Evening Star Newspaper, September 28, 1936, Page 11

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Ave. NOxth 1341 Duncan Phyfe Sofa, Pair R— Antique Duncan Phyfe Base Card Tables, Val. uable Imported Bri Brac, China, Glass, Paintings, Oriental Rugs, Maohogany Chests of Drawers, Walnut Bed Room and Dining Room REGISTERED Fyrniture, Pionos, Ra- dios, Antique Costumes, Portable and Other Talking Machines, Upholstered Suites and Odd rs, 4-Piece Gilt Drawing Room Suite, Electric Fans, 0dd Beds, Springs, Mattresses, Trunks, Suit Cases, Clocks, Silverware, Electric Refrigerators, Studio Couches, Dra- peries, Lamps, Red Leather Charr, Breakfast Sets, etc. AT PUBLIC AUCTION AT SLOAN’S, 715 13TH ST. WEDNESDAY September 30th, 1936 At 10 AM. Terms: Cash . Sloan & Co., Inc., Aucts, DEEP-CLEANSE TWO MILLION FACE PORES Fragrant, mildly medicated Cuticura Soap contains special cleansing ingre- dients to help beautify the skin. Used freely and regularly with Cuticura Ointment, it aids in preventing clogging and irrita- tion of pores—a common cause of imples, blackheads and other com- &l:&xmn l"‘bm. Mlfi,—'m. CUTICURA soar ‘Smothers Pain Corns Shed Off Pain goes, s0 does corn, wher, fou tse E-Z Korn Remover. Soaks thru toughest skin and softens hardest corns until they shed right off—core and all. Easy to use—works fast. "Oh, boy! it's me for New York and the HOTEL GOVERNOR CLINTON, 80 I can take in all the World Series” (Subway right ia froat, direct fo both Polo Grounds and Yankee Stadium.) 1200 New Rooms Privatebath, shower, . culating ice water and servidor 53.00 uan“\“g 7th AVENUVE ond 3w STREET “ANOTT MANAGIMENT OPPOSITE PENN STATION Millions Do MORNING AFTER HEAD' Take PLUTO WATER Feel Like New OR LESS ) SOCIAL SECURITY GRAB BAG SEEN Pay Roll Tax of $5,000;000,- 000 in First Six Years Creates Worry. The far-reaching eflects of the new social security program, mow ing topic in the political fleld, are discussed here in the ninth of a series of erticles based on & first-hand survey of the operation of the system in several States, as well as of the central administration in Washington. BY BLAIR MOODY. By far the most hotly controverted point of the social security act is the huge old-age benefits “reserve fund.” And with good reason, for the pay roll taxes that will total $5,000,000, 000 in the next six years start at a rate double what would be uecessary it the highly questionable reserve policy were abandoned or modified. The initial levy of 2 per cent, spread equally on employers and employes, be 1 per cent if the Government had taken the advice given by nearly every competent authority who had any- thing to do with the program. This “double rate” runs for three years and then becomes triple the necessary level and remains “too high” for more than s decade, tracting needlessly from the people's pockets hundreds of millions of dol- lars which they could be using to purchase goods, stimulate employ- ment and enjoy life. Congress took this amazing and capricious action specifically to pile up a huge bookkeeping “trust fund,” which, in the next 34 years, will reach the staggering total of $47,000,000.000, and which never can be anything more than a ledger-sheet myth. 1Its theoretical purpose is to make the vast system of annuities “self-sup- porting,” but, when you boil it down to essentials, it becomes nothing more than an Alice in Wonderland device to enable Uncle Sam to shift his own I. O. U.'s from one pocket to the other and imagine himself rich. Political Grab Bag. It is, of course, highly desirable, if it will work, to enable wage earners and their employers to finance their own old age and “save the general taxpayer.” Pay-as-you-go financing of & program that costs little now and staggering sums later reeks with danger. If a great collective security scheme such as this cannot pay for itself within its own tax structure— if the amount of each year’s tax is to be juggled around and the size of the benefits lobbied back and forth—the conception of & great “insurance company,” publicly oper- ated for the public good, breaks down, and the whole thing becomes a political grab bag. But it is sensible, too, to determine whether the “reserve” plan of financ- ing, which involves laying aside large sums in the early years of the pro- gram (only $322,000,000 will be paid out of the $5,000,000,000 collected in the first six years), will work out in | practice as it does on paper. The basis of this scheme is that, when the reserve has been built up, it will remain permanently on the books of the Treasury as an asset and will “earn” interest. As benefit payments jump sharply, this interest would augment the revenues from the pay roll tax and prove sufficient to keep the system afloat without calling for -‘ separate subsidy from general taxa- tion. Thus, when the program is in full swing, only 60 per cent of the money disbursed would come from the pay roll taxes, which would then be run- |ning at 6 per cent. The other 40 | per cent, amounting to about $1,400.