Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

Cooperative federal-state progress toward Social Security; highway safety; and cooperation of state governments

Points of Interest:

Vincent Miles of the Social Security Board gave Governors an overview of consideration and passage of the Social Security Act (SSA).

Governors spent considerable time discussing the Act's provisions regarding unemployment compensation. Mr. Miles explained that prior to SSA, unemployment compensation had failed to pass at the state level in large part because employers were reluctant to contribute if they feared that employers in other states were not participating. Social Security resolved this problem by establishing a uniform payroll tax on employers nationwide. Under the new law, state unemployment compensation programs were required to meet federal standards in order to be eligible to apply credit against the federal payroll tax of up to 90 percent of the contributions to their state unemployment compensation funds.

At this point--and largely pursuant to passage of the Social Security Act--15 states and the District of Columbia had unemployment compensation acts on the books. And because three of those states (Massachusetts, New York, and California) were heavily industrial, 45 percent of all industrial workers in the country were now covered by unemployment insurance. However, in view of the fact that the SSA had passed during an odd year, and state legislatures generally met only during odd years, many states would either have to call emergency legislative sessions or wait until 1937 to enact the legislation required to receive credit against federal payroll taxes. Governors of those states argued that it was unfair to deny them credits in the meantime, while Governors of states that had enacted unemployment compensation laws felt that it would be unfair to extend credit to states that might or might not ultimately enact the appropriate legislation. One proposed solution was to postpone the effective date of the Social Security Act's unemployment compensation tax credit requirements. In the end, Governors adopted a resolution to hold the credits for states where unemployment compensation legislation had not yet been enacted.

With respect to welfare aspects of the SSA, Mr. Miles noted that it had been nearly 40 years since state governments first assumed responsibility for public assistance--including aid to the aged and blind as well as to dependent children. By 1934, 25 states and 2 territories offered old-age assistance, 24 states had laws for aid to the blind, and 45 states and the District of Columbia provided aid to mothers of dependent children. Pursuant to passage of SSA, the federal government had given approval to plans for at least one category of assistance in 43 states, and for all three categories of assistance in 23 states.

Memorable Quotes:

Vincent Miles of the Social Security Board said: "The [old-age pension] system was adopted based on the theory that this generation should be taxed a definite tax, and each generation is to produce its own old age fund, and it is not to be a general tax levied upon succeeding generations..."

Governor Harold Hoffman of New Jersey, who had been his state's commissioner of motor vehicles, said: "...in the last ten years there has been a reduction of twenty-one per cent in the number of automobile fatalities in those States that have a driver's license law, while in the States not having a driver's license law there has been an increase of anywhere from two to thirty-one per cent...All of those who have been engaged in the safety work generally, feel that our hope for progress in the conservation of life depends on what we call the "Three E's," engineering, enforcement and education."

Henry Toll of the Council of State Governments said: "The causes of [the] failure of the State...to emphasize the matter of interstate cooperation as much as they might, is probably due partly to the fact that we have a relatively rapid turnover in office...when the government comes into office, [a new Governors feels] that he has been elected primarily for the work of his State...his function and...the problems arising as to the harmonization of his government with those of other States...is secondary.

Resolutions Adopted:
(1) Including Puerto Rico as a member; and (2) requesting that the federal government hold payroll tax credits for states that had not yet enacted unemployment compensation legislation.