Letter to the President of the Senate on a Pending Bill To Increase Public Assistance Payments.
Dear Mr. Vice President:
I understand that the Senate Committee on Finance has reported to the Senate an amendment to H.R. 2416, a tax bill already passed by the House. This amendment is intended to increase by about three dollars per month the Federal share of State public assistance payments to needy individuals who are aged, blind, or disabled. A similar increase of about two dollars per month would be provided for dependent children. This amendment would add about $140 million per year to Federal expenditures for public assistance.
It seems to me that any legislation to increase public assistance payments should take account of the relationship between those payments and the amounts paid under our old age and survivors insurance system.
In considering increases in public assistance payments, it is vitally important that we all keep clearly in mind the basic purpose of public assistance. Its purpose is and has always been to supplement our social insurance system. Our aim has been to expand coverage of social insurance and gradually reduce the need for supplementary public assistance programs. It is essential that a proper relationship be maintained between insurance benefits and assistance payments. At the very least, average benefits from insurance should be as high as average payments under public assistance. Today, the average payment in both programs is about forty-three dollars per month. An increase in public assistance alone would, therefore, result in an average insurance benefit lower than the average assistance payment.
This would be a highly undesirable result for the future of both programs. As the Senate Committee on Finance pointed out in its report on the Social Security Act Amendments of 1950:
"Your committee's impelling concern . . . has been to take immediate effective steps to cut down the need for further expansion of public assistance . . . Unless the insurance system is expanded and improved so that it in fact offers a basic security to retired persons and to survivors, there will be continual and irresistible pressure for putting more and more Federal funds into less constructive assistance programs. We consider the assistance methods to have serious disadvantages to the long-run approach to the Nation's social security problem."
The logic of this report certainly applies in the case of the present amendment. The relationship between the insurance and assistance programs established by the Social Security Act Amendments of 1950 should not now be upset to the detriment of insurance.
If public assistance payments are now to be increased, then old age and survivors insurance benefits should also be increased to at least an equal degree.
Fortunately, it is now possible to increase these insurance benefits without changing the actuarial status of the old age and survivors insurance system as calculated when the Social Security Act Amendments were adopted last year. This is true because the increases in wages which have since taken place will mean a greater increase in the income of the insurance fund than in the liabilities which that fund will be called upon to bear.
As for the increase in public assistance payments provided by the amendment now before the Senate, I believe that consideration should be given to including a provision which would make it entirely clear that the additional funds are actually to be passed along without delay, to the people who receive State aid.
Although practically all the States would receive additional Federal funds under the formula provided in this amendment, the amendment itself provides no assurance that these increases would be passed on promptly to individuals. When the Federal share in the public assistance program was increased in October 1948, the short-run effect was to substitute some Federal funds for State and local funds going into current programs. An immediate result was to make the average increase in payments to individuals less, in many cases, than had been intended by the Congress. If new increases are now to be authorized, we should take care to avoid a repetition of this experience.
HARRY S. TRUMAN
[Honorable Albert W. Barkley, Vice President of the United States, Washington, D.C.]
Note: The Senate passed H.R. 2416 with amendments on July 19, and on July 26 the bill was referred to the House Ways and Means Committee for consideration of the changes made by the Senate. The bill was not reported out by the Committee.
Harry S. Truman, Letter to the President of the Senate on a Pending Bill To Increase Public Assistance Payments. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/230409