So just how would one prepare for this hearing on the basis of available information as to its objectives? Mr. Forand stated that, "Although legislation during this Congress is not possible, the hearings will develop facts that can be used as a basis for a report to the full committee." Only a week or 10 days conceivably remain for conducting the hearings and it is difficult to understand how any intensive and objective appraisal of the many issues, some of them of tremendous importance, can be made in this extremely limited time. It would seem that Mr. Forand's prime objective is making some kind of an interim report to the full committee-with the hope that it might weigh in favor of the continuance of his committee in the next Congress. There is no precedent for the Committee on Ways and Means to act on major legislative proposals without hearings before the full committee. However, there have been a lot of precedents shattered here in the last few years. There may be the thought on the part of some that if the Forand subcommittee gets very far into hearings, it might be continued in the next Congress for the purpose of completing the taking of hearings. Considering the composition of the committee, the administration couldn't want anything better. We have no objection to having set out in the record at this time the position of the Secretary of Labor and the organized labor groups. All this could be quite helpful later on. We are unable to see, though, how interested parties other than administration and labor officials can possibly make a helpful contribution in the hearings with the vague and almost unlimited scope as set out in the hearings' announcementnot to speak of the totally inadequate notice. However, it is of the utmost importance that this subcommittee be apprised of the intense and widespread interest throughout the country in unemployment compensation matters. Any report to be filed by Mr. Forand's group should not be able to honestly assert that a thorough and exhaustive consideration had been given to the viewpoints of all interested groups and parties. We, therefore, strongly urge that you address a letter to Mr. Forand (New House Office Building) asking for further information as to just what the committee proposes to do-what are the major issues that it will seek to set up for consideration. Obviously, you cannot hope to come prepared to speak to 30 pending bills. If it is intended that the hearings be really helpful to the committee in drawing a worth-while report, clearly the subcommittee's hearing objectives must be far better defined. You might want to inform Mr. Forand of your deep interest in unemployment compensation matters generally, and your possible desire to be heard when you had information as to what the hearings were all about. In suggesting the possibility of a desire to be heard, when and if you know what the issues are, you might further want to indicate the necessity of your being given a reasonable time for your preparation. As many of us here see it, it is of the utmost importance that you register with the committee your interest in the general subject matter as above indicated. Certainly we cannot prejudice our case with the next Congress by any inferences that might be drawn that Mr. Forand's report was complete and took into account all interested viewpoints because of any apparent lack of interest in his blitz hearing. So write Mr. Forand at your very earliest convenience, and note a carbon to Congressman Robert L. Doughton, chairman of the House Committee on Ways and Means, New House Office Building; and Daniel A. Reed, ranking minority member, at the same address. All of this for the record. STANLEY RECTOR, Legislative Director. Mr. FORAND. Now, there are two points I should like to clear up. Mrs. Ellickson, you referred to supplemental benefits. Would they be paid from Federal funds? Mrs. ELLICKSON Yes. Mr. FORAND. From where would those funds come? Mrs. ELLICKSON. They could either come out of the general revenues. of the Treasury, or they could come out of the three-tenths of 1 percent tax which has been collected and is still being collected under the tax law, which now exceed the amount paid for the actual costs of the administration of the State agencies. There was the George Loan Fund which was collected from this three-tenths of 1 percent tax collection. That would be available. Or one could take the surplus that is now being collected through this device. I confess that I have not checked the latest figures to see whether that amount would be adequate or not, but we feel that if it is not adequate that logically the costs resulting from defense policies as they hit workers and cause them to be laid off should be met out of the general revenues of the Treasury, just as the general revenues are used for many other war purposes. Mr. FORAND. I understand, then, that would be the same fund that the Secretary of Labor mentioned which should be used for reinsurance purposes? Mrs. ELLICKSON. Well, I do not feel in a position now to say whether that should be used. We feel it should come out of the general revenues. I am not quite clear as to the legal arrangements that might impede the use of the fund. Mr. FORAND. Will you look into that and furnish the committee with a specific suggestion as to how that should be handled? Mrs. ELLICKSON. Yes, sir; I shall be glad to do that. (The following was later submitted by Mrs. Ellickson:) Hon. AIME J. FORAND,、 Subcommittee on Unemployment Insurance, House Ways and Means Committee, House of Representatives, Washington, D. C. DEAR MR. FORAND: When I appeared with Mr. Edelman before your subcommittee, I was asked to submit a supplementary statement in regard to the use of the so-called George loan fund for the payment of supplementary unemployment insurance benefits. Apparently, appropriations would be required for such supplementary benefits whether or not the George loan fund is utilized. The situation, according to my information, is as follows: Section 904 (h) of the Social Security Act establishes a Federal unemployment account in