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The 1970’s as Policy Watershed

The 1970’s as Policy Watershed

By Edward D. Berkowitz, Ph.D., George Washington University, Washington, D.C.

(Prepared for the 2005 Meetings of the American Political Science Association)

In 1974, the expansive social policy system that had prevailed in the postwar era ended, and a more restrictive system that would characterize the rest of the seventies and the early eighties began to take its place. Although important programs, such as Social Security, continued to grow during the seventies, policymakers increasingly looked for ways to limit their growth. Still, the new system afforded many opportunities to nurture social welfare policies in ways that had a profound effect on America. The commitment to Social Security was largely “locked in” by an arrangement made in the expansive era that could not be broken in the restrictive era without great political cost. At the same time, institutions that were not as responsive to current economic conditions as were Congress or the president–such as the courts and the agencies that wrote regulations for civil rights laws– helped to fuel a continuing rights revolution in the face of economic adversity. In a sense, these institutions lagged behind more popularly elected entities in their perception of and response to social problems. After 1974 the causes of welfare reform and national health insurance suffered. Even as that happened, however, Congress passed civil rights and other laws that made symbolic statements or mandated private sector or local activities.

The Nature of the Postwar System

The typical arrangement of a successful postwar social welfare program involved an active federal bureaucracy that was perceived as competent by the general public, a sympathetic group of congressmen with the power to legislate on behalf of the entire Congress and often to appropriate money as well, and a well-organized and geographically dispersed advocacy group. Beyond exhibiting this familiar pattern, successful programs tended to win public acceptance because their supporters created a convincing rationale for the program that meshed with more general societal goals. Hence, the vocational rehabilitation program, created in 1920 but enjoying its greatest period of growth in the postwar era, offered social services to disabled individuals as a means of facilitating the employment of the handicapped. Proponents could argue that the program turned welfare recipients into tax payers and therefore the program represented a good investment of federal dollars. Bureaucrats even developed an argument that for every dollar spent, the program returned more than ten dollars in tax revenues. Furthermore, the program boasted a charismatic administrator named Mary Switzer, a career civil servant with a reputation for bureaucratic competence and a long institutional memory, who used her charm to cultivate good relations with influential congressmen such as Senator Lister Hill (D-Alabama) and Representative John Fogarty (D-Rhode Island). The trio of Hill, Fogarty, and Switzer remained in place for most of the fifties and sixties, and their power over the program was not affected by who was president or which party occupied the White House. Indeed, Switzer and her program did particularly well in gaining appropriations and new authorizing legislation during the Eisenhower administration. A strong political base, anchored by the vocational rehabilitation administrators in each of the fifty states and by the many educational and medical recipients of vocational rehabilitation grants, assured a continuing demand for the program’s expansion.

Other examples of successful postwar social welfare programs included the National Institutes of Health (NIH) and the Social Security program. The NIH enjoyed a situation similar to that of vocational rehabilitation. People regarded federal investment in medical research as an important contributor to the nation’s continuing economic growth. Fogarty and Hill, coached by NIH administrator James Shannon and encouraged by medical researchers and hospitals spread far and wide, made sure that the appropriations for the program increased and its bureaucratic reach, measured by such things as new institutes of health to cover particular diseases or parts of the body, expanded.

Social Security became the classic example of a successful postwar social welfare program. In 1979 Martha Derthick provided a particularly cogent portrait of this program that illustrated the reasons for its success. The program benefited from bureaucratic continuity that allowed program administrators to develop strong loyalty to the agency’s mission. Program administrators collaborated with the largely permanent membership of the Ways and Means and Finance Committees, even to the extent of writing the committees’ reports and making the committees’ estimates of the costs of legislation. The program itself played upon an ambiguity that made it equally congenial to conservatives– who saw it as a program, rewarding wage earners, in aid of the preservation of capitalism–and liberals who recognized it as the nation’s best way to expand the welfare state. An absence of political conflict was a tremendous aid to the program’s expansion. So was the fact that the program had a built-in source of funds through dedicated payroll taxes and was tied to the growth of the economy. As wages rose, the collection of Social Security taxes increased. Since Social Security actuaries made the conservative assumption of level wage growth (and since Congress and the Social Security Administration used the same actuary), surpluses nearly always developed in the fifties and sixties, and these surpluses were spent on program expansion. A historian might add that this expansive system did not take hold until 1950, but the pattern held firm between 1950 and 1972.

Nixon’s Approach to Social Policy

When Richard Nixon became president in 1969, little about the systems governing these programs changed. Although some of the program administrators, such as James Shannon of the NIH, reached retirement age, many of the administrators remained in place during Nixon’s first term. Robert Ball, the Commissioner of the Social Security Administration who exercised considerable influence over the program and maintained close relationships with key legislators such as House Ways and Means chairman Wilbur Mills, kept his job as Social Security Commissioner until 1973, even though it was a presidential appointment. Democrats continued to maintain a tight control over Congress.

