An employee of Associated Charities, a private organization dedicated to alleviating poverty in the District of Columbia, met an old black woman carrying a basket of cinders near the dump in Southeast D.C. on a bitterly cold day in December 1896.
The woman "could not give street and number, but could 'fotch' the agent to her place," according to a case study labeled "Aunt Winnie" in one of the organization's annual reports from near the turn of the century. "Old age, with a heavy load on top and a strong wind blowing, made the walk a trying one. At last the 8x10 cabin was reached. In it was a stove in many pieces held together with wire, a bedstead with rags for mattress and rags for covering. From the leaky roof the floor was wet through and through."
Aunt Winnie, the report said, had no income save the 50 cents she made every two weeks for taking in wash. In summertime she raised herbs and greens, but in winter she "suffered for food and fuel." Her children had all been sold away to slavery, and a nearby niece was too poor to offer any support. Her neighbors helped, providing money for the stove and cot, and a "colored friendly visitor was found to carry broth and other comforts to her." The neighborly charity wasn't enough to persuade the agent, who was essentially a private sector version of a social worker, that the old woman should be on her own.
"In the fall of '98 agent asked her to go into the almshouse, but she would not consent. During the storm in February '99, she was kept from perishing with a great effort. Every visit, and they were many, had to be made through snow up to the waist. It was during these visits that the promise was made that before another winter she would take refuge in an almshouse."
When the weather warmed, Aunt Winnie backed off her promise to go to the almshouse. The social worker started to play hardball.
"It would be hard to say which, the agent or the applicant, suffered the more, because through all this distress had sprung up a loving confidence and perfect trust that seemed cruel to deceive. Attention and assistance were withdrawn gradually."
It worked: In July, Aunt Winnie relented and said she'd go to the almshouse as soon she could sell her cabin. Nobody would buy it, so the social worker told her to tear it down and sell it for kindling. At 2 p.m. on Aug. 23, 1899, the social worker showed up in a wagon.
"[S]he was sitting on her trunk, without a stick of the cabin to be seen. Without a murmur she dropped a courtsey to the bare spot where once stood the cabin and turned away. After an affectionate separation in the almshouse the agent came away feeling that for such a balmy day in August it was a trying task to perform, but for winter's blizzards, a blessed relief. In case of her death a promise has been made to her that the general secretary of the Associated Charities will keep her body from potter's field."
Aunt Winnie, whose story is preserved in the archives of the Historical Society of Washington, had been sent to an American institution that was by then some 300 years old and went by a variety of names: the county farm, the poor farm, the almshouse or, most often, simply the poorhouse. She would probably have been surprised to learn that more than a hundred years later, after the virtual eradication of elderly poverty, a powerful political movement would materialize with the mission of returning to the hands-off social policies that made the poorhouse the nation's only refuge for the jobless, the aged, the infirm and the disabled.
That movement's most outspoken proponent is Fox News host Glenn Beck, who doesn't merely pine for the pre-New Deal era in general, but regularly prevails upon his audience to recognize the particular genius of some of the period's presidents, whose ideologies of inaction he holds up as the American ideal.
Democratic President Grover Cleveland is one such hero. When Beck and guest Joseph Lehman were discussing the proper roles of welfare and charity this summer, Lehman noted that one "extreme [position] is, you've got welfare only as a last resort and all assistance is private."
It wasn't too extreme for Beck. "And this is where we actually were a hundred years ago," Beck said, rightly thinking -- or not -- of people in Aunt Winnie's situation.
"We used to be here. In fact, Grover Cleveland has this excellent statement. In 1887, President Cleveland said, 'Though the people may support their government, the government shall not support the people,'" Lehman responded.
"That's great," said Beck.
While lifting up presidents like Cleveland, he wants to tear down their successors. At Beck University, he offers a course titled "Presidents You Should Hate." Part one focuses on Woodrow Wilson, part two on Franklin Roosevelt.
Until those men rose to power, the political field belonged to politicians in the command of business. Cleveland, however, is a distant second in the Beck view of the world to Calvin Coolidge. Beck told his audience this August that Coolidge was Ronald Reagan's favorite president, and that he was "one of best presidents I think we've ever had that you don't know very much about."
Coolidge earned his place in Beck's heart for refusing to send federal help to the Gulf region during the Great Mississippi Flood of 1927. "And under 30 feet of water, hundreds of people died. This is the Katrina of the 1920s," said Beck. "And, to show you the difference in how far we've come with progressives, at the time that this happened, nobody was standing on their roof with signs saying, 'Help me.' They were helping themselves."
Whatever the victims of the flood may have done, Wall Street certainly helped itself during Coolidge's reign from 1923 to 1929. The Dow ran from under a hundred to a high of nearly four hundred. Corporate profits and consumer debt soared. Coolidge slashed taxes. By 1929, the top 0.1 percent had income equal to 42 percent of all Americans and held 34 percent of all the savings -- while eight in ten had no savings at all.
Those eight-in-ten people without savings had no cushion against the economic crashes that relentlessly afflicted the economy and had no relief against the one calamity that is entirely foreseeable: old age.
"Most people, unless they were well-to-do, had two options," said University of Pennsylvania historian Michael B. Katz. "One was living with their kids, the other was the poorhouse."
There have always been people who for one reason or other -- inability to find a job, old age, disability, racism, sexism, drug addiction -- have been unable to cobble together the means to support themselves. For most of the nation's history, and for all of its colonial past, those people have been dealt with much differently than they were following the enactment of the New Deal, and, in particular, the 1935 Social Security Act, which created old-age insurance, unemployment insurance and welfare. Those programs were expanded over the next several decades and grew to include Medicare, Medicaid, the children's health insurance program and food stamps.
"Social Security is the most successful social program in the history of the world," Senate Majority Leader Harry Reid, a closet New Dealer, said this year. Poverty statistics are unreliable before about 1960, when the elderly poverty rate was 35 percent, but that figure likely represents a steep decline from the day Social Security became law. Though there were no national measurements, in surveys taken between 1925 and 1932 in Connecticut, New York and Wisconsin, nearly half of elderly people lived on less than $25 per month, which survey administrators deemed "insufficient subsistence income." A third in Connecticut had no income at all. An attempt to quantify elderly poverty in 1939, deep into the depression, using census data, found the rate may have been close to 80 percent. Whatever the national numbers, by 1974 official elderly poverty had fallen below 15 percent and by 1995 it had dropped to ten.
Quantifying the success of a social policy is an exercise often frustrated by life's infinite variables. But Social Security is one program so effective that the entire decline in poverty can safely be attributed to it, even by the most cautious academics. "Our analysis suggests that the growth in Social Security can indeed explain all of the decline in poverty among the elderly over this period," concluded Gary Engelhardt and Jonathan Gruber in a rigorous 2004 National Bureau of Economic Research report on the program.
