Part One: Hazards and Vicissitudes
At first glance, it seems a wildly uneven match. The challenger occupies the White House and has at his fingertips the entire armamentarium of the presidency. At the lift of an eyebrow he can send forth a pumped-up Santorum, a Cato crusader, a Swift Boat buccaneer, or an insurgent economist. He has the powerful vocabulary of fear on his side: facing bankruptcy, gonna be flat broke, unsustainable, won’t be there when you need it. He is young, relatively speaking, and fit (certified sober, born again, jogs, cuts brush). He seems possessed of the true believer’s messianic zeal—and he cannot help but be further inspired by knowing that he is on borrowed time. Standing at the pinnacle of power means staring downward, in this case at the slippery slope of a second term, and of course he cannot run again (thanks to a constitutional amendment rolled out in 1947 by a Republican-dominated Congress for the specific purpose of keeping Franklin Delano Roosevelt in the grave). It is now or, just possibly, never.
The defender, on the other hand, has neither title nor troops. He is, moreover, 91 years old and, physically at least, in something less than optimal prizefighting condition. Unlike his opponent, he does not rise before dawn, and he is a connoisseur of two-hour naps. He does not own a computer, let alone a BlackBerry. No cabinet secretaries come at his call—no secretaries of any kind. His bully pulpit is a small drop-leaf table in the living room of his apartment, which is in a retirement community not far from the White House. On the table he keeps a pile of four-page pamphlets in which he has articulated, in summary form, his proposals for the continued well-being of the system with which he has been more closely identified, for a longer span of years, than anyone else alive. When he reads something by some pundit with whom he parts company, or sees a head talking putative nonsense on the tube, or hears of a promising congressional staffer, or takes a phone call from a reporter struggling to grasp the arcana of replacement rates and wage indexing, he stuffs a pamphlet into an envelope and sends it on its way. His pamphlets land on the desks of editorial writers, senators, lobbyists, academics. His thoughts make their way through the corridors of power and percolate through the thinking and testimony of men and women who are half, or less, his age. Some of them, indeed, had not yet been conceived when he retired, officially, in 1973, during the second Nixon administration. He appears to be not quite as tall as he was then, but he is still an imposing man who wears his air of authority like a bespoke suit. He is patient in the extreme, a quality admired by his many allies and respected by his adversaries. He has been described as courtly, a word not much heard these days, especially in politics, and apt: but although he is invariably civil he does not plan to go quietly or see the work of a lifetime destroyed—not if he has anything to say about it, and he still has much to say.
Welcome to Bush v. Ball, perhaps not so uneven a match after all. Its outcome will determine the future of Social Security, and quite possibly much else besides, because the protagonists represent two seemingly irreconcilable philosophies rooted in two strikingly apposed periods of American history. George W. Bush’s world, the would-be world of the “ownership society,” harks back to the freewheeling 1920s if not to the 1880s, before Frederick Jackson Turner announced that the frontier was closed and the phrase “don’t fence me in” began its long descent from actuality to enshrinement as a Cole Porter lyric. BushWorld, although still mostly blueprints, appears to be the official theme park of untrammeled individualism remembered and longed-for if not actually lived. Robert M. Ball, on the other hand, attained adulthood during the Depression and went to work at the Social Security Administration (it was the Social Security Board then) on January 1, 1939, seven-and-a-half years before Bush was born, and in the course of an extraordinary career rose to become the agency’s top civil servant, biggest thinker, longest-serving commissioner, and undisputed spiritual leader. He remains Social Security’s chief advocate and defender, a proud and unapologetic product of the decade when Americans discovered that we were all in this together, and the standardbearer for the belief that we still are and always will be interdependent. I have never met Mr. Bush, but I have had the privilege of knowing Mr. Ball and working with him off and on for 16 years, and it is my opinion that these two strong-willed men are just going to have to duke it out.
