Social Security Act Amendments of 1952

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Sou’al Security Act Amendments oj 1952 by ~~~~~~~ J. COHEN* The Eighty-second Congress amended the Social Security Act cause of the widespread agreement in the closing days of its second session. The fact that this is the on their desirability.“2 second time in 2 years that Congress has acted to liberalize the The House Committee on Ways old-age and survivors insurance and public assistance programs and Means in its report gave the indicates national awareness that these income-maintenance major reason for the legislation. programs should and can be adjusted in line with economic developments. The increased insurance benefits further indicate The rapid rise in wages and prices recognition of the fact that, with rising wage levels, some Iib- during the last few years makes eralizations can be made in the old-age and survivors insurance immediate benefit adjustments im- program without raising tax rates or departing from the self- perative. While the money income supporting basis of the program. of many groups in the population has gone up since the outbreak of HE Social Security Act Amend- which requires a two-thirds vote for hostilities in Korea, the benefit rates ments of 1952 became law on passage. The vote was 150 to 140- of over 4l/2 million persons now on T July 18, 1952, when President not sufficient to pass the bill. On the old-age and survivors insurance Truman affixed his signature to H.R. June 17 the bill was brought up rolls were determined in the early 7800. The new social security law again and was adopted, with amend- part of 1950, prior to the beginning of the present emergency period. As (Public Law 590, Eighty-second Con- ments, by a vote of 361 to 22. a consequence, retired aged persons gress, second session) was described The bill was reported favorably and widows and orphans are finding by the President as an “important by the Senate Committee on Finance, it very difficult to meet their costs landmark in the progress of our with amendments, on June 23; with of living. social security system.” two additional amendments from the Adjustment of the program to keep The amendments affect the old- floor it passed the Senate by a voice its provisions in line with major age and survivors insurance provi- vote on June 26. changes in economic conditions is of sions (title II) and the public as- The conferees from the House of great personal significance to nearly sistance provisions (titles I, IV, X, Representatives and the Senate met all Americans. . , . Unless the old- and XIV) of the Social Security Act, on July 3 and 4 and the morning age and survivors insurance pro- and the Railroad Retirement Act. of July 5. The Conference Report gram is kept dynamic and is con- Section 1 of the law gives the short was adopted in both Houses on July stantly adjusted to major economic developments, many more benefi- title; the other seven sections deal 5, and the bill became law on July ciaries will have to turn to public with increases in old-age and 18. assistance to make up the deficiency survivors insurance benefits; preser- The amendments to the insurance between their income and the mini- vation of the insurance rights of provisions of the law were changes mum necessary to meet living costs. permanently and totally disabled that, in the opinion of the two From the beginning of the social individuals; liberalization of the re- Committees that considered t h e security program in 1935 it has been tirement test; wage credits for mili- legislation, required “attention this the intent of Congress to establish tary service; technical amendments year.” The changes “are all with- contributory social insurance, with related to old-age and survivors in- in areas which were intensively benefits related to individual earn- surance; earned income of recipients studied” by both the House Commit- ings, as the foundation of social se- of aid to the blind; and increase in tee on Ways and Means and the curity. . . . To maintain the gains which already have been made and Senate Committee on Finance be- the Federal share in public assist- to prevent more and more people ance payments. fore the enactment of the 1950 from having to turn to the less satis- amendments.1 Both Committees factory assistance program for sup- General Background pointed out that the changes in the plementation of their insurance H.R. 7800 was introduced by Rep- insurance program “will not require benefits, it is necessary that bene- resentative Doughton, Chairman of any amendment of the present con- fits under old-age and survivors in- the House Committee on Ways and tribution schedule, nor will they surance be increased. disturb the self-supporting basis of Means, on May 12, 1952. Four days Insurance Provisions later the bill was reported favorably the system.” Both Committees also by the Committee, and it came up recognized that other amendments to Five sections of the new law on the floor of the House for a vote the insurance program are necessary, amend the old-age and survivors on May 19. The bill was brought but the changes made were “selected insurance program. The various up under suspension of the rules, because of their urgency and be- 2House Report No. 1944 to accompany 1 For a summary and legislative history H. R. 7800,May 16, 1952, page 2, ano Senate l Technical Adviser to the Commissioner of the 1950 amendments, see the Bulletin, Report No. 1806 to accompany H. R. 7800. for Social Security. October 1950, pages 3-14. June 23, 1952,page 1 (82d Con& 2d sesa.).

