A limited form of the Social Security program began as a measure to implement "social insurance" during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent.
The Social Security Act was enacted . The Act was drafted during President Franklin D. Roosevelt's first term by the President's Committee on Economic Security, under Frances Perkins, and passed by Congress as part of the New Deal. The Act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By signing this Act on August 14, 1935, President Roosevelt became the first president to advocate federal assistance for the elderly.Achenbaum, Andrew (1986). Social Security Visions and Revisions. New York: Cambridge University Press. p. 25-6.
The Act provided benefits to retirees and the unemployed, and a lump-sum benefit at death. Payments to current retirees are financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer (self-employed people are responsible for the entire payroll tax). The act also gave money to states to provide assistance to aged individuals (Title I), for unemployment insurance (Title III), Aid to Families with Dependent Children (Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).
Origins and design Prior to the renewed effort in the wake of the Great Depression, Theodore Roosevelt had mentioned a comprehensive "social insurance" package in his New Nationalism, first espoused in 1910 in the lead up to the 1912 election. In his failed 1932 campaign for governor of Louisiana, entrepreneur and politician Dudley J. Leblanc proposed a monthly stipend for the elderly. Huey Long witnessed the popularity of the idea with Louisiana voters, and subsequently adopted it in his national platform.Clay, Floyd Martin. Coozan Dudley LeBlanc: From Huey Long to Hadacol. Pelican Publishing Company, 1987.
Political Scientists at the University of Wisconsin–Madison, including Edwin Witte, Arthur J. Altmeyer, and Wilbur Cohen developed the 1934 proposal for a federally funded pension plan. Witte and Altmeyer have both been referred to as the "Father of Social Security,"Edwin E. Witte, "Reflections on The Beginnings of Social Security," Remarks delivered at observance cf 20th Anniversary of Social Security Act by Department of Health, Education and Welfare, Washington, D.C., on August 15, 1955.Robert Kastenmeier, "Arthur J. Altmeyer, 'Father' of Social Security," Congressional Record-House, October 18, 1972, H10353-H10354. as has activist Abraham Epstein, who the Social Security Administration credited in a 1992 article as introducing the term "social security" to the United States.
This idea was later popularized by Francis Townsend in 1933, and the influence of the "Townsend Plan" movement on debate over social security persisted into the 1950s. Early debates on Social Security's design centered on how the program's benefits should be funded. Some believed that benefits to individuals should be funded by contributions that they themselves had made over the course of their careers. Others argued that this design would disadvantage those who had already begun their careers at the time of the program's implementation because they would not have enough time to accumulate adequate benefits.
Initial opposition Social Security was controversial when originally proposed, with one point of opposition being that it would reduce the labor force, but supporters argued instead that retiring older workers would free up employment for young men, which during the Depression was a vital point of concern.
Opponents also decried the proposal as socialism. Secretary of Labor Frances Perkins wrote that during a Senate Finance Committee hearing, Senator Thomas Gore (D-OK) asked "Isn't this Socialism?" She replied that it was not, but he continued, "Isn't this a teeny-weeny bit of Socialism?"
Most women were excluded from the benefits of unemployment insurance and old age pensions.Mink, Gwendolyn (1995). The Wages of Motherhood: Inequality in the Welfare State, 1917–1942. Ithaca: Cornell University Press. p. 127. Job categories that were not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers.Quadagno, Jill (1994). The Color of Welfare: How Racism Undermined the War on Poverty. New York: Oxford University Press. p. 7. The act also denied coverage to individuals who worked intermittently.Kessler-Harris, Alice, 2001. pp. 130-1. These jobs were dominated by women and minorities. For example, women made up 90 percent of domestic labor in 1940 and two-thirds of all employed black women were in domestic service.Kessler-Harris, Alice, 2001. p. 146. Exclusions exempted nearly half of the working population. Nearly two-thirds of all African Americans in the labor force, 70 to 80 percent in some areas in the South, and just over half of all women employed were not covered by Social Security.Kessler-Harris, Alice, 2001. p.157.Katznelson, Ira. When Welfare was White: The untold history of racial inequality in twentieth century America. New York: W.W. Norton, 2005. pp. 43-8. At the time, the NAACP protested the Social Security Act, describing it as "a sieve with holes just big enough for the majority of Negroes to fall through."
