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OF THE
ESIDENT
OFFICE
R
EXECUTIVE OFFICE OF THE PRESIDENT
GENERAL
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
October 16, 1996
MEMORANDUM FOR KEN APFEL
THROUGH:
Barry White
BW
Keith Fontenot sofor
FROM:
Desiree Filippone
if
SUBJECT:
1997 Social Security Changes
Today, the Social Security Administration (SSA) announced various changes in the Social
Security program for 1997. These changes include the 1997 Cost of Living Adjustment (COLA)
and the 1997 contribution and benefit base (the "earnings base"). A complete listing of these
changes, comparing the 1996 and 1997 figures, is available on the attached SSA fact sheet.
1997 COLA
The SSA calculated the 1997 COLA to be 2.9%. This is 0.2% less than the estimate in the
FY1997 President's Budget and 0.3% less than the estimate in the Mid-Session Review. The
calculation and implications of the 1997 COLA are detailed below.
Calculation of COLA
1995 3rd Quarter CPI Average:
150.2
1996 3rd Quarter CPI Average:
July:
154.3
(Not Seasonally Adjusted)
August:
154.5
September:
155.1
Average:
154.6
1997 COLA 2.9%
Cost of 1997 COLA in FY97
President's Budget:
$7,329 Million
Mid-Session Review:
$8,374 Million
Current Estimate Based on
$7,604 Million
2.9% Actual
Change from Pres. Budget
+$275 Million
Change from MSR
- $770 Million
Earnings Base
The actuaries have also calculated the increase in the benefit and contributions base--the
"earnings base" that determines the amount of OASDI contributions and benefits. The 1997 base
is $65,400, an increase of $2,700 (4.3%) from the 1996 level of $62,700. Because the earnings
base is indexed to increases in national wages, the 1997 level reflects average growth in national
wages.
1996 OASDI Earnings Base:
$62,700
1997 OASDI Earnings Base:
$65,400
HI Earnings Base:
No Limit
If you have any questions or comments, please call.
cc:
IM
Social Security Distribution
Attachment
SOCIAL SECURITY
USA
AUMINISTRATION
News Release
SOCIAL SECURITY
FOR IMMEDIATE RELEASE
Phil Gambino or Tom Margenau
Wednesday, Oct. 16, 1996
(410) 965-8904 (202) 482-7145
1997 SOCIAL SECURITY CHANGES ANNOUNCED
Social Security Commissioner Shirley S. Chater announced today
that Social Security and Supplemental Security Income benefits will
increase 2.9 percent, beginning with the payments that Social Security
beneficiaries receive Jan. 3 and SSI recipients receive on Dec. 31.
The automatic cost-of-living adjustment is made annually.
For Social Security beneficiaries, the average monthly benefit
amount for all retired workers will rice from $721 to
$745. The maximum federal SSI monthly payments to an individual will
rise from $470 to $484. For a couple, the maximum federal SSI payment
will rise from $705 to $726.
Social Security and SSI benefits increase automatically each year
based on the rise in the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W) from the third quarter of one year
through the corresponding period of the next. This year's increase in
the CPI-W was 2.9 percent.
###
NOTE TO CORRESPONDENTS: A fact sheet showing the effect of the
various automatic adjustments is attached.
Copies of most SSA press releases, as well as other social Security
information and statistics, are available at SSA's Internet site,
Social security online, at http://www.ssa.gov
SOCIAL SECURITY
ROMINISTRATION
Fact Sheet
SOCIAL SECURITY
Shirley S. Chater, Commissioner
Phil Gambino or Tom Margenau
(410) 965-8904 (202) 482-7145
1997 SOCIAL SECURITY CHANGES
Cost-of-Living Adjustment (COLA):
Based on the increase in the Consumer Price Index (CPI-W) from
the third quarter of 1995 through the third quarter of 1996,
Social Security beneficiaries and Supplemental Security Income
(SSI) recipients received a 2.9 percent COLA for 1997. Other
important 1997 Social Security information is as follows:
1996
1997
o
Tax Rate:
Employee
7.65%
7.65%
Self-Employed
15.30%
15.30%
NOTE:
The 7.65% represents the combined Social Security and
Medicare Lax rate. The social security portion (OASDI)
is 6.20% on wages up to the applicable maximum taxable
amount (see below). The Medicare portion (HI) is 1.45%
on all wages.
Maximum Earnings Taxable:
Social Security (OASDI only)
$62,700
$65,400
Medicare (HI only)
NO Limit*
*The maximum was eliminated by the "Omnibus Budget Reconciliation
Act of 1993."
Quarter of Coverage:
$640
$670
SSA Press Office 932 Altmeyer Bldg. 6401 Security Blvd. Baltimore, MD 21235 410-965-8904 Fax 410-966-9973
Retirement Earnings Test Exempt Amounts:*
Age 65 thru 69
$12,500/yr.
$13,500/yr.
($1,042/mo.)
($1,125/mo.)
Under age 65
$ 9,280/yr.
$ 8,640/yr.
($690/mo.)
($720/mo.)
*NOTE:
For people age 65 through 69, the exempt amounts for both
1996 and 1997 were established by legislation enacted
March 29, 1996. For people in this age group, $1 in
benefits will be withheld for every $3 in earnings above
the limit. For people under age 65, $1 will be withheld
for every $2 in earnings above the limit.
Maximum Social Security Benefit: Worker Retiring at Age 65 in
January of 1996 and 1997:
$1,248/mo.
$1,326/mo.
SSI Federal Payment Standard:
Individual
$470/mo.
$484/mo.
Couple
$705/mo.
$726/mo.