Bulletin, September 1952 3 Table l.-Old-age and survivors insurance: Zllustrative monthly benefits based earnings under the program h.&e on earnings after 1936, under the old law and under the 1952 amendments necessarily stopped, or the individual I I or his survivors may be disqualified from benefits altogether. Under the bill, when the worker died or retired, his insured status would be determined on the basis of his covered earnings for the years he was not disabled. In figuring his old-age 45.00 ‘51.20 benefit and the benefits for his sur- 60.00 1 G5.60 50.00 56.30 75.00 84.50 37.50 42.20 75.00 84.40 ’ 80.00 ’ 87.30 ’ 80.10 ’ 87.30 vivors, the years in which he was 60.00 67.60 90.00 101.30 45.00 50.70 : 1900g 101.40 120.00 135.10 ’ 133.60 1 146.50 68.50 77.10 102.80 115.70 61.40 57.90 115.80 137.20 154.50 ’ 150.00 ‘ 168.90 incapacitated for work would be ex- I I I I I I I , cluded from the computation of his 1 Maximum totsJ family benefits permitted by dividusl beneflts not B multiple of 10 cents must be average earnings; hence his total pw. Some benefits exceep statutory maximum be- rounded up to the next multiple of 10 cents. ,,suse of overriding provision that any of the in- earnings would be averaged over the years in which he was able to changes are estimated to increase dren, and other categories of benefi- work. benefit disbursements about $325 mil- ciaries are increased proportionately, The House bill provided that ap- lion for the calendar year 1953. subject to certain provisions limit- plications for increased benefits ing the benefits payable to a single under this section could be filed on Increases in-Amount of Insur- family (the provision, for example, April 1, 1953, and increased pay- ance Benefit limiting the family benefit to an ments would first be made for the Section 2 provides for an in- amount not more than 80 percent of month of July 1953. The Senate crease in old-age and survivors in- the wage earner’s average wage). struck out this provision. The com- surance benefits for both present and The minimum benefit payable to a promise that was reached by the future beneficiaries; it includes a retired person is raised from $20 Conference Committee and that is new conversion table that, beginning to $25. For a family the maximum now included in the law provides September 1952, replaces the table benefit is now $168.75-a lag-per- that no applications may be ac- in the 1950 amendments. cent increase from the former maxi- cepted before July 1, 1953, and that For retired persons whose bene- mum of $150. The minimum family the entire section shall cease to be fits were computed by use of the benefit cannot be reduced by the effective after June 30, 1953. In other 1950 conversion table (and based on maximum provi;ions to less than $45 words, the provision will not become total earnings after 1936), benefits (again a 12x-percent increase from operative unless action is taken by are raised by $5 or 12% percent, the $40 under the old law). the next Congress. whichever is larger. The provisions Table 3 shows the estimated According to the Conference Re- apply generally to old-age insur- average benefits under the new law; port, it is intended that hearings ance beneficiaries now on the rolls. they are given only for 1952, 1960, will be held .on this entire matter The largest monthly amount payable and 2000, since in general there is early in 1953, when the Committees to a retired worker is increased by a smooth trend in the intervening will go into the administrative and $8.60 (to $77.10) ; the maximum for periods. Also shown are the esti- other provisions. The Report sug- a retired man and his wife is in- mated average payments as of Au- gests that this timing will permit creased by $12.90 (to $115.70). Table gust 1952, the last month that the appropriate steps to be taken for 1 presents illustrative benefits show- 1950 law was in effect. the working out of tentative agree- ing the effect of the changes. ments between the Federal Govern- For retired persons whose total Preservation of Rights of Dis- ment and the States for the determi- earnings after 1950 are used, bene- abled nation of disability by State agencies fits are increased by raising from Section 3 of the bill as passed as now provided in the law. It is 50 to 55 percent the percentage in by the House provided for preserv- also intended to obtain at that time the formula applicable to the first ing the insurance rights of persons the views of interested groups as to $100 of the average monthly wage. who become permanently and totally what methods of obtaining evidence The remainder of the formula, 15 disabled.* At present, a worker who of disability should be used, under percent of the next $200, remains is permanently and totally disabled what circumstances and by whom unchanged. Accordingly, for average is penalized in that he may have his determinations should be made, and wages of $100 and over, the increase retirement or his survivor benefits whether or not these provisions or is $5. This amendment applies gen- sharply reduced because his covered any modification thereof should be erally to persons who retire in the enacted into permanent law.4 future. Illustrative benefits showing 3 Various provisions relating to examina- The Committee on Ways and tion of the disabled were deleted from the the effects of these changes are bill as it passed the House on June 17, given in table 2. 1952. See Congressional Record. June 16, 4House Report No. 2491 to accompany Benefits for wives, widows, chil- 1952, page 1421 (daily edition). H. R. 7800, July 5, 1952, page 9.

