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)