FDR - Jean Edward Smith [222]
From the beginning the scheme was self-funding, the contributions to be paid jointly by employers and employees. That was at FDR’s insistence. He instructed Perkins to ensure that no government contribution would be required. The plan must be actuarially sound. “It is almost dishonest,” said Roosevelt, “to build up an accumulated deficit for the Congress of the United States to meet in 1980. We can’t do that. We can’t sell the United States short in 1980 any more than in 1935.”77 Benefits would be proportional to a person’s earnings. In effect—and contrary to the rule in most modern countries, where governments provide the major funding for pension plans—America’s social security system would be freestanding: a property right, not a civil right.78 The downside of FDR’s insistence that social security pay its own way was the immediate adverse effect on the economy. To build the reserve fund from which to pay benefits required withdrawing money from workers’ wages—money that otherwise would be spent. Roosevelt understood that the payroll tax would be deflationary. But he was more concerned about what he called “legislative habits and prejudices.” “Those taxes were never a matter of economics,” FDR said later. “They are politics all the way through. We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”79
Roosevelt’s concern for the legislative pecking order paid quick dividends. Harrison and Doughton shepherded the legislation through their committees, and the floor fight was led by Wagner in the Senate and Lewis in the House. Opposition was strongest in the business community. “The dangers are manifest,” said Alfred Sloan, the president of General Motors. “With unemployment insurance no one will work; with old age and survivor benefits no one will save; the result will be moral decay and financial bankruptcy.” “Never in the history of the world,” said Representative John Taber of New York, “has any measure been brought in here so insidiously designed as to prevent business recovery, to enslave workers, and to prevent any possibility of the employers providing work for the people.”80 In the procedural motions that preceded final passage, House Republicans voted almost unanimously against social security. But when the final up-or-down vote came on April 19, fewer than half were prepared to go on record against. The final vote in the House of Representatives was a lopsided 371–33.
The debate in the Senate played along similar lines. In both Houses concern focused on old-age pensions rather than unemployment compensation. The administration’s proposal “would take all the romance out of life,” said New Jersey’s A. Harry Moore. “We might as well take a child from the nursery, give him a nurse, and protect him from every experience life affords.”81 When Daniel Hastings of Delaware moved to delete pension coverage from the bill, 12 of the 19 Republicans voted in favor. They were tilting at windmills. When the Senate voted on June 19, social security sailed through, 76–6. Roosevelt signed the measure into law in an elaborate White House ceremony on August 14, 1935.82 Commemorative pens were presented to Harrison, Wagner, Doughton, Lewis, and Frances Perkins. FDR always regarded the Social Security Act as the cornerstone of the New Deal, said Miss Perkins. “I think he took