Smith was born in November 1757 in Lancaster, Pennsylvania. He came of age at the height of the American Revolution and, like his father and his brother, Samuel Smith, volun- teered to serve. He distinguished himself at the Battle of Brandywine, but his experience convinced him that he was not suited to a military career. After the war, Smith attended the College of New Jersey (later Princeton University). He graduated in 1781 and went on to study law. Following his ADMISSION TO THE B AR,heestablished a practice in Baltimore, and looked after family business interests while his father served the first of two terms in the Maryland state senate. By 1793 Smith had followed his father into the political arena. He served in the Maryland state senate from 1793 to 1796 and in the Maryland House of Delegates from 1796 to 1800. While in the house of delegates, he served a concurrent term on Baltimore’s city council. In 1801 Smith was appointed secretary of the Navy when his brother stepped down from that post following an appropriations dispute with Congress. Up to that time, military appro- priations had not been monitored or controlled as closely as other government expenditures— and President Jefferson and members of his cabinet had become increasingly concerned about moneys drawn from the Treasury by the Secretaries of War and the Navy. When the cabinet curtailed lump-sum payments and demanded an itemized accounting of how funds were spent, Smith’s brother considered the demands to be a personal attack, and he resigned. Smith, who had a far better understanding of business and accounting practices, was less inclined to view the increased scrutiny as an attack on his character. Most historians record that Smith served as secretary of the Navy from January 1802 to March 1805, but there are indications that he continued to act as secretary during his appoint- ment as attorney general of the United States from March 1805 to the end of the year. Though his was an official appointment as attorney general, he argued no cases before the U.S. Supreme Court and wrote no opinions. There are reasons to believe that Smith’s cabinet service as secretary of the Navy and official duties as attorney general were curtailed for personal as well as political reasons. By 1805, his family had been involved in a number of incidents that caused embarrassment in Washington, D.C. One celebrated event covered by Washington papers was a party given by Smith and his wife for a niece who married Napoléon Bonaparte’s brother. Elizabeth Patterson Bona- parte scandalized Washington with her transpar- ent ball gown, and offended the British ambassa- dor with her suggestive dancing. In January 1806 Smith was asked by the president to consider an appointment as chancellor of Maryland and chief judge of the District of Baltim ore. (Chancellor is the name given to the presiding judge of a court of chancery.) Smith declined the opportunity and remained in Washington. By July 1806 Smith was once again acting as the secretary of the Navy. In United States v. Smith, 27 F. Cas. 1192 (D.N.Y. July 15, 1806), he was called to testify in this capacity as a material witness in a New York trial. And in United States v. Burr, 25 F. Cas. 55 (D. Va. ▼▼ ▼▼ Robert Smith 1757–1842 17501750 18001800 18251825 18501850 17751775 ❖ 1757 Born, Lancaster, Pa. 1775–83 American Revolution ◆ 1781 Graduated from the College of New Jersey (later Princeton University) 1793–96 Served in Md. state senate 1796–1800 Served in the Md. House of Delegates 1802–05 & 1806–11 Served as secretary of the Navy ◆ ◆ 1805–06 Served as U.S. attorney general under President Jefferson 1812–14 War of 1812 ◆ 1811 Served as secretary of state under President Madison 1807 Authenticated government capture documents in United States v. Burr 1806 Served as material witness in United States v. Smith 1813–33 Served as provost of the University of Maryland ❖ 1842 Died, Baltimore, Md. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 238 SMITH, ROBERT Aug. 31, 1807), Smith, as secretary of the Navy, was asked to verify the authenticity of govern- ment documents ordering Aaron Burr’scapture. Smith was named secretary of state on March 6, 1811, by President Madison. He served until November 25, when Madison called for his resignat ion. Madison intimates regarded Smith as an “ornamental” secretary of state because Madison, who had been secretary of state in the Jefferson administration, co ntinued to discharge the duties of his previous office while serving as president. Before calling for Smith’s resignation, Madison attempted to ease him out of office by offering him an embassy post in Russia. Smith declined the offer and decided to return to Baltimore. In 1813 Smith was appointed provost of the University of Maryland. For the next 20 years, he devoted his time to building the university’s prestige and securing its financial future. Smith died in Baltimore on November 26, 1842. FURTHER READINGS Armstrong, Thom M. 1991. Politics, Diplomacy, and Intrigue in the Early Republic: The Cabinet Career of Robert Smith, 1801–1811. Dubuque, IA: Kendall/Hunt. Mihalkanin, Edward S. 2004. American Statesmen: Secretaries of State from John Jay to Colin Powell.Westport, CT: Greenwood Press. v SMITH, WILLIAM FRENCH William French Smith served as U.S. attorney general from 1981 to 1985. A longtime friend and confidant of President RONALD REAGAN, Smith helped formulate the conservative poli- cies that came to be identified with the Reag an administration. Smith was born on August 26, 1917, in Wilton, New Hampshire. He graduated from the University