In 1977, Congress completed action on legislation to better insure the long-term financial integrity of the Social Security System. High unemployment and inflation have continued to threaten the stability of this retirement benefit system, resulting in continued concern about the future fiscal soundness of the program and the need to reform the method of financing.

As passed by the 95th Congress, the Social Security bill:

•Raised the wage base for employers and employees from the 1978 level of $17,700 to $22,900 by 1979 and in steps to $31,800 in 1982. Automatic inflation adjustments will occur annually after that time to a projected 1987 base level of $42,600.

•Increased payroll tax rates for employers and employees from the 1978 level of 6.05% in steps to 7.65% by 1990. These increases will primarily affect upper income wage earners. In return for paying more into the fund those with higher incomes will be building up bigger future retirement benefits and will have greater protection while employed.

Raised the Social Security contribution for employers of tipped workers who are now required to make payments based on the full level of the minimum wage.

•Allowed beneficiaries to earn $4,000 in 1978, increasing in steps to $6,000 in 1982. Over this

amount a beneficiary would continue to lose 50 cents of benefits for every dollar earned-those over 72 years of age would be exempted.

•Adopted a decoupling provision. Decoupling would correct a technical flaw caused by distortion of the automatic cost-of-living increase in the link between wages and pensions in the benefits table.

•Authorized a study of the differences in treatment of men and women under the Social Security program.

Despite this costly initiative, the Social Security System exists in a condition that is untenable over many years—its obligations far exceed its potential

resources.

The major fiscal thrust of the 1977 law falls upon employers. While large companies may be able to cut back on private pension arrangements, many small businesses have no such plans and thus must absorb the full effect of an increased tax on all pay over the Social Security tax base. This discourages the adoption of private pension plans by smaller employers and encourages their termination. The burden will not be borne equally, however, and for some businesses the added payroll tax will force the organization into a deficit position. In other cases, foreign competitors will be given a cost advantage. In total, the result will be added costs, increased prices and more inflation.

RESOLVED

State workers' compensation programs provide a system of compensation to workers injured on the job. The system was instituted on a state-by-state basis to provide legal remedies for disabled workers whose only other recourse was to bring a law suit against the employer and prove in court that the injuries were caused by employer negligence. This process was slow, costly, and uncertain.

In the 60 years since their enactment, workers' compensation programs have assured prompt aid to workers injured on the job, regardless of who was at fault. As the program currently is structured, employers are required to assume the costs of occupational disabilities based on standards established by each of the states. There are workers' comp laws in all 50 states, each law setting a level of benefits appropriate to local needs and conditions. In some states benefit amounts have not kept pace with the rate of inflation, a fact adding further impetus to a federal standards drive. Whether workers' compensation benefits are sufficient and whether they are applied to those most in need has been a subject of numerous pieces of legislation in prior Congresses proposing a system of federalized standards for workers' compensation benefits.

Legislation proposed in the 96th Congress would have established a system of national standards for workers' compensation benefits. Under this approach, the current workers' comp system based on the individual states' rights to establish standards appropriate for their area would be replaced by standards set by Congress and adjudged by the Department of Labor. The bill also would have authorized the Secretary of Labor to issue "advisory standards" for compensation of occupational long-term diseases. Although this provision improved on earlier versions of this legislation calling for a mandatory disease compensation standards, the process through which the "advisory standards" were to be issued included a provision allowing the Secretary to recommend to the Congress that they be made mandatory. Along with establishing federal standards for benefits and compensation of occupational diseases, the

RESOLVED

The Small Business Legislative Council supports the current state-by-state system of workers' compensation. The state-by-state system has functioned in an effective manner for more than 60 years. Federalization of workers' compensation standards would not

bill would have authorized the Secretary of Labor to study the feasibility of indexing total disability or death benefits to periodic changes in average weekly wages in the various states, and to submit recommendations to Congress within three years of enactment for legislation to mandate indexing of benefits.

