agencies of the Government. It made it very difficult, especially for the small businessman of this country, to deal with it, and deal with it in an easy and equitable way for his workers.

I think the changes that have gone on with current tax legislation have been very positive. I am sure, as many people have mentioned here earlier, we have got to remember that we should keep it as simple as possible, and remember the small businessman.

By keeping it simple, I mean in two areas—in the reporting area to the Federal agencies, and also in the compliance area to the Treasury Department as far as regulations are concerned. This is a very difficult thing to coordinate. But it should be done. And it has driven many, many qualified plans out of existence which are the backbone of retirement security for many people in this country. As far as individual retirement accounts are concerned, they were actually put into effect with the 1974 law. But the recent change in the law which occurred last year I think was the single best improvement to our retirement system in that it allows all workers to use this retirement plan.

I would like to support the change. But I would also like to say it doesn't go far enough. I think there should be an increase in the deductible contribution allowed, and we should also allow workers to have greater portability, by allowing them to take partial distributions from retirement plans; that is, when they leave an employ they can take part of the distribution and use what is called the IRA rollover.

I know there is a bill before the House right now, H.R. 4473. I strongly urge your support, the committee's support for this bill. As far as I know, the only objection has been from the Treasury Department because they said that there is a short-term negative impact on this from a tax revenue standpoint.

I think this is very poor thinking, because the Treasury should be looking long term, and in the long term this should be a positive impact for the workers and the general economy of our country.

As far as social security is concerned, first of all I don't think you can take this away from people who have been part of the system for many years. Granted, the system is inequitable. I give you the example, a wage earner who is earning the maximum all his working years, contributing the maximum-another earner who has contributed on a lower end of the scale for many years. But what does the system say? It says if you earn up to the maximum in the last I believe 7 years you will receive the highest benefit payable. That means that person will receive the same benefit as the person who has contributed all his working life on the maximum level. That is inequitable.

I say don't mix the social security fund with general revenue funds. If you are going to make it a good fund and it is going to work, you have to make it comply with something, similar to the insurance industry, the compliances they have to go through. Make it stand on its own. Make it have its own backbone, its own re

serves.

Some suggestions. Cut off social security may be based upon a certain level of income. You can do this in many ways. I deal with many wealthy people who don't need social security. They receive it every month. Quite frankly, it is a bookkeeping headache for a

lot of these people. I see many people that require, that need it, they won't have their bread on the table.

The point is this. I think that you can actually tax social security-once an individual has reached a certain income level. I know that word "tax" is a very annoying word. But I think that is the most appropriate under the circumstances.

I belong to a certain group that has been written about-called the postwar baby boom. Quite frankly, I can sit here and think when I reach so-called retirement age, and the baby boom is right on my heels, I am not going to be part of the social security system. It will not satisfy the retirement payouts that will be required at that time.

To summarize, I think we all know, we have heard it here today, the single worst effect on people today has been inflation in recent years. And this is especially hard on people on fixed incomes, whether they have social security or private pension plans or both. I think the reason-and this is a very general comment—that the inflation is there is because of Government spending. A temporary solution in the Federal area has been to monetize the deficit. Well, the Fed cannot keep printing money or auctioning Treasury notes and Treasury bills, because they are keeping the interest rates high by doing that. And that in turn keeps inflation spiraling.

I found a chart the other day sent to me by the Goldman, Sachs Economic Group. It clearly indicates from 1968 through 1981 Government debt has risen directly in correlation with the consumer price index-it is a straight line upward. 1968, if you call it a 100 basis, in 1981 the basis was 270. And they both have risen together. I think it is clear that as debt rises, so does the inflation factor. The overall solution I think is cut Government spending. The main question is will Congress recognize this and will they act. Thank you very much.

Mr. JEFFORDS. Thank you for a well thought-out statement. We certainly appreciate your comments.

The next witness is Charlene Stebbins. And will Janet Lincoln please come forward.

