Veto of Resolution Excluding Certain Groups From Social Security Coverage.

To the House of Representatives:

I return herewith, without my approval, House Joint Resolution 296, "To maintain the status quo in respect of certain employment taxes and social-security benefits pending action by Congress on extended social security coverage".

Despite representations to the contrary, sections 1 and 2 of this resolution would exclude from the coverage of the old age and survivors insurance and unemployment insurance systems up to 750,000 employees, consisting of a substantial portion of the persons working as commission salesmen, life insurance salesmen, piece workers, truck drivers, taxicab drivers, miners, journeymen tailors, and others. In June, 1947, the Supreme Court held that these employees have been justly and legally entitled to social security protection since the beginning of the program in 1935. I cannot approve legislation which would deprive many hundreds of thousands of employees, as well as their families, of social security benefits when the need for expanding our social insurance system is so great.

Furthermore, if enacted into law, this resolution would overturn the present sound principle that employment relationships under the social security laws should be determined in the light of realities rather than on the basis of technical legal forms. In so doing, it would make the social security rights of the employees directly excluded, and many thousands of additional employees, depend almost entirely upon the manner in which their employers might choose to cast their employment arrangements. Employers desiring to avoid the payment of taxes which would be the basis for social security benefits for their employees could do so by the establishment of artificial legal arrangements governing their relationship with their employees. I cannot approve legislation which would permit such employers at their own discretion to avoid the payment of social security taxes and to deny social security protection to employees and their families.

It has been represented that the issue involved in this resolution is whether or not the legislative branch of the government shall determine what individuals are entitled to social security protection. This is not the issue at all. The real issue is whether the social security coverage of many hundreds of thousands of individuals should be left largely to the discretion of their employers. On this issue the proper course is obvious.

The expressed purpose of the sponsors of this resolution is to exclude from the coverage of the Social Security Act persons who have the status of independent contractors, rather than that of employees. But no legislation is needed to accomplish this objective. Under present law, as interpreted by the Supreme Court, only persons who are bona-fide employees are covered by our social security system.

When all of the considerations regarding sections 1 and 2 of the resolution are sifted, two basic facts remain unrefuted. Hundreds of large employers are assured of an exemption from social security taxes, while hundreds of thousands of employees and their families are equally assuredly prevented from receiving the social security protection which the Supreme Court in June of last year clearly indicated was justly theirs. These two facts were minimized by the sponsors of the resolution who would have us believe, for example, that a travelling salesman who devotes full working time in the service of one company and depends completely upon that company for his livelihood is not an employee of that company but is an independent businessman and does not need social security protection.

Instead of clarifying the distinction between independent contractors and employees, which is a difficult legal issue in many cases, this resolution would revive the confusion which has plagued the administration of the Social Security Act for so many years. Benefits which are now payable to thousands of persons would have to be withheld pending final determination of the new and complex legal problems raised by this resolution.

Moreover, the resolution purports to preserve the past coverage of employees who have already made contributions under this system. But in fact, under the terms of the Social Security Act, such coverage would expire in a few years, and previous contributions would be made worthless.

It has been asserted that it would be difficult for employers to keep the necessary records and meet other requirements of the law with respect to the employees affected by this resolution. This is reminiscent of the objections made in opposition to the original Social Security Act in 1935. If such objections had prevailed in 1935, our social security program never would have been enacted. To allow them to prevail now would threaten the very foundation of the system. I cannot believe that the mere convenience of employers should be considered more important than the social security protection of employees and their families.

It has also been urged that without this resolution some persons would receive credit toward old age and survivors benefits for three or four past years during which contributions were not collected. If the elimination of these credits had been the real purpose of the resolution, it could readily have been achieved without permanently excluding anyone from social insurance protection.

If our social security program is to endure, it must be protected against these piece-meal attacks. Coverage must be permanently expanded and no employer or special group of employers should be permitted to reverse that trend by efforts to avoid a tax burden which millions of other employers have carried without serious inconvenience or complaint.

Section 3 of this resolution contains provisions--completely unrelated to sections 1 and 2--for additional public assistance of $5 per month to the needy aged and blind, and $3 per month to dependent children.

These changes fall far short of the substantial improvements in our public assistance program which I have recommended many times. Nevertheless, I am strongly in favor of increasing the amount of assistance payments. Were it not for the fact that the Congress still has ample opportunity to enact such legislation before adjournment, I would be inclined to approve the resolution in spite of my serious objections to sections 1 and 2. Speedy action on public assistance legislation is dearly possible. I note that section 3 of this resolution was adopted as an amendment on the floor of the Senate, and passed by both houses in a single afternoon. Accordingly, I am placing this matter before the Congress in adequate time so that the public assistance program will not suffer because of my disapproval of this resolution.

At the same time, I urge again that the Congress should not be satisfied at this session merely to improve public assistance benefits--urgent as that is. There are other equally urgent extensions and improvements in our social security system which I have repeatedly recommended. They are well understood and widely accepted and should be enacted without delay.

Because sections 1 and 2 of this resolution would seriously curtail and weaken our social security system, I am compelled to return it without my approval.

HARRY S. TRUMAN