Which r was the social security act apush

by WILBUR J. COHEN and ROBERT J. MYERS*

THE Social Security Act Amendments of 1950 became law on August 28, 1950, when President Truman affixed his signature to H. R. 6000. The new social security bill became Public Law 734 (81st Congress, second session).

In signing the bill, President Truman stated that "passage of this legislation is an outstanding achievement." He pointed out that "by making it possible for most families obtain protection through the contributory insurance system, and by increasing insurance benefits, the Act will ultimately reduce dependence on public charity. This measure demonstrates our determination to achieve real economic security for the American family. This kind of progressive, forward-looking legislation is the best possible way to prove that our democratic institutions can provide both freedom and security for all our citizens.

"We still have much to do before our social security programs are fully adequate. While the new Act greatly increases coverage, many more people still need to be brought into the old-age and survivors insurance system. Expanded coverage and increased benefits in old age insurance should now be matched by steps to strengthen our unemployment insurance system. At the same time, we urgently need a system of insurance against loss of wages through temporary or permanent disability. These and other vital improvements in our social security laws are needed in addition to the Act which I have signed today. I shall continue to urge action on this unfinished business and I know that the Committees of Congress are now preparing to give these matters serious consideration."

The amendments provide the first significant revision of the Social Security Act since the changes made by Congress in 1939. There are four titles in the new law: I-Amendments to Title II of the Social Security Act; II-Amendments to Internal Revenue Code; III-Amendments to Public Assistance and Maternal and Child Welfare Provisions of the Social Security Act; and IV-Miscellaneous Provisions.

Summary of Chief Provisions

The major provisions of the new social security law may be summarized briefly. They extend coverage and liberalize the benefits of the Federal old-age and survivors insurance program, broaden and liberalize Federal grants to the States for public assistance and for maternal and child health and child welfare services, and restrict the authority of the Secretary of Labor in connection with State unemployment insurance laws.

Old-Age and Survivors Insurance

The new law makes three important changes in the Federal old-age and survivors insurance program. First, coverage is extended to approximately 10 million additional persons, including the non-farm self-employed other than doctors, lawyers, engineers, and members of certain other professional groups. Regularly employed domestic and farm workers, a small number of Federal employees who are not covered under the civil service retirement program, and a few others--members of very small occupational groups--are also included; and workers in Puerto Rico and the Virgin Islands are covered. In addition to the automatic coverage extended to these groups, the opportunity to be included is extended to the 1.5 million people who work for State and local governments and are not under retirement systems and to about 600,000 employees of nonprofit organizations. Table I presents estimates of the number of persons in the newly covered groups.

The second major change substantially liberalizes the amount of benefits payable to individuals. Table 2 gives estimates of the average payments under the old law and the new law, while table 3 shows illustrative monthly benefits under the new law. For a retired worker the average benefit is increased from around $26 a month to $46 for persons who are on the rolls now and to around $50-55 a month for those who retire after the new law takes full effect. This increase means that, for a man and wife who are both aged 65, average benefits will be around $75-80 a month.

The new law also increases insurance benefits for widows and orphans. The average monthly benefit for a widow and two children will be increased immediately from about $50 a month to $90-95 and to $100-105 a month when death occurs after the new law takes full effect. The face value of life insurance in force under the law will be increased from about $85 billion under the old law to $190 billion immediately, which is almost as much as the face value of the life Insurance in effect at the present time in all the life insurance companies in the United States. When the new law becomes fully effective, in about 2 years, the face value of life insurance will be about $250 billion.

The third group of major changes provides for payment of benefits in cases in which no benefits were payable previously. Benefits will now be paid to dependent husbands and dependent widowers, to children of insured women under certain circumstances, and with respect to an individual who could not have met the insured status requirement under the old law but is insured under the more liberal requirements in the new law (table 4). Lump-sum death payments will be made, moreover, in the case of all insured deaths. Eligible beneficiaries may earn as much as $50 a month in covered employment and will receive benefits (as against a maximum on earnings of $14.99 under previous law); moreover, for those aged 75 or over there is now no withholding of benefits because of work in covered employment.

Public Assistance

Public Law 734 makes four significant changes in the public assistance provisions of the Social Security Act. Perhaps the most important is the addition to the Federal grants-in-aid program of a new category of federal grants-in-aid to the States for needy individuals who are permanently and totally disabled.

