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Of course, I might say and this has been said before, but I feel it very strongly that these invesigations should be made and these proposals which have been in the air for a long time and have been recommended by the experts should be examined. There is the proposal to have a thorough investigation of the philosophy of the Social Security Act, which is wrong and socialistic, and admitted to be Socialist by some of your top Republicans. If that investigation is made, if the Congress should decide, as it might very well, that it wanted to go on a pay-as-you-go basis for the OASI, getting rid of this very questionable trust fund—that has already been spent by prior administrations and is a very great embarrassment to everyone who mentions it or thinks about it-there would be great savings. If we abolish the wage records in Baltimore, as many people think we should, since they necessitate a tremendous waste of time, taking 10,000 employees and costing a lot of money there would be further savings. The Federal Security Agency is spending $80 million a year out for administration, taking the money out of that old-age trust fund. The administration costs could be greatly reduced. If we did away with the trust fund, that would save the taxpayers $300 million a year, which is not too little, on the interest they are now paying on the certificates of indebtedness in the trust fund on the money that is not there. It was their own money in the beginning, but they are compelled to pay $300 million a year interest. It is as though you went to a bank and put in a $1,000 for your old age, and when you reached age 65 you would draw it out and you receive your interest as well as your capital. If there was a reversal, if you reached age 65 and found that the bank had been taking out 2 or 214 percent interest from your $1,000 capital, that would be the same kind of thing which has been done with OASI funds. In other words, all people, whether they are under the Social Security Act or not covered—the 10,000,000 not covered—have got to chip in through income taxes to pay the interest on those trust-fund certificates of indebtedness.

Senator Hory. Well, Doctor, none of that will be changed with this. Dr. SHEARON. No; it ought to be changed before this elevation.

Senator HOEY. That is a matter of legislation. But none of that would be changed in the adoption of this reorganization plan.

Dr. SHEARON. Then this question arises as to this elevation. As practical politicians, you know perfectly well it would crystallize things as they are, and put a ratchet under any going back any lower. You would not get a chance to reorganize. The new department would hold it, at least as it is, and the Republicans might consider themselves lucky to hold the line, as the Conservatives have tried to do in Great Britain, to hold the line and not let it get any worse.

Senator Smith. Dr. Shearon, you actually should appear before the committees having to do with social security because your statements and testimony are most timely on that subject.

Dr. SHEARON. I do.
Senator SMITH. And not with respect to the reorganization plan.

Dr. SHEARON. I do appear, and I shall again. But, of course, what you are really doing is primarily elevating the social security, which started out with nothing in the till in 1935, and then got more power when it was elevated to Federal Security Administration in 1939. Then the statutory power was taken away from Commissioner Altmeyer. You are getting a pyramid of power that is dangerous, it is a concentration of Government that many people fear. I know that many Southern Democrats do, and certainly many Republicans. They fear a concentration of power leading to a dictatorship in the field of health, welfare, and education. That is what Bismarck did, and that is what the Communists want, and it is a bad thing. I could say a great deal more. I know you have to go to the Senate.

I appreciate this chance to appear-oh, I do want to put this in. I could have written this myself, but actually I had nothing to do with it. It appeared in the Chicago Daily Tribune: it is an editorial on how not to balance the budget, and I intended to read it as part of my testimony, but I will leave it with you and I do think it would be a nice way to end up my testimony. Ít is about the Federal Security elevation.

(The editorial entitled “How Not to Balance the Budget," and the March 19, 1953, issue of "Challenge to Socialism" are in the committee files.)

Senator Smith. Thank you very much, Dr. Shearon. I am sure we appreciate all you have had to say and your long experience in this field.

Dr. SHEARON. Just one other thing.

Senator Smith. The subcommittee will go into executive session because the full committee is meeting this afternoon, and we want to decide our next move, so if you will clear the room

Dr. SHEARON. There are people on a plane now coming up from Texas.

Senator SMITH. I shall have to take it up with the subcommittee, Dr. Shearon. I am sorry, but I have to abide by the committee's wishes, and that is a quorum call, so if you will excuse usDr. SHEARON. What will I do with the people who want to testify?

Senator Smith. If you will keep in touch with the committee or the clerk, he will advise you. We have to report to the full committee this afternoon on something, and that is what we want to do, if the room will be cleared for an executive meeting of the subcommittee.

Thank you very much.

