Is Social Security Constitutional?
- J.A.I.L. News Journal
Los Angeles, California May, 22, 2003
Is Social Security Constitutional?http://www.lewrockwell.com/orig3/attarian7.html
Is Social Security Constitutional?
by John Attarian
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
appropriate time to re-examine Helvering v. Davis and Social Security's constitutionality.
Helvering v. Davis was heard when the Court faced the worst crisis of its history. Indeed, the most important thing about this case is its political
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.
Four Justices, 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 liberal
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 laws.....
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.
A 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 women.
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 pack.
On April 12, the Court upheld the Wagner Act. On May 18, Van Devanter announced his imminent retirement, enabling Roosevelt to nominate a Justice.
The case for his bill was weakening. But Roosevelt would not quit.
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 Justices ignored
McClennen's points.....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
Cardozo's half-baked opinion, mostly lifted from the Administration's brief, an adequate expression of their views on Social Security's constitutionality?
McReynolds and 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 membership.
Roosevelt's Court pack failed, and Helvering v. Davis was a factor.
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.
Given 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
purported constitutionality 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
John 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.
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