Social Security is a mandated supplemental retirement system in the US that was established in 1935 as part of Franklin Delano Roosevelt's New Deal. It was motivated largely by the events of the Great Depression, which saw many Americans out of work and the nation's retired elderly often left in the direst of poverty. The intent of the program is to ensure a threshold subsistence level below which any worker who had paid into the program cannot fall.
The Social Security program is funded out of payroll taxes; that is, a certain percentage of a worker's paycheck goes directly into the a fund to help provide benefits to current recipients. This has in recent years become a bone of contention with some current workers, who complain that the system is unsustainable and that after paying into the system their entire working lives, there will be nothing for them to collect in their own retirement years.
Social Security has long been the so-called "third rail" of American politics, an analogy to the electrified third rail on the subway systems. Touch it and you're dead. It is an enormously popular program to a very large and powerful portion of the electorate — the retired and the soon-to-be-retired. Any attempt to change the program runs the risk of incurring their wrath, and elected officials are notably reluctant to anger such a powerful group of voters.
Recent attempts to put the program on a more sustainable footing centered on the notion of privatizing it. That is, it was suggested that workers be allowed to invest their own contributions in the stock market, opting out of the defined benefits of the system in favor of a defined contribution system. One major defect in this proposal is that it never addresses the issue that caused the creation of the Social Security system in the first place — that is, what happens in economic hard times when the payouts from one's private investments diminish or there are widespread business failures that leave retirees with no income at all?
Rhetoric aside, the Social Security system is more solvent than the system reformers would like you to believe. Current estimates are that funds flowing into the system will be greater than or equal to funds flowing out of the system for several decades. Recent shortfalls in private retirement plans, such as those being experienced by the major airlines, have made it clear that whether or not privatizing the program is a good idea, it is certainly politically impossible right now.