* Associate Professor of Law, University of Florida Frederic G. Levin College of Law. Sincere thanks to my colleagues at the University of Florida who so generously offered me their assistance and comments, including Alyson Flournoy, Michael Friel, David Hudson, and especially Jonathan Cohen, Jeff Harrison, Berta Hernandez, Elizabeth Lear, Lawrence Lokken, Amy Mashburn, and William Page. Special thanks also to Dan Halperin, Norman Stein and John Trout for their comments and suggestions, and to my tireless research assistants David Franco, Christina Lockwood, Katherine Molnar, Josh Richardson and Leslie Thomson, all students in the Graduate Tax Program of the University of Florida College of Law. And finally thanks to the University of Florida College of Law summer research grant program for financial support for this project.
1 Amartya Sen, Poverty and Famines: An Essay on Entitlement and Deprivation 1–2 (1982).
2 Aesop’s Fables, With a Life of Aesop 121 (John E. Keller & L. Clark Keating trans., 1993).
3 The range and number of advertisements is extreme, consisting primarily of advertisements for various investment houses like the “Thank you Paine Webber” television campaign: “You may be able to live on love. But you definitely can’t retire on it.” 1999 TIAA-CREFF Advertisement, Smithsonian, Nov. 1999, at 23. In addition, magazines focusing on financial services routinely feature retirement savings as the principal reason for investment and savings. See, e.g., Retire? Think Again. (Chances are you’ll be working), U.S. News & World Rep., June 2000, at 64–91.
4 The term Social Security will be used throughout this article to refer only to the cash benefits provided by the Old-Age, Survivors, and Disability Insurance (“OASDI”) program. The Old-Age Survivors Insurance (“OASI”) program provides benefits for retired workers and their spouses and children and to survivors of deceased workers. The Disability Insurance (“DI”) program provides benefits for disabled workers and their spouses and children and pays for rehabilitation services for the disabled. See 42 U.S.C. §§ 401–434 (1994). While I will discuss the financing of these two trust funds together, there are issues of financing and eligibility specific to the disability insurance program that are not directly relevant to the focus of this article, which is the ideological and philosophical roots of arguments about income support for retirement. The analysis will therefore focus primarily on old-age benefits under Social Security.
5 Medicare refers generally to the Health Insurance program component of Social Security, as provided under Title XVIII of the Social Security Act. 42 U.S.C. § 1395 (1994). This Article will not address the issues surrounding the financing of Medicare, which are quite different from the financing issues facing the cash benefit programs.
6 See, e.g., Peter G. Peterson, Will America Grow Up Before It Grows Old? How the Coming Social Security Crisis Threatens You, Your Family and Your Country 21 (1996); Social Security’s Looming Surpluses: Prospects & Implications 5–10 (Carolyn L. Weaver ed., 1990).
7 At one end of the spectrum are arguments for preserving the program as is and addressing its financial problems by “advance funding” benefits through accumulated payroll tax surpluses and paying down the overall national debt. Former Commissioner of Social Security Robert M. Ball has most prominently advocated this course of action, and some versions of this approach are discussed in Henry J. Aaron et al., Can America Afford to Grow Old? Paying for Social Security 11 (1989). At the other end of the spectrum are proposals to eliminate the program completely in favor of a private account system in which workers would control the accumulation and investment of their own individual retirement savings accounts. The number of proposals to privatize Social Security in whole or in part, most of which are quite similar, is astonishing and too large to list here. Representative examples include: Martin Feldstein, The Missing Piece in Policy Analysis: Social Security Reform 24 (National Bureau of Econ. Research Working Paper 5413, 1996) [hereinafter Feldstein, Reform]; Peter J. Ferrara, Social Security: The Inherent Contradiction 311 (1980); Laurence J. Kotlikoff, Privatizing Social Security at Home and Abroad, 86 Am. Econ. Rev. 368, 370 (1996); Lewis D. Solomon & Geoffrey A. Barrow, National Issues: Privatization of Social Security: A Legal and Policy Analysis, 5 Kan. J.L. & Pub. Pol’y 9, 23 (1995); and Sylvester J. Schieber & John B. Shoven, Social Security Reform: Around the World in 80 Ways, 86 Am. Econ. Rev. 373, 376 (1996). In between these two extremes are possible intermediate solutions, such as investing payroll tax revenues in the stock market and raising the retirement age to 70 or above, which represent variations on either private equity investments for the public program or preservation of the public program with reduced costs. In Framing the Social Security Debate: Values, Politics, and economics (R. Douglas Arnold et al. eds., 1998), a variety of authors discuss most of the middle of the road proposals. Proposals to maintain the current system but substantially modify it are contained in The Report of the 1994–1996 Advisory Council on Social Security (1996) [hereinafter Advisory Council Report]. The “modification” proposals, supported by a majority of Advisory Council members would (1) extend Social Security coverage to certain state and local government workers; (2) scale back the cost-of-living adjustment; (3) increase from 35 to 38 the number of working years taken into account in computing benefit levels; (4) accelerate the scheduled increases in normal retirement age; and (5) include benefits (net of the employee’s share of payroll taxes previously paid) in the recipient’s gross income and add the resulting revenue to the trust funds. See id. at 15–21. These proposals would have eliminated two-thirds of the then-projected long-term deficit in Social Security; under current projections based on the most recent estimates, discussed below, these proposals might be sufficient to eliminate the entire deficit.
8 Governor Bush has issued his proposal for partial privatization of Social Security in very general outlines on his web site devoted to the topic. See Republican Party, Social Security Blueprint (visited Sept. 24, 2000)<http://www.blueprintforthefuture.com>. While it is difficult to discern the precise contours of his proposal, the plan apparently contains some version of private savings accounts for individual workers, into which some portion of the current payroll tax revenues—perhaps one to two percent—would be diverted. See Robert D. Hershey Jr., From Gore and Bush, Uncooked Retirement Stew, N.Y. Times, June 25, 2000, at 3–14.
9 Vice President Gore proposes to maintain Social Security essentially in its current form and in addition proposes a supplemental plan to provide tax credits for amounts workers would save in individual accounts. See Hershey, supra note 8, at 3–14.
10 See, e.g., Richard H. Pildes, Why Rights Are Not Trumps: Social Meanings, Expressive Harms, and Constitutionalism, 27 J. Legal Stud. 725, 727–28 (1998). Pildes states:
Much of American constitutional law is, of course, cast in the language of protecting individual rights: rights to free speech, or to equal protection, or to democratic participation—to vote, form parties, petition the government. . . . In the canonical text of rights-oriented liberalism, Taking Rights Seriously, Dworkin argued that rights protect individual interests by excluding appeals to the common good (majoritarian preferences) as a justification for limiting rights... Rights must permit individuals to take an action “even if the majority would be worse off for having it done.” This is the picture of the direct clash between the interests of individuals (in liberty, or dignity, or autonomy) and that of the community, with rights trumping the second to secure the first. . . . Dissenters from the recent efflorescence of constitutionalism in other countries have similarly echoed this critique of rights-oriented constitutionalism. For example, since the advent of the Charter of Rights and Freedoms in 1982, some Canadians have found the specter of Canadian constitutionalism uninviting, based on their perception of the American experience. Allan Hutchinson, a constitutional theorist, appeals to Canadians to reject constitutionalism altogether because a “rights-centred society becomes little more than an aggregate of self-interested individuals who band together to facilitate the pursuit of their own uncoordinated and independent life projects—a relation of strategic convenience and opportunism rather than mutual commitment and support.” Charles Taylor, the philosopher, asserts that Canadian culture has traditionally been organized around the model of citizen participation and that the American model of rights poses a threat to that tradition.
