Social Security: Summary of Major Changes in the Cash Benefits Program

[Agnosticsherbet]

How we do things in our system is important. While researching on line to show how Social Security was not the magnificent program form day 1, that we improved it over time, I discovered this. It is a great historical document.

Social Security: Summary of Major Changes in the Cash Benefits Program
Title II of the original Social Security Act of 1935 established a national plan designed to provide economic security for the nation's workers. The system of Old-Age Insurance it created provided benefits to individuals who were age 65 or older and who had "earned" retirement benefits through work in jobs covered by the system. Benefits were to be financed by a payroll tax paid by employees and their employers on wages up to a base amount (then $3,000 per year). Monthly benefits were to be based on cumulative wages in covered jobs. The law related the amount of the benefit to the amount of a worker's total wages covered by the program, but the formula was weighted to give a greater return, on payroll taxes paid, to low-wage earners. Before the Old-Age Insurance program was actually in full operation, the 1939 amendments shifted the emphasis of Social Security, from protection of the individual worker to protection of the family, by extending monthly benefits to workers' dependents and survivors. The program now provided Old-Age and Survivors Insurance (OASI).

For most of the history of Social Security in the following decades, changes to the program were ones of expansion. Coverage of workers became nearly universal (the only large groups remaining outside the system being employees of state and local government who have not chosen to join the system and federal workers who were hired before 1984). Congress established the Disability Insurance (DI) program in 1956, and, for aged and disabled Social Security recipients, the Medicare program in 1965. Both these programs were financed in whole or in part by additions to the payroll tax rate, which increased periodically, from 1.0% of pay on employees and employers, each, in the 1937-1949 period, to its present level of 7.65%. The types of recipients eligible for benefits were expanded over the years, and benefit levels were increased periodically. In 1972, legislation provided that, beginning in 1975, benefits would rise by the same percentage as the cost-of-living.

Beginning in the late 1970s, legislative action regarding Social Security became more concentrated on solving persistent financing problems. The OASDI trust funds would have been exhausted in the early 1980s if legislation had not been enacted in 1977 raising taxes and curtailing future benefit growth. In 1983, Congress passed additional major legislation that restored solvency to the OASDI program. Recently, worsening projections of financial shortfalls (in 2023 in the DI program, 2037 in OASI and DI combined) again have refocused attention on the solvency of the program. The most recent enacted legislation has provided increased incentives for disabled recipients to return to work, and has repealed the earnings test for recipients above the full retirement age.

[Agnosticsherbet]

1. Related to this is the FDR Class Congress that passed his signature legislation.

Democrats had an incredible Congress. Roosevelt is often given all the Credit for Social Security. He had a Congress that wrote that legislation. He did not do it himself.

Composition of Congress Since 1867

Senator Dem Rep Other House Dem Rep other President
73d 1933–1935 96 59 36 1 435 313 117 5 Roosevelt
74th 1935–1937 96 69 25 2 435 322 103 10 Roosevelt
75th 1937–1939 96 75 17 4 435 333 89 13 Roosevelt
76th 1939–1941 96 69 23 4 435 262 169 4 Roosevelt
77th 1941–1943 96 66 28 2 435 267 162 6 Roosevelt
78th 1943–1945 96 57 38 1 435 222 209 4 Roosevelt
79th 1945–1947 96 57 38 1 435 243 190 2 Roosevelt/Truman
80th 1947–1949 96 45 51 0 435 188 246 1 Truman