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Social Security in Three Graphs

For years, Social Security has been known as the ‘third rail’ of American politics: any legislator that touches it risks ending his political life. President Franklin D. Roosevelt designed it this way. Workers pay into the Social Security program via payroll taxes and, in return, expect the program to provide for them when they retire or if they become disabled.

As a result, voters are usually very wary of any changes to the Social Security program. This has protected Social Security from lawmakers who might have wanted to scuttle the program, but it has also made it difficult to reform. Unfortunately, Social Security’s current budgetary trajectory is unsustainable. If lawmakers want to preserve the Social Security program, they should act now to bolster its financial health.

This blog post will examine the Social Security program in three graphs. It will briefly discuss the program’s history, describe the program’s funding structure, and then examine the program’s financial health. Finally, this post will conclude that, given that Social Security’s costs will likely rise faster than its revenue for the foreseeable future, legislators must raise revenue, pare back benefits, or employ some combination of the two in order to meet its obligations to elderly and disabled Americans.

GRAPH 1

The first graph depicts how the number of workers covered by Social Security, and therefore the number of workers paying into the program, has changed from year to year. As you can see, Social Security grew rapidly in its early years, mainly due to Congress expanding the types of workers that the program covers.

When President Franklin D. Roosevelt signed the Social Security Act in 1935, it only covered commerce and industry workers under the age of 65. Congress and President Roosevelt marginally expanded coverage four years later by eliminating the age limit and adding covered workers’ families to the program, but it was not until the 1950s that the federal government began to expand the program in earnest. Presidents Harry S. Truman (in 1950) and Dwight D. Eisenhower (in 1954 and 1956) extended Social Security coverage to agricultural workers, the military and other uniformed services, and to certain state and local government officials (as long as the government in question opted into the program).

Also, in 1956, Eisenhower established Social Security Disability Insurance, which expanded the scope of the Social Security program to include providing benefits to disabled covered workers. Two years later, he extended these benefits to disabled workers’ dependents, as well.

You can see these large expansions clearly in this first graph. Subsequent presidents extended Social Security to other workers, such as to federal and non-profit employees, but the number of active workers paying into Social Security has, on average, grown at a slower rate since the 1950s. This is significant, as the number of workers paying into Social Security at any given time greatly affects the program’s financial viability.

To understand why, we’ll take a look at how the government funds Social Security. It does so in two main ways, through:

  • Tax revenue (roughly 88 percent of current Social Security receipts); and
  • Interest income (roughly 12 percent of current Social Security receipts).

Workers and employers pay the majority of these taxes (96 percent) through payroll taxes.[1] The remaining 4 percent of tax revenue comes from income taxes levied on retirees’ Social Security benefits. Any tax revenue that comes in above what the government needs to pay out to Social Security beneficiaries gets put into the ‘Social Security Trust Fund.’ The government uses this excess ‘Trust Fund’ revenue to buy special U.S. Treasury Bonds from itself and to accrue interest as a second source of revenue for the Social Security program. Additionally, the government can redeem these special bonds at any time, if the Social Security program needs more revenue.

For now, though, we’ll focus on tax revenues. Consider the fact that around 85 percent of Social Security’s total annual revenue comes from payroll taxes that covered workers and their employers pay. This makes Social Security’s finances sensitive to the number of covered workers in the system at any given time. More covered workers means more people paying into the system; less covered workers means fewer people paying in.

This is not necessarily a problem, as long as the money that covered workers and their employers pay into the system still covers retirees’ benefits, as it has for most of Social Security’s existence. However, consider what might happen if the number of retirees grows faster than the number of workers helping pay for their benefits. In this case, Social Security will end up taking in less money than it needs cover their costs because there will not be enough workers to support the number of retirees drawing down Social Security benefits.

The second graph, which shows year-over-year percentage change in the number of covered workers and beneficiaries, illustrates this exact scenario.

GRAPH 2

As we can see, the number of covered workers grew robustly from the 1960s through the 1980s, as the ‘baby boom’ generation started entering the workforce.[2] For much of this period, the numbers of workers and beneficiaries grew at roughly similar rates; at some points, the number of workers grew faster, at other points the number of beneficiaries did.

