Steven Mufson: How FDR and Bush Differ on Social Security
... How we talk about policy says a lot about how we think about it. Is Social Security a planning vehicle that an individual uses for his or her own retirement, or is it a pooling of resources so that all of society can meet the needs of its older members? Is it about each person saving for himself, or is it a matter of young helping old and rich helping poor?
In couching the Social Security debate largely as a matter of personal rather than collective interest, Bush is redefining the program's very essence. The president's drive to divert a portion of payroll taxes from traditional Social Security benefits to personal accounts for every worker is a departure from the origins of the program and the way people talked about it then.
Listen to the way President Franklin D. Roosevelt talked about Social Security when he signed it into law in 1935, during the Great Depression: "We have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age," he said. Roosevelt's target was the rate of poverty, not a rate of return.
Measured by that standard, it's been a smashing success. Poverty among the elderly started dropping as soon as the first monthly Social Security benefits began, and declined even faster after benefits improved in the 1960s. Between 1960 and 1995, the official poverty rate of those 65 and older fell from 35 percent to 10 percent, according to a study published in May 2004 by the National Bureau of Economic Research, a steeper decline than for any other age group. "While poverty was once far more prevalent among the elderly than among other age groups, today's elderly have a poverty rate similar to that of working-age adults and much lower than that of children," the NBER study said.
The study's authors, economics professors Gary Engelhardt and Jonathan Gruber, said the decline could be attributed entirely to increases in Social Security payments.
In taking on poverty, Roosevelt's rhetoric also changed our notion of the government's role and individual responsibility. The Social Security Act of 1935 "reversed historic assumptions about the nature of social responsibility," historian William E. Leuchtenburg wrote in his book, "Franklin D. Roosevelt and the New Deal."
As the counsel for the National Association of Manufacturers put it at that time, perhaps not approvingly, "The concept that the function of government was to prevent exploitation by virtue of superior power has been replaced by the concept that it is the duty of government to provide security against all the major hazards of life -- against unemployment, accident, illness, old age, and death."
But Social Security was never generous enough to protect people from every hazard or hardship. And Roosevelt never intended it that way. "The Act does not offer anyone, either individually or collectively, an easy life -- nor was it ever intended so to do," he said on the third anniversary of signing the legislation. "None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold; and that is the kind of protection Americans want."
To a surprising degree, that's still the protection that Social Security provides....
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