Monday, May 9, 2011

Introduction to the Social Security: Presidential Perspectives Blog

Social Security has been one of the cornerstones of American social policy since its inception in Franklin Delano Roosevelt’s New Deal legislation of 1935. To date, it has survived thirteen presidencies, several major wars, and a dramatic scale of changes since the 20th century. Indeed, though it has been adapted, amended, and tweaked, the basic tenets of Social Security have endured for one main reason: it works. The program has lifted millions of elderly citizens out of poverty, and in 1985 brought the percentage of old-aged persons under the poverty line below that of the general population.[1]

But administrators of Social Security must now confront its most difficult challenge, one which many presidents have tried unsuccessfully to address: the aging of the population. As of the writing of this blog, a generation of approximately 80 million baby boomers is in the midst of retiring, accruing benefits a rate significantly higher than the contributions being made by the workforce.
[2] Whereas in Social Security’s early days, there were about 16 workers paying into the system for every retiree receiving benefits, now there are less than three.[3] Altogether, this trend suggests that without significant changes in current policy, the Social Security system will be bankrupt by as early as 2037, and will be able to pay substantially reduced benefits in the following years.[4]

As we consider options for preventing this looming crisis, it is important to reflect on the history of Social Security to understand how we got to this point and to illustrate how we can learn from the past to shape the debate for the future. In our experience, too often do these reflections stop with the former goal without considering the latter. To avoid this pitfall, we have created an interactive blog to spur meaningful debate about the history of Social Security, and how we can use it to provide recommendations for the future.

In the twelve entries that follow, we present reconstructions of each president’s experience with, and stance on Social Security from FDR to Obama, relying heavily on primary sources. The experiences of President Gerald Ford are excluded due to a lack of primary sources available, as well as because of his comparative lack of influence on the broader contours of the Social Security debate. Each entry begins with pertinent historical questions, followed by a response from the president. After each entry, we provide a brief analysis of the interaction between that president’s experience and several main themes that can be traced throughout the history of Social Security and contribute significantly to its current direction. These key themes include:

1. Expanding Coverage vs. Controlling Costs

Over the past 80 years, presidents have faced conflicting pressures both to control the costs of Social Security and to expand it's coverage and benefits. These influences come from within the political system and from without in varying degrees as Social Security evolves; they often play an essential role in framing the debate over Social Security for each president. As Social Security becomes increasingly sacred to the American public and political elite, reducing benefits becomes ever less feasible. At the same time, as costs skyrocket with the aging of the baby boomer generation, costs become more important to address. The result is the seemingly insurmountable problem of Social Security.

2. Ideological Polarization

As Social Security grows, it is subject to intensifying partisan pressures that shape discussions over what reforms should look like. For example, from its inception, Social Security was viewed by many as a cornerstone of the Democratic party. Since then, it has played a key role in the larger debate between conservatives and liberals over the American welfare state in general. As polarization increases, party lines became even more divided on the issue of Social Security. Democratic and Republican presidents alike must take into account the realities of their party's agenda. Furthermore, it becomes increasingly difficult to establish a bipartisan compromise, which appears to be the method of choice of recent presidents for crafting Social Security reforms.

3. Short-Term vs. Long-Term Solutions

Social Security reform has consistently been a battle between short-term and long-term solutions. Short-term solutions push the issue off the agenda, are extremely popular in election years, and are more politically feasible when the perception is that the problem is here and now. However, they often result in the need for administrations to revisit underlying problems every few years. On the other hand, long-term solutions are extremely hard to sell in the political climate, unless crisis is imminent. When the fiscal situation is relatively stable, it is very difficult to convince Congress and the American public that the need to address the long-term Social Security problem warrants attention. This tension is a major obstacle to meaningful reform.

Understanding how these themes interact with the characteristics of the presidents that have presided over the Social Security system and the constraints they faced will allow us to study the nuances of its political and economic history, and thus its place in the larger debate on the American welfare state. Our analysis sections will also serve as a springboard for discussion, whereby we can, in proper bipartisan fashion, debate the key issues addressed by particular presidents as well as their place in the context of Social Security.

