"Social Security took seven years before anybody got the first check."
Jay Leno on Friday, November 8th, 2013 in a broadcast of the "Tonight Show"
Leno says Social Security took 7 years to issue its first check
Editor’s note: We originally published this fact-check at 12:30 p.m. Nov. 12, 2013, with a rating of Half True. Afterward, we received additional information from the Social Security Administration, which told us that Congress amended the original Social Security Act to begin dispensing monthly checks in 1940. As such, we are republishing this item with a rating of Mostly False.
NBC’s Tonight Show is usually a pundit-free zone.
But on Nov. 8, 2013, host Jay Leno entered the pundit world during a newsmaker interview with Texas Republican Sen. Ted Cruz.
As Cruz made his case against the Affordable Care Act, Leno pushed back a bit. Leno said it was too early to declare the entire program a failure.
"Social Security took seven years before anybody got the first check," Leno said. "It was seven years before anyone got anything."
That claim sent us to the history books to see if it was true, and even more important, to learn what explained the delay.
Social Security broke new legal ground
Just as with today’s Affordable Care Act, a big constitutional cloud hung over the Social Security Act. It became law on Aug. 14, 1935, but its future was murky until the U.S. Supreme Court declared it valid.
"When the federal government seeks to expand its influence in new areas, it must find some basis in the Constitution to justify its action," wrote historian Larry DeWitt with the Social Security Administration.
The rationale for doing what the government had never done before was rooted in the constitutional authority to collect taxes to "promote the general welfare." Congress bought that argument but whether the court would agree was very much in doubt.
The court did not rule for nearly two years. In the interim, the newly appointed Social Security managers were tackling an operational challenge that DeWitt calls unprecedented.
"The record keeping involved was on a scale never before attempted," DeWitt wrote. "By the time of the court's ruling in May 1937, more than 26 million Social Security numbers had been issued; around $150 million in taxes had been collected; a dozen or so benefit claims had already been paid, and there were about 150 local field offices in operation around the country."
We’ll say more about those early benefit claims in just a bit.
Unlike the Affordable Care Act, Social Security was set up as a standalone insurance program. (Today’s debate over whether it truly lives up to that is a separate question.) As an insurance program, it needed to build up reserves before it could start paying out benefits. Plus, because it tied benefits to earnings, there had to be time for workers to log enough pay to qualify for those monthly checks.
The original Social Security Act, in Section 202, said people would have to wait until Jan. 1, 1942, before they could start receiving monthly checks. That would be seven years after passage.
But Congress amended the Social Security Act in 1939 to move up the issuance of monthly checks, the Social Security Administration told PunditFact. The first monthly check was issued in 1940, the Social Security Administration told us.
That’s roughly five years, not seven.
The law had another wrinkle. The administration and Congress added a feature to do a little something for people who retired before then. For the years 1937 to 1939, one-time lump sum checks went out to retirees, or if they died, to their estates.
DeWitt says the very first beneficiary was an Ohio streetcar motorman named Ernest Ackerman.
"Ackerman worked one day under Social Security — Jan. 1, 1937. His wage for that day was $5. He dutifully paid his payroll tax of one nickel and he received a one-time check from Social Security for 17 cents."
In the few years of this temporary program, about 441,000 people got checks and the total payments were more than $25 million.
Leno said after Social Security passed, it was seven years before "anybody got the first check."
That’s what was intended, but Congress amended the law in 1939 to move up the issuance of monthly checks, the Social Security Administration told us. Moreover, people received lump sum checks in from 1937 to 1939. That interim effort involved a lot of people and a fair chunk of change.
There’s an element of truth to Leno’s claim, but not much more. We rate his statement Mostly False.