THE WITHERED LEAVES OF INDUSTRIAL ENTERPRISE
The New Deal was just a year old when, in 1934, Roosevelt summoned his Labor Secretary, Frances Perkins, and asked her to look into creating a program that would help people protect themselves against being impoverished by unemployment or old age. He explicitly did not want it to be a dole. He wanted it to be a system into which people contributed while they were working, so that when the time came to call upon the program for help they could hold their heads high and claim benefits as an earned right. He wanted the system to be universal, in order to spread its costs and its benefits as broadly as possible, and redistributional, so that benefits payable to the poorest contributors would be proportionately greater than benefits payable to the better-off—thereby protecting low-wage workers against the risk of paying hard-earned dollars into the system for decades only to end up destitute and dependent on charity in their old age. The name for this kind of thing was social insurance, and it was a concept that, despite widespread acceptance in Europe, was widely viewed as anathema to the American way of life, grounded as that model was in the near-mythic principle of purposeful self-reliance.
The problem was that by 1934 the American way of life had taken some body blows. The stock market crash of 1929 and the Depression that followed were only the latest. Long before that, the Currier & Ives image of a nation of solitary self-sufficient farmers had faded, gradually replaced by a more brooding reality that photographers like Jacob Riis and Lewis Hine would soon capture: a world of densely urbanized wage earners (or wage slaves, depending on one’s politics), still rugged and strong (except in the airless slums and coal camps) but reliant less on self than on the contents of a weekly pay envelope issued by an indifferent employer they might never see. When the underpaid immigrant miners of Pennsylvania went out on strike in 1902, the spokesman for the mine-owning railroads rejected the notion that the miners and their families might have been suffering: “They don’t suffer—why, they don’t even speak English!” Of course, not all employers were such cartoonish beasts, any more than all workers were angels, but that was not the point: the rules had changed. Jefferson’s agrarians had become Ford’s assembly-line workers. There was no turning back, and by 1934 we had lost our way. The promise of ever-rising prosperity had evaporated, leaving millions of Americans with only the ironic reminders of affluence: “We hold the distinction,” Will Rogers remarked, “of being the only nation in the history of the world that ever went to the poorhouse in an automobile.”
Herbert Hoover’s wistful reliance on classic business economics (you might borrow money to feed a mule, but not a child) had failed; he had been duly turned out. Roosevelt had reassured everyone for a time with his confidence that all would be well and with the thunderous activity of the New Deal’s first hundred days. But, still, 15 million workers were unemployed, more than one in four—and the official figures grossly understated the reality, because so many men and women still nominally holding jobs were working short weeks and taking home less than enough to live on. United States Steel, which in 1929 had 225,000 full-time employees, had 19,000 in 1932, and none, no full-time workers at all, at the moment when Roosevelt took the oath of office on March 4, 1933. As he observed in his inaugural address, “the withered leaves of industrial enterprise lie on every side.” Something, some sort of permanent protective system, needed to be put in place to improve the odds that nothing so catastrophic could again shrivel the national economy and wither the lives of the workers, young and old, who supplied capitalism’s raw motive power and suffered for its sins.
Less remembered than the immortal line from the opening of that first inaugural speech—“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself”—is what Roosevelt said toward its close. He hoped, he said, that the “normal balance” of executive and legislative authority would be adequate to address the challenge of battling the Depression. If not, however, he would ask Congress for “the one remaining instrument to meet the crisis—broad executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” The American people, he proclaimed, “have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.”
Strong stuff, those words: on the page they look not so different from sentiments that, with minimal changes, could as easily have been expressed by Stalin, Hitler, or Mussolini. Small wonder there was addled chatter among upper-crust Republicans about “That Man” (soon the phrase, buttressed by a hiss, would enter the political lexicon) and their fears of a dictatorship in Washington.