The nearly 54 million people drawing Social Security benefits receive, on average, $1,073.80 per month, according to the Social Security Administration. The Center on Budget and Policy Priorities estimates the program keeps some 20 million people out of poverty, including 13 million elderly Americans. Engelhardt and Gruber calculate that each ten percent cut in benefits would lead to a 7.2 percent increase in poverty. Such cuts are beginning to seem likely, despite the robust state of the program's finances, which can cover full benefits through 2037 and boasts a surplus trust fund of $2.6 trillion as of this fall.
The social safety net is coming under the most effective assault it has faced in the past 75 years; Republicans see an opening to finally gouge the New Deal, while Democratic leaders openly discuss cutting Social Security in a conversation colored by deficit hysteria. Half of the Washington phone book, it seems, has recently offered some sort of deficit reduction plan that includes cuts to Social Security.
The keystone of the Social Security Act, its eponymous retirement insurance, has already been fractured by a deal between Obama and Senate Minority Leader Mitch McConnell, who this month agreed to a Social Security payroll tax holiday as a method of stimulating the economy. Republicans openly admit that when the holiday's expiration arrives next year, it will be treated as a tax hike, meaning Social Security's dedicated revenue stream, which has never been tampered with before, may now be compromised, at the same time that leading Democrats propose cutting benefits and raising the retirement age. Unemployment insurance, the leg of the New Deal that saved families from checking in and out of the poorhouse in between jobs, has come under attack in the most dramatic fashion since the Great Depression. When Sen. Jim Bunning (R-Ky.) single-handedly blocked an unemployment insurance reauthorization in February, he was treated by the media as a national pariah. But his position was soon shown to be uncontroversial within the Republican Party, and the media went neutral. President Obama would later claim as a major victory persuading Republicans to sign off on an unemployment reauthorization as part of the tax cut deal. Republicans are vowing that no more extensions are coming unless they're offset by spending cuts elsewhere. The GOP is after Medicare, too, proposing to turn it into a voucher system, where the elderly would be given a coupon to buy health insurance, but the value of the voucher would rise at a rate much slower than health care costs, eventually making health care unaffordable for the elderly, just as it was before the program was implemented. And the economic engine of the New Deal, the necessity of deficit spending to spur employment and growth, has quickly morphed from a near-universally accepted law of economics to a political toxin Washington has puked up.
The easiest leg of the New Deal for the GOP to kick out from under it was Aid to Families with Dependent Children -- more commonly known as welfare. In a debate stained with racial prejudice, the nation was introduced to the "Welfare Queen," a largely mythical mother living fat on the public dole and popping out children for the sole purpose of increasing the monthly stipend. Democrats gave up defending it and President Clinton signed it away in 1995. Politically, "welfare reform" was a dramatic success for Democrats, who no longer need to defend the program during election years. But the new welfare, now called Temporary Assistance for Needy Families, has been a failure: While poverty has risen, unemployment has doubled and food stamp use has ticked up forty percent since the recession began, welfare rolls have expanded by less than ten percent. The tattered net is catching far fewer people.
"The Republicans have been after all three of those programs ever since 1935. They got welfare a few years ago, because that's poor people. They could jump on them," Rep. Jim McDermott (D-Wash.) said during an unemployment standoff this summer. "But unemployment and Social Security is middle-class people -- they haven't been able to get them, but it isn't because they're not willing to try."
Republican hostility to the New Deal is nothing new. Time Magazine summarized the position of Social Security's Republican opponents in 1936: "Wage earners, you will pay and pay in taxes...and when you are very old, you will have an I.O.U. which the U.S. Government may make good if it is still solvent."
Seventy years later, President George W. Bush theatrically stood before a filing cabinet to mock the notion that the Treasury bonds held by Social Security could be redeemed to pay benefits -- a staged act no president would dare pull on China or other holders of U.S. debt. "There is no trust fund, just IOUs that I saw firsthand, that future generations will pay," said Bush. "Imagine -- the retirement security for future generations is sitting in a filing cabinet."
Rep. John Dingell Jr. (D-Mich.) was born in 1926 and remembers the days before the payroll tax started stuffing that filing cabinet. His father, a prominent House Democrat, stood behind FDR during the signing of the Social Security Act; Dingell Jr. was an architect of Medicare. "Goldwater, Reagan, the Tea Party folks are all really part of the same attempt, and that is to get rid of the New Deal and to get away from these dangerous, socialistic ideas," said Dingell.
"I can remember the terror that existed with regard to those county poor farms," Dingell said.
Though Republican hostility to the New Deal isn't new, the Democratic embrace of language that has long been used to undermine belief in government is. Announcing a pay freeze for federal workers, Obama reasoned that "small businesses and families are tightening their belts. Their government should, too." With nearly one in ten people unable to find work, Democrats compete with Republicans over who can sound more concerned about the debt and deficit, despite a longstanding economic consensus that a deficit is a good thing to have in times of slow growth and high unemployment.
What is dangerous about Social Security is that it works. It is evidence that people can do a better job insuring against life's cruel downturns by working together and pooling resources than by going it alone in the market. If the financial market and its representatives in Washington succeed in undermining Social Security, they will not only have access to trillions of dollars, but will have dealt a blow to a leading symbol of the potential collective action. It's no coincidence that cutting Social Security is often described as a "signal" to financial markets. Even Obama, after his election, echoed such language. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's," Obama said before his inauguration.
And Democrats pander to the relentless fear that an offer of kindness may wind up helping someone who either doesn't need the aid or who is in need but is to blame for their pitiful circumstances. President Obama articulated that worry in a weighted response to a question about why his attempts to slow foreclosures had been largely unsuccessful.
During a meeting with progressive bloggers, Obama was asked to defend his administration's failure to stem the foreclosure tide. The president's worry, he said, was that his anti-foreclosure program might accidentally help people who didn't deserve it. "The biggest challenge is how do you make sure that you are helping those who really deserve help, and, if they get some temporary help, can get back on their feet," Obama said, specifically adding that he didn't want the effort to assist "people who through no fault of their own just can't afford their house anymore because of the change in housing values or their incomes don't support it."
FDR and Obama traveled the same course in reverse: Roosevelt came into office a deficit hawk, pushed to balance the budget and cut federal worker pay. He quickly realized his error and turned around. He had the room to maneuver, however, because poverty had become so widespread that it lost its stigma. It could finally be addressed with a level head rather than a wag of the finger.
Before then, however, the nation was just prosperous enough for those with a little to look down upon those with less. When Adeline Nott was committed to a Portland, Maine poorhouse in the 1830s, she challenged her detention. The Maine Supreme Court ruled against her. "The indigent has no claim to be supported in idleness," the judges wrote. "[T]heir poverty generally grows out of an unwillingness to labor, or is occasioned by reckless and improvident habits."
Giving financial support to the jobless, known then as "outdoor relief" -- as opposed to the "indoor relief" of the poorhouse -- will only "encourage the sturdy beggar and profligate vagrant to become pensioners up the public funds," argued John Yates, an influential progressive from the mid-19th Century. A cash payment would "relax individual exertion by unnerving the arm of industry" and lessen the "desire of honest independence."
