The Blog of the Frances Perkins Center

Archive for August, 2010|Monthly archive page

Is this a Saturday Night Live skit?

In Political world on August 25, 2010 at 7:45 am

For months, advocates for Social Security have been decrying the appointment of longtime Social Security foe Alan Simpson as co-chair of the president’s deficit commission (which shouldn’t even be discussing Social Security, but that’s another issue).

Now they’re calling for his resignation.

In an email to Ashley Carson, who is executive director of OWL, written in response to a Huffington Post piece by Carson, Simpson characterized Social Security this way:

We’ve reached a point now where it’s like a milk cow with 310 million tits!

He also insulted Carson by suggesting that she should “call me when you get honest work.”

Simpson has already demonstrated a lack of knowledge of the program in a video rant (see below). His antics would be funny, if they didn’t threaten to harm the program that provides vital benefits to millions of Americans.

The National Council of Women’s Organizations is calling for Simpson’s ouster. You can read more about his offensive letter and their petition here.

Happy Birthday, Social Security!

In Events, New Deal Legislation on August 15, 2010 at 10:27 am

We had a great day yesterday celebrating the 75th anniversary of Social Security at our Frances Perkins Center 2nd Annual Garden Party . We’ll post more pictures and details later, but for now, here are a couple of photos as a preview:

Here's the birthday cake

We had two New Deal grandchildren on hand to cut the cake. Professor June Hopkins is the granddaughter of Harry Hopkins and Tomlin Perkins Coggeshall is Frances Perkins grandson. Perkins was the chair and Hopkins was a member of the Committee on Economic Security, which created the Social Security Act.

Frances Perkins: The Force Behind Social Security

In Biography, New Deal Legislation on August 12, 2010 at 12:22 pm

[Reposted with permission from New Deal 2.0.]

by Bryce Covert

We may not have our social safety net if it weren’t for her tireless work.

Social Security is, rightly, thought of as one of the major accomplishments of FDR’s presidency. But he wasn’t alone in the fight, and the whole project may have failed if not for the passion of Frances Perkins, his Secretary of Labor. Indeed, Perkins sometimes had to fight against FDR’s whims to secure a package that would ensure a better future for American citizens.

Perkins was born to working-class parents who were very supportive of her education, sending her to Mount Holyoke College for undergraduate studies. Later in her life, what was likely bipolar disorder left her husband, economist Paul C. Wilson, unable to continue his career and act as breadwinner. This may have propelled Perkins into pursuing her own career, to which she devoted all of her energy.

Perkins witnessed the Triangle Shirtwaist Factory Fire of 1911 first-hand, and it galvanized her crusade to protect American workers. After studying economics and sociology at Columbia and Wharton, she worked at settlement houses and then as a factory inspector for New York State. She later became Commissioner of Labor for the State of New York under Governor Franklin D. Roosevelt, who would go on to invite her to be his Secretary of Labor as president. Before taking the position, she brought a laundry list of ideas to FDR as collateral for her acceptance. He accepted them, and she went on to hold the position for 12 years. FDR would eventually name her to 18 separate committees. She worked for reforms in favor of workers and to combat the Great Depression. But her crowning achievement may very well have been the Social Security Act.

During the Great Depression, 6.5 million people were sixty-five or over and few had money set aside for old age — and those who had set money aside saw it disappear in the economic crash. Only about 300,000 had public pensions, 150,000 had pensions from private employers or unions, and 700,000 had federal relief. The rest were on their own.

FDR had drawn up ideas to tackle these issues when he got into office, but officials were too busy to deal with them. A year into his presidency, Perkins decided the time was right, notes biographer Kirstin Downey in “The Woman Behind the New Deal.” “She nagged the president to get it started. ‘It is probably our only chance in twenty-five years to get a bill like this,’ she told Roosevelt.” She knew that the dire conditions of the Great Depression were the only hope for passing something so radical: “Nothing else would have bumped the American people into social security except something so shocking, so terrifying, as that depression,” Perkins later said.

With rampant joblessness, Perkins went after unemployment first. But as unemployment insurance seemed ready to sail through passage, FDR decided instead to focus on a bundle of programs under the label ‘economic security.’ The whole thing would have to wait. Downey gives us the subsequent scene: Perkins “hit the roof. ‘That man, that man!’ she muttered. She ripped over to the White House. The next day, FDR told the press conference that he was ‘tremendously’ for the bill.” The two worked together for an “expansive version of an ‘economic security’ package that would cover people from cradle to grave,” Downey writes:

The concept included not only unemployment insurance, which would tide over the jobless workers who were the primary source of support to children and old people, but also old-age pensions, which Frances was eager to promote; health insurance, so people would have medical care, even when they had no money; and financial assistance for the handicapped and for widowed women with children. Many women earned so little money that losing their husbands meant that they must put their youngsters to work or place them in orphanages.