Before we adjourn, Mr. Miles Kennedy, director, national legislative commission of the American Legion, requested an opportunity to be heard on S. 1215 introduced by Senator Hunt, creating a Department of Health, Education, and Public Welfare. It might be well to have the record show that Mr. Kennedy was notified of these hearings, so if the American Legion desires to submit a statement or to testify, arrangements would be made.

Mr. Kennedy stated, however, that the American Legion had no objection to the plan or the bill, and did not desire to make any statement.

I shall include in the record at this point a telegram from Mrs. Joseph Born, president of the Wisconsin Congress of Parents and Teachers, Sheboygan, Wis., addressed to Senator Joseph R. McCarthy, chairman of the Committee on Government Operations, relative to the effect Reorganization Plan No. 1 of 1953 will have on the Children's Bureau.

At the suggestion of Senator McCarthy, the clerk of the committee has requested the Federal Security Administrator to set forth the facts relative to the effect the plan will have on the operations of the Children's Bureau.

Also, I am including, for the record, a telegram submitted to the committee by Senator Henry M. Jackson, addressed to him by Mr. Walter P. Reuther, president of the CIO. Mr. Reuther expresses concern relative to the President's personnel of the Advisory Committee on Social Security.

I have also requested the clerk of the committee to ask the Federal Security Administrator to indicate to the committee what action is contemplated relative to granting additional representation to labor on the Advisory Committee on Social Security. (The material referred to above follows:)

SHEBOYGAN, Wis., March 22, 1953. Hon. Senator JOSEPH MCCARTHY,

Senate House, Washington, D. C.: Mrs. Newton Leonard, president, National Congress of Parents and Teachers, calis attention to President Eisenhower's reorganization plan for a Federal Department of Health, Education, and Welfare in which no mention is made of the United States Children's Bureau. Parent-teacher associations have always maintained close working relationships with this Bureau and have benefited greatly by its services to children and their families. Any curtailment of the Bureau's functions would seriously hamper child welfare. We are concerned in the safeguarding of services of the Children's Bureau in a new Federal department. On behalf of the 93,000 members of this Wisconsin Congress of Parents and Teachers request your consideration.

Mrs. JOSEPH BORN, President, Wisconsin Congress of Parents and Teachers.

ATLANTIC CITY, N. J., March 23, 1953. Senator HENRY M. JACKSON,

Senate Office Building, Washington, D. C.: We urge you to join with Senator Humphrey of the Committee on Government Operations in making plain and denouncing the outrageous usurpation of Government functions by the American Medical Association and the chamber of commerce in the clandestine deal to take over and direct the new Department of Health, Education, and Welfare.

The following wire to Senator Humphrey makes plain the reasons for our request :

"Reorganization Plan No. 1 gives long overdue status to the important governmental functions of health, education, and welfare. But some of the specific provisions of the plan and the circumstances surrounding the activation of the new Department are disturbing.

"Most alarming is the proposal to set up a special assistant for health and medical affairs. In testifying before the joint House and Senate Committee on Government Operations, the President, two past Presidents and the chair'man of the board of trustees of the American Medical Association unashamedly indicated that that they control the appointment to this key job. While Mrs. Hobby stated that no “definitive chart" of the assistant's duties had been prepared, Dr. Elmer L. Henderson, a past president of the AMA, produced a job description which had been given to him by the White House. This “duty sheet” makes clear that the Assistant Secretary is to have control over all health programs and activities of the new Department.

"Such control will place in the hands of the AMA veto power over all of the Department's health activities. It represents a shocking departure from good government to set at the throat of the agency that has primary Federal responsibility for health and medical matters the hands of the AMA—an organization that, in the last 20 years, has tried to throttle virtually every constructive and progressive move in the field of legislation to improve and maintain the health of the American people. The AMA is a private agency with a selfish interest. It is aiming to take over control in a field where the interests of all the people is paramount. This proposal can be evaluated logically only as the price exacted by organized medicine for temporarily not opposing the establishment of a combined Department of Health, Education, and Welfare.

“This abject surrender to the AMA in the field of health unfortunately is consistent with the surrender to the Chamber of Commerce and the insurance industry in the field of social security. Mrs. Hobby's advisory committee on social security, which has already had two meetings with her is composed of four members of the social-security committee of the Chamber of Commerce. A fifth member is in the insurance business. Only one of the six can be considered to be impartial. .

"Organizations like the AMA, the chamber of commerce, and insurance companies cannot be expected to represent any but their own selfish interests. It is unfortunate that recognition has not been given to the necessity for consulting with labor, consumer, and other representatives of the general public."

