Social Security is one of the largest government programs in the United States, providing retirement benefits, disability income, and survivors benefits to millions of Americans. The Social Security program was established in 1935 under President Franklin D. Roosevelt as part of his New Deal legislation. Since then, Social Security has been expanded and altered by numerous presidents and Congresses. But which presidents have made the biggest impact on the Social Security program as we know it today? Quick answer – the presidents who have most significantly shaped Social Security include FDR, who established the program; Lyndon B. Johnson, who enacted major expansions in benefits; Ronald Reagan, who led reforms in 1983 to shore up the system’s financing; Bill Clinton, who eliminated the Social Security earnings test; and George W. Bush, who tried unsuccessfully to introduce private accounts.
History of Social Security
Social Security was established as part of Roosevelt’s New Deal in 1935 in response to the economic devastation caused by the Great Depression. Prior to Social Security, many elderly Americans lived in poverty. Social Security was intended to provide a basic income source for retirees and the disabled. When it was first enacted, Social Security covered only about half the workers in the economy, and provided modest benefits. Initially Social Security was funded by a payroll tax that only applied to the employee, not the employer. Benefits were first paid in 1940.
Over the decades since then, Social Security has been expanded significantly by presidential administrations and acts of Congress. Here are some key developments in Social Security history after its initial enactment:
– 1950: Coverage expanded to cover jobs like farm work, self-employment, and eventually most state and local government employees.
– 1956: Disability insurance added to provide benefits for disabled workers.
– 1961: Retirement age dropped to 62 for men.
– 1965: Medicare enacted to provide health coverage for Social Security beneficiaries.
– 1972: Cost-of-living adjustments (COLAs) applied to benefits to index for inflation.
– 1977: Payroll tax expanded to apply to employer payroll taxes as well as employee.
– 1983: Amendments made to Social Security to shore up financing and prepare for baby boomer retirements. Full retirement age schedule raised.
– 2000: Elimination of retirement earnings test, allowing seniors to earn any amount while collecting benefits.
Key Presidents and Social Security Reform
Here is a more in-depth look at how key presidents shaped Social Security policy:
Franklin D. Roosevelt
As the founder of the Social Security system, FDR lays claim to enacting the single largest expansion of Social Security benefits. When he signed the Social Security Act of 1935 into law, it represented a sea change in the role of government in providing a social safety net for American citizens. At the time, Social Security provided only modest old-age benefits, but FDR intended it to be expanded over time.
Lyndon B. Johnson
President Lyndon Johnson presided over a major expansion of Social Security through the Social Security Amendments of 1965. This legislation created Medicare, which extended health insurance to Social Security beneficiaries. It also introduced benefits for widows, increased payments for workers who wait past full retirement age to collect benefits, and introduced benefits for disabled adult children. The amendments also introduced automatic COLAs into Social Security to provide for inflation.
Richard Nixon
Under President Richard Nixon, Social Security saw two major changes – expansions in the cost-of-living-adjustments (COLAs) and the transition to automatic COLAs indexed to the CPI annually. Prior to 1972, Congress had to approve any COLA increases to benefits. In 1969 and 1971, Nixon approved legislation enacting automatic COLAs based on the CPI index.
Ronald Reagan
When Ronald Reagan took office, there were growing concerns about Social Security’s financing. Reagan convened the Greenspan Commission to make recommendations, and he worked with the Democratic House Speaker Tip O’Neill to pass legislation based on the commission’s report. The Social Security Amendments of 1983 made several changes to shore up Social Security’s finances, including: accelerating scheduled payroll tax increases; delaying the COLA by 6 months; covering federal employees; gradually increasing the full retirement age from 65 to 67.
Bill Clinton
Under Bill Clinton’s presidency, the largest change to Social Security was the elimination of the retirement earnings test. Previously, Social Security recipients under the full retirement age had benefits reduced if they had wage earnings over a certain exempt amount. The Senior Citizens Freedom to Work Act of 2000 eliminated these benefit reductions and allowed seniors to earn any amount while collecting Social Security.
George W. Bush
President Bush in 2005 put forward a proposal to radically change Social Security by allowing workers under age 55 to divert some of their Social Security payroll taxes into private retirement accounts that they could invest. This represented the most significant change proposed to Social Security since its inception. However, there was significant Democratic opposition, and the plan did not move forward.
Impact of Key Reforms
Here is an overview of how some of the major legislative reforms impacted Social Security benefits and financing:
1983 Amendments
– Raised payroll taxes: Tax rate increased 0.3% over 7 years. Increased max taxable earnings.
– Gradually raised full retirement age: From 65 to 67 over several decades. Resulted in benefit reduction of 5-8% per cohort.
– Taxed benefits: Made up to 50% of benefits taxable for high earners.
– Payroll tax shifted balance: Raised more revenue than increased benefits. Built up surplus trust fund.
2000 Elimination of Earnings Test
– Allowed unlimited earnings while collecting benefits before full retirement age.
– Resulted in higher benefits for early claimers who continue working.
– Little impact on system finances.
Proposed Bush Private Accounts
– Would have allowed 4% diversion of payroll taxes to private accounts.
– Major transition financing issue of $1-2 trillion needed.
– Would have reduced Social Security defined benefits significantly.
– Did not move forward due to lack of Congressional support.
Key Presidents and Social Security Legislation
| President | Major Social Security Legislation |
|---|---|
| Franklin D. Roosevelt | Social Security Act of 1935 (Established Social Security) |
| Dwight D. Eisenhower | Social Security Amendments of 1954 (Disability program added) |
| John F. Kennedy | Social Security Amendments of 1961 (Men allowed early retirement) |
| Lyndon B. Johnson | Social Security Amendments of 1965 (Medicare, expanded benefits) |
| Richard Nixon | Social Security Amendments of 1969, 1971 (Introduced automatic COLAs) |
| Jimmy Carter | Social Security Amendments of 1977 (Raised payroll taxes) |
| Ronald Reagan | Social Security Amendments of 1983 (Raised retirement age, payroll taxes) |
| Bill Clinton | Senior Citizens’ Freedom to Work Act of 2000 (Ended retirement earnings test) |
Conclusion
In conclusion, Social Security has been shaped over the decades by many presidents and Congresses. Key developments include its founding under FDR, major expansions under LBJ, financial reforms under Reagan, and benefit boosts under Nixon and Clinton. While proposals have been made to radically restructure Social Security, such as George W. Bush’s private accounts, the core program remains intact from its inception in 1935 and continues to provide retiree benefits to millions of Americans. Going forward, Social Security will likely require occasional reforms, as happened in 1983, to maintain solvency as demographics and life expectancies change.