Clearly Mr. Van Dyk was a huge fan of this President, thought his campaign “superb” and appreciated his promises of “reaching across party and ideological lines to get the public’s business done.” Van Dyk opines:

“You displayed an intellect and sense of cool that made us think you would weigh decisions carefully and view advisers’ proposals with skepticism.”

You know what I get from that phrase? Since the President acted “cool,” some mighty educated people actually believed this to be more than just a pose on his part. Not unlike Madonna’s use of “Voguing” back in the day. Now perhaps they begin to see that a pose has neither to do with governing nor an ability to adapt to the changing realities on the ground.

At that point, Mr. Van Dyk goes off the rails and we see that his blanket approval has come to an end:

The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.

He then complains of Obama stocking his White House with “Clinton administration retreads who had learned their trade in the never-ending-campaign culture of the Clinton years.” Again, blame Clinton. But who did Mr. Van Dyk think this man was going to hire? He faults Obama for his “reliance on these Clinton holdovers.”

Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an “opportunity” to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.

The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.

Does Van Dyk assume any Democratic president would have been this reckless? Hillary Clinton had different health care proposals, different proposals for helping homeowners in this crisis and a much better understanding of the economy. None of her ideas are being utilized, I’m afraid. She just may have exhibited the good sense Mr. Van Dyk longs for and put the financial floor back under us before attempting a more drastic change. But we’ll never know…

Van Dyk discusses Mr. Obama being unfairly compared to FDR & LBJ. Discussing President Johnson’s “Great Society legislation”…

…at every stage, congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.

Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you’re stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.

President Obama is in over his head, so of course he “outsourced.” Why is this gentleman surprised? Mr. Van Dyk willfully ignores the fact that the biggest culprit here is not a “Clinton retread,” but the Queen Bee herself, Speaker Nancy Pelosi. She crafted the stimulus package behind closed doors and the President willingly allowed her this control. Perhaps that was his devil’s bargain for her help in kicking the ladder out from under Hillary. Republicans were not the only ones to be shut out of the crafting of the Stimulus package. Many Democrats were as well. Van Dyk continues:

This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans — not to mention the bailouts of the financial and auto industries — independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.

He then offers up a prescription for a fix:

- Cut back both your proposals and expectations. You made promises about jobs that would be “created and saved” by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.

It’s time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all — badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?

The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.

- Talk less and pick your spots.

Applause and adulation are gratifying. But the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it’s important and they should listen.

“Let voters see you at your desk!” Doing some “work.” Great ideas!

- Conform your 2009 politics to your 2008 statements. During your campaign, you called for bipartisanship and bridge-building. You promised to reduce the influence of single-issue and single-interest groups in the policy process. Yet, in your public statements, you keep using President Bush as a scapegoat.

You have ceded content of your principal proposals to Democratic congressional leaders who in large part have yielded to special-interest constituencies and excluded Republican leaders from policy formulation. This certainly was the case with the stimulus plan. It has been the case with health and energy legislation, with the notable exception of Sen. Max Baucus’s attempt in the Senate Finance Committee to develop genuinely bipartisan legislation.

He concludes by telling Obama

“You have an enormous reservoir of goodwill among Americans of all persuasions. They want you to succeed. Level with them and trim your proposals to what is practical in the current environment.”

But ironically, it is Mr. Van Dyk’s closing statement with which I most take issue:

You had things right in 2008. Take a timeout. Get back to yourself. Make a fresh start.

He did not have things “right” in 2008 because there is no “self” to ‘get back to’. His campaign was always “words, just words.”

While I graduated college with high honors, I am no genius, yet I figured this out from my living room couch back in January of 2008. I watched this man at a debate and his “performance” told me everything I needed to know. I then looked at his voting record and the corporate interests with whom he surrounds himself, his addiction to pretty sound bytes and an over reliance on canned speeches rather than a resume that indicated he had worked even on a smaller level to achieve his stated goals. His current proposals are loaded with top heavy payback for special interests that arguably got him elected in the first place. Wall Street has gotten bailed out. Not Main Street. He lives in support of an oligarchy, like his immediate predecessor. If these are true Democratic principles, its the first I’ve heard of it.

The obscene amount of money spent on his inauguration, expensive “dates” and pizza parties and his hiring not less than 30 “czars” all of whom require staff and total salaries in the millions are more accurate indicators of the man than any of his campaign rhetoric.

Like Obama’s other supporters, perhaps Mr. Van Dyk has yet to understand that speeches will never equal governing ability. He too, blamed the Clintons for being “polarizing” as Bush was, but how true is his claim? Clinton passed true bi-partisan legislation. He had to, as he was working with a Republican Congress for 6 of his 8 years and did very well in that regard. But in his case, he also had deep knowledge of the economy and a willingness to reach across the aisle and conform to the existing reality. He certainly left the country in better shape than he found it.