SSI Resources Limits:
Individual
$2,000
$2,000
Couple
$3,000
$3,000
Average Monthly Social Security Benefits: Before and After the
December 1996 COLA:
Before
After
2.9% COLA
2.9% COLA
All Retired Workers
$ 724
$ 745
Aged Couple, Both
$1,220
$1,256
Receiving Benefits
Widowed Mother and
$1,436
$1,478
Two Children
Aged Widow (er) Alone
$ 687
$ 707
Disabled Worker. Spouse
$1,136
$1,169
and One or More Children
All Disabled Workers
$ 684
$ 704
ENT SIGNS H.R. 3136 THE "CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996" http://www.ssa.gov/legislation/legis_buletin_040996.html
LEGISLATIVE BULLETIN
April 9, 1996
104-22
THE PRESIDENT SIGNS H.R. 3136 THE "CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996"
On March 29, 1996, the President signed into law the Contract With America Advancement Act of 1996 (H.R. 3136), as
P.L. 104-121. The bill contains the Senior Citizens' Right to Work Act of 1996, the Small Business Growth and Fairness
Act of 1996, establishes a new process for Congressional review of agency rulemaking, and provides for a permanent
increase in the public debt limit from $4.9 trillion to $5.5 trillion. The bill contains the following provisions of interest to
Social Security.
Denial of Disability Benefits to Drug Addicts and
Alcoholics
Prohibits disability insurance (DI) and supplemental security income (SSI) eligibility to individuals whose drug
addiction and/or alcoholism (DAA) is a contributing factor material to the finding of disability. This provision
would apply to individuals who file for benefits on or after the date of enactment and to individuals whose claims are
finally adjudicated on or after the date of enactment. This provision applies to current beneficiaries on January 1,
1997. SSA must: 1) notify current DAA beneficiaries of new provisions by June 27, 1996; and 2) complete new
medical determinations by January 1, 1997, for affected current beneficiaries who request such a determination
within 120 days after the date of enactment.
Applies representative payee requirements to DI or SSI beneficiaries who have a DAA condition, as determined by
the Commissioner, and who are incapable of managing benefits. SSA would refer these individuals to the
appropriate State agency for treatment. These provisions would apply to applications filed af ter June 1996. In
addition, retains the $50 fee that representatives can collect for beneficiaries who have a DAA condition that leaves
an individual incapable of managing their own benefits.
Provides an appropriation of $50 million for each of FYs 1997 and 1998 to carry out on a priority basis activities
relating to the treatment of drug and alcohol abuse under the Public Health Service Act.
Continuing Disability Reviews
Authorizes additional funds to SSA for fiscal years 1996 through 2002 for the purpose of conducting Social Security
disability insurance (DI) continuing disability reviews (CDRs) and Supplemental Security Income (SSI) CDRs and
disability eligibility redeterminations. This would be accomplished by increasing the amount of funds available for
appropriations under the discretionary spending cap in the Budget Enforcement Act.
Directs the Commissioner of Social Security to ensure that the funds made available pursuant to this provision are
used, to the greatest extent practicable, to maximize the combined savings to the old-age, survivors, and disability
insurance (OASDI), SSI, Medicare, and Medicaid programs.
Requires the Commissioner to report annually, for FYs 1996 through 2002, to Congress on the amount of money
spent on CDRs, the number of reviews conducted (by category), the disposition of such reviews (by program), and
the estimated savings over the short-, medium-, and long-term for OASDI, SSI, Medicare, and Medicaid programs
from CDRs which result in cessations, and the estimated present value of such savings.
Chief Actuary
Establishes statutorily in the Social Security Administration the position of Chief Actuary, to be appointed by, and
report directly to, the Commissioner, and be subject to removal only for cause. Effective on March 29, 1996.
1 of 3
10/16/96 09:33:00
ENT SIGNS H.R. 3136 THE "CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996" http://www.ssa.gov/legislation/legis_bulletin_040996.htm
Dependency Test for Stepchildren
Provides that a stepchild would have to be receiving at least one-half support from the stepparent when the child's
claim is filed to get benefits. (The option for finding dependency based on living-with would be eliminated.) This
provision is effective for benefits of individuals who become entitled after June 1996.
If the natural parent and the stepparent of an entitled stepchild divorce, benefits to the stepchild based on the work record of
the stepparent would terminate the month after the month in which such divorce becomes final. This provision is effective
for final divorces occurring after, June 1996.
Increase in the Earnings Test Annual Exempt Amount
Gradually raises, beginning in 1996, the earnings limit for the retirement earnings test (RET) for beneficiaries who
have attained normal retirement age to $30,000 by 2002 (compared with an estimated $14,760 for 2002 under prior
law, based on the intermediate assumptions in the 1995 Trustees Report). The applicable 1996 exempt amount under
prior law was $11,520. Exempt amounts under P.L. 104-121 (exempt amounts under prior law are also shown) are:
Year
Exempt Amount
Estimated Exempt
Under P.L. 104-121 Amount Under Prior Law
1996
$12,500
$11,520
1997
13,500
12,120
1998
14,500
12,600
1999
15,500
13,080
2000
17,000
13,560
2001
25,000
14,160
2002
30,000
14,760
After 2002, the annual exempt amount will be indexed to growth in average wages.
The substantial gainful activity (SGA) amount applicable to individuals who are statutorily blind would no longer be linked
to the RET exempt amount for individuals ages 65 to 69. Instead, the SGA amount for blind people would continue to be
adjusted annually as under present law, i.e., based on the national average wage index.
Benefit and Tax Statements
Requires SSA to conduct a pilot study of the efficacy of providing retired workers with information about their
Social Security benefits and taxes. The study would involve a sample of retirement beneficiaries whose entitlement
began in or after 1984. SSA would send them estimates of their aggregate covered earnings, their aggregate Social
Security taxes (including the employer share), and the total amount of benefits paid on their record.
Requires the study to be conducted within a 2-year period beginning as soon as practicable in 1996 and a report on
its results be provided to Congress within 60 days of its completion. Investment of Social Security and Medicare
Trust Funds
Prohibits the Secretary of the Treasury from refraining from investing Social Security and Medicare Trust Fund
monies in Federal securities, and from redeeming securities held by the trust funds, to avoid increasing or to reduce
outstanding public debt obligations. Effective March 29, 1996.