We conclude with a final entry that summarizes our analyses and provides tentative recommendations, based on historical precedence, for the future direction of Social Security. We invite our professors and classmates to comment on these final thoughts as we join a century-long debate over the future of one of the most successful, sacred, and salient social policies in American history. Perhaps through understanding the changing context of public policy, we can together engender the kind of sustained and meaningful non-partisan debate that is so elusive in public policy today.

[1] Remarks by the President in Addressing the Future of Entitlements Conference, Bryn Mawr, Pennsylvania, December 13, 1993. Retrieved from
[2] O’Brien, Sharon. Obama’s views on the Social Security payroll tax. Retrieved from
[3] George Bush, State of the Union Speech, February 2, 2005. Retrieved from
[4] Is Social Security on the table as Obama, Congress tackle the deficit? (2011). CBS News. Retrieved from

Sunday, May 8, 2011

President #1: Franklin D. Roosevelt (1933-1945)

What were the main reasons for pursuing a program of old-age insurance? What were some of the challenges associated with establishing a broad social welfare program?

I was concerned at the time about ensuring the security of the men, women, and children of the Nation against the many hazards and vicissitudes of modern life.[1] Old age was one of the most tragic of all hazards. There is of course, no tragedy in growing old, but there was tragedy in growing old without means of support.[2] As the Nation developed, the forces of industry meant that man’s individual strength and wits were no longer enough, not only for the worker at shop bench, but also for the merchant or manufacturer. Where men had once turned to their friends and their neighbors for help and advice, they now turned to Government.[3]

As Governor of New York, I had proposed the Old-Age Pension Act, one of the most generous pension programs in the country at the time. However, in approving the bill, I noted that the full solution to the problem would be possible only if based on insurance principles, as it would require too much money to provide even a moderate pension for all workers.[4] Accordingly, I proposed a comprehensive program of security for our old people that adopted three principles:

·         Providing non-contributory, old-age pensions for those who were too old or too poor to build up their own insurance
·         Compulsory annual contributions from workers to establish a self-supporting system for future generations
·         Voluntary contributory annuities ensuring that individual initiative could increase annual amounts received in old age.[5]

In furthering the security of older citizens through social insurance, I sought to create a program featuring a maximum of cooperation between States and the Federal Government. I proposed that States meet a portion of the cost management function, leaving to the Federal Government the responsibility of investing and maintaining the reserve funds.[6] I also sought to leave ample scope for the exercise of private initiative, hoping that private investment would relieve the Government of much of the burden it initially assumed.[7]

The Social Security Act proved its essential soundness within a few years of enactment, affording some degree of protection to millions of workers and their families. But as I had said to Congress, it was important not to attempt to apply it on too ambitious a scale before actual experience provided some guidance. Social Security was a development toward a goal rather than a finished product, a base upon which our citizens could build individual security through individual efforts.[8] And it was social legislation that I expected to be improved and strengthened over time.[9]

Accordingly, I proposed some amendments to the Act a few years after its creation. The size of benefits paid to retirees was increased, and a reasonable relationship between wage loss sustained and benefits received was retained. Insurance benefits were extended to cover workers in more occupations. We also provided assistance to the needy aged, blind, and dependent children of the Nation.[10]  It should be noted that Social Security was not intended to offer anyone an easy life. The money paid merely furnished a minimum necessity; the kind of protection Americans wanted from their Government.[11]

The increase in the average length of life and the improvement in the average levels of health and wellbeing that came about at the beginning of the century gave our country great reasons for satisfaction. Yet these improvements were cold comfort to the millions of people whose security was as limited as was that of the Nation as a whole fifty years ago.[12] Through the Social Security Act, we created a sound means to provide security against several of the great disturbing factors in life, especially those which related to old age.