of California at Los Angeles in 1939 and from the Harvard Law School in 1942. From 1942 to 1946, Smith served in the U.S. Navy Reserve, reaching the rank of lieutenant. In 1946 Smith joined the Los Angeles law firm of Gibson, Dunn, and Crutcher, one of the largest and most prominent corporate firms in California. He specialized in LABOR LAW, eventu- ally becoming a senior partner and head of the firm’s labor department. He enjoyed a reputa- tion as a tough but flexible negotiator. He served as a direc tor of the Legal Aid Foundation of Los Angeles from 1963 to 1972. During the 1960s Smith became active in conservative REPUBLICAN PARTY politics. During Arizona Senator BARRY M. GOLDWATER’s 1964 presidential campaign, Smith met Ronald Reagan, who was working for Goldwater. Smith was impressed by Reagan’s views and his political potential and was a member of a small group of southern California business leaders who urged Reagan to run for governor in 1966. After Reagan was elected governor, Smith became his personal adviser. In 1968 Reagan appointed him to the University of California Board of Regents. Smith later served three terms as chairman of the board. Smith remained a close adviser to Reagan after he left the governorship and began his quest for the presidency. When Reagan was elected president in 1980, one of his first appointments was the naming of Smith as his attorney general. ▼▼ ▼▼ William French Smith 1917–1990 19001900 19501950 19751975 20002000 19251925 ❖ 1917 Born, Wilton, N.H. 1914–18 World War I 1939–45 World War II ◆ 1939 Graduated from U.C.L.A. 1942–46 Served in U.S. Navy Reserve ◆ 1946 Joined L.A. firm of Gibson, Dunn, and Crutcher 1961–73 Vietnam War ◆ 1968 Appointed to the Univ. of Calif. Board of Regents 1963–72 Served as director of Legal Aid Foundation of Los Angeles 1967–75 Ronald Reagan served as governor of California 1981–89 Ronald Reagan served as U.S. president ❖ 1990 Died, Los Angeles, Calif. 1981–85 Served as U.S. attorney general 1985–89 Served on the President's Foreign Intelligence Board 1984 Lobbied for passage of the Comprehensive Crime Control Act of 1984 ◆ 1950–53 Korean War WE HAVE LOST CONTROL OF OUR BORDERS .WE HAVE PURSUED UNREALISTIC POLICIES .WE HAVE FAILED TO ENFORCE OUR LAWS EFFECTIVELY . —WILLIAM FRENCH SMITH GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SMITH, WILLIAM FRENCH 239 During Smith’s tenure, the JUSTICE DEPART- MENT shifted its position on a number of issues, including ABORTION, CIVIL RIGHTS, and ANTITRUST LAWS . Adhering to his conservative political views, Smith urged the U.S. Supreme Court to reassess its rulings in earlier abortion cases and to accord greater deference to states that wished to restrict abortions. The Justice Department also placed less emphasis on AFFIRMATIVE ACTION as a means of addressing past RACIAL DISCRIMINA- TION and on mandatory busing as a means of creating integrated public school systems. Although Smith maintained that he vigorously enforced civil rights laws, his critics argued that the department filed fewer cases in the areas of housing and educational discrimi- nation than it did under previous administra- tions. In creating antitrust policy, Smith con- tended that bigness in business is not necessarily bad and that the government should be concerned only with grossly anticompetitive behavior. He was instrumental in developing a more tolerant poli cy toward mergers. This shift in the federal government’s antitrust position has been credited with contributing to the wave of MERGERS AND ACQUIS ITIONS that occurred during the 1980s. Smith also pursued a strong anticrime initiative, increasing the resources used to fight the distribution and sale of illegal narcotics by 100 percent. He also successfully lobbied for the passage of the Comprehensive CRIME CONTROL ACT of 1984 (Pub. L. No. 98-473, 98 Stat. 1838), a sweeping measure that included revised federal rules on bail and the establishment of a commission to create new federal sentencing guidelines. In January 1984 Smith announced his resignation, saying that he wished to work on President Reagan’s reelection campaign and to return to private life. He did not leave office, however, until February 1985. This delay was caused by the difficulties that his eventual successor, EDWIN MEESE III, encountered in obtain- ing Senate confirmation. Smith died on October 29, 1990, in Los Angeles. His memoirs were published the following year. FURTHER READINGS Reeves, Richard. 2005. President Reagan: The Triumph of Imagination. New York: Simon & Schuster. Smith, William French. 1991. Law and Justice in the Reagan Administration: The Memoirs of an Attorney General. Stanford, Calif.: Hoover Institution Press. CROSS REFERENCE Affirmative Action. SMUGGLING Smuggling is the criminal offense of bringing into, or removing from, a country those items that are prohibited or upon which customs or excise duties have not been paid. Smuggling is the secret movement of good s across national borders to avoid CUSTOMS DUTIES or import or export restrictions. It typically occurs when either the customs duties are high enough to allow a smuggler to make a large profit on the clandestine goods or when there is a strong demand for prohibited goods, such as narcotics or weapons. The United States polices smuggling through various federal agencies, including the U.S. Customs and Border Protec- tion agency. This agency, which is part of the DEPARTMENT OF HOMELAND SECURITY,includesthe former U.S. Customs Service, the U.S. Border Patrol, the U.S. Coast Guard, and the DRUG ENFORCEMENT ADMINISTRATION (DEA). Federal