President
Franklin D. Roosevelt initially signed Social Security into
law on August 14th, 1935. He was the first President to
advocate the protection of the elderly, largely in part due
to the effects of the Great Depression, when poverty rates
among Senior Citizens exceeded 50%.
The Social Security Act was created in an attempt to limit
the foreseeable dangers of a "Modern American
Life;" old-age poverty, unemployment, the burdens of
widows, and the care of fatherless children.
Known as the Federal Insurance Contributions Act, it was
intended as a social insurance program funded through
dedicated payroll taxes. It was to provide retirees and the
unemployed with benefits. A lump-sum benefit would be
payable at death.
The original Social Security Act encompassed several social
welfare/social insurance programs. Money was to be allocated
to the various States to provide assistance in the following
areas: Federal Old Age, Survivors, and Disability Insurance,
Health Insurance for Aged and Disabled (Medicare) Grants to
States for Medical Assistance Programs (Medicaid) State
Children's Health Insurance Program Supplemental Security
Income Unemployment Insurance Maternal and Child Welfare,
The Blind and Aid to Families With Dependent Children
Retirees were to receive payments that were financed by a
50/50 combination of payroll taxes on current workers'
wages, and by the Employer. When the Social Security Act was
originally proposed it was not without it's share of
controversy. Even though the Social Security Act was to
provide for Maternal and Child Welfare, women and ethnic
minorities were excluded from unemployment insurance and
old-age pension benefits.
Women qualified for insurance only through their husbands or
children. Women could be entitled to a Mothers' Pension on
the basis that they would be unemployed - staying at home
caring for their husbands' and children.
There was also opposition that it would cause job loss;
Employers' would begrudge having to contribute to paying out
benefits for Retirees.
The advantage was seen as being that older workers would be
encouraged to retire as they would be well-looked after,
thus creating job opportunities for the younger generation,
thereby lowering the unemployment rate; an important factor
in trying to alleviate the economic problems caused by the
Great Depression (an event associated with the stock market
crash on October 29th, 1929).
However, the traditional model of retirement has changed
dramatically since 1935; the increase in longevity and an
overall improvement in health of those once considered to be
of the "retiring age."
These days in the traditional private-sector pension plans,
social security is used only in reference to disability,
retirement, survivorship, and death benefits.
The United States Social Security program is the Federal
Budgets single, and greatest, expense, and the world's
largest Government program.
In 2004, the program paid out $500 million in benefits! The
forecast for 2008 shows a major increase to $610 billion!!
By 2041, as payments are made in excess of receipts
presented, the Social Security fund will officially be
exhausted!
Is it any wonder that reform of the Social Security system
continues to be a major political issue?
Have an opinion or a question you would like me to answer,
then write me!
http://www.CarlHampton.com
Your” Money Matters By Carl Hampton
Author of “
From
Credit Despair To Credit Millionaire”
