Previous
Next

What FDR wanted

November 9, 2009, 5:11 pm

Steve Benen, in the course of making an argument that most of his commenters don’t want to hear, overstates FDR’s intentions with the Social Security Act.

Roosevelt, the towering political figure of the 20th century, with an electoral mandate, a Democratic Congress, and the stench of a failed Republican president fresh on the nation’s mind, had to take what he could get on Social Security, which was far less than what he wanted.

Now, in a perfect world, a unicorn or magic pony of some kind would have written a history of the Great Depression and the New Deal that corrected this gentle myth in a short, introductory fash–OMIGOD! LOOKEE HERE!

The report [Committee on Economic Security] sent to Roosevelt called for universal coverage of the American elderly by pensions paid for partly by their own contributions and increasingly, over time, out of the general revenues of the U.S. Treasury. Roosevelt rejected this plan, declaring it was ‘‘the same old dole under another name’’—he wanted a self-financing plan under which old-age pensions worked on the model of insurance premiums.Workers and their employers would pay into a fund a percentage of their paychecks. In the event of retirement in old age, workers would draw a pension funded by their savings. The program would thus constitute ‘‘a wholly contributory scheme with the government not participating,’’ as Roosevelt asked.Critics immediately pointed out the drawbacks of this plan. No other country financed social insurance this way, and for good reason.

Contributions calculated as a percent of payroll put a relatively heavier tax burden on poorer earners. Within the administration, Harry Hopkins pointed out the regressivity of the payroll taxes and recommended a tax on wealthier Americans’ incomes instead. In the press, opinion-makers fretted that ‘‘the law is almost a model of what legislation ought not to be,’’ as the New Republic wrote.

The administration’s concern with fiscal soundness also prevented the Social Security system from reaching all Americans. Because the United States came late to the business of old-age insurance, it had the advantage of other countries’ experience to examine. As Abraham Epstein, an advocate of old-age insurance, noted in 1922, ‘‘It is evident that it can only be made to apply to persons who are in regular employment. It is next to impossible to collect contributions from persons who are irregularly employed, from agricultural laborers, from those who are not their own employers, from women who work at home not for wages, from small merchants, and so forth.’’ The Roosevelt administration therefore sought to follow other countries that had excluded farm workers and domestic servants from their old-age pension policies at the start, and Congress complied.

Now, you could certainly argue that because Roosevelt and the CES trimmed their interest in health insurance as part of the bill, what they got in the end was “less than what [they] wanted.” And we could point out that Congress did make revisions (for example, to the morals test for “mothers’ pensions”) that made the bill more conservative than perhaps the administration would have preferred. But Benen’s suggestion that FDR had to swallow major concessions to get the Social Security Act passed really isn’t well founded. There’s little doubt that FDR wanted — at least at first — a less comprehensive, less expensive, and more regressive program than what his own advisers outlined. Moreover, there’s plenty of evidence that FDR was ambivalent about aspects of the bill (including the old age pensions) that were not directly related to unemployment relief, which was his strongest motivation for pursuing social insurance in the first place. Even so, when conservative Democrats like Missouri’s Bennett Clark tried to give private employers a way to opt out of contributing to Social Security, Roosevelt successfully fought to preserve the system he’d proposed. All things considered, he pretty much got what he wanted.

This entry was posted in history and current events. Bookmark the permalink.