Nixon took it for granted that he would need to make proposals for welfare reform, national health insurance, and the expansion of Social Security. He realized, however, that, whatever he did, Congress could outbid him. As a consequence, it would be hard for him to claim credit for any social welfare initiative, a situation that reinforced his natural tendency to concentrate on foreign, rather than domestic, affairs.

Despite the difficulties, Nixon made a series of novel proposals in the social welfare field. Since each of these proposals dealt with a specific problem, each was different. As a general proposition, though, the President put forward programs that minimized the discretion of political and professional groups whom the President perceived as disproportionately Democrat in their membership. For this professional or political discretion, the president proposed to substitute cash grants, rather than services controlled by social workers; automatic benefit levels, rather than benefits left to the discretion of Congress; and state, rather than federal, administration of programs. Many of the president’s proposals relied on economic incentives to induce socially acceptable behavior. A guaranteed annual income scheme would, for example, eliminate incentives for families to separate in order to claim welfare benefits, cut down on the arbitrary influence of social workers, and contain economic inducements, in the form of relatively low marginal tax rates, for people to work. The welfare constituency would change from single mothers, who were largely Democrats, to the working poor, who might be induced to join the Republican coalition. Health maintenance organizations, another concept promoted by the Nixon administration, substituted prospective health care reimbursement for retrospective reimbursement in an effort to create incentives for health care providers to reduce costs.

Social Security in the Nixon Administration

The Nixon administration did not neglect Social Security. The novel idea in that field involved automatic cost of living adjustments. Instead of waiting for Congress to pass a benefit increase, the elderly, disabled, and dependent on Social Security would be assured of benefits that were automatically adjusted to changes in the cost of living. In this manner Nixon hoped to take away the credit for Social Security benefit increases from Congress and claim some of the credit himself. In addition, he could argue, as many Republicans did, that the move would help to rationalize Social Security and replace the arbitrary system then in existence. Between 1958 and 1965, for example, Congress, preoccupied with the battle over Medicare, did not raise general Social Security benefits (although it liberalized the program in many other ways, such as creating early retirement benefits for men and benefits for the dependents of disabled workers). Such a hiatus, which punished elderly people who might well have died before 1965, would not be possible under the new system.

To obtain automatic cost of living adjustments, Nixon needed the approval of Wilbur Mills and the other Congressional leaders who had profited from the old system. Not surprisingly, Mills proved resistant to the idea, effectively blocking it in 1969 and 1970. It was becoming clear, however, that the measure had some bipartisan appeal, even if Mills opposed it. The situation was not unlike the period between 1961 and the end of 1964 in the case of Medicare. Mills blocked that program as long as he could and then, after the Democratic landslide of 1964, announced his approval of the program and played the lead role in shaping the final legislation. Something similar happened with cost of living adjustments. Robert Ball, the Commissioner of Social Security, sold Mills on a plan that permitted automatic cost of living adjustments but only if Congress failed to raise benefits in a discretionary manner. In other words, Congress would still have the freedom to pass a benefit increase on its own, but, if for some reason Congress did not take action and if prices rose high enough to trigger an automatic benefit increase, then the automatic benefit increase would take effect. With this proviso, Mills acquiesced to automatic cost of living adjustments and played the key role in their enactment.

Because of disagreements between the House and the Senate, largely over the matter of welfare reform, the process took until the summer of 1972 to resolve. In the end, Congress acquiesced to cost of living adjustments on Mills’s terms. As usual, the Democratic Congress outbid the Republicans on the level of Social Security benefits. Where Nixon hoped for a five percent increase, Mills and his colleagues legislated a twenty percent increase. To justify this large increase, the actuaries at Social Security changed their basic assumptions regarding future economic activity. In particular, they abandoned the notion that wages would remain steady in the future and instead factored a wage increase into their calculations. That produced a large surplus that Congress spent on the twenty percent increase. The President got his automatic cost of living adjustments but only at the expense of the twenty percent increase. As so often the case with Social Security, the true winners appeared to be Robert Ball and the bureaucrats in the Social Security Administration who, it could be argued, got exactly what they wanted.

President Nixon, a candidate for re-election in what would later become known as the Watergate election, signed the new bill into law at the beginning of July, 1972. Congress, which still needed to resolve the matter of welfare reform, continued to work on comprehensive social security legislation. In October Congress passed an omnibus law. The bill contained a significant expansion of Medicare to cover people with disabilities and those of any age with end stage renal disease requiring dialysis. Although the Nixon welfare reform proposals failed of passage, Congress did initiate an ambitious new federal program, known as Supplemental Security Income, that put a national minimum benefit standard in place for adult welfare beneficiaries (and, as it later worked out, many children as well) and allowed the federal government to take over the administration of previously state welfare programs in aid of the disabled, blind, and elderly. In this manner, the Nixon welfare reform initiative could not be dismissed as a simple failure. Instead it had legislative consequences in the form of Supplemental Security Income All in all, the two pieces of Social Security legislation in 1972 represented the apex of postwar social welfare legislation.

