FDR Cared About the Politics, But Not the Economics, of Social Security
(p. 116) Roosevelt's social security plan created an array of problems. First, it retarded recovery from the Great Depression by contributing to unemployment. From 1937 to 1940. employers and employees were docked for social security, and that money was out of private hands and lying fallow in the treasury. Lloyd Peck of the Laundryowners National Association concluded, "The burden of this proposal for employers to carry, through a payroll tax, will act as a definite curb on business expansion, and will likely eliminate many businesses now on the verge of bankruptcy."
. . .
(p. 117) When an accountant quizzed Roosevelt about the economic problems with social security, especially its tendency to create unemployment, he responded, "I guess you're right on the economics, but those taxes were never a problem of economics. They are politics all the way through." Roosevelt explained that "with those taxes in there, no damn politician can ever scrap my social security program. That's why, as Roosevelt admitted, it's "politics all the way through." Most politicians, following Roosevelt's lead, have taken delight in raising social security payouts and using that gift to plead for votes from the elderly at election time.
Source:
Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.
(Note: ellipsis added.)
