American Government-Economics

Most of the problems of the United states are related

to the economy. One of the major issues facing the country

today is social security.

The United States was one of the last major

industrialized nations to establish a social security

system. In 1911, Wisconsin passed the first state workers

compensation law to be held constitutional. At that time,

most Americans believed the government should not have to

care for the aged, disabled or needy. But such attitudes

changed during the Great Depression in the 1930\'s. Many

Americans realized that economic misfortune could result

from eventsover which americans had no control.

In 1935, Congress passed the Social Security Act. This

law became the basis of the U.S. social insurance system.

It provided cash benefits to only retired workers in

commerce or industry. In 1939, Congress amended the act to

benefit and dependent children of retired workers and widows

and children of deceased workers . In 1950, the

act began to cover many farm and domestic workers, non

proffesional self employed workers, and many state and

municipal employees. Coverage became nearly universal in

1956, when laywers and other proffesional workers came under

the system.

Social security is a government program that heips workers and retired workers and their families acheive a degree of economic security. Social security also called social insurance (Robertson p. 33), provides cash payments to help replace income lost as a result of retirememt, unemployment, disability, or death. The program also helps pay the cost of medical care for people age 65 or older and for some disabled workers. About one-sixth of the people in the United States recieve social security benefits.

People become eligible to recieve benefits by working in a certain period in a job covered by social security.

Employers and workers finance the program through payroll taxes. Participation in the social security system is required for about 95 percent of all U.S. workers.

Social security differs from public assistance. Social security pays benefits to individuals, and their families, largely on the basis of work histories. Public assistance, or welfare, aids the needy, regardless of their work records.

All industrialized countries as well as many developing nations have a social security system. The social security program in the United states has three main parts. They are (1) old-aged, survivers, disability, and hospital insurance (OASDHI), (2) unemployment insurance; and (3) workers\' compensation.


This tax was to be taken from the payrolls of the nation\'s employers and employees. The government felt that, like unemployment benefits, the social security should be financed by those who got the greatest benefit, those who worked, and were liable to need those benefits in the future.

A plan that would affect those only who had paid such a tax for a number of years would have done those who were currently suffering under the Depression no good at all. As a result, the social security plan began paying out benefits almost immediately to those who had been retired, or elderly and out of work, and who were unable, primarily because of the depressed economic conditions, to retire comfortably. In this way, the government was able to accomplish two objectives: first, it helped the economy pull out of the depression, by providing a means by which oldpeople could support themselves and, by buying goods and services, support others in the community ; and second, it showed the younger workers of that time that they no longer had to fear living out their retirement years in fear of poverty.

Therefore, the social security payroll tax has been used to provide benefits to those who otherwise would have little means of support, and as of this writing, there has never been a year when Social Security benefits were not paid due to lack of Social Security income. (Boskin p.122) PAYING OUT BENEFITS Social Security benefits increased 142% in the period between 1950-1972. not only the elderly, but many of the survivers, the widows and children, ofthose who paid into the Social Security system, have recieved social security checks. These checks have paid for the food shelters, and in many instances the college educations of the recipients.

Unlike private insurance firms, the United States Government does not have to worry about financial failure. Government bonds are considered the safest investment money can buy-so