Editor's Note

The Great Depression created and exacerbated a variety of social and economic challenges that required immediate and effective government action. The 1930s saw poverty among the elderly grow dramatically; one estimate suggested that over half of all old-age Americans lacked a sufficient income to be self-supporting.[13] Responding to this crisis, a variety of states had enacted old-age pension programs in the early 1930s. However, most of these programs were generally inadequate, providing only 3% of the elderly with benefits that averaged less than 70 cents a day.[14]

There were several reasons for the poor performance of these pension systems, including restrictive eligibility criteria, inadequate implementation of state programs, and a lack of funding. Interestingly, there was a perception among many senior citizens that these pension programs represented “going on welfare,” which might explain low participation rates.[15] Reflecting this poverty and the general lack of appropriate government solutions, several groups calling for radical overhauls of the American system rose to prominence.

In 1933, Francis Townsend, an unemployed doctor from California, devised the Townsend Plan, which stipulated that the government provide a monthly pension to all American citizens aged 60 and older, funded by a national sales tax. The plan, and the subsequent formation of “Townsend Clubs” with total membership of over 2 million people, remained popular several years after the passage of the Social Security Act. More radical alternatives such as the “Ham and Eggs” pension scheme and the “Technocracy” movement illustrated the huge public appetite for expansive government action.[16]

It was in this context that President Roosevelt launched the Social Security program. Demonstrating substantial capacity for policy innovation, Roosevelt introduced the idea of “economic security” to change the debate from a focus on welfare assistance through pensions to a discussion of “social insurance”. By framing the issue in terms of a security risk to society that needed to be mitigated, Roosevelt was able to portray Social Security as being necessitated by broader societal objectives rather than being a method to promote the interests and welfare of individual participants.

The President also repeatedly indicated his firm belief in the need to expand coverage to more citizens and to increase the level of benefits being distributed, responding directly to the problem of persistent poverty and economic hardship among America’s seniors. However, suggestions that Roosevelt was unable or unwilling to consider the potential for significant cost escalation are somewhat unfounded, as the President called for a modest program that made incremental adjustments over time. Further, the scheme for Social Security payments, where taxes on present day workers were used to pay benefits to present day retirees, was broadly accepted as being economically sound given the labor force demographics of the time.[17] The creation of Social Security can thus be said to have occurred against a backdrop of widespread public and political support and with a focus primarily on the expansion of coverage to impoverished elders.

[1] Message to Congress on Social Security, January 17, 1935.
[2] Fireside Chat, June 28, 1934.
[3] A Social Security Program Must Include All Those Who Need Its Protection, Radio Address on the Third Anniversary of the Social Security Act, 1938.
[4] Address to Advisory Council of the Committee on Economic Security on the Problems of Economic and Social Security, November 14, 1934.
[5] Message to Congress on Social Security, January 17, 1935.
[6] Message to Congress Reviewing the Broad Objectives and Accomplishments of the Administration, June 8, 1934
[7] Note: The notion of voluntary private investment originated from President Hoover’s commitment to “Volunteerism.” President Hoover’s famed international relief efforts helped feed millions of starving people and relied on voluntary partnerships between government and business. This success shaped much of his response to the Great Depression, which advocated voluntary efforts and limited federal engagement. President Roosevelt likely sought to retain a rhetorical commitment to private efforts while recognizing the limitations of a solely volunteerism-based approach.  
[8] A Message Transmitting to the Congress A Report of the Social Security Board Recommending Certain Improvements in the Law, January 16, 1939.
[9] Presidential Statement on Signing Some Amendments to the Social Security Act, August 11, 1939.
[10] Ibid.
[11] A Social Security Program Must Include All Those Who Need Its Protection, Radio Address on the Third Anniversary of the Social Security Act, 1938.
[12] Message to Congress on the National Health Program - January 23, 1939.
[13] Historical Background and Development of Social Security. Social Security Administration, U.S. Government, 2011.
[14] Ibid. pg. 7.
[15] See, for example, Berkowitz, Edward. Social Security After Fifty. Greenwood Press, 1986.
[16] Historical Background and Development of Social Security. Social Security Administration, U.S. Government, 2011.
[17] See, for example, Committee on Economic Security Report to Congress, 1934. 