But radical change was not at all what Roosevelt had in mind when, a year later, he gave Frances Perkins her marching orders. Roosevelt and Perkins had known each other since 1910, when they met at a dance. She was then a newly minted social worker investigating factory conditions and he was a novice New York politician with, as she would later recall, “nothing particularly interesting” about him. He became more interesting as time went on, and they developed a close working relationship during his two terms as governor—focusing, particularly as the Depression deepened, on trying to stabilize employment and on developing, as a longer-term priority, systems to provide old-age pensions and unemployment insurance, then all but unknown in the United States. Roosevelt had no training in economics, nor much patience for the dismal science, but he had, in spades, the capacity to assimilate. Perkins, who despite the times felt that being a woman was a handicap “only in climbing trees,” was glad to be his guide. Together they visited a small sweater mill near Poughkeepsie, listened at length to the owner and the workers, learned how profits and wages were being driven through the floor by incessant pressure to produce sweaters at below-cost prices, and on the spot Roosevelt grasped the economics of “the descending spiral,” as Perkins put it. Later, in the White House, his principles and policies were based “to a surprising degree,” she said, “upon his total conception of the experience of this one little mill,” and his immediate goals were to “get wages back to a point where people could buy something and prices back to where a little businessman could make something on his investment and effort.”
WHEN THE DAKOTAS FELL ON WASHINGTON
Now, in June 1934, this pragmatic visionary charged Perkins with convening a committee of cabinet officers to think through and apply on a national scale some of the ideas that they had worked on together in Albany. Chaired by Perkins, the committee included Secretary of Agriculture Henry Wallace, Secretary of the Treasury Henry Morgenthau, and Attorney General Homer Cummings, along with Harry Hopkins, who, although not a member of the cabinet, ran the administration’s relief program and so was more important to economic security, at least in the short run, than anyone else except Perkins. (He was also more colorful—a profane, intense, sloppily dressed, chain-smoking social worker who relaxed by playing poker and betting on horses—and more outspoken, answering early criticisms of his sprawling public-employment projects and pell-mell spending with a side-of-the-mouth declaration that “I’m not going to last six months here, so I’ll do as I please.” Prognostication proved not to be his forte: he lasted, in various essential roles, until after FDR’s death in 1945.)
“It was evident to us,” Perkins later wrote, “that any system of social insurance would not relieve the accumulated poverty. Nor would it relieve the sufferings of the presently old and needy. Nevertheless it was also evident that this was the time, above all times, to be foresighted about future problems of unemployment and unprotected old age.” What is so striking about that statement in retrospect is that what was so evident to Perkins and Roosevelt was not by any means the New Deal’s highest priority at that moment, which was to put desperate people back to work, on public payrolls until private ones emerged from paralysis, by means of the alphabet-soup agencies for which it is still remembered: AAA, CCC, CWA, FERA, NRA, PWA, WPA. To take the long view in 1934 required a huge effort of will—and optimism. But that was Roosevelt’s stock in trade, and Perkins found him more interested in developing a lasting social insurance program than in any of his pump-priming projects, which he considered vital but strictly temporary measures. And so the Committee on Economic Security (CES) went to work.
CES was not the big story of the summer of 1934. “That this has been by all odds the most ruinous drought in U.S. history is old stuff to you by now,” wrote James Agee, then a Fortune magazine staff writer, in his introduction to a photo essay by Margaret Bourke-White in the October issue. “But all the same, the chances are strong that you have no idea what the whole thing meant; what, simply and gruesomely, it was. Really to know, you should have stood with a Dakota farmer and watched a promissory rack of cloud take the height of the sky, weltering its lightnings … and the piteous meager sweat on the air, and the earth baked stiff and steaming.” It was the summer when the overworked topsoil of the Great Plains was “blown away like driven snow,” as Roosevelt put it, and the vast wind-driven dust storms that turned noon to dusk in prairie towns blew high into the sky as well, and the dust was carried all the way across the continent and out into the Atlantic. The dust from the Dakotas fell on Washington, compounding the misery of a hot, humid, pre-air-conditioned summer, but it did not materially impede the work of the CES staff, housed in cramped offices provided by Hopkins. He also solved the problem of how to fund the committee’s work, for which there was no budget, by shuffling $125,000 from funds intended for research on unemployment relief. With funding in place, CES confronted the more vexing question of what it was expected to do.