The Expansion of Social Security in 1973.

In 1973, as the Watergate scandal slowly engulfed the Nixon administration, the postwar system remained in place. To be sure the twenty percent benefit increase in 1972 and the shift in actuarial assumptions sapped some of the expansionary energy. Even the leaders of the Social Security Administration realized that a plateau had been reached with the 1972 legislation. “I just don’t see anything in the way of a near-term future of the kind of quantum jump we have just had in these recent amendments,” Robert Ball said at the time. On another occasion, he remarked that Social Security had reached “the level of considerable stability.” Still, the automatic benefits were not scheduled to take effect until January, 1975, and Congress decided to use its discretionary power to raise benefit levels in 1973.

As the year began, the New York Times reported that, “the United States is in the midst of a new economic boom that may prove to be unrivaled in scope, power, and influence by any previous expansion in history.” That rosy report lent support to the notion that the United States could afford its expanded Social Security program. In Congress, the tax committees set about their work, almost as if the twenty percent increase had not happened. In June, for example, the Senate Finance Committee voted a 5.5% increase in benefits that would become effective at the beginning of 1974. The rationale was that no benefit increases were scheduled until January, 1975 and, because of the high inflation rate, something needed to be done in the interim. Inflation, which would prove to be a major economic problem for the 1970’s, appeared to be advancing at a record pace. In May, the Consumer Price Index stood 5.5% above its level of the previous year. The House concurred in this analysis, and the Ways and Means Committee paved the way for a 5.6% increase that passed both houses at the end of June. The Nixon administration, which had hoped to contain the pressure for Social Security increases by acquiescing to the 1972 changes, worried about the effect of the new Social Security increases on the budget. The Ways and Means Committee made only a slight concession to the administration’s concerns, deciding to postpone the effective date of the increase to June 1974.

Congress felt justified in making these changes because the Social Security system, so far as the actuaries could tell, appeared to be relatively well financed. Each year the Board of Trustees of the Social Security trust funds made a report to Congress on the funds’ fiscal health. The report issued on July 16, 1973 showed a small imbalance, expressed in the technical language of Social Security as –0.32 percent of taxable payroll. The trustees reported that the inflation rate made it likely that the first cost of living adjustment, were it to go into effect, might be 7 percent, rather than 5 percent as had earlier been predicted. The main problem, according to the trustees, was the rising disability rate, the reasons for which the trustees admitted were “not entirely clear.” Disability, with its sensitivity to the employment rate, would become a major problem of the seventies. As early as 1974, the staff of the Ways and Means Committee reported that “Chronic actuarial deficiencies have developed in the Disability Insurance system over the past ten years.” Disability insurance became an often-cited example of a program that appeared to go out of control during the seventies.

Disability was, however, a relatively minor component of the Social Security system, and rising disability rates could not derail the movement for Social Security’s expansion. Not content with the benefit increase passed in June 1973, Congress reconsidered the matter at the end of the year, with the result that the President signed an eleven percent benefit increase at the beginning of 1974. This increase was to take effect in two stages. A seven percent benefit increase would show up in the April benefit checks and a four percent increase would take effect in July. With this new legislation, Congress quietly put aside the measure it had passed earlier in 1973. The only significant concession to those who favored a slower rate of Social Security growth came in the decision to postpone the first automatic cost of living adjustment increases until July, 1975. President Nixon, by now thoroughly embroiled in the Watergate scandal and in danger of losing his job, put a positive face on the developments. He praised the new bill as an “extremely important, far-reaching measure” and noted with pride that Social Security benefits had gone up 68.5% during his administration.

Changes in the Social Security Policy Structure

Even as these events were taking place, however, key changes were occurring in the Social Security program that, by 1975, would transform the program and end the postwar era of Social Security expansion. President Nixon would leave office in August, 1974, and the entire Watergate incident would strengthen Congress at the expense of the executive. As one significant example, Congress would create a Congressional Budget Office in 1974 that would give the Democrats an independent means of analyzing policy proposals and make them less dependent on the President’s Bureau of the Budget for information. In the Social Security field, the tight collaboration between the executive branch in the form of the Social Security Administration and the Congress in the form of the tax committees loosened. Early in 1973, as part of a second term purge of left-over officials from an earlier era, Robert Ball resigned as Social Security Commissioner and the agency’s reputation for administrative competence began an almost immediate decline. The implementation of the Supplemental Security Income program proved to be a particular public relations disaster for the SSA, as the change-over from state to federal administration of the adult welfare categories failed to go smoothly. None of Ball’s successors would enjoy anywhere near his long tenure in office.

