entitled to retirement benefits. To be considered disabled the child would have to be unable to engage in any substantial gainful activity by reason of a severe mental or physical impairment that is expected to continue indefinitely.

As in the case of a child under 18 years of age, monthly benefits would also be payable to the mother of a disabled child entitled to child's benefits as long as he is in her care.

Your committee does not believe that the difficulties that would be encountered in providing cash disability benefits for disabled workers, and that led the committee to delete from its bill the House-approved provisions for such benefits, would be encountered to the same extent in providing benefits for disabled children. The two provisions are very different in their implications and their results. In the first place, there are very few cases involved in the provision for disabled child's benefits. Second, the task of determining the existence of a mental or physical impairment of the required degree of severity and permanence would not be difficult because most cases would be those of children congenitally disabled, or disabled in early childhood. In such cases school and other records showing the history of the case and evidencing the degree and duration of the disability will be available, and the lack of a work record will also be substantiating evidence of the child's disability and dependence on the insured worker. Thus, even in cases where the child is, say, 40 years old at the time of application for benefits, the difficulty involved in determining that he was totally disabled before age 18 and has remained so will not be substantial.

If another Federal disability benefit or workmen's compensation benefit is payable to the disabled child, and if that benefit is larger the child's insurance benefit would not be paid. If the child's insurance benefit is larger than the other disability or workmen's compensation benefit the child's insurance benefit would be reduced by the amount of the other benefit. The bill also provides that the benefits would not be paid to any child who, without good cause, refuses vocational rehabilitation services offered to him. A child who accepts vocational rehabilitation services and takes a job while receiving such services would have 12 months to test his earning capacity without suffering loss of benefits.

It is estimated that about 20,000 children would be added to the benefit rolls in the first year under the provisions of your committee's bill. Annually, about 2,500 disabled children would be either currently attaining age 18 and continued on the benefit rolls or added to the rolls at age 18 or over when the insured person died or became entitled to old-age insurance benefits.

III. EXTENSION OF OLD-AGE AND SURVIVORS INSURANCE COVERAGE

A. GENERAL

The bill would extend coverage to several groups that are excluded under present law. Coverage would be provided for most of the selfemployed professional groups that are now excluded, for additional State and local government employees, and for additional Americans (including certain ministers) employed outside the United States. In addition, the bill makes old-age and survivors insurance coverage

available to more farmers: It provides that certain income derived by a farm owner or tenant that is now treated as excluded rental income shall be covered earnings if the owner or tenant, by agreement with the individual operating the farm, materially participates in the farm production; the present optional method which certain farm operators reporting their income on a cash basis may use to compute their income for social security purposes is modified, and is made available to farm operators reporting their income on an accrual basis and to members of farm partnerships. The bill also revises the basic coverage requirement for farm workers and in some instances extends coverage to farm workers not covered under present law.

B. SPECIFIC COVERAGE GROUPS ADDED

(1) Self-employed professional people

The bill would extend coverage to about 200,000 people who during the course of a year are self-employed in the practice of certain professions. The groups to whom coverage would be extended by your committee's bill are lawyers, dentists, chiropractors, veterinarians, naturopaths, and optometrists. The present exclusion of self-employed physicians (doctors of medicine) and osteopaths (doctors of osteopathy) would be continued. (The bill approved by the House would have covered osteopaths in addition to the self-employed professional groups newly covered by your committee's bill.) Anyone in one of the newly included professions who has net earnings of $400 or more from self-employment would be covered for taxable years that end after 1955. Coverage would be on the same basis as that provided for the self-employed people who are covered under present law. Your committee has received numerous requests for coverage from members of the professions included in the bill. Results of polls conducted by organizations representing these professions and by members of the Congress have been predominantly in favor of coverage. Your committee is convinced that a majority of the members of these groups wish to be included in the system and believes that coverage should be extended to them.

(2) Farm self-employment

Status of share farmers. Both the House and the Committeeapproved bills clarify the status under old-age and survivors insurance of individuals who operate farms under share-farming arrangements made with the owners or tenants of these farms. (Such farmers may be known locally by a variety of names such as "sharecroppers," "renters," "croppers," "tenants," and "lessees," or by other designations.) In specifying that these individuals are selfemployed and not employees for purposes of old-age and survivors insurance coverage, the bill gives statutory recognition to the interpretation being followed in administering the present law.

Your committee believes that this statutory recognition is necessary to dispel doubt as to the intent of the Congress since persons who operate farms under a share-farming arrangement with the owner or tenant have some characteristics of employees and some characteristics of self-employed persons. For example, in some instances the landowner may direct the share farmer to nearly the same extent, on an overall basis, as he does individuals who clearly are employees.

On the other hand, share farmers participate directly in the risk of farming; their return from the undertaking is dependent upon the amount of the crop or livestock produced. The provisions of the bill would remove any doubt as to whether the services performed by the share farmer are rendered as an employee or as a self-employed person by statutorily defining such services to be self-employment. This definition is believed to be consistent with the actual relationships existing under share-farming arrangements in the majority of cases.

Landowners participating in production. Under both the committee-approved bill and the House bill, the present exclusion from self-employment earnings of rentals from real estate would not apply to income derived by an owner or tenant of a farm from its operation by another individual if there is material participation by the owner or tenant in the farm production under an arrangement which provides for such participation. The bill thus would extend coverage under old-age and survivors insurance to certain farmers who, though not covered under the present law, have income from work and therefore are exposed to the type of income loss against which the program is designed to afford protection.