Professional Staff for the Social Security Advisory Board
2 of 3
10/16/96 09:34:38
ENT SIGNS H.R. 3136 THE "CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996" http://www.ssa.gov/legislation/legis_bulletin_040996.html
Authorizes the Social Security Advisory Board to appoint 3 professional staff employees, one of whom is to be
appointed from among individuals approved by Advisory Board members who do not belong to the political party
represented by the majority of the Board.
Review of Federal Regulations
Requires that Federal regulations, including some of those issued by SSA, undergo an additional review of their
economic impact. This review may be conducted, at various stages of the development of a regulation, by the Small
Business Administration, the Courts, and the Congress.
3 of 3
10/16/96 09:34:58
A Brief History Of
Social Security
SOCIAL SECURITY
USA
ADMINISTRATION
SOCIAL SECURITY
th
60th
ANNIVERSARY
Commissioner's Statement
The history of Social Security is a story that we are
proud to tell. It is a story about visionaries who
created a program to enhance and protect the well-
being of millions of Americans. It is a story about the
dedication, hard work and persistence on the part of
Social Security Administration employees who carry
out one of the government's largest and most
important programs. And it is a story about the
commitment of this nation's leaders to maintain and
strengthen a program that has such a beneficial and
significant impact on the lives of so many. It is a
continuing story that is passed on from generation to
generation.
Shirley. S. Chater
1
History
The committee was instructed to study the entire problem of
economic insecurity and to make recommendations that
would serve as the basis for legislative consideration by the
Congress.
OCT-02-1996 16:03
The Problem of Economic Insecurity
In early January 1935, the Committee made its report to the
President, and on January 17 the President introduced the
report to both Houses of Congress for simultaneous
S
ocial Security works because it speaks to a universal
human need. All people throughout human
consideration. Each House passed its own version, but
history have faced the uncertainties brought on by
eventually the differences were resolved and the Social
death, disability and old age. Prior to the turn of the 20th
Security Act was signed into law on August 14, 1935. In
century, the majority of people in the United States lived and
addition to several provisions for general welfare, the new Act
worked on farms and economic security was provided by the
created a social insurance program designed to pay retired
SSA LIBRARY
extended family. However, this arrangement changed as
workers age 65 or older a continuing income after retirement.
America underwent the Industrial Revolution. The extended
family and the family farm as sources of economic security
became less common. Then, the Great Depression triggered a
crisis in the nation's economic life. It was against this
backdrop that the Social Security Act emerged.
The Social Security Act
O
n June 8, 1934, President Franklin D. Roosevelt, in a
message to the Congress, announced his intention to
provide a program for Social Security. Subsequently,
the President created by Executive Order the Committee on
Economic Security, which was composed of Frances Perkins,
Secretary of Labor, Chairwoman; Henry Morgenthau, Jr.,
Secretary of the Treasury; Henry A. Wallace, Secretary of
Agriculture; Homer S. Cummings, Attorney General; and
Harry L. Hopkins, Federal Emergency Relief Administrator.
President Roosevelt signs the Social Security Act, August 14, 1935.
2
3
Text of President Roosevelt's remarks at the
signing of the Social Security Act
The Early Organization
A
nother provision of the Act established a Social
OCT-02-1996 16:04
Security Board (SSB) comprised of three members
appointed by the President, with the chairman
Today a hope of many years' standing is in large part
reporting directly to the President. The original members
fulfilled. The civilization of the past hundred years,
were John G. Winant, Chairman; Arthur J Altmeyer; and
with its startling industrial changes, has tended more
Vincent M. Miles. During the first year, SSB was faced with
and more to make life insecure. Young people have
the tasks of providing employers, employees and the public
come to wonder what would be their lot when they
with information on how earnings were to be reported. what
came to old age. The man with a job has wondered
how long the job would last.
benefits were available and how they were to be provided. In
addition, sites for field installations had to be chosen and
SSA LIBRARY
This social security measure gives at least some
personnel to staff these offices had to be selected and trained
measure of protection to thirty millions of our citizens
who will reap direct benefits through unemployment
compensation, through old-age pensions and through
increased services for the protection of children and
the prevention of ill health.
We can never insure one hundred percent of the
population against one hundred percent of the hazards
and vicissitudes of life, but we have tried to frame a
law which will give some measure of protection to the
average citizen and to his family against the loss of a
job and against poverty-ridden old age
If the Senate and the House of Representatives in this
long and arduous session had done nothing more than
pass this Bill, the session would be regarded as historic
for all time.
First meeting of the Social Security Board, August 23, 1935.
Left 10 right: Arthur J. Altmeyer, John G. Winant (Chairman),
and Vincent M. Miles.
August 14, 1935
P.04
4
5
Early Work
T
he monumental first task was the need to register
OCT-02-1996 16:04
employers and workers by January 1, 1937, when
workers would begin acquiring credits toward old-age
insurance benefits. Since SSB did not have the resources
19379
available to accomplish this, they contracted with the U.S.
Postal Service to distribute the applications. The post offices
collected the completed forms and turned them over to Social
Security field offices located near major post office centers.
The applications then were forwarded to SSB's processing
center located in Baltimore, Maryland, where Social Security
SSA LIBRARY
numbers (SSNs) were registered and various employment
records established (in a process known as enumeration).
Over 35 million SSN cards were issued through this
procedure.
SSA first District Office. in Austin, Texas, 1936.
By June 30, 1937, SSB had established 151 field offices to
handle the enumeration process, with the first office opening
on October 14, 1936, in Austin, Texas.
SOCIAL SECURITY
First SSN card issued on December 1, 1936
to John D. Sweeney, Jr., of New Rochelle,
New York.
Lowest number ever issued: 001-01-0001,
to Grace Dorothy Owen.
More than 370 million SSNs have been
issued since 1936.
P.05
The Candler Building in Baltimore, SSA's record-keeping
center and the beginnings of SSA's presence in Baltimore.