President Obama, by contrast is the “salesman in chief.” That is what the DNC wanted. How is he supposed to pull us back to “reality” with his proposals when he clearly did not have these reasoned intentions in the first place, or a true understanding of how to get us there?

Apparently, Mr. Van Dyk has yet to travel the last mile in his awakening.

Breadline, NY, 1932

Eighty years ago, the daily life of the average citizen was very different then our lives are today. And yet many of the financial and economic challenges seem eerily familiar. Does that mean we are headed for a Great Depression? That we need another New Deal? I don’t know. I am not an economist and I don’t want to play one on this blog. But I would like to present some additional numbers and words for everyone to consider in this discussion.

Most historians mark the start of The Great Depression as, Black Tuesday, October 29,1929. Franklin D. Roosevelt was inaugurated March 4,1933. From 1929 to 1933, the unemployment rate went from 4% to 25%. In addition, in 1933, the underemployment (lower wages and hours) rate was 25%. Which meant, nearly 50% of U.S. households in 1933 were directly experiencing unemployment or underemployment.

___

The Depression’s Impact on the Economy

Historical Statistics of the United States, pp. 235, 263, 1001, and 1007.

h/t K. Wilkison.
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The Depression’s Impact on people: Consumer Spending

Historical Statistics of the United States, pp. 319.

h/t K. Wilkison.
___

So what did all this mean to the American people who lived these numbers everyday? What did average Americans think about the New Deal, The Great Depression, and FDR back when it really mattered whether the New Deal worked or not?

Well, thanks to a Work Projects Administration (WPA) New Deal program – the Federal Writers’ Project I was able to find the actual words and stories of American citizens during that time. So I’ll let these Americans speak for themselves. (Interviews are condensed, full length versions can be found at American Life Histories: Manuscripts from the Federal Writers’ Project, 1936-1940.)

*****
Letter to President Roosevelt
Mr. Emanuel Verschleiser – December 20, 1938

WPA Workers, MA, 1937

To Our Illustrious President:
Our Holy Books say: A poor man is like a dead man. You came and resurrected the poor man from the dead. You came and said: ‘Wake up, forgotten man. I will give you new life. I will give you a new deal.’ Like the prophet, Nathan, who said to King David: You have so many sheep and yet you want to take the last sheep of the poor man; so you said to the rich, to the Wall St. bankers: Leave the poor man his last sheep. Let him also live. All the rich men hate you for that. They know that you brought new hope to the poor plain man. They know that never again will the old times come back. May I end respectfully that your name, our illustrious President, will live forever.

(Mr. Verschleiser of New York, NY was “over 70” years of age, a retired Jewish farmer and former candy shop owner.)

*******
Myron Buxton
July 25, 1939

One reason people here don’t like WPA is because they don’t understand it’s not all bums and drunks and aliens! Nobody ever explains to them that they’d never have had the new High School they’re so goddam proud of … that new brick sidewalks … the shade trees … all around town, if it weren’t for WPA projects… They don’t stop to consider that on WPA are men and women who have traveled places and seen things, been educated and found their jobs folded up and nothing to replace them with. How you going to call Doc Crowley, for instance, a bum? Practiced a dentist, – and now his eyes are going bad, – think he’s not damn grateful for WPA? How about these college fellows, – some of ‘em on here with me,- M.I.T. graduates, – U. of Alabama – Dartmouth – Yale plenty of them can’t get work, and why?…

Soup Kitchen, D.C., 1936

I used to figure everything was right with the world, – you don’t think so much about injustices and inequalities, all the things that oughtn’t to be, when everything’s going rosy with you, know it? It’s only when you get like this, – plugging on WPA never knowin when the axe will fall, – finding but how little people think of your abilities because you’re stuck on WPA – then you begin to read about things, and find that all over everywhere, - there’s two kinds of people, the kind on top, – and the rest, some of whom are trying to get on top, most of whom are just riding along, trying not to think about things any more than they can help…

…you can’t even register in Boston anymore for work, they’ll just look at you as if you were nuts or something! “Why,” they’ll say, “we can fill jobs for ten years just from the people living right here. Go back where you came from. If you can’t find work there, there’s certainly nothing here for you!” So it goes! You know, for a long time I didn’t dare tell mother I was even on the WPA! Then, of course, when the checks came to the house in the mail, the jig was up! She felt terribly about it all, but what could we do? …

One thing I will say, – to you! When the city hasn’t got funds to finance Public Welfare, – and they start in squawking to the state, – and then when the state finds the burden’s more than they can swing, – you’ll see how long it takes the old birds in Washington to realize it’s government help, or else – it’s only that it’s too bad to make all the guys go through what they’ve got to, first, in order to convince Congress we’re not just throwing a lot of heffer-dust about ourselves, right?

