of ratio to the extent that they have contributed. The result is a system which pays the highest retirement benefits to the relatively well to do, who presumably need social security benefits the least, and the lowest benefits to low-income persons who obviously need the most help in the years of retirement.

These premises, false ones, we believe, have tended to make social security a political football. By tampering with the program every 2 years, just before election, Congress has made pawns of the aged in the great game of politics. Political maneuvers may have their place, but they do not solve the problem of the aged.

Gentlemen, our organization believes that there is only one logical approach to this problem today. We must recognize, first, that the primary problem of the aged is financial. Once the aged are supplied with adequate purchasing power they, like the rest of us, will be in a position to provide for most of their other needs and they will solve their recreational and religious and emotional problems like most everyone else. And second, we must recognize that the present social security program cannot, today or tomorrow or ever, accommodate these financial needs. It simply cannot provide the aged with the money they need at a price labor and business can or will

What then is the answer?

pay.

The answer is to start all over; start from scratch. The first thing to do is to repeal title II of the Social Security Act, the title that has caused all the trouble. The second thing to do is, in our opinion, to enact the kind of program we advocate and which we call the Townsend plan. I say "we" advocate, but let me make it clear that the proposed legislation was written, not by our staff, but by Congressmen. Our legislation in this Congress is contained in H.R. 4000, introduced by Representative Blatnik, of Minnesota; and H.R. 4001 by_Representative Gubser, of California. They are identical.

Let me close by giving you a capsule account of this legislation. These are the steps we believe will go a long, long way toward solving the problems of the aged in America:

No. 1. Full retirement pensions for men and women alike at age 60. When we speak of the problems of aging, surely we are talking about the problems of both sexes. As matters stand, we grossly discriminate against women by paying wives of retired workers only one-half the amounts paid to their husbands, and widows only three-fourths the primary benefits. We believe equal rights mean equal pensions. People between 60 and 65 are ignored by the present Social Security Act. If the act attempted to include them all, the costs would be prohibitive. Yet the 60 to 65 group is as much a part of our aged population as the 65-and-older group.

No. 2. Equitable pensions on a universal basis and paid as a matter or right. If pensions were equitable we no longer would have the spectacle of low-income families receiving lower benefits than the well to do. If they were universal, we no longer would have the exclusions as is the case under social security. If they were paid

as a matter of right, we no longer would have to tolerate such dismaying devices as lien laws and pauper oaths.

No. 3. Variable pensions. Our legislation would gear pensions to rise as living costs rise, and level off in times of price stability, and thus it would strike at the very core of the problem of aging. The advantages of this system over social security are obvious.

No. 4. Adequate pensions. Our organization believes that $140 to $150 a month today is a bare minimum pension amount. Our bill would provide it.

No. 5. Sound pension financing. We propose that retirement benefits be financed by means of a 2 percent gross income tax. All business income would be taxed. Individuals would be exempt on the first $250 of their monthly earnings, thus protecting basic purchasing power. Because this tax base is so broad and because it would cover such vast amounts of income, adequate revenue would be raised with a very low rate of tax. A 2 percent tax on gross incomes would provide about the amount of money that could be realized by a 15 percent tax on payrolls.

Gentlemen, I thank you, on behalf of the approximately 1 million people of our organization, for the opportunity of appearing here today. If I may summarize, I would say that the burden of my message is this:

(1) The problem of the aged is primarily financial. All other problems are secondary and minor in nature.

(2) The Social Security Act has proved itself incapable of solving thair financial problems.

(3) Title II of the Social Security Act should be repealed.

(4) A brandnew program, such as the one contained in H.R. 4000, should be enacted by Congress.

We thank you, Senator McNamara and members of the Committee, for the opportunity of appearing here this morning.

Senator MCNAMARA. Thank you, Mr. Townsend.

You have a couple of tables and the statement from the Congressional Record regarding the Townsend plan bill which will be entered in the record as exhibits. The table, The table, I guess, should be included in the record.

Mr. TOWNSEND. Thank you. We would like to have it in the record, if we may; yes.

Senator MCNAMARA. But the Congressional Record portion referring to the Townsend plan bill will be retained as a part of the record as an exhibit because that is readily available and ready for anybody who wants it.

Mr. TOWNSEND. Thank you.

(The tables follow:)

TABLE 1.-Population increases in adult age groups, United States, 1947-57—
Income position of aged, 1947-57
INCREASES IN NUMBERS OF PERSONS

NOTE.-Our elderly population is increasing over 3 times as rapidly as the rest of our adult population. The income share of the aged group remains static. Since the whole group receives the same total share of income, the economic position of the average member of the aged group continuously declines. The part of the income of the aged which is made up of social security benefits increased from 13.9 percent in 1947 to 36.8 percent in 1957. Conversely, the part of their income made up from other resources declined from about 86 percent in 1947 to about 63 percent in 1957. The ability of most Americans to finance their old age through other means than our Federal social security law is shrinking fast and steadily. Our present social security program has failed, not only to better the economic position of our people in old age, but it has even failed to compensate for the constantly shrinking ability of the people otherwise to provide for their old age. These are the facts.

Drastic action on social security legislation must be taken.

Sources: Census Bureau, Current Population Reports, series P-60, No. 5, table 15; No. 6, table 12; No. 7, table 17; No. 9, table 18; No. 11, table 3; No. 14, table 3; No. 16, table 3; No. 19, table 3; No. 23, table 3; No. 27, table 18; No. 30, table 18. Social Security Bulletin, March 1958, tables 7 and 12.

TABLE 2.-Per capita income-Median income by age groups—1956 and 1957

NOTE. In the younger age groups all elements gained income in 1957, over 1956. As noted by the (*)► income for several elements of the aged declined.