law prohibits the importation of a number of items that are injurious to public health or welfare, including diseased plants or animals, obscene films and magazines, and illegal narcotics. Importation of certain items is prohibited for economic or political purposes. For example, the United States bans trade with Cuba, which means that Cuban cigars may not be legally imported. This restriction inevitably results in the smuggling of Cuban cigars into the United States. Federal law also bans the export of military weapons or items related to the national defense without an export permit. In addition, federal law prohibits the impor- tation of goods on which required customs or excise duties have not been paid. Such duties are fixed by federal law to raise revenue and to influence commerce. Travelers at international borders can prop- erly be stopped by customs agents, required to identify themselves, and asked to submit to a search. To combat smuggling, customs agents have the authority to search an individual and his baggage or any packages or containers sent into the country. Within the United States, police cannot conduct searches unless they have GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 240 SMUGGLING a warrant, PROBABLE CAUSE to suspect unlawful activity, or the consent of the individual being searched. Such requirements do not apply to border searches. Customs agents have a right to search anyone at a border for no reason at all, although they ordinarily only conduct extensive and thorough searches of individuals who arouse suspicion. Beginning in the mid-1990s, new technology, including x-ray machines that examine commercial vehicles, has been installed by the Border Patrol at border stations in the Southwest. The DEA has also enhanced its technology for combating smuggling in the Southwest through WIRETAPPING of drug CARTEL members. In addition, law enforcement agencies have developed drug courier profiles that help customs agents identify and question individuals who are likely to be carriers of narcotics. Smugglers use two methods to move goods. One is to move cargoes undetected across borders. Smugglers move illegal narcotics from Mexico into remote areas of the Southwest United States using airplanes, trucks, and human mules. These so-called mules walk across an isolated region of the Mexico-U.S. border with backpacks full of illegal narcotics. In response, the U.S. Congress enacted a law in 2006 that calls for the construction of high- security fencing and walls along 700 of the almost 2,000 mile border. The other method is one of concealment. For example, a smuggler may hide illegal narcotics in unlikely places on ships or cars, in baggage or cargo, or on a person. Some drug couriers swallow containers of narcotics to avoid detection of the drugs if searched. In the event that a traveler possesses anything that he or she did no t declare to customs inspectors, or any prohibited items, the traveler can be compelled to pay the required duties, plus penalties, and can also be arrested. Customs agents can seize the illegal goods. Federal law imposes harsh sanctions for the offense of smuggling. Individuals can be convicted merely for having illegal goods in their possession if they fail to adequately explain their presence. Anyone who is guilty of knowingly smuggling any goods that are prohibited by law or that should havecomethrough customsorwhoreceives, buys, sells, transports, or aids in the commission of one of these acts can be charged with a felony and can also be assessed civil penalties. The merchandise itself, as well as any vessel or vehicle used to transport it, can be forfeited to the United States under FORFEITURE proceedings. FURTHER READINGS Drug Enforcement Administration. Available online at www.usdoj.gov/dea/ (accessed July 31, 2009). White House Office of National Drug Control Policy. 2009. National Drug Control Strategy: 2009 Annual Report. Washington, D.C.: GPO. CROSS REFERENCES Contraband; Drugs and Narcotics; Mexico and the United States; Search and Seizure. SOCIAL SECURITY A federal program designed to provide benefits to employees and their dependants through income for retirement, disability, and other purposes. The social security program is funded through a federal tax levied on employers and employees equally. The Social Security Program was created by the SOCIAL SECURITY ACT OF 1935 (42 U.S.C.A. § 301 et seq.) to provide old age, survivors, and disability insurance benefits to the workers of the United States and their families. The program, which is administered by the Social Security Administration (SSA), an independent federal agency, was expanded in 1965 to include health insurance benefits under the MEDICARE program and to assist the states in establishing UNEMPLOYMENT COMPENSATION programs. Unlike WELFARE, which is financial assistance given to persons who qualify on the basis of need, Social Security benefits are paid to an individual or his family on the basis of that person’s employment record and prior contributions to the system. One method of smuggling is concealment. A U.S. Customs official at the Miami International Airport displays a package of heroin found inside a suspect’s shoes. