The history of social security in the United States can be traced back to the periods following the Great Depression of the 1930s, when there was a lot of financial turbulence and the rate of poverty among the senior citizen was above 50%. A limited form of social security existed then as a social insurance to offer relief to the citizen during such tough times in the economy.
In 1935, The Social Security Act was enacted and it was drafted by the President’s Commission on Economic Security during President Roosevelt first term in office. The aim of the act was to attempt to reduce what were seen as threats in the modern American life and these included things such as unemployment, old age as well as the increasing burden of widows and fatherless children.
Through the Act, retirees and the unemployed were gifted with lump sum benefits at death. The act also allocated moneys to the states for assisting the aged individuals, unemployed individuals, maternal and child welfare, aid to families with dependent children, public health services and aid to the blind.
In 1939, there were a lot of economic concerns with regards to the Social Security Act passed in 1935 as some people started doubting its viability as well as the consequences it was having on the overall economy. The recession that took place in 1937 in the United States was blamed squarely on the government and it was also connected to the abrupt decrease in government expenditure as well as the $2B which were collected in social security taxes. Through the act, social security was perceived as a hybrid system that would accumulate benefits and the beneficiaries would get their benefits on the pay-as-you-go basis.
An amendment was therefore made and this created the Social Security Trust Fund to streamline the operation of the funds and make it more meaningful and helpful to the citizen. The Social Security Trust Fund could also be invested in both marketable and non-marketable securities.
A few years after the establishment of the Social Security, there were calls for its reforms. Some people believed that the fund was not giving women enough support and it would be just a matter of time before women went back to the work force. They thus wanted the social security changed to prevent this from happening. In an attempt to protect the family, a raft of reforms was proposed so that the fund could be ideal in protecting women and all aspects of the family during tough financial times.
Further amendments down the line have been effected on the initial act to take care of the changing interests and needs of the citizens. These are what have shaped the Social Security to what it is at the present where it is guaranteeing the seniors, retirees and special interest groups amongst others peace of mind when they think about their finances.