Alvin M. David
ALVIN M. DAVIDAlvin David served as Assistant Commissioner for Program Evaluation and Planning prior to retiring in 1973. In his 36 years at SSA he played a major role in shaping SSA programs and policy.
If the time for contributory social insurance had not come in 1935, it almost certainly would not have come at all. By 1936, the time had come and already gone. The Great Depression was further in the past, the momentum of New Deal legislative action had come to a halt, and the social insurance idea was too little understood and too much misunderstood to have won Senate approval in the face of the attacks that by then had gathered substantial strength. Nor would the chances have been any better or as good in 1937 or in any later year. A going program could be extended and improved; but at no point after 1935 would the Congress have approved setting up so radically new a departure as a program of benefits geared to wages and paid without regard to need. (What we'd have had would have been a very big and very expensive means-test program and perhaps a non-contributory flat-pension with payments far too small to provide anything like security.)
Looking back, we can see easily the way Social Security has come to be what it is. We see what looks like a straight road from the beginning to here; obscured in the mist of the years are roads that might have been but were not taken--roads that would have led somewhere else, not here. None of the others made the immediate, life-or-death difference made by the 8-7 vote in the Senate Finance Committee, but there were many points where "the road not taken" had made a great deal of difference and, in some cases, had made all the difference.
The foremost of the roads that made all the difference was that of the 1939 amendments, which came through in the nick of time before war in Europe dominated the Nation's attention. The amendments made the difference between a "real-thing" social insurance program and a program that, much like a private pension plan, laid heavy emphasis on individual equity and return of contributions rather than added provision for monthly payments to dependents and survivors, paid benefits based on cumulative rather than average wages, and for the out years was to be financed in substantial part from earnings on an accumulated fund. Such a program could not ever have become comparable to what we have today, with benefits that are paid out of current income and thus can be kept up to date with current earnings levels and cost of living.
Among the roads taken or not taken before or after 1939 that made a great difference were the following.
In 1935, the Senate gave serious and lengthy consideration to an amendment that would have allowed employers who had set up a private pension plan to have their employees excluded from Social Security coverage. Had the amendment been included in the final bill, both employers and labor would have been divided with respect to their interest in Social Security, and the undivided support of each group as well as the combined support of both, which were essential to the program improvements that were made over the years would not have existed. Similar divisions of support, with similarly disastrous results, would have occurred if the Congress had adopted the original Committee on Economic Security proposal that, following a common European pattern, had limited coverage to workers whose earnings were not in excess of $250 per month, and thus had made SocialSecurity more of a class program than a universal one.
The bill developed by the Committee on Economic Security in 1934 provided that in the out years there would be general-revenue as well as employee and employer contributions. The Treasury Department recommended that the program be self-sustaining, and the President agreed. While much is to be said for a general-revenue contribution and while there were times when such a contribution would have made possible a more effective program, there have been other times, especially lately, when dependence on general revenues would have made the program much more vulnerable to benefit cutbacks than is now the case.
Not long after the law was enacted, the Social Security Board brought from Europe a consultant who was reputed to be the world expert on social insurance record-keeping. His advice was that an attempt to operate a wage-record system on the scale required by the newly enacted law would very probably lead to disaster, and he recommended to the Board that it take steps to get the Federal old-age benefits program repealed. A less courageous and less determined Board might have heeded his advice; given that the Board did not heed the advice, a less ingenious American technology might have failed to rise to the occasion and produce the machinery required for a workable system. Either way, what might have but didn't happen had made all the difference.
Administration of the program fell into the hands of a whole lot of people who were competent, devoted to the program's social goals, and more than willing to make the personal sacrifices and do the extra-hard work that operation of the program demanded. They established an enduring tradition of caring, responsible service to the public. It was no sure thing that administration would fall into such hands. Not all programs have been that lucky.
One of the roads taken in 1937 was that of the Supreme Court decision on constitutionality. The same Justices who in 1935 had found unconstitutional the National Recovery Act and the original Railroad Retirement Act were still there, and despite the 1936 election returns, no one could be sure which way the Court would go.
In the 1940's one of the roads taken had to do with the program's coverage. What was at stake was not only the security of the individuals and groups involved but the overall strength and effectiveness of the program itself. A political issue concerned excluding from coverage some half a million "outside salesmen" and a main figure in the campaign to do that was a member of the House Ways and Means Committee, Representative Gearhart, of California. His defeat in the 1948 election hardly went unnoticed. The campaign to exclude the salesmen lost much of its steam and in 1949 the Ways and Means Committee and the House (followed by the Senate in 1950) adopted legislation extending coverage to the self-employed and other major groups. With coverage no longer limited to workers in industry and commerce, Social Security was on its way to becoming a practically universal program. It was more firmly established, and the door was open, as it would not otherwise have been, to important improvements in benefit and eligibility provisions.
In 1953 came hearings before a Ways and Means subcommittee whose chairman was opposed to the fundamentals of the program, and so soon after the legislative advances of 1950--and also of 1952--the program was under serious attack in the Congress. The chairman's efforts were foiled though, the hearings fizzled, and once again a road that could have led to disaster was not taken.
At the time of the hearings, the approach to Social Security on the part of the administration elected in 1952 was as yet uncertain. Abolition of the office of the Commissioner for Social Security, Arthur Altmeyer, was not a promising sign. By 1954, however, the new administration had supported and gained acceptance in Congress of legislation that further extended coverage, further increased the wage base beyond the increase made in 1950, and made other changes that strengthened the program and solidified its position.
Although it had no direct effect on the substance of the program, the 1963 organizational change that abolished the Bureau of Old-Age and Survivors Insurance and in its place established a new Social Security Administration without an administrative layer between it and the Department of Health, Education, and Welfare made a great deal of difference in management and in public and congressional perceptions of the program.
Over the years after 1950 there had been ad hoc increases that kept benefit levels fairly well in line with increases in the cost of living. The combined effect of rising wage levels over this period and the ad hoc adjustments in benefits was that initial benefits generally kept pace with current wage levels and benefits maintained their purchasing power after initial entitlement, though there were frequently substantial delays in making the adjustments. The 1972 legislation making cost-of-living adjustments automatic added tremendously to the effectiveness of the program and to the security it provides. And the complementary change making wage-base increases also automatic added substantially to soundness in financing as well as to program effectiveness.
All the other roads taken and not taken would have had little importance for the future if in 1983 a way had not been found to overcome the financing problems that resulted from unprecedentedly long periods of high inflation and low or negative real wage growth, accompanied by high unemployment. The question was whether there could be a solution more or less acceptable to all concerned--in particular a solution that did not entail severe reductions in Social Security benefits. Considering how nearly irreconcilable the various interests appeared to be, none but the very bravest believed that a generally acceptable solution could be developed. The roads that would have been taken in the absence of the solution that was at last worked out and adopted would have meant serious hardship to beneficiaries and serious damage to confidence in the future usefulness and integrity of the program.
The program we have today did not have to be the great program that it is. It was no acorn that was programmed to become an oak. It might not have happened at all. It might have happened and later been replaced by something else. It might at any number of points have taken the wrong road and become a puny, skinny runt instead of what it is. The American people are lucky that it exists. It is to be more valued and more appreciated and less to be taken for granted than would be the case if it had been a sure thing. And when the times come that new roads are to be taken or not taken, it will need to be guided and directed in ways worthy of the care, devotion, intelligence, vision, and high ideals that made it the marvel that it is--the marvel that has made all the difference in peoples' lives.