The Social Security Act Of 1935

The modern Social Security set-up that we witness today in the United States largely owes itself to the Social Security Act of 1935, which came as a response to the troubled times of great depression and was part of the ‘New Deal’ that was introduced by President Franklin D Roosevelt. An insight in to the original legislation is worth a moment, not only to know why this was introduced, but also to enable fulfillment of its purposes.
The Social Security Act of 1935
Source - Wikimedia Commons (https://commons.wikimedia.org/wiki/File%3ASocialSecurityposter2.gif)

There are few laws that lay down the foundation of a very broad and long lasting reform in governance. Even fewer of such laws actually go to the extent of getting the intended outcomes delivered. Social Security Act of 1935, which achieved both, can thus be considered an exceptional peace of policy making by legislative means.

The Social Security Act of 1935

The Social Security Act of 1935 was the most important and perhaps, the most successful legislation of the NEW DEAL – a list of acts and programs projected by President Franklin D. Roosevelt to protect the vulnerable American population from

the vagaries of Great Depression of 1930s.

The Historical Background

One can say that to a large extent, the genesis of the Social Security Act of 1935 lay in Stock market crashes of October 1929 that formally began the Great Depression – one of the worst phases of economic recession and unemployment faced by the people of United States in modern times. It caused massive unemployment, fall in wages, and worst of all, it wiped out lifelong savings of many by severe devaluation of asset prices. Old people were one of the worst affected and their plight formed the background for interference by the Government.

During this period, President Frank D. Roosevelt initiated many steps, which he termed as the ‘New Deal.’ They included Emergency Banking Act, suspension of gold standard, 1933 Banking Act, Gold Reserve Act and the National Industrial Recovery Act. To protect the old people after they had retired, the Social Security Act was introduced on August 14, 1935. It introduced a system of universal retirement pensions for the first time. In addition it laid down a comprehensive welfare system that has continued till today with modifications from time to time.

The most characteristic feature of the social security package established by this Act was that it also laid down a system of financing it by payroll taxes. Thus even in the worst of economic times, a sustainable system of social security could be established that have since stood the test of time. While

introducing it, Roosevelt said, “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”

The Benefits Mandated by the Social Security Act of 1935

In addition to establishing universal retirement benefits, which constituted the most important feature of this Act, it also introduced several other benefits like unemployment insurance, welfare benefits for poor families and the handicapped, temporary assistance to needy families and health insurance for aged and disabled. In addition, it also laid down a system for grants to states for Medical assistance programs as well as states’ child health insurance programs.

The Statute

The short title of the Act was the social security act (act of august 14, 1935). Its provisions were grouped under 11 different titles. Title I laid down grants to states for old-age assistance, while title II laid down the Federal old-age benefits. Titles III, IV and V dealt with benefits for the unemployed, dependent children and maternal and child welfare respectively. Titles VI pertained to public health works while Title VII established the Social Security Board. Title VIII and IX dealt with the payroll taxes from employees and employers respectively. Title X provided benefits to the blind, and the last sections dealt with general matters like definitions.

Role in Modern Social Security

The Social Security Act has remained up to this date the mainstay of social security for American citizens. In spite of a number of amendments from time to time, rise in assured benefits as well as taxes imposed, the legal framework retains much of the substance prescribed by this Act. It may not have been the most effective measure to fight the great depression, but it has certainly provided substantial social security to people during the last seven decades.



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