How social insurance became “welfare” and “entitlements” — and what we lost in that process

Social insurance programs are at the center of American politics. In fiscal terms, Medicare and the Social Security Administration’s programs for retirement, disability, worker’s compensation, and worker’s life insurance amount to roughly 41 percent of the federal budget. This fiscal centrality, however, does not rest on anything like a broader, public understanding of what makes social insurance social — and thus why such programs are so important in American political life. On the contrary, over the years our vocabulary of social insurance has become increasingly replaced with a vocabulary of welfare and redistribution, creating a fundamentally misleading impression about most of what the federal government does.

In the mid-1930s, when the retirement and survivors insurance programs had their legislative start, university-educated Americans had every reason to be clear about what distinguished social insurance from its commercial counterpart. Indeed, most undergraduate programs in the social sciences took up social insurance’s rationale and history. But note the data measuring the historical use of the expression in three of America’s most important daily newspapers. The changes recorded are startling. By the end of the 20th century, the category of social insurance had seemingly lost its place in the vocabulary of American politics.

This is particularly unsettling because of the enormous importance of social insurance programs in American history. The Great Depression, which wiped out the savings of most American families, caused multiple bank failures, and saw an unemployment rate of some 25 percent, prompted demands for substantially increased government protection against economic disaster. “Welfare” was the term used for programs that made poverty status the precondition for financial aid, and President Roosevelt acknowledged that immediate aid to poor families was required. But his case for increasing the footprint of American social policy was based on the principles of social insurance, not merely poor-relief narrowly construed.

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