What Is the Social Safety Net?

(Editor’s note:  This is the third and concluding segment in this three part series introducing readers to the differing governmental responses to the Great Depression.  These responses have come to define and shape the new order of national government as it exists today.  Click here to view the first segment and the second segment.)

Through the decades, some have criticized F.D.R., calling him a socialist and the New Deal socialistic.  But the New Deal’s aim, according to F.D.R., was simply to multiply the number of American shareholders.  "Is this socialistic?" he asked with a hearty laugh.

Through the social safety net that is at the base of the New Deal social order, the ordinary citizen has come to expect an expanded sense of entitlement and support from the government to all its citizens, especially in time of need.  It is help for the vanquished, cementing the social contract between the federal government and its citizens.  Its goal, simply stated, is to make capitalism more humane.

The ordinary citizen hears so much these days about the social safety net.  But have we ever stopped to consider what the social safety net consists of in reality, where the rubber meets the road?  Today, the social safety net is understood to contain four main anti-poverty, risk-managing components:

       ·          1.   Social Security (1935), the ordinary citizen’s basic retirement/disability benefit.  The Social Security Act (SSA) requires the states to set up welfare funds from which money is disbursed to the elderly, poor, unemployed, unmarried mothers with dependent children, and the disabled.  By this law the federal government also effectively encourages the individual states to adopt unemployment insurance plans.  It was labeled a triumph of social legislation.  Subsequently, the Truman administration’s "Fair Deal" domestic program significantly increased the level of benefits under SSA, expanding the retirement portions, and extended coverage to more than 10 million people, including agricultural workers.

SSA’s legislative twin, the 1935 National Labor Relations Act (NLRA), delivers the right of every worker to join a union of his or her own choosing and the corresponding obligation of employers to bargain collectively with that union in good faith.

Federal deposit insurance (FDIC) backing the ordinary citizen’s passbook savings account adds a subtle touch.  Almost incomprehensibly, this basic protection did not exist under the old order, although today it is largely taken for granted.  Another is the GI Bill of Rights.  By this public policy enactment, returning World War II and Korean War veterans through the early 1950s received certain government incentives regarding citizenship, education, housing, seed money for business.  Whole groups of then immigrants were able to obtain housing, education, jobs and provide a better future for their families, while assimilating seamlessly into American society.  It was a win, win situation for American society.

·             2.   SNAP, government assistance for the  poor.  According to Milo Perkins, the program's first administrator, the initial program from 1939-1943 built a practical bridge across the chasm "with farm surpluses on one cliff and under-nourished city folks with outstretched hands on the other."  In 1961, it was renewed and renamed as the Food Stamps Program.  By 1996, the program was replaced with block grants to states.  In 2008, the name was changed to the current Supplemental Nutrition Assistance Program (SNAP), and funds could also be used to provide recipients with education and training, career pathways and other public benefit programs.  A USDA summary statistical report indicated that almost 47 million people used SNAP in 2012, up from 26 million in 2007, a 177% increase.  That's roughly 15% of the total US population today.

·            3.   Medicare/Medicaid (1965), health care for older Americans and the ordinary citizen in poverty.  The law was enacted as part of President Lyndon Johnson’s Great Society and corresponding War on Poverty.  In 2006, the Bush/"43" administration added a prescription drug benefit (not without a total sell out: to the pharmaceutical industry which drafted the legislation - and of the American people, as it was "paid for" on the national credit card).

·         4.   Obamacare (2010), basic security in health care for all Americans.  The Patient Protection and Affordable Care Act, President Obama’s landmark national health care reform, enshrines "the core principle that everybody should have some basic security when it comes to their health care."  The law focuses on reform of the private health insurance market, providing better coverage for those with pre-existing conditions, extending eligibility for coverage of younger Americans on their parents’ plans until the age of 26; improving prescription drug coverage under Medicare and extending the life of the Medicare Trust fund by at least 12 years.

From a historical perspective, the broader context reveals a tumultuous trade off.  On the one hand, Republican administrations of Harding/Coolidge/Hoover (1920s), Eisenhower (1950s) and Bush/"43" (2000s) certainly meant well in the ideological expression of liberty via individual initiative and enterprise.  Yet left strictly to their own devices they would devolve ultimately to a damaging personification of individual excess.  As the pendulum swung back sharply in the other direction, each compensatory social safety net enactment followed.

The Bush/"43" administration, in fact, expended whatever political capital it thought it possessed in an attempt to "privatize" Social Security.  Proponents said that individual citizens could more efficiently manage their benefits and maximize their return on investment than "the government."  But in view of the Great Recession of 2008, an ordinary citizen can only wonder what further economic disaster would have been befallen the nation, had that particular "initiative" succeeded.

Similarly, during the presidential election of 2012, Republicans campaigned on a promise to "privatize" Medicare in what they said was an effort to reduce its costs.  Democrats, however, saw it as a veiled attempt to eliminate the popular program.

