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Congress and the New Deal:
Social Security

We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program

President Franklin Roosevelt recalling why social security
was based on payroll contributions, 1941

Before the 1930s, support for the elderly was a matter of local and family rather than a Federal concern (except for veterans’ pensions). However, the widespread suffering caused by the Great Depression brought support for numerous schemes for a national old-age insurance system. On January 17, 1935, President Franklin D. Roosevelt sent a message to Congress asking for "social security" legislation. The same day, Senator Robert Wagner of New York and Representative David Lewis of Maryland introduced bills reflecting the administration’s views. The resulting Senate and House bills encountered opposition from those who considered it a governmental invasion of the private sphere and from those who sought exemption from payroll taxes for employers who adopted government-approved pension plans. Eventually the bill passed both houses, and on August 15, 1935, President Roosevelt signed the Social Security Act into law.

The Act created a uniquely American solution to the problem of old-age pensions. Unlike many European nations, U.S. social security "insurance" was supported from "contributions" in the form of taxes on individuals’ wages and employers’ payrolls rather than directly from Government funds.

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