However, starting in the late 2000s, we see the growth rate of workers and beneficiaries diverge. The growth rate of beneficiaries rises and stays consistently higher than that of covered workers as the baby boom generation retires and the much smaller succeeding generations take their place in the workforce.

Another common way to understand this demographic shift is by thinking about the worker-to-beneficiary ratio. This measures how many covered workers there are in the Social Security system for each single beneficiary, and it can give us a rough idea of how many covered workers contribute to the costs of one beneficiary. Since the 1960s, this ratio has equaled three or four covered workers to for each individual Social Security beneficiary. Within a decade, this ratio is projected to decrease to two workers for every one beneficiary. With the growth of the retiree population outpacing that of the covered workers, Social Security’s financial health with continue to suffer.

The second graph also demonstrates the effect the economy has on Social Security’s financial health. As discussed, payroll taxes constitute the vast majority of Social Security funding. The more workers employed, the more payroll tax Social Security takes in; the higher workers’ wages, the higher Social Security’s revenue. During recessions, however, a fall in business activity can cause employers to lay off workers and withhold raises. When this happens, Social Security’s payroll tax revenue drops — although, unless Congress legislates otherwise, its payouts to beneficiaries remains constant.

The graph illustrates the relationship between Social Security receipts and the economy by showing that the number of covered workers slows or even shrinks (that is, the percentage change becomes negatives) when the economy enters a recession. At the same time, the number of beneficiaries often continues to rise (or even begins to rise at a faster rate). A slow economy and a difficult job market can push unemployed workers who may have otherwise stayed in the labor force for another few years into early retirements. When faced with slim job prospects, they retire and draw upon their Social Security benefits for income. The longer an economy remains sluggish, the stronger one would expect this effect to be.

If a worker is too young to retire, unemployment and slow economic growth can push her or him onto the Social Security Disability Insurance (SSDI) rolls, as well. Congress created SSDI to provide assistance to disabled workers, but tough economic times (and loosened SSDI eligibility criteria) can encourage healthy workers to apply after they have exhausted their unemployment benefits and become discouraged about their prospects of finding a job. A slow economy can also encourage injured workers who otherwise might have found a job that accommodated their medical needs to join the SSDI rolls too. This further increases the number of Social Security beneficiaries and decreases the number of covered workers.

Both demographic and economic forces collided during the Great Recession. The recession began in 2007 and turned into a full-blown financial crisis in 2008. The subsequent recovery has been especially sluggish. The second graph shows a large loss of covered workers during this period. It also shows that the number of beneficiaries grew faster than at any other time since the 1970s, in part because workers retired early and applied for disability. The year 2008 did not just feature the financial crisis, it also marked the first year baby boomers could seek early retirement — and faced with a dim economic outlook, many did just that.

This situation — slower growth in tax revenues and faster growth in benefit payouts — has begun to threaten Social Security’s financial health, as we can see in the third graph.

 GRAPH 3

Since 2010, Social Security has cost the government more than it takes in through tax revenues, forcing the government to rely on both tax revenues and interest income. Although interest income has helped cover the total program cost as tax revenues have dipped below required payouts, using interest income to cover the difference can only be, at best, a short-term solution to the long-term financial sustainability of the program.

If the government continues to operate Social Security in a way that ensures tax revenues are lower than the program’s costs, its corresponding interest income (which is generated from interest on U.S. Treasury bonds — which, in turn, comes from other taxes that the government levies) will continue to dwindle. With the current revenue structure unable to support the program’s costs, the government will be forced to cover the shortfall by cashing in the U.S. Treasury bonds it holds in the Social Security Trust Fund. Eventually, if revenues do not rebound, both the Trust Fund and the interest income it generates will run out and the government will be unable to cover all of its Social Security liabilities through annual program revenues alone.

As it stands, the Social Security Trustees Report projects that without significant changes, the Social Security Trust Fund could run out by 2033.[3]

This government has faced this situation before: the last time Social Security tax revenues fell below program costs was in 1983. In response, President Ronald Reagan and the Congress shored up Social Security’s finances by increasing the payroll tax rate, increasing the retirement age, and bringing more workers into the Social Security system, among other things.