Critics of the New Deal, such as Beck, argue that the increased size of government it brought about has eroded Americans' freedom.
"It really buys freedom," said Nancy Altman, author of "The Battle For Social Security" and an advocate for the program. "If you don't have economic security, you lose your freedom in a very demeaning way." There's data to back up Altman's claim: Engelhardt and Gruber found that as benefits increased, the number of elderly people living with their families dropped by more than half. And, most noticeably, poorhouses shut down.
"Social Security -- this is one of the things of which my dad was very proud -- closed eleven hundred old folks' homes in New York. Eleven hundred. And that was just one example, but it tells you what it did all over the country," said Dingell, adding that before Social Security, "everybody and his second cousin piled in with their families. I had relatives that came to stay with my dad and mom I didn't even know were relatives. To tell you the truth, I'm not sure they are. And my grandad on Dad's side, who threw Dad out of the house, came to live with Dad. Dad was the only one of his kids who'd take care of him. He was, quite frankly, the only one who could afford to do so, because Pop was making a fairly decent living during the war, but he was supporting a whole tribe of Dingells and Selmerses and a whole bunch of others who had other Polish names but were related." Americans have not forgotten how to stack up -- the latest Census numbers show multifamily households have surged to their highest numbers since 1968 -- and Engelhardt and Gruber find that cuts to Social Security will only fuel that trend.
Poorhouses assaulted freedom in more painful ways, as well. One winter in the midst of the Great Depression, a "Mr. Green" in Rockingham County, New Hampshire was struggling much like the rest of the nation. "I am informed that you are three months back on your rent. The understanding that I had in your case was that if the county furnished the food, you were to take care for your own rent," wrote a county commissioner to Green on Jan. 26, 1937, one of the coldest winters of the century. "If you do not 'snap out of it' and get to working and paying your rent, my next call on you will be with the police officer and will take your whole family to the county farm. The state of New Hampshire will place your children. A word to the wise is sufficient."
The talk of taking Green's children was no vacant threat. In most states, children were not allowed to live in poorhouses. Families forced into them would be split up, with children either bound for orphanages, foster homes or apprenticeships. Pennsylvania, which banned poorhouses from hosting children between the ages of two and 16, was typical. Hundreds of children in just one home, the Chester County Poorhouse, were "bounded out" -- given to other families -- in the middle of the 19th Century, according to an archive of their names that survives.
Banning children from poorhouses wasn't intended as a cruel rebuke to the destitute, but as a reprieve to the children. "Degrading and vicious influences surround them in these institutions, corrupting to both body and soul. They quickly fall into ineradicable habits of idleness, which prepares them for a life of pauperism and crime," the 1874 annual report of New York state's Commission of Public Charities concluded. "Self-respect is, in time, almost extinguished, and a prolonged residence in a poorhouse leaves upon them a stigma, which clings to them in after years, and carries its unhappy influences through life." The next year, the state banned children from poorhouses.
The adults who stayed behind would live with a motley gang of the dispossessed. Four of the six poorhouses studied in depth by David Wagner, a professor at the University of Maine's School of Social Work, in "The Poorhouse: America's Forgotten Institution," accepted convicts as well as the unemployed, the sick, the drunk, and the elderly and all lasted well into the 20th Century; four later became prisons or jails and, in the case of Rockingham County, both institutions sit on the same property today. At least 2,300 poorhouses existed across the country, according to Wagner, probably many more. Before the Depression, he said, 60 percent of poorhouse residents were old folks, and 20 percent were disabled (The University of Pennsylvania's Michael Katz said the numbers sounded plausible though he wouldn't second the estimate without precise data.)
For some advocates of the poorhouse, the institution was intended to rectify character flaws and was often dubbed a "house of correction," but prisoners and regular "inmates" weren't treated much differently. Wagner uses letters and records and interviews with old folks to give a flavor of poorhouse life.
In July 1895, a 61-year-old poorhouse inmate named Flint Peaslee complained to local officials about conditions at the Haverhill City Farm in Massachusetts, according to Wagner. Peaslee had been asked to care for another inmate named John Doton, who was "paralytic" and had maggot-infested bedsores. The city launched an investigation.
"The man was paralyzed. I saw maggots crawling in some of the sores and the odor was disagreeable," testified a Dr. Anthony. "[B]ed sores are the frequent accompaniment of paralysis ... at times even in hospitals, and with the best of care ... the paralyzed part is affected and it is the constant pressure that aggravates the trouble."
The investigating committee recommended adding a trained nurse and an improved hospital ward to the almshouse. Wagner reports that of the 22 current and former inmates interviewed, ten were critical of the management and 12 supportive.
"The people would work the farm and it would sort of support 'em or provide food, such as that," Dingell said. "But it was a pretty grim existence for those people."
In 1936 a woman's aunt and uncle hoped to extract their niece and her new baby from a poorhouse in New Hampshire. They sent a letter to a county commissioner saying they would take care of the hapless pair at their home, but the commissioner wouldn't allow it, according to Wagner. The commissioner didn't doubt their ability to provide, but he figured the woman would have another burdensome baby. "If I am presented with definite proof from the Merrimack County Farm, that [she] has had a sterile operation, I have no objection to her going to live in your home."
These and other anecdotes are why Wagner views poorhouses as "a place to put people away, a place where involuntary surgery was performed, and a place of punishment for those deemed unworthy of outdoor aid."
Associated Charities highlighted Aunt Winnie's case mainly to show the beneficence of doing social work in warm weather as well as cold weather, but the vignettes from the century-old report also showed the organization's ideological opposition to outdoor relief.
The charity's annual report in 1899 noted several reasons for a "marked improvement in conditions" for poor people in D.C. "First, in the earlier years there was no method of distribution or of ascertaining the deserving poor, but to furnish supplies to all who applied, and much was in this way distributed to impostors and others not really needful or deserving of charity, and which had a tendency to encourage and create pauperism."
"Several years ago the Associated Charities abandoned the principle of relief giving and became a bureau of investigation and information," the report said. "It is confidently believed that there have been very few, if any, case of actual need in the city during the last two years which have not been relieved, and many of those relieved have been of the most deserving kind, who probably would not have been known but for the most excellent methods of investigation employed."
The unemployed who were denied outdoor relief by the city had another option: To be auctioned off to the lowest bidder and live as a boarder. The city would reimburse the homeowner for the specified amount in exchange for putting the pauper up. The jobless person was expected to work without pay in exchange.
Washington's poorhouses live on only in the name of a dive bar just blocks from the Capitol -- congressional staffers frequently imbibe at the "Pourhouse" on Pennsylvania Avenue -- but the rhetoric targeting their one-time denizens has survived to the modern day unscathed. Georgia Republican Rep. John Linder said during a hearing this summer that "even when businesses are willing to hire, nearly two years of unemployment benefits are too much of an allure for some ... The evidence is mounting that so-called stimulus policies rammed through Congress are doing more harm than good." Orrin Hatch attacked outdoor relief when he proposed this summer that the government drug-test the unemployed because "we should not be giving cash to people who basically are just gonna blow it on drugs." Newt Gingrich wants the unemployed to undergo job training to get benefits.