The package would provide “security against the hazards and vicissitudes of life,” in FDR’s words.

FDR named Perkins chair of the committee on economic security, set to craft the legislation. And she wanted to hold people firmly to the mission of the program. “In a meeting with Roosevelt present, she went around the table and extracted from each of the major members of her committee a pledge to support the program being prepared by the committee. Publicly obligated, they could not back down later,” Downey describes. But she couldn’t always keep the fickle Roosevelt to it, and after making his initial announcement to create the committee he neglected to allot money to it. That didn’t stop Perkins, though. “Frances went hat in hand to raise money and borrow staff from other departments,” reports Downey.

The process was rough going, with worries over court challenges to the final legislation, internal struggles within the committee, and even FDR himself publicly doubting whether it was the right time to deal with old age security. Details were hard to resolve and they were close to bumping up against the arbitrary Christmas deadline FDR had set. On December 22 or 23, Frances called committee leaders to her home, “led them into the dining room, placed a large bottle of Scotch on the table, and told them no one would leave until the work was done,” Downey writes. They met the deadline.

Troubles for the bill continued. Treasury Department conservatives raised fears that it risked “alarming business,” while liberals worried the provisions were so weak as to have “little value.” (Sound familiar?) Opposition to the bill became so heavy that a New York Times March 30, 1935 headline declared “Hopes Are Fading for Security Bill.” But Perkins toiled on, determined. She secured 50 signatures from prominent people to a letter urging passage, and “the tide began to turn,” notes Downey. The House passed the bill, and then it passed the Senate, but not before a caveat was inserted that made the Social Security Board entirely independent of Perkins’ department. She would not run the Board, but no matter what her personal disappointment may have been, she helped push the bill through.

Perkins’ tireless, selfless work paid off in the end, and FDR signed the bill into law on August 14, 1935. On the day of the signing, Perkins said it was “one of the most forward-looking pieces of legislation in the interest of wage earners.” By 1936, 1 million people were receiving benefits, made up of nearly 750,000 elderly, 184,000 dependent children, and 18,000 blind.

We owe much to FDR’s vision as a progressive president, but we also owe a great deal to the passion and perseverance of Frances Perkins. Without her, it is very likely that the social programs included in the Social Security Act would never have come to be. Charles Wyzanski later said that she “virtually forced the President to have a Social Security program.” Indeed, Maurine Mulliner, an assistant to Senator Robert Wagner, said, “The one person, in my opinion, above all others who was responsible for there being a Social Security program in the early 30s was Frances Perkins.” The program lives on, her gift to the American people.

Bryce Covert is Assistant Editor at New Deal 2.0.

Jobs bill passes

In Legislation Today on August 10, 2010 at 7:20 pm

Today, the House of Representatives passed and the president signed a bill that will provide help for states by preventing as many as 160,000 teacher layoffs and 900,000 public and private sector layoffs. You can see how many teachers got help in your state in this interactive map.

Frances Perkins would approve. We are especially proud that a member of our advisory council, Congresswoman Chellie Pingree (ME-1), spoke in favor of the bill from the floor.

Here she is at the bill’s signing, second from the left, standing between Congressman David Obey and Secretary of Education Arne Duncan.

Social Security Trustees Report — some background information

In Uncategorized on August 6, 2010 at 9:09 am

Months late, the Social Security Trustees have released their report on the current financial health of the Social Security programs. You can read the full report here: http://www.ssa.gov/OACT/TR/2010/tr10.pdf.

The National Academy of Social Insurance has released its annual brief on the Trustees’ Report: http://www.nasi.org/research/2010/social-security-finances-findings-2010-trustees-report.

Here is a highlight from that brief:

According to the 2010 Trustees report, the Social Security trust funds will have an annual surplus of $77 billion in 2010. Annual surpluses are projected to continue for the next 15 years (2010-24) and reserves are projected to grow to $4,200 billion by the end of 2024. Beginning in 2025, reserves will start to be drawn down to pay benefits. In 2037, the reserves are projected to be depleted. At that time, tax income coming into the trust funds will cover about 78 percent of benefits due, according to the 2010 report of the Social Security Trustees.

