Oasd
The larger and better known initiatives of the program are:
Federal Old-Age, Survivors, and Disability Insurance
Unemployment benefits
Temporary Assistance for Needy Families
Health Insurance for Aged and Disabled (Medicare)
Grants to States for Medical Assistance Programs (Medicaid)
State Children's Health Insurance Program (SCHIP)
Supplemental Security Income (SSI)
U.S. Social Security is a social insurance program funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA).
Tax deposits are formally entrusted to Federal Old-Age and Survivors Insurance Trust Fund, or Federal Disability Insurance Trust Fund, Federal Hospital Insurance Trust Fund or the Federal Supplementary Medical Insurance Trust Fund. The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance).
Roosevelt in 1935 as part of his New Deal, the term Social Security covered unemployment insurance as well. The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans.
Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.9% for social security and 20.4% for Medicare/Medicaid, compared to 20.1% for military expenditure. John Dingell (D-MI); unknown man in bowtie; the Secretary of Labor, Frances Perkins; Sen.
David Lewis (D-MD).
The Social Security Act was drafted by President Roosevelt's committee on economic security, under Edwin Witte, and passed by Congress as part of the New Deal. The act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children.
By passing this act, President Roosevelt became the first president to advocate the protection of the elderly.
Provisions of the Act
The Act is formally cited as the Social Security Act, ch. The Act provided benefits to retirees and the unemployed, and a lump-sum benefit at death.
Payments to current retirees were (and continue to be) financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer. The act also allocated money to states to provide assistance to aged individuals (Title I), for unemployment insurance (Titles III), Aid to Families with Dependent Children (Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).
Controversy
Social Security was controversial when originally proposed, with one point of opposition being that it would cause a loss of jobs.
However, proponents argued that there was in fact an advantage: it would encourage older workers to retire, thereby creating opportunities for younger people to find jobs, which would lower the unemployment rate. Historian Edward Berkowitz subsequently contended that the Act was a cause of the "Roosevelt Recession" in 1937 and 1938.
However, the program has gone on to be one of the most popular government programs in American history.
Most women and minorities were excluded from the benefits of unemployment insurance and old age pensions. Employment definitions reflected typical white male categories and patterns. Job categories that were not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers. The act also denied coverage to individuals who worked intermittently. These jobs were dominated by women and minorities.
For example, women made up 90% of domestic labor in 1940 and two-thirds of all employed black women were in domestic service. Exclusions exempted nearly half the working population. Nearly two-thirds of all African Americans in the labor force, 70 to 80% in some areas in the South, and just over half of all women employed were not covered by Social Security. At the time, the NAACP protested the Social Security Act, describing it as “a sieve with holes just big enough for the majority of Negroes to fall through.”
Some have suggested that this discrimination resulted from the powerful position of Southern Democrats on two of the committees pivotal for the Act’s creation, the Senate Finance Committee and the House Ways and Means Committee. The solution to this dilemma was to pass a bill that both included exclusions and granted authority to the states rather than the national government (such as the states' power in Aid to Dependent Children).
Others have argued that exclusions of job categories such as agriculture were frequently left out of new social security systems worldwide because of the administrative difficulties in covering these workers.
Social Security reinforced traditional views of family life. Women generally qualified for insurance only through their husband or their children. Mothers’ pensions (Title IV) based entitlements on the idea that mothers would be unemployed.
Historical discrimination in the system can also be seen with regard to Aid to Dependent Children. Since this money was allocated to the states to distribute, some localities assessed black families as needing less money than white families.
These low grant levels made it impossible for African American mothers to not work: one requirement of the program. Some states also excluded children born out of wedlock, an exclusion which affected African American women more than white women. One study determined that 14.4% of eligible white individuals received funding, but only 1.5% of eligible black individuals received these benefits.
