Committee on Economic Security (CES)
Volume VIII. Committee Activities
C. MINUTES OF THE MEETINGS
MINUTES OF THE MEETINGS OF THE COMMITTEE ON ECONOMIC SECURITY
August 13, 1934
Time and place: 2:30 p.m.; office of the Chairman.
Members present: Secretary Perkins, Chairman; Mr. Alexander Holtzoff, representing the Attorney General; Mr. V.N. Valgren, representing the Secretary of Agriculture.
Others present: Edwin E. Witte, Executive Director of the Committee on Economic Security; Arthur J. Altmeyer, Assistant Secretary of Labor; T. H. Eliot, Counsel for the Committee.
1. The Chairman introduced the Executive Director, selected since the last meeting of the Committee. It was decided that the Executive Director is to act as Secretary of the Committee on Economic Security and also as Secretary of the Technical Board.
2. The Committee selected A.J. Altmeyer, Assistance Secretary of Labor, as Chairman of the Technical Board.
3. The Committee named the following persons to membership on the Technical Board: Walton Hamilton, Chairman, Advisory Council, N.R.A., A.H. Hansen, Tariff Bargaining Section, State Department, William Leiserson, Chairman, National Mediation Board, H.A. Millis, Member, National Labor Relations Board, Herman J. Oliphant, Counsel of Treasury Department, Stuart Rice, Assistant Director, Bureau of the Census, Department of Commerce.
These six members are in addition to the 3 members previously selected: A.J. Altmeyer, Assistant Secretary of Labor, Otto Beyer, Director of Sections of Labor Relations, Thomas Eliot, Counsel for the Department of Labor, Corrington Gill, Assistant Administrator, Federal Emergency Relief Administration, Alexander Holtzoff, Assistant to the Attorney General, Murray Latimer, Chairman of the Railroad Retirement Board, Isador Lubin, Commissioner of Labor Statistics, H.B. Myers, Assistant Director of Research and Statistics, Federal Emergency Relief Administration, Winfield W. Riefler, Executive Director, Central Statistical Board, H.R. Tolley, Assistant Administrator, Division of Program Planning, Agricultural Adjustment Administration, Victor N. Valgren, Senior Agricultural Economist, Jacob Viner, Assistant to the Secretary of the Treasury, Aubrey Williams, Assistant Administrator, Federal Emergency Relief Administration.
4. The Committee discussed the recommendations to be made to the President for membership on the Advisory Council. Two lists of possible members were submitted by Mr. Altmeyer based on suggestions received from various sources. One of these lists included over 100 names, distributed in such a way that there would be at least one representative from each state, while the other list embraced the names of some 40 persons, all of whom are known to have special interests in the problems of economic security. After discussion, it was decided that the longer list should be used as the basis for recommendation, and that the members of the Committee should be requested to submit to Mr. Altmeyer or the Executive Director within the next week the names of any persons not included on the suggested list whom they might believe would be useful to the Committee in securing public support for a comprehensive program for economic security.
5. The Executive Director presented a report on the beginning of the work of the staff.
The meeting adjourned at 3:15 p.m., the Committee having been called to the White House.
October 1, 1934
Time and place: 12 noon; office of the Chairman
Members present: Secretary Perkins, Chairman; Secretary Morgenthau; Secretary Wallace; Administrator Hopkins; Alexander Holtzoff.
Others present: A.J. Altmeyer, Winfield Riefler, Thomas H. Eliot, Jacob Viner, and Edwin E. Witte.
The Committee was presented with (1) the report of the Executive Director on the progress of the work of the staff, (2) the preliminary report of the staff; and (3) the preliminary report of the Technical Board.
The Committee discussed the general scope of a long-time program for economic security as outlined in this report of the Technical Board. It was the consensus of opinion that further thought and study must be given to the problem before even tentative recommendations can be made to the President. To this end it was deemed advisable that the Committee should endeavor to hold frequent meetings during the next months for the discussion of particular parts of the complete program for economic security and of special problems arising in connection therewith.