An even more important factor in the transformation of Social Security’s policymaking structure concerned the departure of Wilbur Mills from a central position of authority. The story here concerned Mills’s personal decline and the more impersonal changes related to Congressional reform that took place in his committee. What got Mills into trouble was not so much his public performance as his private conduct. Before Watergate, a Congressman=s private life had, for the most part, remained private. Members of Congress used their colleagues to cover up instances of drunkenness or patches of senility that prevented them from doing their jobs. What one did after hours, particularly off in Washington away from the prying eyes of constituents, remained one=s own business. Watergate helped to change that situation. The press now saw uncovering such behavior as an important part of its mission, necessary for getting the story behind the story.

In Mills’s case, his problems began with a bad back that led to taking too many painkillers or maybe his problems resulted from a predisposition to alcoholism. By 1973 he was spending an increasing time away from Washington, under a doctor=s care. Hence, much of the business of the Ways and Means Committee, including the Social Security benefit increases of that year, occurred without him. Then his erratic behavior broke out into public view, one of the era=s moments that would remain in the public=s memory. One night in October, 1974, just two months after Ford came into office, Mills rode through Washington in his Lincoln Continental. His car was moving too fast and the headlights were off. As Mills passed through the parkland near the Jefferson Memorial at the two in the morning, the D.C. Park Police stopped his car. Out ran Annabel Battistella, an exotic dancer who performed under the name of AFanne Fox, the Argentine Firecracker.@ Then, with all of her clothes on, she jumped into the Tidal Basin. The police arrested her and an obviously drunk Mills as well. His arrest made national news and, in an election season, he found it necessary to issue a public apology with his wife standing by his side. He won his election, but it would turn out to be his last. At the end of November, he popped back up in the public spotlight. This time he walked on stage while Ms. Battistella was performing in a Boston night club. Once again visibly drunk in public, he proceeded to hold an impromptu news conference. Once again, the media splashed his picture across the nation.

Wilbur Mills appeared on the stage in Boston only a few weeks after an election in which voters decided to punish the Republicans for Watergate. In such circumstances and in the glare of publicity, Mills=s behavior could not be easily overlooked or excused as a manifestation of his illness. Someone who had been outed as a drunk might not be the best person to oversee the nation=s income tax code or its Social Security system. Almost immediately, therefore, the Democrats in Congress took steps to distance themselves from Mills. On the Monday after the weekend when the Boston incident occurred, they stripped Mills=s committee of its important power to make committee assignments for other Democrats. Ways and Means, in other words, would no longer act as a committee on committees. The next day Speaker Carl Albert (D-Oklahoma) confirmed the stunning news that Wilbur Mills would not seek re-election as chair of the Ways and Means Committee. With that statement, an era in Congressional history ended.

Beginning in 1975, Gerald Ford dealt with Al Ullman of Oregon as chair of Ways and Means. Ullman never enjoyed Mills’s power over legislation because between 1973 and 1975 Congress had changed the rules of the game.

Congressional reform was a popular liberal cause at the beginning of the seventies. The New York Times editorialized at the beginning of 1973 that power had to “responsible and accountable,” a common sentiment during the Watergate scandal. As part of this new accountability, the party leadership deserved more power and the committee chairmen , who, according to the Times served indefinitely regardless of their competence, less. The Times favored eight year term limits on committee chairs and the open election of committee chairmen by the party caucus. The paper also objected to the closed rule that allowed the Ways and Means Committee effectively to legislate on behalf of Congress. Ways and Means did its work in secrecy, shutting out ordinary members (and presumably the voice of the people) from tax legislation.

“Mills Panel Told to Bow to Reform” read the newspaper headline in December, 1974. The reforms included the end of legislation made in closed sessions, the creation of permanent subcommittees, the expansion of the committee membership, and inclusion of at least some junior members on the committee. One objective was to shed sunshine on the legislative process. Another was to diffuse the power of the chairman and make it more certain, as the Times put it, that “the younger, more progressive members who will be appointed to the committee for the next Congress will not be frozen out of key policy-making spots on the panel.”

The first Congressman to hold the position as head of the Social Security Sub-Committee of the Committee on Ways and Means was the relatively obscure James Burke (D-Massachusetts). When Robert Ball, now a private consultant, went to visit him early in 1975, he found him ill-informed on Social Security, hardly the equal of Mills.

