Social Security

Social Security. The passage of the Social Security Act in 1935 launched the federal welfare state. Without this program, now a central feature of American life, the incomes of most older citizens would fall below the poverty line. By the 1990s, more than a quarter of all U.S. households received monthly old age, survivors, or disability pensions. The enactment of this historic measure was neither sudden nor inevitable. Lawmakers and critics had been debating for decades whether the United States should borrow European models, modify programs from the Progressive Era (such as pensions for the aged poor or corporate gratuities), or continue to rely on traditional forms of relief.

In the depths of the Depression of the 1930s, when more than a quarter of all workers were unemployed, large numbers of middle‐class Americans faced dependency in their later years. Older workers were among the first fired, and some hard‐pressed corporations reneged on pension promises. Struggling with bankruptcy and lost savings, many families could not provide for their elderly relatives. Charities and state welfare boards ran out of money. States with old‐age pensions tightened eligibility requirements, and veterans’ benefits were cut.

Something had to be done, but President Franklin Delano Roosevelt, who as governor of New York in 1929 had signed into law the nation's most progressive old‐age pension plan, proceeded cautiously. Roosevelt told Congress early in 1934, “I am looking for a sound means which I can recommend to provide at once security against several of the great disturbing factors in life—especially those which relate to unemployment and old age.” Building on New Deal strategies, the president wanted to give workers and their families “the security of social insurance.” He expected state governments, employers, and workers themselves to join with the federal government in developing a plan built on traditional American practices.

The 1935 act was a complex piece of legislation. Title I provided federal grants to states to pay half the cost of old‐age assistance. Titles II and VIII inaugurated an old‐age insurance program, while Titles III and IX launched an unemployment compensation program. Title IV gave states funds for aid to dependent children. Title V underwrote four different programs for (disabled or not, depending on the program) children and their mothers, especially in rural areas. Title VI increased public‐health services. Title VII created a Social Security Board to oversee programs and to collect data on the program's impact. Title X provided support for the needy blind. Title XI acknowledged Congress's right to “alter, amend, or repeal any provision of this Act.”

Congress radically altered the original provisions of Title II before they even went into effect. Whereas the 1935 act had treated benefits based on employees’ contributions as if they were annuities, and thus correlated to wages, the 1939 amendments gave lower‐income contributors and their surviving families benefits more “adequate” than they had earned. With this change of policy, the system henceforth was tilted toward a welfare model rather than a private‐insurance model. Incremental reforms gradually made Social Security broader in coverage and more generous in benefits. Congress increased Title II benefits 77 percent in 1950. Disability provisions were introduced in the mid–1950s. Medicare, which covered hospitalization for Social Security recipients, was added in 1965. Seven years later, Social Security benefits were automatically indexed to reflect changes in the cost of living.

In its formative years, Social Security enjoyed overwhelming popular support. The system ran surpluses as long as the ratio of workers to beneficiaries was high. Republican presidential candidates Alf Landon in 1936 and Barry Goldwater in 1964 criticized the program, but Republicans generally joined Democrats in supporting reforms recommended by Social Security officials and outside experts. By the mid–1970s, however, support for Social Security had become more problematic. Inflation eroded trust funds. Public confidence was shaken by doomsday scenarios. Some predicted intergenerational warfare: They feared that when the millions of baby‐boomers retired, the cost of their Social Security benefits would place a very heavy tax burden on the younger generation. Congress, spurred by President Jimmy Carter, increased Social Security taxes substantially in 1977. A compromise set of amendments six years later raised the retirement age in the twenty‐first century and set a ceiling on benefits not subject to income tax. Such measures were taken to reaffirm the fundamental aims of the original act.

In many ways, Social Security fulfilled Roosevelt's conviction that the measure was “a sound idea—a sound ideal.” New Jersey senator Bill Bradley in 1983 called it “the best expression of community that we have in this country today.” The value of Social Security benefits in the mid–1990s for an average wage earner who died and left a spouse and two children under eighteen was equivalent to a $322,000 life insurance policy. The program by the mid–1990s paid monthly survivor benefits to 7.4 million Americans, including 2 million children. More than 4 million disabled workers under the age of 65, in addition to 1.7 million of their dependents (including more than a million children), received benefits under Social Security's disability program. Monthly benefits averaged about $680; for a disabled worker, spouse, and two children, roughly $1,100.

For all of its successes, however, Social Security remained under fire as the century ended. Loath to make dramatic changes, politicians were nonetheless frustrated by their inability to reduce the scope of entitlements. Those receiving benefits or who expected to get them shortly were more likely than younger Americans to declare the system financially secure. Many people, moreover, misperceived the program's scope and operations. Some still thought Social Security operated like a private insurance program. Others felt that monthly Social Security checks should be enough to cover basic expenses, obviating the need for private savings or other retirement pensions. As a result, Social Security appeared likely to become even more controversial in the twenty‐first century, particularly if Washington's role in delivering human services continued to diminish.
See also Depressions, Economic; Life Stages; Medicare and Medicaid; New Deal Era, The.

Bibliography

Alan Pifer and Forrest Chisman, eds., The Report of the Committee on Economic Security of 1935, 50th Anniversary ed., 1985.
W. Andrew Achenbaum , Social Security: Visions and Revisions, 1986.
Jill Quadagno , The Transformation of Old Age Security: Class and Politics in the American Welfare State, 1988.
Edward D. Berkowitz and and Kim McQuaid , Creating the Welfare State: The Political Economy of 20th‐Century Reform, rev. ed., 1992.
Carole Haber and and Brian Gratton , Old Age and the Search for Security, 1994.

W. Andrew Achenbaum