The most persuasive argument for the Chamber's plan is that it would merely press to the extreme, and apply to many times more people, the consequences of the present liberality to newly covered workers. Originally, and again each time that coverage has been substantially extended, provisions have been written into the act giving very liberal treatment to people who were then nearing retirement age. If the social purposes of the program dictate the payment of generous benefits to these people who have contributed so little, why do they not dictate the payment of the same or slightly smaller benefits to people who have contributed nothing? How can the present discrimination between the small contributor and the noncontributor be justified? Discriminations like these are found in most pension systems at the start. With almost complete coverage now attained, the numbers excluded from old-age and survivors insurance will decline, and the sharpness of the discrimination will diminish if, as seems probable, no further "new start" again interrupts the gradual lengthening of the participation in the system required for eligibility. Still, if this discrimination could be eliminated at once without endangering the system, the case for doing so would be very strong indeed.
The difficulty is that in a system composed largely of compromises, what is acceptable in moderation may not be acceptable in the extreme. In this case, the extreme—the reduction of eligibility requirements to zero— transforms a difference of degree into a difference of kind. The liberality of the present system to a relatively few persons who have contributed a little has not destroyed the concept of benefits as a quid pro quo, but it is hard to suppose that this concept could survive the extension of a like liberality to several million people who have contributed nothing at all.
To provide so many free pensions from the trust fund would at once raise questions in the minds of contributors why they must pay for what others got for nothing, whether they should not be relieved of at least some part of their duty to contribute, whether their past contributions were not being diverted from the use for which they had been collected, why contributors should be saddled with a burden theretofore borne by general taxpayers. If we were now setting up a new system of free pensions for the present aged, there would be no more reason to resort to payroll taxes to finance it than there is to use such taxes for the general support of government. And the case is not much helped by combining the new system with the old. The special considerations that justify a pay-roll tax as a part of a system of social insurance are weakened to the extent that noncontributors are permitted to share in its proceeds and would be destroyed by such wholesale diversion as the Chamber proposes.
It is the judgment of many students that adoption of the Chamber's proposal would mark the beginning of the end of contributory social insurance. Apparently the Chamber does not disagree with this judgment,
since its spokesmen have taken refuge in denial that the present system is social insurance or that it affords real security. If that were so today, or if enactment of the Chamber's plan were to make it so tomorrow, the rationale of both pay-roll taxes and differential benefits would be so seriously undermined that neither of them would be likely to endure very long. Existing discriminations, which are soon to become less sharp, are a price we must pay for a lasting system of contributory insurance.
Conclusion That old-age and survivors insurance cannot take over the protection of the present "unprotected aged" should not obscure the enormous volume of economic protection it already affords, or the ease with which it can be expanded in many directions to give such added protection as the nation is willing to pay for.
In 1954 about half the total population over sixty-five were eligible for old-age and survivors insurance benefits and were receiving payments unless they or their husbands were still at work. It is estimated that by 1960 the eligible portion of the population over sixty-five will have increased to about three fourths, and it will continue to grow thereafter. With the increase in the amount of benefits, fewer of those eligible for them will require supplementary public assistance. The insurance system will soon be doing for those over sixty-five the major part of the task it was designed to do.
Even for that group, however, many further changes have been urged and will continue to be matters of serious debate. Whatever the level of benefits, there will always be a question whether they should not be higher. Many believe that the tax and benefit base should be raised to at least $6,000, pointing out that more than 40 percent of the full-time male workers in covered employment receive wages higher than the present $4,200 limit, and that for them the system fails to provide benefits that increase with their earnings. Perhaps some recognition of length of participation in the system should be restored to the benefit formula. There has been much dissatisfaction with the "work clause," or retirement test; though liberalized successively in 1950, 1952, and 1954, it will not meet the demands of those who believe that an insurance system should guarantee an annuity at age sixty-five. To repeal the clause, however, would change the risk insured against and change it in a very expensive way. An alternative would be a graduation of the benefit rate in accordance with the age of retirement, so that some compensation would be afforded for the benefits lost by those who continue to work after age sixty-five.