Creation: The Social Security Act
The Social Security Act was drafted by President Roosevelt's committee on economic security, under Edwin Witte, and passed by Congress as part of the New Deal. The act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By passing this act, President Roosevelt became the first president to advocate the protection of the elderly.
Provisions of the Act
The Act is formally cited as the Social Security Act, ch. 531, 49 Stat. 620, now codified as 42 U.S.C. ch.7. The Act provided benefits to retirees and the unemployed, and a lump-sum benefit at death. Payments to current retirees were (and continue to be) financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer. The act also allocated money to states to provide assistance to aged individuals (Title I), for unemployment insurance (Titles III), Aid to Families with Dependent Children (Title IV), Maternal and Child Welfare (Title V), public health services (Title VI), and the blind (Title X).
Controversy
Social Security was controversial when originally proposed, with one point of opposition being that it would cause a loss of jobs. However, proponents argued that there was in fact an advantage: it would encourage older workers to retire, thereby creating opportunities for younger people to find jobs, which would lower the unemployment rate.