President #2: Harry S. Truman (1945-1953)

What improvements did you seek to make on Social Security? Where was the law inadequate? What were the major constraints to reform?

Social Security quickly became an essential part of the American way of life. We successfully created a national system of old-age and survivors insurance under which forty million workers were insured.[1] Social Security provided assistance payments to the needy aged and blind, and to dependent children. And, importantly, Social Security was not a dole or a device that gave everybody something for nothing. We created security worthy of the men and women who fought to preserve the heritage and the future of America.[2]

But the program of Social Security was not complete, and was subject to piecemeal attack and to slow undermining by Republicans in the House of Representatives. In 1948, I vetoed proposals to remove the protection of the Social Security law from persons who were already entitled to its benefits, such as news vendors, commission salesmen, life insurance salesmen, truck and taxicab drivers, and miners. I believe now as I did then that the security and welfare of our nation demand efforts to cover all excluded groups. Any step in the opposite direction would have undermined the entire program, and would have caused a loss in confidence in the permanence of Social Security’s protection against the hazards of old age, unemployment, and premature death.[3] I fought to oppose such attacks.

The public assistance provided under the Social Security Act was designed as a backstop or second line of defense to be replaced in large measure by social insurance benefits. But in my first term, we had not made much progress toward this objective. Indeed, prior to 1950, individual public assistance payments were substantially higher than those under old-age insurance. I therefore proposed that old-age insurance be extended to the over 20 million employed persons that were not covered at the time, and that the scale of benefits be sharply raised. [4] As we produced more, we had a responsibility to make more adequate provisions for the aged, for those who could not find work, and for the others in our society who were in need. When I took office, only 30% of the aged population was eligible for social insurance benefits.[5]

In 1950, I approved amendments to the Social Security Act that brought 10 million more persons under old-age and survivors insurance, demonstrating our commitment to achieving real economic security for the American family.[6] But as I wrote in a letter to an elderly woman struggling to make ends meet, the old-age insurance payments of Social Security were just plain  inadequate. Rising wage levels and a large amount of available revenues meant that we could increase the primary benefit rates by as much as five dollars a month without any added cost to anyone.[7] Reflecting this possibility, I signed into law the Social Security Act Amendments of 1952, that increased old-age and survivors insurance benefits by an average of six dollars a month, while also increasing the Federal contribution to the States for public assistance by $250 million annually.

Throughout my presidency, I fought off attacks on Social Security from Republicans in the House who were perfectly willing to deny millions of Americans the benefits provided by this legislation in order to satisfy the whim of special interest lobbies.[8] Despite this opposition, I preserved the core principles of Social Security, expanded its coverage, and increased annual benefit payments. Because of our efforts, Social Security was better able to provide some protection for the people of this country.

Editor’s Note

During the 1940s, no substantive changes were made to the Social Security program. Benefit payments to enrollees remained fixed during this period. However, in 1946, the Social Security Board was abolished and replaced with the Social Security Administration, headed by a single commissioner.[9]

The subsequent 1950 Amendments passed by Truman dramatically increased benefits, both for existing beneficiaries and for future program members. Along with the 1952 Amendments, this legislation nearly doubled the value of total payments for existing beneficiaries, but did not include a mechanism for automatically adjusting benefits to account for increases in consumer prices.[10] Though President Truman was correct in his assertion that such an increase in benefits was affordable given the surplus of Social Security reserves, a move to raise payment values so rapidly may have been short-sighted given the program’s present struggles. But for President Truman, who like President Roosevelt was concerned primarily with expanding coverage, this expansion was a substantial victory.

Indeed, in the context of his broader domestic agenda, Truman’s progress on Social Security reform was remarkable. Most of his Fair Deal initiatives faced staunch opposition from Republicans whose political clout was increasing, and many of his legislative endeavors, including universal healthcare, were defeated.[11] So while the raising benefits and the number of beneficiaries would prove to have unintended consequences for future leaders, Social Security was very much a legislative success for President Truman given his domestic priorities.