The reformed Congress dealt with Social Security in chastened economic circumstances. In June 1974 the trustees announced that the program was “underfinanced in the long range with a negative balance of about 3 percent of taxable payroll.” The actuaries pointed to new demographic and economic factors that contributed to the problem. Looking at data from the 1970 census, they decided that their earlier estimates of fertility had been too optimistic, and it would be more rational to assume to assume a fertility rate of 2.1 babies per woman, rather than a range of 2.3 to 2.8 as had earlier been assumed. A slower rate of population growth meant a higher future percentage of aged people in the population and a heavier future burden for Social Security. The performance of the economy also continued to present a problem. Early in 1975, the Bureau of Labor Statistics reported that the consumer price index was 12.2% higher at the end of 1974 than at the beginning, the worst performance in that category since 1946. In 1974 reflecting the inflation and the economy’s sluggish performance—a deadly combination that came to be known as stagflation—real spendable earnings declined by 5.4%. The economic boom predicted in 1973 did not seem to be materializing, at just the time that the Social Security system was vulnerable to inflation (which raised benefit levels) and unemployment (which lowered tax collections). Not surprisingly, then, the actuaries noted in February, 1975 that “rising inflation and unemployment are throwing the Social Security retirement system into deficit years earlier than expected.” There was both a short-run and a long-run crisis. In the long run the system was under-funded. As early as 1976, system revenues might not be enough to cover system expenditures, with the result that the system would have to dip into its reserves. By the end of 1980, the reserves on hand would be dangerously low.

Support for the Social Security system remained high, but the system faced a new vulnerability. In May, 1975, President Ford received word from a top aide that “the reserve in the cash benefit funds will be impaired almost immediately and will be completely exhausted by the early 1980s.” The trustees report in May, 1975 showed even worse results than before, with the worsening economy the main culprit. In the middle of the seventies, then, the program experienced an unprecedented degree of criticism. As William Simon, Ford’s conservative Secretary of the Treasury noted, “Once beyond controversy, Social Security has come under persistent attack in the news media for its inequities, its financial uncertainties and its complexity. And economists have called attention to its negative effects on capital formation, employment, and economic activity generally. The common cause of these various problems lies largely in the benefit and contribution formulas prescribed by present law and in the weakness of the link between contributions and benefits.”

Social Security survived its vulnerable period between 1975 and 1983 because of the many beneficiaries invested in its survival but also because it contained built-in legislative protection. As a result of the 1972 amendments, benefit levels were protected against inflation, without Congress having to do anything. President Ford did try to limit the benefit increase in 1975 to five percent as an anti-inflationary measure but got nowhere with his proposal. Putting the burden of an unpopular action on the President when the Congress had the luxury of doing nothing forced the President into an impossible position. As a direct result of historical contingency and this prevailing political dynamic, benefit levels continued to go up with the inflation rate, which meant that they went up considerably in this period.

Constraining Social Security

To be sure, the system was disciplined during the Carter and Reagan years. Carter took steps to end what came to be considered the “technical” problem of double-indexing, which referred to the fact that initial benefits were based on average wages and a formula that was also adjusted for inflation. In effect, the benefits were “double-indexed” for inflation which produced what even Robert Ball conceded to be irrationally high replacement rates. With the problem considered a technical matter, a benefit cut could be made by changing the formula and “fixing” the double indexing problem. Even so, the adjustment left behind the messy problem of people born between 1910 and 1916 who received a windfall and created a sense of grievance in those born just after.

Another form of discipline was a loss of prestige for the Social Security Administration within the federal bureaucracy. The agency had always fancied itself an elite organization with a special sense of mission and a reputation for competence. The way in which the agency implemented the Medicare program served as a model for how the government could accomplish complex tasks effectively. By 1977 the agency’s reputation had declined to such a degree that Joseph Califano, President Carter’s Secretary of Health, Education, and Welfare, decided to remove the Medicare program from the agency and create a new agency that he called the Health Care Financing Administration. Neither Califano nor many of his colleagues had a high opinion of the SSA. Stanford Ross, who became SSA Commissioner in 1978, said he was stunned at “how elderly” the agency was. “There was a kind of stultifying atmosphere,” he said. Hale Champion, second in command at HEW, described SSA as “really rocky,” a “once great organization” filled with people who wanted “to stand around and light votive candles,” that was “over the hill.” Ross made a concerted effort to shake the agency up by reorganizing it and breaking up what he regarded as little fiefdoms of power.

By the end of the administration, Carter’s appointees were involved in a pitched battle with many of the key figures of the postwar apparatus, including Robert Ball, former HEW Secretary Wilbur Cohen, and former AFL-CIO lobbyist Nelson Cruikshank (who actually worked in the Carter White House but took his lead from Ball and Cohen) and even the much impaired Wilbur Mills, over a plan to cut disability benefits. In the end, working through the new subcommittee structure of the Ways and Means Committee, the administration succeeded in passing a version of the bill. It pruned back disability benefits through such features as putting a cap on family benefits and changing the way in which average wages (and hence initial benefits) were computed for people with disabilities.

Late in 1982 and early in 1983, the Reagan administration and the Democratic supporters of Social Security such as Senator Daniel Patrick Moynihan, Representative Claude Pepper, AFL-CIO chief Lane Kirkland and the ever attentive Robert Ball reached an agreement that settled the Social Security issue for the next decade. In return for the Republicans agreeing not to exploit the system’s long-term vulnerabilities, the Democrats agreed to what might be considered a real benefit cut, rather than the technical adjustments made in the late seventies and eighties. The cut consisted of a six month delay in a cost of living adjustment. The basic structure of the program remained in place.