The welfare queen of the 1980s and '90s, and the "99ers" today -- people who've exhausted 99 weeks unemployment benefits, who Beck says his viewers should be "ashamed to call ... Americans" -- were the "gentlemen of leisure in the gutters" in the 1870s, as the New York Tribune put it.
Abetted by journalistic exposes of poorhouse squalor, progressives managed, by the 20th century, to reform the poorhouse into a kinder and more accommodating institution than its Dickensian forebears -- too accommodating, according to some Republicans at the time.
At the turn of the century, Congress did precious little to alleviate poverty. Other than funding pensions provided to Union veterans, the bulk of the congressional anti-poverty effort involved funding poorhouses in the capital with an appropriation that amounted to $13,000 in 1897.
Ohio Republican Stephen Northway quizzed Capt. L.B. Cutler, superintendent of D.C.'s Municipal Lodging House, during a hearing in 1897 about the comings and goings of unemployed single male inmates from one poorhouse to another along the east coast.
"It is amusing, when they get together in the yard, to listen to them talking and telling about this place and that one," Cutler said.
"Much charity to them is a harm," Northway said.
"They are human beings, and we have to take care of them, but it is outrageous to think that they get off as easy as they do," Cutler said. "At the workhouse they are treated very kindly by the man in charge there. He feeds them too well. If they were fed sparingly they would not go there."
Ultimately, outdoor relief for the elderly and the temporarily jobless has prevailed (the handling of non-elderly poor people is another question). President Obama often references the initial passage of Social Security when justifying his administration's compromises, insisting that if liberals held to their principled position and refused to negotiate, Social Security would never have become law. In December, arguing on behalf of extending the Bush tax cuts for the wealthy, he said that "it's a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we're going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans." Obama had made the same widows-and-orphans claim earlier to defend compromises in his health care reform law.
Obama has the details of his history wrong -- widows and orphans came later, not first -- but he also has it wrong in general. In 1935 the House and Senate met to conference the two separate versions of the bill. Neither bill covered every worker -- some are still exempt today; others, such as farm workers, have since been covered -- but the most critical difference was over a carve-out that private pension companies had demanded: If a company offered its own pension, they reasoned, they should be exempt from participating in Social Security. FDR and the House argued that such a carve-out would undermine the universality of the program and encourage companies to offer lousy pensions to get around the law, plans that wouldn't be guaranteed to be around when the retiree needed them and would have little protection against the vicissitudes of the market, as Social Security would.
The Senate also made a straightforward argument that Obama would well recognize: We don't have the votes, the chamber's leaders told the president. It's our way or nothing. For nearly a month in the summer of 1935, FDR stared the Senate down, refusing to accept its offer. He used every lever at his disposal. The president won; the Senate blinked. It's a different story than Obama tells.
Obama's confusion about Social Security's origins would seem mundane if it weren't for the payroll tax holiday he pushed, the deficit commission targeting Social Security he created, and the reports that he'll call for cuts to the program in his State of the Union address.
Social Security reform is necessary, the program's opponents say, because its future solvency is in question: As a result of the Baby Boom and advances in medicine, more people are living longer. But the actuaries who set up Social Security in the 1930s forecast with an eerie exactitude how much life expectancies would increase -- a detail that is always ignored. And the system was reformed by the Greenspan Commission in 1983, when the first Boomers were nearly forty years old. Nancy Altman, a boomer herself, served as a top aide to that commission, and said that it very specifically took into account the coming wave of retirements, which explains why it can pay full benefits through 2037, a quarter century after the first Boomer hits early retirement.
Social Security's actuaries reported this fall that after 2037, payroll taxes would be sufficient to pay nearly four-fifths of benefits through 2084. The payroll tax stops, however, at a little over $106,000. The shortfall could be made up entirely by applying the payroll tax to more income above that threshold.
Instead, President Obama's deficit commission proposed reshaping the payout structure in a more progressive direction, which would fundamentally change the nature of the program. Pundits such as The Washington Post's Robert Samuelson have long been arguing that the program should be more like welfare and that wealthy old folks should have their benefits withheld. But the cost of administering such a program, auditing it and making sure it's not being gamed would erase the savings associated with it, as well as undermine the element of the program that has made it so successful. Social Security has been an impregnable fortress because people feel ownership of it. It's their money. They earned it.
Obama's deficit commission failed to get the 14 of 18 votes necessary to move forward, but Senate Majority Whip Dick Durbin (D-Ill.), a White House ally, voted for it in a gesture that portends its future legislative revival. Durbin, said two sources, has since met with a bipartisan group of senators planning to introduce their own deficit-reduction plan, modeled on the commission's report, that they hope to attach to must-pass legislation to fund the government or raise the debt limit this spring. The gang includes enough Democrats to give their effort a solid chance of becoming law. Among them: Jon Tester, Ron Wyden, Kay Hagan, Mark Udall, Michael Bennet, Jean Shaheen, Amy Klobuchar, Bill Nelson, Dianne Feinstein and Mark Begich.
Top House Republican aides told HuffPost that leadership is planning to use the debt-ceiling vote -- when Congress must authorize the Treasury to issue more debt to pay its obligations or go into default -- to demand major cuts in spending. Lamar Alexander, the Senate's number-three Republican, said that the party will use the looming expiration of the payroll tax holiday to demand changes to Social Security. "My personal hope is that it doesn't become permanent unless we deal with a way to make Social Security solvent over the long term," he told HuffPost. "You have to remember, the payroll tax funds Social Security and I like the idea of a lower payroll tax contribution, but we've got to make sure Social Security is solvent, which we should be doing this next year as the first order of business." Making Social Security "solvent" with less revenue coming in necessarily means cuts in benefits.
In the meantime, people are limping across the finish line. Home values and the retirement security that came with them have plummeted, along with IRAs and 401(k)s. Pension plans are struggling and laid-off, middle-aged workers have pulled hundreds of millions of dollars from retirement savings to pay bills -- often taking brutal tax hits that come along with such withdrawals. The number of people filing for reduced, early Social Security benefits jumped by 25 percent in 2009. That under such circumstances the political class is leaning toward cutting Social Security is evidence of where its power base resides.
Karen Good, who lost her job at a nonprofit in Florida two years ago, exhausted her 99th week of unemployment insurance on Dec. 1, utterly unable to find work. "I'm not a super political person, but I've sort of become one because I need the government now more than I ever have in my life," she said. On Tuesday, mercifully, she turned 62, which makes her eligible for early Social Security benefits. In February, they'll kick in, and she'll start drawing $1,113 a month. It won't come close to replacing her lost income, but it's something.
"I haven't been a proponent, a fan of Social Security for the past 45 years. When I was younger I always felt I should have the option to put my money into an account," Good told HuffPost on her birthday, scoffing at the suggestion that she might be grateful for the money. "I get my money back," she said. "I earned it."