[1] Statement by the President on the 10th Anniversary of the Social Security Act, August 13, 1945.
[2] Ibid. pg 2.
[3] Veto of Bill to Exclude Vendors of Newspapers and Magazines from Social Security Coverage, April 5, 1948.
[4] Annual Budget Message to Congress: Fiscal Year 1950, January 10, 1949.
[5] Annual Message to the Congress: The President’s Economic Report, January 6, 1950.
[6] Statement by the President Upon Signing the Social Security Act Amendments, August 28, 1950.
[7] Letter to Mrs. Elizabeth Cochrane on the Need For Increasing Social Security Benefits, June 13, 1952.
[8] Statement by the President Upon Signing the Social Security Act Amendments, July 18, 1952.
[9] Historical Background and Development of Social Security. Social Security Online, U.S. Government Social Security Administration, 2011.
[10] Achenbaum, Andrew. Social Security: Visions and Revisions. Cambridge University Press, 1986.
[11] Bernstein, B.J. Politics and policies of the Truman Administration. Quadrangle Books, 1970.

President #3: Dwight D. Eisenhower (1953-1961)

What were your policy priorities on Social Security? What were some concerns about the consequences of past policies?

In the several years prior to my presidency, the Federal Government had assumed an increasing variety of functions, many of which were duplicated to some extent in State Government. Upon entering office, I identified the need for a Presidential Commission on Federal/State Relations and noted that the development of the Social Security program warranted study. Though it is a proper function of government to help build a sturdy floor over the pit of personal disaster, this must be done efficiently and with greatest possible benefit to those in need.[1]

In my first message to Congress on the State of the Union, I pointed out this urgent need for making our social security programs more effective. Social Security furnished the opportunity for our citizens, through a heritage of self-reliance, to build the foundation for their own security. We therefore strove to ensure that we extended that opportunity to millions of our citizens who remained unable to avail themselves of this protection under previous versions of the program. I proposed to Congress that would offer over 10 million citizens Social Security protection for the first time. This plan, once enacted, brought immeasurable peace of mind and security to the many citizens who were covered for the first time, while adding greatly to the national sense of domestic security.[2]

We were very concerned about the efficient and responsible administration of social welfare programs, as we recognized that good intent and high purpose were not enough to ensure a program’s success. I therefore established a unified Department of Health, Education, and Welfare that improved the vital delivery of social insurance functions.[3]

The Social Security Act Amendments of 1954 represented the accomplishment of the two goals of expanding coverage and promoting efficiency. By enabling some 10 million more Americans to participate in the Old-Age and Survivors Insurance Program, the Amendments provided a solid foundation of economic security. The Amendments also raised payments to all retired workers by an average of five dollars a month, and increased payments for future retirees. The law also eliminated the five lowest years of earnings from benefits computations, preventing an unfair reduction in benefits for workers suffering from illness or unusual unemployment.[4]  

In 1954, I articulated my belief that private and group savings and insurance schemes fostered by a healthy economy should be the primary means of protection against the economic hazards of old age and death. Private savings must always be encouraged by sound tax and fiscal policies of the Government. Social Security was not intended as a substitute for private savings, but instead was meant to be a foundation about which other private forms of protection can be built. Using these guidelines, several principles emerged from a detailed study on the Federal Social Security system:

·         Coverage must be broadened and benefit levels must be increased for all retirees
·         Discrimination against continuing wage earners must be removed
·         Benefits should be computed on a fairer basis with a higher earnings base for all workers
·         Social Security must fulfill its purpose of helping to combat destitution[5]

Amendments in 1956 contributed further to the successful fulfillment of these principles. The reforms would have imposed a 25% increase in Social Security taxes on everyone covered by the system, but that tax increase was cut in half by my administration because of increases in effectiveness.[6]

