Friday, August 20, 2010

Foot In Mouth Disease

Karl Denninger at The Market Ticker maintains that the Social Security trust fund is, in fact, a myth, that the money has been spent, that “there is no ‘debt’ owed to those receiving benefits,” and that Social Security is a “welfare program which Congress can modify or even eliminate at any time.”

He maintains that the money which people have been paying into the Social Security system all of their lives is merely a tax no different in nature than the income tax. Why it is deducted separately is something which he does not explain. He also does not explain why the check which people receive does not come from the United States Government, but rather comes from the Social Security Administration.

He bases his knowledge on a Supreme Court ruling in Flemming .v. Nestor, which he uses to point out that Congress has the right to “alter, amend or repeal any provision of the Act.” He interprets this to mean that Congress can arbitrarily declare the program’s trust fund defunct, null, void and nonexistent and that it is therefor, at this point, actually fictional. Since the program has no money Congress has no need to continue paying benefits if it doesn’t want to.

It took me a matter of a few seconds to find, contained within that ruling, the following caution. "This is not to say, however, that Congress may exercise its power to modify the statutory scheme free of all constitutional restraint.”

Actually, the Social Security trust fund represents a debt owed by the Unites States government and, like all debtors, it can indeed default on that debt. There are very serious consequences to doing that, however, and Congress is highly unlikely to announce that it has simply decided to default on a portion of the money that it owes. If Mr. Denninger doesn’t know that he is one whole hell of a lot less intelligent than I think he is.

The court roundly and very firmly contradicts Denninger’s assertion further down in the ruling, and either he stopped reading when he believed his point was confirmed, or he does not know how to read,

"Social Security is not a handout; it is not charity; it is not relief. It is an earned right based upon the contributions and earnings of the individual. As an earned right, the individual is eligible to receive his benefit in dignity and self-respect." 102 Cong. Rec. 15110.

The people covered by this act are now able to rely with complete assurance on the fact that they will be compelled to contribute regularly to this fund whenever each contribution falls due. I believe they are entitled to rely with the same assurance on getting the benefits they have paid for and have been promised, when their disability or age makes their insurance payable under the terms of the law. The court did not permit the government to break its plighted faith with the soldiers in the Lynch case; it said the constitution forbade such governmental conduct. I would say precisely the same thing here.

[emphasis mine, J] When you want to use a court ruling to confirm your point, I would suggest you read the damned thing before you cite it.


  1. Anonymous3:17 PM

    The portion of the opinion you are citing is from the dissent. Hence, it carries little to no weight legally. Rather, it is the mere opinion of a single justice who no longer sits on the court. Maybe you should try learning to read legal opinions? Just a suggestion....

  2. Incorrect. The portion which I cited is contained within the secion headed, "MR. JUSTICE HARLAN DELIVERED THE OPINON OF THE COURT." It is the first sentence of section II. Maybe you are the one who should learn to real lagal documents.