| My dissertation studies the political economy of three critical events in the expansion of Social Security: (1) The 1939 Social Security Amendments that dismantled the early attempt to build up the Social Security fund for future benefit payments. (2) The postwar expansion of Social Security that transformed Social Security into the largest federal program. (3) The 1983 Social Security Amendments that cut the benefits of all seniors for the first time since 1950. How were seniors able to win unilateral transfers from taxpayers in the first two events, even though they were a minority of voters? Why seniors were forced to accept a limited reduction in benefits in 1983? To find answers, I estimated the effect of the demographic and economic characteristics of congressional districts on the House votes on the eighteen key bills on Social Security from 1935 to 1983.; I found that the demand from the left, especially the popularity of the Townsend movement was behind the passage of the 1939 Amendments. The Townsend movement was supported by poor seniors asking more relief from the Great Depression. Their pressure forced the congressmen who voted against the Townsend bill to vote for the 1939 Social Security Amendments. This earlier political power of poor seniors, however, disappeared as the Great Depression faded away.; I found that the rapid expansion of Social Security from 1961 to 1977 was supported by a temporary coalition of middle-aged taxpayers and seniors. The support of the middle-aged was conditioned on the credibility of Social Security benefits, which was at its peak for most of this period because it was backed by expected future tax revenue. I supported this argument with a maximum likelihood estimation of a pooled ordered probit model and an estimation of a pooled probit model using a new Bayesian Gibbs Sampling algorithm. In both estimations, the regression coefficients were allowed to vary over time, and the change points were estimated jointly.; I found that seniors were not able to depend on the support of the middle-aged in 1983, because benefits were no longer credible. The double-digit inflation and recession made the benefit payments uncertain, and the Reagan administration remained hostile to nonmilitary spending. Without the support of middle-aged taxpayers, seniors had to concede some benefit cuts.; Two key findings of my dissertation are (1) the support of a coalition of seniors and middle-aged taxpayers was the primary cause of the postwar expansion of Social Security, not the special interest power of seniors. (2) The support of middle-aged taxpayers, however, depended on the credibility of future benefits. My findings imply that an excessive expansion of Social Security that can threaten the credibility of future benefits is politically infeasible. |