As the third graph shows, Social Security’s financial trends were heading in the wrong direction in the early 1980s. The 1983 Social Security reform boosted the program’s revenue, which allowed it to both cover its annual expenses and bulk up the Social Security Trust Fund.[3] However, the late 2000s saw the Social Security program’s revenue fall, for reasons discussed earlier (the Great Recession and demographic shifts). Revenues have already begun to recover and grow again, but so have the program’s expenses. Social Security’s costs seem likely to continually outpace its revenues going forward, as the number of beneficiaries receiving payouts grows quicker than the number of covered workers paying into the system.

Unless the government acts to restore Social Security’s financial stability (or the economic and demographic situation improve drastically), the government may be unable to fully meet its Social Security obligations in the coming decades. The Social Security Trustees Report estimates that, over the long term, Social Security’s shortfall will be about 4 percent of future taxable payrolls, or 1.4 percent of GDP. Congress and the president will have to decide whether they want to cover this shortfall by raising taxes, cutting benefits, or employing some combination of the two. They will also have to decide whether they want to act now to shore up the program or continue to let its finances deteriorate.

President Roosevelt considered Social Security the crown jewel of his New Deal agenda and he expected it to become a lasting American institution. To that end, he recognized the important role payroll taxes play in sustaining the program, both financially and politically. By requiring workers to pay part of their paycheck into Social Security in return for promised future pension benefits, Roosevelt ensured the program’s survival. Workers would now expect that, after paying into Social Security for years, they would receive their pensions when they retired.

As Roosevelt said, “with those taxes in there, no damn politician can ever scrap my Social Security program.” The president shrewdly designed the Social Security program in a way that blocked future politicians from ending it through the legislative process — but not, it seems, from ending the program by doing absolutely nothing at all.

 

NOTES

[1] In 2011 and 2012, the federal government attempted to stimulate the economy through, among other things, a ‘payroll tax holiday‘ that temporarily cut the payroll tax rate workers pay by 2 percentage points (from 6.2 percent to 4.2 percent). In order to cover this temporary cut, Congress reimbursed the Social Security program through the general fund. After several extensions, the payroll tax holiday expired at the end of 2012.

[2] The ‘baby boom’ describes the high birth rate that the U.S. experienced in the immediate post-World War II period. Many Americans returned home from the warfront and began to start large families. The resulting rise in the U.S. birth rate can be seen in the graph below.

[3] Total bond holdings in the Social Security Trust Fund started to decrease in the 1970s and 1980s, when the program’s costs were greater than its tax revenues. The Trust Fund then rebounded after President Reagan and Congress reformed the Social Security program and raised its income in 1983. Today, Social Security faces a similar situation: Social Security’s tax revenues have fallen below its costs. Unless this situation changes, the Trust Fund may run out by 2033, as seen in the graph below.

 

FURTHER READING

2013 OASDI Trustees Report,” Social Security Administration, 2013.

Scott, Christine. “Social Security: What Would Happen If the Trust Funds Ran Out?” Congressional Research Service, 21 October 2013.

Nuschler, Dawn & Sidor, Gary. “Social Security: The Trust Fund.” Congressional Research Service, 4 June 2013.

Nuschler, Dawn. “Social Security Primer.” Congressional Research Service, 17 June 2013.

Report of the National Commission on Social Security Reform (Greenspan Commission).” Social Security Administration, January 1983.

The 2013 Long-Term Budget Outlook.” Congressional Budget Office, September 2013.

Meyerson, Noah & Dacey, Sheila. “How Does Social Security Work?” Congressional Budget Office, 19 September 2013.

Meyerson, Noah & Topoleski, Julie. “Medicare and Social Security Payroll Taxes and Benefits for People in Different Birth Cohorts.” Congressional Budget Office, 20 September 2013.

Morton, William R. “Social Security Disability Insurance (SSDI) Reform: An Overview of Proposals to Reduce the Growth in SSDI Rolls.” 29 April 2013.

Social Security Issue Briefs, U.S. Department of the Treasury.

The Social Security Act of 1935.” Social Security Administration.