6
7
Trust Funds
Monthly Benefits
A
fter Social Security numbers were assigned, the first
Federal Insurance Contributions Act (FICA) taxes
P
ayments of monthly benefits began in January 1940,
OCT-02-1996 16:05
were collected, beginning in January 1937. Special
and were authorized not only for aged retired worker
Trust Funds were created for these dedicated revenues.
but for their aged wives or widows, children under a
Benefits were then paid from the monies in the Social
18, and surviving aged parents. On January 31, 1940, the
Security Trust Funds. Over the years, more than $4.5 trillion
first monthly retirement check was issued to Ida May Fulle
has been paid into the Trust Funds, and more than
of Ludlow, Vermont, in the amount of $22.54. Miss Fuller
$4.1 trillion has been paid out in benefits. The remainder is
died in January 1975 at the age of 100. During her 35 year
currently on reserve in the Trust Funds and will be used to
as a beneficiary, she received over $20,000 in benefits.
pay future benefits.
SSA LIBRARY
First Payments
F
rom 1937 until 1940, Social Security paid benefits in
the form of a single, lump-sum payment. The earliest
reported applicant for a lump-sum benefit was a
retired Cleveland motorman named Ernest Ackerman, who
retired one day after the Social Security program began.
During his one day of participation in the program, a nickel
was withheld from
Mr. Ackerman's pay for Social
Security, and, upon retiring, he
received a lump-sum payment of
17 cents. The average lump-sum
payment during this period was
$58.06. The smallest payment
ever made was for 5 cents.
Ida May Fuller, the first recipient of monthly benefit checks.
Ernest Ackerman--an
P.06
early Social Security
beneficiary.
8
Organizational & Program Changes
Disability
I
n July 1939, the Board was organizationally placed under
result, the SSB chairman no longer reported directly to
T
he Social Security Amendments of 1954 initiated a
OCT-02-1996 16:06
the newly created Federal Security Agency (FSA). As a
disability insurance program which provided the public
with additional coverage against economic insecurity.
the President, but rather to the Administrator of FSA. In
At first, there was a disability "freeze" of a worker's Social
August of that same year, the Social Security Act was
Security record during the years when they were unable to
amended to provide protection for the insured worker's family
work. While this measure offered no cash benefits, it did
as well as for the worker.
prevent such periods of disability from reducing or wiping out
retirement and survivor benefits. On August 1, 1956, the
During the 1940s, Congress made no major changes in old-age
Social Security Act was amended to provide benefits to
and survivors insurance, as it gave priority to legislation
disabled workers aged 50-65 and disabled adult children.
SSA LIBRARY
relating to the war and the problems of postwar adjustment.
Over the next 2 years, Congress broadened the scope of the
However, certain administrative changes took place when, on
program, permitting disabled workers under age 50 and their
July 16, 1946, as part of the FSA's reorganization, the three-
dependents to qualify for benefits. By 1960, 559,000 people
member SSB was abolished and replaced by the Social
were receiving disability benefits, with the average benefit
Security Administration (SSA), with Arthur J. Altmeyer
amount being around $80 per month.
becoming its first Commissioner. SSA continued under the
direction of FSA until April 11, 1953, when it was replaced by
the Department of Health, Education and Welfare (HEW).
With the creation of HEW, the Commissioner reported to the
Secretary of the newly formed department.
Arthur J. Altmeyer,
SSA's first Commissioner
P.07
President Eisenhower signs the 1954 disability "freeze" legislation
10
1
Medicare & Other Changes
In 1969 the Agency's responsibilities were extended even
further by the Federal Coal Mine Health and Safety Act.
T
he decade of the 1960s brought major changes to the
Under this act, SSA was directed to process claims and pay
Social Security program. Under the Amendments of
OCT-02-1996 16:06
benefits to disabled coal miners who have "black lung" disease
1961, the age at which men are first eligible for old-age
and to their dependents or survivors.
insurance was lowered to 62, with benefits actuarially
reduced (women previously were given this option in 1956).
This created an additional workload for the Agency as more
beneficiaries entered the rolls. The number of people
receiving ) disability benefits more than doubled from 1961 to
1969, increasing from 742,000 to 1.7 million.
The most significant administrative change involved the
SSA LIBRARY
signing of the Medicare bill on July 30, 1965, by President
Lyndon Johnson. With the signing of this bill, SSA became
responsible for administering a new social insurance program
that extended health coverage to almost all Americans aged
65 or older. Nearly 20 million beneficiaries enrolled in
Medicare in the first 3 years of the program. SSA would
continue to have responsibility for all aspects of the Medicare
program until a 1977 reorganization created the Health Care
Financing Administration (HCFA) as a sister agency in HEW.
HCFA assumed administrative responsibility for Medicare at
that time.
President Johnson signs the Medicare program into law. Looking on
In addition to this legislation, workloads increased even more
are former President Harry Truman, who received the first Medicare
card at the ceremony, Lady Bird Johnson, Vice-President Hubert
due to the Tax Adjustment Act of 1966. This law included a
Humphrey, and Mrs. Truman.
provision commonly referred to as the "Prouty Amendment,"
which directed SSA to begin making monthly payments to
persons aged 72 and over who were not otherwise eligible for
regular Social Security retirement benefits.
P.08
12
13
SSA Expands and Changes
In 1969, President Nixon identified a need to reform these
and related welfare programs to "bring reason, order, and
D
uring the first year following the enactment of
purpose into a tangle of overlapping programs." In 1971,
Medicare, new benefit claims more than doubled from
Secretary of Health, Education and Welfare, Elliott
OCT-02-1996 16:07
the previous year. As a result, the Agency began to
Richardson, proposed that SSA assume responsibility for th
recruit and train as many new employees as its budgetary
"adult categories." In the Social Security Amendments of
limitations permitted. The Black Lung and Prouty programs
1972, Congress federalized the "adult categories" by creatin;
likewise caused increases in workloads and increases in SSA
the SSI program and assigned responsibility for it to SSA.
staffing.
