Special Message to the Congress on Social Security.

To the Congress of the United States:

I wish to urge upon the Congress the necessity for action at this session to strengthen our system for the protection of our people from the hazards of economic insecurity. We must not let our concern with the pressing problems of post-war adjustment cause us to neglect the human needs of our people.

On several occasions during the past three years, I have recommended to the Congress the type of legislation which I believe should be enacted to strengthen our present social security system. The Congress has not acted on these recommendations. Instead, it is considering legislation which would actually remove the protection of our social security system from many persons now entitled to its benefits. I believe that instead of limiting coverage it should be expanded, and that a number of other improvements should be made.

I urge, therefore, that the Congress take early action on the following recommendations.

1. More adequate benefits under old-age and survivors insurance.

The benefits being paid under old-age and survivors insurance are seriously inadequate. They were adjusted last in 1939. Even then, the benefits in most cases replaced only a small part of the income that the worker or his survivors had lost because of his retirement or death. Earnings and the cost of living have risen sharply since that time and cannot be expected to return to prewar levels. Consequently, further adjustments in benefit rates are imperative.

People whose sole income is from social security payments have just about reached the breaking point. Many of them are widows of workers who were insured under our social insurance system, and others are parents in families receiving aid to dependent children. Many have retired on oldage insurance benefits; others are receiving old-age assistance. All of them face a desperate struggle in trying to procure bare necessities at present prices.

The present average payment for a retired worker is only about $25 a month, and is substantially less for dependents and survivors. If the insurance system is to prevent dependency upon public and private charity this amount is obviously far too low. I recommend that the Congress increase benefits by at least 50 per cent.

I also recommend that women be made eligible for old-age benefits at 60 years, rather than the present 65 years. Wives are usually younger than their husbands. In most cases, therefore, an insured worker cannot retire at 65 because it will be some years before his wife becomes eligible for a wife's benefit, and both of them cannot live on his benefit alone. Lowering the eligibility age is also important for women insured in their own right, for widows, and for mothers who depended on the earnings of a deceased insured worker.

The present law also works hardship by denying benefits to any person who earns

$15 in any month. I recommend that this limit be raised to $40, so that the law will permit more older workers to supplement their benefits by part-time employment.

At the same time that these changes in benefits are made, I recommend that the limit on earnings taxable under the law be raised from $3000 to $4800, and that the date for increasing the tax rate from one per cent to one-and-one-half per cent be moved forward from January 1, 1950, to January 1, 1949.

2. Extended coverage for old-age and survivors insurance.

The protection afforded by old-age and survivors benefits under our existing social insurance program is unfairly and unnecessarily restricted. More than 20 million persons at work in an average week are in jobs where they cannot earn any rights toward these benefits. People in these jobs are in at least as great need of insurance protection as those in jobs already covered. Many of them are in greater need because their earnings are low and uncertain or irregular.

These groups were originally excluded largely because of various special administrative problems. Simple procedures have now been worked out to collect contributions and pay benefits for these people without undue cost or administrative difficulty, and with little inconvenience to employers.

I strongly recommend that the protection of the Federal old-age and survivors insurance system be extended as rapidly as possible to the groups now excluded.

3. Extended coverage for unemployment insurance.

In the case of unemployment insurance, coverage is even more restricted than under old-age and survivors insurance. The principal difference is that under unemployment insurance employees of small firms (those firms employing less than eight persons) are not covered by the Federal law, whereas they are covered under old-age and survivors insurance.

Because of differences in the administrative problems under the two programs, it is more difficult to extend coverage under unemployment insurance. Nevertheless, we should extend coverage at this time to at least two important groups now excluded.

I recommend, therefore, that Federal legislation be amended to extend coverage to those persons who are now excluded merely because they are employed by small firms. These workers are already covered in many States, and I see no reason why they should not be covered in the others.

In addition, I recommend that legislation be 'enacted to provide unemployment compensation to persons employed by the Federal Government. It seems absurd that the Federal Government does not provide to its employees the same protection that private employers are required to furnish for their employees.

In unemployment insurance also, benefits should be more adequate, particularly for the unemployed person who has a family to support. Not all States have raised benefit amounts and extended duration to meet present conditions or to recognize the special needs of workers with dependents. I believe that all States should do so. In addition, the unduly harsh provisions of some State laws for disqualifying claimants should be eliminated.

4. Insurance against loss of earnings due to illness or disability.

I recommend that our social insurance system be broadened to include insurance against the loss of earnings due to temporary or extended disability.

Disability may have an even more serious effect on family income than old age or death. It may occur without warning in early or middle life when the worker has heavy responsibilities for family support and has had little time or chance to make individual savings. It usually involves medical costs as well as loss of wages.

On an average day sickness and disability keep out of the labor force three and a half to four million persons who otherwise would have been working or looking for work. Of these, more than a million and a half have been disabled for six months or longer.

Two States now provide insurance benefits against loss of income from temporary illness or disability. Other States are considering establishing such protection. I believe that the Federal Government should provide a strong financial inducement to all States to provide such insurance.