Kollmann, Geoffrey. ”Social Security: Summary of Major Changes in the Cash Benefits Program.” Congressional Research Service, 18 May 2000.

 

 

The Pileggi Electoral College Plan and 1960

In 1962, after the successive failures of both his presidential and gubernatorial campaigns, a weary Richard Nixon bid the press goodbye:

But as I leave you, I want you to know: just think how much you’re going to be missing. You don’t have Nixon to kick around anymore.

Of course, if Pennsylvania Senate Majority Leader Dominic Pileggi had his way, Nixon might not have spoken those famous words. He would not have had to: if Senator Pileggi had been in charge, Nixon might have beaten John F. Kennedy and become president in 1960.

I am referring, of course, to Senator Pileggi’s ill-conceived Electoral College plan (next session’s version, last session’s plan was defeated). The idea is simple: divide all but two of a state’ Electoral College votes up and award them to the candidates according to the percentage of the popular vote that they won. The candidate that wins the state then gets the extra two votes.

Take the 2012 election, for instance. President Barack Obama won about 52 percent of the popular vote to Governor Mitt Romney’s 47 percent. This gives President Obama 12 electoral votes (10 electoral votes for the popular vote, plus 2 more for winning state-wide).

This would not have changed the outcome of the 2012 election. Indeed, changing Pennsylvania alone might not have altered the outcome of most American elections. But it would have had an effect. For instance, in 2000, President George W. Bush’s margin of victory would have been larger, even though he still would have lost the popular vote.

But to really demonstrate how Pileggi’s system would work, imagine that his plan was in effect in all 50 states. Under this scenario, John F. Kennedy stands a good chance of beating Nixon in the popular vote, but losing to him in the Electoral College.

According to my calculations, the Electoral College votes come in like this:

  • 264 for Kennedy
  • 267 for Nixon
  • 6 Unpledged Electors

Those unpledged electors would have come from the largely Democratic Louisiana and Mississippi. But these states were part of the Southern, conservative wing of the Democratic Party — a wing that was suspicious of Kennedy and that Nixon would successfully court years later. It only would have taken 3 of those 6 to make Nixon president.

Can we say with absolute certainty that Kennedy would have absolutely lost in 1960? No. But it is surely a possibility. And a reason to be wary of any claims that Pileggi’s proposal is somehow fairer than the current system.

FURTHER READING

1960 Presidential Election Results: Pileggi Plan (Excel), Diniverse Major Blog.

Co-Sponsorship Memo, Dominic Pileggi.

Pileggi to reintroduce plan to change Pennsylvania electoral-vote system,” Philadelphia Inquirer.

Corbett-Pileggi plan bad for democracy,” Michael J. Gaudini (Main Line Times). *(This article refers to last session’s Electoral College plan)

Beck Check: Coolidge and Harding

Glenn Beck spent a portion of his February 9 show discussing the presidencies of Warren G. Harding and Calvin Coolidge. I was interested in his talking points, so I decided to run some fact-checking. Here’s the results.

“Coolidge and Harding decreased the real per capita federal expenditures – the size of the government – from $170 per year in 1920 to $70 in 1924. These policies, along with fostering the mentality of self-reliance – the opposite of what the progressives had been preaching in the previous 20 years and the opposite of what progressives teach now. They’re not saying ‘be self-reliant’, they’re saying ‘too big to fail, you can’t make it without the government’s safety nets.’ Stand on your own two feet, America!”

This statement, like many Beck make, is a bit misleading. In the interest of time, we will limit our discussion to his comments regarding Harding, Coolidge, and their economic policies. Were they really the antithesis of the preceding years’ progressivism?

President Calvin Coolidge

We’ll start with the value of this statement ‘on its face’. Did Coolidge and Harding decrease the real per capita federal expenditures from $170 per year in 1920 to $70 in 1924? Yes and no.

Now, I’m not entirely sure what source Beck used, but one of my main sources in researching his claim was a Cato Institute publication by Randall Holcombe titled: “The Growth of the Federal Government in the 1920s.” The Cato Institute is a libertarian think-thank that describes its mission as “to increase the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace.“ I assumed that because of Cato’s reputation (UPenn gave it excellent rankings in its 2010 ranking of think-tanks, including a #2 spot in the area of Domestic Economic Policy) and its advocation of limited government (a position with which Mr. Beck would likely concur), that the research of the Cato Institute would be a fairly noncontroversial in fact-checking Beck.