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION SOCIAL SECURITY 241 History As a general term, social security refers to any plan designed to protect society from the instability that is caused by individual cata- strophes, such as unemployment or the death of a wage earner. It is impossible to predict which families will have to endure these burdens in a given year, but disaster can be expected to strike a certain number of households each year. A government-sponsored plan of social insurance spreads the risk among all members of society so that no single family is completely ruined by an interruption of, or end to, incoming wages. Germany was the first industrial nation to adopt a program of social security. In the 1880s Chancellor Otto von Bismarck instituted a plan of compulsory sickness and old age insurance to protect w age earners and their dependents. Over the next 30 years, other European and Latin American countries created similar plans with various features to benefit different categories of workers. In the United States, the federal government accepted the responsibility of providing pen- sions to disabled veterans of the Revolutionary War. Pensions were later paid to disabled and elderly veterans of the Civil War. The first federal old age pension bill was not introduced until 1909, however. To fill this void, many workers joined together to form beneficial associations, which offere d sickness, old age, and funeral benefit insurance. The federal gov- ernment encouraged people to set aside money for future emergencies with a popular postal savings plan. People who could not manage were helped, if at all, by private charity because it was generally believed that those who wanted to help themselves would. Congress enacted the Social Security Act of 1935 as part of the economic and social reforms that made up President Franklin D. Roos evelt’s NEW DEAL. The act provided for the payment of monthly benefits to qualified wage earners who were at least 65 years old, or payment of a lump-sum death benefit to the estate of a wage earner who died before reaching age 65. In 1939 Congress created a separate benefit for secondary beneficiaries —the dependent spouses, children, widows, widowers, and parents of wage earners—to soften the economic hardship created when they lost a wage earner’s support. The First Payments of Social Security A B fter the enactment of the Social Security Act of 1935 (42 U.S.C.A. § 301 et seq.) and the creation of the Social Security Administration (SSA), the federal government had a short time to establish the program be fore beginning to pay benefits. Monthly benefits were to begin in 1940. The period from 1937 to 1940 was to be used both t o build up the trust funds and to provide a minimum period for participation for persons to qualify for monthly benefits. From 1937 until 1940, however, Social Security paid benefits in the form of a single, lump-sum payment. The purpose of these one-time pa yments was to provide some compensation to peopl e who contributed to the program but wo uld not partici- pate long enough to be vested for monthly benefits. The first applicant for a lump-sum benefit w as Ernest Ackerman, a Cleveland motorman who retired one day after the Social S ecurity Program began. During his one day of participation in the program, five cents was withheld from Acker- man’s pay for Social Security, and upon retiring, he received a lump-sum payment of seventeen cents. Payments of monthly benefits began in January 1940. On January 31, 1940, the first monthly retirement check wa s issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. Fuller died in January 1975 a t the age of 100. During her 35 years as a beneficiary, she received more than $20,000 in benefits. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 242 SOCIAL SECURITY Such beneficiaries are entitled to benefits because the wage earner made contributions to the plan. Beneficiaries can receive their payments directly upon the retirement or death of the worker. Social Security originally protected only workers in industry and commerce. It excluded many classes of workers because collecting their contributions was considered too expensive or inconvenient. Congress exempted household workers, farmers, and workers in family busi- nesses, for example, because it believed that they were unlikely to maintain adequate employ- ment records. In the 1950s, however, Congress extended Social Security protection to most self- employed individuals, most state and local government employees, household and farm workers, members of the armed forces, and members of the clergy. Federal employees, who previously had their own retirement and benefit system, were given Social Security coverage in 1983. Old Age, Survivors, and Disability Insurance Federal Old Age, Survivors, and Disability Insurance (OASDI) benefits are monthly pay- ments made to retired people, to families whose wage earner has died, and to workers who are un- employed because of sickness or accident. Workers qualify for such protection by having been employed for the mandatory minimum amount of time and by having made contributions to Social Security. There is no financial-need requirement to be satisfied. Once a worker quali- fies for protection, his family is also entitled to protection. The entire program is geared toward helping families as a matter of social policy. Two large funds are held in trust to pay benefits earned by people under OASDI: the Old Age and Survivors Trust Fund and the Disability Insurance Trust Fund. As workers and employers make payroll contributions to these funds, money is paid out in benefits to people currently qualified to receive monthly checks. The OASDI program is funded by payroll taxes levied on employees and their employers and on the self-employed. The tax is imp osed upon the employee’s TAXABLE INCOME,uptoa maximum taxable amount, with the employer contributing an equal amount. The self- employed person