There was general agreement also, that a complete program for economic security cannot be put into operation at once, and that in any statements to the public it should be made clear that this is not the intention. The possibilities of enacting the necessary legislation for a complete and unified system of personal economic security in the next session of Congress, with provisions under which the different parts of such a program would come into affect as soon as business and fiscal problems warranted, however, are to be thoroughly explored and considered further by the Committee at a later date.
There was general agreement that the staff should continue its work along the general lines on which it has been working, and should outline in detail the various measures which it recommends for consideration, with estimates of costs by qualified actuaries. Any member of the Committee who desires phases of the general problem of economic security to be explored, which are not now being studied, is to advise the Executive Director.
The problem of exclusive federal administration as contrasted with state administration under standards to be prescribed by the federal government, as it arises in connection with unemployment insurance and old-age security, was discussed at some length. It was decided that a meeting of the Committee be held some evening in the near future for the consideration of this particular subject. At this time members of the Technical Board and of the staff who are strongly of the opinion that the exclusive federal administration is to be preferred are to be given an opportunity to be heard. In the meantime the counsel of the Committee is to ascertain the views of leading authorities on constitutional law on the constitutionality of an exclusively federal system of unemployment insurance and old-age insurance.
The advisability of a National Conference on Economic Security to be held at Washington about the end of October was considered, and it was decided that this is a question which should be submitted to the President. Before this is done, the Executive Director is to submit to the Chairman a tentative outline of the program of such a conference.
The Committee adjourned at 2 p.m.
November 9, 1934.
Time and place: 12:15 p.m.; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Morgenthau; Secretary Wallace; Administrator Hopkins; Alexander Holtzoff.
Others present: A.J. Altmeyer, Winfield R. Riefler, Alvin H. Hansen. Isador Lubin, Jacob Viner, Thomas H. Eliot, Edwin E. Witte, Bryce Stewart.
1. On the recommendation of the Technical Board, Mr. E. Willard Jensen, Executive Secretary, Business Advisory and Planning Council of the Department of Commerce, was added to the membership of the Technical Board.
2. The Executive Director presented a report on the plans for the National Conference on Economic Security and the meetings of the Advisory Council and the several advisory medical committees which will be held the two weeks following the National Conference. The members of the committee were urged to attend the Conference and also some of the meetings of the Advisory Council, and to arrange to have a representative at such meetings as they could not personally attend.
3. The committee received and considered a report of the Technical Board on the major alternative plans for the administration of unemployment insurance. This report was discussed at some length. Mr. Bryce Steward presented the case for an exclusively national unemployment insurance system and was supported by Dr. Lubin. Mr. Riefler and Dr. Viner presented considerations in favor of a cooperative federal-state system. The Committee then unanimously decided that it is inadvisable at this time to try to develop an exclusively national system of unemployment insurance. All of the members also expressed preference for the Wagner-Lewis method for securing a cooperative federal-state system, provided that under this system it is possible to have all unemployment reserve funds held and invested by the federal government and that a reinsurance fund be set up to give greater security than is possible under independent state funds standing alone.
4. The Committee decided that it will hold weekly meetings hereafter at noon every Friday.
The Committee adjourned at 2:00 p.m. to convene again at noon on Friday, November 16, in the office of the Secretary of Labor.
November 27, 1934
Time and place: 12 noon; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Wallace; Administrator Hopkins; Mr. Jacob Viner, representing the Secretary of the Treasury; Alexander Holtzoff.
Others present: A.J. Altmeyer, Winfield Riefler, Murray Latimer, Thomas H. Eliot, Mrs. Barbara Armstrong, and Otto C. Richter, of the staff of the Committee; Edwin E. Witte.
The Executive Director presented a report on the progress of the work of the Committee since the last meeting. Discussion developed concerning the necessity continuing the work of the Committee after its report has been made to the President. There was general agreement that the Committee ought to be continued until the close of the next session of Congress, and that it should actively assist the states in preparing and securing the passage of legislation necessary to supplement the federal economic security legislation.
