Magazine article Financial History

BENEFITS OF HINDSIGHT: A Brief Look Back at 80 Years of Social Security

Magazine article Financial History

BENEFITS OF HINDSIGHT: A Brief Look Back at 80 Years of Social Security

Article excerpt

This year marks the 80th anniversary of Social Security, as President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935. But while this legislation was known as the "crown jewel" of FDR's New Deal program, it was actually his distant cousin, Theodore Roosevelt, who introduced America to the notion of social insurance.

In Theodore Roosevelt's 1912 address to the convention of the Progressive Party, he stated, "We pledge ourselves to work unceasingly in state and nation for...the protection of home life against the hazards of sickness, irregular employment, and old age through the adoption of a system of social insurance..."

The idea of social insurance was not Theodore or Franklin Roosevelt's, however, nor was it an American invention at all. First adopted in Germany in 1889, it was already operating in 34 countries by the time the US implemented such a system.

In the years between Theodore Roosevelt's speech in 1912 and the signing of the Social Security Act in 1935, many disparate ideas were proposed for ensuring the economic security of the American people as the Great Depression took hold. Some of the more famous proponents of these plans were California doctor Francis E. Townsend (who advocated for federal government pensions), Senator Huey Long (who wanted the government to confiscate and redistribute money from the wealthy) and novelist Upton Sinclair (whose 12-point plan for California included the issuance of script currency, a barter system and a state pension plan).

One of the major problems FDR saw in these and other radical calls to action was the undermining of the American capitalist system. Thus, when he introduced his Social Security program at the height of the Depression, many saw this action as an innovative, yet relatively conservative approach. His plan addressed the issue of economic security for retirees by establishing a system in which workers would contribute to their own future security in the form of taxes paid while they were employed. …

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