The History of U. S. Pension Support

You might be interested in Walter Russell Mead’s testimony before the Senate Finance Committee, presented here at The American Interest. In it he provides historical perspective on the ways in which the federal government has aided Americans in providing for their old age from the founding to the present.

Here’s a snippet:

As the 20th century witnessed a clear transition from an agricultural to an industrial era, a new version of the American Dream appeared and a corresponding federal policy model began to take shape. Teddy Roosevelt capitalized on widespread calls for reform and ushered in a new kind of politics. Past Presidents made history by opening new land for settlement; Theodore Roosevelt made history by protecting federal lands from settlement and establishing our system of national parks. Franklin Roosevelt’s New Deal policies further advanced the evolution of a new system tailored to an urban society with a manufacturing economy.

The process of transition was a slow one, with many setbacks and upheavals, but by the 1950s, a new and stable social system had emerged. Americans had learned to manage the forces of industrialism, to regulate the power of finance, and to use the vast resources an industrial society creates to address the unprecedented social problems that the rise of the modern city and the modern factory system brought into being. In post-World War Two America, both blue-collar and white-collar workers increasingly had stable, lifetime jobs in a growing economy. Within this new economy, high school graduates were essentially guaranteed lifetime employment in a job that, at a minimum, provided a comfortable, lower middle-class lifestyle. Likewise, college graduates could expect an equally secure future with an even greater standard of living.

The new economy led to a new American Dream. Americans no longer dreamed of owning a family farm, rather they dreamed of owning a suburban home accompanied by a consumer lifestyle. To ensure that Americans willing to work for it could have that dream come true, the United States government created a novel policy system during the 1950s and 1960s – a set of policies and practices sometimes called the “Blue Model.”

His proposals for alternatives to the present system of Social Security Retirement Income and Medicare are interesting but I think inadequate. Just as examples of the inadequacies I think that the two gravest problems our old age support policies face are the byzantine system of fund accounting that is presently used and that health care benefits are uncapped.

I leave it to the readers. What sort of old age support system will be both effective and sustainable in the brave, new world to which we are evolving today? Keep in mind that the beneficiaries of the present system, by no means limited to the old, will fight tooth and nail to preserve our present system as-is, regardless of generational justice, need, or sustainability. If American history tells us anything, it’s that once granted benefits are darned hard to withdraw. Heck, we’re still subsidizing helium production, something that began nearly a century ago when dirigibles looked like the transport of the future.