Miss Josephine Roche, Assistant Secretary of the Treasury, was elected a member of the Technical Board. Dr. Viner announced his resignation from the Technical Board, effective December 1, which is necessitated by his leaving the government service within a few weeks. The Chairman expressed appreciation of the Committee of the very helpful services of Dr. Viner as a member of the Technical Board and of its Executive Committee.
Discussion then developed over the preliminary recommendations on old-age security presented by the Executive Director and his staff. The report made by the Executive Director was gone over in detail and the recommendations outlined were unanimously approved in principle, with instructions to the director to have a bill drafted incorporating the proposed recommendations. The only change from the recommendations of the Staff deemed advisable by the Committee concerned the coverage of the old-age insurance system. It was felt that this system should include agricultural workers and domestic servants on the same basis as other employees, and that state and local governmental units should have an option as to whether they wished to bring their employees under this system or not.
The Chairman brought up the matter of publicity regarding the recommendations made by the several advisory bodies to the Committee. It was the opinion of all members present that no publicity should be given to any of the proposals which the Committee has under consideration, until the Committee's report has been filed by the President and released by him.
It was decided that the next meeting of the Committee shall be held on Tuesday, December 4, beginning at 12 noon.
The Committee adjourned at 2:00 p.m.
December 4, 1934
Time and place: 12 noon; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Wallace; Alexander Holtzoff; Aubrey Williams, representing the Federal Emergency Relief Administrator.
Others present: Jacob Viner, Josephine Roche, Edward McGracy, A.J. Altmeyer, Winfield Riefler, Katherine Lenroot, Edwin E. Witte, Edgar Sydenstricker and Dr. I.S. Falk, of the Staff of the Committee on Economic Security.
At the suggestion of the Secretary of Agriculture, the minutes of the last meeting of the Committee were corrected to indicate that while the Committee felt that employees in agriculture and domestic service should be brought under the old-age insurance system, it will be necessary to devise special machinery for accomplishing this purpose.
The Committee then considered the recommendations presenting by the Executive Director and the staff of the Committee on "Risks to Economic Security Arising out of Ill Health", which were prepared after consultation with the Medical, Dental, Hospital, and Public Health Advisory Committees.
The recommendations made relating to the extension of public health services were approved in principle, but it was decided that they should be recast in such a way that they will be presented to the President as statements of principles rather than as requests for specific appropriation. It was also deemed advisable to make it clear that the allotment from F.E.R.A. funds to local health departments which is recommended is to be for additional work incident to the present emergency, rather than for the ordinary work of these departments; also that it is inadvisable to ask for the allotment of F.E.R.A. funds for medical services to persons on work relief.
The Committee also approved in principle the statement prepared by the staff relating to social insurance against the cost of sickness, with the understanding that no commitment can be made at this time, prior to the report of the Medical, Dental, and Hospital Advisory Committees in favor of compulsory health insurance.
The Committee then considered the report on "Security for Children" which was prepared by the United States Children's Bureau, at the Committee's request, in cooperation with the Advisory Committee on Child Welfare, and which was also endorsed by the Executive Committee of the Technical Board.
The Committee approved in principle the recommendations relating to a child and maternal health program, but again instructed the Executive Director to recase these recommendations in the form of a statement of principles, rather than as a request for specific appropriations. The Committee similarly approved the recommendations relating to federal participation in state and local services for the protection and care of homeless, dependent, and neglected children, and children in danger of becoming delinquent, and for federal participation in mothers' pensions.
The Committee discussed the progress of the work of the Advisory Council on Economic Security. To facilitate the work of the Committee, the Executive Director was instructed to advise the Council that the Committee deems it necessary to make its report on unemployment insurance to the President immediately after his return to Washington, and to ask the Council to present its recommendations to the Committee at a meeting to be held on Friday, December 7. The Executive Director was also instructed to submit to the Advisory Council a list of questions dealing with unemployment insurance, on which the Committee particularly desires its advice, and to present to the Council at its later meetings during this week all other subjects on which the Committee expects to make recommendations.
