In an attempt to promote President Bush's plan to partially privatize Social Security, nationally syndicated radio host and former Reagan administration official William J. Bennett and FOX News managing editor and anchor Brit Hume falsely claimed that President Franklin Delano Roosevelt advocated replacing Social Security with private accounts. In fact, while Roosevelt advocated "voluntary contributory annuities" to supplement guaranteed Social Security benefits, he never proposed replacing those benefits with private accounts.
On the February 3 edition of FOX News' Hannity & Colmes, Bennett declared: "Franklin Delano Roosevelt, the guy who established Social Security, said that it would be good to have it replaced by private investment over time. Private investment would be the way to really carry this thing through."
Earlier that evening, on FOX News' Special Report with Brit Hume, Hume provided the alleged historical basis for Bennett's claim:
HUME: In a written statement to Congress in 1935, Roosevelt said that any Social Security plans should include, quote, "Voluntary contributory annuities, by which individual initiative can increase the annual amounts received in old age," adding that government funding, quote, "ought to ultimately be supplanted by self-supporting annuity plans."
But Roosevelt was not advocating that the present system of guaranteed Social Security benefits "ought to ultimately be supplanted by self-supporting annuity plans." Rather, he was proposing that both mandatory contributions and voluntary annuities would eventually eliminate the need for a different fund which was established to provide pension benefits to Americans who were already too old in 1935 to contribute payroll taxes to the Social Security system.
Roosevelt outlined the three major tenets he envisioned for Social Security in the January 17, 1935, speech that Hume quoted. As the Social Security Administration (SSA) has noted, these tenets are: 1) "non-contributory old-age pensions for those who are now too old to build up their own insurance"; 2) "compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations"; and 3) "voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age."
The second element, "compulsory contributory annuities," is the backbone of Social Security's current system of guaranteed retirement benefits, which are funded with payroll taxes that employees pay throughout their working years. But it was the first element, a retirement benefit fund for those who would never pay into the new system due to advanced age, that Roosevelt said would eventually be "supplanted" -- or made unnecessary -- by both voluntary annuities and compulsory contributions like those in the current system. In his January 17, 1935, speech, he noted: "It is proposed that the Federal Government assume one-half of the cost of the [non-contributory] old-age pension plan [the other half coming from the states], which ought ultimately to be supplanted by self-supporting annuity plans." As the SSA noted, "It was the President's view ... that ultimately the welfare pensions funded by the states with federal contributions would become unnecessary as the two programs of annuities would gradually come to obviate any need for such welfare type programs."
During 1935 congressional hearings on Roosevelt's Social Security bill, Edwin Witte, executive director of the Committee on Economic Security (CES), clearly stated that the voluntary accounts were intended as a "separate undertaking" meant to "supplement" the compulsory system, not replace it: "The voluntary system of old-age annuities we suggest as a supplement to the compulsory plan." Further, voluntary annuities would be "similar to those issued by commercial insurance companies" -- as Witte explained -- but they would differ from private accounts in that their funds would be deposited into and paid out of the Social Security trust fund, and they would provide a government-guaranteed benefit like mandatory contributions. Prominent contemporary Democrats support Roosevelt's idea of supplemental government-sponsored investment accounts that are paid for by non-Social Security funds, although unlike Roosevelt's plan, these accounts would not be linked to the trust fund.*
Former Social Security associate commissioner James Roosevelt Jr., Roosevelt's grandson, noted in a January 31 Boston Globe op-ed piece: "The implication that FDR would support privatization of America's greatest national program is an attempt to deceive the American people and an outrage."