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84TH CONGRESS

2d Session

SENATE

I

REPORT No. 213:3

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Work ocial Science

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SOCIAL SECURITY AMENDMENTS OF 1956

UNE 5 (legislative day, JUNE 4), 1956.—Ordered to be printed

Mr. BYRD, from the Committee on Finance, submitted the following

REPORT

together with
MINORITY AND INDIVIDUAL VIEWS

[To accompany H. R. 7225)

The Committee on Finance, to whom was referred the bill (H. R. 7225) to amend the Social Security Act to provide disability insurance benefits for certain disabled individuals who have attained age 50, to reduce to age 62 the age on the basis of which benefits are payable to certain women, to provide for continuation of child's insurance benefits for children who are disabled before attaining age 18, to extend coverage, and for other purposes, having considered the bill, report favorably thereon with amendments and recommend that the bill as amended do pass.

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I. PURPOSE AND SCOPE OF THE BILL The old-age and survivors insurance program is designed to provide partial protection against loss of earned income upon the retirement or death of the worker. Nine out of ten American workers can look forward to old-age and survivors insurance benefits for themselves and their families in their old age. Nine out of ten of the mothers and children of the Nation are assured of receiving survivor benefits if the family earner should die. The financing of the system is on a sound basis. Your committee recognizes, however, the responsibility for making improvements, as the need arises.

The following changes would be made under the committee bill: (1) Further extension of the coverage of the program

Your committee has consistently held the view that the coverage of the program should be as nearly universal as is practicable. Coverage would be extended by the committee's bill to additional groups,

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primarily certain professional self-employed persons. Modifications would be made in the coverage requirements for farmers and farm workers to take into account the practical problems that have arisen since they were brought into the program by the 1954 amendments. Changes would be made in the provisions on insured status and benefit computations to give the newly covered groups equitable treatment as compared with those brought in earlier. (2) Widows' benefits beginning at age 62 rather than 65

Most women who are widowed in their 50's or early 60's have been homemakers or have not been members of the paid labor force in recent years. Because of their age and lack of work experience, they have very little chance of employment. (3) Benefits for disabled children

The bill includes provision for payment of disabled child's benefits to the dependent disabled child of a deceased or retired insured worker if the child is permanently and totally disabled and has been so disabled since before he reached age 18. Such children are as dependent on their parents after attaining age 18 as before and therefore the committee believes it is important to fill this gap in the program by providing benefits for disabled children. Your committee does not believe that the serious difficulties involved in providing cash disability benefits for disabled workers, which are discussed below, apply to the provision of benefits for children disabled prior to page 18. Determination of disability generally would not be difficult because of the few cases involved. Most of the cases would be the result of congenital conditions or conditions existing since early childhood, including mental deficiency. (4) Provision related to the financing of old-age and survivors insurance

The financial soundness of a program as important to the economic security of the families of the Nation as old-age and survivors insurance must be carefully guarded. Your committee is recommending the establishment before each scheduled tax increase of an Advisory Council consisting of the Commissioner of Social Security, as chairman, and 12 representatives of workers, employers and the public to review the status of the old-age and survivors insurance trust fund in relation to the long-term commitments of the program and to report its recommendations. We are recommending also a change in the provision regarding the interest rate paid on special obligations issued to the trust fund. (5) Provision for suspending benefit payments to aliens outside of the

United States unless they are nationals of a country that would make payments to citizens of the United States after they had left

the foreign country to reside elsewhere The committee is concerned by the fact that some aliens have come to this country, served in covered employment for a short period, and have then returned to their native countries to live off their old-age and survivors benefits for the rest of their lives.

The bill would suspend the payments to any person not a citizen or national of the United States who becomes entitled to benefits after June 1956 if such a person remains out of the county for 3 full and consecutive months. The payments would be resumed if such a persons returns and remains in this country. However, in the interest

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Ciri-SOCIAL SECURITY AMENDMENTS OF 1956

of fairness and comity the committee thought it desirable to continue the payment of benefits to a citizen of a foreign country if that foreign country has a social insurance or pension system which permits payments to United States citizens in the event they leave such foreign country. 6. Minor improvements in the law designed to facilitate administration

or remedy anomalous treatment in certain cases The committee does not believe that the following proposals, which were included in the House-approved bill but are not in the committee bill, are necessary or desirable:

1. Provision for lowering minimum eligibility age for wives and women workers.-Lowering the eligibility age for women workers would have the undesirable effect of encouraging employers to lower their maximum hiring ages and compulsory retirement ages for women. Lowering the eligibility age for wives would be costly and there is not as great a need as in the case of widows, since the family has income from the husband's benefit.

2. Provision of cash disability benefits for permanently and totally disabled persons at age 50.-Your committee recognizes that prolonged and severe disability is a serious problem to the worker, his family, and the community. As the testimony before the committee has shown, however, there are important differences of opinion as to how the problem can best be met. Your committee has concluded, on the basis of the preponderance of the evidence submitted at the public hearings, that the adoption of a provision for paying cash disability benefits to insured workers under the old-age and survivors insurance program would not be desirable. Under the system now, cash payments are made only upon death or retirement. These conditions are easy to determine. Under the disability proposal, however, the primary condition for payment would be, in the terms of the bill, inability

to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long continued

and indefinite duration. These conditions for payment are much more difficult to determine. Monthly disability benefits have a completely different nature as compared with the present provisions for old-age benefits and survivor benefits. Lack of objectivity in determination of disability makes it both easier for the claimant to maintain, and harder for the administration to deny, the presence of qualifying disability. In many instances, physical disability does not necessarily produce economic disability, although this would in many cases be the tendency if monthly benefits were available.

