7. Preferences, Promises, and the Politics of Entitlement

Abstract

In 1953, the U.S. Chamber of Commerce proposed a major expansion in the coverage of the Old Age and Survivors Insurance Program-the program that we now think of as Social Security. There was much room for expansion because only 55% of the workforce was covered when the Social Security Act was passed in 1935. Legislation enacted in 1950 had already expanded the coverage of the program. It brought many additional workers into the Social Security system and substantially reduced the number of quarters of covered employment that were necessary to qualify for retirement benefits. However, these changes came too late for many people. Many workers had retired before 1950. Others died without working long enough to qualify, leaving widows who were not eligible for survivors insurance. Under the Social Security Act, these unfortunate people were eligible only for Old Age Assistance, the lessgenerous, means-tested welfare program administered by the states. Under the chamber’s proposal, everyone over the age of sixty-five would immediately become eligible for retirement benefits. The Old Age Assistance program would be terminated. Retirement benefits would continue to be financed on a pay-as-you-go basis, using a payroll tax. All remaining workers who had not yet been brought into the Social Security system would be subjected to the payroll tax, but the tax rate would still have to be increased to pay for the expanded system of benefits. From the perspective of the 1990s, it seems odd that a proposal for expanded social spending should come from a major business lobby. The political response this proposal provoked is equally surprising. Conservative Republicans

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