Magazine article The American Prospect

Mangling Franklin

Magazine article The American Prospect

Mangling Franklin

Article excerpt

WHEN I APPEARED ON FOX NEWS' THE BIG STORY on February 4, anchor John Gibson asserted that Franklin D. Roosevelt anticipated George W. Bush's privatization plan, quoting FDR as saying in 1935 that Social Security "ought ultimately to be supplanted by self-supporting annuity plans." I told Gibson that FDR couldn't have been referring to private accounts; he must have been talking about separate accounts of a sort we have today. Frances Perkins, FDR's labor secretary (we used to call her Saint Frances around the department), designed the system to be self-supporting. Each generation of workers would support the previous generation of retirees, forever.

But where had that Roosevelt quote come from? When I got back to my office, I checked. I found it in FDR's address to Congress on January 17, 1935. The question was how to pay for the Social Security benefits of those who were then too old to contribute payroll taxes and thereby qualify. Roosevelt proposed that the state and federal governments pick up the tab until the system was fully up and running. At that point, the government contributions would be "supplanted" by a "self-supporting" Social Security system. Here's the quote in full:

   In the important field of security for
   our old people, it seems necessary to
   adopt three principles: First, non-contributory
   old-age pensions for those
   who are now too old to build up their
   own insurance. It is, of course, clear
   that for perhaps 30 years to come
   funds will have to be provided by the
   States and the Federal Government to
   meet these pensions. Second, compulsory
   contributory annuities, which in
   time will establish a self-supporting
   system for those now young and future
   generations. Third, voluntary
   contributory annuities by which individual
   initiative can increase the annual
   amounts received in old age. It is
   proposed that the Federal Government
   assume one-half of the cost of
   the old-age pension plan, which ought
   ultimately to be supplanted by self-supporting
   annuity plans.

The voluntary contribution annuities FDR proposed for future generations eventually became IP, as and Keogh plans. But nowhere did FDR ever propose diverting part of the payroll tax to finance private accounts at the expense of Social Security. FOX gave Roosevelt's words an entirely different spin--in support of Bush's privatization plan. …

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