(Mr. Buxton of Newburyport, MA was single, 36 year old man with the care of his mother. He was employed as a WPA Draftsman and Asst. Engineer.)

*****
The More Modest Among Us
Mr. Alex Samuels – December 15, 1939

I bought a home in Decatur. That was in 1920 and houses were at their highest price then. The place cost about $8,500 counting the improvements I put in. My wife was rather anxious to own a place. Personally, I never could see that it was cheeper to buy than to rent. . . I also bought a five-acre lot . . .

FSA Resettlement, 1935

I returned to Atlanta in 1931 to try to sell my house. I had already sold the lot … what cost $2,500 for $500. No one was greatly interested in building even in 1928. In 1931 it was practically impossible to sell houses for money … I finally traded it for an abandoned farm. I had a $6,000 equity in the place but should have been glad to have sold it for $1,000. I moved to the farm with my collie dog in the fall of 1931.. .

I had over four hundred hens part of the time but that many hens can easily eat fifty or sixty dollars’ worth of feed in a month, and frequently make a return of fifteen or twenty dollars worth of eggs….there was no money to be made on worn-out farm … The farm was profitable only in one respect – it was a pleasant place to live. I sold it in 1937 and netted $500 on it. I may say that I received $500 on my house which had cost at least $6,000 above rent … came back to Atlanta to try for a job, but didn’t have the luck of finding one.

I don’t believe that any one thoroughly understands all of the causes of depressions . . . Certainly Presidents Coolidge and Hoover did not understand the subject, . . . they smilingly assured the American people that all was well with the world and the best of our coming prosperity was just around the corner. . .I sold the small amount of stock which I owned jointly with my mother before the 1929 break …

The depression was very possibly made during the years [1913?] to 1927 when most of us were spending more than we had really made. The sum of debts, if the estimates are at all correct, represented much too large a proportion of our total wealth, and they could only be carried by a continual advance in values…

… A concentration of wealth in the hands of a small proportion of our citizens cannot possibly be made consistent with general prosperity. Regardless of whether one believes that enormous fortunes are acquired by moral individuals or not… In the United States I believe that our past prosperity has been due to our more fair distribution of wealth among those who produced it rather than to the efforts of a few who have managed to control large enterprises.

The New Deal policies seem to me to be generally correct … However, I do not think we are going to see the 1929 levels reached rapidly. Too many people are now accustomed to live on a lower consuming level than they did in the 1920′s. Very few of these I know who are earning well during that period are now spending as freely as they did then. To reach that glorious but rather silly level of spending, we must probably wait until a new generation of spenders, arrives.

Unemployed, 1935

… The W. P. A. or some such arrangement is almost a necessity as long as our industrial organizations unable to properly employ people who are able to work. I believe that in time we will again adjust things, however, so that it will not be necessary. It scarcely would be beneficial to business employment or production to have the millions now depending on W. P. A. unable to buy at all…

The prospects of getting employment do not seem especially good, but there should be a pretty fair chance of starting a small business…

(Mr. Samuels of Atlanta, Georgia, 55 years of age, degrees in mathematics and physics. He taught physics at Georgia Tech and Cornell. From 1914-20, taught in the Philippines and traveled to Japan, China, and India. He became a WPA worker just 3 months prior to his December 1939 interview.)

*****
So what is my take on FDR’s New Deal? Do I think it worked? Yes, because I think the it did what it needed to do for the American people. The New Deal gave them:

HOPE – for their future
FOCUS – beyond their daily existence
DIVERSION – from their anger and resentment
LIFELINE – in the face of total desperation
FAIRNESS – that the government was looking out for them

And here’s my hope – as everyone continues to debate our current economic situation, the whys and hows of the New Deal, and what any of this could mean for us now, that we not forget that there are very real and complex American lives at the center of all of this, and they are not easily reduced to numbers and simple formulas.

________
SusanUnPC has a great clip where Sean Hannity (Yet Again) Makes Sense [Update] and gives an unusual Republican backing the New Deal comparison between FDR and Obama.

In the first post on our nation’s Social Security system I tried to give a brief history of how the program came about and the immediate needs of people suffering from the Depression that caused FDR to propose and the Congress to enact the 1935 Social Security Act.

In this the second installment of the series I want to deal with two things. One, what were the provisions of the 1935 Social Security Act, and two, how has the 1935 Social Security Act program been changed or altered over the years.

The Social Security Act of 1935 created several different, wide-ranging, and separate programs. The Act created unemployment insurance, old-age assistance (essentially welfare), old-age benefits (we now call this Social Security), aid to dependent children, and grants to the states to provide various forms of medical care.

Below is a description of all of those programs, or Titles, the 1935 Social Security Act created with a brief description of each program.

Title I – Grants to States for Old-Age Assistance was designed to provide “financial assistance” to “aged needy individuals” immediately. In other words, this program was a welfare program for the aged and was to be administered by the individual states following federal guidelines and paid for out of the General Fund.