In the case of disability extending for six months or more, I recommend that insurance against loss of earnings be established in connection with the present old-age and survivors insurance program.

5. Improved public assistance for the needy.

All of the foregoing recommendations relate to measures to strengthen our contributory social insurance system. Social insurance is a practical and tested means by which individuals can join together for self-protection. It does now, and should increasingly in the future, constitute our social security system's first line of defense against want. Our constant aim should be to extend and improve this means for providing protection through mutual efforts by employers and employees, on a basis which emphasizes independence and self-reliance, rather than relief.

But we cannot neglect our second line of defense. Needy persons who are not yet protected adequately by insurance have to fall back on public assistance. And we may expect that there will be some who will continue to need public aid even after the desirable expansion in our social insurance system becomes effective. We should therefore strive to make this assistance adequate throughout the United States.

The recent rise in living costs bears especially heavily on old people, fatherless children, and others who cannot earn and must depend on small fixed incomes or on savings. Many who can no longer make ends meet have been obliged to ask for public aid.

The aid now available to needy people is inadequate in many cases and in some areas of the country. This inadequacy stems in large part from three major deficiencies in the Federal Government's program for helping the States to finance public assistance.

The Social Security Act sets undesirably low maximum limits on the amount of the payment to an individual in which the Federal Government will share. The limits are even lower for aid to dependent children than for aid to the needy aged and the needy blind.

Even within the present maximum limits, the amount of the Federal grant to a State depends on the amount the State itself provides for the program. Where need is greatest, State resources are usually smallest. A needy person in a poor State therefore benefits less from Federal funds under the Social Security Act than a person in no greater need who happens to live in a rich State.

Moreover, Federal grants to States under the present Act may be used only for three groups of the needy--the aged, the blind, and dependent children. Other persons in equal need do not share in these funds. Nor is there any provision under which the Federal Government shares with the States the costs of welfare services which avert or reduce the need for continued assistance.

I recommend that the Act be amended to meet these deficiencies (1) by permitting the Federal Government to match more fully the higher payments which many States find necessary to meet the needs of recipients; (2) by relating Federal grants more equitably to the financial resources and needs of each State; and (3) by providing Federal grants to help cover the cost of aid to persons not included in the present categories and the cost of essential welfare services which avert or reduce the need for assistance.

The measures I have recommended have had long and careful consideration, and I strongly urge their enactment without further delay.

It has long been recognized as an inescapable obligation of a democratic society to provide for every individual some measure of basic protection from hardship and want caused by factors beyond his control. In our own country, the obligation of the Federal Government in this respect has been recognized by the establishment of our social security system.

Under this system, most of our people now enjoy some degree of protection against the insecurity resulting from old age or unemployment or the death of heads of families. But the protection that is given them is far from adequate, and there are other millions of our people who are excluded from such protection altogether.

It is especially important to strengthen our social security system at this critical time, when the false claim is constantly being made that democratic societies cannot protect their people from the economic and social uncertainties of modern civilization. We have studied with care and at great length the manner in which the system should be strengthened and we have the knowledge now to take many specific steps for that purpose. We should act upon that knowledge without further delay.

The passage of the Social Security Act in 1935 marked a great advance in our concept of the means by which our citizens, through their Government, can provide against common economic risks. Although this Act is still under attack from some quarters, it is regarded by a vast majority of the American people as an essential and basic element of our democracy. A strong social security system is recognized as an essential part of our national program to insure maximum levels of production and employment and to insure fair distribution of the output of our economy.

The original Act was necessarily experimental in many respects, and was deliberately limited in its coverage and in the benefits provided until experience should permit its extension. In 1939, substantial amendments were made to improve the Act on the basis of the experience gained by that time.

Since 1939, we have gained much further experience. Furthermore, extensive study has been given to the problem, both by the Executive and Legislative Branches. From this experience and these studies has come a wide area of agreement concerning most of the steps needed to improve our social security system. Even where agreement has not been reached, the evidence and arguments have been so fully developed that nothing can be gained by further delay.

I wish to emphasize that, because of general economic conditions, this is a particularly opportune time for taking these steps. Now, when employment and earnings are at the highest levels on record, is the most favorable time for our working people to earn protection against serious economic risks which face them and their families as a result of unemployment, disability, old age, and death. Moreover, the increased coverage and higher contribution rates which I have proposed will result in a greater excess of income over expenditures in the social insurance trust funds than is at present the case. Even when the expanded public assistance program is taken into account, the net effect of my recommendations is still to increase substantially the excess of income over outgo. Such an excess of income over outgo is valuable to reduce present inflationary pressures and to store up purchasing power for future use.

The measures I have recommended will extend and broaden our social security system to provide protection to millions of our people now excluded and against risks now pressing heavily upon individual families. They will provide protection to our people more and more on an insurance basis, and reduce our reliance on relief and similar types of public aids. They will do much to prevent distress and to continue our progress toward the great goals of individual welfare and independence.

It would clearly be unfair to the millions of our people for whom we know how to provide better protection to delay longer these sound and practical measures.

HARRY S. TRUMAN