In reaching this conclusion your committee has taken into account the significant progress that has already been made in meeting the needs of disabled workers. In 1950, when the question of disability benefits came before this committee, the committee rejected the proposal for paying cash disability benefits under the old-age and survivors insurance system. This position was sustained by the Senate. In conference with the House, a fourth category of assistance grants to States was approved-aid to the permanently and totally disabled. Since 1950, 42 States have begun operations under this program, some of them only recently. About 244,000 needy disabled persons are now receiving monthly assistance payments, which total about $165 million annually. Further, many other disabled persons or their children who are in need-over a half million of them-are receiving assistance payments under other federally aided programs of aid to the blind and aid to dependent children. Disabled individuals are also aided under State and local general assistance programs. In most of the States, therefore, provisions already have been made to meet the basic needs of those who cannot support themselves because of extended and serious disability.

Significant strides have been made, too, in the Federal-State program of vocational rehabilitation under the impetus of the 1954 amendments, which greatly expanded the program. Many witnesses who appeared before your committee expressed the belief that payment of cash disability benefits would in some cases, discourage rehabilitation.

The 1954 amendments to the Social Security Act included in the

survivors insurance rights of workers during periods of total disability. The freeze provisions will be helpful to many disabled persons in

viding higher retirement and survivor benefits, and in bringing more individuals promptly to the attention of State rehabilitation agencies.

More time is needed to develop more fully all of the existing programs for the disabled and to evaluate their results. In particular, it would be desirable to have more experience with the disability freeze.

Your committee has been impressed by the testimony of the many medical experts who have testified that many problems would be encountered in evaluating physical and mental impairments for purposes of determining eligibility for disability benefits.

Difficulties in determining elibigility, and other factors, lead to uncertainty as to the future costs of a cash disability program. Cost estimates in the field of disability benefits, as pointed out by the Chief Actuary of the Social Security Administration, are subject to a wider range of variation than are estimates for other types of benefits. The basic cost estimates which have been presented to the committee were based on high employment conditions; under low employment conditions, the cost would be significantly higher. The old-age and survivors insurance system is on a sound financial basis; your committee strongly believes that it must be kept so and should not be altered by adding a benefit feature that could involve substantially higher costs than can be estimated.

In view of all these considerations your committee has decided against including provisions for cash benefits to disabled workers.

3. Provision for increasing the contribution rates in the old-age and survivors insurance program.The improvements proposed in the committee-approved bill can be financed within the framework of the present tax schedule, under which contribution rates will be raised periodically until 1975, when they reach 4 percent on employee and employer and 6 percent on the self-employed.

Had the provisions of the House bill for payment of benefits to disabled workers at age 50 and to all insured women at age 62 been added to the committee bill, the contribution rates would have had

to be increased to 2% percent on employee and employer and to 3% percent on the self-employed beginning in January 1957. Such an increase would have required the taxpayers under the system to pay an additional $1.7 billion in each of the next 3 years or a total of approximately $5.1 billion in excess of the taxes prescribed in present law. Moreover under the House bill the tax rates would be raised periodically until 1975 when rates of 472 percent on employee and employer and 6% percent on self-employed would be imposed.

Your committee believes it would be unwise to burden the millions of covered workers with increased social security taxes at this time, as would be required under the House-approved bill. Substantial tax increases were made as recently as January 1, 1954, when the rate was increased, and January 1, 1955, when the taxable wage base was raised to $4,200. It seems much wiser to confine improvements in the program to those that can be absorbed within the present tax schedule.

II. Child's INSURANCE BENEFITS FOR CHILDREN WHO ARE Dis

ABLED BEFORE ATTAINING AGE 18 Under present law child's benefits are not paid to a child who has attained age 18. Your committee's bill would provide for the payment of benefits after age 18 to the dependent child of a retired or deceased worker if the child has been permanently and totally disabled since before age 18. The mother of the child would also be eligible for benefits under this provision so long as she continued to have the child in her care.

Your committee recognizes the situation faced by people who have the care of a child who because of a mental deficiency never grows up, or who because of a physical impairment requires constant care throughout his life. The suffering of these parents is the more acute because they are constantly concerned about what will happen to the child when the usual family income is cut off by the death or retirement of the wage earner. Under present law, when the father qualifies for monthly benefits upon retirement at age 65 or later, his child can get a benefit equal to one-half of the father's benefit provided the child is under age 18. The mother also gets a benefit. Benefits are also payable to the mother and young child when the father dies. In either case, however, benefits which the present law provides for a child stop when he reaches 18, regardless of whether the child continues to be dependent because of mental or physical incapacity. And a child who is over 18 when his father retires or dies cannot get benefits at all.

The House-approved bill would meet the first situation, where the disabled child is under 18 when the father dies or becomes entitled to retirement benefits. In this situation, the child would continue to receive his benefits after reaching 18 if he was still disabled. The mother caring for him would also continue to receive benefits. But this provision of the House bill would not meet the second situation where the disabled child is over 18 when the father dies or becomes entitled to retirement benefits. Your committee's bill would provide benefits for a child who has been totally and permanently disabled before attaining age 18, if the child is totally and permanently disabled and dependent upon the parent at the time the parent dies or becomes

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