It's almost perverse in a sense, but the more than 47 million people who look forward to their monthly Social Security checks owe it all to the greatest economic depression in...

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WASHINGTON — It’s almost perverse in a sense, but the more than 47 million people who look forward to their monthly Social Security checks owe it all to the greatest economic depression in U.S. history.

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Things turned ugly after the stock market crashed Oct. 29, 1929. The Great Depression of the 1930s ensued. Billions of dollars were lost. Millions of people suddenly were out of work, living in poverty and standing in bread lines for handouts to feed their families.

By 1934, many elderly people did not have enough money to support themselves.

As the economic crisis deepened, so did the country’s discontent. Calls for change seemed to come from every corner.

One popular idea borrowed from the principles of “social insurance” that Germany had adopted in 1889. It stressed the government’s responsibility to provide for citizens’ economic security.

But President Hoover, believing the situation would right itself, prescribed little more for an ailing nation than charity and voluntary relief efforts that did not quite get off the ground. Few people had anything to give.

Facts and figures

Number of people collecting benefits this year:
47.4 million, or about one in every six Americans

Number of eligible retired workers and dependents:
32.8 million

Number of eligible disabled workers and dependents:
7.8 million

Number of eligible survivors:
6.8 million

Total Social Security payout this year:
$492 billion

Average monthly retiree benefit:

Date of first monthly benefit:
Jan. 31, 1940

Size of cost-of-living adjustment next year:
2.7 percent, or about $25 a month for the typical retiree

Size of first adjustment, in 1950:
77 percent

Percentage of older people receiving Social Security:
90 percent of those age 65 and older

Percentage of workers in jobs covered by Social Security:
98 percent

Source: Social Security Administration

The Associated Press

Historic change came in 1932. Voters denied Hoover a second term and elected Franklin D. Roosevelt. The Democratic challenger appealed to the “forgotten man” by promising a “new deal” to solve the crisis. He pushed for a Social Security system in which workers would contribute toward their future economic security through taxes paid while they worked.

Even more momentous change could come next year, the 70th anniversary of the government-run program.

President Bush, fresh off re-election, wants to remake Social Security by adding 401(k)-style personal investment accounts for younger workers who choose them.

Elected in a landslide, Roosevelt took office at the height of the Depression in March 1933. Unemployment was 25 percent. Many families were without food or homes. Millions feared what would come next.

Approved in 1935

In response, Roosevelt informed Congress in 1934 of his plan for a Social Security program.

Congress held hearings in January and February of 1935, followed by some close committee votes. But the bill, renamed the Social Security Act, passed by overwhelming margins — 372-33 in the House in April and 77-6 in the Senate in June.

Roosevelt signed it Aug. 14, 1935, during a ceremony in the White House Cabinet Room. With a few strokes of a pen, he fulfilled his promise of a “new deal” and created core public-assistance programs that continue to this day.

Under Social Security, retired workers age 65 and older were assured of a steady income. The law also created the nation’s unemployment system, the now-abolished Aid to Families with Dependent Children program and an old-age assistance program. It also authorized grants to states to provide medical care.

Social Security has become the government’s largest benefit program, with more than 47 million people expected to collect $492 billion this year. The average monthly check is $926.

Workers and their employers each pay a tax on wages that finances the pay-as-you-go system of monthly benefits, mostly for retirees. But the soon-to-begin-retiring generation of baby boomers will strain the program when they stop contributing to Social Security and start collecting it.

By 2018, the program is expected to begin paying out more in benefits than it collects through payroll taxes — a calculation that is driving the debate for an overhaul.

Diversion proposed

Bush wants to let younger workers divert some of those taxes for private investments in stocks and bonds.

The first payroll taxes were collected in January 1937. For the next several years, lump sums were paid to people who contributed but would not participate long enough to qualify for the monthly benefits that would come later.

Ernest Ackerman, a Cleveland motorman who retired one day after the program began, is the earliest known applicant for a lump-sum benefit. He received 17 cents.

Changes in 1939 expanded Social Security into more than merely a benefit for retirees by making the spouses and minor children of retired workers and a worker’s survivors eligible for payments.

Monthly benefits began in 1940. The first such check — for $22.54 — was issued Jan. 31 to Ida May Fuller, a legal secretary from Ludlow, Vt. She lived to be 100 and collected Social Security for 35 years.

Benefit amounts would remain unchanged until 1950, when Congress authorized a 77 percent increase to adjust for the higher cost of living.

From that point, Congress enacted periodic cost-of-living adjustments until legislation made the increases annual and automatic, starting in 1975. Benefits will increase 2.7 percent next year, or an average of about $25 per month.

Social Security was changed in 1956 to provide benefits to disabled workers 50 to 64 years old and to disabled adult children. President Eisenhower removed the age requirement in 1961 and authorized payments to dependents of disabled workers.

More transformation for Social Security came in the 1960s and beyond.

Eligibility age lowered

The eligibility age was lowered to 62, and the Social Security Administration was put in charge of Medicare, which President Johnson signed into law in 1965 to provide health-care coverage for people 65 and older.

In the 1970s, the agency also became responsible for the Supplemental Security Income welfare program. This was designed to help poor elderly, blind and disabled people and is paid for with general tax revenue.

After decades of growth, the 1980s brought a major change to Social Security, although in the opposite direction.

By then, the program faced a short-term financial crisis made worse by a sluggish economy. That led President Reagan to approve the first across-the-board cut in benefits in an effort to extend its future. In 1983, he signed legislation to begin increasing gradually the retirement age for full benefits to 67, from 65.

Social Security moved deeper into the electronic age in the 1990s. There was a Web site in 1994, and the end of paper checks five years later, partly over concerns about theft and forgery. They were replaced by electronic bank deposits.

Bush announced at his first inauguration that he intended to overhaul Social Security and offer personal savings accounts to younger workers.