The Committee adjourned at 2:45 p.m. to meet again on Friday, December 7, at 12:00 noon.
December 7, 1934
Time and place: 12:00 noon; office of the Chairman.
Members present: Secretary Perkins, Chairman; Administrator Hopkins; Josephine Roche; Alexander Holtzoff; Louis Bean representing the Secretary of Agriculture.
Others present: A committee of the Advisory Council on Economic Security consisting of Frank P. Graham, chairman, Miss Grace Abbott, Marion B. Folsom, William Green, Paul Kellogg, Morris E. Leeds; A.J. Altmeyer, Edwin E. Witte, Thomas H. Eliot, Bryce Stewart.
Through its Committee, the Advisory Council presented its recommendations on some of the major issues arising in connection with unemployment compensation. The report of the Council was as follows:
"Recommendations of the Advisory Council on Some of the Major Issues in Unemployment Compensation":
"In presenting these recommendations, the Advisory Council assumes that unemployment compensation is to be developed along the lines of a cooperative federal-state system, in which the federal government is to levy a uniform tax on industry to induce action by the states, and the states will be responsible for the actual administration of benefits. The Council also assumes the desirability of allowing wide latitude for experimentation by the several states, subject, however, to the condition that all reserve funds must be deposited in the Federal Reserve Banks and invested and liquidated under rules and regulations to be made by the same agency which is responsible for the credit policies of the government.
"Coverage. The Coverage of the unemployment compensation at is to be compulsory for all employers with six or more employees, including those engaged in agriculture and in domestic service, but excluding interstate carriers if a special system for unemployment compensation to the employees of such interstate carriers is established. Public construction work done by contractors is to be included within the compulsory coverage on the same basis as other work carried on by private employers. Educational, charitable, and religious institutions are likewise to be included. Only the first $50 of the weekly pay of employees included under the act is to be subject to the federal excise tax.
"Contributions. The federal law is to impose a payroll tax of 3 per cent on employers subject to the act, beginning with the year 1936, but with a proviso that if in the year 1935 the index of production of the Federal Reserve Board is less than 90 per cent of the index of production of the index for 1926, the rate of tax in the year 1936 shall be only 1 per cent; (before arriving at this rate of payroll tax, the Council rejected a proposed rate of 5 per cent by a vote of 7 to 10, and a proposed rate of 4 per cent by a tie vote of 9 to 9, after which the rate of 3 per cent was agreed upon by a vote of 15 to 3). No contributions from employees are to be required in the federal act, but the states are to be free to require contributions by employees if they so desire. No contributions are to be required from general federal revenue. It is suggested, however, that in the report of the Committee, as well as in any model bill which may be recommended, attention is to be called to the fact that more adequate benefits can be paid if contributions are increased, without specifying whether these increased contributions are to come from employers, employees, or the government.
"Benefits. In the determination of benefits, the principle is to be followed that unemployment compensation should not attempt to create a fund which will remain solvent and entirely self-supporting during a period of as severe and prolonged depression as that through which we have passed. Unemployment compensation should not be made to carry the entire load of depressional unemployment, but rather should be directed toward the unemployment of normal times. The benefits to be recommended in the model bill and in all actuarial calculations made public should be based on the experience of the period 1922 to 1930, rather than of the period from 1922 to 1933. In such calculations benefits of 50 per cent of the weekly wage, subject to a maximum of not less than $15 and a waiting period ranging from two to four weeks are to be assumed. The standard maximum length of benefits is to be fixed in accordance with the calculations of the actuaries, but provisions are to be included under which a longer period of benefits is to be allowed to employees who have a long employment record during which they have not drawn upon the unemployment insurance funds. Wide latitude, however, is to be allowed to the states, subject to the minimum standards prescribed in the federal law, to make variations as to waiting periods, rates of benefit, ratio of number of weeks' benefits benefit to weeks of employment, and other factors regarding benefits.