Id. at 727–28 (citation omitted).
11 See generally Joel F. Handler & Lucie White, Hard Labor: Women and Work in the Post Welfare Era (1999).
12 See Alicia H. Munnell, Introduction to Framing the Social Security Debate: Values, Politics, and economics 1–2 (R. Douglas Arnold et al. eds., 1998).
13 Social Security old-age benefits are calculated for workers born after 1928 and retiring in 1991 or later using the highest 35 years of earnings up to the year in which the worker turns 62. Because the earnings records of prospective retirees are wage-indexed, that is, updated to current dollar levels in the year the worker reaches age 62, the benefit formula is applied to an earnings record reflecting economic growth over the worker’s lifetime. Once the beneficiary begins receiving benefits, the annual cost of living increase guarantees the retiree at least an update in purchasing power, if not a full share of economic growth after retirement. See 42 U.S.C. § 415(i) (1994).
14 See Eugene C. Steuerle & Jon M. Bakija, How Social Security Redistributes Income, 62 Tax Notes 1763, 1764 (1994) (“Social Security is the largest transfer program in the United States, each year redistributing hundreds of billions of dollars between generations. It also reallocates the shares of income enjoyed by different income groups within each generation.”) The limits of redistribution within the Social Security system as currently structured are well documented, and its shortcomings, particularly with respect to the differential benefits provided under the system to minority and women workers and to non-traditional family units, are important issues for discussion. It should be noted that the Social Security benefit system (and the assumptions of its founders that it would make most needs-based welfare obsolete) is based on assumptions about equal and free access to all levels of the paid labor force that may be admirable aspirations but that probably do not reflect reality for African-American, Latino and other minority workers, as well as to some extent for women generally. That problem is one of structure of the American economy and work force and is probably not possible to address within the structure of Social Security itself. In contrast, the problem of a benefit structure based on traditional family units is certainly amenable to resolution within the structure of the earned right entitlement concept. These issues, however, are beyond the scope of this article, although their resolution would likely be perfectly consistent with the discussion below of the importance of redistributive entitlements in the retirement context.
15 See Aaron et al., supra note 7, at 117–20.
16 The history of the institution of retirement has been examined in some detail over the last 20 years. See, e.g., William Graebner, A History of Retirement 14 (1980). See generally The Countryside in the Age of Capitalist Formation: Essays in the Social History of Rural America (Steven Hahn & Jonathan Prude eds., 1985); The Evolution of Retirement: An American Economic History 1880–1990 (1998); Carole Haber & Brian Gratton, Old Age and the Search For Security: An American Social History (1994); David Hackett Fischer, Growing Old in America (1978). However, the future of retirement as an institution of the lower and middle classes, not simply of those with private means to support leisure in middle and old age, has not received much attention in the current Social Security debate. This is a discussion that needs to be conducted and will be the focus of a future article; however, this article is confined to an analysis of the current debate over Social Security and how best to finance the existing institution of retirement.
17 See infra notes 199–235 and accompanying text.
18 See infra notes 199–235 and accompanying text.
19 See infra notes 270–283 and accompanying text.
20 See infra notes 267–283 and accompanying text.
21 See Pildes, supra note 10, at 727–28.
22 See infra notes 143–144 and accompanying text.
23 For a thorough discussion of the distorting effects of “winner take all” economics in the setting of the income tax, see generally Martin J. McMahon & Alice Abreu, Winner-Take-All Markets: Easing the Case for Progressive Taxation, 4 Fla. Tax Rev. 1 (1998).
24 For an example of the current preoccupation with inducing widespread participation in investing and the stock market, see James A. Fanto, We’re All Capitalists Now: The Importance, Nature, Provision and Regulation of Investor Education, 49 Case W. Res. L. Rev. 105, 107 (1998).
25 See infra notes 143–172 and accompanying text.
26 See generally Charles H. Reich, The New Property, 73 Yale L.J. 733 (1964) [hereinafter Reich, New Property].
27 See infra notes 188–189 and accompanying text.
28 See infra notes 184–266 and accompanying text.
29 See infra notes 271–287 and accompanying text.
30 For a discussion of the struggles to delimit property rights on the Web, see generally Julie E. Cohen, Lochner in Cyberspace: The New Economic Orthodoxy of “Rights Management,” 97 Mich. L. Rev. 462 (1998), and Carol M. Rose, The Several Futures of Property: Of Cyberspace and Folk Tales, Emission Trades and Ecosystems, 83 Minn. L. Rev. 129 (1998).
31 Martin S. Feldstein, Social Security, Induced Retirement and Aggregate Capital Accumulation, 82 J. Pol. Econ. 905 (1974) [hereinafter Feldstein, Social Security].
32 See Hershey, supra note 8, at 14. Columnists have weighed in on both sides. See, e.g., Molly Ivins, Social Security Plan Depends on Details Bush Won’t Divulge, Minneapolis Star-Tribune, May 26, 2000, at A23; William Safire, Grab That Third Rail, N.Y. Times, June 26, 2000, at A17.
33 Karen Burke & Grayson M.P. McCouch, Privatizing Social Security: Eight Myths, 74 Tax Notes 1167, 1167–73 (1997).
34 See generally Feldstein, Reform, supra note 7; Solomon & Barrow, supra note 7; Don Nickles, Policy Essay: Retiring in America: Why the United States Needs a New Kind of Social Security for the New Millennium, 36 Harv. J. on Legis. 77 (1999).
35 See generally Feldstein, Reform, supra note 7; Solomon & Barrow, supra note 7; Nickles, supra note 34.
36 See infra notes 41–79 and accompanying text.
37 See infra notes 80–109 and accompanying text..
38 See infra notes 110–130 and accompanying text.
39 See infra notes 131–144 and accompanying text.
40 Feldstein was the first to propose this effect primarily for Social Security. See generally Feldstein, Social Security, supra note 31.
41 The fertility rate (number of children per woman) increased during the period of 1945 to 1960. See 2000 Board of Trustees of the Fed. Old-Age & Survivors Ins. & Fed. Disability Ins. Trust Funds., Ann. Rep. 63 tbl.II.D2 (2000) [hereinafter Trustees’ Report].
42 Nickles, supra note 34, at 84.
43 See Burke & McCouch, supra note 33, at 1167–73.
44 See Philip J. Longman, Financing the Future: Is Social Security the Problem or the Solution?, in Social Security And The Budget Proceedings Of The First Conference Of The National Academy Of Social Insurance 63–64 (Henry J. Aaron ed., 1990) (stating: “As the ranks of the elderly swell in the next century, those of children will diminish. . . . What will happen when this anomalously large [baby boom] generation reaches old age, and begins to consume far more than it produces?”); see also Peter G. Peterson, The Morning After, Atlantic Monthly, Oct. 1997, at 43, 43–69. The subtitle of the article is Consuming Our Children.
45 See Nickles, supra note 34, at 85 (citations omitted).
46 See Trustees’ Report, supra note 41, at 21–22.
47 See id. at 60, 63 tbl. II.D2. The fertility rate reached a peak of 3.61 in 1960, declining to as low as 1.74 in 1976, but rising again to its current rate of 2.06 in 1999. See id. at 63 tbl.II.D2.
48 See id. at 60.
49 See Aging Societies 3 tbl.1–1 (Barry Bosworth & Gary Burtless eds., 1998) (finding that the aged dependency ratio in 2000 is 25.1 in Japan, 18.7 in United States, and in 2020 will be 43.2 in Japan, 24.8 in United States).
