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New Deal: the Security Act of`1935. The act created the United States' first national old age insurance system. Beginning in 1937, taxes were paid by employers and employees into a fund that would be used to assist workers upon retirement. The first payments were to begin in 1941 but this was later moved up to 1940. The act also included provisions that created a national system of unemployment compensation and that gave federal grants to states for categorical welfare programs (for example aid to single mothers, the blind and the elderly). Politically, the social security act if often credited with helping make the Democratic Party the majority party for a generation.