Title II – Federal Old Age Benefits.” Title II of the 1935 Social Security Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement beginning in 1942. (First contributions had to be collected and a fund built up before being able to pay benefits.)

The Title II program would be paid for by contributions from both the individual and the employer and put into a Trust Fund (created in 1939) separate from the General Fund and for the express purpose of funding old age benefits. This is the program most of us mean when we say, “Social Security.”

Title III – This was also a grant program that provided financial assistance to the states for Unemployment Compensation and Administration and paid for out of the General Fund.

Title IV – Grants to States for Aid to Dependent Children paid for through the General Fund. In effect this was another welfare program.

Title V – Grants to the States for Maternal and Child Welfare, again paid for through the General Fund.

Title VI – Public Health Work, again paid for through the General Fund.

Title X – Grants to States for Aid to the Blind again paid for through the general Fund.

Titles VII, VIII, IX, and XI are administrative in nature and set up the Social Security Board and detailed how contributions/taxes would be collected especially for Title II.

As you can see, The 1935 Social Security Act was a very broad and all-encompassing program extending a social safety net far and wide for those suffering during the Depression and beyond. And except for Title II, all of these programs would be paid for through the General Fund.

[I can’t help but make a snarky remark here. Look at the specifics of this program and how it is targeted to help people in need and compare it to the Christmas tree approach of the current stimulus package.]

Over the years each of these programs has been referred to as “Social Security” since they were all created by the 1935 Social Security Act. But as you see, they are really separate and distinct programs funded in different ways. I tell you this now because I want you to know this and keep this in mind because the unscrupulous among us have sometimes deliberately misled people regarding some of these programs to try and achieve their own selfish agendas, especially as regards wanting to change the old age insurance benefits, or Title II of the Social Security program.

The Title II program is funded by FICA taxes. In short, the individual contributes into the system and the employer is taxed an equal amount. The self-employed must make both contributions. All of this money goes into a separate account, or Trust Fund, to be used expressly for and exclusively for those who contribute into Title II. None of this money ever goes into the General Fund. NOT EVER. Furthermore, no one can receive benefits under Title II unless they paid into the system for at least 40 quarters. If you did not pay into the system you are not eligible to receive any benefits. Therefore, no illegal alien can, and more importantly does not receive any monies from Title II, the Social Security old age insurance program – not one dime! (This is true even if they paid into the system under a phony or even stolen Social Security number, as some do.)

It is a different matter with the other programs that the 1935 Social Security Act created, as you will read a bit later.

Changes Made to 1935 Social Security Act
Now let’s look at how The 1935 Social Security Act has changed over the years. As I researched this I was amazed at how stable the program has been since its inception. It has occasionally been slightly tinkered with here and there, but by and large it is remarkable how few changes there have been. The main changes have tended to be in one of two categories. The first category increases benefits going to recipients, and the second is continually making the program more financially sound.

I am not going to list each and every minute change to this act. If you are interested in minutia you can go to Social Security History and the Social Security Administration has listed them all. I will only hit the highlights.

1935-1939

The original Social Security Act was mostly a white male program. According to Wikipedia most women and minorities were excluded from receiving benefits from all of the various programs through how employment was defined and through specific listing of the job categories that were or were not covered. Certain jobs were just plain and explicitly excluded from the program. For example, most agricultural workers were excluded, as well as nurses, teachers, hospital workers, librarians, and domestic workers to name just a few.

Since many of the programs were also administered by the states, even more discrimination crept into the programs at that level. Fortunately, the practice of discrimination began to change in the late 1930’s as shifting gender roles and positions of minorities in society began to change. By the 1950’s the debate changed from which occupations should be covered by Social Security to achieving universal coverage.

1939

Before Title II even paid out any benefits retirees there were changes made to the program in 1939. Originally benefits were to be paid only to the worker. The 1939 Amendments added two new categories of benefits. Payments could now be made to the spouse and minor children of a retired worker, and second, in the event of a premature death a survivor’s benefit was added.

The 1939 Amendments also increased Title II benefit amounts and moved up the start of the program from 1942 to 1940.

The taxing provisions of Title VIII [see above] were also removed in 1939 (would not have been constitutional) and authority to tax was placed with the IRS (constitutional) and renamed Federal Insurance Contributions Act, or as we affectionately know it today, FICA.

However, the most significant change in 1939 was the creation of a Trust Fund managed by the Secretary of the Treasury for any surplus monies collected. These excess funds could be invested in both marketable and non-marketable securities. I could do an entire post on the Trust Fund and how it operates; it is that all-encompassing. There is not enough room in this post to detail its inner workings.