A RETURN TO VALUES LOST
Roosevelt in hindsight is often credited (or blamed) for having had a clear vision of what he wanted to accomplish, but that was not entirely true. He had a general idea of what he meant by “economic security”—he was just beginning to call it “social security”—but he was characteristically vague about the details and about how he proposed to get there from here. That was for the committee and its staff to work out. Hardly anyone in the United States in 1934 had more than an academic hunch how to apply social insurance principles nationally in a complex economy going through a severe depression for which no end was in sight. But that did not deter Roosevelt from announcing, in a message to Congress on June 8, his intention to address “the hazards and vicissitudes of life,” rationalizing that such a cosmic effort fell within the constitutional charge to the federal government to promote the general welfare. “Next winter,” he said, with what appears to have been studied casualness, “we may well undertake the great task of furthering the security of the citizen and his family through social insurance.”
Next winter. He would give CES all of six months to come up with a plan he could present to the new Congress that would be elected in November, and as he told the present Congress, he did not want to do things piecemeal: “I am looking for a sound means which I can recommend to provide at once security against several of the great disturbing factors in life—especially those which relate to unemployment and old age.” If that was a lot to swallow, particularly for those still clinging to the taste of do-or-die individualism, he was ready with what he hoped would be a disarming argument: “This 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. … We must dedicate ourselves anew to a recovery of the old and sacred possessive rights for which mankind has constantly struggled—homes, livelihood, and individual security.” We would revisit Monticello, in short, but we would go there together aboard a bus.
Abraham Epstein, a longtime social insurance advocate, recalled that the speech “fell like a bombshell on the country.” He found his colleagues “bewildered by its boldness and political audacity.” They hadn’t thought of Roosevelt as having any particular interest in a subject “in which economics, politics, statistics, social policy, trade unionism, wages and industrial production are intertwined.” He had surprised them. Now CES would have to figure out what he meant.
For months the committee wrestled with the challenge of designing an unemployment insurance program, unable to decide between a wholly federal or federal-state approach. A federal program would do a better job of providing consistent protection for workers moving from one state to another and would protect against states competing to lower the cost of labor by skimping on unemployment benefits. But there was doubt about whether the Supreme Court, at that time profoundly hostile to anything fragrant of a further expansion of federal power, would accept the better approach. Back and forth went the debate until Perkins convened a meeting at her house one night, disconnected the telephone, and decreed that the participants would stay there until they had an agreement. “We sat until two in the morning,” she recalled. Finally everyone agreed to propose a federal-state system, albeit “reluctantly and with mental reservations.”
The committee’s decision allowed Roosevelt to focus on old-age insurance, for which there were no state models to draw upon. More than two dozen states had old-age assistance programs on paper, but CES researchers estimated that they were enrolling only 3 percent of the elderly and paying, on average, 65 cents a day in benefits. That was the extent of the help being provided to the already indigent elderly. There was no program in place to help workers guard against facing destitution when they reached retirement age, nor was it possible that any state on its own could undertake such a program, especially given workers’ mobility. If the job was to be done at all, the federal government would have to do it, but philosophical considerations aside, the federal government had never attempted anything on such a scale, not even the payment of Civil War pensions. The alternative, however, was to accept as a given that, even when the economy picked up again, most hard-working people would end their days in poverty, dependent upon family members, if they were lucky, or the poorhouse, if they were not.
Franklin and Eleanor Roosevelt encouraged ordinary Americans to write to them, and in 1934 the letters poured in at the rate of 5,000 to 8,000 a day. (Hoover had needed one staff person to answer his mail; FDR eventually needed 50.) Many came from old men and women who felt that they must have been the very people Roosevelt had in mind when, in a famous 1932 speech, he spoke of “the forgotten man at the bottom of the economic pyramid.” “We are still Forgotten,” a man in Lincoln, Nebraska, wrote in May 1934, and went on to tell the story of his generation:
We who have tried to be diligent in our support of this most wonderful nation of ours both social and otherwise, we in our younger days tried to do our duty without complaining. We have helped to pay pensions to veterans of some three wars, we have raised the present young generation and have tried to train them to honor and support this our home country. And now a great calamity has come upon us and seemingly no cause of our own it has swept away what little savings we had accumulated and we are left in a condition that is impossible for us to correct … please do not send us to the Poor Farm but instead allow us the small pension of $40.00 per month and we will do as we have done in the past (not complain) …
Roosevelt did not need to read such letters to know how desperate his countrymen were, but he did read many of them (and answered them personally), and he kept pressing Perkins and her committee to present him with solutions. CES recognized that the old-age security problem was really three problems: how to help those already old, how to help those approaching the end of their working years, and how to help those who, with some help, could set aside sufficient funds over the years to cover at least a reasonable part of the cost of paying themselves a basic annuity in old age.