Another important change remedies a basic defect in the aid to dependent children program. Before, there was no provision for the need of the parent or other relative with whom the child was living. The new legislation includes the relative with whom the dependent child is living as a recipient for Federal matching purposes.

Third, the Federal Government will match expenditures for assistance to aged and blind persons in certain types of public medical institutions. Under the old law no expenditures made to persons in public institutions were matchable. Further, if the State plan includes provision for payments to persons in any private or public institution, the State must establish or designate some State agency that will be responsible for establishing and maintaining standards for such institutions. This requirement will raise the standards of those institutions that have been understaffed and underfinanced, that have been firetraps, and in which people have been badly treated.

Fourth, Federal matching funds will be available for direct payments made by the States to doctors, hospitals, or other persons furnishing medical care. Under previous law the Federal Government did not participate in the cost of medical care unless payment for such care was made directly to the assistance recipient. This new provision will make it possible to develop working relations with the medical profession, hospitals, public health officials, and other groups to improve the quality and quantity of medical care for the 5 million persons receiving assistance under the Social Security Act.

Maternal and Child Health and Child Welfare Services

Another major provision in the amendments authorizes increases in Federal grants for maternal and child health services, child welfare services, and services for crippled children. A total of $22 million had been authorized for grants to the States for the maternal and child health, child welfare, and crippled children programs under title V of the Social Security Act. This total is increased to $37 million for the fiscal year ending June 30, 1951, and to $41.5 million for each year there after.

The estimated level-premium costs of the new insurance program are shown in table 5. As will be seen from the table, the level-premium cost under the old law--taking into account 2-percent interest--is 4.50 percent of payroll. This amount is considerably lower than the cost estimated when the program was revised in 1939, largely because of the rise in the wage level during the past decade (higher wages result in lower cost as a percentage of payroll because of the weighted nature of the benefit formula).

Under the new law the level-premium cost of the benefits is increased to 6.10 percent of payroll. This figure must be adjusted slightly, however, for two factors--the administrative costs, which are charged directly to the trust fund, and the interest earnings on the present trust fund, which will be about $13.5 billion at the end of 1950. When these elements are considered the net level-premium cost of the amended law is shown to be 6.05 percent of payroll.

The additional Federal costs for the public assistance and maternal and child health and child welfare amendments are estimated at $177-220 million a year, as shown in table 6, which also notes the assumptions on which the estimates are based. These estimates may be high, because they do not consider the possible effect on the assistance programs of the old-age and survivors insurance amendments, which increase benefit amounts and make more persons eligible immediately for insurance benefits; as a result, some persons may be able to leave the assistance rolls and others may have their assistance payments lowered. On the other hand, should assistance rolls and the amount of the average assistance payments continue to increase as they have in the

Legislative History

Action in the House of Representatives

Under the Constitution, all revenue bills must originate in the House of Representatives. Since social security legislation involves taxes, it must be first introduced in the House. For this reason, on February 21, 1949, President Truman transmitted his recommendations and drafts of two bills to Mr. Doughton, Chairman of the House Committee on Ways and Means. The two bills were introduced in the House by Mr. Doughton and became the basis of Committee consideration. H. R. 2892 dealt with public assistance and child welfare services, and H. R. 2893 dealt with Federal old-age, survivors, and temporary and permanent total disability insurance.

After extended hearings the House Committee on Ways and Means on August 22, 1949, reported out a single bill, H. R. 6000, covering insurance, assistance, and child welfare services. The vote in the Committee was 23 to 2 for reporting out the bill. On October 3, 1949, Mr. Kean, a member of the Committee, introduced H. R. 6297, which carried out the minority views on H. R. 6000.

H. R. 6000 was considered in the House under a closed rule prohibiting any amendments from the floor except one motion to recommit the bill to the Ways and Means Committee. On October 5, 1949, H. R. 6297 was offered on the floor of the House of Representatives as a substitute for H. R. 6000 but was defeated by a vote of 232 to 112. Then, on the same date, H. R. 6000 was passed in the House by a vote of 333 to 14.

Action in the Senate

Since Congress adjourned shortly after the House action, it was not possible for the Senate to consider H. R. 6000 before 1950.

The Senate Finance Committee held extended hearings on social security and adopted a number of important amendments to H. R. 6000. The bill was reported to the Senate on May 17, 1950, and debate began on June 12.

