Social Security Act (1935)

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Social Security Act (1935)

The United States suffered a major economic crisis between 1929 and 1941 called the Great Depression . Most families struggled to survive the difficult challenges of the time. Many lost their savings, their jobs, and their homes.

In 1932 the nation elected Franklin Delano Roosevelt (1882– 1945; served 1933–45) to be president. Supporters hoped he would guide the nation through changes for improving the economy. At Roosevelt's request Congress enacted many pieces of important legislation between 1933 and 1939, collectively referred to as Roosevelt's New Deal . One of these laws was the Social Security Act of 1935.

Initiation

By the 1930s much of western Europe had laws providing unemployment compensation for people who lost their jobs and financial assistance for the elderly. The United States lagged behind in such efforts, but there were a few citizens attempting to motivate Congress. President Roosevelt responded to citizens' initiatives by creating a special committee in 1934 to investigate the concept of social security.

The committee's recommendations became the foundation for the Social Security Act. The act provided unemployment insurance, aid to the poor, and pensions for the elderly. Rejecting warnings that the act would destroy individual responsibility and self-help, Congress passed it, and Roosevelt signed it into law on August 14, 1935.

The act's provisions

An important part of the Social Security Act was the pension plan that provided income to citizens over sixty-five. The size of the pension depended on funds raised through taxes that both employers and employees paid over the duration of employment. Originally the pension did not apply to those who could not contribute to the fund (nonworkers, for example), nor to family members of a deceased pensioner, nor to farmers and domestic laborers. In 1939 Congress amended the act to allow payments to be passed on to family members who survived a deceased pensioner.

The act also created funds for other assistance programs. Unemployment insurance provided income for people who lost their jobs. It was funded by taxes paid by employers and employees. Aid to Dependent Children (ADC) was designed to help single parents who could not adequately support their children. Amendments would broaden the aid of this program to poor, two-parent families and to their children as well. Finally the act created programs for assisting the blind, providing aid to those with other physical handicaps, and providing funds for rural health programs and vocational, or job, rehabilitation.

Legacy

The Social Security Act is now the largest, costliest, and some say most successful domestic program in the history of the United States. As the baby boom generation born after World War II (1939–45) reaches retirement, however, many are concerned that Social Security programs will not have enough money to meet growing demand. So far the government has managed to change the act to preserve its programs.

In 1950, there were sixteen workers paying into Social Security for every person drawing benefits. In 2007, there were just 3.3 workers for every person drawing benefits. By the time baby boomers retire in large numbers, that figure will drop to 2.1 workers. The system will have more recipients coming in than it can afford to pay out. The Government Accountability Office of Congress estimated that by the mid 2020s, the federal government will need to come up with more than $200 billion a year just to pay Social Security benefits. That number will eventually climb to $300 billion.