WALTER P. REUTHER,

President, CIO. (The Federal Security Administrator has complied with these requests, and the information is included in the record at this point):

FEDERAL SECURITY AGENCY,

Washington, March 24, 1953. Mr. WALTER L, REYNOLDS Chief Clerk, Senate Committee on Government Operations,

Washington 25, D. C. DEAR MR. REYNOLDS: In response to your two oral requests of yesterday to Mr. Miles, I hope the following facts will provide the answers which you need:

1. In respect to the concern expressed by various persons and groups about the fact that the Children's Bureau was not mentioned in Reorganization Plan No. 1 of 1953, the reason is that none of the constituent agencies of the Federal Security Agency was specifically mentioned in the plan. Such other important agencies as the Public Health Service, Office of Education, Food and Drug Administration, and Office of Vocational Rehabilitation were not mentioned by name in the plan. All of the component parts of the Federal Security Agency, including the Children's Bureau, will be transferred to the new department under the terms of section 5 of the reorganization plan. Nothing in the plan would in any way alter the status of the Children's Bureau. The plan would not change the relationship of the Children's Bureau to the proposed new department as compared to its present relationship to the Federal Security Agency.

2. We have recently begun to consult informally with various persons familiar with the field of old-age and survivors insurance for the purpose of developing recommendations to the President in respect to the extension of the old-age and survivors insurance system so as to include groups of persons not now covered by the system. Some preliminary discussions have been held with persons in the insurance field. We are now in the process of adding individuals from organized labor and agriculture as consultants on this matter. If I can be of further help, please let me know. Sincerely yours,

OVETA CULP HOBBY, Administrator. (Whereupon, at 12:25 p. m., the subcommittee adjourned to go into executive session.)

(Public Law 109 follows:)

[PUBLIC LAW 109—81st CONGRESS]

[CHAPTER 226—1st SESSION)

(H. R. 2361] AN ACT To provide for the reorganization of Government agencies, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I

SHORT TITLE

SECTION 1. This Act may be cited as the “Reorganization Act of 1949”.

NEED FOR REORGANIZATIONS

SEC. 2. (a) The President shall examine and from time to time reexamine the organization of all agencies of the Government and shall determine what changes therein are necessary to accomplish the following purposes :

(1) to promote the better execution of the laws, the more effective management of the executive branch of the Government and of its agencies and functions, and the expeditious administration of the public business ;

(2) to reduce expenditures and promote economy, to the fullest extent consistent with the efficient operation of the Government;

(3) to increase the efficiency of the operations of the Government to the fullest extent practicable;

(4) to group, coordinate, and consolidate agencies and functions of the Government, as nearly as may be, according to major purposes ;

(5) to reduce the number of agencies by consolidating those having similar functions under a single head, and to abolish such agencies or functions thereof as may not be necessary for the efficient conduct of the Government; and

(6) to eliminate overlapping and duplication of effort. (b) The Congress declares that the public interest demands the carrying out of the purposes specified in subsection (a) and that such purposes may be accomplished in great measure by proceeding under the provisions of this Act, and can be accomplished more speedily thereby than by the enactment of specific legislation.

REORGANIZATION PLANS

SEC. 3. Whenever the President, after investigation, finds that

(1) the transfer of the whole or any part of any agency, or of the whole or any part of the functions thereof, to the jurisdiction and control of any other agency; or

(2) the abolition of all or any part of the functions of any agency; or

(3) the consolidation or coordination of the whole or any part of any agency, or of the whole or any part of the functions thereof, with the whole or any part of any other agency or the functions thereof; or

(4) the consolidation or coordination of any part of any agency or the functions thereof with any other part of the same agency or the functions thereof; or

(5) the authorization of any officer to delegate any of his functions; or

(6) the abolition of the whole or any part of any agency which agency or part does not have, or upon the taking effect of the reorganization plan will

not have any functions. is necessary to accomplish one or more of the purposes of section 2 (a), he shall prepare a reorganization plan for the making of the reorganizations as to which he has made findings and which he includes in' the plan, and transmit such plan (bearing an identifying number) to the Congress, together with a declaration that, with respect to each reorganization included in the plan, he has found that such reorganization is necessary to accomplish one or more of the purposes of section 2 (a). The delivery to both Houses shall be on the same day and shall be made to each House while it is in session. The President, in his message transmitting a reorganization plan, shall specify with respect to each abolition

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