May, 22, 2003
Is Social Security Constitutional?
http://www.lewrockwell.com/orig3/attarian7.htmlIs Social Security Constitutional?
May 24 marks the 66th anniversary of Helvering v. Davis (1937),
in which the Supreme Court found Social Security constitutional. With Social
Security's prospects shaky, and overhaul inevitable, this is an
time to re-examine Helvering v. Davis and Social Security's
Helvering v. Davis was heard when the Court faced the
worst crisis of its history. Indeed, the most important thing about this case is
Franklin Roosevelt's New Deal was immensely
popular with the public and he dominated the lopsidedly Democratic Congress.
Only one thing thwarted Roosevelt: the Supreme Court.
George Sutherland, Willis Van Devanter, Pierce Butler, and James McReynolds,
believed that the Constitution should be interpreted conservatively, according
to the intent of the Framers. In their view, the federal government could not
intervene in economic or local matters, and the Tenth Amendment - "The powers
not delegated to the United States by the Constitution, nor prohibited by it to
the States, are
reserved to the States respectively, or to the people" -
narrowly confined its legitimate activities. So the New Deal was invalid. Chief
Justice Charles Evans Hughes and Owen Roberts often concurred. The
Justices, Harlan Fiske Stone, Louis Brandeis, and Benjamin Cardozo,
believed that the Constitution had to be interpreted flexibly, to meet changing
circumstances. A clause in Article I, Section 8, empowering Congress to impose
and collect taxes "to pay the Debts and provide for the common Defence and
general Welfare of the United States," they believed,authorized New Deal
Meanwhile, the Supreme Court hammered the New Deal. On May 27,
1935, in a crushing defeat for Roosevelt, it voided the National Industrial
Recovery Act and the Frazier-Lemke Farm Bankruptcy Act. It struck down the
Agricultural Adjustment Act on January 6, 1936, the Guffey Coal Act on May 18,
and the Municipal Bankruptcy Act and a New York state law setting minimum wages
for women on May 25.
Enraged, Roosevelt decided to subdue the Court. His
megalomania inflated by his 1936 landslide, on February 5, 1937 he abruptly
asked Congress to enact a bill empowering him to appoint one additional Justice
for every one who turned 70 and did not retire, for a maximum of six, thus
enlarging the Supreme Court from nine Justices to up to fifteen.
firestorm ensued. Critics rightly called Roosevelt's proposal a plan to pack the
Court. Even liberals who deplored the Court's decisions, including many
congressional Democrats, opposed it.
Its arm cruelly twisted by
Roosevelt's threat to its independence, the Supreme Court began surrendering in
self-preservation. On March 29, the Court upheld a revised Frazier-Lemke Act;
the National Firearms Act;
the Railway Labor Act, which promoted collective
bargaining; and a Washington state law providing for minimum wages for
Then cases arose involving the blatantly pro-labor Wagner Act and
the Social Security Act. The Court was in a hideous bind. Most of the Justices
opposed the expansion of government power which these laws
entailed - but if
they voided them, Congress would probably enact Roosevelt's Court
On April 12, the Court upheld the Wagner Act. On May 18, Van
Devanter announced his imminent retirement, enabling Roosevelt to nominate a
The case for his bill was weakening. But Roosevelt would not
Such was the situation when the Supreme Court considered the
Helvering v. Davis case. On November 12, 1936, George Davis, a stockholder of
Edison Electric Illuminating Company of Boston, sued, alleging that the Social
Security tax was unconstitutional, and asking that the company be kept from
paying it. The U.S. District Court for the District of Massachusetts upheld the
tax, but the Circuit Court of Appeals reversed it. IRS Commissioner Guy
Helvering asked that the case go to the Supreme Court.
Among the issues to be decided, it stated, were whether Social Security's
taxes were valid exercises of the taxing power in Article I, Section 8; whether
providing the benefits was valid under the "general welfare" clause; and whether
Titles VIII and II, the tax and benefit titles for old-age benefits, taken
together, are an exercise of powers not granted by the
Arguing before the Court on Davis's behalf of May 5, Edward McClennen
demolished the claim that Social Security's tax was simply for raising general
revenue. Taxing the smallest wage earners and exempting income above $3,000 a
year is, he observed, an odd way to
raise general revenue. And if that was
the goal, why not tax laborers exempted from the Social Security tax? Obviously,
because the benefits would be "limited to the same classes of people." The
So the Court ducked the core issue of whether Social Security is an
unconstitutional government insurance program. Why?
The majority of the Helvering v. Davis majority, Hughes, Roberts, Van
Devanter, and Sutherland, were conservatives. Most had bitterly criticized the
New Deal. Can anybody really believe that they found
opinion, mostly lifted from the Administration's brief, an adequate expression
of their views on Social Security's constitutionality?
Butler dissented - but wrote no opinions. Did they have nothing to say? Or were
they afraid of Roosevelt?
In saving Social Security, the Court saved
itself - and people knew it. The decision, the Washington Post opined, drove
"another nail in the coffin of the President's plan to enlarge the court's
Roosevelt's Court pack failed, and Helvering v. Davis was a
But its validity is shaky. Cardozo's opinion is laughably weak:
leaning on a brief full of duplicitous arguments, ignoring McClennen's exposure
of Social Security's true purpose, and ducking the main issue. Clearly, the
Court upheld Social Security for one reason only: Roosevelt was holding a gun to
its head. Helvering v. Davis was a political act of self-preservation, made
under duress. We know what things obtained under duress are worth.
all that, the issue of Social Security's constitutionality, far from being
settled, remains wide open. Somehow I doubt that the Framers, who after all
meant the Constitution as a fetter on expansive government and not a blank check
for it, intended the Constitution to authorize a tax-devouring engine of
dependence on the State like Social Security. The
of Social Security rests on sloppy argument, willful evasions of reality, and,
ultimately, frightened submission to one of the worst acts of tyrannical
bullying in the federal government's history. Here again the reality of Social
Security is radically at variance with the myths. The case for holding this
program inviolate collapses
May 23, 2003
Attarian (send him mail) is a writer in Ann Arbor, Michigan, with a Ph.D. in
economics. His book Social Security: False Consciousness and Crisis, which
treats the myths and realities of Social Security in detail, has just been
published by Transaction Publishers.
Copyright © 2003 LewRockwell.com
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