Social Security: The Long Road

31 Dec

SOCIAL SECURITY: THE LONG ROAD                                                                                          James A. Young

            The human search for security against the disasters of injury, economic collapse, and old age goes back thousands of years – to ancient Egyptian grain storage and public works projects and to medieval Chinese retirement homes and public health clinics.  In more recent times, Founding Brother Thomas Paine’s Agrarian Justice (1795) proposed that a 10 percent tax inheritance tax on property be used to provide 15 pounds sterling to all persons when they turned 21 years of age and 10 pounds sterling per year to anyone aged 50 or older and to the blind and the lame.  Paine’s proposal didn’t go very far at the time, despite his reminder that liberty is a rather empty concept without a move toward greater economic equality.

Yet, some movement was made in that direction through pensions for soldiers who’d served in the army of the Revolution, and pensions for soldiers in other wars followed.  But the most thorough system – one that may be fairly described as social security and that proved to be largely a model for our Social Security system – came to fruition during and after the American Civil War.  This program provided a pension for any veteran of the U.S. Army who suffered disabilities resulting from military duties and survivor benefits for widows and orphans, as well as old age pensions.  By 1894 such payments accounted for 37 percent of the U.S. federal budget and covered 6 percent of the population – before Confederate veterans and families became eligible after 1900.

Thirty-two other countries, most notably Germany and Great Britain, adopted social insurance programs before the U. S. Congress voted on an American plan, because conservatives continued to oppose the idea.  Leading Republicans argued that it would overburden industry, break the government financially, and/or cut into the profits of private insurance companies.  They and others also felt that the Supreme Court would find such a program unconstitutional.  Even the AFL, many of whose member unions operated insurance plans of their own, didn’t approve of a national plan until 1932.  From the Left, some opposed the plan brought forth by Labor Secretary Frances Perkins’s Committee on Economic Security because its financing was regressive in nature – as it is.  But President Franklin D. Roosevelt insisted that workers must be taxed to support the program, in order that politicians of the future could not come along and take it away.

Other, more financially liberal, proposals included Louisiana Senator Huey Long’s “Share Our Wealth” plan, backed by 27,000 supporting clubs and their 7.5 million members, as well as Dr. Francis Townsend’s idea for $200-per-month for senior citizens and his 2.2 million supporters in 7,000 clubs across the land.  Together the two movements brought tremendous pressure to bear upon the Roosevelt Administration and are credited by some for pushing the “Second New Deal” (from 1935) that also produced the National Labor Relations (Wagner) Act, the WPA, the Fair Labor Standards Act, and other measures of the period.

In any event, all of the legislative amendments to kill or modify the proposal were defeated, and President Roosevelt signed the bill into law on August 14, 1935.  The new Act provided benefits to the worker who had paid 1 percent of his/her wage (matched by the employer), and monthly benefits were to begin in 1942 (later amended to 1940).  At the insistence of conservative Southern Democrats, however, agricultural and domestic workers – heavily ethnic minorities in number – were excluded from coverage.  The Act did also provide federal grants to states for providing welfare for the poor.  Finally, the Act created an unemployment insurance program against job loss, a step that only seven states – not Pennsylvania – had already taken on their own.  A Social Security Board then took office and got to work quickly, because Senator Huey Long’s “Swan Song Filibuster”* killed funding for the Act and they had to borrow money from the Labor Department to get the program up and running.

In 1939 Congress added child, spouse, and survivor benefits to the Act and in 1950 added regularly employed agricultural and domestic workers and non-farm self-employed persons (but not independent professionals).  Disability benefits followed in 1956, and by the early 1960s 90 percent of the nation’s jobs were covered by the Act.  Meanwhile, the U.S. Supreme Court had ruled in the case of Halvering v. Davis (1937) that the Social Security Act is constitutionally sound, based on the government’s right to tax.  The country’s most successful and most popular nation-wide program was secure.

  • Senator Long was assassinated and died in September 1935.
  • Young presented orally a somewhat longer version of this article at the annual conference of the Pennsylvania Labor History Society in October 2015.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: