Social Security did not really “arrive” in America until 1935. However, there was one precursor to Social Security following the Civil War. At that time in history there were literally “hundreds of thousands” of widows, orphans and disabled veterans. Legislation of 1862 provided for benefits linked to disabilities “incurred as a direct consequence of….military duty.” (1 p. 2). This program allowed widows and orphans to receive the same pension that would have been owed to their deceased soldier if he had been disabled. In 1906, old-age was made a qualification for benefits, and by the year 1910, “Civil War veterans and their survivors enjoyed a program of disability, survivors and old age benefits similar to the later Social Security Programs.” (1 pg. 3). So although Social Security as we know it came years later, this program was a good model for the later social programs.
Huey Long was a US Senator from Louisiana in 1930, and was considered a “radical populist.” (1 p. 4). His idea was to confiscate money from the nation’s privileged and distribute it to the poor. He called upon the government to implement his program entitled “Share Our Wealth” and guarantee every family in the nation an annual income of $5,000. Additionally, every person over the age of 60 would receive an old-age pension. (1 p. 4).
Following Huey Long’s proposal that had a huge amount of followers and supporters, Francis Townsend, a doctor from Long Beach devised a plan known as the Townsend Old Age Revolving Pension Plan, in which the government would provide $200 per months to every citizen over the age of 60. The person had to be retired, their past had to be free of “habitual criminality,” and the money received had to be spent within the US within 30 days of receipt. (1 p. 5).
Of course once the Social Security Act was passed in 1935 some of these alternative movements phased out. The Townsend Act hung in until November of 1949 when it was only 39 member votes short of forcing the House to consider the Townsend Act as a replacement for the Social Security Act. (1 p. 7). Just think: we could be complaining about the Townsend Act Crisis rather than the Social Security crisis!
In early January of 1935, President Franklin D. Roosevelt introduced his program for Social Security to both Houses of Congress for their simultaneous consideration, and the bill passed overwhelmingly in both Houses. The Social Security Act was signed into law by President Roosevelt on August 14, 1935, and along with other provisions was designed to pay retired workers over the age of 65 a continued income after their retirement. (1 p. 8).
There have been Several amendments to the original 1935 Social Security Act, for instance, in 1939 Social Security was modified to add benefits to the spouse or minor children of a retired worker, and even added survivor’s benefits, paid to the family in the event of the premature death of a covered worker. (2 p. 2). This modification led to the notion that Social Security, rather than an individual-based program, was a family-based program that was uniquely designed to provide retirement benefits, disability benefits, premature death benefits and even medical costs after retirement. (2 p. 2).
The very first monthly retirement check was sent to an individual who had paid a total of $22.54 into the system. The benefits she received over her lifetime amounted to $22,000! (2 p. 2). In 1950 another significant change occurred in the Social Security Act in that the first cost of living adjustment was made. Then in 1954, a stipulation was added that would freeze a worker’s record during the years he was disabled and unable to work. Further, in 1961, the retirement age for men was reduced to 62, with a reduced monthly benefit for those choosing to retire early. The 1972 amendment brought automatic cost of living increases, a minimum monthly benefit was established, and monthly benefits were significantly increased to those individuals waiting until the age of 65 to retire. (2 p. 3).
In 1975 a report developed by the Treasury Department showed that the Social Security Payroll taxes collected would not be sufficient to meet Social Security payments by 1979, causing Congress to increase the tax rate, reduce benefits, and make the automatic adjustment to the amount of earnings subject to Social Security independent of cost of living raises. (2 p. 3). Since that time we’ve heard speech after speech from various Presidents on their spin on “fixing” Social Security. The reality is that originally Social Security was a kind of social insurance; the employee paid money into the system, fully expecting that when and if he retired, or became unable to work, all those dollars he had paid into the system would come back to help him survive and take care of his family. Thus the name “insurance,” and the philosophy that it was something that would take care of those who could not take care of themselves came into being.
Whether or not our present system is in serious trouble is open for debate. One theory holds that by 2010 the system will be defunct, and those who have paid into the system for many years will have done so in vain. Others believe that the system, while needing some “tweaking” is solid, and will take care of those who have paid into it.