Martha Derthick and Policymaking for Social Security

derthickMartha Derthick died recently at the age of 81. I never met her, but I became intimately acquainted with her book Policymaking for Social Security. I stumbled when I was collecting raw material for a paper I wanted to write to illustrate the importance of what political scientists call “expressive” voting. The book turned out to be a gold mine. It has more page markers than any other book I own. (See the photo below.)

When the Social Security program was introduced in the 1930s, it covered only a portion of the labor force. In some recent posts (see e.g. here), Paul Krugman cites this fact to illustrate the harsh realities that policymakers face when they innovate.

The evidence in Derthick’s account drives this point home with the power of a pile driver. Policymaking is like battlefield medicine. The leaders who succeed sustain a clear-eyed commitment to triage.

I started my paper by recounting just one of the many revealing episodes from Derthick’s history.

In 1953, the U.S. Chamber of Commerce proposed a major expansion in the coverage of the Old Age and Survivors Insurance Program — the program that we now think of as Social Security. There was much room for expansion because only 55% of the workforce was covered when the Social Security Act was passed in 1935. Legislation enacted in 1950 had already expanded the coverage of the program. It brought many additional workers into the Social Security system and substantially reduced the number of quarters of covered employment that were necessary to qualify for retirement benefits. However, these changes came too late for many people. Many workers had retired before 1950. Others died without working long enough to qualify, leaving widows who were not eligible for survivors insurance. Under the Social Security Act, these unfortunate people were eligible only for Old Age Assistance, the less generous, means-tested welfare program administered by the states.

Under the chamber’s proposal, everyone over the age of sixty-five would immediately become eligible for retirement benefits. The Old Age Assistance program would be terminated. Retirement benefits would continue to be financed on a pay-as-you-go basis, using a payroll tax. All remaining workers who had not yet been brought into the Social Security system would be subjected to the payroll tax, but the tax rate would still have to be increased to pay for the expanded system of benefits.

From the perspective of the 1990s, it seems odd that a proposal for expanded social spending should come from a major business lobby. The political response this proposal provoked is equally surprising. Conservative Republicans in Congress took the initiative in promoting the chamber’s plan. Daniel Reed, the conservative chairman of the Republican-controlled Ways and Means Committee, called for fundamental reexamination of the system. Carl Curtis, a Republican from Nebraska who had been critical of the evolving Social Security system, chaired the subcommittee hearings on the chamber’s proposal and took the lead in promoting it in Congress. After lengthy consideration, the liberal Republicans in control of the Department of Health, Education, and Welfare in the new Eisenhower administration decided not to support it. Nelson Rockefeller, the undersecretary responsible for legislative proposals, was generally supportive of the existing Social Security system and did not want to propose any major changes to its structure. Senior citizens, even those who would become eligible for retirement benefits under the chamber’s plan, did not offer any organized support for the plan.

Program executives in the Social Security Administration reacted with alarm and outrage to the hearings conducted by Curtis. As government employees, and especially as holdovers from the previous Democratic administration, they were constrained from openly attacking the merits of the proposal and the integrity of the members of Congress who supported it. However, they did feed analyses and denunciations to sympathetic policy analysts on the staff of the American Federation of Labor (AFL), who passed them on to the Washington press corps. Because the Eisenhower administration did not support the chamber’s plan and because opponents were able to characterize it as a dangerous assault by enemies of the Social Security system, it never received serious consideration in Congress.

Five years later, in 1958, internal estimates prepared by the Research Department of the Social Security Administration showed that 35% of the people over age sixty-five still were not eligible for Social Security retirement benefits (Cates 1983). Large numbers of them had no private source of income and refused to accept public assistance — to “go on the dole.” They lived out their lives in circumstances of extreme poverty.

Roosevelt accepted an initial system of old age pensions that covered part of the labor force, calculating (correctly) that the political forces the program would unleash would expand coverage over time. The agonizing decision was what to do about the existing elderly. In the 1930s, many lived in what we would now consider appalling poverty, even by the standards of the era. Roosevelt understood that even in the depths of the depression, voters had no appetite for making “the dole” more generous. The viable path toward reductions in extreme poverty was to build a new system framed as an “insurance program” with “earned” benefits that increased along with lifetime “contributions.”

Many people argued on humanitarian grounds for grandfathering the existing elderly into the generous pensions offered by this new system. Roosevelt opposed this measure for the same reason that the Chamber of Commerce favored it. Both sides anticipated that it would doom the program by reframing it as a version of the dole. In 1933, when the new system of pensions was first enacted, and again in 1953, after opponents regrouped, defenders of the program followed the cold logic of triage.

Ultimately, the Social Security system did succeed in reducing poverty among the elderly, but demographics were an important part of the story. The poverty rate fell as the uncovered elderly died.


References:

Derthick, Martha. 1979. Policymaking for Social Security. Washington, DC: Brookings Institution.

Cates, Jerry R. 1983. Insuring Inequality. Ann Arbor: University of Michigan Press.

Romer, Paul. “Preferences, Promises, and the Politics of Entitlement.” Chap. 7 from Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America, Victor R. Fuchs (ed.), Chicago: University of Chicago Press, 1995.

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