50 See id. at 4 tbl.1–2 (finding the fertility rate in France was 1.8, in Germany was 1.3, and in the United Kingdom was 1.8, compared to 2.1 in the United States, in 1990–95).
51 See Lee A. Sheppard, News Analysis: Stripping Social Security of its Redistributive Features, 73 Tax Notes 1012, 1015 (1996) [hereinafter Sheppard, News Analysis].
52 See Solomon & Barrow, supra note 7, at 15.
53 Id.
54 See id.
55 For example, according to the Bush campaign:
[I]nstead of dramatically raising taxes or cutting benefits, individual workers could be permitted to establish personal retirement accounts. By allowing younger workers to invest a portion of their payroll taxes in stocks and bonds, these accounts will generate higher rates of return, thus helping to increase retirement income for younger workers. . . . In addition to worsening rates of return, the current structure of the Social Security system impedes, rather than enhances, wealth creation.
The Republican Party, A Blueprint to Strengthen and Improve Social Security (visited Sept. 28, 2000) <http://www.blueprintforthefuture.com/pdfs/ssblueprint.pdf> [hereinafter Republican Party, Blueprint].
56 See generally Steven C. Wilber, ACCF Center for Policy Research Compares Social Security Reform Proposals, 81 Tax Notes 1667 (1998) (summarizing current reform proposals).
57 See Aaron et al., supra note 7, at 117.
58 See Gene Steuerle, The Simple Arithmetic Driving Social Security Reform, 78 Tax Notes 377, 377–78 (1998).
59 See infra notes 80–109 and accompanying text.
60 See Trustees’ Report, supra note 41, at 19–29.
61 See id. at 21–22 fig.I.G2.
62 See Population Division of the U.N. Secretariat, World Fertility Patterns 1997, U.N. Doc. ST/ESA/SER.A/165 (1997), available in World Fertility Patterns 1997 (visited Nov. 6, 2000)<http://www.undp.org/popin/wdtrends/fer/fermap.htm>.
63 Id. at 37–38. (“Increased immigration affects the cost of Social Security much like increases in birth or mortality rates—it increases the ratio of workers to retirees.”).
64 For a thorough exploration of the uses and misuses of immigration laws and changing conceptions of citizenship in America, see generally Rogers M. Smith, Civic Ideals: Conflicting Visions of Citizenship in U.S. History (1997).
65 See Trustees’ Report, supra note 41, at 13, 62, 63, 64.
66 See id. at 22–27; see also Aaron et al., supra note 7, at 11. See generally Alicia H. Munnell, The Economics of Private Pensions (1982).
67 See Barry Bosworth, What Economic Role for the Trust Funds?, in Social Security in the 21st Century 156–177 (Eric R. Kingson & James H. Schulz eds., 1997).
68 See Robert Ball, Panel on Formulating a Deficit Reduction Package: What Is the Role of Social Security? First Presentation, in Social Security And The Budget Proceedings Of The First Conference Of The National Academy Of Social Insurance 123, 127–128 (Henry J. Aaron ed., 1990) (discussing how surpluses in Social Security were used to reduce the federal deficit).
69 See Trustees’ Report, supra note 41, at 25.
70 See Bosworth, supra note 67, at 160.
71 See Trustees’ Report, supra note 41, at 24 tbl.I.G.2. Under the intermediate assumptions, the 75-year actuarial deficit is –1.89. Thus, an increase of .95%, from 6.2% to 7.15%, beginning in 2001, would eliminate the projected long-term deficit, taking into account trust fund surpluses that would be accumulated until around 2018. See id.
72 See Bosworth, supra note 67, at 175 (“The combination of a tax increase to restore actuarial balance and a mildly more aggressive investment policy could essentially eliminate future financing problems. While Social Security is a large share of the government budget as currently presented, it is a small element in the total economy.”).
73 Dependency ratios generally measure the number of persons in the society not engaged in producing output relative to those in the labor force who are—that is, the number of non-workers who must be economically supported by the working populations. See James H. Schulz, The Economics of Aging 269 (6th ed. 1995).
74 See Theodore Marmor et al., Social Security Politics and the Conflict Between Generations: Are We Asking the Right Questions?, in Social Security in the 21st Century, supra note 67, at 195–207, 201.
75 See House Comm. on Ways and Means, Overview of the Federal Tax System, H.R. Rep. No. 103–17, at 64–65 tbl.1 (1993) (showing top marginal tax rate of 91 or 92% throughout the period 1950–63, dropping to 77% for 1964, and 70% for 1965–67. The top marginal rate did not fall as low as 50% until 1982).
76 Harold Sheppard, The United States: The Privatization of Exit, in Time For Retirement 252, 259–260 (Martin Kohli et al. eds., 1991).
77 See id. at 277–78.
78 See id. at 278–79
79 See Steuerle & Bakija, supra note 14, at 1770 (discussing how under the current system low to moderate income people will be better off and high income individuals will be worse off); see also Aaron et al., supra note 7, at 117–18 (switching to privatization would eliminate the possibility of paying extra benefits to workers whose earnings were low and would increase welfare applications).
80 See, e.g., Nickles, supra note 34, at 96 (arguing that historical data and projections for the future show Social Security has a much lower rate of return than private markets).
81 The original description of the Social Security program in the Report of the Committee on Economic Security in 1935 reflects this thinking: “A contributory annuity system, ¼will enable younger workers,¼to build up gradually their rights to annuities in their old age.” Report to the President of the Committee on Economic Security, in the Report of the Committee on Economic Security of 1935, at 45 (1935) [hereinafter CES Report].
82 This is only the OASDI rate, financing the Old Age and Survivors’ Insurance (OASI) and Disability Insurance (DI) programs. The remaining 1.45% of the FICA tax is for the Health Insurance (HI) or Medicare program. The Federal Insurance Contributions Act requires that employers and employees each “contribute” 6.2% of wages, up to a maximum taxable wage base, indexed for inflation to finance old-age survivor and disability benefits. 26 U.S.C. §§ 3101–3102 (1999). The taxable wage base was equal to $76,200 in 2000. See Trustees’ Report, supra note 41, at 34–35 (listing the taxable wage base for each year from 1937 through 2000).
83 See Sheppard, News Analysis, supra note 51, at 1012–13.
84 42 U.S.C. § 401 (1999).
85 See Solomon & Barrow, supra note 7, at 15–16.
86 See, e.g., Burke & McCouch, supra note 33, at 1167–73.
87 Nickles, supra note 34, at 90. Senator Nickles goes on to contrast the savings possibilities with Social Security’s poor investment possibilities:
The benefit of long-term savings and investment is compounded interest. Researchers have analyzed both historical data and projections for the future with results that are staggering in terms of the rate of return of Social Security versus private markets. . . . Social Security’s real rates of return are diminishing rapidly. The average worker retiring in 1997 will recover the value of her own and her employer’s contributions in 13.9 years; however, it will take almost twice as long for the average worker retiring in 2025 to recover those contributions—26.2 years.
Id. at 96–97.
88 Solomon and Barrow summarize the issue this way: “Under either pay-as-you-go or partial advance financing, Social Security is unable to provide an adequate pension system. This is primarily due to the fact that without full financing, the system cannot exploit the tax-free compounding of interest on funds paid into the system.” Solomon & Barrow, supra note 7, at 15.
89 See Yung-Ping Chen & Stephen C. Goss, Are Returns on Payroll Taxes Fair?, in Social Security in the 21st Century, supra note 67, at 76–89; see also John Geanakoplos et al., Would a Privatized Social Security System Really Pay a Higher Rate of Return?, in Framing the Social Security Debate, supra note 7, at 137.