SSA was chosen to administer the new program because of i
reputation for successful administration of the existing socia
Although increased staffing provided much needed relief, it
insurance programs. SSA's nationwide network of field
was obvious that merely increasing the number of employees
offices and large-scale data processing and record-keeping
LIBERAY USS
was not a long-term solution. Consequently, it was
operations also made it the logical choice to perform the maj
determined that the only adequate long-term response to the
task of converting over 3 million people from State welfare
dramatic workload increases was to launch a coordinated
programs to SSI. To cope with the influx of new beneficiarie
effort to restructure the organization, streamline its
SSA hired approximately 10,000 new employees and opened
workflows, and accelerate the development of improved
several hundred new field offices. In addition, SSA installed
computer systems. These changes helped SSA bring its
the SSA Data Acquisition & Response System (SSADARS), i
massive new workloads under manageable control.
new nationwide computer network that provided online data
retrieval and file updating capabilities.
SSI
At the start of the program in 1974 there were 3.2 million SS
beneficiaries receiving an average payment of $114 per
month. By the end of 1994, there were 6.2 million
I
n the 1970s, SSA became responsible for a new program,
beneficiaries and the average payment amount was $351.
Supplemental Security Income (SSI). In the original 1935
Social Security Act, programs were introduced for needy
aged and blind individuals and, in 1950, needy disabled
HHS Is Created
individuals were added. These three programs were known
as the "adult categories" and were administered by State and
local governments with partial Federal funding. Over the
years, the State programs became more complex and
I
n May 1980, the Department of Health and Human
Services (HHS) was created in a cabinet-level
inconsistent, with as many as 1,350 administrative agencies
reorganization that removed the education function and
P.09
involved and payments varying more than 300% from State to
placed it in a separate department. SSA and HCFA remaine
State.
sister agencies in the new Department of Health and Human
Services.
14
Disability Changes
T
he Social Security Amendments of 1980 made many
OCT-02-1996 16:08
changes in the disability program. Most of these
changes focused on various work incentive provisions
for both Social Security and SSI disability benefits.
The 1980 Amendments also required SSA to conduct periodic
reviews of current disability beneficiaries to certify their
continuing eligibility. This was to become a massive
workload for SSA and one that was highly controversial. By
1983, the reviews had been halted, and in 1984, Congress
passed the Disability Benefits Reform Act modifying several
LIBERAY ASS
aspects of the disability program.
President Reagan signs the 1983 Amendments into law. Also pictured,
left to right: Senator Bob Dole (R-KS): Rep. J.J. Pickle (D-TX); Rep.
Claude Pepper (D-FL); Rep. Bob Michel (R-IL): Senator Daniel Patric
The 1983 Amendments
Moynihan (D-NI): Rep. Thomas P. O'Neill (D-MA); Rep. Barber
Conable (R-NY): and Senator Howard Baker (R-TN).
I
n the early 1980s the Social Security program faced a
Systems Modernization
serious long-term financing crisis. President Reagan
appointed a blue-ribbon panel, known as the Greenspan
Commission, to study the financing issues and make
recommendations for legislative changes. The final bill,
D
uring the 1970s and into the 1980s, SSA's automate
computer systems, which once were state-of-the-art
signed into law in 1983, made numerous changes in the Social
had deteriorated significantly. Some workloads wei
Security and Medicare programs, including the taxation of
seriously backlogged and SSA came within a few hours of n
Social Security benefits, the first coverage of Federal
getting the January 1980 checks issued on time because of
employees under Social Security and an increase in the
computer problems.
retirement age in the next century.
SSA developed a comprehensive response to the need for
computer modernization in its Systems Modernization Plan
(SMP), published in February 1982. The objective of the
SMP was nothing less than a thorough overhaul of every
TNTAI P 10
aspect of SSA's computer systems. The SMP was a major
P.10
success and it positioned SSA to adapt to the changes of the
1980s and to take advantage of new and emerging
technologies in the 1990s and beyond.
16
The "before & after" of systems modernization
Full-time permanent staffing over the years
1982
Today
Thousands
OCT-02-1996 16:09
It took 6 weeks to receive a
Now issued in 5 days
Social Security card
100
It took 39 months to post
Now done in 6 months
annual wage reports
80
It took 4 years to do
Now done in 6 months
annual recomputations for
60
those entitled to higher
benefits
40
SSA LIBRARY
Annual cost-of-living
Now done in 24 hours
increase (COLA) took
3 weeks of computer
20
processing
Emergency payments took
Now received in 5 days
0
'36 '39 '40 '50 '55 '60 '65 '70 '75 '80 '85 '90 '93 '94
15 days
Program Growth
Staffing
F
rom its modest beginnings, Social Security has grown
to become an essential facet of modern life. One in
A
8 the programs for which SSA is responsible have
seven Americans receives a Social Security benefit, and
grown over the years, the organization has grown to
more than 90 percent of all workers are in jobs covered by
keep pace with its increased duties. The peak in SSA
Social Security. From 1940, when slightly more than 222,000
staffing occurred in 1977, shortly after a major expansion due
people received monthly Social Security benefits, until today.
to the SSI program. At the end of fiscal year 1977, SSA had
when over 42 million people receive such benefits, Social
80,054 full-time permanent staff. In the early 1980s, SSA
Security has grown steadily. The SSI program has nearly
undertook a major downsizing of the organization, cutting
doubled in size over the years from its inception in 1974.
almost 25 percent of its staff over a 5-year period. In January
1995, SSA employed 61,315 full-time permanent staff.
P.01
18
19
Beneficiaries over the years
More than 3 million children gel a Socia.
Security check each month because a par
Social Security
SSI
retired, became disabled or died.
1937
53,236*
1974
3,249,000
OCT-02-1996 16:09
1938
213,670*
1975
4,360,000
More than 26 millie
1939
174,839*
1980
4,194,000
retired workers
1940
222,000
1985
4,200,000
receive Social Secur
every month.