contributes twice the amount levied on an employee. In 2009 the self-employment rate was 15.3 percent, levied on EARNED INCOME up to a maximum of $106, 800. Old Age Benefits A person becomes eligible for Social Security old-age benefits by working a minimum number of calendar quarters. The number of quarters required for full insurance increases with the worker’s ag e. Forty quarters is the maximum requirement. The individual is credited for income up to the maximum amount of money covered by Social Security for those years. This amount is adjusted to reflect the impact of inflation on normal earnings and to ensure that a worker who pays increasing Social Security contributions during his or her work life will receive retirement benefits that keep pace with inflation. Persons born before 1943 can retire at age 65 with full benefits based on their average income during their working years. For those born between 1954 and 1960, the retirement age for full benefits has increased to age 66. Persons born in 1960 or later will not receive full retirement benefits until age 67. Any person, however, may retire at age 62 and receive less than full benefits. At age 65, a worker ’s spou se who has not contributed to Social Security receives 50 percent of the amount paid to the worker. Since 1975, Social Security benefits have increased annually to offset the corrosive effects of inflation on fixed incomes. These increases, known as “cost of living allowances” (COLAs), are based on the annual increase in consumer prices. Allowing benefits to increase automati- cally ended the need for special acts of Congress, but it has also steadily increased the cost of the Social Security Program. A person who continues to work past the retirement age may lose some benefits because Social Security is designed to replace lost earnings. If earnings from employment do not exceed the amount specified by law, the person receives the full benefits. If earnings are greater than that amount, one dollar of benefit is withheld for every two dollars in wages earned above the exempt amount. Once a pe rson reaches age 70, however, he does not have to report earnings to the SSA, and the benefit is not reduced. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SOCIAL SECURITY 243 Survivors’ Benefits Survivors’ benefits are paid to family members when a worker dies. Survivors can receive benefits if the deceased worker was employed and contributed to Social Security long enough for someone his or her age to qualify for Social Security. Both mothers and fathers earn protection for their families by working and contributing to Social Security. If a wage earner dies, his unmarried children are entitled to receive benefits. If the child of a wage earner becomes permanently disabled before age 22, he or she can continue to receive survivors’ benefits at any age unless he or she becomes self-supporting or marries. Survivors’ benefits can also go to a surviving spouse when the worker dies. A surviving spouse who retires can begin collecting survivors’ benefits as early as age 60. If a worker dies and leaves a divorced spouse who was married to the worker for at least ten years, the ex-spouse can receive survivors’ benefits at age 60 if he or she retires. In addition to monthly checks, the worker’s widow or widower, or, if there is none, another eligible person, may receive a lump-sum payment of $255 on the worker’s death. Disability Benefits In the 1970s, the SSA became responsible for a new program, Supple- mental Security Income (SSI). The original 1935 Social Security Act had included programs for needy aged and blind individuals, and in 1950 programs for needy disabled individuals were added. These three programs were known as the “adult categories” and were administered by state and loca l governments with partial federal funding. Over the years, the state programs became more complex and inconsistent until as many as 1,350 administrativ e agencies w ere involved, and payments varied more than 300 percent from state to state. In 1969 President RICHARD M. NIXON identified a need to reform these and related welfare programs. In 1972 Congress federalized the “adult categories” by creating the SSI program and assigned respon- sibility for it to the SSA. A person who becomes unable to work and expects to be disabled for at least 12 months or who will probably die from their condition can receive SSI payments before reaching retirement age. Workers are eligible for disabil ity benefits if they have worked enough years under Social Security prior to the onset of the disability. The amount of work credit needed depends on the worker’s age at the time of the disability. That time can be as little as one and one-half years of work in the three years before the onset of the disability for a worker under 24 years of age, but it is never more than a total of ten years. A waiting period of five months after the onset of the disability is imposed before SSI payments begin. A disabled worker who fails to apply for benefits when eligible can some- times collect back payments. No more than 12 months of back payments may be collected, however. Even if workers recover from a dis- ability that lasted more than 12 months, they can apply for back benefits within 14 months of recovery. If workers die after a long period of disability without having applied for SSI, their family may apply for disability benefits within three months of the date of the worker’s death. The family members are also eligible for survivors’ benefits. A disability is any physical or mental condition that prevents the