by Alf Landon
The U.S. Congress enacted the Social Security Act, originally called the “Economic Security Bill,” in August of 1935. The Act was aimed at giving older Americans a pension that would provide them with a reasonable standard of living as they aged. The Social Security Act was politically moderate. The agency created to administer these benefits was to be funded by both employees and their employers, as opposed to using funds collected from general tax money. Still, it represented a milestone in moving this country toward a modern welfare state; as a result of this legislation, the United States joined other industrialized nations in offering old-age pensions and unemployment compensation. Several groups offered a spirited resistance to the program. Alf Landon, the Republican candidate for President in 1936, offered strong opposition to Social Security based on its burden on employers and employees as well as the possibility that the money coming into the Treasury would not be put away for later liabilities.
…Beginning next January employers must, in addition, begin paying taxes on the payrolls out of which your wages are to come. This is the largest tax bill in history. And to call it “social security” is a fraud on the workingman.
These taxes start at the rate of $2 in taxes for every $100 of wages. They increase until it is $6 in taxes for every $100 in wages.
We are told that this $6 will be equally divided between the employer and the employe [sic]. But this is not so, and for a very simple reason. The actual fact will be, in almost every case, that the whole tax will be borne either by the employe [sic] or by the consumer through higher prices. That is the his¬tory of all such taxes. This is because the tax is imposed in such a way that, if the employer is to stay in business, he must shift the tax to some one else.
Do not forget this: such an excessive tax on payrolls is beyond question a tax on employment. In prosperous times it slows down the advance of wages and holds back re-employment. In bad times it increases unemployment, and unemployment breaks wage scales. The Republican party rejects any feature of any plan that hinders re-employment… …One more sample of the injustice of this law is this: Some workers who come under this new Federal insurance plan are taxed more and get less than workers who come under the State laws already in force.
For instance, under the new law many workers now 50 years old must pay burdensome taxes for the next fifteen years in order to receive a pension when they are 65; whereas those of the same age who come under some State laws- pay no taxes and yet actually get a larger pension when they reach the age of 65.
These are a few reasons why I called this law unjust and stupidly drafted. There is a further important point in connection with the compulsory saving provided by the plan of the present administration. According to this plan, our workers are forced to save for a lifetime. What happens to their savings? The administration’s theory is that they go into a reserve fund, that they will be invested at interest, and that in due time this interest will help pay the pensions. The people who drew this law understand nothing of government finance…
…Let me explain it in another way—in the simple terms of the family budget. The father of the family is a kindly man, so kindly that he borrows all he can to add to the family’s pleasure. At the same time he impresses upon his sons and daughters the necessity of saving for their old age.
Every month they bring 6 per cent of their wages to him so that he may act as trustee and invest their savings for their old age. The father decides that the best investment is his own I O U. So every month he puts aside in a box his I O U carefully executed, and, moreover, bearing interest at 3 per cent.
And every month he spends the money that his children bring him, partly in meeting his regular expenses, and the rest in various experiments that fascinate him.
Years pass, the children grow old, the day comes when they have to open their father’s box. What do they find? Roll after roll of neatly executed I O U’s.
I am not exaggerating the folly of this legislation. The saving it forces on our workers is a cruel hoax.
There is every probability that the cash they pay in will be used for current deficits and new extravagances. We are going to have trouble enough to carry out an economy program without having the Treasury flush with money drawn from the workers…
Source: Alfred M. Landon, “I Will Not Promise the Moon,” Vital Speeches of the Day (October 15, 1936), 26–27.
Alfred Mossman Landon, known as Alf Landon (September 9, 1887 – October 12, 1987), was an American Republican politician, who served as the 26th Governor of Kansas from 1933 to 1937. He was best known for having been the Republican Party's nominee for President of the United States, defeated in a landslide by Franklin D. Roosevelt in the 1936 presidential election.
(Fortitude Lodge 107, KS)