1950
3,477,000
1990
4,888,000
1960
14,845,000
1994
6,295,000
1970
26,229,000
1980
35,585,000
About four out of five workers can count
SSA LIBRARY
*
1990
39,832,000
Recipients of one-time
Social Security if they become disabled.
lump-sum payments.
More than 4 million disabled workers ge
1994
42,883,000
Social Security checks today, along with
about 1.5 million family members.
Social Insurance Beneficiaries Today (12/94)
SSI Beneficiaries Today (12/94)
Retired Workers
Blind/Disabled Adults
26.4 million
Social Security
3.9 million
61.7%
61.99
12.9%
9.3%
7.7%
8.4%
Widows/Widowers
23.6%
14.3%
5.5 million
Disabled Workers
Spouses
Aged Adults
P.02
4 million
Children
3.3 million
Children
1.5 million
3.6 million
0.9 million
20
Payments over the years
Recent Legislation
Social Security
SSI*
Between the passage of the Disability Benefits Reform Act 0
1937
$1,278,000
1974
1984 and the Social Security Independence and Program
$5,096,000,000
Improvements Act of 1994, Congress passed 80 laws
0CT-02-1996 16:10
1938
$10,478,000
1975
$5,716,000,000
containing provisions affecting the programs administered b
1939
$13,896,000
1980
$7,714,000,000
SSA. The vast majority of these bills involved "technical"
corrections and minor changes in program provisions.
1940
$35,000,000
1985
$10,749,000,000
Significant changes during this period included:
1950
$961,000,000
1990
$16,132,000,000
P.L. 99-177 (12/11/85): Placed the Social Security Trust
1960
$11,245,000,000
1994
$25,291,000,000
Funds "off budget" for most purposes.
1970
$31,863,000,000
*
P.L. 99-643 (11/10/86): Expanded and made permanent
1980
$120,511,000,000
Includes only federally
administered payments
provisions allowing special SSI cash payments and Medicaid
SSA LIBRARY
1990
$247,796,000,000
coverage to certain individuals who work despite severe
impairments.
1994
$316,812,000,000
P.L. 100-360 (7/1/88): Created the Medicare Catastrophic
Coverage Program (repealed in 1989).
One recent innovation in payments was the introduction of direct
P.L. 101-239 (12/19/89): Required SSA by 1999 to send
deposit in 1976. Since then, the percentage of beneficiaries receiving
annual Personal Earnings & Benefit Estimate Statements to
their benefits by direct deposit has grown steadily so that today more
virtually all persons working under Social Security.
than 52 percent of all payments are issued this way.
P.L. 103-66 (8/10/93): Increased the percentage of Social
Security benefits subject to income taxes, repealed the limit
Direct Deposit
on earnings subject to the Medicare portion of the Social
Security tax and required States to begin reimbursing the
52.2%
Federal Government for the costs of administering the State
supplements to SSI benefits.
P.L. 103-296 (8/15/94): In addition to making SSA an
independent agency, placed new restrictions on Social
47.8%
Security and SSI disability benefits paid to those disabled du
to drug addiction or alcoholism.
P.03
P.L. 103-387 (10/22/94): Raised the threshold for Social
Checks
Security coverage of the earnings of domestic workers.
22
2
President Clinton's statement at the White
Independence
House bill-signing ceremony for the
Independent Agency:
T
hroughout the 1980s and 1990s, there was growing
bipartisan support for removing SSA from under its
departmental umbrella and establishing it as an
When Franklin Roosevelt made a speech to the New York
0CT-02-1996 16:11
legislature in 1931, he said this: "The success or failure of any
independent agency. Finally, in 1994 the Social Security
government must be measured by the well-being of its citizens."
Independence and Program Improvements Act of 1994
That was the goal that moved him 59 years ago yesterday. On
(P.L. 103-296) was passed unanimously by Congress and, in a
that day, in a ceremony in the Cabinet Room, just behind us,
ceremony in the Rosé Garden of the White House, President
he signed the Social Security Act into law. And that is what
Bill Clinton signed the act into law on August 15, 1994.
guides us today.
With an independent Social Security Administration, we are
reinventing our government to streamline our operations so
that we can serve the American people better. We are
SSA LIBRARY
strengthening those things which Social Security ought to
do, and taking precautions to make sure it does not do
things which it ought not to do. It is proving that
government can still work to improve people's lives. And
now Social Security, we know. will work even better.
For millions of Americans, that signature 59 years ago
transformed old age from a time of fear and want to a period
of rest and reward. It empowered many American families
as well, freeing them to put their children through college to
enrich their own lives, knowing that their parents would not
grow old in poverty President Roosevelt said then that
that session of Congress would be regarded as historic for
all time
What we do here today maintains that historic commitment.
If we keep focus on the work we are sent here to do, what
we do here today can be but the precursor of things that we
also can do to benefit the American people that will be
historic for all time.
President Clinton signs legislation to make SSA an independent agency, using
the same pen used by President Roosevelt when he signed the bill creating
Termten
August 15, 1994
P.04
Social Security, as Secretary of Health & Human Services Donna Shalala
looks on.
- August 15, 1994
24
25
Statements about the independence legislation
"Sixty years ago an infant was born here--Social Security. Today, it
has become an independent institution. In all those 60 years, it has
kept its word, it has kept to its mark, it is sound, it is solvent, it is
"Yesterday, Social Security turned 59 years old. Today, it is reborn
independent, and it is as free as anything can be in a democratic
as an independent agency. What a great birthday present for the
society from political manipulation. And so we celebrate that
0CT-02-1996 16:11
American people. Mr. President, by making the Social Security
Congressman Sam Gibbons (D-FL), Acting Chairman, House
Administration an independent agency, you are renewing the pledge
Ways & Means Committee, 8/15/94
made by Franklin Roosevelt in 1935--to 'give some measure of
protection to the average citizen and to his family against the loss of
a job and against poverty-stricken old age.' Fifty-nine years from
"I am extremely pleased to be here today, in support of the
today we will look back at this day and know that our commitment
conference
agreement.
which represents the culmination of
to the American people has not faltered, but matured gracefully over
congressional action I helped initiate over a decade ago. Bringing
the years."
soundness to the Social Security system has been one of my chief
Secretary of Health & Human Services, Donna Shalala, 8/15/94
legislative priorities
We owe it not just to our senior citizens, but
to our children and the obligations we leave them."