90 See Chen & Goss, supra note 89, at 76–89.
91 See id.
92 See id. at 83.
93 See id. at 88.
94 See infra notes 231–232 and accompanying text.
95 See Kathryn L. Moore, Privatization of Social Security: Misguided Reform, 71 Temp. L. Rev. 131, 132 (1998).
96 The Social Security Act entitles all who meet the eligibility criteria to benefits based on earnings recorded through the payroll tax withholding system. See 42 U.S.C. §§ 402, 413–415 (1994).
97 Id.
98 I.R.C. §§ 3101–3328 (1994).
99 See, e.g., Chen & Goss, supra note 89, at 76–89; see also Theodore Marmor et al., America’s Misunderstood Welfare State: Persistent Myths, Enduring Realities 163–64 (1992) (contending that charge that Social Security is a “Ponzi scheme” is mudslinging, and mischaracterizes public satisfaction with the system).
100 See Trustees’ Report, supra note 41, at 68–69.
101 See, e.g., Nickles, supra note 34, at 90; Solomon & Barrow, supra note 7, at 15.
102 See Solomon & Barrow, supra note 7, at 14.
103 See id.
104 See id.
105 For a discussion of suggestions for means-testing, see Eric R. Kingson & James H. Schulz, Should Social Security Be Means-Tested?, in Social Security in the 21st Century, supra note 67, at 41–61.
106 See infra notes 270–278 and accompanying text for a discussion on public acceptance of earnings-based benefits as opposed to needs-based benefits. This attitude also reflects the social welfare policy analyst’s reluctance to accept needs-based welfare benefits as the stigmatized, lesser-status benefits as compared to Social Security benefits, which have always had middle-class acceptance with little or no stigma because of the earned right on which they are based.
107 See Virginia P. Reno & Robert B. Friedland, Strong Support but Low Confidence: What Explains the Contradiction?, in Social Security in the 21st Century, supra note 67, at 178–94.
108 See, e.g., Mickey Kaus, The Case for Means-Testing Social Security, in Social Welfare Policy at the Crossroads: Rethinking the Roles of Social Insurance, Tax Expenditures, Mandates, and Means Testing 117–24 (Robert B. Friedland et al. eds., 1999) (proposing transformation of Social Security into an Australian-style means-tested pension eliminating benefits for those with high income or assets).
109 For a thorough discussion of the roots of American attitudes toward the poor as well as of current welfare policy, see generally Joel Handler, The Poverty of welfare Reform (1995).
110 Trustees’ Report, supra note 41, at 19–31.
111 See Solomon & Barrow, supra note 7, at 13 n.78 (“Today more young Americans believe in UFOs than believe they will receive their Social Security benefits.”).
112 See id. at 14.
113 See Ball, supra note 68, at 127–28.
114 Solomon and Barrow note that:
Social Security . . . enjoys the dubious honor of being the largest single item in the federal budget and the largest government program in American history. Social Security outlays currently represent more than one-fourth of non-defense expenditures, and future obligations are projected to quickly consume assets, bankrupting the system, under the Social Security Board’s intermediate assumptions, by 2030.
Solomon & Barrow, supra note 7, at 13 (citations omitted).
115 See id. at 14 (“The stability of pay-as-you-go financing depends upon the business cycle, fertility rates, inflation, and demographics.”).
116 See id.
117 See Nickles, supra note 34, at 81.
118 Id.
119 See id. at 98–99 (observing that personal retirement accounts would give individuals ownership and property rights over their retirement savings).
120 See Solomon & Barrow, supra note 7, at 14; see also Sheppard supra note 51, at 1012.
121 See generally Handler, supra note 109; Solomon & Barrow, supra note 7.
122 See Solomon & Barrow, supra note 7, at 15–16 (discussing proposals to fix Social Security); see also Peter A. Diamond, The Economics of Social Security Reform, in Framing the Social Security Debate, supra note 7, at 60–61 (“A larger trust fund is a way of making Social Security more valuable for future generations at a cost of making it less valuable for current generation. . . . The greater the degree of funding, the more the concern will be reduced.”).
123 See Diamond, supra note 122, at 60–61.
124 See Ball, supra note 68, at 128.
125 See J. Douglas Brown, Essays on Social Security 44–56 (1977). Brown was the chair of the 1937–1938 Advisory Council on Social Security which developed much of the 1939 Act.
126 See, e.g., Lawrence H. Thompson, Administering Individual Accounts in Social Security: The Role of Values and Objectives in Shaping Options 5 (1999) (discussing generally the desire to avoid any additional burden on employers). See also Trustees’ Report, supra note 41, at 22–30.
127 Trustees’ Report, supra note 41, at 173; see also Solomon & Barrow, supra note 7, at 13.
128 Nickles, supra note 34, at 98. The claim made by Nickles that Social Security was supposed to be self sustaining is not correct. It was known from the beginning that payroll tax financing would just be a beginning to the solution and it was not expected to last indefinitely. See A Letter from the President’s Committee on Economic Security, Accompanying the Foregoing Message, January 17, 1935, in The Public Papers and Addresses of Franklin D. Roosevelt 47 (Samuel I. Rosenman ed., 1938); see also The White House Statement Summarizing Report from the President’s Committee on Economic Security (Excerpts), January 17, 1935, in The Public Papers and Addresses of Franklin D. Roosevelt, supra, at 49, 53.
129 See Brown, supra note 125, at 6, 26, 84–85.
130 See id. at 71.
131 See Feldstein, Social Security, supra note 31.
132 Solomon & Barrow, supra note 7, at 16.
133 Selig D. Lesnoy & D.R. Leimer, Social Security and Private Saving: New Time Series Evidence with Alternative Specifications (Social Security Admin. Office of Research & Stat. Working Paper No. 22, 1981).
134 Martin S. Feldstein, Social Security and Private Saving: Reply, 90 J. Pol. Econ. 630, 630–42 (1982).
135 Cato the Elder was noted for his unwavering hatred of the state of Carthage, and for his declaration each time he took the floor of the Roman Senate, “Carthago delenda est!”—”Carthage must be destroyed.” For Feldstein’s similarly unwavering opposition to Social Security, see Martin S. Feldstein, Should Social Security Be Means-Tested?, 95 J. Pol. Econ. 468–84 (1987); Martin S. Feldstein, Toward a Reform of Social Security, 40 The Public Interest (1975); and see generally Martin Feldstein, Would Privatizing Social Security Raise Economic Welfare? (National Bureau of Econ. Research Working Paper 5281, 1995).
136 Feldstein states that:
The social security payroll tax distorts the supply of labor and the form of compensation. . . . Unlike private pensions and individual retirement accounts, the social security system does not invest the money that it collects in stocks and bonds but pays those funds out as benefits in the same year that they are collected. The rate of return that individuals earn on their mandatory social security contributions is therefore far less than they could earn in a private pension or in a funded social security program. . . .
Feldstein, Reform, supra note 7, at 5–6.
137 Id. at 17–18.
138 See generally Robert J. Barro, The Impact of Social Security on Private Savings—Evidence from the U.S. Time Series (1978).
139 See Congressional Budget Office, Congress of the United States, Assessing the Decline in the National Savings Rate 37 (1993); Munnell, supra note 66, at 77–88; Henry Aaron, Economic Effects of Social Security 51–52 (1982); see also Olivia S. Mitchell & Stephen P. Zeldes, Social Security Privatization: A Structure for Analysis, 86 Am. Econ. Rev. 363, 366 (1996) (“Overall, it seems precarious to build a case for privatization based on the argument that it would increase national savings.”).