4 Social Security Means made an exhaustive study of at least 20 quarters of coverage out Table 3.-Old-age and survivors insur- the old-age and survivors insurance of the 40-quarter calendar period ance: Estimated average monthly benefit payments and average program and of the administrative ending with the quarter in which his lump-sum death payments under aspects of disability insurance and period of disability began. In addi- the old law and under the 1952 disability assistance in connection tion, for the purpose of testing re- amendments with the 1950 amendments to the cent attachment to the labor force, Under 1952 Social Security Act. The House of he must have had at least 6 quarters Under amendments Representatives at that time ap- of coverage out of the 13-quarter old law Type of benefit proved a program that would have period ending with the quarter in A;:&& SeNem- 1960 2000 paid monthly cash benefits to in- which the period of his disability 1952 sured workers who became perma- began. These requirements are in- -___ ------nently and totally disabled. This tended to screen out most persons Old-age _____-_ ._. $42 5;; $59 $57 Male ___._. -.__ 66 program was not approved by the employed only intermittently and Female-.---.- ii :i Wife’s I... .____.. i: 32 ii Senate and was omitted from the those who have not recently been Widow’s I______. 3”: conference bill that became the So- employed. They are more restrictive Parent’s 2_____... 4o 4F 2 Mother’s _____.._. 3”: iA :3” 48 cial Security Act Amendments of than those for retirement or death Child’s 3-.- ._._.. 27 30 39 42 Lump-sum death 1950. The present provision is much benefits so that only those workers payment 4-e-_. 150 170 185 180 more limited, since it would, if put will be eligible whose reason for into effect, merely preserve the in- leaving the labor market can be pre- ’ lkcludes persons eligible for old-age benefits; includes husband’s or widower’s benefits. surance rights of qualified workers sumed to be disability. 2 Excludes persons eligible for old-age, widow’s, and widower’s beneEts. who become permanently and totally To have his insured status pre- r 3 Iucludes chi!d’s benefits both for child survivor disabled. served and his benefit amount re- beneficiaries and for children of old-age beneficiaries. 1 Arcrage amount per deceased worker. In private insurance and in Gov- main unaffected by the period of ‘Source: Actuarial Cost Estimates Jo?’ the Old-Age ernment insurance for veterans, such disability, the worker would have oad Surkms Znsurance System (IS Modified by the .skid Sect&g Act Amendments of 1956 (table 3). “waiver” provisions with respect to to be totally disabled for not less House Ways and Moans Comnitteo Print, July 21, insured individuals who become than six consecutive c a 1 e n d a r lP.- totally disabled operate to keep their months, and his physical or mental ual handicap, would be in the same insurance in force, undiminished, impairment would have to be ex- position as all other disabled per- without any further premium pay- pected to be permanent. sons; they could qualify for a period ments for the duration of total dis- To be considered permanently of disability under the general defi- ability. Similarly, under the provi- and totally disabled an individual nition of disability if unable to sions of the law, if made operative, must have been stricken with an ill- engage in any substantially gainful no further covered earnings would ness, injury, or other physical or activity by reason of their impair- be required, in the absence of earn- mental impairment that can be ex- ment. ing capacity, to preserve the status pected to be permanent. The im- The first month in which disabled a qualified worker had acquired at pairment must be medically deter- persons could file an application for the time he became disabled. minable, and it must preclude the a disability determination, if the If the “freeze” provisions become disabled person from performing section becomes effective, would be operative, by later action of Con- any substantially gainful work. July 1953. Retired workers on the gress, the preservation of rights to An individual would also be dis- old-age and survivors insurance rolls old-age and survivors insurance will abled, by definition, if he is blind who establish a “period of disabil- be afforded only to those disabled within the meaning of that term ity” could receive increased retire- persons having both substantial and as used in the law. Persons who do ment benefits beginning with the recent covered employment. An in- not meet the statutory definition, but month of July 1953. Persons who dividual will qualify if he has had who nevertheless have a severe vis- were permanently and totally disabled as early as the fourth quarter Table \2.