The woman "could not give street and number, but could 'fotch' the agent to her place," according to a case study labeled "Aunt Winnie" in one of the organization's annual reports from near the turn of the century. "Old age, with a heavy load on top and a strong wind blowing, made the walk a trying one. At last the 8x10 cabin was reached. In it was a stove in many pieces held together with wire, a bedstead with rags for mattress and rags for covering. From the leaky roof the floor was wet through and through."
Aunt Winnie, the report said, had no income save the 50 cents she made every two weeks for taking in wash. In summertime she raised herbs and greens, but in winter she "suffered for food and fuel." Her children had all been sold away to slavery, and a nearby niece was too poor to offer any support. Her neighbors helped, providing money for the stove and cot, and a "colored friendly visitor was found to carry broth and other comforts to her." The neighborly charity wasn't enough to persuade the agent, who was essentially a private sector version of a social worker, that the old woman should be on her own.
"In the fall of '98 agent asked her to go into the almshouse, but she would not consent. During the storm in February '99, she was kept from perishing with a great effort. Every visit, and they were many, had to be made through snow up to the waist. It was during these visits that the promise was made that before another winter she would take refuge in an almshouse."
When the weather warmed, Aunt Winnie backed off her promise to go to the almshouse. The social worker started to play hardball.
"It would be hard to say which, the agent or the applicant, suffered the more, because through all this distress had sprung up a loving confidence and perfect trust that seemed cruel to deceive. Attention and assistance were withdrawn gradually."
It worked: In July, Aunt Winnie relented and said she'd go to the almshouse as soon she could sell her cabin. Nobody would buy it, so the social worker told her to tear it down and sell it for kindling. At 2 p.m. on Aug. 23, 1899, the social worker showed up in a wagon.
"[S]he was sitting on her trunk, without a stick of the cabin to be seen. Without a murmur she dropped a courtsey to the bare spot where once stood the cabin and turned away. After an affectionate separation in the almshouse the agent came away feeling that for such a balmy day in August it was a trying task to perform, but for winter's blizzards, a blessed relief. In case of her death a promise has been made to her that the general secretary of the Associated Charities will keep her body from potter's field."
Aunt Winnie, whose story is preserved in the archives of the Historical Society of Washington, had been sent to an American institution that was by then some 300 years old and went by a variety of names: the county farm, the poor farm, the almshouse or, most often, simply the poorhouse. She would probably have been surprised to learn that more than a hundred years later, after the virtual eradication of elderly poverty, a powerful political movement would materialize with the mission of returning to the hands-off social policies that made the poorhouse the nation's only refuge for the jobless, the aged, the infirm and the disabled.
That movement's most outspoken proponent is Fox News host Glenn Beck, who doesn't merely pine for the pre-New Deal era in general, but regularly prevails upon his audience to recognize the particular genius of some of the period's presidents, whose ideologies of inaction he holds up as the American ideal.
Democratic President Grover Cleveland is one such hero. When Beck and guest Joseph Lehman were discussing the proper roles of welfare and charity this summer, Lehman noted that one "extreme [position] is, you've got welfare only as a last resort and all assistance is private."
It wasn't too extreme for Beck. "And this is where we actually were a hundred years ago," Beck said, rightly thinking -- or not -- of people in Aunt Winnie's situation.
"We used to be here. In fact, Grover Cleveland has this excellent statement. In 1887, President Cleveland said, 'Though the people may support their government, the government shall not support the people,'" Lehman responded.
"That's great," said Beck.
While lifting up presidents like Cleveland, he wants to tear down their successors. At Beck University, he offers a course titled "Presidents You Should Hate." Part one focuses on Woodrow Wilson, part two on Franklin Roosevelt.
Until those men rose to power, the political field belonged to politicians in the command of business. Cleveland, however, is a distant second in the Beck view of the world to Calvin Coolidge. Beck told his audience this August that Coolidge was Ronald Reagan's favorite president, and that he was "one of best presidents I think we've ever had that you don't know very much about."
Coolidge earned his place in Beck's heart for refusing to send federal help to the Gulf region during the Great Mississippi Flood of 1927. "And under 30 feet of water, hundreds of people died. This is the Katrina of the 1920s," said Beck. "And, to show you the difference in how far we've come with progressives, at the time that this happened, nobody was standing on their roof with signs saying, 'Help me.' They were helping themselves."
Whatever the victims of the flood may have done, Wall Street certainly helped itself during Coolidge's reign from 1923 to 1929. The Dow ran from under a hundred to a high of nearly four hundred. Corporate profits and consumer debt soared. Coolidge slashed taxes. By 1929, the top 0.1 percent had income equal to 42 percent of all Americans and held 34 percent of all the savings -- while eight in ten had no savings at all.
Those eight-in-ten people without savings had no cushion against the economic crashes that relentlessly afflicted the economy and had no relief against the one calamity that is entirely foreseeable: old age.
"Most people, unless they were well-to-do, had two options," said University of Pennsylvania historian Michael B. Katz. "One was living with their kids, the other was the poorhouse."
There have always been people who for one reason or other -- inability to find a job, old age, disability, racism, sexism, drug addiction -- have been unable to cobble together the means to support themselves. For most of the nation's history, and for all of its colonial past, those people have been dealt with much differently than they were following the enactment of the New Deal, and, in particular, the 1935 Social Security Act, which created old-age insurance, unemployment insurance and welfare. Those programs were expanded over the next several decades and grew to include Medicare, Medicaid, the children's health insurance program and food stamps.
"Social Security is the most successful social program in the history of the world," Senate Majority Leader Harry Reid, a closet New Dealer, said this year. Poverty statistics are unreliable before about 1960, when the elderly poverty rate was 35 percent, but that figure likely represents a steep decline from the day Social Security became law. Though there were no national measurements, in surveys taken between 1925 and 1932 in Connecticut, New York and Wisconsin, nearly half of elderly people lived on less than $25 per month, which survey administrators deemed "insufficient subsistence income." A third in Connecticut had no income at all. An attempt to quantify elderly poverty in 1939, deep into the depression, using census data, found the rate may have been close to 80 percent. Whatever the national numbers, by 1974 official elderly poverty had fallen below 15 percent and by 1995 it had dropped to ten.
Quantifying the success of a social policy is an exercise often frustrated by life's infinite variables. But Social Security is one program so effective that the entire decline in poverty can safely be attributed to it, even by the most cautious academics. "Our analysis suggests that the growth in Social Security can indeed explain all of the decline in poverty among the elderly over this period," concluded Gary Engelhardt and Jonathan Gruber in a rigorous 2004 National Bureau of Economic Research report on the program.
