Financing Economic Security in the United States

By William Withers | Go to book overview

CHAPTER V THE ECONOMIC EFFECTS OF RELIEF AND SOCIAL SECURITY FINANCE

IT IS INEVITABLE that the economic effects of financing security will be taken into account in determining the size and character of security expenditures. Security finance may exert influence upon the economic system through the size and distribution of payments for security, the measures used to secure the funds, and the methods employed in managing them before the actual payment for security purposes is made. Security payments can have considerable influence apart from their effect upon the welfare of recipients. Relief and insurance payments may alter wages, interest rates, and the volume of saving. They may also exercise an inflationary or deflationary influence over prices and the volume of business activity. The taxation imposed in connection with the security program may also have far-reaching effects. In particular, the pay-roll taxes may be expected to affect the size and character of the Federal budget, the amount of individual saving, and the level of prices. If the general economic consequences of these relief and social security measures, regarded from the standpoint either of expenditures or of revenues, are mainly adverse, strong public opposition will appear and a realistic limit will be set through political agencies representing the amount of burden the public will tolerate. Opposition along these lines may prove strong enough to wreck any relief or insurance sys-

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