How Social Security was Born: Not a Bonus, But a Guaranteed Retirement for all Americans Michael Streich

 

Formally known as the Wagner-Lewis-Doughton social security bill, the Social Security Act was passed by Congress June 19, 1935 and signed into law as immediate legislation by President Franklin D. Roosevelt. Old age benefits were discussed by Roosevelt and key supporters who would hold positions in his administration before his 1933 inauguration. His Secretary of Labor, Frances Perkins, writes that Roosevelt, “…always regarded the Social Security Act as the cornerstone of his administration…” Not all Americans supported the measure, referring to the act as “socialism.” It is still considered controversial and falls under Congressional scrutiny whenever Republicans make significant gains in Congressional representation, as happened most recently in the 2010 midterm elections.

 

The Social Security Act Begins as an Unemployment Insurance Measure

 

During the heady days of FDR’s first Hundred Days, New York Senator Robert Wagner and Rep. David J. Lewis of Maryland approached Roosevelt with a rudimentary bill to provide unemployment insurance. Roosevelt, however, wanted to include social security. Concerns over benefits for America’s seniors arose out of the popularity of the Townsend Movement. This movement proposed generous old age pensions at federal expense.

 

The 1935 bill was the product of many lengthy committee hearings, unending hours of research, and continual brainstorming by FDR’s brain-trust. The initial measure included a health care plan, but this part of the bill was dropped as Roosevelt knew the medical establishment would oppose it, and the rest of the bill was not to be opened to the danger of failure.

 

Passing Social Security and Unemployment Insurance

 

Combining Social Security and unemployment benefits was the recommendation of Harry Hopkins, one of FDR’s key advisers. Unlike other New Deal programs, it was to be a permanent program and not deficit funded. Roosevelt stated, “We can’t sell the United States short in 1980 any more than in 1935.”

 

Roosevelt might have been astounded that in 1980, Ronald Reagan was elected President, beginning the tide of conservative ascendancy in the Congress. By 1985, into his second term, the Senate Budget Committee, led by New Mexico Senator Pete Domenici, recommended a one-year freeze on Social Security benefits.

 

As passed in 1935, Social Security was limited. During Committee hearings, Treasury Secretary Henry Morgenthau opposed a universal system, suggesting that rural farm workers be exempted as well as small businesses that employed less than ten people. Frances Perkins recounts in her memoirs, none of the provisions would completely solve the nation’s poverty, but it was the first step in solving future depression-condition problems.

 

Opposition to Social Security during the New Deal and Beyond

 

No emergency legislation will make an immediate difference without the necessary funding. Before Congress adjourned in the summer of 1935, Louisiana Senator Huey Long, one of Roosevelt’s most ardent critics, mounted a filibuster to stop any funding legislation. His filibuster lasted until adjournment and Roosevelt was forced to creatively look for temporary workers to help set up the newly independent agency.

 

Others, like Oklahoma Senator Thomas Gore, asked Secretary Perkins during a hearing “isn’t this like socialism?” The entire notion of “cradle to grave” federal entitlement reeked of socialism for stalwart GOP lawmakers. These views were vocally resurrected every time Congress expanded Social Security.

 

In 2010 and again in 2011, Social Security recipients received no cost-of-living adjustments (COLAs) yet their Medicare contribution costs rose. In the 2010 midterm election, most seniors voted Republican.

 

Senator-elect Rand Paul of Kentucky campaigned on the promise that he opposes “any cuts in benefits for seniors” and “raising the Social Security retirement age…” Days after the election, however, he said “everything is on the table” to balance the budget. (ABC News, November 3, 2010)

 

National Health Care Tied to the Social Security Bill

 

Although Roosevelt cut health care from the 1935 bill, when Congress revisited Social Security in 1939 Senator Wagner attempted to add amendments, including a disability benefit. Congress voted down these expansions.

 

Wagner’s 1939 Health Bill was designed to expand unemployment benefits and Social Security. This was not a universal, federally mandated health plan such as found in other nations. Opting into the plan was not mandatory nor did his bill include forcing Americans to purchase health insurance.

 

Nevertheless, it was severely attacked, most notably by the American Medical Association and the pharmaceutical industry. Universal health care had been attempted since 1915 and was deemed a progressive measure. Not until March 2009 would Congress enact a health care bill that provided affordable coverage for all Americans.

 

The Role of Government during Periods of Economic Hard Times

 

Conservative Republicans led by President Herbert Hoover in the early years of the Great Depression abhorred federal intervention that amounted to any hint of welfare. Even Franklin Roosevelt rejected the government “dole.” But Roosevelt and the liberal Democrats believed that the role of the federal government was to stimulate the economy by putting people to work and providing safety mechanisms like unemployment insurance.

 

Advisers like Frances Perkins made the argument that even a minimal unemployment payout in the first weeks of unemployment would stop evictions and enable breadwinners to provide for their families.

 

Senator Wagner stated that, “Industry can not run with the mechanical perfection of a gyroscope and out of simple caution we must continue to devise methods of dealing with those who may be severed from their normal work despite our best efforts.”

 

Social Security provided one concrete method for ensuring the survival of American retirees. It continues to do so today. For most, the monthly payout represents a fixed income that covers the bare necessities. Any tampering with those benefits would be criminal to the millions who paid into the system all of their lives.

 

Sources:

 

Lewis L. Gould, The Most Exclusive Club (Basic Books, 2005)

J. Joseph Huthmacher, Senator Robert F. Wagner and the Rise of Urban Liberalism (Atheneum, 1968)

Frances Perkins, The Roosevelt I Knew (Viking Press, 1946 First Edition)