Social Security Reflects Wisconsin Values
January 31, 2005
On a recent visit to the Wisconsin Historical Society, I noticed a frayed and yellow sheet of paper, its typewriter ink faded but still legible. On it were notes written during the drafting of the Social Security Act of 1935. It's a little known fact that Wisconsin has a very strong connection to Social Security, in its origins, authorship and administration; and our Historical Society holds a treasure trove of original source material from that era. The conceptual underpinnings of Social Security came directly from the "Wisconsin Idea," the concept that government and the University could and should collaborate to address serious social and economic problems.
In the 1920s, lured by the promise of quick riches, millions of Americans invested all of their assets in the stock market, losing everything when the market crashed in 1929. In the Depression that followed, no group suffered more than the millions of senior citizens who had no income, no resources, and were forced to live in poverty.
Spurred by that tragedy, two Wisconsin natives and UW-Madison trained economists and faculty members, Arthur Altmeyer and Edwin Witte, led President Roosevelt's Committee on Economic Security in drafting and shepherding through Congress what became the Social Security Act of 1935. That Act was a contract with Americans assuring them that seniors would never again face their final years in the depths of such poverty.
Of all the programs instituted by government in our nation's history, Social Security is arguably the most successful and one of the most meaningful. It is the only universal, defined-benefit, inflation-protected pension system for American workers. More than 95 percent of all workers are covered by it. In contrast, fewer than half of all workers have employer pension coverage on their job. And unlike traditional private pensions, Social Security doesn't lose value when a worker changes jobs.
Benefits are based on the amount of wages a worker has earned and the number of years worked. Benefits are paid as long as the worker (and his or her spouse) lives, and the monthly benefit amount is predictable and steady. Few private pensions provide this type of benefit.
Social Security benefits are protected against inflation. Almost no private pension or investment plan is guaranteed to maintain purchasing power.
But Social Security is more than just retirement income. It provides disability and survivor benefits that are unmatched in the private sector. And it is also family insurance-providing benefits for elderly widows, and young parents who have lost a spouse. It provides dependable monthly income to children who have lost a parent to death or disability. No private pension or savings account can provide this kind of protection.
Those who seek to privatize Social Security have sought to portray the program as unaffordable, unsustainable, and facing an imminent financial crisis. A close look at the facts reveals otherwise.
Social Security is a pay-as-you-go program. Current workers, through a payroll tax, fund current retirees. With absolutely no changes, the program will be able to pay full benefits to all retirees until 2042, according to Social Security actuaries, or 2052, according to the non-partisan Congressional Budget Office (CBO).
However, if current workers are allowed to divert money out of the Social Security contract and into private accounts, there will not be enough revenue to pay benefits to current beneficiaries and, without raising taxes, the government would be forced to borrow that money, raising the deficit to an estimated $2 trillion. This would create a crisis.
So why the clamor to create private accounts? Despite its undeniable success, there have always been people opposed to Social Security who have worked repeatedly to dismantle the program. They simply do not believe the government should insure Americans against poverty. I find this indefensible.
Wisconsin has been a national leader in advancing progressive ideas that further the common good. Social Security is a product of the Wisconsin Idea, reflecting Wisconsin values. Like those Wisconsinites who led the effort to end poverty among our senior citizens in the 1930s, I feel it is my duty to strengthen the Social Security program and keep their promise to generations who follow.