- ioon,ooo a year, would be “earned” by the trust fund. But—earned where Taxpawer Pays Interest. The law says the trust fund must be invested in Government bonds. And who pays the interest on the Government’s bonds? ‘That’s right, boys and girls, the ‘taxpayers! In other words, the wage earner would be “saved” from paying taxes to support the program from one pocket, by being forced to contribute from the other pocket. But this system involves not only absorbing the entire national debt in the reserve fund, but buying more Government bonds—by over $12,- 000,000,000—than now exist. In other words, the scheme would certainly precipitate a brand-new gov- ernmental spending spree, because it would virtually- force the borrowing and spending of money to jack up the national debt, so that the Gov- ernment would owe itself enough to collect enough interest from the tax- payers to make its annuity program “self-supporting.” Now, when the worker and his boss dig into their jeans for the pay roll taxes, they will cough up good, hard money that they could spend for a new radio or a pair of shoes. They will think they are doing it so the money can be laid aside for their fu- ture. But when it gets to Washington, all that will be laid aside for the future will be an entry on a ledger sheet. | The actual money will go to swell the Treasury’s current bank balance and cut down the amount it must borrow, because it would be silly to pay interest to outsiders when it can get all it needs from the reserve in its other pocket. “There are several things we could do with the reserve,” . Altmeyer, Security Board member. “We could buy in the Government debt, use the money for general ex- penses and cut other taxes, or embark But what will happen, ‘then, when the money has been spent and Government is holding » its own I. O. U.'s in the reserve and Joe Spivis, who has been pa: weekly contributions for all these years, comes around to collect his annuity? Will he be informed: “Sorry, but we used your money 10 years ago to reduce taxes”? Probably not. Unless the plan col- lapses, the taxpayers of that day will O. U. when it is presented. need 30 years stored in some Treasury “saved” for him. And since THE EVENING STAR, Young Washington which takes effect January 1, would | - James Howell, 11, may not grow is proving at the ‘New York Avenue how the work is done, He is the son o, Howell, 7 N street, and is a sizth-grade pupil at St. Aloysius School. Tnmormw Ruth Wright, daughter of Mr. and Mrs. John W. Wright, of Paul Junior High School.—Star Staff Photo. WAS demands could best by the reply that the sys- self-supporting “insurance that could not pay out more "1t would be & or none. The as-you-go plan have been better? “The trouble with that,” says Prof. stride, a pay roll tax of 12 per cent | § . instead of 6 would be required. That's too high.” The only alternatives to this 12 B per cent tax, Witte says, would be to reduce benefits and “gyp” the worker who had been contributing regularly | SPRYnhtvulor':néud-.G;ofrnm, strained ligaments. Can' uefies as you rubitin. also for euh, bruises. 70% absolute alcohol. Large size, 29¢—double size, 49¢. up to be a fireman, but he Pl:wuround that he knows Mr. and Mrs, Herbert payers of the future are going to have to pay the bill anyway, why make them do it through a device the principal effect of which is merely to make the tax burden now a lot higher than it needs to be? The answer to this question takes us behind the scenes of the New Deal while the act was being written. President Roosevelt, two months before his security message went to Congress, saild he was not sure this was “the time” for an annuity pro- gram. But his Committee on Eco- nomic Security, comprising four cabi- i net members and the Federal relief | sdministrator, and advised by the | most competent experts available, tu- | vored it. This committee proposed to flnnnu the program by a tax exactly like the | one now on the books, except that it | started at 1 per cent (instead of 2),! suggested that this levy be increased by !; per cent every five years, in- stead of 1 per cent every three years, until it reached a maximum of 5 per cent, instead of 6. It contemplated an eventual reserve of $15,000,000,000, which could have been handled easily by purchase of Government securities, but did not involve the economic dislocations that would result from | wiping out the debt entirely. Day for Contributions. This was & partial pay-as-you-go plan. It assumed that, during the early years of the system, when the curve of benefit payments would rise slowly, the pay roll tax would exceed payments from the fund. In 1965, when these lines would cross and the tax would be insufficient to meet an- nuity demands, Congress would have to contribute from other sources of taxation. We find Secretary of Labor Frances Perkins, chairman of the President’s committee, telling a Senate com- mittee: “We came to the conclusion that it was better, from the point of view of maintaining and building up the national income, not to build up the reserve, but to pay as you go.” But, 11 days later, Secretary of the Treasury Henry Morgenthau, speak- ing for the committee and the ad- ministration, told Congsess that the rates should be doubled, the huge reserve piled up, and the committee’s previous recommendation junked. So! Congress applied its rubber stamp. ‘What had happened in those 11 days was a disagreement in policy be- tween the committee and Mr. Roose-. velt. The President wanted s pro- gram he could tell the country was “self-supporting.” He didn’t want any one pointing out tha hile the co ] | AT YOUR RETA! ———————— mittee's pay roll tax would be onerous, | | lo¢ = ) N SPEC deficit for later years. He saw, ap- ‘n TRIAL JAR? it still left a tremendous prospective || parently, that this would give political I Print neme snd address critics & chance to rake the act as | “fine mow, but ruinous later.” | And then the President pointed out that, if Congress once opened the | flood gates of general taxation, the || Mailse SPRY,Ine.d £.37th St N.V.C. pressure to boost benefits would be“ Dest. W-18 \\MOMI LSBURY'S PANCAKes \ E How ABOUT $OM ¢oR pILLS REAKFAST 7°M°RRQW? Just add milk or water—stir— PILLSBURY'S PANCAKE FLOUR ALSO PILLSBURY'S BUCKWHEAT PANCAKE FLOUR MY MATERNITY NURSE TOLD ME ABOUT THIS NEW WALDORF TISSUE. IT SURELY I COMFORTABLE An Oil Burner with this m ark AS LOW AS $).16 per w““ Sold, guaranteed, installed, serviced and fueled by the makers of Essolene The new Essoburner has everything! 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