- 3Iri-n~e a;3 survivors insurance: Illustrative monthly benej?ts based of 1941 could establish a period of on ‘earnin$s after 1930, unrler the oki lnw and under the 1952 amendments disability (if otherwise qualified) provided they were continuously W;d;bv,d Widow and Widow and Ret$f$Tiker Aged widow 2 children 3 children disabled and filed an application for determination of disability on or after July 1, 1953, and before Janu- ary 1, 1955. The survivors of workers $54______$25.00 $27.50 $37.50 $41.30 518.80 $20.70 $37.60 541.40 ’ $40.00 ’ $45.10 ’ $40.20 ’ $45.00 who died after having qualified for 160----__ 50.00 55.00 75.00 ’ 80.00 37.50 41.30 75.00 ’ 80.00 ’ 80.00 ’ 80.00 ’ 80.10 ’ 80.10 a period of disability would also re- 150----__ 57.50 62. m 86.30 93.80 43.20 46.90 86.40 93.80 115.20 ’ 120.00 ’ 120.00 ’ 120.00 203______65.00 70.00 97.50 105.00 48.80 52.50 97.60 105.W 130.26 140.10 ’ 150.00 ’ 160.20 ceive increased benefits. 250______72.50 77.50 108.80 116.30 54.40 58.20 108.80 116.46 144.X0 155.20 ’ 150.10 ’ 168.90 The law provides that determina- a00______80.00 85.00 120.00 127.50 60.00 63.80 120.00 127.60 ’ 150.10 ’ 168.90 ’ 150.30 ’ 168.90 tion as to whether or not an in- ‘Maximum total family beneflts permitted by divldual benefits not a multiple of 10 cents must be dividual is permanently and totally law. Some beneflts exceed statutory maximum be- rounded up to the next multiple of 10 cents. cause of overridlng prosislon that any of the fn- disabled, as defined in the law, and

Bulletin, September 1952 5 the beginning date of his disability necessary for the Federal Security he could earn only $50 a month. The would be made by a State agency Administrator to ascertain whether increase is effective for earnings pursuant to agreements with the another benefit has been determined from wages for the month of Sep- Federal Security Administrator. The to be payable by a Federal agency, tember 1952; for earnings in self- State agencies administering or SU- other than the Veterans Adminis- employment it is effective for the pervising the administration of the tration, on the basis of the same first taxable year that ends after approved State plan for aid to the service when the denial of the wage August 1952 (the calendar year 1952 permanently and totally disabled, or credits would make a difference of for practically all self-employed the State agencies administering the not more than 50 cents in the pri- persons). approved plan under the Vocational mary insurance amount of the serv- Rehabilitation Act, or the State icemen. Technical Amendments agencies administering the State’s The new credits will apply to Section 6 makes five technical workmen’s compensation law are monthly benefits for months after changes that are designed to correct specified as the State agencies that August 1952 and to lump-sum death certain inequities and simplify ad- could be utilized for the purpose of payments when death occurs after ministration. Included is an amend- making such determinations. August 1952. The new credits-like ment to the Railroad Retirement The Administrator would be au- those for World War II service- Act, increasing minimum benefits thorized to reverse a determination may not be counted towards old- and liberalizing the retirement test by a Stale agency that an individual age and survivors insurance benefits under the railroad retirement pro- is disabled or to determine that his if a periodic benefit based in whole gram, so that the present coordina- disability began on a later date than or in part on the same military tion of benefits under that program that determined by the State agency. service is determined to be payable and old-age and survivors insurance IIe would not be authorized, how- by another Federal agency (other may be maintained. ever, to reverse a determination by than the Veterans Administration). Recomputation of insurance bene- a State agency that a person is not The cost of the credits will continue fits for certain individuals aged 75 disabled, nor would he be author- to be borne by the trust fund, as and over.