Dealing with the Supreme Court

Name: Social Security Act

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  A national system of pensions for old people and widows. The payments fell between $10 and a maximum of $85 monthly, paid from taxes on earnings and employers’ profits.
  
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  Provided help for the blind and physically handicapped.
  
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  Mothers with dependent children were paid up to $20 a month.
  
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  Set up a national system of unemployment insurance so the unemployed would receive financial help from State Government instead of local charities. It was intended that individual states would provide unemployment insurance, with aid from the Federal Government in the form of payroll tax rebates.
  

The aid provided to the blind, handicapped and mothers with children was known as ‘categorical assistance’. It was based on the ‘matching grant’ principle that is, the Federal Government contributed as much money for this group as did each state. Better off states had far more money to distribute than others. For example, in 1939 dependent mothers and children in Arkansas received $8.10 a month, whilst in Massachusetts the rate was $61.07 a month.

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  Some employers could not afford to pay and it was too expensive to collect. It was envisaged that they would become involved at a later date.
  
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  Unemployment benefit was paid for only 16 weeks at a very low rate.
  
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  So many people applied for unemployment benefit that many areas tried to avoid having to pay it.
  
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  Many states compensated for unemployment benefit by cutting back on other relief schemes. Increased residential qualifications and more stringent forms of means testing were introduced.
  
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  Ex-President Hoover thought that it encouraged people to be lazy and that it took away their dignity by treating them as numbers rather than as individuals.
  
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  The most in need, e.g. farm labourers, casual workers and domestic servants were excluded – this amounted to millions of needy people.
  
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  It was believed that they wealthy should pay more towards the scheme.
  
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  Pensions were low and were not paid out until the 1940s.
  
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  Pensions were paid out according to how much the recipient had paid in whilst working.
  
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  The medical profession had fiercely opposed sickness benefit as the American Medical Association believed it would limit the right to set doctors to set fees. There were no health insurance clauses in the bill.
  
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  It took powers away from individual states and concentrated it in Washington.
  

Despite these drawbacks, the Social Security Act was a major departure, a foundation, on which all subsequent administrations have built. Never before had there been a direct system of national benefit. FDR refused to fund it through taxes it had to be self-financing.