1940-1950

For ten years between 1940 and 1950 only one significant change was made to any of the programs. The Social Security Board was abolished in 1946 and replaced by the Social Security Administration (SSA) headed by a single Commissioner. The SSA still exists today.

Benefit levels however, remained very low. According to the official Social Security History web pages, “……. until 1951, the average value of the welfare benefits received under the old-age assistance provisions of the Act [Title I] were higher than the retirement benefits received under Social Security [Title II] provision. And there were more elderly Americans receiving old-age assistance than were receiving Social Security.”

So several amendments to the Act were made in 1950. Again, from the official history page of the Social Security website, “These amendments increased benefits for existing beneficiaries for the first time …….and they dramatically increased the value of the program to future beneficiaries. By February 1951 there were more Social Security retirees than welfare pensioners, and by August of that year, the average Social Security retirement benefit exceeded the average old-age welfare assistance grant for the first time.”

Today most people know that the Title II program has an annual cost-of-living (COLA) clause. This was not always the case. The first retirees received the same monthly benefit for the remainder of their life. But that also changed in 1950 when a COLA was enacted by Congress. At that time these increases were not automatic and were enacted by Congress periodically as necessary. It was not until 1972 that Congress enacted legislation providing for an annual automatic COLA based on the average increase in consumer prices.

Also in the 1950’sthe disability provisions were strengthened.

1960’s and 1970’s

The decade of the 60’s brought several significant and major changes to the Social Security Act. Retirees were given a choice of early retirement with a reduced annual benefit.

But by far the biggest change in the decade of the 1960’s was signed into law by President Lyndon Johnson on July 30, 1965. The Medicare program extended health coverage to retirees by helping them pay for hospital and medical expenses.

Like Title II of the 1935 Act, Medicare is a social insurance plan for people aged 65 or older. It operates as a single-payer heath care plan. This program consists of two parts. Part A is for hospital insurance, and Part B is for medical insurance. The 1965 amendment did not provide for prescriptions in most instances. It would be 30 more years before prescription drugs would be added to the program. Medicare is paid for by additional FICA taxes and is administered by The Centers for Medicare and Medicaid Services (CMS), which is part of the Department of Health and Human Services (HHS). [Snarky comment #2, for those keeping count- which thankfully Tom Daschle will not be heading.]

Above is video of President Johnson signing the Medicare Bill and Former President Harry Truman signing up for Medicare.

As mentioned earlier, another major change in the 1970’s was the introduction of the permanent COLA.

There were a series of Amendments made in 1977 to deal with projected shortfalls due to the bad economy of the 70’s. And for the first time the issue of a projected shortfall due to the baby boom is mentioned and a slight FICA increase was made.

Supplemental Security Income
If you remember, The 1935 Social Security Act created several different programs. Except for title II, the other programs were administered by the states with partial funding from the federal government.

Over the years the programs varied tremendously from state to state with payments to recipients varying by as much as 300% between the states. There were also over 1000 agencies administering these programs. It was a bureaucratic nightmare rife with confusion and inequalities.

In 1969 President Richard Nixon changed that. He initiated reforms that would “bring reason, order, and purpose into a tangle of overlapping programs.” At Nixon’s instance Congress federalized Title I, Title X, and the disabled category (created in the fifties) by creating the Supplemental Security Income program (SSI) in the Social Security Amendments of 1972.

The Social Security Administration, created in 1946 to administer Title II, was chosen to administer this new SSI program because of its reputation for successful administration of the Title II program and because of its nationwide field offices and data-processing and record keeping skills.

However, Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues, not with Social Security or FICA taxes.

In keeping with the original Titles and the disability amendment SSI is designed to help the aged, blind, and disabled people, who have little or no income, and provides cash to meet basic needs for food, clothing, and shelter.

I am going to include this next part here, even though it is out of chronological order because it deals with SSI benefits to illegal aliens. This is often the source of the misunderstanding, urban legends, myths, or downright lies about illegals getting Social Security Title II benefits.

During President Clinton’s administration a balanced budget bill was passed and a Welfare Reform bill was passed. The Balanced Budget Act of 1997 among other provisions restored SSI eligibility to some non-citizens whose eligibility would have been terminated under the Welfare Reform Act.

Now here is where it can sometimes get dicey. Some politicians and some activist who do not like Social Security (Title II) and want to totally get rid of it, and/or who would like to make some money off of the pool of money in the Title II Trust Fund sometimes play fast and loose with the truth.

When people sometimes will say that immigrants and/or illegals are receiving Social Security what is most likely happening is that eligible aliens are receiving SSI monies. Some folks do not distinguish between Title II monies and SSI monies. And because many people do not know the difference between the two programs, and because both programs are run by the same Social Security Administration, many people believe that illegals are dipping into their retirement pot and that they will bankrupt the Title II system. They are not. They are getting SSI monies.