The nearly 54 million people drawing Social Security benefits receive, on average, $1,073.80 per month, according to the Social Security Administration. The Center on Budget and Policy Priorities estimates the program keeps some 20 million people out of poverty, including 13 million elderly Americans. Engelhardt and Gruber calculate that each ten percent cut in benefits would lead to a 7.2 percent increase in poverty. Such cuts are beginning to seem likely, despite the robust state of the program's finances, which can cover full benefits through 2037 and boasts a surplus trust fund of $2.6 trillion as of this fall.
The social safety net is coming under the most effective assault it has faced in the past 75 years; Republicans see an opening to finally gouge the New Deal, while Democratic leaders openly discuss cutting Social Security in a conversation colored by deficit hysteria. Half of the Washington phone book, it seems, has recently offered some sort of deficit reduction plan that includes cuts to Social Security.
The keystone of the Social Security Act, its eponymous retirement insurance, has already been fractured by a deal between Obama and Senate Minority Leader Mitch McConnell, who this month agreed to a Social Security payroll tax holiday as a method of stimulating the economy. Republicans openly admit that when the holiday's expiration arrives next year, it will be treated as a tax hike, meaning Social Security's dedicated revenue stream, which has never been tampered with before, may now be compromised, at the same time that leading Democrats propose cutting benefits and raising the retirement age. Unemployment insurance, the leg of the New Deal that saved families from checking in and out of the poorhouse in between jobs, has come under attack in the most dramatic fashion since the Great Depression. When Sen. Jim Bunning (R-Ky.) single-handedly blocked an unemployment insurance reauthorization in February, he was treated by the media as a national pariah. But his position was soon shown to be uncontroversial within the Republican Party, and the media went neutral. President Obama would later claim as a major victory persuading Republicans to sign off on an unemployment reauthorization as part of the tax cut deal. Republicans are vowing that no more extensions are coming unless they're offset by spending cuts elsewhere. The GOP is after Medicare, too, proposing to turn it into a voucher system, where the elderly would be given a coupon to buy health insurance, but the value of the voucher would rise at a rate much slower than health care costs, eventually making health care unaffordable for the elderly, just as it was before the program was implemented. And the economic engine of the New Deal, the necessity of deficit spending to spur employment and growth, has quickly morphed from a near-universally accepted law of economics to a political toxin Washington has puked up.
The easiest leg of the New Deal for the GOP to kick out from under it was Aid to Families with Dependent Children -- more commonly known as welfare. In a debate stained with racial prejudice, the nation was introduced to the "Welfare Queen," a largely mythical mother living fat on the public dole and popping out children for the sole purpose of increasing the monthly stipend. Democrats gave up defending it and President Clinton signed it away in 1995. Politically, "welfare reform" was a dramatic success for Democrats, who no longer need to defend the program during election years. But the new welfare, now called Temporary Assistance for Needy Families, has been a failure: While poverty has risen, unemployment has doubled and food stamp use has ticked up forty percent since the recession began, welfare rolls have expanded by less than ten percent. The tattered net is catching far fewer people.
"The Republicans have been after all three of those programs ever since 1935. They got welfare a few years ago, because that's poor people. They could jump on them," Rep. Jim McDermott (D-Wash.) said during an unemployment standoff this summer. "But unemployment and Social Security is middle-class people -- they haven't been able to get them, but it isn't because they're not willing to try."
Republican hostility to the New Deal is nothing new. Time Magazine summarized the position of Social Security's Republican opponents in 1936: "Wage earners, you will pay and pay in taxes...and when you are very old, you will have an I.O.U. which the U.S. Government may make good if it is still solvent."
Seventy years later, President George W. Bush theatrically stood before a filing cabinet to mock the notion that the Treasury bonds held by Social Security could be redeemed to pay benefits -- a staged act no president would dare pull on China or other holders of U.S. debt. "There is no trust fund, just IOUs that I saw firsthand, that future generations will pay," said Bush. "Imagine -- the retirement security for future generations is sitting in a filing cabinet."
Rep. John Dingell Jr. (D-Mich.) was born in 1926 and remembers the days before the payroll tax started stuffing that filing cabinet. His father, a prominent House Democrat, stood behind FDR during the signing of the Social Security Act; Dingell Jr. was an architect of Medicare. "Goldwater, Reagan, the Tea Party folks are all really part of the same attempt, and that is to get rid of the New Deal and to get away from these dangerous, socialistic ideas," said Dingell.
"I can remember the terror that existed with regard to those county poor farms," Dingell said.
Though Republican hostility to the New Deal isn't new, the Democratic embrace of language that has long been used to undermine belief in government is. Announcing a pay freeze for federal workers, Obama reasoned that "small businesses and families are tightening their belts. Their government should, too." With nearly one in ten people unable to find work, Democrats compete with Republicans over who can sound more concerned about the debt and deficit, despite a longstanding economic consensus that a deficit is a good thing to have in times of slow growth and high unemployment.
What is dangerous about Social Security is that it works. It is evidence that people can do a better job insuring against life's cruel downturns by working together and pooling resources than by going it alone in the market. If the financial market and its representatives in Washington succeed in undermining Social Security, they will not only have access to trillions of dollars, but will have dealt a blow to a leading symbol of the potential collective action. It's no coincidence that cutting Social Security is often described as a "signal" to financial markets. Even Obama, after his election, echoed such language. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's," Obama said before his inauguration.
And Democrats pander to the relentless fear that an offer of kindness may wind up helping someone who either doesn't need the aid or who is in need but is to blame for their pitiful circumstances. President Obama articulated that worry in a weighted response to a question about why his attempts to slow foreclosures had been largely unsuccessful.
During a meeting with progressive bloggers, Obama was asked to defend his administration's failure to stem the foreclosure tide. The president's worry, he said, was that his anti-foreclosure program might accidentally help people who didn't deserve it. "The biggest challenge is how do you make sure that you are helping those who really deserve help, and, if they get some temporary help, can get back on their feet," Obama said, specifically adding that he didn't want the effort to assist "people who through no fault of their own just can't afford their house anymore because of the change in housing values or their incomes don't support it."
FDR and Obama traveled the same course in reverse: Roosevelt came into office a deficit hawk, pushed to balance the budget and cut federal worker pay. He quickly realized his error and turned around. He had the room to maneuver, however, because poverty had become so widespread that it lost its stigma. It could finally be addressed with a level head rather than a wag of the finger.
Before then, however, the nation was just prosperous enough for those with a little to look down upon those with less. When Adeline Nott was committed to a Portland, Maine poorhouse in the 1830s, she challenged her detention. The Maine Supreme Court ruled against her. "The indigent has no claim to be supported in idleness," the judges wrote. "[T]heir poverty generally grows out of an unwillingness to labor, or is occasioned by reckless and improvident habits."
Giving financial support to the jobless, known then as "outdoor relief" -- as opposed to the "indoor relief" of the poorhouse -- will only "encourage the sturdy beggar and profligate vagrant to become pensioners up the public funds," argued John Yates, an influential progressive from the mid-19th Century. A cash payment would "relax individual exertion by unnerving the arm of industry" and lessen the "desire of honest independence."
Critics of the New Deal, such as Beck, argue that the increased size of government it brought about has eroded Americans' freedom.