the unemployment trust fund. There is authorized to be appropriated to this account an amount equal to the excess of taxes collected under the Federal Unemployment Tax Act and unemployment administration expenditures. The accumulated excess since the effective date of the tax is about $1,000,000,000. However, none of this has actually been applied to the Federal unemployment account. It would therefore be necessary for sufficient appropriations to be made to the account to provide for such supplementary payments to the unemployment account. Although title XII of the Social Security Act authorizes loans from the Federal unemployment account to the States whose reserves run low, the use of the account need not be limited to such loans. In fact, no reference is made in section 904 (h) to the use of this account. Accordingly, there would be no legal problem involved if Congress should authorize the use of this account for the payment of supplementary benefits. Regardless of the method utilized, we believe the National Government has an obligation to provide adequate unemployment insurance for persons unemployed as a result of the defense program. Very sincerely yours, KATHERINE POLLAK ELLICKSON, Mr. FORAND. Now, my next question is directed to Mr. Edelman. Reference was made to federalization of the system. I understand first of all that you said specifically you were in favor of federalizing the system. What would be the position of the States under those circumstances, would the present State employment services just merely act as agents of the Federal Government, or just how would they operate? Mr. EDELMAN. I think Mrs. Ellickson is really in a much better position to answer that specifically. Mrs. ELLICKSON. We prefer a completely federalized set-up, such as you have now through congressional action for the workers on the railroads with a completely federalized system and all of the employees Federal employees, all the people who now administer the unemployment insurance for railroad workers. It would be possible to absorb the staffs of the existing agencies, and we believe that there are jobs where their experience should be protected where they are qualified. However, we do not favor a system which would simply make the existing State agencies act as agents for the Federal Government because we believe that there is considerable waste of manpower involved in such a relationship and that there are unnecessary complications in administration. Mr. FORAND. If it should be that the Federal Government would take over all of these activities what would be the status of the State agencies? Would they be eliminated completely, or just how would they operate? Mrs. ELLICKSON. Well, various alternatives are possible, of course, but the efficient way would be simply to have in, say, the State of Rhode Island, branches of the National Public Employment Service, which would be administering the national laws in Rhode Island, and which would not need to be making all of the detailed administrative rulings that now must be made in Rhode Island because of the fact that Rhode Island has its own law, and there are 50 other agencies making similar rulings. However, as part of good administrative policy we believe that it is desirable to have the people who are administering the law within a State familiar with the problems of that State and close to the people of the State through the proper use of labor-management advisory committees, and so forth. Does that answer the point you had in mind? Mr. FORAND. No; that does not quite clear it up. Now, in Rhode Island we have our Department of Employment Security that handles all of these functions in conjunction with the Federal Government. If the Federal Government were to take over the entire set-up, what would become of that State agency? Would that agency be eliminated completely, or would the State continue, under your proposal, to maintain the Department of Employment Security separate and distinct from the Federal Government? Mr. EDELMAN. I think actually how it would work out, Mr. Congressman, is that the bulk of the State operation would be absorbed by the Federal agency. We would rather object to an indiscriminate blanketing into a new Federal agency of every State agency in the country. Obviously the efficient ones would be largely blanketed in. If there is an area of intrastate operation which the State itself would still need to carry on it would seem to me that an arrangement either in the law or by practice should be worked out so that in the employment office the local separation of function would not be 76344-51--12 apparent to the ordinary applicant for a job. If the State itself felt it necessary to carry on some operation supplementing, or in addition to that which the Federal agency would carry on concerning local problems, that that could easily and effectively be coordinated with the Federal set-up. Mr. FORAND. We thank you, Mr. Edelman, and Mrs. Ellickson for the contribution that you have made to the hearing this morning. Are there any other persons in the room who desire to be heard on this subject? If not, we will declare the hearings closed, and the committee will meet subject to the call of the Chair. (Thereupon, at 11:25 a. m., the subcommittee adjourned, subject to the call of the Chair.) (The following material was submitted for the record:) CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, Hon. AIME J. FORAND, Ways and Means Committee, House of Representatives, Washington, D. C. DEAR MR. FORAND: The Chamber of Commerce of the United States strongly opposes H. R. 8059, the unemployment compensation bill on which your subcommittee has been holding hearings. We believe the bill constitutes (1) a violation of the intent of Congress to maintain a "State-Federal system" for unemployment compensation and (2) a practical invasion of functional areas traditionally reserved to the States without valid reason for such intervention. Unemployment compensation in the United States is intended to provide protection for workers during temporary periods of involuntary