Beware and ask questions when someone tells you illegals are raiding the Social Security system. Ask those who are telling you these things if the immigrants or illegals are getting Title II monies or SSI monies. Now you know the difference between the two and hopefully you won’t be fooled by the games some folks like to play with your emotions.

The 1980’s

Major changes were made to Title II by President Ronald Reagan upon the recommendations of the Greenspan Commission in the 1983 Amendments. These changes were in response to both short term and long term projected shortfalls in the system.

Contributions amounts went up for both individuals and employers, retirement age went up, some benefits were lowered, more federal employees were added into the system, taxed Social Security benefits, among many other provisions.

The original Title II program was a pay-as-you-go program. In other words, current workers paid for benefits for current retirees. This was great for the WW II retirees as 78.2 million baby boom workers could afford to pay to fund increased benefits for many years. The 1983 Amendments changed this formula. For the first time in Social Security’s Title II history the baby boom generation was funding a part of their own retirement simply because there were not enough citizens behind them to afford to continue the same benefit level for them unless they helped to pay for it up front.

1990’s and 2000’s

In addition to the changes already mentioned under SSI President Bill Clinton also made some changes to the disability portions of the act.

However it was left to President George W. Bush to make the biggest and most controversial change to the Medicare portion of Title II in 38 years. The Medicare Prescription Drug, Improvement, and Modernization Act was enacted in 2003. During hearings on the bill the projected cost of the Prescription Bill was estimated to be $400 billion.

I will let Wikipedia take up the story from here: “The MMA was signed by President George W. Bush on December 8, 2003, after passing in Congress by a close margin.

“One month later, the ten-year cost estimate was boosted to $534 billion, up more than $100 billion over the figure presented by the Bush administration during
Congressional debate. The inaccurate figure helped secure support from fiscally conservative Republicans who had promised to vote against the bill if it cost more than $400 billion. It was reported that an administration official, Thomas A. Scully, had concealed the higher estimate and threatened to fire Medicare Chief Actuary Richard Foster if he revealed it. By early 2005, the White House Budget had increased the 10-year estimate to $1.2 trillion.

“Former US Comptroller General David M. Walker has called this “…probably the most fiscally irresponsible piece of legislation since the 1960s… because we promise way more than we can afford to keep.”

One of the strongest organizations lobbying for the bill was AARP. It was during the Prescription drug debacle that I first learned, realized, or finally understood that AARP is not an advocate organization. It is an insurance company first and foremost. It will look out for its corporate interests first. And making money was clearly more important than helping poor people afford life-saving prescription drugs. To this day I refuse to join AARP for that reason alone.

President George W. Bush also attempted to privatize Social Security, but that did not fly. I think W learned an important lesson. Don’t rile up the senior set. One, they are vocal. And two, they vote!!! However, that issue is not dead and there are still many individuals and organizations who would like to privatize Title II.

We will deal with the issue of privatization in the next installment in this series entitled, “Is Social Security Really Broke?”

CAPTION: On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54.

Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975.

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Until my next installment, please keep these figures in mind:

In 1940 when the first benefits were paid 222,488 people received benefits totaling $35,000,000.

By 2006 there were 7,235,565 people receiving benefits totaling $41,312,000,000.

Since 1935 – for 74 years -The Social Security Act has literally kept millions of retired and disabled Americans from the poor house during the ups and downs, good and bad times, and the recessions and depressions our country has faced. Not bad for a government program!!!!

Editor’s Note: Yes! This essay is written by “bert,” who you all know from her regular comments here. She submitted this superb article for publication, and we are so pleased to share this fine writing and excellent research with you. Below, you’ll see that “bert” also found a shocking historic photograph and a video of Franklin Roosevelt signing the bill into law. Thank you, bert!

This post is a follow-up to Susan’s excellent post last Friday regarding Social Security remaining this country’s core safety net, for that is truly what it is.  

During the Bush administration there was a move afoot to privatize Social Security. There are rumors and signals from the Obama administration that politicians will again try to “save” Social Security by privatizing it. 

It is amazing that while most, if not all of us, pay into the system and will some day be eligible to receive benefits, most of us know very little about how the program came about and how it operates. There is a lot of misinformation out there and many people labor under some pretty big myths about the program. 

When I was a child I loved Friday nights. Since it was not a school night I could stay up late and watch one of my favorite TV shows, Dragnet, a classic police drama. The lead character, Sergeant Joe Friday, was played by actor Jack Webb as a serious, no-nonsense, slightly droll officer. When interviewing victims or witnesses all he wanted was “the facts,” no emotional fluff for this detective. 

In fact, the phrase, “Just the facts, ma’am,” became his trademark line. (Piece of trivia – Sergeant Friday never uttered those exact words. That phrase was uttered by Stan Freberg in a parody of Dragnet. But that is a different story all together.) 