"It really buys freedom," said Nancy Altman, author of "The Battle For Social Security" and an advocate for the program. "If you don't have economic security, you lose your freedom in a very demeaning way." There's data to back up Altman's claim: Engelhardt and Gruber found that as benefits increased, the number of elderly people living with their families dropped by more than half. And, most noticeably, poorhouses shut down.
"Social Security -- this is one of the things of which my dad was very proud -- closed eleven hundred old folks' homes in New York. Eleven hundred. And that was just one example, but it tells you what it did all over the country," said Dingell, adding that before Social Security, "everybody and his second cousin piled in with their families. I had relatives that came to stay with my dad and mom I didn't even know were relatives. To tell you the truth, I'm not sure they are. And my grandad on Dad's side, who threw Dad out of the house, came to live with Dad. Dad was the only one of his kids who'd take care of him. He was, quite frankly, the only one who could afford to do so, because Pop was making a fairly decent living during the war, but he was supporting a whole tribe of Dingells and Selmerses and a whole bunch of others who had other Polish names but were related." Americans have not forgotten how to stack up -- the latest Census numbers show multifamily households have surged to their highest numbers since 1968 -- and Engelhardt and Gruber find that cuts to Social Security will only fuel that trend.
Poorhouses assaulted freedom in more painful ways, as well. One winter in the midst of the Great Depression, a "Mr. Green" in Rockingham County, New Hampshire was struggling much like the rest of the nation. "I am informed that you are three months back on your rent. The understanding that I had in your case was that if the county furnished the food, you were to take care for your own rent," wrote a county commissioner to Green on Jan. 26, 1937, one of the coldest winters of the century. "If you do not 'snap out of it' and get to working and paying your rent, my next call on you will be with the police officer and will take your whole family to the county farm. The state of New Hampshire will place your children. A word to the wise is sufficient."
The talk of taking Green's children was no vacant threat. In most states, children were not allowed to live in poorhouses. Families forced into them would be split up, with children either bound for orphanages, foster homes or apprenticeships. Pennsylvania, which banned poorhouses from hosting children between the ages of two and 16, was typical. Hundreds of children in just one home, the Chester County Poorhouse, were "bounded out" -- given to other families -- in the middle of the 19th Century, according to an archive of their names that survives.
Banning children from poorhouses wasn't intended as a cruel rebuke to the destitute, but as a reprieve to the children. "Degrading and vicious influences surround them in these institutions, corrupting to both body and soul. They quickly fall into ineradicable habits of idleness, which prepares them for a life of pauperism and crime," the 1874 annual report of New York state's Commission of Public Charities concluded. "Self-respect is, in time, almost extinguished, and a prolonged residence in a poorhouse leaves upon them a stigma, which clings to them in after years, and carries its unhappy influences through life." The next year, the state banned children from poorhouses.
The adults who stayed behind would live with a motley gang of the dispossessed. Four of the six poorhouses studied in depth by David Wagner, a professor at the University of Maine's School of Social Work, in "The Poorhouse: America's Forgotten Institution," accepted convicts as well as the unemployed, the sick, the drunk, and the elderly and all lasted well into the 20th Century; four later became prisons or jails and, in the case of Rockingham County, both institutions sit on the same property today. At least 2,300 poorhouses existed across the country, according to Wagner, probably many more. Before the Depression, he said, 60 percent of poorhouse residents were old folks, and 20 percent were disabled (The University of Pennsylvania's Michael Katz said the numbers sounded plausible though he wouldn't second the estimate without precise data.)
For some advocates of the poorhouse, the institution was intended to rectify character flaws and was often dubbed a "house of correction," but prisoners and regular "inmates" weren't treated much differently. Wagner uses letters and records and interviews with old folks to give a flavor of poorhouse life.
In July 1895, a 61-year-old poorhouse inmate named Flint Peaslee complained to local officials about conditions at the Haverhill City Farm in Massachusetts, according to Wagner. Peaslee had been asked to care for another inmate named John Doton, who was "paralytic" and had maggot-infested bedsores. The city launched an investigation.
"The man was paralyzed. I saw maggots crawling in some of the sores and the odor was disagreeable," testified a Dr. Anthony. "[B]ed sores are the frequent accompaniment of paralysis ... at times even in hospitals, and with the best of care ... the paralyzed part is affected and it is the constant pressure that aggravates the trouble."
The investigating committee recommended adding a trained nurse and an improved hospital ward to the almshouse. Wagner reports that of the 22 current and former inmates interviewed, ten were critical of the management and 12 supportive.
"The people would work the farm and it would sort of support 'em or provide food, such as that," Dingell said. "But it was a pretty grim existence for those people."
In 1936 a woman's aunt and uncle hoped to extract their niece and her new baby from a poorhouse in New Hampshire. They sent a letter to a county commissioner saying they would take care of the hapless pair at their home, but the commissioner wouldn't allow it, according to Wagner. The commissioner didn't doubt their ability to provide, but he figured the woman would have another burdensome baby. "If I am presented with definite proof from the Merrimack County Farm, that [she] has had a sterile operation, I have no objection to her going to live in your home."
These and other anecdotes are why Wagner views poorhouses as "a place to put people away, a place where involuntary surgery was performed, and a place of punishment for those deemed unworthy of outdoor aid."
Associated Charities highlighted Aunt Winnie's case mainly to show the beneficence of doing social work in warm weather as well as cold weather, but the vignettes from the century-old report also showed the organization's ideological opposition to outdoor relief.
The charity's annual report in 1899 noted several reasons for a "marked improvement in conditions" for poor people in D.C. "First, in the earlier years there was no method of distribution or of ascertaining the deserving poor, but to furnish supplies to all who applied, and much was in this way distributed to impostors and others not really needful or deserving of charity, and which had a tendency to encourage and create pauperism."
"Several years ago the Associated Charities abandoned the principle of relief giving and became a bureau of investigation and information," the report said. "It is confidently believed that there have been very few, if any, case of actual need in the city during the last two years which have not been relieved, and many of those relieved have been of the most deserving kind, who probably would not have been known but for the most excellent methods of investigation employed."
The unemployed who were denied outdoor relief by the city had another option: To be auctioned off to the lowest bidder and live as a boarder. The city would reimburse the homeowner for the specified amount in exchange for putting the pauper up. The jobless person was expected to work without pay in exchange.
Washington's poorhouses live on only in the name of a dive bar just blocks from the Capitol -- congressional staffers frequently imbibe at the "Pourhouse" on Pennsylvania Avenue -- but the rhetoric targeting their one-time denizens has survived to the modern day unscathed. Georgia Republican Rep. John Linder said during a hearing this summer that "even when businesses are willing to hire, nearly two years of unemployment benefits are too much of an allure for some ... The evidence is mounting that so-called stimulus policies rammed through Congress are doing more harm than good." Orrin Hatch attacked outdoor relief when he proposed this summer that the government drug-test the unemployed because "we should not be giving cash to people who basically are just gonna blow it on drugs." Newt Gingrich wants the unemployed to undergo job training to get benefits.