Health Insurance

A more direct example of the effect of the new policy environment on social policy came in the field of health insurance. After 1972 Social Security insiders such as Robert Ball saw national health insurance as the next big thing in America’s welfare state. This issue had been a contentious one, almost from the time that it arose during the New Deal. Reformers thought that the government should bring the costs of health care within people=s financial reach by starting a national program of public health insurance. Members of the medical profession worried that the federal government=s entrance into the field would undermine their professional autonomy and lower the quality of care. The result was stalemate and the expansion of private, rather than public, health insurance. By 1964, however, a consensus had developed that the federal government should finance health care for the nation’s elderly.

With the passage of health insurance for the elderly, or Medicare, in 1965, many people assumed that a more comprehensive program would follow. In the optimistic Great Society environment, it appeared likely that Congress would expand Medicare to cover other age groups and bring national health insurance to the United States.

Things moved in an incremental manner in the period between 1965 and 1972. In 1968 an idea arose that Medicare should be expanded to cover prenatal and infant care. Such an idea had the virtue of consistency with other Great Society proposals that centered on education and investing in the country=s future. Bringing health security to expectant mothers and infants would cut down on infant mortality and developmental disabilities and would pay for itself in the form of reduced illness and increased productivity as the children headed toward adulthood. Philip Lee, a prominent health care official in the Johnson (and later the Clinton) administration, commented that he and many others believed that kiddie care, as it came to be known, would become the vehicle to move national health insurance forward. “We thought by 1975 there would be national health insurance,” he said.

Lee’s sentiments reflected a more general feeling that national health insurance was inevitable. Even President Nixon, wary of most Great Society programs and no defender of Medicare, felt obligated to offer his own health insurance proposal. Health, Education, and Welfare Secretary Elliot Richardson, the peripatetic member of Nixon=s cabinet, appeared before a Congressional committee in October 1971 and pronounced himself certain that the hearings would culminate in national health insurance. Richardson presented the Nixon administration=s idea of mandating coverage. Each employer would be required to provide a basic health insurance package to its employees. Provision would be made for the unemployed or others without permanent attachment to the labor force. Liberals, led by Senator Edward Kennedy, countered with a plan that contained more complete health care that was financed through federal funds. The legislative climate was such that even the Health Insurance Association of America, a trade association representing the interests of private health insurers, felt compelled to raise money from its members in order to present its own plan, which it prevailed upon Representative Omar Burleson (D-Texas) to introduce. The industry favored voluntary private health insurance but offered to make special provisions for those who lacked the means to pay for it.

The battle for national health insurance continued through the end of the Nixon administration. The effort culminated in 1974 with the appearance of four health insurance bills that ranged from Edward Kennedy’s liberal proposal to Nixon’s idea of mandating private coverage. An important new addition to the mix came from the unlikely pairing of liberal Senator Kennedy and conservative Representative Wilbur Mills. It featured benefits similar to the Nixon plan, including numerous expenses that a patient would have to bear himself, but financed by the federal government through a payroll tax. AI believe this proposal,@ Senator Kennedy said, Ais a major step toward guaranteeing good health care as a right–and can be built upon for future years.@

The press reacted as if the passage of national health insurance was only a matter of time. The Wall Street Journal reported that Aprospects for Congressional action this year@ had improved considerably. The Washington Post added that Ain recent weeks the prospects for national health insurance have brightened suddenly and unexpectedly.@ According to the New York Times, President Nixon, Vice President Ford, Senators Mansfield, Scott and Long and Representatives Albert, Rhodes, and Mills were all interested in passing legislation.

The labor movement, still a force on Capitol Hill, held the key to the success of the Kennedy-Mills bill and the health insurance cause more generally. If labor retreated from its strong support for the earlier (more liberal and more generous) Kennedy bill and accepted the Mills-Kennedy bill with the same enthusiasm, it would give the bill a strong liberal base of support. Conservatives might be persuaded to join in on the theory that the bill represented the best deal they could get. The Nixon administration, meanwhile, saw the movement on national health insurance as proof that it was not paralyzed by the Watergate scandal. Some Capitol Hill observers thought that the administration was eager to work something out. As the Times noted in May, President Nixon “may see in national health insurance a something-for-everyone issue that if passed would enhance his popularity.”

