Social Security

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In the United States, Social Security is a product of the Social Security Act and its amendments. Created in 1935 under the command of President Franklin D. Roosevelt, the act was passed as part of the New Deal. The act provided federal assistance for retirees and the unemployed, the elderly and those with disabilities[1]. The federal assistance was paid for through a payroll tax collected on citizen's paychecks.

Amount of benefits paid out through the Social Security Act[2]


History of Social Security

Social Security originated from English Laws called Poor laws brought to America by settlers. Social Security was created by President Franklin Roosevelt in 1935. It is the backbone of the United State’s social commitment, to provide citizens with a source of income who are deemed worthy. Social Security accounts for 20% of the federal budget in the US [3]. "The first colonial poor laws were fashioned after those of the Poor Law of 1601. They featured local taxation to support the destitute; they discriminated between the "worthy" and the "unworthy" poor; and all relief was a local responsibility." The term "Social Security" was first used in the U.S. by Abraham Epstein in connection with his group, the American Association for Social Security. Originally, the Social Security Act of 1935 was named the Economic Security Act, but this title was changed during Congressional consideration of the bill. Originally the 1935 law only paid retirement benefits to the primary household worker. In 1939, survivor benefits for the retiree's spouse and children were added. In 1956, disability benefits were added.[4]

Even though social security did not officially arive in America until 1935 there was a process that had been used before that was similiar to the up and coming social security called civil war pensions. "The Civil War Pension program began shortly after the start of the War, with the first legislation in 1862 providing for benefits linked to disabilities "incurred as a direct consequence of . . .military duty." Widows and orphans could receive pensions equal in amount to that which would have been payable to their deceased solider if he had been disabled. In 1890 the link with service-connected disability was broken, and any disabled Civil War veteran qualified for benefits. In 1906, old-age was made a sufficient qualification for benefits. So that by 1910, Civil War veterans and their survivors enjoyed a program of disability, survivors and old-age benefits similar in some ways to the later Social Security programs." [5]

Future of Social Security

As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.

Ratio of Taxpayers to Benefit Recipients

Ratioben.jpg [6]


  1. Social Security Act of 1935 "Legislative History 1935 Social Security Act". Retrieved November 8, 2006.
  5. "Historical Background and Development of Social Security." Social Security Online. Web. 24 Apr. 2012. <>.


The Future Financial Status of the Social Security Program." The United States Social Security Administration. Web. <>.

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