There were 28 amendments offered from the floor of the Senate. Twelve were adopted, 15 were rejected, and one was eliminated on a point of order. Action on the most important of those adopted was as follows:

1. The increase in the maximum taxable wage base to $3,600, passed by the House but eliminated by the Senate Finance Committee, was restored.

2. The definition of "employee" was expanded slightly to include certain wholesale salesmen and agent-drivers.

3. Self-employed funeral directors and accountants were excluded from coverage.

4. Compulsory coverage was extended to employees of transit systems taken over, in whole or in part, from private ownership by State or local governments after 1936.

5. The provision, included in the House but eliminated by the Finance Committee, for Federal matching of payments under the aid to dependent children program to the mother or other adult relative caring for dependent children, was restored.

6. A provision was added to limit the authority of the Secretary of Labor in determining whether a State conforms to the Federal requirements in the Internal Revenue Code and the Social Security Act relating to unemployment insurance.

All the amendments adopted except the one relating to unemployment insurance were approved by the Finance Committee.

There were record votes on three amendments. An amendment by Senator Myers to increase to $4,200 the maximum wage base in Federal old-age and survivors insurance was defeated, 36 to 45. An amendment offered by Senator Long to provide Federal grants to the States for needy disabled persons was also defeated, 41 to 42. The amendment offered by Senator Knowland to require State court review in State unemployment insurance was adopted, 45 to 37.

The Senate passed H. R. 6000 on June 20 by a vote of 81 to 2. The Senate also passed a resolution, recommended by the Committee on Finance, for further study of the Social Security program by the Committee or "any duly authorized subcommittee thereof." The Committee is to determine the scope of the study, which is to include (but is not limited to) certain specified points. The first of these points is "the type of social security programs which are most consistent with the needs of the people of the United States and with our economic system, including study and investigation of proposed programs for a pay-as-you-go universal coverage system and the problems of transition to such a system." The other points listed for study are extension of coverage to farm operators and farm workers still outside the coverage of old-age and survivors insurance, the financing of the program, increased work opportunities for the aged, relationship of the program to private pension plans, and relationship to the care and rehabilitation of and income maintenance for disabled workers. The Committee is authorized to employ a technical and clerical staff and appoint advisors.

Action of the Conference Committee

The conferees of the House were Representatives Doughton, Mills, Champ, Lynch, Reed, Woodruff, and Jennkins. The conferees of the Senate were Senators George, Connally, Byrd, Millikin, and Taft. Senator George acted as chairman. The Conference Report was submitted to the House on August 1, 1950. Mr. Lynch did not sign the Conference Report because of his opposition to the Knowland amendment and to the deletion of the Division for permanent and total disability insurance.

Action on the major points of difference between the House and Senate bills that the Conference Committee had to reconcile is summarized below. Chart 2 gives a detailed description of the old-age and survivors insurance, public assistance, and maternal and child health and child welfare Divisions of the old law, the bill passed by the House and as passed by the Senate, and the final law.

Old-age and survivors insurance.-

Seventeen of the major differences between the House and the Senate versions of the bill concerned the insurance program. The final decisions on these points were as follows:

1. Elimination of the House provision for permanent and total disability insurance.

2. Elimination of the House provision for increment in the benefits for years of coverage under the program.

3. Elimination of the House provision specifically including tips in covered wages.

4. Coverage of some salesmen, some homeworkers, certain kinds of agent drivers, and certain other groups as employees. (Compromise between Senate and House.)

5. Exclusion of State and local government employees covered under retirement plans (coverage under voluntary agreement had been provided in the House version for all State and local employees).

6. Exclusion of certified, registered, and licensed public accountants, full-time practicing public accountants, naturopaths, architects, funeral directors, and all professional engineers from coverage as self-employed persons. (Senate provision.)

7. Inclusion of regularly employed agricultural labor. (Substantially the same as Senate provision.)

8. Inclusion of publishers under coverage as self-employed persons. (Senate provision.)

9. Inclusion on a compulsory basis of employees of certain transit systems taken over in whole or in par

by State or local governments after 1936. (Compromise between Senate and House.)

10. Provision for voluntary coverage of employees of nonprofit organizations through an election by the

employer and a statement that two thirds of the employees desire coverage. (Compromise between Senate

11. Increase in the second step in the benefit formula from 10 percent to 15 percent. (Senate provision.)

12. A substantial increase-77.5 percent in the average benefit for current beneficiaries. (Midway between Senate and House provision.)