First, let’s define “Real Per Capita Federal Expenditures.” Federal expenditure per capita is how much money the federal government is spending per person. That is, it is the total federal government spending divided by the population. When we define this as “Real,” it simply means we’re adjusting for inflation. Because of inflation, comparing the dollar amounts of one year to another is an unequal comparison. Thus, the amounts need to be converted in order to nullify the effects of inflation and see how much the amount really increased or decreased.

As the following chart from the Holcombe paper shows, total real per capita federal expenditures in 1920 was $390.98. In 1924, that total was $194.85.

Quite a decrease.

Much of this decrease had to do with World War I. Federal expenditures increase largely during wartime in order to fund the war, and then subside once the war is over, because the military is no longer in need of large funding to sustain the war effort. In order to try to account for this, there is a second column in the table above. This one tries to subtract defense expenditures from the total. This is where Beck, it appears, is getting his numbers. According to this table, the 1920 federal expenditures per capita, minus defense, were $170.15, and those in 1924 were $70.36. Again, a nice decrease.

It would seem, then, that Beck’s statement is somewhat true. Of course, he is discounting a large part of the federal budget, but (and this is purely conjecture based on what I have seen of Beck’s opinions), he may feel that this discounting is justified as national defense is a necessary expenditure, and he would possibly want to limit his discussion to the federal government’s expenditures of which he disapproves.

Either way you look at the numbers, however, there is a nice decrease in federal expenditures. So Beck seems justified either way.

Holcombe, though, contends that the table suggests “there are war-related expenditures in the government budget even after subtracting defense, veterans, and interest expenditures. This makes it apparent that one cannot accept nonwar expenditures as unrelated to the war.” Although the table attempts to extricate total expenditures from military spending, there is still at least somewhat of a relationship between the two.

But let us overlook this for a moment and continue on with Beck’s statement. Let us assume that Coolidge and Harding were largely responsible for the decrease in real per capita federal expenditures, and not the end of World War I (a large leap). Even if this were true, Coolidge and Harding still did not reach the pre-war levels of real per capita federal expenditures — levels that occurred during the Progressive Era. In 1916, before the war began, the total was $83.60, as compared to Coolidge and Harding’s $194.85 in 1924.

Also, Beck comments only on 1920 to 1924, which should seem odd considering the Harding-Coolidge years actually stretched to 1929. Beck fails to mention that real per capita federal expenditures minus defense (the numbers from the second column that he cites during his show) actually rose after 1924. In 1929, at the end of the Harding-Coolidge run, the total expenditures minus defense had risen to  $89.30. Not a large increase, but much bigger than the total minus defense for 1916, which was $22.75. The total expenditures until 1929 actually continued to decline until 1927, as the table shows, and then increased, reaching $195.41 in 1929.

Holcombe says that:

“From 1924 to 1929, before Depression-related expenditures would have found their way into the budget, nonmilitary expenditures increased by 27 percent, all during the Coolidge administration. If we take the decline in expenditures up through 1924 as a winding down of the war effort, there appears to be a considerable underlying growth in federal expenditures through the 1920s–growth worth examining more closely. What at first appears to be a relatively stable level of federal expenditures in the 1920s actually is substantial underlying growth, masked by a decline in war-related expenditures.”

