History of Social Security in the United States

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.

[4] Political Scientists at the University of Wisconsin–Madison, including Edwin Witte, known as the "Father of Social Security," Arthur J. Altmeyer, and Wilbur Cohen developed the 1934 proposal for a federally funded pension plan.

[15] Nearly two-thirds of all African Americans in the labor force, 70 to 80 percent in some areas in the South, and just over half of all women employed were not covered by Social Security.

[17][18] 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.

Furthermore, the Treasury realized how difficult it would be to set up payroll deduction plans for farmers, for housekeepers who employed maids, and for nonprofit groups; therefore they were excluded.

Larry DeWitt rejects the speculation that the exclusions were the product of southern white racial hostility toward blacks; there is no evidence of that in the record.

Rodems and Shaefer note in all other countries unemployment insurance programs "excluded domestic and agricultural workers when they were first implemented, a fact that the key New Deal policy makers were well aware of.

Davison in Britain, Andre Tixier of the International Labour Organization, and Edwin Witte, Wilbur J. Cohen, and Evelyn Burns in the United States.

Beginning with a set of decisions in March, April, and May, 1937 (including the Social Security Act cases), the Court would sustain a series of New Deal legislation.

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.

Worried that a lack of assistance might push women back into the work force, these individuals wanted Social Security changes that would prevent this.

The amendment added wives, elderly widows, and dependent survivors of covered male workers to those who could receive old age pensions.

[51] 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.

After years of debates about the inclusion of domestic labor, household employees working at least two days a week for the same person were added in 1950, along with nonprofit workers and the self-employed.

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.

[55] Medicare and Medicaid were added in 1965 by the Social Security Act of 1965, part of President Lyndon B. Johnson's "Great Society" program.

Throughout the 1950s and 1960s, during the phase-in period of Social Security, Congress was able to grant generous benefit increases because the system had perpetual short-run surpluses.

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.

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.

The 1970s are described as a period of stagflation, meaning economic stagnation coupled with price inflation, as well as higher interest rates.

To combat the declining financial outlook, in 1977 Congress passed and Carter signed legislation fixing the double-indexing mistake.

After the 1977 amendments, the economic assumptions surrounding Social Security projections continued to be overly optimistic as the program moved toward a crisis.

[62] In 1982, projections indicated that the Social Security Trust Fund would run out of money by 1983, and there was talk of the system being unable to pay benefits.

This meant that benefits in excess of a household income threshold, generally $25,000 for singles and $32,000 for couples (the precise formula computes and compares three different measures) became taxable.

[67][68] The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (to take it "off-budget"[citation needed]).

[citation needed] As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers".

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.

A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment.

(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.

Many of these cases were pivotal in changing the assumptions about differences in wage earning among men and women in the Social Security system.