Under this amendment it is contemplated that the owner or tenant of land used in connection with the production of agricultural or horticultural commodities must participate to a material degree in the management decisions or physical work relating to such activities in order for the income derived therefrom to be classified as net earnings from self-employment.

Computation of self-employment income from agriculture.—Under present law, individual farmers who report their income on a cash basis have the following option in reporting their net earnings from agricultural self-employment for credit under old-age and survivors insurance: (a) If annual gross farm income is between $800 and $1,800, inclusive, either net earnings or 50 percent of gross income may be reported; (b) if gross income is more than $1,800 and net earnings are less than $900 either net earnings or $900 may be reported. If gross income is more than $1,800 and net earnings are $900 or more, net earnings must be reported. The optional method of reporting farm income is designed to make it unnecessary for a small farmer with low gross income to keep records that he does not ordinarily keep. It also enables both large and small farmers to maintain their old-age and survivors insurance protection during years when they have gross income of $400 or more regardless of whether they have any net earnings.

Your committee found that the option required revision so that more low-income farmers could secure protection under old-age and survivors insurance. Farmers whose annual gross farm income is less than $800 and whose net earnings are less than $400 a year cannot be covered under present law. The bill approved by your committee would permit those farmers with gross income of $400 or more to be covered. The bill would also enable farmers who have little, if any, net earnings to report their gross farm income up to $1,200 a year and thus to maintain their social-security protection at a higher level than that permitted by the option included in the present law.

Under present law the option can be used only by individuals who report their income on a cash receipts and disbursements basis; mem

bers of a farm partnership and individual farmers who compute their income for tax purposes on an accural basis must report their actual net earnings. This has created inequities because members of farm partnerships and accrual-basis farmers are, in the same way as other farmers, subject to hazards that are peculiar to farming-hazards that make farm income subject to sharp fluctuations and result in years of low net income or net loss. Such farmers need the same opportunity as other farmers to maintain their protection under old-age and survivors insurance during bad years.

The bill would permit farmers the following option in reporting their earnings from agricultural self-employment for old-age and survivors insurance purposes: (a) If annual gross income from agricultural selfemployment is between $400 and $1,200 inclusive, either net earnings or gross income may be reported; (b) if gross income from agricultural self-employment is over $1,200 and net earnings are less than $1,200 either net earnings or $1,200 may be reported. If net earnings are $1,200 or more, net earnings must be reported. The option would be available to members of farm partnerships and to individual farmers regardless of whether income is reported on an accrual or a cash basis. The following table summarizes the effect of the provisions of the bill for optional reporting for self-employed farm operators as compared with those of present law:

1 The option may be used if farm operator has gross income from farming of less than $400 and has selfemployment income from other covered activities which when added to gross income from farming equals $400 or more.

2 Option cannot be used.

(3) Certain employees of State and local governments who are under retirement systems

Under present law, employees of State and local governments may be covered under the old-age and survivors insurance system through voluntary agreements between the States and the Department of Health, Education, and Welfare. Employees whose positions are under a State or local retirement system (except policemen and firemen) may be included in an agreement after a favorable referendum among the members of the system.

The committee-approved bill includes special provisions related to certain employees who are under State or local retirement systems in several States.

One of these provisions would, for several States, make a change in the requirement in present law under which all members of a retire

ment system (with minor exceptions) must be treated as a single group for purposes of coverage. The present requirement is that all members of a retirement system coverage group must be covered if any are covered. In operation, this requirement has imposed an undesirable limitation upon the ability of the States to afford employees the combined protection of the basic Federal system and a State or local system. In some States no reduction in the protection afforded by an existing State or local retirement system can be made unless the employee specifically consents. As a result, if old-age and survivors insurance is to be extended to the retirement system members, it must be added on top of their existing protection in order to satisfy those members who prefer to retain the full protection of their existing system. In some cases the employees or the employing governmental unit may be unwilling or unable to pay the combined contributions that would be required under such an arrangement. The bill would provide that the State, at its option, may cover under old-age and survivors insurance only those persons now members of a retirement system who wish to be covered, provided that all new employees are covered compulsorily under old-age and survivors insurance. The provision would apply to the States of Georgia, Indiana, New York, North Dakota, Pennsylvania, Tennessee, Washington, Wisconsin, and to the Territory of Hawaii.

In some States the requirements that all members of a retirement system be covered as a group has prevented certain State employees from obtaining old-age and survivors insurance coverage because funds are not available to pay the employer's old-age and survivors insurance contribution on behalf of other State employees in the retirement system. Where State employees are compensated in whole or in part from Federal funds under title III of the Social Security Act (grants to States for unemployment compensation administration) Federal funds are available to pay the employer's contribution under old-age and survivors insurance. If the Federal old-age and survivors insurance law permitted, these employees could be covered immediately without waiting for action to provide the necessary funds for the employer's contribution on behalf of other State employees. The committee bill includes a provision which in certain States would permit these employees, either as a separate group or in a group with other members of the department in which they are employed, to hold a separate referendum and, if the referendum is favorable, to be covered by old-age and survivors insurance as if there were no other employees in the State retirement system. The provision would apply to the States of Georgia, North Dakota, Pennsylvania, and Washington and to the Territory of Hawaii.

Certain nonprofessional school district employees. Before old-age and survivors insurance became available to State and local government employees, several States included nonprofessional school employees, such as clerks and janitors, under their teachers' retirement systems. These systems, having been designed for employees who make a career of educational work, generally are not well suited to employees who move back and forth between school employment and other types of employment. The bill would permit certain States to cover nonprofessional school employees who are under a teachers' retirement system without a referendum and without covering the professional employees who are in the system, provided