURITY ADMINISTRATION, WASHINGTON, D. C.-Resumed Mr. ALTMEYER. I was on page 13, the middle of the page. I will take up next The CHAIRMAN. Benefit formulas, I assume, unless you want to say something about the preceding paragraph about which a good many questions were asked." Mr. ALTMEYER. I thought I would finish the prepared statement and then go back because some of the questions cannot be answered without referring to interrelated factors. The CHAIRMAN. Very well, you go ahead and finish. Then you may go back to any other part of it you wish. Senator MILLIKIN. Where are you commencing, Doctor? Mr. ALTMEYER. On page 13, beginning with benefit formula. Under the present law, monthly benefits are calculated by taking 40 percent of the first $50 of average monthly wages and 10 percent of the remainder. H. R. 6000 amends this provision by providing for 50 percent of the first $100 of average monthly wages and continuing the 10 percent on the remainder. In order that the insurance benefits may be made more adequate, the 10-percent factor should be increased to 15 percent. The CHAIRMAN. That is in keeping with the Advisory Committee recommendations. Mr. ALTMEYER. Yes, sir; they went up to $4,200. We are recommending going up to $4,800. Senator MILLIKIN. What is the basis for the increase? What is your theory on it? 60805-50-pt. 1 Mr. ALTMEYER. In order to maintain somewhat the same relationship between benefits through the whole scale. Senator MILLIKIN. And 15 percent is the figure that would do that? Mr. ALTMEYER. Furthermore I Senator MILLIKIN. Is 15 percent the figure that will do that? Mr. ALTMEYER. It will do that and something more, Senator. was going to say it has a bearing on the question that Senator Taft raised yesterday about the increase from $4,200 to $4,800. But I will wait until I have finished and then Senator Taft may want to bring up that question. It is interrelated, in other words. Senator MILLIKIN. If he does not bring up the question I will bring it up, and at that time you will also discuss the 15 percent at that point? Mr. ALTMEYER. Yes, sir. Under H. R. 6000 payments for the 3,000,000 persons now on the benefit rolls will be increased considerably less than will the benefits for those who come on the rolls just after the new legislation becomes effective. It would be equitable, and would involve fewer administrative problems, if the payments for those now on the rolls were increased by a method which on the average yielded more nearly the same results as would application of the new benefit provisions. The CHAIRMAN. Do you suggest that method, Doctor? Mr. ALTMEYER. Yes, sir; the method we suggested in H. R. 2893 would have raised the benefits for those now on the rolls to more nearly the same level as the benefits for those retiring after the enactment of the new legislation. Senator MILLIKIN. That would be at the taxpayer's cost, would it not? Mr. ALTMEYER. No; we estimate, Senator, that the level-premium figure would cover that cost as well as the other costs involved in the revision. Senator MILLIKIN. It obviously would not apply to prior calculations on the present rate of benefits. Mr. ALTMEYER. Yes, sir. Senator MILLIKIN. It would have the effect, if we have a reserve system, to that extent of reducing reserves. Mr. ALTMEYER. Yes, sir. Senator MILLIKIN. May I ask a further question? The CHAIRMAN. Yes, sir. Senator MILLIKIN. Is there any objection to that? It seems to me that we cannot have two systems of benefits where the benefits have matured. Off the cuff it seems to me that is equitable. What are the objections to it? Mr. ALTMEYER. I didn't get your question. Senator MILLIKIN. I am talking about increasing the benefits of those who are now receiving them. The CHAIRMAN. Who are already on the rolls. Mr. ALTMEYER. Yes, sir. Senator MILLIKIN. It seems to me off the cuff that is equitable, so I am asking you what are the objections to it. Mr. ALTMEYER. I don't know of any objections. They did raise them about 70 percent. Senator MILLIKIN. Yes. Mr. ALTMEYER. We are suggesting that they be raised somewhat more so that they smooth in more closely with the new benefits. Senator MILLIKIN. Are there any objections to the principle of doing it? Mr. ALTMEYER. I do not know of any, Senator. 