Yet, Holcombe says, “It would be misleading to try to judge the growth of the federal government in the 1920s only by looking at aggregate expenditures.” With this, we go beyond Beck, who leaves the discussion simply at expenditures. Holcombe notes several areas in which the government grew under Coolidge and Harding –

  • the creation of government-owned corporations (which began prior to Coolidge and Harding, but did not stop during their terms)
  • the expansion of federal aid to states
  • expansion in the role of the post office and the salaries of its workers (“postal deficits in the 1920s were caused by the expansion of postal services and the provision of many services without charge or considerably below cost.”)
  • expanding the enforcement of prohibition (for instance, Coolidge created the Bureau of Prohibition)
  • aid to the agriculture industry (“Whether evaluated financially or with regard to programs, the 1920s saw considerable government growth in the agricultural industry, and laid the foundation for more federal involvement that was to follow in the New Deal.”)
  • antitrust action

Below is an excerpt regarding antitrust action during the Harding-Coolidge years:

Expenditures are the easiest measure of the size of government, but tell only a part of the story of government growth. Government regulation also has a substantial impact, but is harder to measure.[23] Starting with the Sherman Act in 1890, the federal government began its antitrust activity to try to limit the economic power of businesses. Only 22 cases were brought before 1905, but the pace started picking up later in that decade, which saw 39 cases brought between 1905 and 1909. From 1910 to 1919, a total of 134 cases were brought, showing increasing antitrust enforcement. But there was little slowdown in the 1920s, which saw a total of 125 cases. [24] As Thomas McCraw (1984: 145) notes, “By the 1920s antitrust had become a permanent part of American economic and political life.” One might anticipate, after an increase in cases, that firms would be more cautious in their activities to avoid antitrust cases being brought against them. But McCraw (1984: 146) further notes that in the 1920s a large proportion of antitrust cases were brought against firms that were not normally regarded as being highly concentrated. Antitrust enforcement in the 1920s was vigorous and increasingly broad in scope.

I highly suggest you read the entire Holcombe paper, but those are essentially the points in the paper that I found related to Beck’s statement. I was also surprised by how well Holcombe seems to sum up the refutation of Beck’s claims. I’ll let Holcombe’s words speak for themselves:

Normalcy, in the Harding-Coolidge sense, meant peace and prosperity, but it also meant a continuation of the principles of Progressivism, which enabled the Republican party to retain the support of its Progressive element. Despite the popular view of the 1920s as a retreat from Progressivism, by any measure government was more firmly entrenched as a part of the American economy in 1925 than in 1915, and was continuing to grow. Harding and Coolidge were viewed as pro-business, [10] and there may be a tendency to equate this pro-business sentiment as anti-Progressivism. [11] The advance of Progressivism may have been slower than before the war or during the New Deal, but a slower advance is not a retreat. [12]

Late economist Herbert Stein (Former Chairman of the Council of Economic Advisors under Presidents Nixon and Ford and a member of the board of contributors for the Wall Street Journal) also wrote of Coolidge’s economic policies in his excellent book “Presidential Economics: The Making of Economic Policy from Roosevelt to Clinton.” His conclusions regarding the Coolidge years (on page 28) also run contrary to Beck’s claims:

But if we use as a test of conservatism the degree of government intervention in the economy, the Coolidge administration was not conservative compared to its predecessors. Coolidge presided over a New Era, and the era was new not only in the height of the stock market; it was also new in the economic role of the government, and part of the confidence in the future of the American economy was so strong in the Coolidge days was confidence in the cooperative policy of government. When Coolidge said that the business of America is business he did not mean that the business of government is to leave business alone. He meant that it is the business of government to help business. That was even more positively the idea of his activist Secretary of Commerce, Herbert Hoover. Coolidge did not undo the interventionist measures of the Theodore Roosevelt and Woodrow Wilson regimes. At the end of his term the federal budget was larger than in the time of, say, William Howard Taft. He reduced income tax rates, but we still had an income tax, which we hadn’t fifteen years earlier. Perhaps most important, his term was a period of increasing acceptance of the responsibility of the Federal Reserve to help stabilize the economy.

The Coolidge and Harding years, it seems, were not the years of limited government and abandonment of progressivism that Beck says they were. He may have had a few numbers correct (though he failed to properly identify them), but his implications are not entirely borne out by the facts.

(Beck goes on to describe the “Roaring Twenties,” and describes them as “arguably the most prosperous 8 years this country has ever seen.” A discussion of Beck’s “Roaring Twenties” description and how that decade compares to other economic expansions in American history (post-WWII boom and the 80s/90s, for instance) is the topic for a blog entry found here.)


Who Built America, Mr. Buchanan?

