The Social Security Controversy

Report Outline
Social Security as an Issue in the Campaign
Federal-State Program for Social Security
Cost of Social Security: Old-Age Reserve Fund
Program's Present Status and Possible Changes

Social Security as an Issue in the Campaign

Social security was projected into the presidential campaign as an active issue by Governor Landon's criticism of the existing legislation in an address at Milwaukee on September 26 and by John G. Winant's subsequent resignation from the chairmanship of the Social Security Board to enter the lists in defense of the administration's program. In his letter of resignation, dated September 28, Winant recalled that the Social Security Act in its inception was “viewed as a non-partisan, humanitarian measure,” and that three times as many Republicans in Congress voted for it as voted against it. He said that he had never held the act was without fault, and that he had “assumed and even hoped that time and experience might dictate many and important changes.” He was obliged to conclude, however, that Landon's address “was not a plea for the improvement of the act; it was a plea to scrap the act.”

Landon's Attack on the Social Security Act of 1935

At Milwaukee Landon stated his “firm belief in the justice, necessity, and feasibility of old-age pensions,” but he denounced the present law as “unjust, unworkable, stupidly drafted, and wastefully financed.” Referring to the taxes on payrolls and wages to finance the pensions, he called the act the “largest tax bill in history” and declared that “to call it social security is a fraud on the working man.” He asserted that the social-security taxes would slow down the advance of wages and hold back re-employment in prosperous times, and would increase unemployment and break wage scales is bad times. “The saving it forces on our workers is a cruel hoax,” he charged. Landon criticized also the provisions of the present act designed to induce states to enact unemployment-insurance laws. Although the statute stipulates only that such laws meet certain standards, he contended that it completely ignored “what has been of priceless value to us—the use of the states as experimental workshops in which new methods and policies may be tried out and gradually perfected.”

Landon attacked the plan for a huge old-age reserve fund invested solely in federal securities, using arguments similar to those employed by Winthrop W. Aldrich, chairman of the Board of the Chase National Bank, in a speech at the Virginia Institute of Public Affairs last July. He contended that this plan, by keeping the Treasury flush with funds, would constitute a continuous invitation to extravagance on the part of Congress. The Republican plan, he said, would be formulated on a pay-as-you-go basis, financed by direct, visible, and widely distributed taxes earmarked for the purpose. He indicated that for the existing federal contributory old-age pension scheme there would be substituted a plan to be administered by the states “to provide for every American citizen over 65 the supplementary payment necessary to give a minimum income sufficient to protect him or her from want.” Winant in his letter of resignation held that this meant the Republicans had “definitely rejected the constructive provisions of the Social Security Act only to fall back upon the dependency dole—a dole with a means test.”