Some writers have suggested that this discrimination resulted from the powerful position of Southern Democrats on two of the committees pivotal for the Act's creation, the Senate Finance Committee and the House Ways and Means Committee. However, other writers have disputed these arguments.Larry DeWitt, "The Decision to Exclude Agricultural and Domestic Workers from the 1935 Social Security Act." Social Security Bulletin (2010) 70#4 pp: 49-68. online
The Social Security law was very unpopular among many groups, especially farmers, who resented the additional taxes and feared they would never be made good. They lobbied hard for exclusion. Furthermore, the Treasury realized how difficult it would be to set up payroll deduction plans for farmers, for housekeepers who employed maids, and for nonprofit groups; therefore they were excluded. State employees were excluded for constitutional reasons (the federal government cannot tax state government). Federal employees were also excluded. Larry DeWitt rejects the speculation that the exclusions were the product of southern white racial hostility toward blacks; there is no evidence of that in the record.DeWitt, "The Decision to Exclude Agricultural and Domestic Workers from the 1935 Social Security Act." Social Security Bulletin (2010) 70#4 pp: 49-68. Other scholars have replicated and endorsed DeWitt's analysis, agreeing that the exclusions were made by policy experts on technical grounds and were not grounded on racial hostility. Rodems and Shaefer note in all other countries unemployment insurance programs "excluded domestic and agricultural workers when they were first implemented, a fact that the key New Deal policy makers were well aware of."Richard Rodems and H. Luke Shaefer, "Left Out: Policy Diffusion and the Exclusion of Black Workers from Unemployment Insurance." Social Science History 40.3 (2016): 385-404 quote p 385 The exclusions followed consultation with leading experts in Europe as well as the United States, including William Beveridge, Henry Steel-Maitland, and R.C. Davison in Britain, Andre Tixier of the International Labour Organization, and Edwin Witte, Wilbur J. Cohen, and Evelyn Burns in the United States.Rodems and Shaefer, "Left Out" p 401
Social Security reinforced traditional views of family life.Mink, Gwendolyn. The Wages of Motherhood, 1995. pp. 126-130. Women generally qualified for benefits only through their husbands or children. Mothers' pensions (Title IV) based entitlements on the presumption that mothers would be unemployed.
Historical discrimination in the system can also be seen with regard to Aid to Dependent Children. Since this money was allocated to the states to distribute, some localities assessed black families as needing less money than white families. These low grant levels made it impossible for African American mothers to not work: one requirement of the program.Mink, 1995, p. 142. Some states also excluded children born out of wedlock, an exclusion which affected African American women more than white women.Mink 1995, p. 143. One study determined that 14.4% of eligible white individuals received funding, but only 1.5 percent of eligible black individuals received these benefits.
Poor people in half the states already received small pensions. In other states they were housed in poor farms. The new law had a temporary program of Old Age Assistance that provided monthly cash payments to old people on relief. That program faded away as people qualified for Social Security. Marietta Stevenson, “Old-Age Assistance.” Law and Contemporary Problems 3#2 1936, pp. 236–45.
Debates on the constitutionality of the Act In the 1930s, the Supreme Court struck down many pieces of Roosevelt's New Deal legislation, including the Railroad Retirement Act. The Social Security Act's similarity with the Railroad Retirement Act caused Edwin Witte, the executive director of the President's Committee on Economic Security under Roosevelt who was credited as "the father of social security," to question whether or not the bill would pass;1955 Amendments to the Railroad Retirement Act; Notes and Brief Reports ssa.gov John Gall, an Associate Counsel for the National Association of Manufacturers who testified before the US House of Representatives in favor of the act, also felt that the bill was rushed through Congress too quickly and that the old age provision of the act was "hodgepodge" that needed to be written more properly in order to have a higher likelihood of being ruled constitutional. The Court threw out a centerpiece of the New Deal, the National Industrial Recovery Act, the Agricultural Adjustment Act, and New York State's minimum-wage law. President Roosevelt responded with an attempt to pack the court via the Judicial Procedures Reform Bill of 1937. On February 5, 1937, he sent a special message to Congress proposing legislation granting the President new powers to add additional judges to all federal courts whenever there were sitting judges age 70 or older who refused to retire. The practical effect of this proposal was that the President would get to appoint six new Justices to the Supreme Court (and 44 judges to lower federal courts), thus instantly tipping the political balance on the Court dramatically in his favor. The debate on this proposal was heated and widespread, and lasted over six months. Beginning with a set of decisions in March, April, and May, 1937 (including the Social Security Act cases), the Court would sustain a series of New Deal legislation.
Two Supreme Court rulings affirmed the constitutionality of the Social Security Act.