After 65

John Steven McGroarty, onetime newshawk, is poet laureate of California by act of the Legislature. Three months ago Californians gave him another distinction when they elected him to Congress. Last week he won for himself still another distinction when he beat President Roosevelt by 24 hours in getting a "social security" measure to Congress. Said Laureate-Congressman McGroarty of his bill:

"Why, this will mean permanent prosperity. It will empty the poorhouses and the jails. It will cure 90% of our problems. You can't laugh it down. This won't debunk. It's the simplest thing in the world. These professional economists can't see it. It comes from the brain of a little country doctor. God always picks a man like that!"

The McGroarty Bill called for the Townsend Plan--$200 a month pension for every well-behaved oldster over 60.

Next day President Roosevelt sent a message to Congress:

"It is overwhelmingly important to avoid any danger of permanently discrediting the sound and necessary policy of Federal legislation for economic security by attempting to apply it on too ambitious a scale before actual experience has provided guidance for the permanently safe direction of such efforts. The place of such a fundamental in our future civilization is too precious to be jeopardized now by extravagant action."

With this admonition the President sent a report on social security drafted not by a man picked by God but by his Cabinet Committee on Economic Security, assisted by civitarians, welfare workers, actuaries, medical men, etc. Within the hour an Administration Bill embodying the Committee's proposals was in the legislative hopper. Its chief points:

Unemployment Insurance. A Federal tax on payrolls will finance the plan. The rate will scale up to 3% in 1938. In any year an employer may deduct up to 90% from his payroll tax for the amount he pays into his State's unemployment insurance fund. The States, within limits, will be permitted to figure out their own insurance plans, but the funds collected must be deposited for safekeeping in the U. S. Treasury. Suggested plan for State adoption:

Four weeks after becoming jobless a man should begin drawing half pay from the insurance fund or $15 a week, whichever is less. This payment should continue from 15 to 25 weeks depending on how long the beneficiary had been previously employed. After 25 weeks insurance payments should end and the unemployed person should go on work relief.

Old Age Pensions. Provision for the aged is divided into three parts.

1) The Federal Government will pay half the amount of State pensions to poor persons now over 65 but not more than $15 a month. If such a pensioner leaves any estate, however, the Government will claim from it the total amount of Federal contributions to his pension.

2) All persons under 65, and earning $250 a month or less, would be compulsory members of a Federal annuity system. Funds for these annuities like funds for unemployment insurance will be raised by a payroll tax: 1% for the first five years, 2% for the next five and so on up to a maximum tax of 5%. The tax will be paid by employers who will deduct half of it from the pay envelope of each employe. Thus a clerk getting $20 a week will at first get $19.90 and a stamp for a 10-c- contribution to the annuity fund. By the time the tax reaches 5% the $20 a week clerk will get $19.50 in his envelope and 50-c- in annuity stamps.

No annuities would start until after the system had been in operation five years. The size of the annuities would vary with the number of weekly contributions to the annuity fund. The maximum that any one over 65 would get, after contributing to the annuity fund for 45 years, would be 40% on the first $150 of his monthly wage. Thus if a man works at a wage income of $100 a month for 45 years he will have contributed $1,050 to the annuity fund and his employers an equal amount. The total sum, $2,100, even with 3% interest added, cannot provide many $40-a-month pension payments. On the other hand a man of 20 cannot expect on the average to live beyond 66 so that the Government figures on breaking even.

3) Anyone might voluntarily contribute to the Government's fund to buy a small annuity, up to a maximum of $50 a month. This puts the Government directly into the business of selling annuities, just as life insurance companies do.

Health Insurance. Because the medical profession has kicked up such sand, President Roosevelt sidestepped the question of health insurance. As a sop he proposed to distribute to the States the following sums for the following purposes:

P:$25,000,000 a year for the care of dependent children.

P:$4,000,000 a year for the care of mothers.

P:$3,000,000 a year for the care of crippled children.

P:$1,500,000 a year for child welfare.

P:$10,000,000 a year for Public Health services and research.

Cost. For fiscal 1936 $98,400,000 will start the Social Security project. In succeeding years the Federal cost of pensions and insurance benefits will jump the total to $217,500,000. Theoretically this sum will gradually decrease as the aged get annuities that have been paid for instead of pensions for being destitute.

Kicks. Congressional kicks against the Administration's Social Security program were that it was not liberal enough. To Townsend Planners the idea of $30 a month pensions was small change compared to their proposal of $200 a month. Said Senator Borah: "I am not satisfied to make an outlay of nearly $1,000.000,000 for armaments and $15 for old age." Said Senator Nye: "We are led to the mountain top by the generalized prospectus and rudely dropped by the detailed program."

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