SSA LIBRARY
Congressman Bill Archer (R-TX), Ranking Minority Member,
"Mr. President, this bill comes to you from a unanimous Senate and
House Ways & Means Committee, 08/11/94
a unanimous House of Representatives. There
are
42
million
people now receiving Social Security, and 135 million Americans pay
into the fund. These are, in the truest sense, stockholders in this
"Now on this 11th day of August, 1994, A.D., the Liberty Bell can
great enterprise, and they are entitled to the understanding that it
ring for the Social Security system. The House of Representatives,
is independent, vigilant and sound. This legislation, I believe,
by what it is about to do, will take the final action in a 10-year effort
ensures this
to make a declaration of independence for the Social Security
Senator Daniel Patrick Moynihan (D-NY). Chairman, Senate
system."
Finance Committee, 8/15/94
Congressman Andy Jacobs, (D-IN) Chairman, House Social
Security Subcommittee, 08/11/94
"An independent Social Security Administration is the first step in
restoring public confidence in America's social security system. The
new Social Security Administration will be a far more efficient, far
"I rise enthusiastically in support of (the independence legislation)
more vigilant, and far more responsive agency for Oregonians and
and urge my colleagues to join me in once again approving this
all Americans who depend on Social Security programs."
monumental piece of legislation to restore independence to the
Senator Bob Packwood (R-OR) Ranking Minority Member, Senate
Social Security Administration."
Finance Committee, 8/15/94
Congressman Jim Bunning (R-KY). Ranking Minority Member,
House Social Security Subcommittee, 08/11/94
P.05
26
2:
Timeline
Key Dates
16:12 0CT-02-1996
Social Security Act signed
1935
1930s
Social Security Board created
1935
Federal legislation to promote economic security
6/8/34
First District Office opened in Austin, TX
1936
was recommended in President Franklin D.
Roosevelt's Message to Congress.
First Social Security numbers issued
1936
President Roosevelt created the Committee on
6/29/34
Economic Security to study the problems related
First lump-sum benefits paid
1937
to economic security and to make
SSA LIBRARY
recommendations for a program of legislation.
Social Security Board became part of
1939
Federal Security Agency (FSA)
The Committee on Economic Security's
1/17/35
recommendations were introduced in the 74th
Coverage expanded to include
1939
Congress.
dependents and survivors
The Social Security Act was passed in the House
4/19/35
of Representatives, 372 to 33.
Monthly benefit payments began
1940
The Social Security Act was passed in the Senate
6/19/35
SSA created
by a vote of 77 to 6.
1946
The Social Security Act became law with
8/14/35
HEW created, replaced FSA
1953
President Roosevelt's signature.
Coverage expanded to include disability
The Senate confirmed the President's
8/23/35
1956
nomination of the original members of the Social
Security Board, John G. Winant, Chairman;
Medicare signed into law
1965
Arthur J. Altmeyer, and Vincent M. Miles.
SSI began
The first field office was opened in Austin, Texas.
10/14/36
1974
The Baltimore office for record-keeping
11/9/36
HHS created, replaced HEW
1980
operations opened in the Candler Building.
P.06
SSA became an independent agency
1995
Applications for Social Security account numbers
11/24/36
were distributed by the Post Office.
2'
28
John D. Sweeney, Jr. of New Rochelle, New York
In a special message to Congress, President
11/19/4
12/1/36
was issued the first Social Security card.
Harry S. Truman proposed a comprehensive,
prepaid medical insurance plan for all people
Workers began to acquire credits toward old-age
1/1/37
t
through the Social Security system.
insurance benefits.¹
7/16/40
OCT-02-1996 16:12
Under the President's Reorganization Plan of
First applications for benefits filed. Ernest
1/37
1946, the Social Security Board was abolished
Ackerman, a retired Cleveland motorman, was
and replaced with the Social Security
among the first to apply.
Administration; Arthur J. Altmeyer became first
Commissioner of Social Security.
President Roosevelt accepted the resignation of
2/19/37
John G. Winant from the Social Security Board
and appointed Arthur J. Altmeyer as the new
1950s
Chairman.
First Social Security benefits paid (one-time
Social Security Act Amendments established a
8/28/5
3/11/37
SSA LIBRARY
lump-sum only).
program of aid to the needy who are
permanently and totally disabled.
Under the Federal Reorganization Act of 1939,
7/1/39
the Social Security Board was made part of the
William L. Mitchell became Acting
4/10/5:
newly established Federal Security Agency.
Commissioner of Social Security.
Arthur J. Altmeyer was reappointed for a 6-year
8/3/39
The Federal Security Agency was abolished and
4/11/53
term as the Chairman of the Social Security
its functions transferred to the newly formed
Board.
Department of Health, Education and Welfare.
The Social Security Amendments of 1939
John W. Tramburg became Commissioner of
11/24/:
8/10/39
broadened the program to include dependents'
Social Security.
and survivors' benefits.
Charles I. Schottland became Commissioner of
8/26/5.
Social Security.
1940s
The Social Security Amendments established a
9/1/54
disability "freeze" to help prevent the erosion of a
Monthly benefits first became payable under
1/1/40
disabled worker's benefits.
old-age and survivors insurance to aged retired
The Social Security Act was amended to provide
8/1/56
workers and their dependents and to survivors of
deceased insured workers.
monthly benefits to permanently and totally
disabled workers aged 50-64 and for adult
Ida May Fuller became the first person to
1/31/40
children of deceased or retired workers, if
receive an old-age monthly benefit check under
disabled before age 18.
P.07
the new Social Security Law.