Although the proposed legislation made other technical changes in workers' compensation standards, the combined effect of the main provisions outlined herein would place a substantial burden upon small business. The federalization of workers' comp standards, aside from various legal arguments regarding states rights in this area, would establish artificially high benefit standards for most states regardless of current wage rates and compensation levels. The resulting increase in cost once again would place small firms in the financially precarious position of either absorbing these cost increases or passing them on in the form of higher prices, thus eroding further their competitive stance.

Regarding occupational disease standards, small businesses already burdened through high insurance rates could very well be confronted with further increases if the Secretary of Labor should determine that compensation levels for certain diseases are too low and thus recommend to Congress that higher, mandatory standards be enacted. Again, the burden on small business is evident-sharp increases in premium costs, or total unavailability of insurance coverage.

Finally, allowing the Secretary to undertake the study of indexing the benefit levels to periodic changes in states' average weekly wages would add a potential for further inflationary pressures. Like increases in Social Security taxes and minimum wages, increases in workers' comp benefits lead inevitably to increasing employer costs and thus higher prices. Indexing the benefits to average weekly wages, themselves indexed to changes in the Consumer Price Index, is yet another push in the inflationary spiral. Small business would again bear the greatest share of this burden.

necessarily guarantee that benefits will be adequate or that the system is free from abuse. Federalization would only increase costs to employers in the form of increased Insurance rates, and thus would fuel inflation.

Despite elaborate measures undertaken by Congress during the past century to ensure the viability of small competitors, it is today easy to document a "tilt" in antitrust enforcement practices which has adverse impact specifically on the sector of the economy the antitrust laws are designed to protect, the `small businesses of this country. At present, enforcement is on an ad hoc basis only. There are not clear guidelines to enforcement authorities to make their efforts effective in critical areas. As pointed out by a former director of the Bureau of Economics of the FTC, "The net result. . . . is that the little guys, not the giants who dominate our manufacturing and trade industries, typically get sued."

Strict enforcement of antitrust laws would result in an enhanced social benefit, as competition would be strengthened from a larger number of healthy competitors. What is needed is a rational set of policy guidelines to direct antitrust enforcement authorities to the areas where their efforts would achieve optimum remedies. Formulation of such a long-range plan by the Congress is a task of surpassing importance in the economy of the coming years, which today is suffering from the difficulty of ensuring a competitive sector in the business community. Efforts to step-up enforcement of antitrust laws must have as its goal the encouragement of the small-scale enterprise as the only realistic check against giantism in business.

RESOLVED

The Congress of the United States must affirm that the antitrust laws exist to preserve the very nature of the competitive economy on which our country is founded, and in doing so, must act to strengthen that sector of the economy which fosters competition, small business. Congress must act to stem the spread of concentration, and in doing so, ensure diversity, choice, and opportunity for future generations of citizens. The specifics of long-range enforcement planning should include the following elements:

1. Preservation of a plurality of antitrust enforcement authority, as embodied in the FTC and Department of Justice.

2. Prior to the institution of government antitrust proceedings, a competitive impact statement must be filed in the court, setting out the reasons why the government believes it essential that the matter be litigated; the reason why the defendant or defendants were selected; and the objective of the litigation— what the government seeks to achieve.

3. That the rigors of per se rules of antitrust

culpability be determined inapposite and inappropriate in reference to smaller-scale enterprise. 4. That antitrust enforcement be tailored to restore competition in a target industry in the direction of a realistic norm, keeping in mind that the best vehicle for restoration of competition is a healthy and thriv*ing small business component. Current policy allows selection of a relatively small component in a given industry, usually a small to medium-size business, and then harsh punishment with antitrust sanctions for the purpose of “setting an example."

5. That the impact of the challenged market behavior be based on actual empirical evidence rather than the application of theoretical rules. Under the present system, the application of arbitrary rules tends to suppress healthy and desirable competitive practices employed for the purpose of gaining a foothold in a market, or meeting the deep pocket competition of a giant-scale conglomerate enterprise. What is proposed is attuning enforcement to the realities of the marketplace, rather than in a manner consistent with a priori notions.