"Industrial and House Funds Within a Single State. States are to be permitted freedom to establish wither exclusive pooled unemployment insurance funds or to remit industrial and house funds. Industrial and house funds, however, are to be permitted only on condition that the state law provided either (1) that the companies exempt from the contributions to the pooled state fund must guarantee payment of the full benefits at which employees may become entitled under the law, without any reduction by reason of the fact that their reserve accounts become law, and that they establish to the satisfaction of the state authorities that they have sufficient assets not less than 15 per cent of their annual payroll to actually guarantee benefits, or (2) that such companies contribute at least 1 per cent on their payrolls to the state fund, with a right to share in this fund in the event that their own reserve accounts run low, such that they establish financial responsibility to the satisfaction of the state authorities.
"Interstate Industrial and Company Funds (Accounts). Interstate industrial and company funds, except as otherwise specified, from the laws of the states in which they operate and subject to federal control, are to be permitted, subject to the following conditions: (1) Only industries and employers who have a substantial number of employees in each of two or more states, shall be permitted to establish interstate funds. (2) Interstate industrial and company funds must make a contribution of 1 per cent on their payroll to the pooled state funds of states in which they operate having such funds. (3) Interstate industrial and company funds must give as liberal benefits in each state in which they operate as required by the law of that state. (4) Interstate industrial and company funds shall be exempted from other requirements of the employment compensation authority. (5) Interstate industrial and company funds may be set up only with the approval of the federal administrative agency.
"State Transfers of Employees. The principle that employees who have unused benefit credits should not lose these credits because they change their employment from one state, industry, or house fund to another, was recognized, but it was felt that no plan to carry out this principle can be worked out off-hand. It is recommended that the federal administrative agency be instructed to study this problem and adopt rules for carrying out the express policy prior to the time when benefits actually become payable.
"State Administration. The federal law is to require that states must accept the provisions of the Wagner-Peyser act and provide for the administration of unemployment compensation through the public employment offices. All personnel connected with the administration of unemployment compensation is to be selected on a merit basis, under rules and regulations to be prescribed by the federal administrative agency. It is also to be provided in the federal act that the state administrations must furnish such statistics and reports to the federal agency as it may require.
"Other Problems. The Council is considering various other aspects of unemployment compensation, including the type of the federal law, the organization of the federal administrative agency, standards to be written into the federal legislation, the probationary period, and guaranteed employment. It is requested that another opportunity be accorded the Council to report its recommendations upon themes and other aspects of unemployment compensation."
Discussion developed uncertainty regarding the interpretation of the Council's recommendation on industrial and plant funds (accounts), and the Committee of the Council itself asks that this subject be referred back to the Council for further consideration.
There was some discussion also over the proposed coverage of the unemployment compensation act. The sentiment was expressed that the coverage should be as exclusive as it could possibly be made, and should, if possible, parallel that of the old-age insurance system.
Question was also raised regarding the recommendation that the unemployment reserve funds be deposited in the Federal Reserve Banks. It was suggested by a member of the Committee that the requirement should be that these funds should be deposited in the Treasury.
December 18, 1934
Time and place: 12:00 noon; office of the Chairman.
Members present: A.J. Altmeyer, representing the Secretary of Labor; Administrator Hopkins; Secretary Wallace; Josephine Roche and Allen Sweezy; Alexander Holtzoff.
Others present: Edwin E. Witte and Thomas H. Eliot.
The Secretary delivered to each member of the Committee a copy of the report of the Advisory Council as approved at the final meeting of the Council held on Saturday, December 15.
The Committee considered major questions of policy which remain to be determined in connection with the recommendations to be made on unemployment compensation. The questions discussed and the action taken was as follows:
Time of Taking Effect. It was decided to recommend that a payroll tax to be levied by the federal government in connection with the unemployment compensation scheme shall take effect January 1, 1936. The rate of tax in the first year is to be 1 per cent, if during the 12 months ending October 31, 1935, the monthly index of production of the Federal Reserve Board shall average less than 85 (1923 - 1925 = 100); 2 per cent if such average is more than 85 but less than 95; and 3 per cent if more than 95. In the second year and thereafter the rate of tax is to be 3 per cent, regardless of any production index. An official determination of the average of the monthly index of production in the 12 months ending October 31, 1935, is to be made by the Governor of the Federal Reserve Board prior to January 1, 1936, and certified to the Secretary of the Treasury.
