Social Security Act was part of FDR’s New Deal

The New Deal programs of the 1930s created dozens of new government agencies that carried the regulation of business to new heights, tried to tell farmers what they might raise or what they might not raise, gave labor organizations legal protection and even got into the banking business.

Social Security

Probably the most revolutionary of all the New Deal undertakings lay in the field of Social Security. Conditions during the depression era of the 1930s made legislation in the area seem abundantly apparent. Some historians think the Social Security Act was the most complex measure ever considered by Congress.

By the 1930s, most of the industrialized nations of Western Europe had enacted some kind of social insurance legislation providing for old-age care and unemployment compensation. For a number of reasons, the U.S. had lagged behind in such efforts.

It was not until the administration of President Franklin D. Roosevelt that an effective social security measure was adopted in this country.

Not a radical idea

There was nothing radical about a plan for old-age pensions. By 1930, almost half the states had some kind of old-age pensions, but they were generally limited in scope. Only Wisconsin had a working unemployment compensation plan. Even the Democratic Party platform of 1932 called for a pension and unemployment plan. In Congress, four members had introduced legislation in 1932 that provided for some social relief that followed the pattern of Wisconsin. The bills were debated in committee and died producing no fruit.

Special committee

It was now Roosevelt’s turn, and he wanted something to complement his recovery program out of the depression conditions. In the summer of 1934, Roosevelt decided to take the initiative. He asked Congress to delay action on any existing bill while he appointed a special committee to look into the aspect of social security. The committee was to present to Congress a comprehensive measure during the 1935 year.

In June 1934, “the deeply loved or roundly hated” 32nd president established the Committee on Economic Security, headed by Secretary of Labor Francis Perkins. She had served in Roosevelt’s cabinet when he was governor of New York and would hold the Federal Labor office title until 1945. This longevity made her an insider on the decision-making processes of the New Deal and being involved in all stages of the preparation of the Social Security Act.

Cradle to grave

The committee charge was to produce a simple plan that would cover everyone in the country from the cradle to the grave. The Perkins’ committee spent most of the time debating two problems: whether the unemployment system was to be a national or a state program, and whether or not the old-age insurance was to be self-supporting or was to receive revenues from the general tax fund.

After much debate and some reservations, the committee chose the state-federal approach, so if the Supreme Court should strike down the act, the state system would still be able to function.

On the question of old-age pensions, the committee faced the problem of providing for those workers who would be retiring soon without a sufficient number of contributions in the system to return a reasonable pension. The solution that was negotiated provided that the system should be self-supporting and a large reserve fund would be established.

Submitted to Congress

The Social Security Bill was submitted to Congress Jan. 17, 1935. The atmosphere, in both chambers of Congress, was already filled with warnings that this was socialism, that the act would destroy individual responsibilities and the principles of self-help. Certainly, the Supreme Court would strike it down as violating the Constitution.

But members in both houses of Congress soon realized that something had to be done to rid the landscape of soup kitchens, Hoovervilles, unemployment, dust storms and the American Communist Party propaganda.

Beyond Congress, there arose an intense opposition from some segment of the general public. Huey Long of Louisiana, who presented the Every Man a King address, encouraged a more extensive bill. Francis Townsend of California had a private revolving pension scheme and Father Charles Coughlin, a Roman Catholic priest on the radio in Michigan, talked about a Union of Social Justice.

The American Federation of Labor, National Association of Manufacturers and the American Communist Party all had a dime’s worth of objection to the plan. The opposition to the plan was more noisy than effective and failed to register with most voters.

The Social Security Act passed in the Senate on a vote of 76 votes to six and in the House by 371 votes to 33 Aug. 14, 1935. Roosevelt signed the measure immediately.

Details of the plan

Money to fund the plan was to come from a tax to be levied on the wages of the employee and the employer’s payroll. Benefits would be payable at age 65. In addition, the federal government would extend grants to the states for the care of the destitute and provide matching funds for the care of dependent mothers, children and the blind and for public health services.

A Social Security Board was established to administer the various provisions of the act. Experience with the Social Security Act and implementation of its provisions have led Congress to amend the original legislation repeatedly over the years.

While clearly revolutionary for America at the time, the Social Security Act was considered inadequate by many of its supporters. The idea that a worker should pay one-half of the cost of his own retirement stopped far short of most of the European models.

As some pointed out, the worker would already be paying a disproportionate share as a consumer because the employer’s payroll tax in the program would immediately be passed on in the form of higher prices.

The New Dealers responded that the worker contribution built up equity that would make it impossible for subsequent administrations to deny him his coverage.

A weak feature of the original law was its limited scope since it omitted farm workers and domestics from making contributions and contained no health insurance provision of any kind.

However, the act represented the beginning of a growing awareness that the federal government had a responsibility to provide certain social benefits to a maturing nation. That’s your history!