This paper traces Social Security from President Franklin D. Roosevelt's original vision in the 1930s through its implementation and into contemporary debates over program viability. It explains how Roosevelt framed social insurance as distinct from welfare, secured Congressional approval, and overcame Supreme Court challenges. The paper then addresses modern pressures—declining labor force growth and rising life expectancy—that threaten system solvency. It presents policy options proposed by AARP and others, including raising retirement age, indexing benefits to longevity, adjusting payroll tax caps, and means-testing higher earners. Finally, it argues that despite political obstacles, Congress must enact reforms to preserve the program's original mission.
The concept of social security as originally conceived by President Franklin Delano Roosevelt was that Americans should enjoy security at home, have a secure livelihood, and benefit from social insurance as "...a minimum of the promise that we can offer to the American people" (Houser et al., 2014). On June 8, 1934, Roosevelt stated that a social security program would provide relief and recovery from the Great Depression and help people reconstruct their lives (Houser, 2014, p. 150).
At the time Roosevelt was elected, millions of Americans were financially destitute, especially older Americans. Approximately half of Americans older than 55 years of age "...were destitute and unemployed with little hope of changing their situation" (Houser, 2014, p. 150). In his fireside chat on June 28, 1934, Roosevelt pitched recovery legislation that would use "...the agencies of government to assist in the establishment of means" to offer "adequate protection against the vicissitudes of modern life" (Houser, 2014, p. 150). Roosevelt was clearly opening the door to legislation that would provide insurance of a social nature.
On June 29, 1934, Roosevelt established the Committee on Economic Security (CES), tasked with offering suggestions for new legislation by December 1, 1934 (Houser, 2014, p. 151). At this time in American history, the public held negative associations with welfare. Roosevelt therefore framed the proposal around "insurance" rather than welfare. This meant the CES would pitch the idea that people would pay into a system through payroll deductions and receive "later payments" in the form of social security (Houser, 2014, p. 151).
On November 14, 1934, Roosevelt assured the American people that social security would not be "charity" and must be financed "by contributions, not taxes" (Houser, 2014, p. 152). He was assuring the public that no new taxes would be implemented and that social security money would come from payroll taxes. In the same speech, Roosevelt noted that several other advanced countries had already established social insurance programs, and that they were working well (Houser, 2014, p. 152).
On August 14, 1935, thanks to lobbying by President Roosevelt and his Secretary of Labor Frances Perkins, the President signed the Social Security Act into law. One final hurdle remained: the U.S. Supreme Court had to uphold the law as constitutional, which it did shortly thereafter (Houser, 2014, p. 154).
Because the growth rate of the labor force has been declining "sharply" and life expectancy is "rising" in the United States, questions have emerged about the system's viability (Brooks & Razin, 2005). Some economists argue that the social security system cannot continue as it is currently configured. Brooks (2005, p. 46) explains that two essential questions must be addressed before there can be consensus on securing the system for the long term. First, is the U.S. government obligated to continue sending money to retirees who have paid payroll taxes during their working years? Second, is social security merely another piece of legislation that Congress could repeal at any time? Morally, it can be argued that the federal government is obligated to continue providing funds to the social security program, since young workers have been told from the time they received their social security numbers (typically at age 16) that there would be financial returns when they retire.
One reason social security remains a necessary benefit to workers is that over the past few decades, it has become clear that workers rarely remain with one exclusive employer for twenty to thirty years (Solomon, 2008). Workers today change jobs much more often than they did in the past—especially between ages 18 and 36. Building up substantial years with one employer is rare, which means workers do not have the opportunity to accumulate a "substantial pension" based on years of service (Solomon, 2008, p. 20). Changing the social security system in any significant way is "fraught with political peril," Solomon explains.
When President George W. Bush proposed allowing workers under 55 years of age to invest "a portion of the Social Security taxes into personal retirement accounts," the idea was abandoned before any legislation was introduced (Jacobson, 2014). Jacobson, writing in the Tampa Bay Times, noted that proposals to privatize social security fall into the "third rail of politics," meaning "touch it and you die" (Jacobson, 2014). In 2012, Representative Paul Ryan of Wisconsin proposed the same privatization idea, and it "went nowhere in Congress," Jacobson explains. Simply communicating the idea and attempting to educate the public on this major change for social security is political poison, especially because older people worry that changes might jeopardize future revenue. This concern stems from the belief that the stock market cannot be relied upon to provide positive returns for investors.
"AARP reform proposals and their trade-offs"
Most, if not all, of the recommendations for improving the viability of Social Security are controversial and will not be politically easy to implement. However, since the facts clearly point to a need to reform Social Security, at some point Congress and the Executive Branch must develop the best plan—one that negatively impacts the fewest people—so that the system will continue to fulfill what President Roosevelt intended for it to do in the 1930s.
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