140 According to economist James Schulz:
It is a common misconception that there is a direct relationship between the personal saving of individuals (for retirement and other reasons) and economic growth. While there is a need for saving to facilitate investment in the economy, there is a variety of ways such saving can be accumulated. Hence, there is no agreement on the need or importance of any one accumulation process, such as through personal saving or private pensions.
Schulz, supra note 73, at 112.
141 Id. at 113 (citation omitted).
142 See Kathy Bergen, Personal Savings Stutter While the Economy Hums, Chi. Trib., June 5, 1998, at N1 (“‘Americans are actually doing pretty well’ in their savings, according to Dallas Salisbury, president of the Employee Benefit Research Institute. The household savings rate is somewhat misleading, he said, noting, for example, that it ‘doesn’t include any values going up in the equity markets and it doesn’t include a lot of money in defined-benefit (traditional) pension plans, and that adds up to substantial amounts of individual wealth.’”).
143 See Solomon & Barrow, supra note 7, at 17; see also infra notes 147–173 and accompanying text.
144 See infra notes 210–220 and accompanying text.
145 See Marmor et al., supra note 99, at 128–32 (discussing of Social Security financing “crisis” of early 1980’s and public reaction).
146 See, e.g., Louis Rukeyser, Small Firms Look Like ‘87 Winners, Chi. Trib., Jan. 17, 1987, at C6 (stating the bull market began in August of 1982).
147 While Feldstein can be said to have begun the chorus of calls for privatization of Social Security with his economics papers from the 1970s forward, the real flood of argument for privatization began with proponents like Ferrara in 1980 and continuing with Peterson’s popularizing work in the late 1980s. The prolonged bull market began in about 1982, as discussed in Robert Shiller, Irrational Exuberance 5(2000).
148 See supra notes 80–109 and accompanying text.
149 See supra notes 80–109 and accompanying text.
150 E.J. Dionne puts it this way:
Social insurance was a wise admission on the part of supporters of competitive economies that citizens would take the risk such economies require only if they were provided with a degree of security, especially against old age. . . . Risk is tolerable, even desirable, as long as every one of life’s risks does not become an all or nothing game. . . . The power of the social insurance idea rests on a respect for individualism. It does not rest on a utopian and mistaken view of what radical individualism can accomplish.
E.J. Dionne Jr., Social Security Brief No. 6, Why Social Insurance? (visited Sept. 12, 2000) <http//www.nasi.org/socsec/briefs/ssbr6.htr>.
151 Burke & McCouch, supra note 33, at 1167–73.
152 See generally Orville Schell, To Get Rich is Glorious, China in the Eighties (1984).
153 See, e.g., Republican Party, Blueprint, supra note 55.
154 See id.
155 Feldstein’s work is largely devoted to this notion, as discussed supra notes 131–144 and accompanying text.
156 Solomon and Barrow argue that:
Social Security must be liberated from its inherently contradictory welfare and insurance roles and its fundamentally unstable financing scheme. The current system must be replaced with a program that grants workers a stake in their retirement, eliminates the negative impact on personal savings, and allows retirees to enjoy the benefits they have earned. Privatization is necessary to achieve these goals, to break the political quagmire, and to provide for the futures of tomorrow’s retirees. Privatized pensions offer superior returns, carry protected property rights, and are beyond the reach of politicians.
Solomon & Barrow, supra note 7, at 17.
157 Senator Nickles states:
A system of personal savings accounts [means that workers] who start work earlier are rewarded by a system that depends on compounded investment and returns. Furthermore, because benefits would no longer be tied to life expectancy, retirement money would belong to the workers, whether they lived five years past retirement or twenty. Consequently, low-wage earners could pass along their remaining benefits to children or grandchildren, thereby increasing future generations’ opportunity for a higher standard of living.
Id.
158 See infra notes 212–220 and accompanying text.
159 See infra notes 212–220 and accompanying text.
160 Alan Greenspan, Testimony before the Senate Budget Committee, Federal News Service, Jan. 26, 1995.
161 See Solomon & Barrow, supra note 7, at 18.
162 See Moore, supra note 95, at 157–158 (discussing how different proposals can result in transition costs ranging from 1.6% additional payroll tax up to about 5%).
163 A recent monograph published by the United Nations examines the transitional costs involved in shifting from unfunded to funded pension systems in Latin America, essentially in the Chilean model, and concludes that “in several countries, especially those with more aged populations and high coverage systems, the pension debt is very high, and that a switch from unfunded to fully funded systems implies substantial fiscal costs, that may even turn out to be economically and politically unviable. . . .” Jorge Bravo & Andras Uthoff, Transitional Fiscal Costs and Demographic Factors in Shifting from Unfunded to Funded Pension in Latin America 5, U.N. Doc. LC/L 1264–P (1999).
164 See Trustees’ Report, supra note 41, at 6 tbl.I.C1 (summary of OASDI Trust Fund Operations).
165 This is one contrast that is frequently overlooked by those who call for means-testing the program. The prospect of checking income and assets of 35 or 40 million beneficiaries, each month, should give pause to those who would like to increase the “targeting” efficiency of the program through means-testing.
166 See Thompson, supra note 126, at 6. Under a centralized federal model the additional annual costs are less than 0.1% of the assets under management. Costs are substantially higher where the activities are decentralized. In the United Kingdom, charges averaged around 10%, and in Chile the charge ran about 19% of contributions. See id.
167 See Bravo & Uthoff, supra note 163, at 8 (administrative costs of the Chilean system by 1999 were close to 25%).
168 According to Senator Nickles:
Today, Americans are increasingly aware of the need for long-term financial planning and are capable of handling their own investments. Indeed, surveys show that Americans are already investing in the private market and becoming better educated about how it works. . . . Moreover, they want to have ownership over their own futures.
Nickles, supra note 34, 106–08.
169 See, e.g., Deborah McGregor, Levitt Warns Inquiry of Risks in Day Trading, Fin. Times London, Sept. 17, 1999, at 6; Tom Walker, If You Love to Play the Market, Take this Test—You May Have a Problem, Atlanta J. Const., Jan. 13, 1994, at F3.
170 See David Barboza, N.A.S.D. Chief Cautions Firms about Internet Trading Risks, N.Y. Times, Feb. 10, 1999, at C9 (noting scrutiny being directed at day traders, and suggesting that “day traders are creating volatile and risky markets”).
171 In fact, Shiller has characterized the last several years of increases in the stock market this way:
The recent high valuations in the stock market have come about for no good reasons. The market level does not, as so many imagine, represent the consensus judgment of experts who have carefully weighed the long-term evidence. The market is high because of the combined effect of indifferent thinking by millions of people, very few of whom feel the need to perform careful research on the long-term investment value of the aggregate stock market, and who are motivated substantially by their own emotions, random attentions, and perceptions of conventional wisdom. Their all-too-human behavior is heavily influenced by news media that are interested in attracting viewers or readers, with limited incentive to discipline their readers with the type of quantitative analysis that might give them a correct impression of the aggregate stock market level.
Shiller, supra note 147, at 203.
172 Id. at 222.
173 See Gregory S. Alexander, Commodity & Propriety: Competing Visions of Property in American Legal Thought 1776–1970, at 10 (1997) (arguing that commodification is an essential aspect of modernity); see also Barry Schwartz, The Costs of Living (1992) (discussing the “marketization” of modern life).
174 In this regard, see Martha Nussbaum, Human Rights Theory: Capabilities and Human Rights, 66 Fordham L. Rev. 273, 274 (1997), for a cogent discussion of the relationship between rights and welfare and the different types of equality, including well-being, resources, opportunity, or capabilities.