worker from doing substantial work. Examples of disabilities that meet the Social Security criteria include brain damage, heart disease, kidney failure, severe arthritis, and serious mental illness. The SSA uses a sequential evaluation process to decide whether a person’sdisabilityisserious enough to justify the awarding of benefits. If the impairment is so severe that it significantly affects “basic work activity,” the worker’smedical data are compared with a set of guide-lines known as the “Listing of Impairments.” A claimant found to suffer from a condition in this listing will receive benefits. If the condition is less severe, the SSA determines whether the impairment prevents the worker from doing his former work. If not, the application will be denied. If so, the SSA proceeds to the final step, deter- mining whether the impairment prevents the applicant from doing other work available in the economy. At this point, the SSA uses a series of medical-vocational guidelines that consider the applicant’s residual functional capacity as w ell as his age, education, and experience. The guidelines look at three types of work: One type is for persons whose residual physical capacity enables them to perform only “seden- tary” work on a sustained basis, another is for those able to do “light” work, and a third is for those able to do “medium” work. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 244 SOCIAL SECURITY If the SSA determines that an applicant can perform one of these types of work, benefits will be denied. A claimant may appeal this decision and ask for a hearing in which to present further evidence, including personal testimony. If the recommendation of the administrative law judge conducting the hearing is adverse, the claimant may appeal to the SSA Appeals Council. If the claimant loses his appeal, he may file a CIVIL ACTION in federal district court seeking review of the agency’s adverse determi- nation. Persons who meet the OASDI disability eligibility requirements may receive three types of benefits: monthly cash payments, vocational rehabilitation, and medical insurance. Provided proper application has been made, cash payments begin with the sixth month of disability. The amount of the monthly payment depends upon the amount of earnings on which the worker has paid Social Security taxes and the number of his eligible dependents. The maximum for a family is usually roughly equal to the amount to which the disabled worker is entitled as an individual, plus allowances for two dependents. Vocational rehabilitation services are pro- vided through a joint federal-state program. A person receiving cash payments for disability may continue to receive them for a limited time after beginning to work at or near the end of a program of vocational rehabilitation. Called the “trial work period,” this period may last as long as nine months. Medical services are available through the Medicare Program (a federally sponsored pro- gram of hospital and medical insurance). A recipient of OASDI disability benefits begins to participate in Medicare 25 months after the onset of disability. In 1980 Congress made many changes in the disability program. Most of these changes focused on various work-incentive provisions for both Social Security and SSI disability benefits. The SSA was directed to review current disability beneficiaries periodically to certify their continuing eligibility. This produced a massive workload for the SSA and one that was highly controversial, as persons with apparently legitimate disabilities were removed from SSI. By 1983, the reviews had been halted. The CONTRACT WITH AMERICA Advancement Act of 1996 (Pub. L. No. 104-121) changed the basic philosophy of the disa bility program. New applicants for Social Security or SSI disability benefits are no longer eligible for benefits if drug addiction or alcoholism is a material factor in their disability. Unless they can qualify on some other medical basis, they cannot receive disability benefits. Individuals in this category already receiving benefits had their benefits terminated as of January 1, 1997. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub. L. No. 104-193), which concerns welfare reform, terminated SSI eligibility for most noncitizens. Previously, lawfully admitted ALIENS could receive SSI if they met the other requirements. All existing noncitizen benefici- aries were to be removed from the rolls unless they met one of the exceptions in the law. Medicare The Medicare Program provides basic health- care benefits to recipients of Social Security and is funded through the Social Security Trust Fund. President HARRY S. TRUMAN first proposed a medical care program for the aged in the late 1940s, but it was not enacted until 1965, when Medicare was established as one of President Lyndon B. Johnson’s GREAT SOCIETY programs (42 U.S.C.A. § 1395 et seq.). The Medicare Program is administered by the Health Care Financing Administration (HCFA). The federal government enters into Sources of Income for the Aged, 2004 SOURCE: Social Securit y Administration, Income of the Aged Chartbook, 2004. Percentage receiving income Social Security Asset income Retirement benefits other than Social Security Earnings Public assistance Veterans’ benefits 0 20 40 60 80 100 89% 55% 41% 24% 4% 4% ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION SOCIAL SECURITY 245 contracts with private insurance companies for the processing of Medicare claims. To qualify for Medicare payments for their services, healthcare providers must meet state and local licensing laws and standards