Development of The U.S. Social Security Program

Subject: Sociology
Pages: 4
Words: 846
Reading time:
4 min
Study level: College

Introduction

Social security is an administrative body of the United States government that deals with insurance programs not only for the elderly but also for people with physical disabilities. It also caters to benefits on survivors. Due to the inevitable life experiences such as death, aging, severe diseases as well as physical disabilities which cause a major threat to individuals’ economic security, the social security programs have been toiler made to cater for threats brought about by such life uncertainties. The United States has an independent social security agency where workers make contributions from their earnings in form of taxes from which they earn future benefits.

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Historical background

The social security program was created during President Franklin Roosevelt’s administration when he signed an Act on social security in 1935 from which another body, the Social Security Board was created to watch over the administrative activities of the program. Although the security board began without a prior financial budget and stuff, it had three executives who had been appointed by President Roosevelt. However, a temporary budget for the security board was allocated by the emergency relief program sometime later. In 1936, the first social security office was set in Texas but an official collection of social security taxes began the following year, 1937. The very first beneficiary of the social security fund was a Vermont lady resident, Ida Fuller who received a US$22.54 cheque in the year 1940. Later in 1936, a number of agencies including public health services merged with the social security board to form the federal security agency under which monthly benefits of the social security program started (DeWitt, 2010, p. 1). President Harry Truman reorganized the program in 1946 and changed its name to social security administration. Although inflation effects on the cost of living led to the placement of the program under the Department of Health and Human Services years later, President Bill Clinton returned its status back to an independent government agency in 1994 by law.

Current structure

The Social Security Agency has two major but different funds through which the federal government is obliged to debt payment in the form of social security benefits. The Old-Age and Survivors Insurance (OASI) Trust Fund is the largest including additional securities from the federal government through tax incomes on the labor force. The other fund is the Disability Insurance (DI) Trust Fund which involves special benefits from the federal government since it entails securing the livelihood of the physically disabled persons who require special attention. The budgets for these trust funds are done separately from other federal expenditure plans in the United States as there is a law that protects the Social Security Funds budget from being included in other federal budgets to prevent subsequent adjustments of the funds.

The operations of the Social Security Funds are under the supervision of a commissioner with a deputy who takes over the responsibilities of the commissioner in his/her absence in cases where there is no acting commissioner designated by the president. In the case in which the commissioner and his deputy cannot perform their respective duties, commissioner officers are allowed to take up the functions through a federal reform act (Liu, 2001, p. 1). However, the order with which the officers are eligible for such responsibilities begins from operations to Budget, Finance, and Management. Following the Deputy Commissioner is an associate and deputy associate commissioners followed by Regional and deputy regional commissioners whose functions are taken up by Social Security Administrators in case of their inability to perform their duties for whatever reason.

Calculation of benefits

Calculation of benefits depends on the fund that the benefactor chooses namely, Retirement and Survivors Benefits. Calculation of either benefit is dependent on the amount of earning the benefactors contribute. For the Social Security Retirement Benefit, the law provides an average of 40 percent of the benefactors’ earnings before retirement. Pre-retirement earnings are first restated to reflect the current date’s wage growth after which the highest earnings from a total of thirty-five years are samples and their average calculated then divided by twelve. This gives a reflection of the Average Indexed Monthly Earnings (AIME). From the AIME, the Primary Insurance Amount (PIA) is deduced and so does the Full Retirement Age (FRE) earnings (Perkins, 1996, p. 1).

Other benefits provided by the Social Security Administration in the United States include the Supplementary Security Income (SSI) which is a program targeting the old and physically impaired persons with particular needs. Although Medicare is not run by the security agency, some of its activities such as determining benefactor eligibility and calculation of premium earnings are done at the security administration offices.

Conclusion

The United States Social Security Administration seeks to protect the livelihood of the American people by laying a foundation through which individuals can secure their financial stability for the future to prevent the effects of life’s uncertainties such as aging, death, physical inabilities, and illnesses. It is thus a very important body of the federal government which has gradually developed since the administration of President Roosevelt up to date.

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Reference List

DeWitt, L. (2010). The Development of Social Security in America. Web.

Liu, L. (2001). Foreign Social Security Developments prior to the Social Security Act. Web.

Perkins, F. (1996). Summary of major changes in the Social Security Cash Benefits Program. Web.