The Social Security Act created a joint federal and state program for both unemployment insurance and old age pension. The social Security Act, which was considered radical when enacted, is today considered one of the mainstays of American society.
FDR had first proposed a Social Security Act in 1930, as governor of New York. The idea was not radical. Bismarck had introduced it in Germany in the 1880s. However, despite being proposed a number of times, the idea had never received traction in the United States. FDR formally introduced the Social Security Act to Congress, on January 17th, 1935. In his address to Congress on the matter, FDR stated that the bill would provide “some security against the hazards and vicissitudes of life.”
The final Social Security bill became law on August 14th, 1935. The law provided for old age pensions, unemployment insurance, and aid to dependent children. Most of the cost for the bill was to be self-funded, with the federal government levying a tax of 1% on the wages of employers with 8 or more workers. The old age pensions would be paid out of the contributions of employees and their employers to the fund. These deductions began in 1937 at 1% and were scheduled to rise to 3 % by 1947. The only portions of the bill to be paid for by the government were the aid to dependent children and a special provision to support the indigent elderly (that provision only required subsidizing until the fund began and could pay out benefits from the money earned.)