However, a “just the facts, ma’am” mentality is exactly what we will need if we are to save this vital core social safety net from politicians who for some reason want to do away with this program. That is the purpose of this post and future ones if necessary. I want to give you, I want to arm you with facts about our – your – Social Security program. 

I had initially hoped to write one comprehensive post. But when I began to do the research I found out there was just so much great information out there I could not get it all into one post. So I have decided to break it down into more manageable pieces. In this post I will deal with how and why Social Security came into existence. In subsequent posts I will deal with the changes that have been made to the program over the years, and last of all try to answer the question: is the Social Security program bankrupt? 

So let’s start at the beginning. How and why did Social Security begin? 

Everyone knows that Social Security was created by Franklin Delano Roosevelt during the Great Depression. But why? What were the conditions that made helping senior citizens and children so imperative? 

We all tend to think Social Security was only in response to the Great Depression. But the Great depression had roots in many places, not the least of which was the Industrial Revolution. 

If you remember your American history classes you know that there was a shift from an agricultural society to an industrialized society in the mid to late 1800’s. The Industrial Revolution and the resulting urbanization of America led to the disappearance of the "extended" family and the safety net it provided young and old alike. 

This also meant that more people were dependent on wages to buy food. Prior to the Industrial Revolution most families could at least grow enough food to feed their immediate family.  

All of that changed in the decades before the Great Depression. When economic income is primarily from wages then your economic security can be threatened by factors outside of your control. Recessions, bank failures, layoffs, failed business can all adversely affect you. And none of those things are your fault. You can still work hard but that will not protect you from the vagaries of the market. 

The upshot of all this is that the old ways of providing for economic security for children and the elderly were crumbling prior to and during the depression. Keep that in the back of your minds as you read about the Great Depression and what happened to ordinary folks like yourselves.   

Most historians agree that the Great Depression began on Black Friday, the day the Stock market crashed, October 27, 1929.  Herbert Hoover was President. Most people believed the economy would correct itself as the nation had survived worse recessions. But this belief soon proved untrue. 

According to the Eleanor Roosevelt Papers, by the time FDR took the oath of office in January, 1933 unemployment had grown from 8 million at the start of the recession to 15 million people. This was roughly one-third of the non-farmer work force. The GNP had fallen from $103.8 billion to 55.7 billion.  

When the depression began about 18 million elderly, disabled, and single mothers with children lived at bare subsistence levels. [Emphasis mine] By 1933 another 13 million Americans had lost their jobs. States, which had been caring for the elderly, disabled, and mothers with children, were over-whelmed and could no longer provide even minimum help. Poorhouses and orphanages were created to help, but often conditions in these institutions were extremely harsh and only the most destitute would apply. 

Food riots broke out, men deserting their families began to rise, and the homeless were living in public parks and in shanty towns. The effect of the Depression on poor children was devastating. 

Most of the elderly did not have personal savings or retirement pensions to even provide for bare minimum support during good economic times, let alone during an economic crisis. For those that did those savings and investments were wiped out by the crash.  

Americans had always taken pride in their rugged individualism and self-reliance. But these kinds of harsh realities and conditions made many Americans begin to question that assumption.  

From the Eleanor Roosevelt Papers: 

“…… Although the depression was world wide, no other country except Germany reached so high a percentage of unemployed. The poor were hit the hardest. By 1932, Harlem had an unemployment rate of 50 percent and property owned or managed by blacks fell from 30 percent to 5 percent in 1935. Farmers in the Midwest were doubly hit by economic downturns and the Dust Bowl. Schools, with budgets shrinking, shortened both the school day and the school year. 

The breadth and depth of the crisis made it the Great Depression. 

No one knew how best to respond to the crisis. President Hoover believed the dole would do more harm than good and that local governments and private charities should provide relief to the unemployed and homeless. By 1931, some states began to offer aid to local communities. FDR, then governor of New York, worked with Harry Hopkins and Frances Perkins to begin a direct work relief program. This helped only a very few. By 1932, only 1/4 of unemployed families received any relief. In 1932, only 1.5 percent of all government funds were spent on relief and averaged about $1.67 per citizen. [Emphasis mine]  

Cities, which had to bear the brunt of the relief efforts, teetered on the edge of bankruptcy. By 1932, Cook County (Chicago) was firing firemen, police, and teachers (who had not been paid in 8 months). Breadlines and Hoovervilles (homeless encampments) appeared across the nation.”   [See photo below] 

Citation: The Eleanor Roosevelt Papers."The Great Depression." Teaching Eleanor Roosevelt, ed. by Allida Black, June Hopkins, et. al. (Hyde Park, New York: Eleanor Roosevelt National Historic Site, 2003). http://www.nps.gov/archive/elro/glossary/great-depression.htm 

This picture haunts my heart and my soul. This is America circa 1932. It looks like a third world country.  