Some points to keep in mind:

The most important take-home point from the Trustees Report is that Social Security works just as intended, even in the worst of economic times. Social Security Trust Funds are doing precisely what they are supposed to do – assuring full payment to all eligible persons, on time and in full.

Social Security is the nation’s most conservatively financed and carefully monitored public program. That’s why the Trustees Reports have been issued every year, since 1941. The annual Trustees Report projects income and outgo further than private pension programs and further than the Social Security programs of nearly every other nation. It is intended to provide Congress an extremely long lead time to make adjustments that are needed from time to time.

This year’s Trustees Report is doing exactly what these reports are designed to do – providing an early warning system. It projects that in 26 years, if Congress takes no action before then, Social Security’s projected revenue will cover only around 78 percent of the cost of projected benefits and expenses.

Given that Social Security is projected to be able to pay benefits in full and on time for another quarter of a century (2037) and given how important Social Security is, having proven its worth once again during this severe economic recession, proposals to restore Social Security to long-range solvency should be debated in the sunshine through the normal legislative process, as it always has been done, not through a fast-tracked commission where no commission members or even staff have as their primary expertise, Social Security and retirement income, as opposed to the budget.

The real question we should be looking at is how we want Social Security to serve families and the nation in the future. Today Social Security is the most important source of retirement income protection as well as America’s most important disability protection and life insurance protection, especially for all our children.

Some facts related to Trustees Report:

  • Social Security is projected to pay all benefits in full and on time through 2037.
  • Social Security’s assets (a.k.a., reserves, surplus) will continue to grow from $2.5 trillion at the beginning of 2010 through 2024, when they will reach $4.2 trillion.
  • Because annual surpluses are expected to continue for the next 15 years, Social Security’s assets are projected to reach $4.2 trillion by the end of 2024.
  • With no action whatsoever, Social Security will have sufficient income and assets to pay all monthly benefits in full and on time through 2037.
  • Social Security is prohibited by law from contributing to the federal deficit.
  • By law, Social Security cannot borrow.
  • Social Security is prohibited from paying benefits if it has insufficient income and assets to cover the cost.
  • Social Security can pay all benefits in full and on time after 2037 with a relatively modest increase in dedicated revenues.
  • The 2010 trustees report projects that Social Security would be in complete actuarial balance for the full 75 year valuation period, if revenues were increased by the equivalent of increasing the deductions from workers’ wages by 0.92 percent, matched by employers.
  • Social Security could be restored to balance more progressively, such as with a tax on sales and purchases of stock, a tax on the assets of very large estates, or by raising the payroll tax cap.*
  • By increasing the revenue by a small amount more than is needed to pay scheduled benefits, those benefits could be increased either in a targeted way or across the board.
  • The fact that 2010 benefit payments are projected to exceed one part of Social Security’s dedicated revenue, that from so-called payroll taxes, ignores the fact that 2010 benefit payouts are less than all of Social Security’s income combined.
  • Social Security has three revenue sources: (1) mandatory contributions, deducted from the wages of workers, and matched by employers (commonly referred to as “payroll taxes); (2) interest earned on revenue not needed to pay benefits and expenses in prior years, and so invested in certificates of obligation and bonds issued by the U.S. Treasury, and (3) income taxes on the Social Security benefits of those with higher incomes.
  • These three sources of revenue, taken together, are projected to exceed the cost of all benefits and associated administrative costs in 2010 by a projected $76.7 billion, according to the 2010 Trustees Report.
  • There is nothing new or surprising about Social Security’s benefits exceeding the payroll tax contributions.
  • Benefits exceeded payroll tax contributions in 1958, 1959, 1961, 1962, 1965, 1975, 1976, 1977, 1978, 1979, 1980, 1981, 1982 and 1983. The sky did not fall. Indeed, the trust funds acted as intended, providing a margin of safety so that benefits could be fully paid, even in very difficult economic times. (see Table 4.A3—Combined OASI and DI, 1957–2008 in the Social Security Administration’s Annual Statistical Supplement, 2009; http://www.ssa.gov/policy/docs/statcomps/supplement/2009/4a.pdf).
  • Since 1983, Congress has required all covered workers to have relatively large amounts withheld from wages, and invested in Treasury bonds whose interest could be used when needed. The recession has accelerated by a few years the date that some of the interest is needed.
  • In the 1970’s and early 1980’s, the trustees redeemed bonds in order to pay scheduled benefits.

[Thanks to SocialSecurity-Works.org for the facts and figures above.]

*Currently, workers only pay FICA tax on salary up to $106,800. Any money earned above that limit is not taxed.