STATEMENT OF CHARLENE STEBBINS, VERMONT ALLIANCE,

BRADFORD, VT.

Ms. STEBBINS. How do you do, Mr. Jeffords. I am Charlene Stebbins, from Bradford. I am on the executive board of the Vermont Alliance. We are affiliated with the Vermont Coalition for Jobs, Peace, and Justice.

I want to begin my remarks by telling you a story about what Doris is bringing you. When I was 11 years old I went to Congress with my mother and aunt, and we had lunch with Senator Aiken and Senator Mike Mansfield. That is where I was introduced to steak tarter, which is chopped sirloin with a little bit of caviar, egg in the middle of it, such as you have there. And it was a fact that was ballyhooed in this country several years ago, and it is true today still, that people in America, elderly people, are still eating dogfood.

It is a shame what is going on in America today. And we are sitting here talking about wealth and we are talking about power.

And the fact is that the Republican administration came into power on the backs of the poor people of this country.

I find it very ironic we are sitting here in Woodstock, Vt., one of the most wealthy communities I have seen in the State, and holding this hearing and talking about poor people, elderly people on social security, and what's wrong. Then we are talking about cutting Government spending as a way to end the ills of the Federal budget.

What is really happening is this. Back in the 1960's, corporate taxes made up about 23 percent of the Federal budget. They now make up about 7 percent of the Federal budget, and it is going down. I resent very much hearing people say poor people are to blame, and that the Reagan administration is taking the load off the middle-class taxpayer, when that is not the truth at all.

What we are seeing is the most unprecedented military buildup in the history of the world. And we are seeing President Reagan's safety net with an awful lot of holes in it.

There is just no way that I can see you going back to Washington and allowing us to keep continuing. If you are really for the people of this State-we are 27th in the Nation in per capita income. There are a lot of poor, poor people in the State. You should know that yourself.

Now, you are running for re-election, right? And this is a really good cheap way to get a little publicity. You can come here and have this hearing. But what you are doing is just sitting here and listening to people's troubles, and then you are going back to Washington and I don't think you are going to do a heck of a lot about things.

I think if you want to really feel for the people of this State, if you want to really see, show people what is really going on in your head, and show them you really care for them, then you will stop this sham and this hypocrisy, and go back to Washington and scream bloody murder. Because things are not working out the way it is going.

I am sorry to have to call you a hypocrite, but that is the way I see it.

Mr. JEFFORDS. I appreciate your coming. I appreciate your candor.

Ms. STEBBINS. I will appreciate it if you go back to Washington and do something. And don't just maintain the status quo.

Mr. JEFFORDS. I can assure you I will do what I can. But unfortunately I don't have the control I would like to have over certain things.

Ms. STEBBINS. I feel you can be doing a lot more than you are doing, sir.

Mr. JEFFORDS. OK. I appreciate your comments. I will take them to heart.

Ms. STEBBINS. And think about the elderly people and what they are eating tonight. OK.

Mr. JEFFORDS. I would just ask you one thing. I will go back and do what I can. I know you will do what you can. But I also would like you to take a look at my record.

Ms. STEBBINS. I have taken a look at your record. I don't think it is good enough.

Mr. JEFFORDS. All right. If you have done that, that is all I can ask you to do. Thank you.

Next, Chauncey Collins. Chauncey, I really appreciate you coming here. You are one man I really admire a lot. You have done a great deal for the Vermont workingman, been a very good leader and advocate of your people. I appreciate your coming here.

STATEMENT OF CHAUNCEY COLLINS, VERMONT LABOR FORUM, ST. JOHNSBURY, VT.

Mr. COLLINS. I have a prepared statement. I want to ad lib a little bit, and give what the people from the Forum think and what I have heard in the workplace. I represent about 5,000 to 6,000 workers in the State of Vermont, depending on the economy. It is down now, but it goes up as high as 6,000. We have a meeting three times a year. They tell me what they think. People get up and read statements. And social security has come up quite a few times. In the last meeting we had it come up.