The welfare queen of the 1980s and '90s, and the "99ers" today -- people who've exhausted 99 weeks unemployment benefits, who Beck says his viewers should be "ashamed to call ... Americans" -- were the "gentlemen of leisure in the gutters" in the 1870s, as the New York Tribune put it.
Abetted by journalistic exposes of poorhouse squalor, progressives managed, by the 20th century, to reform the poorhouse into a kinder and more accommodating institution than its Dickensian forebears -- too accommodating, according to some Republicans at the time.
At the turn of the century, Congress did precious little to alleviate poverty. Other than funding pensions provided to Union veterans, the bulk of the congressional anti-poverty effort involved funding poorhouses in the capital with an appropriation that amounted to $13,000 in 1897.
Ohio Republican Stephen Northway quizzed Capt. L.B. Cutler, superintendent of D.C.'s Municipal Lodging House, during a hearing in 1897 about the comings and goings of unemployed single male inmates from one poorhouse to another along the east coast.
"It is amusing, when they get together in the yard, to listen to them talking and telling about this place and that one," Cutler said.
"Much charity to them is a harm," Northway said.
"They are human beings, and we have to take care of them, but it is outrageous to think that they get off as easy as they do," Cutler said. "At the workhouse they are treated very kindly by the man in charge there. He feeds them too well. If they were fed sparingly they would not go there."
Ultimately, outdoor relief for the elderly and the temporarily jobless has prevailed (the handling of non-elderly poor people is another question). President Obama often references the initial passage of Social Security when justifying his administration's compromises, insisting that if liberals held to their principled position and refused to negotiate, Social Security would never have become law. In December, arguing on behalf of extending the Bush tax cuts for the wealthy, he said that "it's a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we're going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans." Obama had made the same widows-and-orphans claim earlier to defend compromises in his health care reform law.
Obama has the details of his history wrong -- widows and orphans came later, not first -- but he also has it wrong in general. In 1935 the House and Senate met to conference the two separate versions of the bill. Neither bill covered every worker -- some are still exempt today; others, such as farm workers, have since been covered -- but the most critical difference was over a carve-out that private pension companies had demanded: If a company offered its own pension, they reasoned, they should be exempt from participating in Social Security. FDR and the House argued that such a carve-out would undermine the universality of the program and encourage companies to offer lousy pensions to get around the law, plans that wouldn't be guaranteed to be around when the retiree needed them and would have little protection against the vicissitudes of the market, as Social Security would.
The Senate also made a straightforward argument that Obama would well recognize: We don't have the votes, the chamber's leaders told the president. It's our way or nothing. For nearly a month in the summer of 1935, FDR stared the Senate down, refusing to accept its offer. He used every lever at his disposal. The president won; the Senate blinked. It's a different story than Obama tells.
Obama's confusion about Social Security's origins would seem mundane if it weren't for the payroll tax holiday he pushed, the deficit commission targeting Social Security he created, and the reports that he'll call for cuts to the program in his State of the Union address.
Social Security reform is necessary, the program's opponents say, because its future solvency is in question: As a result of the Baby Boom and advances in medicine, more people are living longer. But the actuaries who set up Social Security in the 1930s forecast with an eerie exactitude how much life expectancies would increase -- a detail that is always ignored. And the system was reformed by the Greenspan Commission in 1983, when the first Boomers were nearly forty years old. Nancy Altman, a boomer herself, served as a top aide to that commission, and said that it very specifically took into account the coming wave of retirements, which explains why it can pay full benefits through 2037, a quarter century after the first Boomer hits early retirement.
Social Security's actuaries reported this fall that after 2037, payroll taxes would be sufficient to pay nearly four-fifths of benefits through 2084. The payroll tax stops, however, at a little over $106,000. The shortfall could be made up entirely by applying the payroll tax to more income above that threshold.
Instead, President Obama's deficit commission proposed reshaping the payout structure in a more progressive direction, which would fundamentally change the nature of the program. Pundits such as The Washington Post's Robert Samuelson have long been arguing that the program should be more like welfare and that wealthy old folks should have their benefits withheld. But the cost of administering such a program, auditing it and making sure it's not being gamed would erase the savings associated with it, as well as undermine the element of the program that has made it so successful. Social Security has been an impregnable fortress because people feel ownership of it. It's their money. They earned it.
Obama's deficit commission failed to get the 14 of 18 votes necessary to move forward, but Senate Majority Whip Dick Durbin (D-Ill.), a White House ally, voted for it in a gesture that portends its future legislative revival. Durbin, said two sources, has since met with a bipartisan group of senators planning to introduce their own deficit-reduction plan, modeled on the commission's report, that they hope to attach to must-pass legislation to fund the government or raise the debt limit this spring. The gang includes enough Democrats to give their effort a solid chance of becoming law. Among them: Jon Tester, Ron Wyden, Kay Hagan, Mark Udall, Michael Bennet, Jean Shaheen, Amy Klobuchar, Bill Nelson, Dianne Feinstein and Mark Begich.
Top House Republican aides told HuffPost that leadership is planning to use the debt-ceiling vote -- when Congress must authorize the Treasury to issue more debt to pay its obligations or go into default -- to demand major cuts in spending. Lamar Alexander, the Senate's number-three Republican, said that the party will use the looming expiration of the payroll tax holiday to demand changes to Social Security. "My personal hope is that it doesn't become permanent unless we deal with a way to make Social Security solvent over the long term," he told HuffPost. "You have to remember, the payroll tax funds Social Security and I like the idea of a lower payroll tax contribution, but we've got to make sure Social Security is solvent, which we should be doing this next year as the first order of business." Making Social Security "solvent" with less revenue coming in necessarily means cuts in benefits.
In the meantime, people are limping across the finish line. Home values and the retirement security that came with them have plummeted, along with IRAs and 401(k)s. Pension plans are struggling and laid-off, middle-aged workers have pulled hundreds of millions of dollars from retirement savings to pay bills -- often taking brutal tax hits that come along with such withdrawals. The number of people filing for reduced, early Social Security benefits jumped by 25 percent in 2009. That under such circumstances the political class is leaning toward cutting Social Security is evidence of where its power base resides.
Karen Good, who lost her job at a nonprofit in Florida two years ago, exhausted her 99th week of unemployment insurance on Dec. 1, utterly unable to find work. "I'm not a super political person, but I've sort of become one because I need the government now more than I ever have in my life," she said. On Tuesday, mercifully, she turned 62, which makes her eligible for early Social Security benefits. In February, they'll kick in, and she'll start drawing $1,113 a month. It won't come close to replacing her lost income, but it's something.
"I haven't been a proponent, a fan of Social Security for the past 45 years. When I was younger I always felt I should have the option to put my money into an account," Good told HuffPost on her birthday, scoffing at the suggestion that she might be grateful for the money. "I get my money back," she said. "I earned it."
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