Between the years 1937 and 1940, Social Security paid benefits in the form of a single lump-sum payment. These payments granted refunds to individuals who had contributed to the program but would not participate long enough to be vested for the monthly benefits that would begin in 1942. The average lump-sum payment was $58.06. The smallest was 5 cents.

CS Question #1: Why did the U.S. government enact a federal Social Security program instead of using locally administered programs?

In 1939, Social Security evolved from a retirement program into a family program. Amendments provided benefits to the spouse and the minor children of a retired worker. Other amendments granted benefits to the survivors of a participating worker in the case of premature death. By early 1940, the first retirement benefit checks were issued. No other real changes occurred in Social Security until 1950, when benefits were increased to match the rate of inflation. This was referred to as a COLA, or a cost of living allowance. Since the original law did not provide for increases in payments through time, many retirees who collected Social Security were still living dangerously close to the poverty level. The 1950 Social Security amendments allowed Congress to increase benefits by enacting special legislation. Later, in 1972, a law was passed that automatically increased benefits based on the annual increase in consumer prices. In 1961, President Lyndon Johnson enacted the Medicaid program under the current system of Social Security. Medicaid provided health coverage to almost all Americans over the age of 65.

CS Question #2: In what ways has Social Security been modified to reflect the changes in the economic and social environment?

In 1996, the basic ideology of the disability program was changed. The previous policy had granted benefits to any person who had a medical condition that prevented him or her from working, regardless of the cause of the disability. The new law disallowed any applicants who had disabilities due to drug or alcohol abuse. Any individuals in this category who were already receiving benefits had them terminated. For the first time, the federal government was trying to withdraw coverage from formerly eligible workers. Another 1996 law changed the policy of federal payments. Instead of printing paper checks to be sent to and cashed by the beneficiary, the federal government began issuing payments through electronic funds transfer, or EFT. These changes were designed to prevent fraud and abuse. The modifications made in 1996 were largely due to the political beliefs of the Republican Party. Party members were trying to change the public's perception of Social Security as being an inefficient, bureaucratic and fraudulent system.

CS Question #3: How has Social Security changed to address public perception?

The future of Social Security and other public benefit programs is uncertain. Due to the changing demographics of the United States, experts predict that the Social Security fund will be exhausted as the baby boomer generation reaches retirement age. In the next decades, the workforce will not be large enough to fund retirees' Social Security benefits, Medicaid and other federal programs. Currently, politicians are offering alternative plans to save Social Security. One idea is to privatize Social Security, that is, to invest Social Security funds in private stocks rather than in treasury bonds. Other options are to increase certain taxes and increase the retirement age to compensate for the future increase in retired workers.

CS Question #4: Why is Social Security threatened by an increase in retirees?

Further Thought:

1. Are government entitlement programs necessary?
2. In an industrialized society, who is responsible for providing for the needy?
3. In what ways do government entitlement programs affect the overall economy?