175 See generally, e.g., Nickles, supra note 34.
176 See infra notes 255–265 and accompanying text.
177 See Robert W. Gordon, Paradoxical Property, in Early Modern Conceptions of Property 95, 95 (John Brewer & Susan Staves eds., 1996) (“The ideology of property as absolute dominion has many sources. . . . Yet . . . these very different sources. . . . [tend] to converge. . . . in the model form of property as absolute individual right”).
178 See Reich, New Property, supra note 26, at 785.
179 See id.
180 See Charles Reich, Symposium On The Trends In Legal Citations And Scholarship: Property Law And The New Economic Order: A Betrayal Of Middle Americans And The Poor, 71 Chi.-Kent. L. Rev. 817, 819 (1996) [hereinafter Reich, Symposium]. For one major critique of Reich’s approach, see generally William H. Simon, Rights and Redistribution in the Welfare System, 38 Stan. L. Rev. 1431 (1986).
181 See generally Reich, New Property, supra note 26.
182 See generally Linda Gordon, Pitied But Not Entitled: Single Mothers and the History of Welfare 1890–1930 (1994) [hereinafter Gordon, Pitied Not Entitled]; Michael B. Katz, In the Shadow of the Poorhouse: A Social History of welfare in America (1986).
183 See, e.g., Robert M. Ball & Thomas N. Bethell, Bridging the Centuries: The Case for Traditional Social Security, in Social Security in the 21st Century, supra note 67, at 259, 261; see also Solomon & Barrow, supra note 7, at 9.
184 See generally Solomon & Barrow, supra note 7.
185 See id.
186 See infra notes 270–283 and accompanying text.
187 Reich, New Property, supra note 26.
188 Akhil Amar, Forty Acres and a Mule: A Republican Theory of Minimal Entitlement, 13 Harv. J.L. & Pub. Pol’y 37 (1990).
189 Bruce Ackerman & Anne Alstott, The Stakeholder Society (1999).
190 See infra notes 242–265 and accompanying text.
191 Some interesting current work on the nature of citizenship has centered on the notion of economic citizenship in the context of economic globalization. See generally Linda Bosniak, Citizenship Denationalized, 7 Ind. J. Global Legal Stud. 447 (2000).
192 For an illuminating discussion of connections between public rights and social norms, see Richard McAdams, The Origin, Development, and Regulation of Norms, 96 Mich. L. Rev. 338 (1997).
193 See infra notes 199–235 and accompanying text.
194 Reich, New Property, supra note 26, at 778–86.
195 An extensive review of Social Security cases in the federal courts reveals no cases after a 1950s case dealing with deportation of a member of the Communist Party, which involved depriving a primary recipient of benefits under Title II of the Social Security Act once in benefit status, except for cases dealing with erroneous overpayments which, by statute, were allowed to be recouped. See, e.g., Califano v. Yamasaki, 442 U.S. 682 (1979).
196 See infra notes 236–253 and accompanying text.
197 William Simon’s analysis of Reich’s “new property” and social insurance well illustrates the liberal distaste for the distinction between poverty-based and earnings-based entitlements. See generally Simon, supra note 180.
198 For a discussion of the concept of entitlement in the welfare context, and the impact of the Personal Responsibility and Work Opportunity Act of 1996, Pub. L. No. 104–193, 110 Stat. 2279, which eliminated the few entitlement protections that existed under the old AFDC program, leaving recipients completely vulnerable to state and local administrative actions, see Sylvia Law, Ending Welfare As We Know It, 49 Stan. L. Rev. 471, 483–88 (1997). For the classic indictment of welfare as a means of social control, see generally Frances Fox Piven & Richard Cloward, Regulating The Poor: The Functions of Public Welfare (2d ed. 1993).
199 Much of the historical discussion in both the Solomon and Barrow and the Nickles articles is inaccurate, particularly the notion that there was no substantial history of government support for the poor or for the elderly prior to enactment of Social Security. See, e.g., Solomon & Barrow, supra note 7, at 10 (“Before the adoption of the Social Security Act of 1935, the public sector played only a limited role and the federal government a virtually nonexistent one in combating poverty.”)
200 I have explored the origins and evolution of Social Security and retirement entitlements in more detail in an earlier article, from which much of the discussion here is drawn. See Patricia E. Dilley, The Evolution of Entitlement, 30 Loy. L.A. L. Rev. 1063, 1085–39 (1997).
201 See id.
202 See id. at 1095–96; see also John P. Resch, Federal Welfare for Revolutionary War Veterans, 56 Soc. Serv. Rev. 171, 172 (1982).
203 See Dilley, supra note 200, at 1095–96.
204 See Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States 102–151 (1992). Skocpol states that “[b]etween 1880 and 1910, the U.S. federal government devoted over a quarter of its expenditures to pensions distributed among the populace. . . . By 1910, about 28% of all American men aged 65 or more, more than half a million of them, received federal benefits averaging $189 a year.” Id. at 65.
205 See id. at 132.
206 See Brian Gratton, The Creation of Retirement: Families, Individuals, & the Social Security Movement, in Societal Impact on Aging: Historical Perspectives 63–68 (K. Warner Schaie & W. Andrew Achenbaum eds., 1993); see also Dilley, supra note 200, at 1102–1106 (discussing industrialization and beginnings of voluntary retirement).
207 If Civil War soldiers were 18 to 30 when they entered service in 1861, their children would have been born primarily between 1855 and 1890, so that when the Great Depression hit in 1929, those children would have been middle-aged to elderly adults themselves.
208 See, e.g., Solomon & Barrow, supra note 7, at 10.
209 See generally Haber & Gratton, supra note 16; David Hackett Fischer, Growing Old in America (1978).
210 See W. Andrew Achenbaum, Social Security: Visions and Revisions 105 (1986).
211 See id.
212 See James A. Wooten, The ‘Original Intent’ Of The Federal Tax Treatment Of Private Pension Plans, 85 Tax Notes 1305, 1307–08 (1999).
213 See Dan M. McGill, Fundamentals of Private Pensions 16–17 (3d ed. 1975); see also William C. Greenough & Francis P. King, Pension Plans and Public Policy 27–30 (1976). Most discussions of the extent of private pensions in this period draw on Murray Latimer’s extensive contemporaneous survey of private pension plans, in which he estimated that about 400 industrial pension plans were established between 1875 and 1929 by companies employing less than 10% of the total labor force. Less than half of those employees would have ever qualified for benefits under those plans. See Murray W. Latimer, Industrial Pension Systems in the United States and Canada 42–48 (1932).
214 See Ann Orloff, The Politics of Pensions: A Comparative Analysis of Britain, Canada and the United States 1880–1940, at 278–79 (1993).
215 See Greenough & King, supra note 213, at 38. According to James Wooten:
In the second and third decades of the twentieth century, it became clear that the pay-as-you-go approach was no way to manage pension costs. In the 1910s, a number of public employers encountered cash shortages when the costs of their plans rapidly increased out of all proportion to expectations. The same problem hit many private firms in the 1920s. By 1915 this pattern of escalating costs produced financial difficulties and reorganizations of teacher pension plans in a number of cities and states. In the same year, the U.S. Steel pension plan amended its age and service requirements in the face of rising costs. . . . Another plan based on Carnegie’s largesse, that of the Carnegie Foundation for the Advancement of Teaching, reorganized several years later for similar reasons. These events and others like the much publicized failure of the pension plan of Morris & Co. in the mid 1920s gave credence to the warnings of the first generation of American pension specialists that pensions would be secure only if employers funded these obligations in advance.
