When Did Social Security Start?

Social Security is what is known as an entitlement program and we each contribute to it with our taxes whether we like it or not. So, when did social security start and why is the program so controversial.

Social Security was a program that arose out of the troubles of the Great Depression of the late1920s and 1930s. The program was created in 1935 when the Social Security Act was passed into law. The Act has been modified many times since then and even faced constitutionality issues when first passed, which is just one reason why the Act is very controversial.

The Social Security Act was an effort by the government to create a safety net for Americans. At the time of its passing, the country was a disaster. Unemployment was in the 30 percent range and the economy had collapsed by 50 to 60 percent as a world wide economic meltdown played out. Rich and poor alike were wiped out financially as banks failed right and left. It was very similar to what we saw in 2008 and 2009, except the government moved to save the banks this time.

So, why is Social Security controversial these days? It has been in place for 80 plus years after all! The problem is two fold. First, Social Security is actually one of the better programs the government has. It has historically taken in hundreds of billions of dollars more a year than it has spent. Given this, the program should be loaded with money, right? It is not. The problem is Congress has borrowed the surplus every year to pay the interest on the national debt. They knew the bill would come due some day and 2010 is that day. For the first time ever, there will be no Social Security surplus and the government will have to find some other way to pay the interest on the national debt. This dovetails into our next issue.

The “Baby Boomers” are coming. Why is this a problem? There is an odd bulge in the population of the United States. The bulge is the baby boomer generation. It is just starting to enter its retirement age. Suddenly, there are going to be millions of people demanding benefits from social security and it is going to put a serious drain on the program. Depending on economic conditions, Social Security might go bankrupt as early as 1935.

The Social Security Act established the program in 1935. It has been a huge success. If Congress had left the surpluses alone, the program would be ready to run for another couple hundred years. Instead, the program faces bankruptcy in twenty to twenty-five years.

<< Back to National Debt Articles

Bookmark this page

Delicious Digg Facebook Reddit Stumbleupon Twitter