Although, as the committee found, there were in 1934 “no even reasonably complete data … regarding the means of support of aged persons,” by conservative estimate at least half of the approximately 7.5 million Americans over 65 were dependent on the kindness of others, family or charity, for their support. The committee’s research confirmed another starkly obvious fact about the breakdown of the American way of life: with the deepening of the Depression, “many children who previously supported their parents have been compelled to cease doing so, and the great majority will probably never resume this load.” CES found that those approaching old age were in similarly dire straits: “The depression has largely wiped out wage earners’ savings and has deprived millions of workers past middle life of their jobs … and there is little possibility that there will be a reversal of this trend in the near future.”
The committee’s proposed solution had two parts: improved assistance for those already old, to be paid for from general tax revenues, with the federal government making grants-in-aid to the states; and, for younger workers and those nearing retirement, something entirely new: a contributory system to enable them, “with the aid of their employers, to build up gradually their rights to annuities in their old age.”
“Contributory annuities are unquestionably preferable to noncontributory pensions,” wrote the committee’s staff director, Edwin Witte. “They come to the workers as a right, whereas the noncontributory pensions must be conditioned upon a ‘means’ test. Annuities, moreover, can be ample for a comfortable existence, bearing some relation to customary wage standards, while gratuitous pensions can provide only a decent subsistence.” In less than 50 crisp words, he captured the core characteristic—benefits replacing a percentage of prior wages—of what would become the Social Security retirement insurance program (even though “ample” was certainly going too far as a description of its benefits, then or ever).
THE WHOLE BALL OF WAX
Witte’s task of fleshing out such a plan would have been hard enough if the president had been willing to keep his hands off. But FDR was already thinking of social insurance as his legacy, and he had strong opinions about its design. As time went on he worried, for example, that the scheme-in-utero might be getting too complicated as well as too limited in scope.
“You want to make it simple—very simple,” Roosevelt told Perkins. “So simple that everybody will understand it.” This was unadulterated wishful thinking, but never mind. “And what’s more,” he went on, “there is no reason why everybody in the United States should not be covered. I see no reason why every child, from the day he is born, shouldn’t be a member of the social security system. When he begins to grow up, he should know he will have old-age benefits direct from the insurance system to which he will belong all his life. If he is out of work, he gets a benefit. If he is sick or crippled, he gets a benefit. … And there is no reason why just the industrial workers should get the benefit of this. Everybody ought to be in on it—the farmer and his wife and his family.”
Perkins recalled sitting across from him, shaking her head at the thought of the political as well as administrative challenges facing a new and untried system. She was as committed to the idea of social insurance as he was, but she had to make it work. To try to make it universal, as well, was asking for trouble. Roosevelt disagreed. “I don’t see why not,” he said, watching her reaction.
“I don’t see why not. Cradle to the grave—from the cradle to the grave they ought to be in a social insurance system.”