Wooten, supra note 212, at 1307–08.
216 See Jill Quadagno, The Transformation of Old Age Security: Class and Politics in the American Welfare State 78–79 (1988); see also Dilley, supra note 200, at 1115–19.
217 “In terms of its impact on economic performance, the depression was a disaster without equal in the twentieth century. The contraction phase of the depression, extending from August 1929 to March 1933, saw the most severe decline in key economic aggregates in the annals of U.S. business cycle history. Real GNP fell by more than one-third, as did the price level. Industrial production declined by more than 50%. Unemployment rose to 25 percent by 1933.” Introduction to The defining moment: The Great Depression and the American Economy in the Twentieth Century (Michael D. Bordo et al. eds., 1998)[hereinafter Defining Moment].
218 See Colin Gordon, New Deals: Business, Labor, and Politics in America, 1920–1935, at 160 (1994) [hereinafter Gordon, New Deals]; see also Haber & Gratton, supra note 16, at 42.
219 See Gordon, New Deals, supra note 218, at 160.
220 For an extended analysis of the cooperation between business interests and New Deal reformers in developing both Social Security and private pensions, see generally Gordon, New Deals, supra note 218.
221 Among the numerous accounts of the enactment of Social Security are the following: J. Douglas Brown, supra note 125; Orloff, supra note 214; Quadagno, supra note 216; and Graebner, supra note 16. For a general recent history of the New Deal era, see generally David M. Kennedy, Freedom From Fear: The American People in Depression and War, 1929–1945 (1999).
222 See Wilbur J. Cohen, The Development of the Social Security Act of 1935: Reflections Some Fifty Years Later, 68 Minn. L. Rev. 379, 406, 408 (1983); see also Brown, supra note 125, at 44–56.
223 See CES Report, supra note 81, at 45.
224 See Cohen, supra note 222, at 388, 407.
225 See Dilley, supra note 200, at 1123–24, 1128.
226 See Orloff, supra note 214, at 290–92.
227 See CES Report, supra note 81, at 25 (“Men who reach 65 still have on the average 11 or 12 years of life before them; women 15 years”).
228 See Gordon, New Deals, supra note 218, at 248.
229 See Kennedy, supra note 221, at 257.
230 See CES Report, supra note 81, at 5 (“The satisfactory way of providing for the old age of those now young is a contributory system of old-age annuities”).
231 See Orloff, supra note 214, at 290 (“Roosevelt and Witte, reacting to a policy inheritance which dramatized the dangers of politically motivated expansion of benefits, were determined to keep the federal government out of the business of giving direct grants to citizens and never wavered from a commitment to contributory features for whatever permanent old age program was settled on.”).
232 Frances Perkins, The Roosevelt I Knew 281 (1946).
233 See Kennedy, supra note 221, at 266.
234 According to William Simon:
Perhaps the central substantive theme of liberal welfare discourse is the analogy of welfare benefits to traditional private law norms associated with contract and property. The private law analogy is in turn linked to an ideal of individual independence and self-sufficiency and to an ambition to immunize distributive arrangements from collective reassessment and revision. On a practical level, it is linked to an aversion to direct or explicit redistribution, and especially to need-based or means-tested redistribution.
See Simon, supra note 180, at 1432.
235 See id.
236 See infra notes 255–266.
237 Historians have chronicled several factors contributing to the lack of public support and respect for welfare programs aimed at the poor. Clearly racism was one factor as the African-American migration to northern cities, which accelerated in pace in the post-war period, changed the public (if not the real) face of welfare clientele in the 1960s. See Nicholas Lemann, The Promised Land: The Great Black Migration and How It Changed America 194 (1992); see also Jacqueline Jones, The Dispossessed: America’s Underclasses from the Civil War to the Present 272–73 (1992).
238 Perkins, supra note 232, at 283.
239 See Simon, supra note 180, at 1451 (“The dominant influence on the [Social Security] Act was Roosevelt, and the dominant influence on Roosevelt was a commitment to private law analogies and a concomitant distaste for public assistance. . . . Roosevelt consistently sought to minimize federal involvement in public assistance and to extirpate any resemblance to public assistance from the social insurance programs.”).
240 Simon is particularly harsh in his assessment of the rights-based rhetoric of Social Security in contrast to the implicit unworthiness attributed to recipients of public assistance—”the dole,” in Roosevelt’s terms. See id. at 1449–53. For an extended discussion of the stigma attached to welfare but not to Social Security benefits, see generally Gordon, Pitied Not Entitled, supra note 182.
241 See e.g., Lynn A. Baker, The Prices of Rights: Toward a Positive Theory of Unconstitutional Conditions, 75 Cornell L. Rev. 1185, 1186 n.2 (1990). Baker states:
By “public assistance” I mean all government-provided “necessities of life,” whether in the form of a cash grant or in-kind aid. Such benefits include food stamps, medical care, and cash grants to those unable for various reasons to earn a subsistence income. I mean, therefore, to include not only “welfare,” but also non-need-based income maintenance insurance schemes such as Unemployment Compensation and Social Security, which provide cash grants to the unemployed, some of whom might have savings and other assets sufficient to provide them a subsistence income even in the absence of paid employment.
242 See generally Reich, New Property, supra note 26.
243 See Reich, Symposium, supra note 180, at 818–19.
244 See id.
245 See id.
246 For an extended description and critique of The New Property’s due process legacy, see Simon, supra note 180, at 1459–78.
247 The principal victories were Shapiro v. Thompson, 394 U.S. 618 (1969) (holding that statutory denial of welfare benefits to applicants residing in the state for less than a year creates an impermissible classification violating equal protection principles), and more prominently, Goldberg v. Kelly, 397 U.S. 254 (1970) (holding that due process requires a fair hearing prior to termination of welfare benefits which are based on statutory entitlement for qualified recipients). The watershed case reversing the trend since Goldberg was Mathews v. Eldridge, 424 U.S. 319 (1976), in which the Court held that due process does not require an evidentiary hearing prior to the termination of disability benefits. See also Peter Edelman, Responding to the Wake-Up Call: A New Agenda for Poverty Lawyers, 24 N.Y.U. Rev. L. & Soc. Change 547, 547 (1998). Edelman states:
Four facts frame the world as seen by advocates for the poor in 1999. One, the Constitution is not our friend. If thinking about the rights of the poor means thinking about any constitutional rights the poor have as a particular consequence of their poverty, the short answer is, they do not have any. The Supreme Court saw to that in a series of cases in the early 1970s. . . . Now we know that the Constitution provides no recourse for people who would invoke it to seek a judicial response to their need for income, health, housing, education, or any other element of survival.
Edelman, supra, at 547.
248 The Presidential campaigns of 1980 through 1992 all featured attacks on welfare “fraud and abuse,” implications that the majority of welfare recipients were having children purposely to increase welfare payments, and the like.
249 See Edelman, supra note 247, at 550–51. Here Edelman states:
Although Congress is no longer interested in waging a war on poverty, Congress is far from irrelevant today, as there are still major opportunities to pursue and dangers to avoid in Congress. While Congress and the President cursed the poor with the Act of 1996, they enacted major child health insurance legislation in 1997. But more than at any time since the 1930s, legislative and other governmental action affecting the poor is also occurring in state capitals and locally. The 1996 federal welfare law devolved a vast array of decisions to the states; many states, in turn, left a wide range of decisions to the counties.
Id.