Yesterday, Pat Buchanan talked about how America was “built, basically, by white folks.” He goes on to talk about how all the founding fathers were white and how white people fought in the wars, etc… Let’s do some fact-checking.

First of all, any talk that considers ‘white folks’ is problematic for the simple question of: how do you define ‘white’? For years, many ethnicities now commonly considered ‘white’ were ‘othered’. Take this excerpt from “Performing Whiteness: Naturalization Litigation and the Construction of Racial Identity in America“, written by John Tehranian and published in the Yale Law Journal:

In reality, however, many individuals of European descent were not readily integrated into mainstream American society. If anything, they found themselves caught on the dark side of the white/black binary. The Irish, for example, endured heavy prejudice in the United States,  and, for years, they were considered the blacks of Europe.  Similarly, Italians,  Greeks,  and Slavs  suffered from low social  [*826]  status,  and their racial status was a matter of great controversy that remained unresolved for years.

Furthermore, through an analysis of the racial-prerequisite cases after 1923, this study supports the view that race is a social construction.  Categories are situational.  They can alter over time. For example, the notion of white has undergone a significant transformation in the United States over the past two centuries. In the early years of the republic, white referred to those of Anglo-Saxon or Teutonic descent. Thus, the Irish and Italians were viewed as outside of the category. Over time, however, the Irish and Italians became a part of a broadened, more flexible definition of white. 

However, I doubt Mr. Buchanan had this in mind. So, I’ll simply assume for the purpose of this blog post, that ‘white’ is defined as having ancestors from Western Europe.

So then, this has been a country “built, basically, by white folks” because since ‘white folks’ ‘ first trip to the Americas, they have constituted a majority that has dominated minorities. Start with the Native Americans and move forward. The structure of society places power squarely into the hands of white people (which is not to say that there were not also poor white people — because there undoubtedly were, but Mr. Buchanan is not questioning whether white people built America, only the opposite). He then latches onto a few important American events, saying how these events featured only white people.

Yet, since these events all took place in periods in which white people still held absolute power in society, it should come as no surprise that white people were the participants in said events.

Of course “white men were 100% of the people that wrote the Constitution.” Do I really need to prove to you that allowing an African American slave or a Native American to take part in the drafting of the US Constitution would have been unthinkable at the time?

Of course white men were “100% of the people who signed the Declaration of Independence.” Again, would people of color even be invited to have any serious role in declaring independence from Britain? And, too, would they feel the same imperative British colonists felt to declare themselves independent from England?

Buchanan also claims that white people were “100% of the people who died in Gettysburg and Vicksburg.”

He’s close, but not correct. There were black soldiers who fought and were killed in both battles. In fact, in searching I even came across the picture of a memorial for black soldiers in Vicksburg –

Buchanan goes on the say that whites were “probably close to 100% of the people who died at Normandy.” Well, he’s right about this one. There were black soldiers at Normandy, but not too many. And why is that? Well, because “Most black soldiers never got a chance to fight.” You know, segregation and all.

So, its not like minority groups didn’t exist or were just too lazy to participate. Quite the opposite — they did exist and were excluded from participation.

However, let’s take this discussion beyond the examples Pat points out. What were some events that helped build America and its economy? Perhaps the railroads

And what a future. In 1830, railroads began popping up throughout the country. In December of that year, as Norfolk Southern employees will proudly tell you, America’s first scheduled railway service with a locomotive began on the South Carolina Railroad, serving the port of Charleston. It’s a myth that the South at that time was somehow “backward” in adopting new technology. Elsewhere–in upstate New York, Pennsylvania, New Jersey, and soon in other states throughout the East, Midwest, and South–railroads proliferated. In 1840, some 3,000 miles of iron routes carried trains. Most rail lines weren’t connected one with another. In 1850, there were 7,500 miles of track, with many interconnections. By 1860, about 30,000 miles of mostly interconnected routes formed a system.

Powerful economic incentives sparked and spread this explosive growth, in a chain reaction of national development. Economic historians have shown that, compared to roads and turnpikes, the new railroads cut overland time-in-transit for passengers and goods by two- to six-fold, while cutting cost-per-mile to shippers and travelers in real dollars by two- to four-fold. Compared to canals, the time was cut by a factor of eight to ten. As any hand-held business calculator today will reveal, such a combination of cost-and-time saving creates a dramatic leap in economic investment rates of return for manufacturers. The improved financial return rates are permanent, because the increased speed of economic flows is sustained thereafter. There had never before been this kind of economic leap in human history.

