Social Security: Mythmaking and Policymaking
Attarian, John, Freeman
As Social Security's critics know, the government program is robed in myths, for example, that it is "insurance" financed with a "trust fund," paying "guaranteed" benefits "as a matter of earned right." These myths have given most Americans a mistaken understanding of Social security. As a result, they perniciously affected policymaking in the past and severely constrain reform options today.
Beginning in 1935, when Social security was enacted, the program's administrators made a huge effort to shape the public's understanding of and beliefs about it. In speeches, articles, pamphlets, and other mass-circulation literature, they described Social security as "insurance" under which workers pay "contributions" or "premiums" to receive "guaranteed" benefits that, being "paid for," are theirs "as a matter of earned right," without any means test.1
The mainstream media uncritically adopted these semantics, referring to "earned annuities regardless of other income," "old-age insurance," "insurance premiums," old-age income provided "as a matter of right," Social Security as a "mass insurance policy," and to the government as "writing insurance policies guaranteeing to pay monthly benefits."2 Moreover, and very importantly, Social Security's payroll tax and the creation of the "Old-Age and Survivors Insurance Trust Fund" as part of the 1939 Social Security Amendments made this depiction seem real and believable.
As a result these semantics became Americans' frame of reference for thinking about the program. That is, the terms created a false consciousness about Social Security. By "false consciousness" I mean simply an understanding of something's nature that is at variance with reality, but that is nevertheless taken as true and governs belief and conduct.
The falseness of these beliefs is proved by Section 1104 of the original Social Security Act, never repealed: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." This routine reservation of power to amend legislation means Congress can cut benefits. And it has, several times, beginning with the removal of Social security's money-back guarantee in 1939. This necessarily demolishes the "earned right," and with it any analogy to insurance, with its binding contractual obligations. For obvious reasons, this particular provision of Social Security, and its implications, were never publicized by Social Security's partisans.
This false consciousness quickly attained a powerful grip on the American mind. In 1950 the self-employed were brought under Social Security. Beneficiaries who had previously started small businesses in retirement found that their new efforts were now covered employment; monthly self-employment earnings above $50, then $75, would trigger loss of benefits under the "retirement earnings test." Many self-employed elderly were outraged: had they not been told that their benefits came as a right?3 Similarly, the famous Flemming v. Nestor Supreme Court ruling (1960) arose because Ephram Nestor, deported for being a communist in the 1930s, lost his benefits under the 1954 Social security Amendments, which suspended benefits for those deported for subversive activity. Invoking statements by politicians that benefits are paid as an earned right, Nestor's unsuccessful suit is further evidence of the public's absorption of Social security's myths.4
Beginning in the late 1950s several senior groups were organized, including, the American Association of Retired Persons (AARP) in 1958, the National Council of Senior Citizens in 1961, and the Gray Panthers in 1971. The growth of the population aged 65 and over, from 19.1 million in 1965 to 26.1 million in 1980 and 32 million in 1990, fueled the expansion of these senior organizations. The AARP, for example, grew from 800,000 members m 1968 to 5 million by 1975 to 16 million by 1986, and to 28 million in 1990.5
This was a fateful development. …