Historical, Social, and Political Context
Following industrialization of the early 20th century, America faced many social and political changes. These included movement toward cities, often increasing the separation between extended family members and particularly between members of different generations; greater proportions of workers working in factories, causing increased dependence on factors out of their control such as unemployment or recession; and the economic and social repercussions of the Great Depression, including high unemployment and often insufficient state welfare systems (“Historical Development”). These factors culminated in discussions around how best to financially support the aging populations in a way that was both equitable and feasible, both of which raise questions around the societal evaluation of the worth of aging populations in general and of individuals within them.
The Social Security Act of 1935, passed by FDR, is the basis for modern-day social security. The act included general welfare as well as a new federal program designed to financially aid retired workers over 65, which, according to Roosevelt, aimed to protect the average worker from poverty in old age (“Historical Development”). The theory of Title II of the Social Security Act was one of social insurance, meaning that workers pay taxes into a general fund throughout their working years and the benefits returned in old age would be scaled by the amount contributed. However, only workers in commerce or industry paid into the social security reserve and were thus eligible for benefits when they retired (Dewitt, 2010).
The Townsend Plan was one of the most favored alternatives to the Social Security Act and gained substantial following. In addition to having a weekly magazine called the National Townsend Weekly, thousands of Townsend Clubs and millions of volunteers worked to promote the plan (Dewitt, 2001). As proposed by Francis E. Townsend in “Old Age Revolving Pensions: A National Plan…”, the Townsend Plan prescribed $200 per month to those 60 and older regardless of previous employment, and the only conditions for eligibility were to be retired and to have had no significant criminal history. The plan was to be paid for by a 2% transaction tax, and any benefits given must be spent by the end of the month to encourage economic stimulation (Townsend, n.d.). Many found the Townsend Plan to be overly idealistic, but it accrued a solid support base by responding directly and immediately to the challenges of the Great Depression (Dewitt, 2010).
The Social Security Act generally offered much smaller financial benefits than those promised by the Townsend Plan, but was more economically feasible and stable by several measures. The Social Security Act passed in 1935 may have arisen from political compromise with conservative southern democrats, where monetary cuts were made for who received benefits and how much individuals received in order to maintain the act’s economic feasibility (Stoesz, 2016).