-Under this provision, an ized to make a determination that in the case of the World War II individual will, on application, have such disability began on a day earlier provisions. The conference commit- his benefit recomputed by the new than that determined by such State tee rejected the provision included formula if (1) in or before the agency. in the House version of the bill that month of filing such application he The Administrator would be au- would have authorized. appropria- attained age 75, (2) he is entitled thorized to pay the entire cost to tions from the General Treasury to to an old-age insurance benefit that the State of carrying out the agree- meet the additional costs of the wage was computed and could have been ment, if the State is willing to enter credits. computed only under the conversion into such agreement. If the State is Section 5 also extends the time table, and (3) he has at least 6 not willing to enter into an agree- normally permitted for claiming re- quarters of coverage after 1950 and ment, the Administrator would have imbursement for burial expenses if before the quarter in which he filed no authority to act directly to make a serviceman dies abroad between application for such recomputation. determinations. Therefore, persons June 25, 1950, and December 31, The change gives these individuals residing in a State where no agree- 1953, and his body is returned to the an opportunity, not previously avail- ment exists could not have any de- United States for burial or reburial. able, to have their benefits computed termination made by an agency of Reimbursement may be claimed by the benefit formula rather than that State. within 2 years of the date of burial by the conversion table if this al- or reburial rather than within 2 ternative results in a larger primary Wag;eFvreits for Military years of the date of death, as pre- insurance amount. viously required. RecompzLtation of insurance bene- Section 5(a) of the amendments It is expected that Congress will fits for certain self-employed in- provides old-age and survivors in- give further consideration to pro- dividuals in case of death or entitle- surance wage credits of $160 for posals for covering military service ment in 1952.-Under the old law each month of service in the active under the insurance program before an individual’s self-employment in- military or naval service of the section 5 terminates at the end of come for the taxable year ending United States from July 25, 1947, 1953. in or after the month in which he through December 31, 1953. With became entitled to old-age insur- but one exception, which was made Liberalization in Retirement ance benefits or died, whichever first to simplify administration, these Test occurred, could not be taken into credits will be provided on the same The retirement test is liberalized account in a computation of his basis as the credits provided under by section 4. A beneficiary may now average monthly wage. In comput- section 217(a) of the 1950 law for earn as much as $75 a month in ing an individual’s average monthly World War II service. The excep- covered employment and still re- wage a minimum divisor of 18 is tion is the provision making it un- ceive his benefit. Under the old law required. As a result, a person who,

6 Social Security for example, becomes entitled or occurred. Without this amendment, Administrative time and money will dies in 1952 could in the computa- the Social Security Administration be saved by this amendment, and tion of his average monthly wage would have had to make two sepa- payment of the increased benefits have at most only 1 year of self- rate computations of benefits for a will be expedited. No substantial employment income divided by 18. larger number of individuals, al- differences in the benefit amounts The average monthly wage and pri- though in most cases the information will result. mary insurance amount would thus needed for the later computation is be lowered. available at the time the first is Actuarial EJ7ectEo.f Insurance The new provision applies to any made. The amendment relieves this Amendments person who becomes entitled to an administrative burden. It also per- Congress, in enacting the 1950 old-age insurance benefit in 1952 mits use of the wages in the 6 amendments, was of the belief that and whose self-employment income months preceding the quarter in the old-age and survivors insurance for the taxable year in which he 1952 in which a beneficiary filed an program should be on a completely became entitled was not used in the application for a recomputation based self-supporting basis. Therefore a initial computation of his average on earnings after entitlement. tax schedule was developed that monthly wage. Such an individual Maintenance of existing relation- would, according to a reasonable may have his benefit recomputed ship between the old-age and sur- estimate, achieve this result. if he files an application for recom- vivors insurance system and the rail- The schedule was determined to putation after the close of such tax- road retirement system.