In 1958, I again approved legislation to increase Social Security benefits and expand the tax base, in light of changes in the economy since 1954. For the fifth time in a twelve year period, legislation had successfully been enacted that provided an increase in benefits. But, worrying, the 1958 Amendments were also the fifth time that laws increased the Federal share of costs of these programs relative to the financial contribution of the States and communities. The Federal share increased from about 45% in 1946 to about 59% in 1958.[7] By the fiscal year 1960, Federal programs for the aged, including Social Security programs, increased fivefold since 1950 and cost about $15 billion.[8]

Throughout my presidency, I sought to reaffirm our commitment to the efficient and responsible administration of the Social Security program. I also expanded coverage to millions of Americans, providing them with much needed economic security that served as a foundation for private work, planning and thrift to increase individuals’ own standards of living.
Editor’s Note

Eisenhower’s presidency was a remarkable development for the Social Security program. The Eisenhower amendments to Social Security resulted in one of the largest ever expansions of the program in terms workers covered and total benefits paid.[9] Yet Eisenhower, as a moderate Republican leader, was also the first president to truly inject notions of efficiency and cost control into the dialogue on Social Security and old-age insurance. These ideas were largely symbolic, with little substantive change proposed by President Eisenhower to match the rhetoric of an increasing reliance on more efficient administration and private provision of economic security.

Thus in many ways Eisenhower’s presidency represents a minor turning point of sorts. The rhetoric and actions of Presidents Roosevelt and Truman focused exclusively on increasing access to Social Security and the associated equity gains from such improvements. President Eisenhower, too, focused on improving access to benefits, but began to take steps to address burgeoning costs and inefficiencies in the program, thus shifting the balance marginally away from programmatic expansion, and establishing a trend of increasing focus on the reduction of costs, particularly among Republicans.

Despite his rhetoric, it is worthwhile to note that President Eisenhower adopted a radically different approach to Social Security than did the Republicans in the House of Representatives under President Truman. Whereas they sought to undermine the program’s core structure through systematic reductions in coverage, Eisenhower sought to increase coverage while reducing costs in other areas. This perhaps reflected the emerging reality of Social Security’s popularity and status as the “third rail” of American politics. Finally, it indicated that there was not yet a sharp and coherent partisan divide over the long-term objectives of social security between Democratic and Republican presidents.  

[1] Statement by the President Concerning the Need for a Presidential Commission on Federal/State Relations, February 26, 1953.
[2] Special Message to the Congress Transmitting Proposed changes in the Social Security Program, August 1, 1953.
[3] Special Message to the Congress Transmitting Reorganization Plan I of 1953 Creating the Department of Health, Education, and Welfare, March 12, 1953.
[4] Statement by the President Upon Signing the Social Security Amendments of 1954, September 1, 1954.
[5] Special Message to the Congress on Old Age and Survivors Insurance and On Federal Grants in Aid for Public Assistance Programs, January 14, 1954.
[6] Statement by the President Upon Signing the Social Security Amendments of 1956, August 1, 1956.
[7] Statement by the President Upon Signing the Social Security Amendments of 1958, August 29, 1958.
[8] Letter to Secretary Flemming on Receiving the Report of the Federal Council on Aging, November 16, 1959.
[9] Berkowitz, Edward D. America’s Welfare State: From Roosevelt to Reagan. Johns Hopkins University Press, 1991.

President #4: John F. Kennedy (1961-1963)

What measures did you take to strengthen the Social Security Act? To what extent were your decisions motivated by a desire to expand coverage? By a desire to increase efficiency?

