Why Worry? P. L. Poirot

WHEN CHARLES STEVENSON ques tioned "How Secure Is Your So cial Security?" in the October, 1967, Reader's Digest, he might have anticipated official response. Wilbur J. Cohen, Under Secretary of Health, Education, and Welfare, promptly obliged in the Congres sl:onal Record of September 27, 1967. What Mr. Stevenson could scarcely have predicted is that Washington's answer would sub stantiate the view that "social se curity insurance is in trouble." Not that Mr. Cohen said so direct ly, but what he said leads to that sad conclusion. In co-sponsoring the Social Se curity Amendments of 1967 in the House, Congressman John W. Byrnes had testified: I personally do not feel that the burdens imposed by this bill are greater than the taxpayers will be willing to pay. After all, today's tax payer is tomorrow's beneficiary. PAUL L. POIROT Apparently, the 24 (out of 25) members of the House Ways and Means Committee who signed the report on H.R. 12080 felt the same way. And so did other congress men, as indicated by the over whelming 415-3 House approval of the bill. All of this, implies Mr. Cohen, attests to the "actu arial soundness" of the social se curity program. The political pulse has been measured by experts and a taxpayer revolt is not antici pated. So, social security is as sound as the dollar, if that's any consolation to anyone over 30 who has seen the dollar lose 60 per cent of its purchasing power with in his lifetime.

To the complaint that the social security program puts a squeeze on the young, Mr. Cohen replies that it is not so: "Young workers as a group will get social security protection worth 20 to 25 per cent more than they will pay in social security contributions." What Mr. Cohen fails to men1968 WHY WORRY'! 47 tion is that the "20 to 25 per cent more" is a possibility only be cause he has not counted the matching half of the social secur ity "contributions" employers are compelled to pay. Even so, with just his own half of the tax, a young worker could have bought a government bond that yields a 33lf3 per cent return in about seven years, or put his money in a savings account at 414 per cent, where it would double in dollars every 1672 years. The harsh fact is that a young worker can hope to get back from social security about 40 per cent fewer actual dollars than he and his employer paid into it on his account. His tax dollars are spent as received and earn no interest for him at all.

When Mr. Cohen says, "Young workers could not buy compar able insurance protection from private insurance companies ... ," the reason ought to be plain: It's against the law to operate a pri vate insurance company that way. Not that the chain-letter fraud of paying off early entries from the contributions of latter-day-suckers hasn't been tried by Ponzi and numerous other schemers. But, so far as is known, every so-called in surance company that has tried to operate without reserves -levying against remaining policyholders to payoff each current claim - eventually has reached the point of no return and has failed. That the so cial security program has survived for 30 years in the United States may be explained by the fact that new entrants are continuously drafted, with no dropouts allowed. Each taxpayer is drafted into the program for the duration of his productive and taxable lifetime.

Mr. Cohen is quite right, of course, when he says that a com pulsory social security program of this type, with prior claim to every one's future earnings, does not need and should not be expected to build up $350 billion or more of reserves. And he adds, "The 350 billion re ferred to is the amount that would be needed - if social security were a private, voluntary insurance pro.. gram - to payoff all obligations on the assumption that there would be no new entrants into the system." In other words, the $350 billion referred to is that part of the ob ligations to those presently covered by social security which will have to be paid by those "joining" later. That makes it reasonably clear why new entrants could not be counted on if they had any choice in the matter. The "soundness" of social security rests upon its compulsory nature. Anyone who endorses com pulsion as the best policy, despite Mr. Cohen's assurances, well might worry about what will happen to him in his old age. ~ A GROWING ASSORTMENT of indi viduals in the United States, strange as it may seem calling themselves liberals or libertarians, are insisting that not enough view points and opinions are making their way into the American press.