With the passage of Obamacare in 2010, as with the enactment of Social Security in 1935 and Medicare in 1965, there is little wonder that the Republican Party’s dominant, conservative right wing base is in a dither about the "liberal" President Obama.  The familiar cry can be heard once again of an impending end to American life as we know it.  Strictly from the lens of the class interest of business, Republicans may be "right" once again.  But, fortunately, government under order of the New Deal is about the larger, class interest of the nation.  For the dispossessed in all their ordinary colors, shapes and sizes, the social safety net in a historical context begins to speak rather well of a democratic society in relation to its citizens.

-Michael D’Angelo

F.D.R., the Dispossessed and the "New Deal" Social Safety Net

(Editor’s note:  This is the second and middle segment in a three part series which began last week under the title of “Herbert Hoover and the Crisis of the Old Order.”  This segment introduces readers to President Franklin D. Roosevelt and the New Deal.  To view the first segment, click here.)

Why is a social safety net necessary?  Is there at times a collective revulsion against a competitive system which competes at the expense of human decency?

From the failure of the private sector’s old order and out of its ashes, the 1932 election of Franklin D. Roosevelt to the presidency signified nothing less than a new order.  To be sure, the attraction of Russian communism to the left, and German/Italian fascism to the right, were carefully weighed by Americans but ultimately rejected.  Both are gone, a footnote to the past.  But F.D.R.’s “New Deal” experiment which saved capitalism from itself has survived, now in its 9^th working decade.

Today, some apparently need reminder that we have a social safety net only because the private sector once failed unceremoniously, ceased to operate, then refused to do anything about it.  In 1929, the class interest of business was mistaken for the national interest, resulting in both class and national disaster, which we have come to know as the Great Depression.  It really did happen - to both the vanquished and the dispossessed alike.  But the New Deal changed all that.

It has been proven time and again that the economic system of capitalism is indeed king when it comes to consolidating business systems, increasing productivity, vanquishing competition, establishing and maintaining the victor’s monopoly status.

But there is at times a collective revulsion against a competitive system which competes at the expense of human decency.  In an unregulated system, labor is the first casualty in an economic crisis.  Profits are preserved by cutting costs.  Therefore, the company that works its labor the longest and pays it least gains the greatest competitive advantage.  Cutthroat competition makes the unscrupulous employer the leader in its field.  Think how the Walmart model is (mis)shaping the global economy.  The rest unwittingly follow in a race to the bottom.  It is for others to clean up the mess.  But if others means government, then government means the New Deal.

Perhaps it’s easier to view the Great Depression strictly from the lens of the class interest of business and see in the big picture how that myopic vision leads necessarily down the path to failure.  From this perspective the one and only consideration is profit or private gain.  Neither human welfare in general nor stewardship of the environment is more than a mere balance sheet expense.  The public interest is an annoying distraction.  There is little in the way of a moral compass, such consideration being secondary.

Business leaders seem consistently to miss a critical component.  Today, as was the case in the 1930s, the central idea behind economic expansion is restoring the mass purchasing power of the ordinary citizen, who provides the best and most efficient means, in fact the only realistic means, to jump start the economy.

But the ideology of unregulated capitalism stands opposed, the class interest of business, in turn, foreclosing higher responsibilities to human beings and planet.  This is true in issues ranging from the minimum wage and employer provided health care - to protecting domestic jobs against outsourcing - to safeguarding a worker’s basic retirement benefit - to adhering to the wisdom of progressive income and inheritance tax rates - to stewardship of the environment – to protecting the democratic process at the ballot box through, fair, impartial elections.

The strictly pro-business agenda and the stock arguments behind it have been historically refuted.  For example, the assertion that tax cuts for the wealthy spur job creation is not supported by employment statistics over time.  It simply is not the case, to the chagrin of the sheep who genuflect at the foot of the private sector altar.  But thanks to self-serving, conservative right wing propaganda, these arguments linger with remarkable staying power.  For many, image is reality, and as a result stubborn dogma is propagated through familiar media outlets which are controlled by and for the benefit of the class interest of the profit motive only.

The path for the continuous responsibility of government for human welfare is seemingly barred.  But the ordinary citizen must despair not!  When all appears lost, into this toxic political environment interject F.D.R.’s New Deal, and the social safety net it introduced to American society.

F.D.R. took the oath of office with the simple confession that he did not have ready answers to solve the problems of the Great Depression.  But unlike his predecessor, he vowed that he would at least try to do “something” rather than nothing.  In short, he would improvise, experiment, see how the experiment worked.  And if it didn’t work, he would try something else.  The social experiment would become famous in US History as the “New Deal.”

The constitutional dedication of federal power to the general welfare, or the social safety net as it is better known, began a new phase of national history.  Gradually, the sharpest edges and cruelest effects of capitalism were softened.  The beast of capitalism was tamed, made more humane.  And so capitalism endures, a modified version from that which had existed under the old order to be sure, with modest, sensible regulation of an otherwise harmful concentration of economic power which benefits only the privileged few.  In the class interest of the nation.

(Editor’s note:  The third and concluding segment in this three part series identifies and analyzes what are understood today to be the four main components of the social safety net, as well as the larger consequences for the ordinary citizen.)

-Michael D'Angelo