He was Dutch-stubborn and insistent. Tom Eliot, a 26-year-old lawyer on loan from the Labor Department to draft the legislation, recalled how Roosevelt “pulled the rug out” from under anyone who suggested introducing just one form of social insurance at first, unemployment insurance or old-age insurance, choose one. “I want the whole ball of wax,” Roosevelt said. With an eye on the upcoming congressional elections, he wanted to be able to say, and did say, “Among our objectives we put the security of the men, women, and children of America first.” He also sought to convey the idea that social insurance, while admittedly novel, was nothing to be nervous about. In one of his famous fireside chats he compared it to the renovations scheduled for the White House, observing that the installation of modern air conditioning would not alter “the simplicity and the strength” of the grand old structure itself. One imagines the FDR-haters hunched by their radios grinding their molars over that one. But it worked. “Everybody jumped on the social security bandwagon,” recalled Abraham Epstein, the social insurance advocate. The party in power usually loses seats in midterm elections; in 1934 the Democrats added to their large majorities in both House (313-122) and Senate (59-37) with a net gain of nine seats in each, “the most overwhelming victory in the history of American politics,” wrote Arthur Krock in The New York Times.
Even Roosevelt, however, could not get the whole ball of wax. He badly wanted a national health insurance program as part of his cradle-to-grave package, but by the time CES convened a major public conference in November 1934 it was clear that the American Medical Association would send doctors to die in the ditches before the AMA would accept “socialized medicine.” Given Roosevelt’s deadline (he was adamant about having a plan ready to present to the new Congress when it convened in January 1935) there was no time to mobilize public opinion. Roosevelt had tried to exploit what appeared to be an opening when the American College of Surgeons briefly broke with the AMA and endorsed national health insurance at its 1934 convention, but the effort was wasted: the AMA had been beating down all such proposals at the state level for 15 years, and it was clearly ready to try to take down FDR’s entire package if necessary. Roosevelt backed off, hoping to revive his national health insurance plans at a later date. (That date never came, and in 1943, after various false starts, FDR finally concluded, off the record, that “we can’t go up against the state medical societies; we just can’t do it”—a phrase that still resonates.)
CONFLICTS OF LOGIC AND FEELING
There were other things that couldn’t be done. Within CES there was a serious split over the question of whether an old-age insurance program should be based on universal coverage from the outset. The staff wanted to go for it; Perkins was ambivalent. Morgenthau was afraid that any attempt to achieve true universality would prompt an AMA-level reaction among small businesses and, most worrisome, among the powerful southern Democrats whose loyalty to the New Deal could not be taken for granted. The thought of the federal government rushing to the aid of black field hands did not sit well with people like the editorial writer at the Jackson Daily News who opined that “the average Mississippian can’t imagine himself chipping in to pay pensions for ablebodied Negroes to sit around in idleness . . . while cotton and corn crops are crying for workers to get them out of the grass.” Morgenthau ambushed Perkins by unexpectedly taking his concerns public in testimony before the House Ways and Means Committee, where he maintained that the Treasury could not reliably collect payroll taxes from farmers and farm laborers, employers of domestic servants, and employers with fewer than 10 employees. Roosevelt could have done a rug-pulling job on Morgenthau, but did not; it was one of those unedifying moments when the heroic FDR suddenly turned up missing. Congress saw no reason to dispute Morgenthau, and another 20 years would pass before amendments to the Social Security Act would extend coverage, too late in many cases, to the millions of low-paid and desperately needy workers, often black, often female, who were left out in 1935.
In fairness to Roosevelt it must be said that he had two compelling reasons to alter course as time went on. First, as one of his advisers put it, “the idea that the federal government had any responsibility at all for the welfare of individual citizens was still very strange to many people,” and he realized he could push that idea only so far. Second, he was not the only man in America working on an old-age pension program. Out in California, a down-andout doctor named Francis Townsend had had an epiphany in which he envisioned enactment of a national “transaction tax” that would finance $200-a-month pensions for every American over 60 who would agree to spend the money within 30 days. It was a fantastic and, for many reasons, thoroughly unworkable idea, but it captured the imagination of millions of Americans who, unlike economists, could see nothing wrong with getting their hands on that kind of money (twice the average wage), even if they then had to let go of it. Townsend Clubs sprang up like dandelions, dedicated to persuading Congress to adopt the plan. Ten million Americans signed a supporting petition. Meanwhile, one of the Senate’s most unruly and unpredictable members, Huey Long of Louisiana, once a New Deal ally but no longer, was championing a “Share Our Wealth” movement based on the forced excision of affluence from those with the most and its redistribution to those with the least, who would thereby be assured of a home, a car, a radio, a shorter work week, and an old-age pension. By 1935 Long had millions of devotees and was working on a book whose title—My First Days in the White House—hints at his aspirations. Except in Louisiana, where his name still evokes reverence, Long is remembered today largely for inspiring All the King’s Men, but in 1935 Roosevelt took seriously the threat of being denied a second term by a third-party Long candidacy in 1936, and it might have happened had Long not been mortally wounded by an assassin in Baton Rouge in September 1935.