Debates on the constitutionality of the Act
In the 1930s, the Supreme Court struck down many pieces of Roosevelt's New Deal legislation, including the Railroad Retirement Act. In May, the Court threw out a centerpiece of the New Deal, the National Industrial Recovery Act, the Agricultural Adjustment Act, and New York State's minimum-wage law.
President Roosevelt responded with an attempt to pack the court via the Judiciary Reorganization Bill of 1937. On February 5, 1937, he sent a special message to Congress proposing legislation granting the President new powers to add additional judges to all federal courts whenever there were sitting judges age 70 or older who refused to retire. The practical effect of this proposal was that the President would get to appoint six new Justices to the Supreme Court (and 44 judges to lower federal courts), thus instantly tipping the political balance on the Court dramatically in his favor.
Davis, 301 U.S, 548 (1937) held, in a 5–4 decision, that, given the exigencies of the Great Depression, " is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare". The arguments opposed to the Social Security Act (articulated by justices Butler, McReynolds, and Sutherland in their opinions) were that the social security act went beyond the powers that were granted to the federal government in the Constitution.
They argued that, by imposing a tax on employers that could be avoided only by contributing to a state unemployment-compensation fund, the federal government was essentially forcing each state to establish an unemployment-compensation fund that would meet its criteria, and that the federal government had no power to enact such a program.
Helvering v. 619 (1937), decided on the same day as Steward, upheld the program because "The proceeds of both taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way".
That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers.
Ida May Fuller, the first recipient
Implementation
Payroll taxes were first collected in 1937, also the year in which the first benefits were paid, namely the lump-sum death benefit paid to 53,236 beneficiaries.
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Brattleboro, Vermont.
Expansion and evolution
Further information: List of Social Security legislation (United States)
The provisions of Social Security have been changing since the 1930s, shifting in response to economic worries as well as concerns over changing gender roles and the position of minorities. Officials have responded more to the concerns of women than those of minority groups. Social Security gradually moved toward universal coverage.
These rose to $961 million in 1950, $11.2 billion in 1960, $31.9 billion in 1970, $120.5 billion in 1980, and $247.8 billion in 1990 (all figures in nominal dollars, not adjusted for inflation). The Recession of 1937 was blamed on the government, tied to the abrupt decrease in government spending and the $2 billion that had been collected in Social Security taxes. Benefits became available in 1940 instead of 1942 and changes to the benefit formula increased the amount of benefits available to all recipients in the early years of Social Security. These two policies combined to shrink the size of the reserves.
The original Act had conceived of the program as paying benefits out of a large reserve. The managing trustee of this fund is the Secretary of the Treasury.
The money could be invested in both non-marketable and marketable securities.
The move toward family protection
Calls for reform of Social Security emerged within a few years of the 1935 Act. Even as early as 1936, some believed that women were not getting enough support.
Worried that a lack of assistance might push women back into the work force, these individuals wanted Social Security changes that would prevent this. In an effort to protect the family, therefore, some called for reform which tied women's aid more concretely to their dependency on their husbands. Others expressed apprehension about the complicated administrative practices of Social Security. Concerns about the size of the reserve fund of the retirement program, emphasized by a recession in 1937 led to further calls for change.
These amendments, however, avoided the question of the large numbers of workers in excluded categories. Instead, the amendments of 1939 made family protection a part of Social Security.
This included increased federal funding for the Aid to Dependent Children and raised the maximum age of children eligible to receive money under the Aid to Dependent Children to 18. If a married wage-earning woman’s own benefit was worth less than 50% of her husband’s benefit, she was treated as a wife, not a worker. If a woman who was covered by Social Security died, however, her dependents were ineligible for her benefits. Since support for widows was dependent on the husband being a covered worker, African American widows were severely underrepresented and unaided by these changes.
In order to assure fiscal conservatives who worried about the costs of adding family protection policies, the benefits for single workers were decreased and lump-sum death payments were abolished.
FICA
A poster for the expansion of the Social Security Act
Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA).
