Hearings, Reports and Prints of the Senate Special Committee on Aging

PREFACE

Social Security, which will celebrate the 40th anniversary of enactment in 1975, has become an ingrained feature of the American scene. Close to $5 billion is paid each month to more than 30 million persons for retirement, disability, or death benefits.

Approximately 21 million beneficiaries are elderly.

But other recipients are youngsters deprived of a parent, as well as disabled persons of all ages.

In one form or another, Social Security touches the lives of almost every American family.

Nearly 31 million persons-one out of every seven Americans— receive retirement, disability, or survivor benefits. Approximately 100 million workers now contribute to Social Security. And they are building protection for themselves and their dependents.

More than 90 percent of all persons 65 or older are eligible for Social Security payments. About 80 percent of all men and women in the 21 to 64 age category are protected in the event a family breadwinner suffers a long-term disability. And 95 percent of all mothers and dependent children are eligible for benefits if the father in the family

dies.

In a very real sense, Social Security is family security. It is also the economic mainstay for the vast majority of older Americans. Social Security represents over half of the income for two-thirds of aged single beneficiaries and one-half of elderly couple beneficiaries. And it accounts for almost the entire source of support-90 percent or more of total income-for 30 percent of single elderly beneficiaries and 15 percent of older couples.

Huge computers and tens of thousands of employees are needed for the Social Security Administration to do its job.

In many small and even medium-sized communities, monthly Social Security checks constitute the largest single source of income.

Clearly, the Old Age, Survivors, Disability and Health Insurance (OASDHI) program commonly known in all its parts as Social Security-must, of necessity deal in huge numbers and must aim for

clean efficiency of operation.

But for all its bigness, OASDHI must also retain one of its most precious assets: the confidence of individual persons who, by paying into the system during their working years, are entitled to the many protections offered by the system.

It's not enough for the checks to arrive on time--a common dole

could do that.

The people of the United States must also believe-as they have, overwhelmingly, for nearly four decades-that Social Security is their program, based on their earnings, attuned to their changing

circumstances.

To a large degree, Social Security has made that belief valid, but deeply ingrained. It has the trust of the public; it even while fundamental values and concepts remain fixed. Confidence, however, is best maintained when its underpin examined fairly frequently and sometimes skeptically.

As Chairman of the Senate Special Committee on Aging, hearings on "Future Directions in Social Security" in Janu At that time, I said:

Our goal is to take a reflective look-at a time when legislative u Congress have completed work on historic Social Security legislationnificance of recent accomplishment as well as actions that must ulti taken to build upon that accomplishment.

The "significant accomplishment" to which I referred incl A 20 percent across-the-board increase in Social Secur fits enacted in 1972.

Authorization of an automatic cost-of-living adjustme anism to keep Social Security benefits current with ups prices.

Approval of a federalized assistance program for t blind, and disabled-the Supplemental Security Income or SSI, as it became known.

Despite these and other improvements the "Future Directio ings were deemed necessary in order to deal with issues that resolved if the generally favorable impression of Social Secu be maintained, and if the program is to remain viable and ro to changing conditions.

Thanks to fine testimony by persons thoroughly familiar wi Security, the "Future Directions" hearing transcripts hav source books for information and ideas about OASDHI, pre future.

For the serious student of OASDHI, the transcripts are w intensive study.

For others who are concerned about Social Security but nee concise reference, the Senate Committee on Aging offers thi report.

Dorothy McCamman, who provided invaluable leadershi the Committee's "Economics of Aging" study in the late 19 played a major role in the "Future Directions" study. As th of the first half of this report, she summarizes testimony rece far on:

Social Security financing, including discussion of th of payroll contributions on low- and middle-income wo Suitability of the means by which automatic increases i are determined.

Shortcomings or anomalies in present coverage...
The need for an independent Social Security Admini

1 On January 27, 1975, Senator Church introduced S. 388, the Social S ministration Act. S. 388 would (1) establish the Social Security Administr autonomous agency outside the Department of Health, Education, and Welfa it under the direction of a three-member governing board appointed by the Pr the advice and consent of the Senate; (2) prohibit the mailing of notices Security and Supplemental Security Income checks which make any reference to elected Federal officials; and (3) separate the transactions of the Social Se funds from the unified budget. Cosponsors of S. 388 include Senators Clark, Kennedy, Biden, Ribicoff, Williams, Hart (Michigan), Burdick, Tunney,

Throughout the hearings, there has been strong support for the introduction of general revenue financing, but only if it does not weaken the contributory principle and only for well-selected, limited, and measurable purposes. Long-range forecasts about the future of the Social Security financing structure, made early in 1975, suggest a clear need for judicious use of general revenues, but only when absolutely needed and only for clearcut objectives.

At forthcoming hearings, the Committee will consider such topics as: Improving SSI, treatment of women and minorities, long- and short-range projections of payroll contributions during periods of demographic change, overall "adequacy" of Social Security payments and relationships with private pensions, and issues related to mandatory retirement.

Obviously, a report now being readied for publication by the statutory Social Security Advisory Council will receive careful attention, as will an actuarial report released by the Senate Committee on Finance on February 10. The Finance Committee report has made it clear, in my view, that extensive changes must be made in financing the Social Security system, but that there is no real reason to rush into such changes. We seem to have time to weigh possible courses of fairly immediate action. From advance appraisals of the Advisory Council's likely findings, a generally similar conclusion seems likely to emerge from that body, as well.

Therefore, the "Future Directions" hearings will continue as they have in the past, unhurried and comprehensive. There will, however, be new emphasis upon the impact of inflationary pressures upon the Social Security system, particularly when inflation is accompanied by

recession.

We will continue to recognize the enduring strengths of Social Security, even while we attempt to deal with its deficiencies.

PART 2: THE WHITE PAPER

For that reason, the Committee is particularly fortunate that within recent weeks, five former Health, Education, and Welfare Secretaries and three former Social Security Commissioners joined in endorsing a "White Paper" called: Social Security: A Sound and Durable Institution of Great Value.

The signers of the paper include Elliot L. Richardson, John W. Gardner, Wilbur J. Cohen, Robert Finch, and Arthur Flemming-all former H.E.W. Secretaries and all three surviving former Social Security Commissioners, Robert M. Ball, William L. Mitchell, and Charles I. Schottland.

Their action was prompted by a rash of recent newspaper and magazine articles which cast doubt on the soundness and durability of Social Security. (One such series, I might add, appeared in my own daily newspaper in Idaho. I personally found the stories to be inaccurate and alarming; I was pleased when the same newspaper ran an article soon afterward challenging the earlier allegations.)

But even if there had been no attacks on Social Security, the White Paper would have been worthwhile because it provides an expert appraisal of Social Security's place in our society. In addition, it offers valuable insights into future financing and concludes that there will

be sufficient time to deal with the long-run change in the ratio of retired people to active workers.

In addition, the White Paper deals with the Congressional compac made with the people of this Nation on continuance and assurance o future benefit payments. It tells why Social Security is social insur ance, rather than welfare.

In short, it is worth careful attention, by every citizen, young or old It is reprinted as Part 2 of this report for study and for reference during future national debates on matters of concern to each and every

one of us.

FRANK CHURCH, Chairman.

CONTENTS

Preface

Part 1. Unresolved issues: An Interim Staff Report_.

Introduction --.

Financing

The retirement test..

The benefit level------

Adjustment of benefits.

Coverage

Administration of Social Security-.