Social Security Fairness Act Is unconstitutional

OPINION:

As a libertarian, the one thing I fear more than big government is bigger government.

The Social Security Fairness Act of 2023 is now law, the worst example of big government getting bigger in modern times. While Congress has been unable to find common ground on the stability of the venerated program in 40-plus years, it took three months to put the program another $1 trillion in the hole.

This legislation, however, represents more than a financial liability; it is a constitutional problem.

This law does not aid the general welfare. It simply alleviates the need for lawmakers to think about a longtime system defect.

In terms of the constitutional limits on Congress, the primary Supreme Court authority for Social Security comes from Helvering v. Davis, in which the court ruled that the “scheme of benefits” as constructed in 1935 was constitutional because of Article 1, Section 8, which empowers Congress to spend money in aid of the “general welfare.”

The court further stipulated that the definition of general welfare is reserved for Congress within a visible constraint: “The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power is not an exercise of judgment.”

As part of its ruling on the constitutionality of Social Security circa 1935, the court documented the purpose of the legislation, extensive evidence of the problem, studies and analysis of the solution and the extensive debates in Congress about the problem lawmakers hoped to solve. In combination, the court concluded that Congress did not improvise a judgment when it found that the award of old-age benefits would be conducive to the general welfare.

Essentially, the court ruled that Congress can spend money to promote the general welfare, but lawmakers must have some idea of the problem they hope to solve and how the extra spending will deal with that issue.

The Social Security Fairness Act of 2023 expands benefits for those who opted out of Social Security for part of their career. These people collect benefits that most of us can’t get.

To illustrate, teachers who contribute to Social Security over a career must forgo their earned pensions before they qualify for survivor benefits. Thus, a typical teacher is not eligible for spousal benefits. As a result of this legislation, if that teacher worked a full career without paying into Social Security, he or she would get 100% of any spousal benefits.

In other words, the person who contributed to Social Security for a lifetime would get nothing, while the person who worked a similar career would get as much as $30,000.

In order to meet the constitutionality standards set in Helvering v. Davis, Congress must demonstrate that it considered the question, why should those who don’t participate get more in the way of benefits than those who contribute for a lifetime? Further and specifically, how does encouraging people to opt out of Social Security improve the welfare of all? 

Great debate? The sponsors of the legislation would not even respond to the question.

To be constitutional, in the sense of the Supreme Court, Congress would have to show how the hope here is to spare those who choose not to participate in Social Security from “the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey’s end is near.”

We are talking about someone like Jill Biden, who devoted her career to teaching. We could be talking about Melania Trump, who may have earned a pension from overseas work. In short, there is no reason to believe that the population served by the incremental benefits as a whole is in need, much less struggling to put food on the table. 

The law does not aid the general welfare. In fact, it will take nearly $1 trillion from voters who may face the poor house and haunting fears at journey’s end.

The root of the problem is a system defect through which the system mistakes those who chose to work outside of Social Security as unemployed and struggling to make ends meet. This bug has been around for over 40 years, dating back to the Stonehenge era of Social Security, when the government lacked the tools and data to incorporate tangible and transparent adjustments into the benefit formula.

“Whether wisdom or unwisdom resides in the scheme of benefits set forth in Title II, it is not for us to say.”

This means that the Windfall Elimination Provision and Group Policy Object rules, as poorly conceived as they might be, pass the Supreme Court’s standard of constitutionality. The defect was well understood, and the legislative outcome, which engaged the best minds of Congress — including former Senate Majority Leader Charles E. Schumer and President Biden — produced the WEP and GPO to achieve the highest level of fairness possible within the system’s constraints. 

The legislation isn’t a matter of general welfare. It is a cash payment to a select number of voters to buy their silence over the nothingness that Congress has done over the past 40 years.

If these rules harm the public or general welfare, Congress needs to raise money from those responsible for creating the hazard: specifically, the state employers who wish to run their pensions independently of Social Security. The decision of the employer to participate in Social Security is a business choice. 

That choice creates the hazard of retirement for its employees in the form of rules that they don’t understand, causing great harm in their retirement years. This is no different from a company that wishes to sell the disposal of hazardous waste. That business model puts its employees at risk, and most states require such a business to pay for the remediation of the side effects of its business decisions. This approach is called responsibility.

As for the people who are affected by these rules, they have one thing in common: They opted out of Social Security for some part of their career. Where you work and what you do are personal choices. They choose to work for an employer that does not participate in Social Security. Whether it was an informed choice or not, if your paycheck does not withhold money for Social Security, you have opted out.

According to Congress, the consequences of these choices should be paid for by future retirees to promote the general welfare of the present.

• Brenton Smith is a policy adviser with The Heartland Institute.