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Reports & Studies
House Committee Report on 1935 Bill
We, the undersigned members of the minority, submit the following statement showing in brief our attitude toward this proposed legislation, which is known as "the economic security bill":
The bill is separated into several titles; which readily and naturally segregate themselves into two categories:
(1) Those which spring from the desire of the Federal Government to provide economic assistance to those who need and deserve it.
(2) Those which are based upon the principle of compulsory insurance. In the first group are:
Title I, granting aid to the States in meeting the cost of oldage pensions;
Title IV, granting aid to the States in caring for dependent children;
Title V, granting aid to the States in providing for maternal and child welfare; and
Title VI, granting aid to the States in providing for public health generally.
We favor the enactment of each of the foregoing titles, which our opinion should have been incorporated in a separate bill.
OLD AGE PENSIONS
We favor such legislation as will encourage States already paying old age pensions to provide for more adequate benefits, and encourage all other States to adopt old age pension systems.
However, we believe the amount provided in the bill to be inadequate, and favor a substantial increase in the Federal contribution
GRANTS FOR CHILD WELFARE, PUBLIC HEALTH, ETC.
Title IV. Dependent children: We favor a vigorous and sympathetic program for the care and training of dependent children that will recognize the importance of a congenial family environment.
Title V. Maternal and child welfare: For years our Government has extended aid to the States to provide for maternal and child welfare. Title V continues this aid in an increased amount.
Title VI. Public health: For years our Government also has provided aid in the interest of the public health. Title VI increases the amount of this aid.
We may add that we would favor a stronger and more vigoro program than that provided in this proposed legislation for the ben' fit of those covered by these three titles.
In the group of titles which are based upon the principle of compulsory insurance are title II, with its related title; VIII, and title III, with its related title IX.
Titles III and IX taken together provides for what is commonly known as "unemployment insurance." The incidental revenue collected under title IX is intended to offset the payments made under title III.
The ostensible purpose of title III is commendable. Any program that would supplant unemployment with employment would meet with great favor. Employers and employees would all welcome such a program; also the many millions who are now unemployed. The latter are neither employers nor employees. Therefore, there are three great groups vitally interested in unemployment insurance.
Because of the large number of persons vitally interested, the problem is one which reaches practically every citizen, and its solution involves practically all our people. A program which will not give employment to the unemployed will not solve the problem.
On account of the deplorable condition in which the employer finds his business at this time; the tragic condition in which the employee finds himself due to the ever mounting cost of the necessaries of life and the failure of wages to keep pace with these costs; and the fact that the number of unemployed is constantly increasing, there is doubt in our minds that the legislation proposed in these two titles will result in a general national benefit at this time.
However, we favor the principle of unemployment insurance. These titles of the bill aid those States desiring to establish such insurance, and therefore we resolve all doubts in favor of this legislation.
Title II provides for compulsory old age annuities, and title VIII provides the method by which the money is to be raised to meet the expense thereof.
These two titles are interdependent, and neither is of any consequence without the other. Neither of them has relation to any other substantive title of the bill. Neither is constitutional. Therein lies one of the reasons for our opposition to them.
The Federal Government has no power to impose this system upon private industry.
The best legal talent that the Attorney General's office and the Brain Trust could marshal has for weeks applied itself to the task of trying to bring these titles within constitutional limitations. Their best effort is only a plain circumvention. They have separated the proposition into two titles. This separation is a separation in words only. There is no separation in spirit or intent. These two titles must stand or fall together.
The learned brief submitted by the Attorney General's Office contains in its summation the following weak, apologetic language:
There may also be taken into consideration the strong presumption which exists in favor of the constitutionality of an act of the Congress, in the light of which and of the foregoing discussion it is reasonably safe to assume that the social security bill, if enacted into law, will probably be upheld as constitutional.
We also oppose these two titles because they would not in any way contribute to the relief of present economic conditions, and might in fact retard economic recovery.
The original bill contained a title providing for voluntary annuities.
This was another attempt to place the Government in competition with private business. Under fire, this title has been omitted. It was closely akin to title II. In fact, it had one virtue that title II does not possess in that it was voluntary while title II is compulsory.
These titles impose a crushing burden upon industry and upon labor. They establish a bureaucracy in the field of insurance in competition with private business.
They destroy old age retirement systems set up by private industries, which in most instances provide more liberal benefits than are contemplated under title II.
Appended hereto is a table showing the total taxes imposed under titles VIII and IX.
The minority membership of the Ways and Means Committee have at no time offered any political or partisan opposition to the progress of this measure, but on the contrary have labored faithfully in an effort to produce a measure that would be constitutional and that would inure to the general welfare of all the people.
SUPPLEMENTAL VIEWS OF MR. KNUTSON
While I concur in a general way with the conclusions of my colleagues of the minority, there are certain provisions of the bill so obnoxious to me that I cannot support it. My reasons for voting against the measure are as follows:
1. It is obvious from the provisions of this bill that it cannot be made effective for several years, hence it will be a bitter disappointment to those who have looked hopefully to this administration for immediate relief.
2. The measure is wholly inadequate and therefore will not give the result sought to be obtained.
3. The age limit of 65 is too high to give the needed relief. The limit should be fixed at 60, which would help the unemployment situation materially and at the same time care for a large number now out of work and who by reason of age are unemployable.
4. The old age pension to be granted under H. R. 7260 would be wholly inadequate in the relief of distress. The amount paid would be so small that its effect upon business would be negligible.
5. The administering of this law will result in discrimination. People living in States that are bankrupt, or nearly so, will receive absolutely no benefits from this legislation. These people must be taken care of by the National Government.
6. The two pay roll taxes which the bill imposes will greatly retard business recovery by driving many industries, now operating at a loss, into bankruptcy, or by forcing them to close down entirely, thereby further increasing unemployment, which would greatly retard recovery.
7. Many small concerns having 12 or 15 employees would discharge enough employees to exempt them from the payment of the pay roll taxes which would yet further aggravate the unemployment situation.
8. The proposal to establish a new bureau to administer this law is indefensible and a needless expense to the taxpayers. In the interest of economy the administration of the law should be vested in the Veterans' Administration, which is equipped to handle this activity.