And while thousands of railroad employees went to work building the tracks and running the trains, railroad companies ordered huge and increasing amounts of rail, fuel, and construction supplies, which required thousands of other employees throughout American industry. The secondary impacts on the economy were without precedent. Whole ironworks were devoted to making rails, while trains consumed–and distributed–increasing proportions of the nation’s rapidly growing energy production.

Now take this description of the men who built the railroads:

After the Central Pacific (CP) started building the Transcontinental Railroad eastward from Sacramento, demand for Chinese workers increased greatly. The CP figured they needed 5,000 workers to build the railroad, but the most they ever had just using white workers was about 800. Most of these stayed only long enough for a free trip to the end of the track and then headed for the gold fields. The CP hired all the available Chinese workers and then sent agents to Canton province, Hong Kong, and Macao.

With an average height of 4’10″ and weight of 120 lbs., many doubted these men could handle 80 lb. ties and 560 lb. rail sections. But handle them they did, as well as most other construction jobs. So well in fact that by the time they joined the rails at Promontory Summit, Utah on May 10, 1869, more than 9 out of 10 CP workers, over 11,000 in all where Chinese.

Much of the work they did has become legend. Driving through California’s Sierra Nevada Mountains, they were faced with solid granite outcroppings. After the CP’s imported Cornish miners gave up, the Chinese with pick, shovel and black powder progressed at the rate of 8 inches a day. And this was working 24 hours a day, 7 days a week, from both ends and both ways from a shaft in the middle. The winters spent in the Sierras were some of the worst on record with over 40 feet of snow. Camps and men were swept away by avalanches and those that weren’t were buried in drifts. The Chinese had to dig tunnels from their huts to the work tunnels. Many didn’t see daylight for months.

At Cape Horn in the Sierras, they hung suspended in baskets 2,000 ft. above the American River below them and drilled and blasted a road bed for the railroad without losing a single life (lots of fingers and hands though). After hitting the Nevada desert they averaged more than a mile a day. But working in 120 heat and breathing alkali dust took its toll. Most were bleeding constantly from the lungs.

And then, of course, there’s the effect the African-American slave population had on the American economy.

African peoples were captured and transported to the Americas to work. Most European colonial economies in the Americas from the 16th through the 19th century were dependent on enslaved African labor for their survival.

According to European colonial officials, the abundant land they had “discovered” in the Americas was useless without sufficient labor to exploit it.

Each plantation economy was part of a larger national and international political economy. The cotton plantation economy, for instance, is generally seen as part of the regional economy of the American South. By the 1830s, “cotton was king” indeed in the South. It was also king in the United States, which was competing for economic leadership in the global political economy. Plantation-grown cotton was the foundation of the antebellum southern economy.

But the American financial and shipping industries were also dependent on slave-produced cotton. So was the British textile industry. Cotton was not shipped directly to Europe from the South. Rather, it was shipped to New York and then transshipped to England and other centers of cotton manufacturing in the United States and Europe.

In sum, the slavery system in the United States was a national system that touched the very core of its economic and political life.

The situation is much more complicated that Mr. Buchanan’s brief comment would suggest. America wasn’t simply built by one group of people. Did one particular group hold the reins during America’s more formative years? Yes, but that by no means validates Mr. Buchanan’s viewpoint — like I’ve said, it is not because white people wanted to actively build America while minorities looked on from the sideline; it is because white people were in control, they had the power. Again, please note that I am not saying all white people were rich wealthy leaders of the country, because there were poor white people as well. It is just that there were virtually no rich wealthy colored leaders.

Also, look at the numbers. White people made up the vast majority of the population. Even if you wholly ignore the essential elements of discrimination and segregation, there’s also the fact that due to their status as a majority, white people would naturally have a higher percentage of participation in things like the military.

America was built by many different people, and I would think that Americans would not try to downplay that diversity.