|LOOKING BACK AT SOCIAL SECURITY|
May 18, 2000
RAY SUAREZ: This week, Republican presidential candidate Governor George Bush proposed a fundamental change in Social Security, converting a part of the money withheld from paychecks into a personally owned asset. Are Americans willing to accept a change in the program? Though Social Security is still a huge issue in American politics, it's apparently no longer that high-voltage third rail.
GOV. GEORGE W. BUSH: Millions of Americans will have an asset to call their own. This is the best thing about personal accounts. They're not just a program, they are your property, and no politician can take them away.
RAY SUAREZ: Governor Bush has not only grabbed the third rail, but has proposed an enormous shift in the underlying idea-- from "we" to "me."
FRANKLIN ROOSEVELT: We have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job, and against poverty-stricken old age.
RAY SUAREZ: Franklin Roosevelt signed the legislation establishing the Social Security program in 1935. People born that year turn 65 this year. Vice President Gore has proposed sticking with the current "pay as you go" system.
AL GORE: If you chose to invest part of your Social Security into the stock market, and the investments somehow didn't work out, and you had sharply reduced benefits, then what would happen?
RAY SUAREZ: Are the presidential candidates making history with this
latest debate over Social Security? Some answers now from "NewsHour"
regulars, presidential historians Doris Kearns Goodwin and Michael Beschloss,
and journalist and author Haynes Johnson. Joining them tonight is Joan
Hoff, Professor of History at Ohio University.
DORIS KEARNS GOODWIN: Well, it's very interesting. When Roosevelt first proposed Social Security in 1935, it was in part in response to the pressure of another program, the Townsend Program, that wanted to actually give $200 every month to every person over 65, and then force them to spend it that month, so that the expenditures would help the Depression go away. And suddenly these old people were running into stores and buying, or putting on layaway, refrigerators and radios and saying, "when my money comes next month, I'll pay," so much so that salesmen said they never wanted to see an old person in their store again. So his program was really considered a more conservative program, because the employees themselves were going to contribute, as well as the employers, a certain percentage of their payroll. And the interesting thing Roosevelt said was that the reason he wanted the employees to contribute was not simply for the economics, but he knew if they contributed, government could never take it away from them. If the government came along later and said, "we don't want this program anymore," it would be so embedded in the hearts and minds of the American people, because their own money had gone into it, and I think that's why it had become the third rail for such a long period of time.
RAY SUAREZ: But was there an understanding that it was an aid program, a benefit? In his statement, he said, "we can't insure against the vicissitudes of life," but he wanted to cushion the blows a bit.
DORIS KEARNS GOODWIN: Oh, there's no question. I mean, old people during the Depression were being so hurt by that Depression. I mean, they were living without dignity, it was the end of their lives, they didn't have food, they didn't have housing, and he felt it was responsibility of the government to help care for them, but he did it in this way to make it politically palatable. And the original Social Security Act also had in it aid for children, dependent mothers, and things that were also larger than just the Social Security we think of today.
RAY SUAREZ: Over time, Michael, did anybody take a good run at changing the outline of the program, trying to start a national debate about fixing it?
MICHAEL BESCHLOSS: They have tried, you know, especially Republicans. For instance, after the Second World War, many conservative Republicans said, "the first thing we'll do once we elect a President is repeal Social Security, because this is a big sign of the welfare state, Big Brother, all those things that Franklin Roosevelt brought that we want to get rid of," they said. And in fact, when Dwight Eisenhower was elected in 1952, there was a lot of talk about that, and the first thing that Eisenhower did once he became President was to assure Americans that he not only would preserve Social Security, but he inaugurated one of the biggest expansions of Social Security in history. 1964, Barry Goldwater said, "perhaps Social Security should be abolished." Goldwater was going to lose that election against Johnson anyway, but this didn't help. In 1980, Ronald Reagan had said a number of things that suggested that he thought that Social Security should be made voluntary for some people. That fall, his campaign handlers said, "look, the first thing you've got to do is assure people that this is not on your mind, you're not going to do anything to take away Social Security." And especially in that debate with Jimmy Carter, Reagan made a very big point of saying, "a president should not say never, but one thing I will promise you is that Social Security will not be reduced."
RAY SUAREZ: Joan Hoff, one feature over the years of politicians' speeches was that one generation should keep faith with another. Now if you read the papers, it's about "where's mine?" And "how I'm going to feather my nest and save and take care of myself." Is this a march that we made in baby steps, or not even realizing we were making it?
JOAN HOFF: I think we really didn't make that march until very recently, until the decade of the 1990's, and the prosperity which came in the... really in the middle of that decade-- that is, in 1995. Prior to that, I think that while there was talk about the flaw in the system of Social Security-- namely that if you ever had a time period when fewer people put in than people were taking out money, it would go bust. Aside from that argument, most people did think it was a generational responsibility. It's only, I think, been in the last half a dozen or eight years with this new prosperity and new economy, where people are beginning to think more about investing their own money and investing-- wish hopes, anyway-- some of their Social Security money. So it's a new idea with the new economy, but it is based on the current level-- which is unprecedented-- of prosperity. And that's the thing we have to keep in mind. Both Gore's plan and Bush's plan, even though they appear quite different, are premised on this assumption, and economic assumptions are always things to... I think, very often are mistaken. They are both based on this unprecedented prosperity, so I think what we're seeing is a trendy moment in history when prosperity is allowing people to think that they could, perhaps, invest some of their payroll tax on their own. If the market goes South at any point, you will find them back, I think, to the generational approach, which was the one that Roosevelt set in motion, as Doris said.