Including all sources of money income, the aged received about half the income received by the rest of the adult population. When compared with younger, fully adult people, those aged 25 through 64, this ratio is emphatic in terms of per capita income-which is the average obtained by dividing the total income received by a group by the total number of persons in that group. In the light of median income-which is the income position below which is found half of the group and above which is found half of the group (in other words, the income position of the average member of the group)--it becomes clear that the average aged American enjoys half the rate of income enjoyed by the senior group of younger adults, those 25 years. of age to retirement age, as the most conservative possible interpretation that can be put on the above, authentic facts about income distribution.

Source: Bureau of the Census, Current Population Reports, series P-60, No. 27, table 18 and No. 30, table 18.

Senator MCNAMARA. Thanks very much. I think you presented a real challenge to us here. As you say, speaking for 1 million members of your organization and from long experience in the problems of the aged and the aging, your testimony is most valuable to the subcommittee and we appreciate your appearance here very much. Mr. TOWNSEND. Thank you, sir.

(The prepared statement of Mrs. Ford follows:)

PREPARED STATEMENT OF MRS. J. A. FORD, SECRETARY, TOWNSEND PLAN FOR NATIONAL INSURANCE

Mr. Chairman and members of the committee, my work of more than 20 years with the Townsend organization has brought me face to face with the problems of the aged in almost every State. Having talked personally with many thousand of them, I am persuaded that most of their problems are due to one thing-lack of money. The great majority of these people are receiving the lower benefits of OASI or the national average or less of State old-age assistance. The aged of today are, of course, the men and women who survived the great depression of the 1930's, two world wars, and the greatest era of inflation in American history. Hundreds of thousands of today's aged lost their savings, insurance policies, stocks and bonds, and property at an age too old to recoup their losses. Others who thought they had, even after the depression, sufficient funds to see them through their old age, found in later years that their savings and annuities had lost about 35 percent of their original purchasing power as a result of the continuing rise in the cost of living.

The greater number of our aged find themselves without adequate funds today. Even among those who are just retiring many are in the position of Frank Christensen, of Minneapolis, who wrote: "I am 69 years of age. Wife 66. I was laid off as a janitor of a school July 1. I have $33 social security from schoolwork of 20 years. Can you see why old people suffer so in the United States?" Some say, "Let them find work." In all of my thousands of contacts, I have yet to meet a man or woman who would have refused employment. If they

could have obtained employment and were physically able to work, they would have preferred to do so rather than be classed as paupers. This committee is of course fully aware that most industries will not hire anyone over 45, and that even some Government agencies have placed an age limit of 35 years on new employees.

Your committee has expressed its interest in measures to prevent physical and mental health deterioration. But how can we expect good health when hundreds of thousands of the aged are now receiving either the minimum or low national average social security benefit of $72, supplemented in some States by a small additional amount of old-age assistance? As of December 1957, 14 percent of OASI beneficiaries (442,681) were receiving between $26.60 and $33 a month. How can anyone live on $33, or even $60 or $80 a month, and pay for rent, food, clothing, and medical care? We can never prevent physical and mental deterioration among these people as long as they are bound, because of inadequate income, to a malnutrition diet and haunted by a fear of the morrow. Why do we continue to ignore the needs of our aged as individuals? Some so-called authorities allege that the cost of providing these people with sufficient money to care for themselves would be too high. So we wait until malnutrition and lack of care render them ill and a total burden-and then they are placed in institutions at a cost double or triple the amount we allow them as individuals. Here in Washington the average old-age assistance payment in February 1959 was $59.85, but the per capita cost in February for inmates of the District of Columbia Village (formerly known as Blue Plains) Home for the Aged and Disabled was $6.95 per day, or obut $210 a month. The contrast is shocking, gentlemen.

Life is hard enough for elderly citizens, without having to realize that they are cast aside as second-class citizens, and even denied the consideration given to the welfare of criminals in Federal prisons. For these prisoners, health care, physical exercise, entertainment, and a balanced diet is provided-requiring an allowance of $4.57 per day for each of them, which is almost three times the amount our individual aged are allowed.

The elderly do not ask for luxuries, but only for the means to obtain those necessities to enable them to live as American citizens and preserve their human dignity.

Housing needs exist, but not as isolated sections-not as old-age communities or settlements. Never should it be compulsory for them to move if they do not desire to do so. I speak of those who have lived in one area for most of their lives-they wish to hold on to their friends and memories.

Give the elderly people freedom from fear, and you will automatically give them better health, physical and mental. They will have the heart to take up the many outside activities that can be planned for them by local civic and church groups. You will see how small the actual cost will be compared to the financial burden for the country involved in institutional and charity costs. The formula for solving the problems of the aged and aging can be found in Congressman Blatnik's bill, H.R. 4000, known as the Townsend pay-as-you-go pension plan, which is offered as an amendment to title II of the Social Security Act. The attached sheet, listing some of the facts about the social-security problem, should be of interest to those who seek to solve the problems of the aged.

THE FACTS ABOUT THE SOCIAL SECURITY PROBLEM

In our view, social security as a condition in the lives of our people is essential to the general welfare of this Nation and of its people. However, extensive study has convinced us that the means so far employed to deal with this problem are futile.

Authentic evidence shows that ever since the end of World War II our elderly have been increasing well over three times as fast as any other segment of our adult population, while their share of total income has virtually stood still. These facts demonstrate that our present program under title II of the Social Security Act cannot lead to social security for the American people.

Continuing this trend can only produce an indefensible injustice to our people, involving repercussions we cannot possibly be excused for allowing. The American people have long made clear their approval of the whole principle of social security. They recognize the necessity for a Federal program to maintain social security in their lives.