<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2//EN"> <HTML> <HEAD> <META HTTP-EQUIV="Content-Type" CONTENT="text/html;CHARSET=iso-8859-1"> <X-CLARIS-WINDOW TOP=0 BOTTOM=464 LEFT=0 RIGHT=788> <X-CLARIS-TAGVIEW MODE=minimal> <META NAME="GENERATOR" Content="Visual Page 1.1 for Windows"> <TITLE>Alf Landon's Speech on Social Security 1936 Presidential Campaign</TITLE> </HEAD> <BODY BGCOLOR="#FFF7E7"> <CENTER> <TABLE BORDER="0" WIDTH="83%"> <TR> <TD WIDTH="151"><IMG SRC="pics/landon.gif" WIDTH="152" HEIGHT="200" ALIGN="BOTTOM" BORDER="0"></TD> <TD> Text of Gov. Landon's Milwaukee Address on Social Security   SUNDAY, SEPTEMBER 27, 1936   </TD> </TR> </TABLE> <HR ALIGN="CENTER"> <TABLE BORDER="1" CELLPADDING="10" CELLSPACING="1" WIDTH="85%" BGCOLOR="#FFFFCC"> <TR> <TD WIDTH="651"> I am going to talk tonight about economic security--economic security for the men and women obliged to earn their daily bread through their own daily labor. There is no question that is of deeper concern to us all. Even in good times there is ever present in the minds of workers the fear of unemployment. In periods of deep depression there is the fear of protracted idleness. And always, in prosperity and in depression, there is the ever-present dread of penniless old age. From the standpoint of the individual, I know of no more intensely human problem than that of economic security. From the standpoint of the government there is no problem calling more for a sympathetic understanding and the best efforts of heart and mind. But to solve the problem we must have more than a warm heart and a generous impulse. We must have the capacity and the determination to translate our feelings into a practical, workable program. Daydreams do not pay pensions. Now in broad terms there are two ways to approach the development of a program of economic security. One is to assume that human beings are improvident--that it is necessary to have the stern management of a paternal government to force them to provide for themselves--that it is proper for the government to force them to save for their old age. The other approach is to recognize that in an industrial nation some people are unable to provide for their old age-- that it is a responsibility of society to take care of them. The act passed by the present administration is based upon the first of these approaches. It assumes that Americans are irresponsible. It assumes that old-age pensions are necessary because Americans lack the foresight to provide for their old age. I refuse to accept any such judgement of my fellow-citizens. I believe that, as a nation, we can afford old-age pensions--that in a highly industrialized country they are necessary. I believe in them as a matter of social justice. Because of my firm belief in the justice, necessity and feasibility of old-age pensions, I am going to discuss the present act with the utmost frankness. It is a glaring example of the bungling and waste that have characterized this administration's attempts to fulfill its benevolent purposes. It endangers the whole cause of social security in this country. In my own judgement--and I have examined it most carefully--this law is unjust, unworkable, stupidly drafted and wastefully financed. Broadly speaking, the act is divided into three main sections. One deals with compulsory old-age insurance. It applies to about one-half of our working population. It excludes, among others, farmers and farm laborers and domestic servants. Another part of the act attempts to force States to adopt unemployment insurance systems. The third part of the act provides old-age pensions for those in need who do not come under the compulsory plan. Now let us look at the so-called old-age insurance plan in more detail, and on a dollars and cents basis. In other words, let us see just how much the old people of this country are going to get, when they are going to get it and who is going to pay for it. Here we are dealing not with opinions but with hard facts, with the provisions of the law. Under the compulsory insurance plan of the present law, none of our old people will get any pension at all until 1942. If you happen to be one of those insured--and remember about half of our workers are not--you have to earn, on the average, $125 a month every single month for the next twenty years to get a monthly pension of $37.50. And you have to earn $125 a month for the next forty-five years to get a pension of $59.38 a month. Besides, these sums have to support both the worker and his wife. But meanwhile, being Jan. 1 of next year, 26,000,000 working people begin paying taxes to provide these pensions. Beginning next January employers must start deducting these taxes from the pay envelopes of their employees and turn them over to the government. Beginning next January employers must, in addition, begin paying taxes on the payrolls out of which your wages are to come. This is the largest tax bill in history. And to call it "social security" is a fraud on the working-man. These taxes start at the rate of $2 in taxes for every $100 in wages. They increase until it is $6 in taxes for every $100 in wages. We are told that this $6 will be equally divided between the employer and the employee. But this is not so, and for a very simple reason. The actual fact will be, in almost every case, that the whole tax will be borne either by the employee or by the consumer through higher prices. That is the history of all such taxes. This is because the tax is imposed in such a way that, if the employer is to stay in business, he must shift the tax to someone else. Do not forget this: Such an excessive tax on payrolls is beyond question a tax on employment. In prosperous times it slows down the advance of wages and holds back re-employment. In bad times it increases unemployment, and unemployment breaks wage scales. The Republican party rejects any feature of