Samuel Freeman

EDINBURG, August 29 - In his Second Inaugural Address in 1937, Franklin Roosevelt spoke of “one third of a nation ill clad, ill housed, ill nourished.” 

He spoke of “millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.” He vowed to end poverty. Were it a matter of will, Roosevelt doubtlessly would have ended poverty; not just then, but forever.

While he did much, laying the foundation through economic policies and government programs that would keep the American economy thriving, the standard of living rising, and the poverty rate falling for the next 40 plus years, today, we again see “millions of families trying to live on incomes so meager that the pall of family disaster hangs over them day by day.”

What we do not see today is something still very prevalent in 1937. We do not see our elderly working until they die or become too disabled to work. We do not see them depending on their impoverished children for their sustenance and survival, homeless, eating out of garbage cans, living in “poor houses”, dying because they have no access to medical care. We do not see these things because of one of Roosevelt’s premier objectives for his first two years in office - an Old Age Retirement program enabling people to retire before their health is spent, and to live out their retirement years independent and financially secure.

In the early 20th century, the nation experienced tremendous migration from rural to urban areas. A people who once could feed themselves from the land on which they lived became dependent on food produced by others and shipped into cities for sale in vegetable and meat markets, and bakeries. When the Great Depression hit, some of those who could returned to live with family members who continued to live on farms. Most, however, were trapped in the cities where hundreds of thousands stood patiently in soup lines stretching for blocks.

Today, of course, we are far more urbanized, with a much smaller proportion of our population engaged in farming. Much of the nation’s farming, in fact, has been taken over by capitalist agri-business giants far more interested in maximizing profits than in food quality or safety, as repeatedly demonstrated, most recently by the hundreds of millions of eggs recalled because of salmonella contamination.

The relatively higher rural population (as compared to today) meant more of our nation’s elderly lived in agricultural environments where they had access to food. Extended families were far more prevalent then than today. Then, people generally lived relatively close to where they grew up. Several children living close to their parents increased their ability to care for aging parents no longer able to work.

In our cities, however, the extended family already was breaking down. Elderly persons living in urban areas were much more likely to be limited to their own resources, or to the “charity” of strangers.

Today, families are much smaller, and the extended family largely has ceased to exist. The strength of extended families in the Rio Grande Valley is one of few notable exceptions.

Though times were bad in the 1930s, there was more of a cushion for the elderly than today - that is, except for Social Security.

As we see the elderly today, such as our “Winter Texans” - driving nice cars, nicely dressed, eating in restaurants, living in nice homes, clearly in good health - it may be difficult for some to realize just how difficult it was for our elderly during the Great Depression. If the wrong-wingers have their way, we will find out, and quickly.

In the 1930s, half of our elderly population lived in poverty; whereas today, the poverty rate for persons age 65 and over is under nine percent, significantly less than the national poverty rate of 13.2 percent. However, if we were to destroy Social Security as the wrong-wingers want, 20 million of our elderly citizens would fall into poverty, and their poverty rate would soar to 45 percent according to the Center for Budget Priorities and other demographers, not much lower than their poverty rate during the Depression.

In 1933, the unemployment rate was 40 percent, with well over 50 percent of the population either unemployed or underemployed. Hundreds of thousands of people were living in cardboard shanties in city parks, derisively named Hoovervilles. Among the nation’s elderly, fully half lived in poverty.

Thankfully, President Roosevelt was determined to establish a retirement insurance program enabling our elderly to have to live without the insecurities and fears so many of the elderly of the 1930s faced daily.

Roosevelt faced two problems. The short term problem was providing welfare assistance to the unemployed, the homeless, and especially the elderly. The second was to provide long term economic security for the elderly. Some wanted to merge to two objectives into one program that provided both welfare and pension benefits to the elderly.

Roosevelt opposed this, insisting each issue be addressed separately. His concern was, if any pension program was “means tested,” that is, benefits were based on people’s inability to support themselves, the retirement pension program would be a target for opponents of welfare. While a universal social insurance retirement program would be more costly, it had several advantages. One of the most important was it would not be a welfare program.

Though he understood the necessity of welfare programs in the midst of the Great Depression, Roosevelt did not like welfare. Welfare discourages both work and savings, whereas social insurance encourages both. Welfare is degrading, whereas social insurance is uplifting. To prove eligibility for welfare, people must prove something negative about themselves - that they are incapable of supporting themselves. However, to prove eligibility for a social insurance retirement benefit, people must prove something positive about themselves - that they worked.

Since people cannot receive welfare benefits until they have exhausted their savings, those facing the possibility of becoming impoverished have no incentive to save. However, a social insurance retirement program designed only to meet basic needs encourages workers to save for their retirement, to have greater resources, and more financial security during retirement.

Although Roosevelt wanted a universal social insurance retirement program, this was not politically expedient. Several classes of workers initially were excluded from Social Security. These included federal government workers who were covered under the then recently adopted civil service retirement system, and railroad employees because they already were covered under a universal railroad retirement program. State and local government workers also were excluded, even though most states and the vast majority of local governments did not have meaningful retirement plans for their employees. They were excluded because of potential constitutional questions.

Roosevelt had hoped all other workers would be covered. However, agriculture and domestic workers also were excluded initially, as well as employers with only a few employees. Two explanations have been given for their initial exclusion. The first is the belief it would be difficult to collect payments from these employers. The second is powerful Southern Congressmen wanted to minimize African American eligibility for Social Security, and a high percentage of African Americans worked either in agriculture or as domestics. Both explanations probably are accurate.

Consequently, when Congress passed the Social Security Act of 1935, about 60 percent of workers were covered, with the vast majority of African Americans and also female workers excluded on the basis of their occupations. Over time, almost all workers have been brought into Social Security, including federal and most state and local employees, and domestic and agricultural workers.

These inclusions have strengthened Social Security because expanding the pool spreads the risk. Revenues increase and relative costs decrease. Health insurance can be used as a good example. A person purchasing an individual health insurance policy will pay significantly higher premiums than a person who has health insurance through a small group, such as an employer with 25 employees. However, a person in a large group, with say, 25,000 employees will pay significantly lower premiums.

The wrong-wingers want to privatize or partially privatize Social Security, or want people to be able to set up “individual retirement accounts” with some or all of the monies they and their employer currently pay into Social Security. All of these proposals are designed to cripple and destroy Social Security. That is not self-evident to many people, but look at the example of health insurance premiums. As the pool is narrowed and risk is shared less broadly, total revenue from premiums go down while the shared risk increases, making health insurance more expensive for the small group and even more expensive for a person with an individual health insurance policy.

Wrong-wingers’ arguments, intellectual dishonesty, and outright lies will be examined in a subsequent column.

Samuel Freeman is a political science professor based in the Rio Grande Valley. His Left Is Right column appears exclusively in the Guardian.

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