In 1961, I signed into law a series of Social Security Amendments that represented a step towards eliminating many of the hardships of old age, disability, or untimely death of a family’s wage-earner. I have always believed that the nation’s strength lies in the continued well-being of its people, and changes in our population, working habits, and in our standards of living required further revision of Social Security to maintain that well-being. The 1961 Amendments made Social Security more effective and more beneficial for recipients.[1]

Specifically, the 1961 reforms lowered the eligibility age for old-age and survivors insurance benefits from 65 to 62 with an accompanying actuarial reduction, and increased the minimum monthly benefit payable to all retirees. Benefit payment levels were also increased to widows, orphans, and need children, while the retirement test was made more generous. Finally, a tax increase scheduled for 1969 was moved forward one year to 1968, while employers were required to pay a slightly higher Social Security contribution rate.[2]

These changes reflected my continued belief that public welfare must be more than a salvage operation, picking up the debris from the wreckage of human lives. The emphasis must be not only on the long-range costs in terms of the budget, but the long-range costs in human terms as well.[3] I urged Congress to further amend the Social Security Act to ensure that States receiving Federal funds not exclude otherwise eligible persons on the basis of harsh residence requirements for the aged, blind, and disabled. Increased mobility is a hallmark of our economic times and should not be unfairly punitive on individual families.[4]

But to encourage flexibility and efficiency in welfare programs, I recommended that my Secretary of Health, Education, and Welfare identify mechanisms to simplify the coordination, administration, and operation of programs, to increase experimental and pilot projects and local levels. The steps I recommended to Congress were not cheap, but restored human dignity and, by increasing the well-being of citizens, would save money in the long run.[5]

Editor’s Note

President John F. Kennedy’s domestic policy agenda primarily concerned areas outside of Social Security. Thus during his short-lived presidency, Kennedy was responsible only for minor changes to the Social Security Act. However, it was clear from his speeches and proposals that though important, President Kennedy viewed budgetary cost cutting as a distinctly secondary goal in comparison to improving the plight of the old-aged and disabled. Kennedy still acknowledged the importance of improving efficiency in program administration, notably calling for state and local-level policy experimentation while supporting more flexible state approaches to funding challenges. A final noteworthy point is that Kennedy, like many of his predecessors, was comparatively unafraid to include conversations about tax increases, providing these were framed in the correct way and phased in with a substantial time delay.   

[1] Statement by the President Upon Signing the Social Security Amendments of 1961, June 30, 1961.
[2] Social Security Amendments of 1961: Summary and Legislative History. Social Security Administration, U.S. Government, 2011.
[3] Special Message to the Congress on Public Welfare Programs, February 1, 1962.
[4] Ibid. pg. 4.
[5] Ibid. pgs. 4, 5.

President #5: Lyndon B. Johnson (1963-1969)

How did Medicare come about? What constraints and opportunities were involved in is passage? How did this legislation shape future expectations?

At the beginning of my presidency, I indicated that the administration would continue to build on the efforts of President Kennedy to create a better country for its older citizens; to ensure that the older American would never become a second-class citizen in his own country. When I entered office, the problem of poverty was an all-pervasive blight. Over three million elderly families were living with incomes of less than three thousand dollars a year, with much less money to pay for a much higher need for medical services.[1]

Thirty years before my presidency, the Nation took a first step to meet the needs of its older citizens by adopting the Social Security program, which gave Americans some confidence as they looked towards retirement. But many older citizens were still defenseless against the high medical costs of sickness or disability. Existing “solutions” such as private insurance and welfare based assistance were not adequate. 

Therefore I proposed a sound and workable solution: hospital insurance based on Social Security payments. This program had two basic goals: protecting those over 65 from the heaviest costs of serious illness and providing a base that private programs of health insurance could then supplement.[2] The system was to be funded and administered through the Social Security program.

Medical science and our increasing health standards lengthened our life spans. Our assignment was to improve the quality of that life for older Americans. I took a series of steps to achieve this goal. I directed the Council on Aging to study and create ways to develop new skills for our older workers. I also sought the passage of hospital care for the aged, and declared May 1965 as Senior Citizens Month.[3]

The resulting Medical Care and Social Security Bill was a great step forward for all of our senior citizens. For the first time, health insurance protection for all persons of 65 and over was a part of America’s social insurance system. During their working years, Americans would be expected to contribute a small amount each payday for future hospital insurance protection. Upon reaching the age of 65, the Government would contribute to lower the burden of medical costs.[4]