unemployment. It is not intended as a cure for widespread or extended unemployment. Secretary of Labor Tobin, quoting Business Week, in testimony before your committee summed up both the intent and effects of the system when he said, "Unemployment compensation has proved to be an effective cushion for business-as well as workers against the impact of lay-off On the whole, unemployment compensation in the United States has and is discharging this responsibility creditably. * * The historical position of the States in this area until recently has been considered both by the States themselves and by the Federal Government to be exclusive in respect to certain functional fields. The Social Security Act of 1935 contemplated a "State-Federal system." The intent of the Congress in the original establishment of unemployment compensation is quite clear. The role of the Federal Government was marked out to be primarily one of encouraging the States to enact State unemployment compensation laws, and secondly of acting as a watchdog on the disbursements of moneys for administrative expenses. Justification for Federal action in any area of social insurance has always been attributed either to (1) the magnitude of the problem and the inability of voluntary groups or State and local governments to cope with it or (2) the failure of State and local government to assume responsibility and initiative. Both these reasons may have been valid in the circumstances under which the Social Security Act was first passed in 1935. But neither of these reasons for Federal action exists now nor can reasonably be anticipated for the next several years. Unemployment now constitutes no real problem. In fact, if Government spokesmen are correct, the exact opposite-manpower shortages-would seem to be the more pressing problem of the day. Forty-five State legislatures will be in session in 1951. The record of these States in recognizing, meeting, and dealing with the problems of unemployment compensation to date would suggest that where the need actually exists for further revision of their programs, they can be counted on to take the initiative. (See p. 34 of the attached pamphlet, dealing with State law liberalizations, 1935-50.) This statement is by nature necessarily general. The short time allotted for hearings and the brief period between your announcement and the actual start of hearings made it difficult for us to present either testimony or a more detailed statement of our views at this time. In the event, however, that hearings by your subcommittee are continued after January 3, the chamber would welcome an invitation to present testimony on H. R. 8059 or on any of the many basic issues involved in this bill. I would appreciate it if you would make this letter a part of the record of your hearings on H. R. 8059. Cordially yours, CLARENCE R. MILES, Manager TENNESSEE TAXPAYERS ASSOCIATION, INC., SUBCOMMITTEE ON UNEMPLOYMENT COMPENSATION, DEAR SIRS: Hon. Aime J. Forand, chairman of Subcommittee on Unemployment Insurance, informs us that we may file a brief setting forth our views respecting the provisions known as the Knowland amendment incorporated in the Social Security Act of 1950. Tennessee Taxpayers Association is a State-wide body of interested citizens and taxpayers formed in June 1932, 181⁄2 years ago, for the purpose of conducting an impartial character of fact-finding and recommendatory service in the fields of local, State, and Federal Government. The association has an able 70-man tax study committee which maintains watchful care over the tax provisions of each level of our government. Our tax committee and our association endorsed and warmly commended the provisions embodied in the Knowland amendment as being wise, sound, salutary, and distinctly in the public interest. The Knowland amendment to H. R. 6000, as the House Committee on Ways and Means will instantly recall, was made necessary in order to curb the Secretary of the United States Department of Labor or any other Federal authority from assuming power not contained in the statute or supported by any implication of the Federal employment-security law. Government by law goes out the window whenever we allow a Federal official without any statutory authority to declare the employment-security law of any State to be out of conformity with the requirements of the Federal employment-security statute, after such State laws have been previously approved for conformity by the duly designated Federal Social Security Administration and no change has been made in such laws since their approval. The members of our committee and of our association are devoted to the principles of constitutional government and are unalterably opposed to the arbitrary assumption of power wholly beyond and completely removed from anything contained in the Constitution and the statutes of the United States of America. We wish this statement to be incorporated in the hearings of the House Ways and Means Committee or its Subcommittee on Unemployment Insurance. It should be noted in the record that Chairman Forand gave altogether inadequate notice of hearings to be conducted by his subcommittee. Also such notice gave no indication of the specific legislative proposals upon which he proposed to conduct hearings. Matters of grave and tragic concern to the Nation will absorb the entire time and attention of the present Congress until its final adjournment. This will necessitate that new bills must be introduced next year. The subject matter of these bills, if still deemed to warrant introduction and hearings, will necessitate entirely new procedures by the Congress which convenes on January 1, 1951. It would seem that these hearings are legislatively purposeless and should be set aside in toto. Yours truly, WILLIAM R. POUDER, Executive Secretary. TENNESSEE WHOLESALE GROCERS' ASSOCIATION, INC., SUBCOMMITTEE ON UNEMPLOYMENT COMPENSATION, House of Representatives, Washington, D. C. GENTLEMEN: In reply to his letter of December 19, 1950, which we received from Hon. Aime J. Forand, chairman of Subcommittee on Unemployment Insurance, |