4. Increase in benefit amount for each year of coverage: Under the present law, basic benefits are increased by 1 percent for each year of coverage. H. R. 6000 reduces the rate of increase to one-half of 1 percent per year. This agency believes it most important that this "increment" be retained at 1 percent. The provision of an additional amount of benefit for each year in which the individual made contributions on a significant amount of wages is essential in order to maintain equity between the short-term and long-term contributor. The person who has worked and contributed to the system for 40 years or more should receive more in benefits than the one who has contributed only 5 years. Without an increment in the benefit formula, two men whose monthly wages while working were the same and who were insured employment for the same proportion of their possible time, would receive exactly the same amount of monthly benefits, even though one of them had contributed for 5 years and the other for 45 years. 5. Eligibility requirements: One important measure of the success of a contributory program of social insurance is the extent to which it reduces the need for payments under the noncontributory publicassistance programs. În the long run, the additional coverage and liberalized benefits amounts provided under H. R. 6000 would achieve this objective to a much greater extent than would the present law. However, the great mass of older workers newly covered under this bill could not qualify for old-age benefits until they had contributed for at least 5 years, and many of them will be unable to work so long. Therefore we recommend somewhat less restrictive eligibility requirements, especially for those who were past middle age when the insurance program began. The CHAIRMAN. Do you suggest a formula or method for that? The CHAIRMAN. Is that in the first bill that was introduced? The CHAIRMAN. That is the same method that you suggest here? Mr. ALTMEYER. That is one method. The Advisory Council suggested another method. There are various methods, Senator, that I think would be less restrictive than the one contained in H. R. 6000. Senator MILLIKIN. There is no way to compel a rational relationship between the noncontributory public assistance and the contributory, is there? I mean there is not a day in the week that someone cannot get up in Congress and move an amendment to increase the amount of contribution to the noncontributory public assistance, is there? Mr. ALTMEYER. No, sir. Senator MILLIKIN. So we will always have that problem with us. Mr. ALTMEYER. Yes, sir. I think so, except that I do not think people realize sometimes that the old-age assistance, for example, is on the basis of need and resources must be taken into account, whereas the insurance benefits are payable regardless of the amount of resources. Senator MILLIKIN. Yes. Mr. ALTMEYER. So it is not quite correct to compare average payments under the two, because in one resources are taken into account and in the other resources are not. Senator MILLIKIN. It always has been our theory that as we increase the benefits under the contributory system we could decrease the amount of public assistance. Mr. ALTMEYER. Yes, sir. Senator MILLIKIN. Personally I think that is sheer theory. I do not think it will happen much because the States are building up large public assistance pensions and there will be all sorts of pressures to continue the system, and personally I believe it will be continued. I would like to ask you how many people who are receiving public assistance benefits are also receiving contributory insurance benefits. Mr. ALTMEYER. We think there is about a 10-percent overlap. Senator MILLIKIN. About 10 percent? Mr. ALTMEYER. About a 10-percent overlap. Senator MILLIKIN. Those receiving contributory benefits are also receiving public assistance? Mr. ALTMEYER. Yes, sir. Senator MILLIKIN. Is that an increasing number? Mr. ALTMEYER. Yes, sir; and I think perhaps my 10-percent figure is based upon a previous period of time. It may be more now. Senator MILLIKIN. Can you get us some statistics on that State by State? Mr. ALTMEYER. We do not have very recent statistics. They have to be obtained by actual field investigation, and that is rather costly to undertake. So we have made some sample studies. I do not think we have made any for the last year or two. Senator MILLIKIN. I believe the question has an important bearing, Mr. Chairman, and I suggest that we put in the record whatever they have on that. The CHAIRMAN. Will you supply us, Doctor, your latest figures on that? Mr. ALTMEYER. Yes, sir. The CHAIRMAN. Let them go in the record. Mr. ALTMEYER. Yes, sir. (The information referred to is as follows:) |