On August 14, 2010, one of the New Deal’s most famous and enduring programs, Social Security, will celebrate its 75th anniversary. While the debate over the role of government rages and deficit hawks advocate cuts to Social Security benefits to trim the federal deficit, Social Security once again finds itself in the public limelight. To gain a better understanding of Social Security, it is instructive to look back at how the act came into being and what kind of support it received when it was first proposed.
When Franklin Roosevelt took office in 1933, the plight of the aged and unemployed in the United States was grim beyond all description. With no unemployment insurance and private charities overwhelmed by the scale of the crisis, millions suffered a level of economic deprivation that is hard to imagine today. This was especially true for the elderly, where only 15 percent of the population was covered by private pension plans. Age discrimination, lack of adequate health care, and other factors had reduced employment among older men from roughly 70 percent in 1870 to roughly 33 percent in 1930. For women, especially those who had lost their husbands, things were even harder, as it is estimated that only 8.1 percent of older women held steady jobs in that year. As the Depression deepened, these dire statistics became even more pronounced, augmented by the burgeoning banking and financial crisis that wiped out millions of savings accounts between 1930 and 1933.
FDR’s response to this unprecedented economic calamity led to a flurry of legislative activity in his first “100 days” in office. The legislation was geared toward reforming the banking and financial sector (via the Emergency Banking Act, the Glass Steagall Act and the Truth in Securities Act, among others) and providing immediate relief in the form of jobs (via the creation of the Civilian Conservation Corps, the establishment of the Federal Emergency Relief Administration and the launching of the Tennessee Valley Authority).
By 1934, however, FDR was thinking more and more about the structural failures of modern industrial capitalism and the critical need — especially in a world where economic hardship had given rise to fascist regimes in Europe and Asia — to create some measure of economic security. This was particularly important for those who were suffering most in the wake of the West’s economic collapse: the aged and unemployed. On June 29, 1934, therefore, FDR issued Executive Order 6757, establishing the Committee on Economic Security (CES).
Chaired by Frances Perkins, FDR’s Secretary of Labor and the first female cabinet member in US history, the CES was charged with developing “recommendations concerning proposals which…will promote greater economic security,” especially “security against several of the great disturbing factors in life…unemployment and old age.” The Committee received advice from an advisory council made up of leading figures from the public and private sectors (including representatives from business and organized labor), as well as a number of advisory subcommittees. By January 15, 1935, the Committee had completed its work and sent its recommendations to the President, who, after reviewing them, sent them to Congress. In his cover letter, FDR focused on four provisions. Three of those are well known and were incorporated into the final Social Security Act: unemployment insurance, old age benefits, and aid to dependent mothers, children, and the blind. Less well known are the provisions providing federal aid to state and local public health agencies. The President also recommended that the question of “health insurance” deserved further study as per his previous assertion that “the problem of economic loss due to sickness” is “a very serious matter.”
Contrary to the impression one might glean from today’s debates over Social Security, the original measure, although somewhat controversial, received a broad measure of bipartisan support. It passed the House by a vote of 371-33 and the Senate by a vote of 76-6 (with 81 Republicans voting for the Bill in the House, and 16 voting in favor in the Senate). It is also interesting to note that the first commissioner of the Social Security Board was a Republican, John Gilbert Winant, the former Governor of New Hampshire.
Today, despite the current discussions among some policy elites about the need to cut Social Security, the program remains extremely popular among the American public. Moreover, well respected organizations like the Center on Budget and Policy Priorities argue that recent fears over the near term health of Social Security are greatly exaggerated. Most mainstream economists also agree that the long-term health of Social Security can be secured much as it has been in the past: through an increase or the elimination of the Social Security tax cap, by boosting future revenues, and other adjustments that do not involve a reduction in benefits.
Whatever the solution, one would hope that both the White House and Congress will be guided by the same philosophical approach that inspired FDR. Reflecting on the plight of the aged and unemployed, he once remarked that the “true conservative seeks to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it.”
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.