13. Liberalization of the eligibility provisions to make it easier for persons to become insured for benefits during the next two decades. (Senate provision.)

14, Liberalization of the method of computing the "average monthly wage" for benefit purposes. (Senate provision.)

15. Payment of benefits to dependent husbands and widowers of insured women workers. (Senate provision.)

16. Liberalization of survivors insurance benefits with respect to deaths of insured married women. (Senate provision.)

17. Lump-sum death payment to be made for all deaths of insured persons. (House provision.)

On the eight chief points of difference in the assistance program, the decisions were:

1. Elimination of the House provision that would have increased assistance payments by providing a higher percentage of Federal funds under a formula weighted in favor of States making low payments.

2. Acceptance with amendments of the House provision for Federal grants to the States for the needy permanently and totally disabled.

3. Acceptance with amendments of the House provision extending Federal grants for public assistance to Puerto Rico and the Virgin Islands.

4. Elimination of the Senate provision for Federal matching of State supplementary old-age assistance payments on a 50-50 basis for persons who become insurance beneficiaries after the effective date of the bill.

5. Elimination of the Senate provision increasing the maximum payments for aid to dependent children in which the Federal Government would share from $27 to $30 a month for the first child and from $18 to $20 for each additional child.

6. Acceptance of the Senate provision for mandatory exemption of $50 of earned income for the blind, beginning July 1952.

7. Acceptance of the Senate provision for continuing the present maximum 5-year residence requirement for aid to the blind instead of the House requirement of 1 year.

8. Extending to 1955 the provisions in the House-approved bill for Federal grants to aid to the blind programs in Pennsylvania, Missouri, and Nevada. (Compromise between Senate and House.)

The following decisions were made on four major differences affecting other programs.

1. Increase in Federal grants for maternal and child health services from $11 million to $16.5 million annually (except that for the present fiscal year the grant is to be $15 million); for services for crippled children from $7.5 million to $15 million (for the present fiscal year, $12 million) ; and for child welfare services from $3.5 million to $10 million. (Compromise between Senate and House.)

2. Amendment of the child welfare program by adding the following Senate provision: "Provided that in developing such services for children the facilities and experience of voluntary agencies shall be utilized in accordance with child care programs and arrangements in the State and local communities as may be authorized by the State."

3. Continuation through 1952 of the loan fund within the Federal unemployment account, which permits advances to State unemployment insurance funds that run low. (Senate provision.)

4. Provision restricting the authority of the Secretary of Labor to withhold grants to States for administration of unemployment insurance in certain questions of compliance with the Federal Unemployment Tax Act and title III of the Social Security Act. (Senate provision.)

Adoption and Approval

During consideration of the Conference Report in the House of Representatives, Representative Byrnes, a member of the Ways and Means Committee, moved to recommit the Conference Report to the Conference Committee. Mr. Byrnes indicated that his motion to recommit was made in order "to try to close out any attempt to remove the Knowland amendment from the Conference Report." Mr. Lynch, also a member of the Ways and Means Committee, had indicated previously that if he were recognized he would offer a motion to recommit with instructions to the House conferees to strike out the Knowland amendment and insert permanent total disability insurance. Mr. Lynch did not have an opportunity, however, to present his recommittal motion since Mr. Byrnes was recognized to make his motion to recommit. On the parliamentary question of ordering the previous question the vote was 188 to 186, which thus prevented Mr. Lynch from amending Mr. Byrnes' recommittal motion. When this action had been taken, Mr Byrnes' motion was rejected.

The Report was adopted in the House of Representatives on August 16, 1950, by a vote of 374 to 1 and by the Senate the following day without a roll-call vote. The bill received President Truman's approval on August 28, 1950.

Basic Documents Relating to H. R. 6000

H. R. 2892, 81st Congress, First Session (see House Hearings).

H. R. 2893, 81st Congress, First Session (see House Hearings).

Hearings before the Committee on Ways and Means, House of Representatives, 81st Congress, First Session, on H. R. 2892 and H. R. 2893 (Parts 1 and 2).

H. R. 6000, 81st Congress, First Session, as introduced on August 15, 1949, as reported out on August 22, 1949, and as passed by the House of Representatives on October 5, 1949.

Report of the Committee on Ways and Means on H. R. 6000 (Report No. 300, 81st Cong., 1st sess.), August 22, 1949.

