According to the Nation Poverty Center of the University of Michigan, 15 percent of the entire US population, or 45 million people, lived at or below the national poverty level in 2010. Many of these people are barely able to make ends meet, and are forced to make difficult decisions about paying for one basic necessity over another. This often leads to stress-related conditions such as heart disease, depression and anxiety, and many poverty-stricken people who cannot afford to treat these medical problems themselves.


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According to the Nation Poverty Center of the University of Michigan, 15 percent of the entire US population, or 45 million people, lived at or below the national poverty level in 2010. Many of these people are barely able to make ends meet, and are forced to make difficult decisions about paying for one basic necessity over another. This often leads to stress-related conditions such as heart disease, depression and anxiety, and many poverty-stricken people who cannot afford to treat these medical problems themselves.

Fortunately, federal and state governments provide income, health care and other benefits as safety nets for impoverished and economically vulnerable people. These come in the form of Social Security benefits, Medicaid and unemployment insurance. Government benefits are an important aspect of a healthy, productive society and serve as a fail-safe against widespread poverty. Without them, many would go without basics such as food, shelter clothing and health care.

The Social Security Act was passed in 1935 under President Franklin Delano Roosevelt. At the time, Social Security benefits were enacted as a means to curtail the high rate of poverty the elderly experienced during the Great Depression, which was more than 50 percent. The original Social Security Act and the amendments that followed created the federal Social Security Administration, as well as state government programs to provide assistance to additional people in need.

At first, Social Security benefits only applied to retirees. However, in 1939, an amendment to the original Social Security Act added survivor's benefits for the families of deceased workers. Another amendment in 1956 gave people with debilitating conditions and serious illnesses disability benefits. Health coverage in the form of Medicare, a federal program, and Medicaid, a state program, was added in 1965. The 1935 Social Security Act also created a federal unemployment benefit program, although some states, such as Wisconsin, already had such programs in place since 1932.

Government benefits are often joint undertakings between each state and the federal government. Although states run their own Medicaid and unemployment programs and have the ability to set their own program qualifications, they also work closely with the federal government to help as many people as possible. State governments receive partial funding for their benefit programs from federal sources and must adhere to some federal guidelines. Similarly, the Social Security Administration, a federal entity, has offices in every state to streamline the application process, provide local services and location-specific benefits.

Funding for these benefits comes from a few different sources. Title VIII of the Social Security Act mandated tax deductions from wage income to cover Social Security program expenditures. In the Internal Revenue Code, these are referred to as Federal Insurance Contributions Act, or FICA taxes. Also known as payroll taxes, FICA deductions equal 7.65 percent of a wage-earner's income, up to $110,100. Medicaid funds come from state income taxes while unemployment benefits are paid for by employers. State governments also receive some funding from the federal government for their Medicaid and unemployment programs.

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