The Social Security Fable
No, it was never intended to be an “insurance” program.

Franklin Delano Roosevelt


Andrew C. McCarthy

Franklin Delano Roosevelt’s legacy — or is it mythology? — lies at the center of an emerging chasm on the right. His domestic statism bequeathed us the modern American welfare state. His World War II leadership was largely responsible for victory over Nazi and Japanese totalitarianism, yet set the stage for the brutal Soviet conquest of half the world — and whether “set the stage” means “passively indulged,” “actively facilitated,” or something in between, is the nub of the argument.

At the peril of oversimplification, I would contend that neoconservatives — an important bloc of the conservative movement, and one that is extraordinarily influential in the Republican party — recall FDR more fondly than do more traditional conservatives. As Charles Krauthammer observes in Things That Matter, a terrific new collection of memorable Krauthammer columns, many neoconservatives have made the political journey from left to right, as Charles himself has. They harbor sympathy for liberal aspirations to a more egalitarian society, even as they recognize the damage wrought by New Deal and Great Society programs. They see FDR as the heroic trailblazer of a true Pax Americana, a world stabilized by U.S. engagement, leadership, and strength.

To the contrary, more traditional conservatives (I count myself in this camp), seethe over the evisceration of limited-government constitutionalism and the blurring of lines between prudent foreign interventions and international adventurism, between sovereignty and multilateralism. It makes for a healthy intramural debate — as long as we try to remember that it really is intramural, as we often forget when it gets as heated as it is at the moment.

Ronald Radosh, the former Marxist and accomplished neoconservative historian, has lately been the spear’s point in defending the FDR legacy on both the foreign-affairs and domestic-policy sides. His blistering review of Diana West’s American Betrayal vigorously champions Roosevelt’s conduct of World War II. I believe Ron gives Diana’s book a bad rap, and I will explain why in another column, coming soon.

For now, my focus is the New Deal welfare state, especially Social Security. This week, at his PJMedia blog, Radosh took exception to my NRO column from last weekend, which dealt (for a second consecutive weekend) with the divide between the so-called Republican establishment and the conservative base: the former sympathetic to the Washington-centered welfare state wrought by the New Deal, the latter to the Constitution’s original, limited-national-government framework. I have elsewhere addressed Ron’s objections to my column’s critique of Dr. Krauthammer’s appearance on Jon Stewart’s television program — in which Charles described Social Security, Medicare, and Medicaid as “the great achievements of liberalism.” Here, I will tackle the Radosh take on Social Security, which parrots a Roosevelt-administration fairy tale that even its authors abandoned three-quarters of a century ago when forced to justify the program in Supreme Court litigation.

Radosh claims that Social Security “at its start was not meant as a welfare program”; it was, instead, a retirement-insurance program — as he puts it, “aid to elderly retirees that would be based on funds taken from their own paychecks that would be given to them upon retirement.” According to Ron, you can trust that this is the case because . . . FDR said so. (A voice in the back of my head chirps, If you like your health-insurance plan, you can keep your health-insurance plan!) Thus, the argument goes, unreconstructed conservatives like me are “more than foolish” to contend, contra Radosh, that Social Security, along with Medicare and Medicaid, are (here Ron quotes me) “frauds designed to create permanent dependency on government.”

Radosh insists that Krauthammer agrees with him. Apparently, while Ron appropriately praises Charles’s new book, he missed the 2011 column on Social Security included in the collection. Dr. K aptly titled the column, “Of Course It’s a Ponzi Scheme.” In it, he acknowledges what ought to be incontestable: “Social Security is a pay-as-you-go program. A current beneficiary isn’t receiving the money she paid in years ago. That money is gone.” That, he concludes, is what makes it not insurance but the very “definition of a Ponzi scheme.” In such frauds, “Word [ultimately] gets around that there are no profits, just money transferred from new to old. The merry-go-round stops, the scheme collapses and the remaining investors lose everything.”

FDR’s insurance claim was a façade, and far from an idle one. It was adopted precisely because Social Security was — by design and operation — a welfare program. New Dealers worried not only that an unprecedented federal welfare program would be unpopular in principle; they realized that an honest proposal to provide welfare for the destitute elderly would not garner political support for the taxes necessary to pay for it.

Radosh need not take my word for this. He can start with William Voegeli’s excellent Never Enough: America’s Limitless Welfare State — a book Ron describes as “one of the most important . . . ever written by a conservative writer” before oddly attempting to use it as a cudgel against me. “The New Deal,” Voegeli aptly asserts, “was not just an ambitious effort to end the Depression, but an ambitious effort to expand the scope of government — dramatically, endlessly, and permanently.” Within that framework, as related in Liberty and Tyranny by Mark Levin (who is not just a bestselling author and popular radio host, but also a former Reagan-administration official and a very able constitutional lawyer), FDR “designed Social Security to entangle the individual in a methodological fiction — the illusion of insurance — that would addict the individual to the opium of entitlements.”