Labor and its liberal allies however, had to think in strategic political terms that caused them to speculate in political futures. Maybe the next Congress that would be elected in 1974 at a time when the Watergate scandal resonated with Americans would be more liberal than the sitting Congress and hence more willing to pass national health insurance along the lines that labor preferred. Maybe this next Congress would be veto proof and thus render the administration irrelevant. The Times hinted that liberals could be stalling in the hope that a “broader bill” would emerge in 1975. In August, 1974 Leonard F. Woodcock of the United Automobile Workers noted that it might be better to wait until the next year. Persuaded by this reasoning, the Executive Council of the AFL-CIO issued a negative report on the Kennedy-Mills bill bill. AWhile on balance Mills-Kennedy is an improvement over the Nixon bill,@ the Council stated, Ait falls short of meeting the needs of America.@ Clearly, organized labor wanted to wait.

As things turned out, the United States never came closer to enacting national health insurance. Although the Democrats did win the hoped-for victory in 1974, the new Congress that met in 1975 faced a balkanized committee structure that made gaining agreement on a complex matter like national health at a time of divided government that much more difficult. In addition, the economy deteriorated to the point where all ambitious social policy ventures were doubtful undertakings. Some sort of policy hinge point had been reached. It was a rational move in 1974 to hope for something better than the Kennedy Mills bill and wait for the national election. The Democrats ultimately lost the bet, despite their electoral success, because of circumstances that could not have been clearly foreseen in the crucial negotiating months over health insurance in the spring of 1974.

The Failure of Big Ticket Items

A similar dynamic applied to welfare reform. It was another big ticket item that the Carter administration pressed on Congress in 1977. But it was difficult to compromise the interests of those who saw welfare reform as a means toward bureaucratic efficiency and reduced costs and those who regarded welfare reform as a vital measure in aid of the poor and likely to increase social spending. The many social welfare programs involved in welfare reform, all of which had bureaucratic protectors in Congress, meant that, regardless of the costs, the matter of welfare reform was difficult to negotiate in a political sense, particularly when the subcommittee structure added another degree of protection to individual programs.

Big ticket items were more difficult to pass after 1974 than before, but that did not mean that nothing was passed. With more legislative windows open in the expanded Congressional system, more things got passed. Where before an unsympathetic word from Wilbur Mills might kill a proposal, the new system afforded more avenues of appeal. Individual policy entrepreneurs, who had always been prevalent in the Senate, had more room to operate. In 1974, for example, Congress passed the Child Abuse Prevention and Treatment Act. Issues such as the public response to the battered child syndrome continued to generate their share of legislation.

Disability Rights

The disability rights movement served as a case in point. In the expansionary postwar era, disability fell into a realm of public policy devoted to medicine, vocational guidance, and income maintenance. These strategies had the common characteristic of putting people with disabilities in the hands of professional caretakers or consigning them to a life of inactivity.

In the seventies, a feeling began to grow, first among the parents of children with disabilities, then among people who had once had polio, and finally among those with other disabilities, that a different response was required. These members of the disability community sought education, jobs, and other tangible benefits not as discretionary privileges to be granted by doctors, rehabilitation counselors, school administrators, or other gatekeepers but as fundamental rights. The rights strategy shifted the burden of adjustment from people with disabilities to society itself. In this distinctively seventies view, the deficits of people with disabilities mattered less than did the defects in the environment. Contrary to the post-war wisdom, people with disabilities did not need to be changed or simply maintained. Instead, the environment that surrounded them needed to be altered in order to accommodate them. Physical barriers, such as high curbs and steep steps, had to be removed; attitudinal barriers, such as prejudices on the part of employers who interpreted difference as inability, needed to be broken down.

The disability rights revolution, in common with the other civil rights movements of the post-war era, first took hold in the courts. In the late sixties and early seventies, lawyers, who worked in such settings as the Mental Health Law Project, advocated legal protections for people who lived in insane asylums or facilities for the mentally retarded. The crusading lawyers won favorable judicial rulings on such subjects as Aminimum constitutional standards for adequate treatment.@ In 1972, public interest lawyers and the parents of children with disabilities gained significant victories in the field of education for the handicapped. In the cases of Mills v. Board of Education and PARC v. Pennsylvania, the federal district courts held that disabled children had a right to a Afree and appropriate public education.@ With these rulings in hand, the advocates went to Congress and asked the legislators to put the wording of these decisions into statute law. In response, Congress passed the Education for all Handicapped Children Act of 1975 which ignored the fiscal stringencies of the era and President Ford=s desire not to create new entitlement programs and ordered school districts across the nation to provide a free appropriate education for all handicapped children.

Here was another example of how the post 1974 policy environment functioned. The law relied on advocates coming to Congress and asking Congress to enact judicial decisions into law. Congress “played back” a number of court decisions and elevated them to the status of law. The question of cost was finessed in part by mandating local activity rather than activating federal expenditures.