-The exist- be roughly equivalent to the level- able year. The self-employment in- ing relationship between the two premium cost under the intermedi- come during the taxable year in programs is maintained by (1) in- ate estimate for the 1950 amendments which the individual became entitled creasing from $50 to $75 the amount when they were enacted and, ac- can be counted when the benefit is that survivor beneficiaries may earn cording to available actuarial cost recomputed. Any increase in the in employment covered by old-age analyses, continues to be so for the amount of the benefit resulting from and survivors insurance and still re- amended law according to current the recomputation will be paid retro- ceive benefits under the Railroad estimates. Table 4 gives an estimate actively to the first month of entitle- Retirement Act;5 (2) specifying that of the level-premium cost of the ment. the new old-age and survivors in- insurance system, tracing the in- Similarly, if an individual, on the surance military service wage credits crease in cost according to the major basis of whose wages and self-em- provided under the amendments are types of changes adopted. ployment income survivor benefits creditable under the railroad pro- Neither the House nor the Senate are payable, dies in 1952 and if he gram on the same basis as the wage Committee recommended in 1950 had self-employment income in the credits provided under earlier legis- that the system be financed by a taxable year that ended with his lation for World War II service; and high, level tax rate from 1951 on death, the primary insurance amount (3) providing that the coordination but rather recommended an increas- will be recomputed on application provisions in the Railroad Retire- ing schedule, which-of necessity- by his survivor to include the self- ment Act apply to the Social Se- will ultimately have to rise higher employment income derived by him curity Act as amended by the 1952 than the level-premium rate. None- during the taxable year ending with legislation. One effect of the latter theless, this graded-tax schedule will his death. No such recomputation provision is to ensure that the new would be made, however, if the increases in old-age and survivors Table 4.-Old-age and survicors insur- person, on the basis of whose wages insurance benefits will be considered ance: Estimated level - premium costs as percent ojpayroll. by speci- and self-employment income bene- in determining both the amount of $ed change in law fits are payable to his survivors, be- the social security minimum guar- came entitled to old-age insurance antee of the railroad program and benefits before 1952. Any increase the amount of the reductions in rail- Item resulting from a recomputation road annuities in dual benefit cases. ___------under this provision would be paid Simplification of computation of Cost of benefits under old law, retroactively to the first month of benefits for dependents and survi- using 2 %-percent interest rate.. _- ._.______15.35 entitlement to survivor benefits. The vors.-This amendment permits ben- Effect of 1952 changes ______recomputation would not affect *the efits for most dependents and sur- Increased benefits ______amount of the lump-sum death pay- vivors on the rolls in August 1952 to Liheritli?cd retirement test--- Military service credits.---. ment. be increased on the basis of their Cost of benefits under 1952 Use of lag wages in initial compu- existing benefit, without reference to amendments ______5.85 tation in case of death or entitlement the original record showing the in 1952.-This change makes it pos- existing primary insurance amount. 1 Est,imates made in 1950, using 2.percent interest rate, 6.05 percent; using 2 ?4-percent interest rate, sible to use in the initial computa- 5.85 percent. tion of benefits the wages paid in sFor the benefit provisions and legisla- S&me: Actuarial Cost Estimates for the OZd-Age tive history of the Railroad Retiwment and Suroioors Insurance System as Modijied by the the 6 months before the quarter in Act amendments of 1951, see the Bulletin, Social Security Act Amendment8 of I&5? (table S), r5;se Ways and Means Committee Prmt, July 21, 1952 in which death or entitlement February 1952, pages 7-12.