Employee Contributions. Discussion developed agreement that no provisions for employee contributions should be written into the federal law. In the model state bill there are to be alternative provisions on this point, to fit the situation (1) where employee contributions are desired, and (2) where no employee contributions are wanted. In the report of the Committee and in advice given the states attention is to be called to the fact that the 3 per cent contribution rate will allow benefits for only a relatively short period, and that if longer periods of benefits are desired, employee contributions should be considered.
Interstate Industry and Plant Funds. Discussion developed doubt as to the wisdom of permitting interstate industry and plant funds exempt from state laws and subject to exclusive federal regulation. No final decision was reached, however, regarding the wisdom of permitting such interstate industry and plant funds.
Type of Federal Law. Discussion of the type of federal law to be recommended developed agreement that the differences between the Wagner-Lewis and subsidy types of law are relatively slight. All members also recognized that the so-called subsidy type is misnamed, as it does not involve a subsidy or grant-in-aid as these terms are usually understood, but merely a different method of collection of the tax than does the Wagner-Lewis bill. No final decision was reached on the type of law to be recommended.
The Committee adjourned at 2:00 p.m. to convene again tomorrow December 19, at 11:30 a.m.
December 19, 1934
Time and place: 12:00 noon; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Wallace; Administrator Hopkins; Josephine Roche; Alexander Holtzoff.
Others present: A.J. Altmeyer, Thomas H. Eliot, Edwin E. Witte, Allen R. Sweezy.
The Secretary presented to the members of the Committee copies of the conclusions received from several members of the Advisory Council stating their position in favor of employee contributions and of industrial and plant reserves in a system of unemployment compensation. This conclusion was discussed and considered, but no further action taken on the suggestions contained therein.
The Committee continued its discussion of the type of federal law to be adopted. There was general agreement that the term "subsidy plan" is a misnomer and that there is no essential difference between the so-called Wagner-Lewis and subsidy types of unemployment compensation laws except as to the manner in which the unemployment reserve funds come into the Treasury. No final decision was reached as to the type of plan to be advocated.
There was also discussion of the federal agency which should be set up for the administration of unemployment compensation and old-age insurance. Consensus of opinion appeared to be that since these forms of social insurance relate primarily to industrial workers and must be closely connected with the employment service, they should be connected with the Department of Labor, but no decision was reached upon this point.
The Committee adjourned at 2:00 p.m., to convene again on call of the Chairman.
December 28, 1934
Time and place: 12:00 noon; office of the Chairman.
Members present: Secretary Perkins, Chairman; Administrator Hopkins; R.C. Tugwell, Undersecretary of Agriculture; Josephine Roche; Alexander Holtzoff.
Others present: Edwin E. Witte, Thomas Eliot, Allen Sweezy.
The Committee discussed the conditions under which industry and company reserve and guaranteed employment plans are to be permitted in state laws, and the conditions under which employers maintaining such reserve accounts or guaranteed employment plans shall be entitled to credits against the federal tax additional to the actual amounts paid into their reserve accounts. It was decided that the provisions as outlined in the revised tentative draft of the report of the committee prepared by the secretary shall stand, but with the further provision that no additional credits are to be allowed in any case until after five years.
The Committee also considered the basis on which the federal tax is to be computed and decided that this basis is to be the employer's entire payroll without any exceptions and without limitation to the first $50.00 of the wage or salary of any employee, as was suggested in the tentative draft of the Committee's report.
The Committee then considered the method of procedure to be followed in getting its report into final form. It was decided that the Chairman is to appoint a subcommittee which is to go over the revised draft of the report prepared by the Secretary and to make such changes as it deems advisable.
The Committee adjourned at 2:00 p.m. to meet again on call of the Chairman, after the subcommittee has completed its revision of the report.
