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A.J. Muste

Congress Passes Harmless Social Security Program

Big Business Unconcerned About Bill;
Completely Ineffectual in Improving Workers Conditions;
Passes Burden onto Labor

(24 August 1935)

From New Militant, Vol. I No. 35, 24 August 1935, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Roosevelt administration attaches great importance to the passage of the Social Security Bill last week. The measure provides for federal subsidies for unemployment insurance, the setting up of an old age pension system by taxation of employers and workers, special subsidies for aged persons not covered in the contributory plan and subsidies for certain forms of child welfare.

It is set forth by the administration as a partial but substantial redemption of its pledges to do something for the “forgotten man” and to keep the big fellows in their place though not destroying the foundations of the capitalist system itself. It is expected to be a vote-getter for Franklin D. in the 1936 elections. If the Supreme Court should declare this and other New Deal measures unconstitutional, Roosevelt still has his choice of campaigning next year as the champion of the masses against the reactionary few for a constitutional amendment; or if economic conditions are fairly good and discontent not sharp, forgetting about the whole business and campaigning as the man who brought back prosperity and did his best for the plain people.

Neither the present Social Security measure nor the other laws enacted by Congress in the closing days of its long session will do anything to relieve immediate distress. Not until the first of next year does a 1 percent tax on payrolls for unemployment insurance go into effect and the full 3 percent tax does not go into effect until January 1, 1938. The contributory old age annuity tax does not go into effect until January 1, 1937. Even after the tax goes into effect it will be some time, of course, before any benefits obtain. So far as the present and immediate future go the hammering away at wage standards via the WPA and other channels is the Rooseveltian gift to the masses. Social Security legislation is a cover under these conditions for the wage-cutting campaign. Little wonder that as the business organs report, no particular enthusiasm is being displayed by the workers over the passage of the act.

Big Business Indifferent

As for the business interests, they are expressing comparatively little alarm over this legislation. They are much more concerned about the measures relating to banking, security and public utilities which Congress is threatening to pass and which might in some slight degree interfere with the piling up of profits and with the “right” of private business to “manage its own affairs.” There is good reason for the absence of intense alarm over the social security legislation. In the first place, as we have already pointed out, it is some time before these measures go into effect. In the second place, the possibility of emasculation by the Supreme Court remains. Thirdly, the increased costs of production may always be passed on to the consumer. Fourthly, new machinery, more intensive methods of production to keep down the cost of social legislation for the employer, can and will be resorted to.

In any case the taxes will be comparatively small, 3 percent of the payroll for unemployment insurance and a maximum by January 1, 1949, of 3 percent for the old age pension system. The exchange of a few million dollars in social security benefits for a cut of billions of dollars in the wage bill is decidedly “good business.” Let Ma Perkins, Eleanor Roosevelt and the rest of the social workers have a fling. Finally, as experience in other countries has conclusively demonstrated, it is always possible, as the capitalist crisis intensifies, to effect a cut in the munificent benefits due under these social insurance programs.

Perkins Waxes Eloquent

It is important to note the philosophy back of this legislation. It is based on the concept that the present “revival” in business, the upturn on the stock exchange etc. is the beginning of a real capitalist boom. In a feature article in the New York Times Frances Perkins states:

“The cost of social security will be comparatively small for some years to come. This was deliberately arranged by the committee for the President in order that the incidence of tax might be gradual, as business and workers will be paying this tax in the early years of recovery from depression and before the full prosperity level has been reached.”

She becomes positively eloquent in painting the figure of the U.S. under liberal capitalism.

“The foundation has been laid. On it will be reared a structure, through the experience of the years to come, which will prove a haven for the nation’s wage-earners in times of economic distress and when they become old and feeble. It will be a refuge also for widows and dependent children. In achieving such results it will likewise benefit all employers and investors by promoting and stabilizing mass purchasing power.”

The intelligence displayed by economists, business men, workers and Congress in the passage of this legislation and “the intellectual courage and human insight of the President” have brought “a renewal of faith in the possibilities of life in this great nation as broad as a continent.”

Of course, as per the formula of liberal capitalism, this prosperity is to be made “permanent and real” by achieving a balance of consumption and production by “the promotion and stabilization of mass purchasing power without which the present economic system cannot endure.”

No Revival at All

The fatuous exponents of liberal capitalism continue to hold forth this hope and doubtless in many Instances actually to believe it themselves, in spite of the real facts about the present “revival” of business, etc. as set forth, for example, in the statistics of the U.S. Dept. of Commerce itself. These indicate that there was an increase of about 5 billions in the national income for 1934 as compared with 1933 but when relief wages are eliminated the net share of labor in 1934 was only 64.2 as compared with 65.5 in 1933. This does not take account of the fact that prices during the period rose as fast or even faster than wages so that the real wages of labor have decreased.

According to the same report the dividend and business profits rose sharply from $7,365,000,000 to $8,103,000,000 between 1933 and 1934.

Wage earners in 1934 received only 52 percent of their 1929 income. Property owners received 61.4 percent and men in business for themselves 65.2 percent of their 1929 income. Thus all the indications are that both earned and unearned incomes above $5,000 are going dp and that incomes below $5,000 are going down.

Nothing has taken place in these closing days of Congress to cause any change in the program of the masses of workers and farmers, namely, fight against the Roosevelt wage-cutting program, against the entire WPA set-up, against fake social security, for substantial protection against the risks of sickness, accident, old age and unemployment, at the cost of employers and government. bove all, organization to achieve power and thus to end, before It inflicts still further misery upon the masses, a system whose most liberal and humanitarian exponents can do no better than the Roosevelt “social security” program.

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