Bulletin, September 1952 7 produce a considerable excess of in- eressional consideration of the 1950 considered a resource in determin- come over outgo for many years so legislation, when a a-percent in- ing the other individual’s need for that a sizable trust fund will be built terest rate was used. assistance. With this provision, full up. This fund will not, however, be effect could not be given to the as large as would arise under a Public Assistance special consideration that Congress level-premium tax rate. The fund Two sections of the law relate felt the blind deserved and that was will be invested in Government se- to public assistance. One corrects a its purpose in enacting the 1950 curities, and the resulting interest deficiency in the 1950 amendment amendments. income will help to bear part of the relating to the $50 earned-income To remedy this deficiency in the increased benefit costs of the future. exemption in aid to the blind; the law, the 1952 amendments permit As will be seen from table 4, the other increases the rate of Federal the States, effective July 1, 1952, to level-premium cost under the 1950 participation in all public assist- also disregard the earned income of law-taking into account 2% -per- ance programs. the recipient of aid to the blind in cent interest-is about 5 l/3 percent determining the need of any other of payroll. This is approximately 0.7 Aid to the?Blind individual under the same or any of percent of payroll lower than the In 1950 the provisions of the So- the other State assistance plans ap- cost was estimated to be on a 2- cial Security Act relating to State proved under the Social Security percent interest basis when the pro- plans for aid to the blind were Act. Since this requirement does not gram was revised in 1950, partly amended so that such plans (a) could become mandatory until July 1, 1954, because of the higher assumed in- provide for disregarding up to $50 the State legislatures have ample terest rate and partly because of the of earned income of needy blind in- time to make any necessary changes rise in the earnings level that has dividuals in determining their need, in the State laws governing Federal- occurred in the past 3 or 4 years. and (b) had to provide for disre- State public assistance. (Higher earnings result in lower garding the first $50 of such income annual costs as a percent of payroll after June 30, 1952, if the plans were Additional Federal Funds because of the weighted nature of to continue to be approved. This Section 8 provides for additional the benefit formula.) income was to be disregarded, how- Federal funds to the States for pub- Under the new law the level-pre- ever, only in determining the need lic assistance to needy aged, blind, mium cost of the system is increased for aid to the blind of the person and disabled persons and to depend- to 5.85 percent of payroll, using a who earned it. When this earned in- ent children. This section was added 2 %-percent interest rate. This is still come was available to another per- on the floor of the Senat’e by Sena- about 0.20 percent of payroll lower son claiming or receiving assistance tor McFarland and adopted by a than the cost (on an intermediate- under aid to the blind or any of the voice vote. Its objective is to make cost basis) of the 1950 act according other assistance programs approved it possible for the States, without to the estimates made during con- under the Social Security Act, it was providing additional State or local

Table 5.-Public assistance: Federal participation in assistance payments under the old law and under the 1952 amendments - - 1Maximum amounts of individual monthly payments subject to Federal share of expenditures within specified maximums Federal pnrtlcipation - -. Program 51 States ’ 51 states 1 - ‘uerto Rico - and the 19R2 Virgin Old law unend- Islands 2 Old iaw ments -- .- Old-age assistance ______I $50 $55 3/4 of Erst $20 of State’s aver- 4/5 of first $25 of State’s ayer age monthly payment plus age monthly payment plus l/2 the belance l/2 the balance Aid to the blind ______.- 50 55 3/4 of first $20 of State’s arer- 415 of first $25 of State’s aver- 112 age monthly payment plus age monthly payment plus l/2 the balance l/2 the balance Aid to the permanently and totally disabled-.. ._ 60 55 3/4 of Erst $20 of State’s aver- 415 of first $25 of State’s aver- 112 age monthly payment plus age monthly payment plus 112 the balance l/2 the balance Aid to dependent children: One adult in each family ______.- 30 __ - - __ _ - __ _ First child ______._ ;: 18 Each additional child-.------.---- ______._ 18 E 12 ._--___-_--___-_------.______..-.------Per pt?r807&~______-______. ._ ------. _.__ _ _ - __ _ 314 of flrst $12 of State’s aver- 4/5 of Erst $15 of State’s average monthly payment plus age monthly payment plus l/2 the balance l/2 the balance

* 48 States. the District of Columbia, Alaska, and Hawaii. Vlrgln Islands. Maximum payments in fiscal year-$4,250,000 for Puerto Rico 1 The 1952 amendments made no change in the provisions for Puerto Rico and and $160,000 for Virgin Islands.