January 7, 1935
Time and place: 2:30 p.m.; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Morgenthau; Secretary Wallace; Aubrey Williams, representing the Federal Emergency Relief Administrator.
Others present: Edwin E. Witte, A.J. Altmeyer, Josephine Roche,, Allen Sweezy.
Secretary Morgenthau presented a number of comments on the revised draft of the report of the Committee on Economic Security, of which copies had been supplied to all members by the Secretary of the Committee. Matters requiring material changes in the report dealt with in these comments were the following:
(1) Employee contributions in unemployment compensation: the Secretary stated he strongly favored employee contributions and that he would like to have his position upon this point made clear to the President.
(2) The Secretary urged that the report should make it clear that under the compulsory old-age annuity plan proposed, the government would in the early years of the plan contract a very considerable liability for unearned annuities and would increase its debt accordingly, although it would not have to make any contributions immediately for the payment of these annuities. He also expressed the view that this increased indebtedness of the government should be shown in all statements of the finances of the annuity system, and in the annual budgets of the government . All members of the Committee agreed that the report should be changed as suggested by the Secretary of the Treasury.
Secretary Wallace then presented a number of matters in which he felt that the report did not exactly express his views. Discussion developed that upon all points deemed material by the Secretary his objections involved emphasis and statement, rather than any disagreement as to principles. It was decided that the report is to be revised to meet the objections of the Secretary.
Mr. Williams, at the request of Administrator Hopkins, asked that there be left out of the report the recommendations relating to expenditures from F.E.R.A. funds for medical and hospital services. He also suggested that there be put back into the report a recommendation that all welfare activities of the federal government be centralized in a single department. These suggestions of Mr. Williams were included with the understanding that matters involving insurance on a contractual basis should not be considered welfare activities.
The Secretary of the Committee was instructed to prepare a revision of the report in accordance with the decisions reached at this meeting of the Committee and to submit the revised statements for approval to the members particularly interested.
The Secretary and the counsel were instructed to submit drafts of all bills, incorporating the recommendations of the Committee to the attorneys of the Treasury Department and the Department of Agriculture for their criticism and approval. At the suggestion of Secretary Wallace it was decided also that drafts of all bills embodying the recommendations of the Committee shall accompany its report to the President.
The Committee adjourned at 4:30 p.m.
February 15, 1935
Time and place: 4:30 p.m.; office of the Chairman.
Members present: Secretary Perkins, Chairman; Josephine Roche, representing Secretary Morgenthau; Alexander Holtzoff, representing the Attorney General; R.S. Tugwell, representing Secretary Wallace.
Others present: A.J. Altmeyer, George C. Haas, of the Treasury Department, Edwin E. Witte, Edgar Sydenstricker and I.S. Falk of the staff of the Committee on Economic Security, Dr, Nathan Sinai, and Dr. Michael Davis, associate members of the staff of the Committee on Economic Security.
Mr. Sydenstricker presented a preliminary draft of a report on "Risks to Economic Security arising out of Ill Health." This report presented the recommendations of the staff, prepared after meetings of the Medical, Dental, Hospital, and Nurses Advisory Committees, on the extension of public medical facilities and services and health insurance.
Dr. Davis in behalf of the staff explained in detail the recommendations relating to the extension of public medical services and facilities. Discussion developed general agreement with the recommendations of the staff, the only suggested change being that the studies proposed should be undertaken cooperatively by the Public Health Service and the Children's Bureau, under the general direction of Miss Roche.
The proposals regarding health insurance were presented in detail by Dr. Falk. The possibility was suggested that provisions for each benefit to cover wage loss due to illness be included in the pending Social Security Bill. It was suggested that if this benefit were combined with the old-age annuity system there would be a strong incentive for agricultural workers, domestic servants, and casual employees to report non-payment of contributions, so that it would become feasible to keep these classes of employees within the compulsory annuity system. In opposition, it was claimed that it is impractical to have a federal system of cash benefits for loss of employment through sickness and state administration of unemployment compensation.