set by the HCFA. Medicare is divided into a hospital insur- ance program and a supplementary medical insurance program. The Medicare hospital insurance plan is funded through Social Security payroll taxes. It covers reasonable and medically necessary treatment in a hospital or skilled nursing home, meals, regular nursing care services, and the cost of necessary special care. Medicare’s supplementary medical insur- ance program is financed by a combination of monthly insurance premiums paid by people The Future of Social Security T he payment of OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE (OASDI) benefits has been a cornerstone of U.S. social welfare policy since the establish- ment of the Social Security Administra- tion (SSA) in 1935. At the same time, the long-term financial stability of OASDI has been a constant worry. In the early 2000s, concerns about Social Security mounted as policy makers assessed the impact of the retirement of the “Baby Boom” generation. Many younger people raised the issue of “generation equity.” They express doubt that Social Security benefits will be available when they retire and anger that they will be forced to pay, through payroll taxes, for the baby boomers' retirement benefits. Reform of the Social Security system has always been a politically charged subject. Retirees and those approaching retirement form a strong LOBBYING force, and they zealously protect their benefits. Employers and employees are equally vocal in their opposition to higher pay- roll taxes to fund OASDI. Thus, changes in Social Security required bipartisan support, which materialized in the face of an impending Social Security crisis. The 1982–1983 National Commission on Social Security Reform successfully se- cured from Congress the short-term financing of OASDI. As a result, Con- gress passed a series of laws meant to accumulate surpluses as a hedge against future burdens. The Social Security surplus is the amount by which revenue from the federal payroll tax exceeds the amount of Social Security benefits paid out. Shortly after these new laws went into effect, Social Security began running a surplus. Surplus Social Security revenue can be used to fund other government programs and to help retire the national debt. During the favorable economic climate of the late 1990s, Congress began to use the surplus to pay down the federal debt, hoping to better position the government to meet its obligations to future retirees. Also, in 2000, the federal government generated enough revenue so that the entire Social Security surplus was available for paying off debt. The state of Social Security became a major campaign issue in the 2000 elec- tions, with both Republicans and Demo- crats attempting to appear as though they were guardians of Social Security assets. Candidates from both parties promised to create a “lockbox,” meaning that the Social Security surplus would be spent entirely on debt retirement. With the advent of fiscally lean years in the early 2000s, the lockbox approach was largely disregarded by politicians who advanced other ideas about what to do with Social Security surpluses. These ideas included using the surplus to help offset decreases in revenues brought about by tax cuts and using the surplus to fund new or expanded spending initiatives. Analysts argue that the real issue often is clouded. It is not how to spend the surplus now, but how to maintain the long-term solvency of the Social Security trust fund. Planners estimate that the income from the trust fund will exceed expenses each year until 2017. The trust fund balances will then start to decline as investments are redeemed to meet the increased expenses from a swelling retired workforce. The SSA estimates that begin- ning in 2041, payroll taxes would have to rise to 28 percent to cover the projected deficit. In its 1996 report, the Social Security Administration's Advisory Council looked at various long-term financing options for OASDI. The council could not reach consensus on a specific long-term plan, but it did suggest several types of financing that represent a marked departure from previous efforts to fund Social Security. The council noted that past efforts have generally featured cutting benefits and raising tax rates on a “pay-as-you-go” basis. The council agreed that this ap- proach must be changed and offered three ways of restoring financial solvency. One approach, called Maintenance of Benefits (MB), calls for an increase in income taxes on OASDI benefits, a redirection of some revenue from other trust funds, and, most importantly, the ADOPTION of a plan allowing the federal government to invest a portion of the trust fund assets directly in common stocks. Rates of returns on stocks have historically exceeded those on federal government bonds, where all Social Security funds are invested. If the returns GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 246 SOCIAL SECURITY who sign up for coverage, and money contrib- uted by the federal government. The govern- ment contributes the majority of the cost of the program, which is funded out of general tax revenues. Persons who enroll pay a small annual deductible fee for any medical costs incurred above that amount dur ing the year and also a regular monthly premium. Once the deductible has been paid, Medicare pays 80 percent of all bills incurred for physicians’ and surgeons’ services, diagnostic and laboratory tests, and other services, but does not pay for routine physical checkups, drugs, and medicines, eye- glasses, hearing aids, dentures, and orthopedic shoes. Doctors are not