Since the earliest days of this country, Americans have been generous to orphaned children, the poor and the elderly. When the nation was mostly agricultural -- that is, up to the 1870s -- communities took care of their poor. Local villages and towns developed poor relief systems and even workhouses. Poor Mothers' Pensions were developed prior to WWI to help indigent mothers care for their children rather than put them in foster homes or institutions.
By the mid-twenties some states were experimenting with old-age assistance and aid to the blind. Then the politicos began to develop the idea that a social insurance system would be appropriate for a more-and-more industrialized society. They decided that contributory financing of social insurance would make that security a matter of rights as opposed to a public assistance approach where only those in need would receive help.
This insurance first began with workers' compensation. In 1908 the Federal Government adopted a law covering Federal employees in hazardous jobs and the first State compensation law to be held Constitutional was adopted in 1911. By 1928, workers' comp laws were in effect in all but four states. These laws paid only on death or severe injury of the insuree. Families took care of the elderly or they took care of themselves unless they were police officers, teachers or firemen. New Jersey's teachers' pension plan, the oldest in the nation for government employees, was established in 1896. By the early 1900s several local governments had set up retirement plans for police officers and fire fighters. In 1920 the Civil Service Retirement System was set up for Federal employees.
Veterans' Benefits were also established early. These initially consisted of widows' pensions, compensation for war disabled and land grants. After WWI, a full-scale hospital system was developed, including medical care benefits. And the fist-sized snowball was picking up steam as it began the downhill roll.
The Great Depression of the 1930s gave the greatest impetus to Federal welfare action. Neither the states nor local communities had the resources to cope with the growing problem. In 1932, the Federal Government made loans, then grants, to states to pay for relief, both direct and work related. FDR proposed the Social Security Act of 1935 and Congress passed it.
This law established two social insurance programs on a national scale to help the elderly and the unemployed. It set up benefits for retired workers who had been employed in industry and commerce along with a Federal state system of insurance -- Grants-in-Aid to the states for programs of Old Age Assistance and Aid to the Blind for those who were not eligible for social security.
In 1939 the additions began: Aid to Dependent Children, Tax on Employers of Eight or More, Public Health Aid, Unemployment Insurance, Railroad Retirement System and more.
And the snowball had just begun to grow.
It grew again in the 1940s and 1950s with weekly cash benefits to the temporarily disabled and more complicated health benefits for Federal workers. Veterans' benefits were expanded and increased
By 1964 the Federal Food Stamp Program was added along with other nutrition programs including school breakfasts and lunches. In 1996 the Personal Responsibility and Work Opportunity Reconciliation Act. Medicaid was created in 1965. Public assistance provisions expanded in 1972. In 1983 coverage became compulsory and the age of eligibility for benefits was increased from 65 to 67.
Originally, Social Security benefits were not taxable as income. All funds collected for Social Security went into the Social Security Trust Fund and were used exclusively for benefits. Excesses above those required for immediate benefits were (and are) invested in US Treasury bonds. These funds may be used by the government in any way Congress sees fit.
No matter who's to blame for the mess social security is in there are two facts about it that are downright felonous:
First, today up to 85% of Social Security benefits are taxed. If benefits were simply reduced the funds collected from Social Security payroll taxes and not paid out because of the reduction in payments would REMAIN IN THE SOCIAL SECURITY TRUST FUND. But by making the benefits taxable, $21 billion a year that is collected for the Social Security Trust fund is paid out to beneficiaries and is then collected back in the form of Income taxes. These funds are deposited in the General fund of the United States. Each year then $21 billion dollars of Social Security Payroll taxes are siphoned out of the Social Security Trust fund and placed in the general fund to be used for other than what the tax was originally intended.
And Second: In the words of President Bush, "The trust fund is just an empty IOU, just a piece of paper. You pay your payroll tax; we pay for the people who have retired, and if there's any money left over, we spend it on government. That's how it works."
So the $1.5 Trillion social security "trust fund" is really nothing but worthless, non-marketable IOU pieces of paper.
Actually that's all it is supposed to be. My parents' generation paid for their parents' retirement, we paid for our parents' and expected our children to pay for ours, their children to pay for theirs. But the catch lies in the last sentence of the President's statement: "if there's any money left over, we spend it on government." THAT is the crux of the problem.
It's not the social security system that is in trouble; it's the way Congress handles it. Congress should be held accountable by the people, even if it means they all go to jail.