Today, few features of the American policy landscape are as prominent and popular, or have proven as resilient over time, as the Social Security program. The largest single item of federal expenditure, Social Security routinely ranks among the state activities most valued by ordinary citizens (United States Office of Management and Budget 2008). Over the last thirty years, the retirement program has survived largely intact against assault by a highly mobilized and politically ascendant conservative movement, most recently withstanding President George W. Bush's 2005 push for partial privatization.

Such political success, however, could hardly have been predicted at the moment of Social Security's establishment. Two features of the scheme's original financial architecture suggested a particularly troubled political future. First, the program was to be financed solely via payroll contributions from insured workers and their employers. Among its consequences, reliance on payroll taxes made the program's financing highly regressive, concentrating the visible tax burden on those constituents who could least afford to pay (Leuchtenburg 1963; Leff 1983). Second, the program was established on a “funded” actuarial basis, much like a private insurance plan. As a funded scheme, Social Security would not use current payroll contributions to finance current social expenditures but save them to cover the cost of future outlays. While “funding” would result in lower long-term contribution rates, it required imposing a far higher payroll tax and paying far lower benefits for the scheme's first decades.