Social Security Act

The 1935 statute creating the American social insurance system

Overview

Signed by Franklin Roosevelt in August 1935, the act created old age insurance funded by payroll contributions, unemployment insurance administered by states, and aid to dependent children and the disabled. The 1965 amendments added Medicare and Medicaid, and the system now pays benefits to nearly seventy million people, the largest single line of the federal budget. It survived constitutional challenge early on and became the backbone of the American welfare state. Its trust fund mechanics fuel perpetual reform debate. Payroll taxes flow to a trust fund from which monthly benefits are paid under a statutory formula.