In this country, we believe that every man wants dignity and a decent life, that every man wants a fair chance and not charity. Our passage of Medicare reflected our belief that older Americans earned and deserved a peace of mind, not pain and panic, in the event of illness or disease. [5] For our citizens who have moved to the sidelines after serving their tour of duty, those citizens were and continue to be our prideful responsibility, and they should be entitled to the best medical protection available.[6]

During my presidency, I had the honor of celebrating the 30th anniversary of the passage of the Social Security Act. Because of Social Security, millions of Americans were able to stand unafraid of their future. It had become so important to our lives in 1968 that it was hard to imagine that when it was first proposed it was bitterly attacked – much in the same way Medicare was maligned when it first came into being.[7]

But our efforts to pass Medicare, as well as our improvements to Social Security in 1968 represented the most significant step forward since President Franklin Roosevelt signed the Act into law in 1935. Over 20 million Americans, in addition to receiving health insurance, received increased Social Security benefits of at least 13%.  Additionally, I appointed a Commission on Income Maintenance Programs to study all aspects of existing welfare and to make recommendations for constructive improvements where necessary. In those years, we proved that people who have earned their living can make their lives better and more secure by diverting part of their incomes to protect themselves from fortune. Our challenge was and continues to be insuring human dignity and security to those who are unable to by their own protection.[8]

Editor’s Note

The decade of the 1960s brought substantial reforms to Social Security. On July 30, 1965, President Johnson singed the Medicare bill, creating a new social insurance program that extended health coverage to almost all Americans aged 65 or older. In fact, in the first three years of the program alone, nearly twenty million beneficiaries were enrolled.[9] The program was a remarkable success in providing increased protection and safety to America’s older generations.

The much discussed problems associated with the rapidly rising costs of Medicare demonstrate the difficulty that President Johnson and subsequent leaders had in curtailing the program’s problematic growth. But at the time of its inception, Medicare was sorely needed, with millions of American citizens exposed to a variety of illness without a method to cover related costs. For President Johnson, as it had been for President Kennedy, his primary concern was the expansion of coverage, and his speeches and statements indicate little consideration for the long-run cost effectiveness of a broad-based health insurance program for elders.

In fact, public opinion was largely in favor of Medicare, as it has been since the program’s inception. This likely reduced the pressure on Johnson and other leaders to discuss the more long-term effects of such a massive expansion in public welfare expenditures. Also notable, was Johnson’s creation of a commission to identify and recommend improvements to the welfare system. The establishment of “expert” commissions would be a hallmark of future presidential endeavors to reform welfare, and likely reflected both a growing faith in technical expertise and the increasing importance of creating quantifiable metrics for justifying policy decisions.

President Johnson’s passage of Medicare can thus broadly been seen from two perspectives. First, it was largely successful in its stated objective of protecting vulnerable elderly populations from destabilizing healthcare costs. It has improved health outcomes and increased standards of living. However, a more recent perspective emphasizes the high long-run costs to society, particularly to future generations, of these benefits. The problem of increasing present consumption at the expense of future investments would henceforth be a prominent issue for leaders on both sides of the political spectrum.    

[1] Statement by the President Upon Making Public the Report of the President’s Council on Aging, February 9, 1964.
[2] Special Message  to Congress on the Nation’s Health, February 10, 1964.
[3] Remarks to the Members of the President’s Council on Aging, February 16, 1965.
[4] Ibid.
[5] Remarks Upon Presenting a Social Security Check to the 20 Millionth Beneficiary, May 5, 1965.
[6] Remarks with PResdient Truman at the Signing in Independence of the Medicare Bill, July 30, 1965.
[7] Statement by the President Upon Signing the Social Security Amendments and Upon Appointing a Commission to Study the Nation’s Welfare Programs, January 2, 1968.
[8] Ibid., pg. 3.
[9] Berkowitz, Edward D. America’s Welfare State: From Roosevelt to Reagan. Johns Hopkins University Press, 1991.