Research Notes & Special Studies by the Historian's Office
Research Note #10:
|Following the August, 1935 passage of the
Social Security Act, the new Social Security Board faced huge administrative
challenges as it had to create a large organization from scratch.
Throughout the waning months of 1935 and into early 1936 much of the
planning was done for the new organization. Budget estimates were
especially difficult because no organization existed in the federal
government performing the tasks the Board would be required to undertake,
and so past experience could not be used as the basis for the estimates,
and because many provisions of the Act involved federal financial
support of optional State programs, and it was impossible predict
which States would create corresponding State programs.
Budget matters were further complicated by the fact that Senator Huey Long (D-LA) had filibustered the Administration's final appropriation bill at the end of the Congressional session in August 1935, causing Congress to adjourn without appropriating any money to implement the Social Security Act. In fact, to even get started at all, the Social Security Board had to borrow money from the budget of the Works Progress Administration. Indeed, budgetary matters were so severe that the three executives comprising the Social Security Board (John Winant, Arthur Altmeyer and Vincent Miles) all had been on the job since September or October of 1935 and were not paid for the first time until February 1936!
As soon as the new session of Congress was convened, the Administration submitted its appropriation request for the Board for the remainder of fiscal year 1936 and for the coming fiscal year 1937. (The government's fiscal year in that era ran from July 1st to June 30th. Fiscal year 1937 thus would begin on July 1, 1936.) In August 1935 the three members of the Board had submitted an initial budget (the one Huey Long had blocked) based essentially on nothing but guesswork since they didn't even have a staff at that point, and they had no opportunity for any planning prior to submitting that first request.
On January 9, 1936 the House Appropriations Committee, chaired by Congressman James P. Buchanan (D-TX), conducted hearings on the Board's new budget request. One month later, on February 9th, the Congress finally passed a basic budget for the Social Security Board for the remainder of 1936, with the understanding that the Board could submit a later supplemental request if it deemed it necessary. The fiscal year 1937 budget submission was also due. So on April 23, 1936 the Board again went before the House Appropriations Committee to defend its budget request for the remainder of 1936 and all of 1937. During the hearings there was sharp questioning of the Board's estimates by several members of the Committee, including Chairman Buchanan. The Board admitted to a great deal of uncertainty in its estimates, and even suggested cutting in half its estimate for administrative expenses for the three remaining months of fiscal 1936.
By the first of May no action had been taken by the Committee and Board Chairman John Winant called on Committee Chairman Buchanan to see if he could expedite matters. During his meeting with Buchanan, Winant learned to his shock that the Committee was planning major cuts in the Board's budget request. Buchanan told Winant to expect a cut of at least 25% in the Board's fiscal 1937 administrative budget, among other reductions. Winant tried to persuade the Chairman that such a cut would be unbearable; he even tried to bargain for a 20% reduction, but Buchanan was non-committal.
Toward the end of the meeting Buchanan raised the issue of the placement of the Board's 12 Regional Offices. Chairman Buchanan informed Winant that he wanted one of the Regional Offices to be placed in the Chairman's hometown of Austin, Texas. The Congressman made it clear that if Winant wanted his help on the Board's budget request, that this was the quid pro quo he had in mind. This presented a problem for Winant since the Board had already selected San Antonio, Texas as the site of the Regional Office for the southwest, and had already made a hiring commitment to the individual who would be serving as the Regional Director. Even so, Winant felt he had to agree to the Chairman's terms and so he pledged to move the Regional Office to Austin.
After returning to his office, Winant began to have second thoughts and realizations about the administrative difficulties this commitment would cause. As he was sailing for Europe in two days on a tour of European social insurance systems, he dropped the matter on the desk of the Board's Executive Director, Frank Bane, with the request that Bane see if there was anything he could do to repair the damage. Bane, a consummate diplomat, explored with Chairman Buchanan whether some accommodation could be worked out. The deal finally agreed to was that Buchanan would drop his insistence that a Regional Office be located in Austin in exchange for the placement of the first field office in Austin. And so, the first Social Security District Office was opened in Austin, Texas on October 14, 1936.
(When the fiscal 1937 budget was finally passed in June 1936, the appropriation for the Board's administrative budget had been reduced by slightly less than 20%.)