A Short History of Social Security and Commentary

You could argue that the Industrial Revolution was what ultimately lead to social security. The Industrial Revolution sifted population away from farms and into cities, urbanization started to grow and change demographics in the country. In fact in 1890, only 28% of the population lived in cities. By 1930 this percentage had exactly doubled, to 56%.
This change away from an agrarian lifestyle to urban living, changed the face of the American family. Rural families were generally extended, with multiple generations living together. In this extended family situation, when a family member became elderly, ill or disabled, the group was better able to pull together to take care of this person. The shift of population into urban areas, the nuclear family became more of the norm, and the ability to take care of disabled or elderly family members seriously suffered.

The Great Depression brought this problem to the forefront. Social security was a product of the New Deal legislation passed by President Roosevelt in 1935. At that time, there was a tremendous amount of pressure upon the administration to do something to help the country during its financial collapse. At that time the poverty rates for senior citizens exceeded 50 %, there were numerous bank failures and the stock market crash of 1929, had all contributed to wipe out retirement savings/assets of millions of Americans.

The solution was creation of a type of social insurance, i.e. Social Security. It was a program, an insurance program, put in place by the government to carried out or mandated economic assistance to the unemployed, the elderly, or the disabled (disability coverage was added in 1956).

The fact that it was social insurance, was not overlooked by its conservative detractors. When introduced into Congress, there were cries that this was socialism. There were arguments against its adoption calling it government welfare. That it was an invasion of states' rights. Providing to the elderly, or the disabled was a duty that should be left to the states. Nevertheless the act passed and was signed into law.

It was not long after its adoption that the law was challenged in the Courts, as being a piece of unconstitutional legislation. The case that discusses the Court decision that Social Security is a constitutional act of the Congress, is reminiscent of the argument against the Affordable Care Act i. e.

Steward Machine Company v. Davis, 301 U.S, 548 (1937) the U.S. Supreme Court held, in a 5–4 decision, that, given the exigencies of the Great Depression "[It] is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare”.

It was a divided court and there were strong opinions against the law. Justices Butler, McReynolds, and Sutherland argued that the social security act went beyond the powers that were granted to the federal government in the Constitution. They argued that, by imposing a tax on employers that could be avoided only by contributing to a state unemployment compensation fund, the federal government was essentially forcing each state to establish an unemployment-compensation fund that would meet its criteria, and that the federal government had no power to enact such a program.

In other words, it was an unconstitutional invasion on state's rights. It is something each state has responsibility, and not the Federal government. Really sounds like the present conservative position on taxes, health care etc. Where would we be today if they had been successful in their arguments in the 30's?