The most important of the disability rights laws extended Title VI of the Civil Rights Act of 1964 into new areas. In 1972 the re-authorization of the vocational rehabilitation program became enmeshed, for reasons unrelated to social welfare policy, in a political controversy between Nixon and the Congress. Nixon vetoed two different versions of the law before Congress came up with an acceptable alternative. Somewhere in the middle of this protracted battle, someone got the idea of using the legislation to extend the provisions of Title VI to people with disabilities. That suggestion sent an aide to Senator Jacob Javits (R-New York) scurrying out of the room to look for the wording to Title VI. In this manner, what became Section 504 was the Rehabilitation Act of 1973 was inserted into the bill. Unlike the later 1975 laws, no group of legal advocates or anyone else pushed to include this provision. Section 504 elicited almost no attention in Congressional hearings and Congressional committee reports. Those who followed the legislation were concerned about its various grants in aid to the states, universities, and hospitals. Section 504 was an afterthought, one that seemed in keeping with the still liberal spirit of the times.

After passage of the law and with the onslaught of the economic and political troubles that ushered in the seventies, the Republicans in the executive branch began to view Section 504 with alarm. They realized that its innocuous language–ANo otherwise qualified handicapped individual in the United States shall, solely by reason of his handicap, be excluded from participation in, be denied the benefits, or be subjected to discrimination under any program or activity conducted by an Executive agency@–masked its long reach. The new law meant that all hospitals, schools, colleges, urban transportation systems, and a host of other institutions would have to be accessible to people with disabilities. As a consequence, officials in the Department of Health, Education, and Welfare hesitated to put the law into operation. They stalled for the rest of the Ford administration, worried that it might cost as much as $26 billion to make facilities that received federal funds accessible to the handicapped.

During the life of the Ford administration, disability rights groups, such as the American Coalition of Citizens with Disabilities (ACCD) that had been created in 1975, education groups such as the American Council of Education, and groups representing particular interests of local governments such as the American Public Transit Association all became aware of the law and tried to influence the regulations. What was interesting that the battle took place not in the Congress but in the regulatory realms of the Department of Health, Education, and Welfare. Unlike their superiors, the lawyers who worked in the Office of Civil Rights entertained a general sense of sympathy toward the cause of civil rights. They considered the problems in writing the regulations to center on how effectively to transfer legal principles developed on behalf of blacks to people with disabilities. These regulators, who were certainly out of step with the Nixon and Ford administrations, were far less constrained by fiscal conditions than were people working at the Office of Management and Budget or the authorizing committees in Congress. Those outside of the Office of Civil Rights were better able to delay the implementation of the regulations than they were to influence their contents.

In the end, the regulations for Section 504 emerged as something of a partisan political issue that played itself out in presidential politics. Jimmy Carter, the Democratic challenger, pledged that he, unlike Republican incumbent Gerald Ford, was in favor of disability rights and would put Section 504 into effect. After Carter’s election, HEW Secretary Joseph Califano signed the regulations but only after protestors from the ACCD picketed in front of his house and in front of the San Francisco regional headquarters of his department.

One might dismiss this story as an example of symbolic politics that had little real effect on social policy. Yet the number of people with disabilities, depending on how one defined the concept, was, according to a 1978 estimate, on the order of 36 million or one person out of every six. If that were true, then people with disabilities were a larger minority group than either blacks or Hispanics, and their political independence made them a political prize worth courting. Changes in educational, transportation, or employment policy on their behalf had the potential to make a difference in many realms. Indeed, the physical design of America changed in the seventies. Curb cuts began to appear on the corners of city streets. Rest rooms acquired wider toilet stalls, urinals mounted lower on the walls, and faucet handles that could be pushed or pulled. Ramps appeared in public buildings. Subway systems no longer depended solely on stairs and escalators to move people in and out of stations. Elevators and public buses had audio devices that called out the stops to facilitate the use of public facilities by people with visual impairments. Automatic teller machines, which were just beginning to make their appearance during the seventies, acquired instructions written in braille. Theaters and ball parks contained sections with no seats for the convenience of patrons in wheelchairs. The relatively unheralded disability rights movement, therefore, succeeded in making major changes in the American built environment at a time when other social policy initiatives were stalled.


The 1970’s did mark a watershed in public policy. The key point of discontinuity, however, was not the start of the new decade but the conjunction of events that took place in 1973 and 1974. After the great divide in social policy that occurred in 1974, major policy initiatives often failed to be enacted and many social programs had difficulty maintaining their real level of spending in the inflationary economy. The programs that were exceptions to this rule were those with commitments “locked in” during the previous era or programs that benefited from the actions of the courts and regulatory agencies. Actions taken in 1972 in the case of Social Security and 1973 in the case of vocational rehabilitation produced “lagged” social consequences. Actions not taken in 1974, such as failing to enact the Kennedy-Mills, also produced important consequences. In all cases, the phenomenon of the seventies as a policy watershed exercised an important influence over the development of American social policy.

How to Cite this Article (APA Format): Berkowitz, E.D. (2011). The 1970’s as policy watershed. Social Welfare History Project. Retrieved from

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