I have paid social security since it first started. I was a pinboy. I remember what the politicians said about it at the time. It is a little different from what they are saying now. They said at the time they were going to start social security so people when they reached their golden years they could live in dignity, that we would be able to at least live. And now they seem to have changed that and say it was only a supplement anyway, and you should rely on private pensions or what you can save yourself.

If you do that, anyway you cut out social security or rely on what you can save, private pensions-and I have a pension that I am going to get from the place I work-we negotiated it, and it is as good as the private pensions that are in the workplace. But it is nowhere as near enough to live on. That with social security and a cutback, you can barely live.

That is about the size of it. It is nothing good. And I believe that if you cut out social security, you are going to go back where people are going to starve to death. Because people who work, if they have some sort of an upset in their life, like hospital bills, sickness, trouble with their kids, trying to send their kids through college, they are going to spend their money. There is no other way. You cannot put your money into an IRA, say my kid has a chance to go to college and become something, and say I cannot give it to you, I have to save it for my retirement. So you spend the money you have. If people have sickness, they wind up broke, and start all over again. And it goes on and on until they retire. Only with good luck can you save money. Only with a good income can you have IRA. That is the only way you can say let's cut back a little on social security and build up the other things. It should be the other way around. We should increase benefits, not decrease it.

I believe a lot of politicians want to cut social security out, and I have heard this all my life. When Reagan went in the White House, I believe they said now is our chance. I have been to several hearings on social security. It seems to me the trend, that they are trying to brainwash the people into saying let's all share together, you guys take a little cut, and then we will. But it winds up the

worker works all his life, and gets out there, and he takes the cut all by himself.

Profits are going up. They are not going down. Industry is not suffering. If the social security system put their money into industry, it would be one of the most profitable organizations in the world today. We would not have to worry. But back at that time they said, no, we shouldn't do that, we shouldn't interfere with private business. So they invested the money into Government debentures, where there was low interest.

And a way out of it, the simple way, is let's take a chance, and stop creating war machines and bombs, and just take a chance and live for a while at peace with the rest of the world and take that money and finance social security and protect our elderly. And I don't believe that we will be into a major war. I think it works just the opposite. If we build everything up, and we keep this going, we are going to be in a war and spend our money that way, and there won't be enough money to support the old people of this country. And that is exactly the way I feel about it, and the way a lot of people in the forum feel about it.

The simple solution is, if we took the $40 billion the President is talking about, put it into social security, and not build a couple of B-1 bombers, the problem would be over. That is what I would like to have you go back and tell them. We have enough bombs. We don't want a war. We want to protect our social security system and our elderly in this country.

One other thing I wanted to mention. It was mentioned two or three times here today, and they keep mentioning it in Washington, the President keeps talking about it-"Why don't you just work a little while longer for your country, why don't you just work a little longer. I am working."

Of course he is making a little bit more money. Why don't they do something about it, and pay off the people on social security when they are 65, and say go back to work, and what money you earn you can keep, and continue to pay into the system. That is what they should do. They should allow the people to work as long as they want to, but not force them to do it.

If I get ready to retire at 62, or decide to go to 65, I don't believe the Government should force me to work and say that is my little minor contribution to the social security system. I think that is on the backs of the poor people, on the backs of the working people. I think what they should do is say, OK, if you want to work you work, continue to pay into it, and you can keep the money. Your social security will start at 65. There would be more money coming into the system. I think the answer is that simple. Thanks a lot.

[The prepared statement of Mr. Collins follows:]

PREPARED STATEMENT OF CHAUNCEY P. COLLINS, CHAIRMAN, VERMONT LABOR FORUM, ST. JOHNSBURY, VT.

Early in the nineteen thirtys', the U.S. Government, in an effort to restore to the people just coming out of a Depression, a feeling of security in those years to come when they would no longer be part of the Nation's work force, instituted the Social Security act.

Many thought then-as many do now-that if the "powers-that-be" had taken that money and invested it in good old intangible American Stocks, the Country