Both Long and Townsend were very much alive and on Roosevelt’s mind as CES struggled to resolve the question of how a contributory retirement plan should be structured and financed. It was a question that would still be controversial 70 years later. The committee considered and rejected a Townsendite approach, paying the same amount to everyone, in favor of benefits based on replacing a percentage of earnings. As for financing, the basic idea was simple enough: workers should contribute a fixed percentage of their wages toward their eventual retirement, and their employers should be taxed an equal amount, to establish a system capable of converting the revenues from contributions and taxes into adequate (if not ample) lifetime annuities at the time of a worker’s retirement. There was general agreement that the retirement age should be set at 65. But then things got complicated. A 20-year-old worker just starting out would have ample time to build up equity in such a program, but a 50-year-old would not. Should those nearing retirement expect to receive no more than a paltry benefit, or should they receive as much, or almost as much, as if they had been contributing for many more years than was actually the case? There was a strong case for taking the latter approach, but to cover the cost would mean either raising payroll taxes to “near-confiscatory” heights, as Perkins put it, or partially funding the system from general tax revenues. Roosevelt said no to both. Borrowing from the Treasury would look too much like “the same old dole under another name.” The system had to be self-sustaining. There appeared to be no solution other than to postpone the plan. The president said no to that too. “We have to have it,” he told Perkins. “The Congress can’t stand the pressure of the Townsend Plan unless we have a real old-age insurance system, nor can I face the country without … a solid plan which will give some assurance to old people of systematic assistance upon retirement.”
Perkins, with wry understatement, observed that “the President was in the midst of one of the minor conflicts of logic and feeling which so often beset him but kept him flexible and moving in a practical direction.” Exactly. In January 1935 the flexible president would go before the new Congress with a non-universal contributory retirement plan, based on modest deductions from workers’ earnings and matching employer taxes, that in seven years would begin paying benefits ranging from $10 to $85 a month based on prior earnings, and that would someday require a large infusion of funds from general revenues or some other adjustment or combination of adjustments to maintain solvency over the long run. The complex program he proposed would be set upon, instantly, by critics left and right, including some who actually understood it. But Roosevelt would carry the day—presiding, on August 14, 1935, at the bill-signing ceremony that made Social Security the law of the land (at least until the Supreme Court took a look at it), and proclaiming, with understandable pride:
We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but 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. … If the Senate and the House of Representatives … had done nothing more than pass this Bill, the session would be regarded as historic for all time.
About three years later, the young Bob Ball—after graduating from college, completing a master’s thesis on the future of the American labor movement, working in a department store and writing for a labor newspaper—landed an entry-level field job with the Social Security Board. It was not much, but he was on his way, although only a very bad fiction writer would have pretended that Bob Ball knew then where he would be 66 years later: out on the ramparts, leading the defense of Social Security against something euphemistically called the ownership society. No one, of course, could have anticipated anything of the kind. For one thing, Social Security was not yet even paying benefits, so it could hardly have a profile high enough to invite sustained and potentially fatal attacks. For another, Roosevelt was still in charge, which meant (to most people) that all was well. He would say so himself. In 1941, taken to task by a Columbia University economist—who argued that payroll taxes were regressive and that the funds set aside for future benefits had probably prolonged the Depression by taking purchasing power out of the economy—Roosevelt shrugged off the criticism.
“I guess you’re right on the economics,” said this president who had never cared all that much for economics. “But those taxes were never a problem of economics. They are politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”
Coming in the Summer issue: Part Two: The Word with the Big New Syllable