The payroll taxes are sometimes even called "FICA taxes."
In the original 1935 law the benefit provisions were in Title II of the Act (which is why Social Security is sometimes referred to as the "Title II" program.) The taxing provisions were in a separate title, Title VIII. Since it wouldn't make any sense to call this new section of the Internal Revenue Code "Title VIII," it was renamed the "Federal Insurance Contributions Act."
The payroll taxes collected for Social Security are of course taxes, but they can also be described as contributions to the social insurance system that is Social Security.
Also in 1956, women were allowed to retire at 62 with benefits reduced by 25%. Widows of covered workers were allowed to retire at 62 without the reduction in benefits.
Amendments of the 1960s
In 1961, retirement at age 62 was extended to men, and the tax rate was increased to 6.0%.
In 1962, the changing role of the female worker was acknowledged when benefits of covered women could be collected by dependent husbands, widowers, and children.
This change resulted in a single measure of the fiscal status of the government, based on the sum of all government activity. The surplus in Social Security trust funds offsets the total debt, making it appear much smaller than it otherwise would.
Amendments of the 1970s
1972 Amendments
In June 1972, both houses of the United States Congress approved by overwhelming majorities 20% increases in benefits for 27.8 million Americans. The bill also set up a cost-of-living adjustment (COLA) to take effect in 1975.
For example, minimum monthly benefits of individuals employed in low income positions for at least 30 years were raised. Increases were also made to the pensions of 3.8 million widows and dependent widowers.
These amendments also established the Supplemental Security Income (SSI).
SSI is not a Social Security benefit, but a welfare program, because the elderly and disabled poor are entitled to SSI regardless of work history. Congressional amendments to Social Security took place in even numbered years (election years) because the bills were politically popular, but by the late 1970s, this era was over.
For the next three decades, projections of Social Security's finances would show large, long-term deficits, and in the early 1980s, the program flirted with immediate insolvency. Social Security became known as the "Third Rail of American Politics." Touching it meant political death.
Several effects came together in the years following the 1972 amendments which rapidly changed the outlook on Social Security's long-term financial picture from positive to problematic.
By the 1970s, the phase-in period, during which workers were paying taxes but few were collecting benefits, was largely over, and the ratio of elderly population to the working population was increasing. These developments brought questions about the capacity of the long term financial structure based on a pay-as-you-go program.
During the Carter administration, the economy suffered double-digit inflation, coupled with very high interest rates, oil shortages, high unemployment and slow economic growth.
Productivity growth in the United States had declined to an average annual rate of 1%, compared to 3.2% during the 1960s. There was also a growing federal budget deficit which increased to $66 billion.
Price inflation (a rise in the general level of prices) creates uncertainty in budgeting and planning and makes labor strikes for pay raises more likely.
These underlying negative trends were exacerbated by a colossal mathematical error made in the 1972 amendments establishing the COLAs. The financial picture declined almost immediately and by the early 1980s, the system was again in crisis.
Amendments of the 1980s
After the 1977 amendments, the economic assumptions surrounding Social Security projections continued to be overly optimistic as the program moved toward a crisis.
The court upheld his claims, stating that automatically granting widows the benefits and denying them to widowers violated equal protection in the Fifth Amendment.
Dates of coverage for various workers
1935 All workers in commerce and industry (except railroads) under age 65.
1939 Age restriction eliminated; seamen, bank employees added; additional domestic workers and food-processing workers removed
1946 Railroad and Social Security earnings combined to determine eligibility for and amount of survivor benefits.
1950 Regularly employed farm and domestic workers. State and local government employees (except firemen and policemen) under retirement system if agreed to by referendum.
In that case, Ephram Nestor, a Bulgarian immigrant to the United States who made contributions for covered wages for the statutorily required "quarters of coverage" was nonetheless denied benefits after being deported in 1956 for being a member of the Communist party.
The case specifically held:
2. (a) The noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments.