10/08/12 Social Security Paper A brief introduction to the topic of United States Social Security program tells us that it came from the “Old-Age, Survivors, & Disability Insurance” federal program and is meant to provide welfare. There were actually a few similar precursors to what we know as social security, one example being a pension program following the American Civil War. After the Civil War there were hundreds of thousands of widows, orphans, and disabled vets. Even before this, an article informed me that the first national pension program began in early 1776; prior to the signing of our declaration. Not long after the Civil War had ended, America began to rapidly change. This had a lot to do with the Industrial Revolution and the urbanization of the population. This led us to stray from an extensive agrarian family unit that could support their elders to a more condensed American family living in cities. Combining demographic and social changes (including the increase of life expectancy by roughly 10 years), America had fewer and fewer people living on the land, and more of its population in the cities. Unfortunately, this led to a “fragile” provision of economic security.
Social Security itself was created on August 14, 1935, when President Roosevelt signed the Social Security Act. Not only did this new legislature help with the general welfare of the public, but it also provided a way for retirees over 65 years of age to receive a continued form of income. It has since been combined with a more current version of itself to be able to cover more social welfare/insurance programs. It’s not too surprising to learn that back then, women and minorities weren’t able to receive the benefits of this new act. Women and minorities weren’t the only ones barred from the perks of Social Security. Many trades, professions, and job categories were out of luck. Considering that nearly half of the work force was exempt from benefits, there was a of room improvement. Payments between the years of 1937 and 1940 were made in the form of lump-sum payments. This was designed to “provide some ‘payback’ to those people who contributed to the program but would not participate long enough to be vested for monthly benefits.” One poor guy, Ernest Ackerman, retired the day after the S.S. Act was signed into law and received a whopping 17 cents. Monthly payments began on January 31, 1940 when the first retirement check was issued to Ida May Fuller of Ludlow, Vermont for the amount of $22.54. The additions to the Social Security Act that I mentioned above combined with the original act include the 1950 addition “Cost of Living Allowance” (COLA). This allowed payments to follow changes in dynamics of the market value of the U.S. dollar. The Social Security Program does generate its money from the taxation of wages from employees and employers. Employees pay a tax rate of 4.2% of their gross wage, while employers pay a 6.2% of theirs. Medicare has a tax rate of 1.45%. Certain jobs generate wages that are not subjected to taxation; certain state/local government workers, low income employees, and a few assistant jobs. This taxed money is sent to the Social Security Trust Fund which is a fund operated by the Social Security Administration. This fund apparently earns interest, but unfortunately composes about 5 trillion dollars of our national debt. Some skeptics think that the program in its entirety is just a big Ponzi scheme, but I don’t believe it was intended to end up the way it has. Hopefully our nation can come together and get itself out of the big hole we’re in so that my generation and future generations can receive the benefits of Social Security in retirement.

References: http://www.ssa.gov/history/pdf/2005pamphlet.pdf http://www.nssfug.org/ http://www2.ucsc.edu/whorulesamerica/power/social_security.html http://www.fpanet.org/ToolsResources/SocialSecurityPredictor/HistoryofSocialSecurity/