Dr. Altmeyer suggested that the incentives desired can be secured through cooperative arrangements for the collection of contributions under state and federal laws, and the representatives of the Treasury Department were asked to ascertain from the Bureau of Internal Revenue whether they considered such cooperative arrangements practical and sufficient to warrant leaving agricultural workers, domestic workers, and casual workers within the scope of the compulsory annuity system.
The Committee adjourned at 7:15 p.m.
March 15, 1935
Time and place: 11:45 a.m.; office of the Chairman.
Members present: Secretary Perkins, Chairman; Secretary Morgenthau, Administrator Hopkins; Mr. Tugwell, representing Secretary Wallace.
Others Present: Mr. Altmeyer, Josephine Roche, Mr. Sydenstricker, Dr. Falk, Joseph P. Harris.
The Chairman asked Mr. Sydenstricker to present a brief review of the proposed health report to the President. Following this review, Mr. Altmeyer called attention to the parts of the report dealing with medical care for persons on relief and asked Mr. Hopkins to comment upon this. Mr. Hopkins pointed out that these recommendations as they stood in the tentative report were in conflict with the administration policy of discontinuing direct relief. He pointed out further that these recommendations were directed at administrative policy rather than legislation, inasmuch as the administration already had legislative authority to carry them out. He thought that the report should be addressed primarily too legislation. He did not object to the proposal for medical care for persons who were receiving public assistance, but pointed out that other special interest groups were constantly recommending the use of relief funds for other special purposes such as housing, dentistry, etc. He objected particularly to the specific parts of the tentative report recommending an allowance of $1 per day for hospital care from federal funds. It was agreed that the report should be changed to conform with these suggestions.
Mr. Hopkins next raised the problem of insurance against temporary disability, pointing out that in normal times illness is the most important cause for families becoming dependent upon public charity. He asked Mr. Sydenstricker to make a statement about the actuarial basis of a 1 per cent contribution rate upon payrolls for this purpose.
Mr. Sydenstricker stated that the proposal for a 1 per cent contribution rate upon payrolls was based upon very adequate statistical data covering thousands of families and years of study of sickness in this country. He said that we have more information in this country on the risks arising out of illness than any other country in the world before it adopted disability insurance.
Dr. Falk outlined the specific parts of the proposal of disability insurance, and submitted to the members the tentative draft of the amendment to the Social Security bill. He stated that .6 to .7 per cent of the payroll was needed to pay benefits to 26 weeks maximum duration, 50 per cent of wages earned, with one week waiting period, varying somewhat from state to state. He said that the statistical information was for the entire country and that the requirements of any particular state might be higher or lower. The proposed amendment provides for a federal fund of .3 per cent for two purposes: (1) reinsurance fund to safeguard the financial integrity of the state funds against epidemics, and unusual risk, and (2) for financing preventive or other medical work through allotments to the states.
There was a discussion of the reinsurance feature, particularly because it had been discontinued in the unemployment insurance. It was pointed out that the reinsurance feature would be conditional upon a state setting up an actuarially sound system.
Miss Roche raised the question as to whether the disability insurance should be submitted as an amendment to the Social Security bill now before Congress. This question was discussed at some length and was finally decided that it was a question of policy upon which the Committee could not attempt to pass.
It was moved by Mr. Hopkins that the report be approved substantially in its present form, subject to change by the Chairman and Mr. Sydenstricker, and submitted to the members for their signature. This was agreed to without vote.
Mr. Altmeyer called attention to the fact that the report recommended that the disability insurance cover all disability not compensable under state workmen's compensation laws. This would mean that disability insurance would cover industrial diseases in those states which have not enacted laws covering such diseases in the workmen's compensation acts. The Chairman objected to this proposal on the ground that industrial diseases should be covered in workmen's compensation laws, and employers thus forced to adopt preventive measures. Mr. Hopkins thought it inadvisable to cover industrial diseases unless they were compensable. No decision was reached on the point.
The meeting adjourned at 1:45 p.m.