For more depression era photos click link below: 

http://www.english.illinois.edu/maps/depression/photoessay.htm 

In America prior to Social Security there were Civil War veteran’s pensions and some company pensions. I will not delve into that history except to note there is some precedent to Social Security in America 

Some states provided aid for the elderly and retirees. But these state programs were basically just welfare programs and eligibility was based on financial need. Then, as now, most Americans opposed welfare type programs. Furthermore, these plans were woefully inadequate, most providing less than $1 a day. And when the depression came there were just too many in need for them to be effective. 

Throughout 1934 Roosevelt talked about ‘national economic insecurity’ and a ‘social insurance’ plan during many of his fireside chats. On June 8, 1934, Roosevelt announced his intention to provide for a Social Security program. By executive order he initiated a commission composed of five of his top cabinet-level officials to find a way to achieve this goal. The committee was instructed to study the entire problem and to make recommendations that would serve as the basis for legislation. 

What Roosevelt did that was so innovative was to introduce an alternative to welfare and called it “social insurance.” He changed the debate. He created a work-related, contributory system in which workers would provide for their own future economic security through personal and company paid contributions, or taxes, paid while they are still employed. 

“Security,” Roosevelt said, “was attained in the earlier days through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry make less real these simple means of security. Therefore, we are compelled to employ the active interest of the Nation as a whole through government in order to encourage a greater security for each individual who composes it . . . This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion . . .”  [All emphasis mine] 

In January 1935 the commission made its report to the President and on January 17, 1935 Roosevelt sent the report to both houses of Congress for simultaneous consideration.  

The final bill was passed into law by voice vote on August 8, 1935 in the House (372 Yes, 33 no, 25 not voting) and on August 9th in the Senate (77 yes, 6 no, 12 not voting). 
 
On August 14, 1935 President Roosevelt signed the bill into law at a ceremony in the White House Cabinet Room. 

President Roosevelt’s remarks on this video, posted by politicalhack28, say it all:  

"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but 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-ridden old age." 

From the Social Security – History website: “The two major provisions relating to the elderly were Title I- Grants to States for Old-Age Assistance, which supported state welfare programs for the aged, and Title II-Federal Old-Age Benefits. It was Title II that was the new social insurance program we now think of as Social Security. The new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement.” 

The original bill provided benefits only to the worker. In 1939 an amendment added two new categories of benefits – payment to a spouse and minor children of a retired worker (dependents benefit) and survivors benefits in case of a premature death of a covered worker. This changed Social Security from a workers only retirement program to a family based economic security program. 

From the Report of the Social Security Board which recommended those changes: 

"It is impossible under any social insurance system to provide ideal security for every individual. The practical objective is to pay benefits that provide a minimum degree of social security—as a basis upon which the worker, through his own efforts, will have a better chance to provide adequately for his individual security."  

Now how does all of this affect me here and now?  

According to the National Center for Policy Analysis that is really quite simple. 

“SOCIAL SECURITY IMPORTANT FOR RETIREMENT OF POOR AND RICH” 

“Even the wealthy depend upon Social Security for much of their consumption after they quit working, according to a new report from the National Center for Policy Analysis (NCPA). 

Consider:

Social Security accounts for virtually all of the discretionary consumption of households with pre-retirement incomes of less than $50,000 a year or $25,000 for singles.  

Social Security accounts for about one-third of all discretionary consumption for the highest-income households — couples earning $500,000 or singles earning $250,000 prior to retirement.   

A primary goal of financial planning is to maintain a consistent standard of living during a person's lifetime.  If Social Security were abolished tomorrow, all retirees would experience an immediate reduction in their consumption.   

If younger workers were notified in advance, they could adjust their saving and spending habits today to avoid abrupt changes in their standard of living upon retirement.   

Yet only the highest income workers have the ability to adjust so as to completely smooth their consumption across their lifetime.  Because low- and middle-income workers are constrained by current obligations they cannot completely adjust.  

For example, if Social Security benefits were eliminated for workers age 35 or younger:

A couple with an annual income of $500,000 could level their consumption across their lifetime by reducing their current consumption by almost 18 percent in each succeeding year.  

Yet a couple with an annual income of $200,000 that reduced their current consumption by almost 24 percent, would experience approximately another 15 percentage point reduction in consumption upon retirement.  

A couple with an annual income of $50,000 that reduced their current consumption by more than 21 percent would experience another 26 percentage point reduction upon retirement.” 

Source: Laurence J. Kotlikoff, Ben Marx and Pietro Rizza, "How Much Do Americans Depend on Social Security?" National Center for Policy Analysis, Policy Report No. 301, August 2007. 

So on Friday last, Susan was one-hundred percent correct: Social Security is this nation’s CORE safety net in good and bad times; but especially in the bad times.  

Don’t let anyone, especially politicians take your safety net away and give it to Wall Street types.