RAY SUAREZ: So Haynes, who took the "danger: High voltage" sign off the third rail?
HAYNES JOHNSON: The people themselves. This is the quintessential entitlement. This is where the word comes from. You're entitled to "the government is going to help you, they're going to protect you, they're going to preserve what you have." And nobody, to this point, has ever suggested abolishing it. As Michael and Doris said, there was a great... from the very beginning, this was attacked as socialized... socialism, Communism, the big government, all of the shibboleths and so forth, and railing against that thing, and every time it's been expanded and expanded and expanded. There's a wonderful story about John Breaux, the Senator from Louisiana, where he went down to one of his constituents in New Orleans, and she met him at the airport, and she came up and said, "Senator, Senator, don't let the government get their hands on my Social Security plan." The idea that this is not a government program, so it's okay. The fact is, nobody is going to abolish Social Security. The question is how you preserve it, and to what degree, and that's this debate about investing the money. All through the 80's, and Mr. Gingrich was talking about the same thing, for one of his central parts in the new Republican era, letting you invest your money in the marketplace.
RAY SUAREZ: So has...
HAYNES JOHNSON: A part of it, only, though.
RAY SUAREZ: Has this odd relationship with the program kept us from having a good rigorous national conversation about it?
HAYNES JOHNSON: Yeah, because no one wants to change it, basically, because people are... They like what they have, they would like to make money on the side, as Joan Hoff said-- this great market. We would all like to be dot-com billionaire, you know, by the time we're 20, and we don't need our own governmental Social Security. But the truth is that those people who are involved in the system don't want to lose it, and so you've got this... and politicians come up to this line and they always step back from it.
RAY SUAREZ: Joan Hoff
JOAN HOFF: And it's always... It's always been bipartisan support, too, that... You have to remember, every president has increased the taxes, payroll taxes, and that's how they solved the deficit problem that has been projected for a number of years. So that being bipartisan, throwing it into now a partisan debate for this election is something new and different, because most Presidents knew they had to work out a plan for Social Security that would be bipartisan.
DORIS KEARNS GOODWIN: And you know what's interesting is that Governor Bush is taking a certain risk, in a sense, because if he remembers back to Goldwater, the most effective ad during that 1964 election-- everyone remembers the daisy commercial-- but the one that really had the greatest impact, some people claim, are the ones where they had two hands cutting up a Social Security card, and then saying, "Goldwater has recommended that this become voluntary. Lyndon Johnson will save your Social Security." And people were really worried, so Bush obviously must know all that, so even introducing this must mean that he's deciding that showing leadership is more important than taking this risk that other people might get upset with his messing around with it in any way.
RAY SUAREZ: Well, Michael, should we take that as a signal that the political axis is shifting in the direction of the boomers, away from seniors?
MICHAEL BESCHLOSS: I think that's somewhat true, and one of the biggest reactions in favor of Bush's plan we see from the polls this week has been from younger people who say, "why don't we benefit more from this booming economy and the stock market?" But the greatest thing about what we're seeing this week is what we always complain about-- Doris, Haynes and I-- is that we so rarely see a big debate about a real issue in a presidential campaign. 20th century, so rarely has the big programs come out of campaign. Social Security was never discussed in 1932. Eisenhower's interstate highways, never discussed in 1952. Johnson, Medicare was somewhat discussed in 1964, not much. Reagan's tax reform, the same thing-- not discussed in the '84 campaign. Here finally we have a real debate, two very different ways of fixing Social Security in the framework of presidential campaign. Whatever the next president does, he can say he has a mandate for doing that.
RAY SUAREZ: Or perhaps get scared back into the hole by the price there is to pay this season. That's happened in the past, too, hasn't it?
MICHAEL BESCHLOSS: Absolutely. Presidents have promised all sorts of things and been scared back particularly on Social Security. As I was mentioning earlier, Eisenhower in 1952 -- even Reagan was toying during his first term, with reforming Social Security in certain ways that would help to preserve the program. Finally, he fell back on that time worn idea of appointing a commission, which in this case was headed by this obscure economist named Alan Greenspan. (Laughter)
HAYNES JOHNSON: But there's one thing, Ray, that we haven't talked about: The demographics. Young people today don't think it's going to be around for them. They don't think the government's going to be able to sustain them, and they also see they can make money in the markets, and they also know that there're going to be much more people like me who are older, than them who are younger-- this explosion-- and so there is a real concern down the road of what you do about that, how do you make it viable? How do you preserve it - whether you have a mixture nor not - and that's something that politics is haven't really faced in the long term. So if we get a debate on this, that would be very useful.
JOAN HOFF: And one of the reasons they haven't faced it, I think, is that they've been using the Social Security funds to make the surplus in the budget look better, or to make the deficit ok less. And that's a tricky thing out this. The Reagan Commission actually proposed what would have resolved the problem back then-- simply making it means-tested, and the program would be solvent indefinitely. But at was considered politically unpalatable. There are other less complicated ways to look at this. You could raise the age for getting the benefits. You could means-test them, as has been suggested. You could reduce the benefits. You could increase taxes again. But what's tricky is that this surplus is balancing the budget. Until last year, the Social Security surplus was the surplus in the budget.
RAY SUAREZ: And both the vice president and the governor of Texas this week took a lot of those options off the table. Joan Hoff, guests, thanks a lot.