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The Poorhouse: Aunt Winnie, Glenn Beck, And The Politics Of The New Deal

Posted:   |  Updated: 07/11/2013 10:44 am EDT

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.