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Wed Aug 14, 2019, 07:18 AM

84 Years Ago Today; FDR Signs Social Security Act into law [View all]


President Roosevelt signs the Social Security Act into law on August 14, 1935.

The Social Security Act of 1935 is a law enacted by the 74th United States Congress and signed into law by President Franklin D. Roosevelt. The law created the Social Security program as well as insurance against unemployment. The law was part of Roosevelt's New Deal domestic program.

By the 1930s, the United States was the lone modern industrial country without any national system of social security. In the midst of the Great Depression, physician Francis Townsend galvanized support behind a proposal to issue direct payments to the elderly. Responding to this movement, Roosevelt organized a committee led by Secretary of Labor Frances Perkins to develop a major social welfare program proposal. Roosevelt presented the plan in early 1935, and he signed the Social Security Act into law on August 14, 1935. The act was upheld by the Supreme Court in two major cases decided in 1937.

The law established the Social Security program, an old-age program funded by payroll taxes. Over the ensuing decades, Social Security program contributed to a dramatic decline in poverty among the elderly, while spending on Social Security became a major part of the federal budget. The Social Security Act also established an unemployment insurance program administered by the states, as well as the Aid to Dependent Children program, which provided aid to families headed by single mothers. The law was later amended by acts such as the Social Security Amendments of 1965, which established two major healthcare programs, Medicare and Medicaid.

Background and history
Industrialization and the urbanization in the 20th Century created many new social problems, and transformed ideas of how society and the government should function together because of them. As industry expanded, cities grew quickly to keep up with demand for labor. Tenement houses were built quickly and poorly, cramming new migrants from farms and Southern and Eastern European immigrants into tight and unhealthy spaces. Work spaces were even more unsafe.

By the 1930s, the United States was the lone modern industrial country where people faced the Depression without any national system of social security, though a handful of states had poorly-funded old-age insurance programs. The federal government had provided pensions to veterans in the aftermath of the Civil War and other wars, and some states had established voluntary old-age pension systems, but otherwise the United States had little experience with social insurance programs. For most American workers, retirement due to old age was not a realistic option. In the 1930s, physician Francis Townsend galvanized support for his pension proposal, which called for the federal government to issue direct $200-a-month payments to the elderly. Roosevelt was attracted to the general thinking behind Townsend's plan because it would provide for those no longer capable of working while at the same time stimulating demand in the economy and decreasing the supply of labor. In 1934, Roosevelt charged the Committee on Economic Security, chaired by Secretary of Labor Frances Perkins, with developing an old-age pension program, an unemployment insurance system, and a national health care program. The proposal for a national health care system was dropped, but the committee developed an unemployment insurance program largely administered by the states. The committee also developed an old-age plan that, at Roosevelt's insistence, would be funded by individual contributions from workers.

In January 1935, Roosevelt proposed the Social Security Act, which he presented as a more practical alternative to the Townsend Plan. After a series of congressional hearings, the Social Security Act became law in August 1935. During the congressional debate over Social Security, the program was expanded to provide payments to widows and dependents of Social Security recipients. 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 program was funded through a newly established a payroll tax which later became known as the Federal Insurance Contributions Act tax. Social Security taxes would be collected from employers by the states, with employers and employees contributing equally to the tax. Because the Social Security tax was regressive, and Social Security benefits were based on how much each individual had paid into the system, the program would not contribute to income redistribution in the way that some reformers, including Perkins, had hoped. In addition to creating the Social Security program, the Social Security Act also established a state-administered unemployment insurance system and the Aid to Dependent Children program, which provided aid to families headed by single mothers. Compared with the social security systems in western European countries, the Social Security Act of 1935 was rather conservative. But for the first time the federal government took responsibility for the economic security of the aged, the temporarily unemployed, dependent children and the handicapped.

The Social Security Act has been amended significantly over time, but contains ten major titles.

Title I—old age
Title I is designed to give money to states to provide assistance to aged individuals

Title III—unemployment
Title III concerns unemployment insurance

Title IV—child aid
Title IV concerns Aid to Families with Dependent Children.

Title V—child welfare
Title V concerns Maternal and Child Welfare.

Title VI—public health
Title VI concerns public health services (investigation of disease and problems of sanitation)

Title X—blindness
Title X concerns support for blind people.

Title XI—General Provisions, Peer Review, and Administrative Simplification
Title XII—Advances to State Unemployment Funds
Title XIII—Reconversion Unemployment Benefits for Seamen
Title XIV—Grants to States for Aid to the Permanently and Totally Disabled
Title XV—Unemployment Compensation for Federal Employees
Title XVI—Grants to States for Aid to the Aged, Blind, or Disabled
Title XVI—Supplemental Security Income for the Aged, Blind, and Disabled
Title XVII—Grants for Planning Comprehensive Action to Combat Mental Retardation
Title XVIII—Health Insurance for the Aged and Disabled
Title XIX—Grants to States for Medical Assistance Programs
Title XX—Block Grants to States for Social Services
Title XXI—State Children's Health Insurance Program


In 1940, Social Security benefits paid totaled $35 million. 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). In 2004, $492 billion of benefits were paid to 47.5 million beneficiaries. In 2009, nearly 51 million Americans received $650 billion in Social Security benefits.

During the 1950s, over-65s continued to have the highest poverty rate of any age group in the US with the largest percentage of the nation's wealth concentrated in the hands of Americans under 35. By 2010, this figure had dramatically reversed itself with the largest percentage of wealth being in the hands of Americans aged 55–75 and those under 45 being among the poorest. Elder poverty, once a normal sight, had thus become rare by the 21st century.

Reflecting the continuing importance of the Social Security Act, biographer Kenneth S. Davis described the Social Security Act "the most important single piece of social legislation in all American history."


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Reply 84 Years Ago Today; FDR Signs Social Security Act into law [View all]
Dennis Donovan Aug 14 OP
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