Ground was broken for the Woodlawn building
11/57
complex.
30
President Richard M. Nixon signed the Federal
12/30/1
William L. Mitchell became Commissioner of
2/4/59
Coal Mine Health and Safety Act.
Social Security.
1960s
1970s
OCT-02-1996 16:13
Official opening of the new East Building.
8/10/7
Dedication ceremony for the Social Security
7/1/60
Administration's Woodlawn headquarters.
Social Security Amendments of 1972 signed into
10/30/:
law by President Nixon.
The Social Security Amendments of 1961 were
6/30/61
signed by President John Kennedy, permitting
The Administration Building at the Woodlawn
1/19/73
all workers to elect reduced retirement at age 62.
complex was renamed in honor of Arthur J.
Altmeyer who died on October 16, 1972.
Robert M. Ball became Commissioner of Social
4/17/62
Security.
Arthur E. Hess became Acting Commissioner of
3/27/73
SSA LIBRARY
Social Security.
Employees began to occupy the Annex Building
5/4/64
in Woodlawn.
Dedication ceremony for the new West Building,
8/20/73
located at the Woodlawn complex.
President Lyndon B. Johnson signed the
7/30/65
Medicare Bill in the presence of former President
James B. Cardwell became Commissioner of
10/1/73
Truman who proposed this legislation in his
Social Security.
message to Congress in 1945.
Supplemental Security Income went into
1/1/74
The Tax Adjustment Act of 1966, which was
3/15/66
operation as a result of the Social Security
signed by President Johnson, included the
Amendments of 1972.
Prouty amendment that allowed people age 72
and older to qualify for benefits without any
HEW reorganization was announced in the
3/9/77
Social Security coverage.
Federal Register, transferring Medicare to HCFA.
Lyndon Johnson, the only President to visit the
10/12/66
Don I. Wortman became Acting Commissioner of
12/12/:
Social Security Administration's headquarters,
Social Security.
arrived to participate in the 15th Annual Honor
Stanford G. Ross became Commissioner of Social
Awards Ceremony.
10/5/7
Security.
The Bureau of Disability Insurance completed its
2/69
move to the Dickinson Building.
The Metro-West Building was completed.
12/79
Personnel moved into the new Supply Building
11/69
located at the Woodlawn complex.
1980s
P.08
Herbert R. Doggette, Jr. became Acting
1/1/80
Commissioner of Social Security.
32
William J. Driver became Commissioner of
1/3/80
Social Security.
Independent Agency legislation passed
8/5/94
unanimously in the Senate.
SSA's new National Computer Center was
11/80
opened.
Independent Agency legislation passed
8/11/94
unanimously in the House.
DHEW became the Department of Health and
5/4/80
19:13 9661-20-100
Human Services.
President Bill Clinton signed legislation to make
8/15/94
SSA an independent agency.
Metro-West Building was dedicated.
10/29/80
SSA became an independent agency.
Herbert R. Doggette, Jr. became Acting
3/31/95
1/20/81
Commissioner of Social Security.
John A. Svahn became Commissioner of Social
5/6/81
Security.
Martha A. McSteen became Acting
9/14/83
LEBRARY USS
Commissioner of Social Security.
Disability Benefits Reform Act of 1984 signed.
10/9/84
Dorcas R. Hardy became Commissioner of Social
6/26/86
Security.
Gwendolyn S. King became Commissioner of
8/1/89
Social Security.
1990s
Louis D. Enoff became Acting Commissioner of
10/1/92
Social Security.
Lawrence H. Thompson became Acting
7/18/93
Commissioner of Social Security.
Shirley S. Chater became Commissioner of
10/8/93
Social Security.
Vice President Al Gore visited SSA to promote
6/6/94
the principles highlighted in the National
Performance Review. Mr. Gore's arrival marks
P.09
the first visit of a Vice President to SSA
headquarters.
34
3!
36
11/53-8/54
John W. Tramburg
7/46-4/53
Arthur J. Altmeyer
*Acting
8/54-2/59
Charles I. Schottland
4/53-11/53
William L. Mitchell*
of Social Security
Commissioners
12/77-10/78
Don I. Wortman* *
3/73-10/73
Arthur E. Hess*
2/59-4/62
William L. Mitchell
*Acting
10/78-12/79
Stanford G. Ross
10/73-12/77
James B. Cardwell
4/62-3/73
Robert M. Ball
3
OCT-02-1996 16:14
Herbert R. Doggette, Jr. *
William J. Driver
Gwendolyn S. King
Louis D. Enoff"
1/80-1/80
1/80-1/81
8/89-10/92
10/92-7/93
SSA LIBRARY
Herbert R. Doggette, Jr. *
John A. Svahn
Lawrence H. Thompson*
Shirley S. Chater
1/81-5/81
5/81-9/83
7/93-10/93
10/93-
P.11
Martha A. McSteen*
Dorcas R. Hardy
9/83-6/86
6/86-8/89
38
*Acting
*Acting
OCT-02-1996 16:14
SSA LIBRARY
P.12
SOCIAL ADMINISTRATION USA SECURITY
Social Security Administration
SSA Publication No. 21-059
July 1995
ICN 440000
TOTAL P.12
OCT-02-1996 16:01
SSA LIBRARY
P.01
SOCIAL SECURITY
USA
ADMINISTRATION
SOCIAL SECURITY ADMINISTRATION
HISTORIAN'S OFFICE
LARRY DEWITT/BOB KREBS
6401 SECURITY BLVD.
BALTIMORE, MD. 21235
(410) 965-8107/965-8106
FAX: (410) 965-8105
TO: Molly BROSTROM
DATE: 10/2/96
Policy CounciL
FAX #: (202)456-7028 PAGES: 23 (including cover sheet)
FROM:
LARRY DEWITT
SUBJECT: BRiEf HiSToRy of SOCIAL SECURITY
COMMENTS:
FYI: FOR FUTURE REFERENCE, OUR history info
is AVAilAblE AT: http://www.SSA.gov/hurght