required to accept Medicare patients, but almost all do. were to continue, the MB plan would maintain Social Security benefits for all income groups of workers and reassure younger workers that they will get their money’s worth when they retire. A second approach, labeled the Indi- vidual Accounts (IA) plan, would create individual accounts that would work alongside Social Security. The IA plan would increase the income taxation of benefits, accelerate the scheduled increase in retirement age, reduce the growth of future benefits to middle- and upper- income workers, and increase employees’ mandatory contributions to Social Secu- rity by 1.6 percent. This increase would be allocated to individual investment ac- counts held by the government and con- trolled by the worker, but with a limited set of investment options available. It is estimated that the combined income from both funds would yield essentially the same benefits as promised under the existing system for all groups. A third approach, labeled the Per- sonal Security Accounts (PSA) plan, would create larger, fully funded individ- ual accounts that would replace a portion of Social Security. Under this plan, 5 percent of an individual’s current payroll tax would be invested in his PSA, which he then could use to invest in a range of financial instruments. The rest of his payroll tax would be used to fund a modified OASDI program. It would provide a flat dollar amount, in addition to the proceeds of the individual's PSA. This approach would also change the taxation of benefits and move eligibility for early retirement benefits from age 62 to 65. The combination of the flat benefit payment and the income from the PSA would exceed, on average, the benefits promised under the existing system. In 2001 the concept of individual accounts was once again proposed, this time by the GEORGE W. BUSH adminis- tration's Commission to Strengthen So- cial Security (CSSS). The CSSS introduced the idea of Social Security individual accounts, also called Personal Retirement Accounts (PRAs). PRAs would earn a market return over the workers’ lives and replace some of the retirement benefits promised by Social Security. These plans are also known as “carve-outs” because they carve out or redirect some portion of aworker’s 12.4 percent Social Security payroll tax into a personal retirement account that can be invested in stocks and bonds. The accounts would be owned and presumably managed by individual workers. Any type of personal retirement account privatizes a portion of Social Security, which means a significant shift in the way Social Security is funded. Proponents claim that they would gener- ate more advance funding for Social Security's long-term obligations. They would also result in a higher level of national saving for retirement. In addi- tion, advocates point to the fact that individuals gain more control over their future because they are allowed to invest as much or as little in Social Security plans and private retirement plans as they choose. The PRA system, however, raises several concerns: n Would the government be permit- ted to manipulate the STOCK MARKET or make politically motivated in- vestment decisions with PRA funds? n Would inexperienced investors make poor investment choice s and be left to suffer the consequences? n Would a precipitous stock market decline cause workers to lose their retirement funds? After his reelection in 2004, Presi- dent Bush declared he would spend some of his “political capital” to enact a PSA plan for Social Security. Democrats strongly resisted Republican efforts, and by the end of 2005, any legislative momentum had been stopped. Though Republicans continue to introduce PSA legislation every year, the stock market crash of 2008 and the economic recession that followed led critics of the PSA idea to speculate how much worse Americans would have been if they had invested part of their income in a volatile market. As the debate on both sides contin- ued, it was unclear whether a PSA plan could be enacted. But one point re- mained clear: Some type of reform had to be enacted to protect the long-term stability of Social Security, as the Baby Boomer generation was expected to steadily consume the funds. FURTHER READINGS Beland, Daniel 2007. Social Security: History and Politics from the New Deal to the Privatization Debate. Lawrence: Univ. Press of Kansas. Benavie, Arthur. 2003. Social Security Under the Gun: What Every Informed Citizen Needs to Know about Pension Reform. New York: Palgrave Macmillan. Friedman, Sheldon, and David C. Jacobs, eds. 2001. The Future of the Safety Net: Social Insurance and Employee Benefits. Cham- paign, Ill.: Industrial Relations Research Association. President's Commission to Strengthen Social Security. 2001. Strengthening Social Secu- rity and Creating Personal Wealth for All Americans: Commission Report. Washing- ton, D.C.: CSSS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SOCIAL SECURITY 247 . president in 198 0, one of his first appointments was the naming of Smith as his attorney general. ▼▼ ▼▼ William French Smith 191 7– 199 0 190 0 190 0 195 0 195 0 197 5 197 5 20002000 192 5 192 5 ❖ 191 7 Born, Wilton,. N.H. 191 4–18 World War I 193 9–45 World War II ◆ 193 9 Graduated from U.C.L.A. 194 2–46 Served in U.S. Navy Reserve ◆ 194 6 Joined L.A. firm of Gibson, Dunn, and Crutcher 196 1–73 Vietnam War ◆ 196 8. Served as provost of the University of Maryland ❖ 1842 Died, Baltimore, Md. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 238 SMITH, ROBERT Aug. 31, 1807), Smith, as secretary of the Navy, was