The Past and Future of Entitlements

Conservative reformers should remember that FDR didn't impose social insurance on the country—Americans wanted it

In the autumn of 1933, a newspaper in Long Beach, Calif., published a letter submitted by Francis Everett Townsend, a broke 67-year-old who'd failed as a physician, a manufacturer of dry ice, and a real estate salesman. In his telling, he looked out his window one morning and saw three elderly women going through garbage cans in search of food. "A torrent of invectives tore out of me, the big blast of all the bitterness that had been building in me for years," he wrote. "I swore and I ranted, and I let my voice bellow with a wild hatred I had for things as they were."

Vowing to his wife that he would shout "until the whole country hears," he formulated a plan, sending it to The Long Beach Press Telegram. In order to provide for the 15 to 20 million Americans over age 60, he proposed, every last one should be granted a pension of $150 per month -- enough for a middle class existence at the time. They'd be required to spend the sum within the month, affording economic stimulus that would revive the nation's economy. A national sales tax of two percent would fund the plan.

Readers loved the idea.

"Living on fixed incomes in simple cottages, the Long Beach elderly -- the majority of them Folks from Iowa and elsewhere in the Midwest.... had come to Southern California to enjoy a simple life of churchgoing, potluck suppers, and checkers in the park, having earned, in their opinion, the right to enjoy the eleven years actuarially remaining to them in 1930," Kevin Starr writes in Endangered Dreams, his history of the era. "The Depression destroyed their plans as pension trusts shrank or, in some cases, as they went under entirely.... Fully 50 percent of the elderly in America were in need of some form of outside aid if they were to make it through the slump."

A recent Kevin Drum post reminded me of that anecdote. The conservative movement is continuing its decades long quest to shrink or repeal Social Security and Medicare, Drum argued, and in doing so their behavior is surprisingly quixotic:

America, as always, is ideologically (moderately) conservative and operationally (moderately) liberal. This hasn't changed much since the Nixon era, but Republicans just can't seem to wrap their heads around it. So Ronald Reagan implodes over Social Security in 1982, Newt Gingrich implodes over Medicare in 1995, George Bush implodes over Social Security in 2005, and the tea party Republicans implode over Medicare in 2011. Americans, in the least surprising news ever, still don't trust Republicans to screw around with Medicare or Social Security. Even Republicans don't trust Republicans to do it. Probably it's because Republicans have hated both programs from the beginning and keep trying to wreck them every time they get their trigger fingers anywhere close to the levers of power.

What makes this even weirder is that in just the past decade Republicans have helped their political cause by standing up for Medicare: first in 2003 when they passed the prescription drug plan and then in 2010 when they won a big House majority by beating up Democrats for cutting Medicare. But despite all this, they still don't get it. They're still convinced that someday Americans are going to blink their eyes and suddenly agree that Social Security and Medicare are liberal boondoggles that need to be privatized and slashed. It's just an astonishing unwillingness to accept reality.

On the whole, that political analysis is correct. Be it wise or unwise, the elimination of Social Security and Medicare isn't ever likely to happen. But the bigger failure among hardcore conservatives is their inability to perceive the certain consequences of repeal. Lots of old people would see a significant decline in living standards, spend their accumulated savings on medical care, and rely much more heavily on their adult children. Besides being bad consequences in themselves, is it realistic to imagine an aging America in which that didn't create pressure to pass some sort of new entitlement? Repeal would create the conditions for reintroduction of the very legislation just vanquished.

Conservatives don't appreciate the inevitability of this reaction because they think of The New Deal as a radical, top down policy agenda that FDR and a bunch of other elites conceived and implemented by forcing it upon the country. In their version of the 1930s, Dr. Townsend and others like him don't exist. In actual history, however, it is astonishing how rapidly and widely the idea he put into the newspaper spread.

The immediate reaction was encouraging enough that he and a colleague incorporated Old Age Revolving Pensions, Ltd. on January 1, 1934. Eight months later, the first Townsend Club was organized, and chapters soon sprang up all over the United States. "By January 1935, a half million Americans had joined Townsend Clubs and were sending nearly $1 million in dues and other donations into the movement's headquarters," Starr writes. That same year, a newly elected congressman from Los Angeles arrived in Washington, D.C., and promptly introduced legislation to implement The Townsend Plan. Townsend made the cover of Newsweek. Come 1936, membership in Townsend Clubs surpassed 2.1 million people, and The Townsend National Weekly was earning roughly a quarter-million dollars a year in advertising fees for support stockings, constipation remedies, and other geriatric products. "In terms of yearly coverage in the New York Times," Edwin Amenta wrote in his history of the movement, the Townsend Plans rank "as the eighth-most publicized U.S. social movement organization of the twentieth century."

The takeaway is simple: Old age pensions were a bottom up demand made by the citizens of a country far less accustomed to social welfare spending than is ours. Nor were they merely a  leftist phenomenon. There were FDR Democrats and Upton Sinclair socialists, to be sure, but the Townsend clubs tended to support Republican candidates, and were seen by contemporaries and some historians as right-wing populists -- that era's answer to Glenn Beck fans. "In Sinclair Lewis' best-selling It Can't Happen Here (1935), a demagogue modeled on Huey Long manipulates organizations like the Townsend Plan to win the presidency and implement fascism," Amenta writes.

Dr. Townsend, an obscure senior citizen turned national activist and celebrity, wrote a letter to the editor at a moment of personal failure and anxiety about the future. His legion of fans faced straits as dire, and conservatives of that era had no compelling counter-proposal to address their needs.

That dynamic tells us as much about the passage of old age pensions in America -- FDR pushed Social Security through as a more moderate iteration on the same idea -- as the abstract debate about the appropriate role of the federal government that we have all these years later, removed from Depression era need.

We pretend that first principles and presidents make policy. In the long run, however, bad times always arrive, and anxious citizens look to big government unless functional alternatives are available. It's something Milton Friedman and Friedrich Hayek both understood, but the most strident advocates of ending big government seem to have forgotten it.

The right will succeed in reining in big government -- a vital task! -- only insofar as it's able to provide alternatives to historic entitlements that succeed in making people secure enough that they don't despair of relying on them alone, even during the economic downturns of tomorrow and decade after next. All this makes developing a sustainable conservative agenda much more difficult (if no less necessary), which is why folks on the right are so hesitant to admit that it's true. On this matter, however, history is a better guide than ideology. FDR was as transformative a president as we've had, but the move toward a safety net in an economically depressed, industrialized nation was inevitable. It was terrifying to grow old in poverty and without medical care.

It still is.

Image credit: Reuters