Roosevelt historian David Woolner shines a light on today’s issues with lessons from the past.
In his news conference on December 7, President Obama defended his recent decision to compromise with the Republicans over the extension of the Bush tax cuts in part by insisting that sometimes compromise is necessary. He reminded his critics on the left that progress often comes a few steps at a time and that to refuse to compromise is to court failure. He then compared the progress that his administration has made in health care reform (imperfect as it may be) with some historical examples, such as FDR's passage of the Social Security Act, which he noted initially only "affected widows and orphans."
The president may be correct when he states that a good many of the social-economic reforms we now take for granted were brought into being gradually. But his hasty characterization of Social Security as something that initially only helped "widows and orphans" is incorrect and doesn't do it justice.
The Social Security Act remains one of the most important pieces of social legislation in American history. It was -- like today's health care reform bill -- very controversial at the time it was passed, and it is true that many of its provisions were "grandfathered in." But the decision to implement the act in stages had as much, if not more, to do with the practical challenges associated with putting it into practice as they did with politics. Moreover, the initial legislation was much broader in its impact than the president implied. It not only was designed to provide old age pensions to roughly 60 percent of the work force (and in 1935 only about 15 percent had any sort of pension), but also established our nation's first national system of unemployment insurance and allocated federal funds to the states to provide immediate relief to the indigent elderly, grant aid to dependent children, and offer assistance to the blind and the handicapped. It also included modest sums for public health services. Old age benefits were to be awarded to a worker when he or she retired at the age of 65, paid for by payroll tax contributions that the worker made during his or her period of employment. Under the original legislation, these taxes would first be collected in 1937 and monthly benefits were set to begin in 1942 so as to allow time to build up the Social Security Trust Fund and provide a minimum period of participation for benefit qualification. Under an amendment passed in 1939, the start date for monthly benefits was changed to 1940. In the meantime, between 1937 and 1940, workers who contributed to the program but would not participate long enough to qualify for monthly benefits would receive a one-time lump-sum payment.
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As stipulated in the law, then, monthly payment of Social Security benefits began in January 1940 for retired workers, their aged wives or widows, children under the age of 18, and surviving aged parents. It was, as noted, a monumental piece of legislation that was vehemently opposed by business interests and a good many conservative Republicans in Congress. Republicans argued that the provisions of the act, including unemployment insurance, would cost the country jobs and was un-American in its reliance on government. Some critics even went so far as to argue that it would bring about "the ultimate socialistic control of life and industry," the "abandonment of private capitalism" and would end in "moral decay, financial bankruptcy, and the collapse of the republic." In the end, though, the act received the support of a significant number of Congressional Republicans. The first chairman of the three-person Social Security Board that the act established was the former Republican Governor of New Hampshire, John Winant.
In his message to Congress on the need to develop Social Security legislation, FDR observed that in "earlier days" security was attained "through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry make less real these simple means of security." As such, he argued, "we are compelled to employ the active interest of the Nation as a whole through government in order to encourage a greater security for each individual who composes it." Nevertheless, he went on, "[t]his seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion. Ample scope is left for the exercise of private initiative."
In other words, FDR saw the establishment of Social Security as a reflection of the recognition that in a modern capitalistic industrial society government can and must become an active instrument of social and economic justice. Given the meager and almost non-existent presence of the State in the management of the economy and in the day-to-day lives of Americans prior to the onset of the New Deal, the establishment of this principle was no incremental step. Rather, it was a huge leap forward -- even when one factors in the many short-comings of the original legislation.
President Obama is right. Much of the progress we have made as a nation has come one or two steps at a time. But there are also some compelling examples in our history when bold leadership, combined with bold action, inspired the government and the people to act as one in the best interests of all. The passage of the 1935 Social Security Act is perhaps the best example of this. It marks a fundamental shift in the American people's attitude about the role of government. Through its provisions, it not only helped establish the belief that government could and should work to advance the general welfare, but also helped restore their faith in a liberal capitalist democracy at a time when the democratic system of government was under siege in much of the rest of the world.
As President Obama tries to maneuver his agenda forward toward his "North Star", he might do well to remind the American people that sometimes change comes about not merely through incremental steps, but also through the dramatic action and bold vision of a people and a government dedicated to the notion that together they can seize control of their destiny.
David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.