any plan that hinders re-employment. Yet it is solely by such tax that the plan of this administration is financed. Its entire cost is to be raised by a 3 per cent tax on wages and a 3 per cent on payrolls. I do not see how any one can believe that the average man making $100 a month should be compelled to save 3 per cent of his wages. Certainly he is not in a position to save 6 per cent of his wages. One more sample of the injustice of this law is this: Some workers who come under this new Federal insurance plan are taxed more and get less than workers who come under State laws already in force. For instance, under the new law many workers now 50 years old must pay burdensome taxes for the next fifteen years in order to receive a pension when they are 65; whereas those of the same age who come under some State laws pay no taxes and yet actually get a larger pension when they reach the age of 65. These are a few reasons why I called this law unjust and stupidly drafted. There is a further important point in connection with the compulsory saving provided by the plan of the present administration. According to this plan, our workers are forced to save for a lifetime. What happens to their savings? The administration's theory is that they go into a reserve fund, that they will be invested at interest and that in due time this interest will help pay pensions. The people who drew this law understand nothing of government finance. Let us trace the process step by step. The worker's cash comes into the treasury. What is done with it? The law requires the treasury to buy government bonds. What happens when the treasury buys government bonds? Well, at present when there is a deficit, the treasury gives some nice new bonds in exchange for the cash which the treasury gives the treasury. Now what happens to the cash which the treasury gives the treasury? The answer is painfully simple. We have good spenders in Washington, and they spend the cash that the treasury gives the treasury. Now I know all this sounds silly, but it happens to be an accurate recital of what this administration has been foolish enough to enact into law. Let me explain it in another way--in simple terms of the family budget. The father of the family is a kindly man, so kindly that he borrows all he can to add to the family's pleasure. At the same time he impresses upon his sons and daughters the necessity of saving for their old age. Every month they bring 6 per cent of their wages to him so that he may act as trustee and invest their savings for their old age. The father decides that the best investments are his own I O U. So every month he puts aside in a box his I O U carefully executed, and, moreover, bearing interest at 3 per cent. And every month he spends the money that his children bring him, partly in meeting his regular expenses, and the rest in various experiments that fascinate him. Years pass, the children grow old, the day comes when they have to open their father's box. What do they find? Roll after roll of neatly executed I O U's. I am not exaggerating the folly of this legislation. The saving it forces on our workers is a cruel hoax. There is every probability that the cash they pay in will be used for current deficits and new extravagances. We are going to have trouble enough to carry out an economy program without having the Treasury flush with money drawn from the workers. Personally, I do not want the Treasury flush with trust funds--funds which the trustee can mingle with its own general funds. I want the Treasury to be a position where it must consider every penny it spends. I want the Secretary of the Treasury to be obliged to say to committees of Congress every time a new appropriation is proposed, "Gentlemen, you will have to provide some new taxes if you do this." With this social security money alone running into billions of dollars, all restraint on Congress will be off. Maybe some people want that, but I don't. And even if the budget is balanced, the fact that there is a billion dollars and more of extra cash on hand each year that can be made instantly available for any purpose by issuing special bonds to the trust fund is too great a temptation. This temptation is further increased by another provision of the law--that provision relating to how much of the cash collected will be paid out in pensions. During the next ten years only 10 cents out of every dollar collected from the workers will be paid out as benefits. And from now until 1950 only 16 cents out of every dollar collected will be paid out as benefits. The workers asked for a pension and all they have received is just another tax. There is one more point I want to mention about the compulsory old age pension system. This is the question of keeping records. The administration is preparing a plan, the exact nature of which we shall not know until after the election, for keeping the life records of 26,000,000 of our working people. These records are necessary because the amount of the pension anyone is to receive depends upon how much he has earned after the act goes into effect. The record must show every job a man has, and every dollar he earns so long as he is working at something that brings him under the plan. If he is working in a factory and changes to another factory, a government agent must keep track of him. Imagine the vast army of clerks which will be necessary to keep these records. Another army of field investigators will be necessary to check up on the people whose records are not clear, or regarding whom current information is not coming in. And so bureaucracy will grow and grow, and Federal snooping flourish. To get a workable old-age pension plan we must repeal the present compulsory insurance plan. The Republican party is pledged to do this. The Republican party will have nothing to do with any plan that involves prying into the personal working