250 See generally Gordon, Pitied Not Entitled, supra note 182.
251 See 363 U.S. 603, 610–11 (1960).
252 See id. at 605, 610–11.
253 Simon, supra note 180, at 1486 n.179.
254 See Reich, New Property, supra note 26, at 817.
255 See Amar, supra note 188.
256 See Ackerman & Alstott, supra note 189.
257 Amar bases his notion of economic independence as a necessity for full citizenship on what he describes as the “R/republican tradition” in American law: “[A] minimal entitlement to property is so important, so constitutive, and so essential for both individual and collective self-governance that to provide each citizen with that minimal amount of property, the government may legitimately redistribute property from other citizens who have far more than their minimal share.” Amar, supra note 188, at 37–38. Amar suggests the Civil War and the abolition of slavery in the Thirteenth Amendment had to provide a mechanism to achieve an alternate, inclusive economic democracy:
The solution to the problem . . . provides people with inalienable property rights in their own persons. Moreover, I suggest, it is a vision that, especially under section two of the Thirteenth Amendment, provides for forty acres and a mule. It is a vision that provides a right to sustenance and shelter: minimum sustenance, minimum shelter. . . . [T]he new economic rights under the Reconstruction Amendments are redistributive, at least in part.
Id. at 39–40.
Amar deliberately invoked the imagery of Jefferson as well as of Thaddeus Stevens to provoke thought about the fundamental connection between independent, autonomous citizenship and economic rights. In addition, he envisions his economic citizenship to include rights to adequate public education, and access to employment and job training. See id. at 42.
258 The principal ill Alstott and Ackerman seek to cure with their stakeholder proposal is the rising inequality of income in American society: “Trickle-down economics has utterly failed and will continue to fail in the globalizing economy of the future. The past is prologue: By 1995, the top 1% owned 38.5% of the nation’s disposable wealth, up from 33.8% in 1983.” Bruce Ackerman & Anne Alstott, Isaac Marks Memorial Lecture: Your Stake In America, 41 Ariz. L. Rev. 249, 250 (1999). Ackerman and Alstott propose a new starkly redistributive public entitlement based on the theory of an economic birthright:
The basic proposal is straightforward. As young Americans rise to maturity, they should claim a stake of $80,000 as part of their birthright as citizens. . . . Stakeholders are free. They may use their money for any purpose they see fit: to start a business or pay for higher education, to buy a house or raise a family or save for the future. But they must take responsibility for their choices. . . . We do not deny the need for a “social safety net” for Americans who make particularly bad choices, but this is not our primary focus. We are concerned with providing a fair opportunity for success for all Americans, and not only those lucky enough to be born to parents of the symbol-using classes.
Id. at 250, 251, 254.
259 See supra notes 257–258.
260 See supra notes 257–258.
261 See supra note 257.
262 See supra note 257.
263 See Orloff, supra note 214, at 290. Orloff states:
A vivid example of [Roosevelt’s distaste for welfare and commitment to earnings based entitlement] came when Harry Hopkins. . . . eloquently argued for noncontributory old age and unemployment benefits as a matter of right for citizens. FDR saw this as being ‘the very thing he had been saying he was against for years—the dole’ and vetoed all such proposals. . . . Roosevelt, Perkin, and Witte preferred to develop what they saw as the only reasonable and fiscally sound long-term solution to the problem of old age dependency: a contributory program of old-age benefits, to be firmly distinguished from noncontributory social assistance.
Id.
264 See generally Shiller, supra note 147.
265 See Ackerman & Alstott, supra note 189, at 255–256.
266 See id. at 254. But see Shiller, supra note 147, at 203–233.
267 See supra notes 236–263 and accompanying text.
268 See Feldstein, Reform, supra note 7, at 5.
269 See, e.g., Solomon & Barrow, supra note 7, at 14.
270 See supra notes 199–220 and accompanying text.
271 See supra notes 199–220 and accompanying text.
272 See supra notes 199–220 and accompanying text.
273 For example, according to Locke’s labor theory of property rights, it would be the act of performing labor by picking and gathering apples that would make them one’s property. See John Locke, The Second Treatise of Government § 27 (J.W. Gough ed., 1976). In his Second Treatise, Locke stated:
“Though the earth, and all inferior creatures be common to all men, yet every man has a property in his own person; This nobody has any right to but himself. The labor of his body, and the work of his hands we may say are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in he hath mixed his labor with, and joined it to something that is his own, and thereby makes it his property.”
Id.
274 For a discussion of these varying offspring of Lockean property theory, see Ian Shapiro, Resources, Capacities, and Ownership: The Workmanship Ideal and Distributive Justice, in Early Modern Conceptions of Property 27–35 (John Brewer & Susan Staves eds., 1996).
275 See generally Leon Litwack, Been in the Storm So Long: The Aftermath of Slavery (1979); C. Vann Woodward, Reunion & Reaction: The Compromise of 1877 and the End of Reconstruction (2d ed. 1966).
276 See Haber & Gratton, supra note 16, at 117–122.
277 See, e.g., Howell V. Williams, Benjamin Franklin and the Poor Laws, 18 Soc. Serv. Rev. 77, 77 (1994). Benjamin Franklin’s attitude toward poor relief was revealed in a 1773 letter: “‘I have sometimes doubted whether the laws peculiar to England, which compel the rich to maintain the poor, have not given the latter a dependence, that very much lessens the care of providing against the wants of old age.’” Id.
278 See Edelman, supra note 247, at 550–51.
279 See supra notes 199–220 and accompanying text.
280 See Orloff, supra note 214, at 284–87 (noting that popular pressure from old age assistance movements impelled enactment of Social Security); see also Brown, supra note 125, at 6 (“In the [Advisory] Council’s view, the old-age insurance system was not a special arrangement for a segment of the American people, but a means of affording adequate protection against hardship for all gainfully employed persons throughout the country.”).
281 See Edward D. Berkowitz & Kim McQuaid, Creating the Welfare State: The Political Economy of 20th Century Reform 200–01 (1922).
282 For a discussion of rights in service of a positive social objective, see generally Pildes, supra note 10.
283 See Dilley, supra note 200, at 1102–06.
284 One commentator has noted: “Today, you’re likely to get less help in retirement from your employer and from the cash-strapped Social Security system than your parents did. Therefore, you’ll be less likely to have 70% to 80% of your peak earnings at your disposal when you stop working full time.” Peter Keating, You Can Afford the Lifestyle You Want, Money, Oct. 1996, at 94, 96.
285 See S. 1103, 106th Cong. § 1 (1999); H.R. 3206, 106th Cong. § 1 (1999)(proposing legislation for privatizing or partially privatizing social security); H.R. 1793, 106th Cong. § 1 (1999); H.R. 874, 106th Cong. § 1 (1999).
286 See, e.g., Nickles, supra note 34, at 96.
287 See Joseph S. Piacentini & Jill Foley, Employee Benefit Research Institute, EBRI Databook On Employee Benefits 459 (2d ed. 1992).
288 See Steve Farrar, Today’s Babies Can Expect to Live to 130, London Sunday Times, Feb. 14, 1999; Nick Nuttall, Life Could Begin at 100 if Scientists Have Their Way, London Times, Aug. 30, 1993; Shankar Vedantam, Skip the Food and Sex and Live to Age of 170, Den. Post, June 30, 1996, at A36.
289 To some extent, housing may be an exception to this rule if the retired person has paid off a mortgage on a family home, but even in that case there are maintenance and property tax expenses that still have to be paid throughout retirement.
290 See Graebner, supra note 16, at 14.
291 See id. at 162–63 (“Workers were entitled to pensions after a long and useful life in industry.”).