Actuarial Cost Estimates for Expanded Coverage and Liberalized Benefits proposed for the Old-Age and Survivors Insurance System by H. R. 6000, October 3, 1949 (House version), June 26, 1950 (comparison of House and Senate versions), and July 27, 1950 (final law). Prepared by Robert J. Myers, Actuary to the Committee on Ways and Means.

H. R. 6297, 81st Congress, First Session.

House debate on H. R. 6000, Congressional Record, October 4 and 5, 1949 (Vol. 95, Nos. 184 and 185).

Hearings before a Subcommittee of the Committee on Ways and Means, House of Representatives, 81st Congress, 1st Session, on Extension of Social Security to Puerto Rico and the Virgin Islands.

Report to the Committee on Ways and Means from the Subcommittee on extension of Social Security to Puerto Rico and the Virgin Islands, February 6, 1950.

Recommendations for Social Security Legislation, the Reports of the Advisory Council on Social Security to the Senate Committee on Finance, 949 (S. Doc. No. 208, 80th Cong., 2d Sess.).

Hearings before the Committee on Finance, United States Senate, 81st Congress, 2d Session, on H. R. 6000 Parts 1, 2, and 3).

The Major Differences in the Present Social Security Law, the Recommendations of the Advisory Council, , and H. R. 6000 (as passed by the House), printed in Part 1 of the Senate Hearings, pp. 2-18.

Report of the Senate Committee on Finance on H. R. 6000 (Report No. 669, 81st Cong., 2d sess.), May 17, 1950.

H. R. 6000 (in the Senate of the United States), 81st Congress, 2d Session, as reported by the Senate Finance Committee.

Senate debate on H. R. 6000, Congressional Record, June 12-20, 1950 (Vol. 96, Nos. 115-121).

Summary of Principal Changes in the Old-Age and Survivors Insurance System Under H. R. 6000, According to Conference Agreement. Prepared by Robert J. Myers, Actuary to the Committee on Ways and Means, July 25, 1950.

Summary of Principal Changes in the Social Security Act Under H. R. 6000 As Passed by the House of Representatives, As Passed by the Senate, and According to Conference Agreement. Prepared by Robert J. Myers, Actuary to the Committee on Ways and Means, July 25, 1950.

Conference Report on H. R. 6000 (H. Rpt. No. 2771, 81st Cong., 2d sess.), August 1, 1950.

House and Senate debate on Conference Report, Congressional Record, August 16 and 17, 1950 (Vol. 96, Nos. 162 and 163).

President's Statement, White House press release, August 28, 1950.

Chronology of Public Law No. 734 (H. R. 6000)

January 5, 1949- President Truman recommends revision of social security law in message on State of the Union.

February 21, 1949- President Truman sends letter and draft bills to Mr. Doughton.

February 21, 1949- H. R. 2892 and H. R. 2893 are introduced by Mr. Doughton.

February 28-April 27,1949- House Ways and Means Committee holds public hearings on social security legislation.

May 2-August 19, 1949- House Ways and Means Committee holds executive sessions.

August 15,1949- H. R. 6000 is introduced by Mr. Doughton.

August 22,1949- H. R. 6000 is reported out by House Ways and Means Committee.

September 29-October 3, 1949- House Rules Committee holds public hearings on closed rule on H. R. 6000.

October 3, 1949- H. R. 6297 is introduced by Mr. Kean.

October 4, 1949- House of Representatives passes closed rule on H. R. 6000.

October 4,1949- House begins debate on H. R. 6000.

October 5, 1949- H. R. 6297 is rejected as a substitute for H. R. 6000 on a motion to recommit, 112-232.

October 5, 1949- H. R. 6000 is passed by House of Representatives, 333-14.

January 17-March 23, 1950- Senate Finance Committee holds public hearings on H. R. 6000.

February 6, 1950- Subcommittee on Puerto Rico and Virgin Islands of House Ways and Means Committee files report recommending inclusion of those Territories in the insurance and assistance programs.

April 3-May 17, 1950- Senate Finance Committee holds executive sessions on H. R. 6000.

May 17, 1950- Amended version of H. R. 6000 is reported out by Senate Finance Committee.

June 12, 1950- Senate begins debate on H. R. 6000.

June 20, 1950- Senate passes H. R. 6000, 81-2.

July 17-August 1, 1950- Conference Committee holds executive sessions on H. R. 6000.

August 1, 1950- Conference Committee files report.

August 16, 1950- House of Representatives approves Conference Report.

August 17, 1950- Senate approves Conference Report.