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1 Social Security: Its Present and Future Fiscal Aspects: Digest [1] (1944)

handle is hein.tera/sityprefut0001 and id is 1 raw text is: DIGEST SOCIAL SECURITY Its Present and Future Fiscal Aspe In all postwar planning Social Security assumes an ever-growing importance. Yet its fiscal imp'ications for the future have never been adequately explored. The facts presented herewith are taken from a comprehensive study made during the past year and a half by the research staff of the Tax Foundation under the direction of Harley L. Lutz, Professor of Public Finance, Princeton University. The Tax Foundation is a non-profit organization devoted to the objective examination of problems of public administration as well as the impact of taxation on the nation's social and economic structure. This report presents for the first time a comprehensive, objective picture projected into the future, from 1945 to 1960 and in some cases to 1980, of what the taxpayers can expect to pay for social security, first, under the present laws and, second, under the system which would be estab- lished by enactment of the Wagner-Murray bill (Senate 1161). The report is in two parts. Part I. The first part of the report projects the future costs under the present social security system, and analyzes the old-age and survivors insurance and unemployment compensation benefits, both of which are financed out of payroll taxes, and examines the other federal features of our social security system, financed through a series of grat-ts to the states. Surmising that many people believed the sticial security system to be a guarantee against re- currence of a depression period, and that others considered it a device to prevent depression hard- ships, the report suggests that this faith might possibly be misplaced, since the most vulnerable part of the social security program is that relating to unemployment compensation, and there has not yet been a test of this weakest link. So far, according to the report, the program has brought a large stream of revenue into the Treasury in excess of the trickle of outgoing payments. On December 31, 1943, the total assets of the trust fund for old-age and survivors insurance were $4,820,458,000, and the unemployment trust fund had total assets of $5,146,745,000. It is an illusion,. the report says, however, to consider these sums as reserves. Old-Age and Survivors Insurance Estimates of receipts, expenditures and fund balances, from 1945 to 1980, based upon the schedule of taxes provided in the social security law, show a continuing wide margin of receipts over expenditures and a resulting accumulation of a huge fund balance over a period of years. As- suming that the present payroll taxes of one per cent each on employees and employers will rise to two per cent each in 1945, two and a half per cent each from 1946 to 1948 and three per cent each thereafter, the report anticipates a fund balance of $39 billion in 1960 and $65 billion in 1980. The total number of monthly beneficiaries under old-age and survivors insurance is expected to rise from 2,498,000 in 1945 to 6,465,000 in 1960 and 11,942,000 in 1980. Meanwhile estimated total receipts will rise from $2,306,000,000 in 1945 to $3,600,000,000 in 1960 and $4,077,000,000 in 1980, and estimated total expenditures will rise from $268,000,000 in 1945 to $1,716,000,000 in 1960 and to $3,435,000,000 in 1980. The rapid growth of the fund balance invested in federal government obligations presents, ac- cording to the report a grave issue of public policy. If the terms of the present law relative to tax rates and benefits operate without change, workers and ermployers will pay in taxes $37,836,000,000 more, to 1980, than the beneficiaries receive, after meeting the administrative costs.

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