records of 26,000,000 people. Before discussing the positive part of our program, however, I want to take up the second main feature of the present act, the part dealing with unemployment insurance. The problem of unemployment insurance differs fundamentally from that of old-age pensions. Old-age pensions were reasonably well established in a number of States even prior to the passage of the Social Security Act. Federal grants to States to supplement State old-age pensions do not differ from the practice followed for years--the practice of making grants to States to supplement and encourage projects for the general welfare. Unemployment insurance is something new and of a different character. We have never had unemployment insurance in this country. With the exception of two States, and their laws are of recent origin, there were no unemployment insurance laws on the statute books of our States before the Social Security Law. Under these circumstances for the Federal Government to step in and use its taxing power to compel all the States immediately to enact unemployment insurance statutes is something unheard of. It is most unwise. There is no element of real help to the States in the present statute. There is merely compulsion. It completely ignores what has been of priceless value to us--the use of the States as experimental workshops in which new methods and policies may be tried out and gradually perfected. The Republican platform proposes to encourage adoption by the States of honest and practical measures for meeting the problems of insurance against unemployment. It does so because we recognize that we live on a continent with a wide range of working conditions and standards of living. It does so because we have still nearly everything to learn in this field. With State experiments, different States trying out different plans and watching the results, we shall work out a much better system than could possibly be imposed at this time from Washington. The impatient advocates of almost every social reform are disposed to seek the short cut of Federal action rather than to wait for slower, but more certain, progress achieved under State auspices. If a State makes a mistake, the effect is local and limited. With State action we avoid mistakes involving the whole country. As Woodrow Wilson said of State action, it "has given speed, facility, vigor and certainty to progress of our economics and political growth." It is urged that competition among industrial States will prevent State action in this field. But forward-looking States like your own have been disproving this for twenty-five years. This brings us to the third main feature of the present act--the section dealing with pensions for the needy aged not covered by the compulsory insurance plan. This part of the present law can be made to serve as the foundation of a real old age pension plan. This, the Republican party proposes to do. It proposes to overhaul this section and make of it a workable, common-sense plan--a plan to be administered by the States. We propose through amendments to this section to provide for every American citizen over 65 the supplementary payment necessary to give a minimum income sufficient to protect him or her from want. Frankly, I am not in a position to state with finality the total cost of this plan. One of the most serious criticisms to be made of the present Social Security Act is the haste with which it was constructed, and the inadequate knowledge on which it rests. I do not intend to repeat this error. I have been studying this problem closely for the past year and a half, and I have had the benefit of the opinions of many close students of these problems. Elaborate computations of the probable costs have been prepared for me. And while I am not willing to accept these computations as final, it is clear from them that the plan which we propose will be much less expensive than the plan of the present administration because we will not create a needless reserve fund of $47,000,000,000. Our plan will be on a pay-as-you-go basis, with the result that we will know year by year just what our pensions are costing us. That is sound, common-sense financing. There is one other point I want to impress upon you. This is the question of raising the money to pay the pensions. The precise method of taxation used will depend upon the decision of Congress working in co-operation with the Treasury. But there are three essential principles which should be complied with: The necessary funds should be raised by means of a special tax earmarked for this purpose so that the already difficult problem of budget-balancing may not be further complicated. The tax should be direct and visible. And the tax should be widely distributed. Only if every member of the great body of our citizens is conscious of his share of the cost can we hope to resist the constant pressure to increase pensions to the point where the burden will be unbearable; only if every one bears his just share can we hope to prevent it being used for political purposes. If we will prevent such exploitation and if we will put the plan on a sound financial basis, we can afford to be liberal to our old people. If the present compulsory insurance plan remains in force, our old people are only too apt to find the cupboard bare. Let me repeat! I am a profound believer in the justice and necessity of old age pensions. My criticism of the present act is not that its purpose is bad. It is that this act will involve a cruel disappointment for those of our people least able to bear the shock of disappointment. To these--our old people, our workers struggling for better conditions, our infirm--I will not promise the moon. I promise only what I know can be performed: economy, a living pension and such security as can be provided by a generous people.   </TD> </TR> </TABLE> </CENTER>   </BODY> </HTML>