Social Security funds, to increase public assistance shall be used to give assistance to Provisions Deleted in payments $5 a month for each aged, more people, give higher payments Conference blind, and disabled person, and $3 to those persons who are already Certain provisions were deleted a month for each recipient of aid on the rolls, or save State and local from H.R. 7800 by the conference to dependent children. Table 5 com- money. A State may use the addi- committee. Section 6 of the House pares the new provisions with those tional Federal money to do any one bill would have extended the op- formerly in effect. The increased of these things or a combination of tion of State governments to enter Federal funds are made available them. into agreements with the Federal for a 2-year period-from October Government so that these agree- 1952 through September 1954, when Table 6.-Public assistance: Esti- ments could also cover members of the provision will be terminated un- mated additional annual cost to retirement systems (including uni- less it is extended or modified by Federal Government of 1952 amendments versities and public housing agencies Congress.6 [In millions; based on March 1952caseloads] but specifically excluding policemen, The maximum Federal share in firemen, and elementary and sec- the assistance payment for an aged, States with per ondary school teachers) if, of the blind, or disabled person is increased capita income members of the retirement system from $30 to $35 a month. Before Program Total voting, two-thirds elect to be cov- the 1952 amendments the Federal Above Below national xxtionnl ered. This section would also have Government’s $30 share represented *Iverage 1 overage 2 , extended to January 1, 1955,7 the 60 percent of a $50 payment to an _- Total ______-_-_. 3 $242.7 $118.4 $124.3 time within which the coverage of individual; the $35 payable under _- State and local government em- the amendments represents 64 per- Old-age assistance-. 159.0 76.6 82.4 Aid to the blind.... 6.8 3.1 2.7 ployees may be made retroactive to cent of a $55 payment. The increases, Aid to dependent children ____-.-.-. 70.4 34.7 35.7 January 1, 1951, and would have including those for aid to dependent Aid to the perma- permitted Wisconsin to extend old- children, are shown in table 5. ncntly and totall] disabled----.w.--. 3 7.5 3.5 age and survivors insurance cover- This section is estimated (on the - age to persons under a retirement basis of March 1952 caseloads and 124 States. system (excluding policemen, fire- average payments) to cost an addi- * 27 States. 3 Excludes estimates for 19 States that did not men, and elementary and secondary tional $242 million a year to the have plans for aid to the permanently and totitlly school teachers) without requiring a Federal Government if all States disabled in March 1952. vote by members of the system. pass on the full amount to the re- The C)onference Report stated that cipients on the rolls. There is no Public assistance expenditures in the deletion of these provisions did requirement that the States must March 1952 were running at an annual rate of about $21/4 billion, of not “imply that they [the conferees] pass on these amounts. The estimated which $1x/4 billion came from Fed- do not favor the inclusion of similar cost of the amendment for the vari- provisions in the law; it is the in- ous programs is shown in table 6. eral funds and about $1 billion from tent of the conferees that the entire The public assistance amendments State and local sources. If the entire amount of the additional Fed- matter of the extension of Federal do not provide for an automatic in- eral funds made available by the coverage to employees already cov- crease of $5 a month or any other ered by State and local retirement specific amount in the assistance McFarland amendment is passed on systems will be explored thoroughly payment to an individual recipient. by the States, the total Federal ex- early in 1953, when the disability Whether recipients will get increased penditures are estimated to reach provisions are to be reexamined.” payments as a result of the new about $11/2 billion a year. Assuming The other amendments that were provisions and how much they will that State and local funds remain dropped would (1) have made addi- get depend on what the States do the same, the total expenditures for tional Federal funds for public as- under their own laws and policies public assistance will be running at sistance available to Puerto Rico and for administering the programs. an annual rate of $21/2 billion. The the Virgin Islands; (2) have re- States have leeway in deciding old-age assistance rolls, however, quired the States to pass on the ad- whether the additional Federal funds have been declining. Moreover, the increased insurance benefits may ditional Federal funds for public as- make it possible to make some sistance to recipients; and (3) have s Mr. Mills, in submitting the Conference further reductions in expenditures permitted States to exempt for 1 Report to the House of Representatives, for both old-age assistance and aid year, in determining old-age assist- said: “A Senate provision requiring that ance payments, income up to $50 the States pass on the increase in Federal to dependent children. On balance, funds was deleted. It does not appear it would appear that total expendi- earned in agriculture and nursing. necessary since the provision only applies tures for public assistance, when all for 2 years and in my opinion it will not the new amendments are fully in 7 H. R. 6291 approved by the President be extended if the States do not pass on on June 28, 1952, as Public Law 420 (82d the increases.” Congressional Record, July effect, will still be running at a rate Cong., 2d sess.) extends ‘this time limit 5, 1952, page 9735 (daily edition). of $2% to $21/ billion a year. 1 year-to January 1, 1954.

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