The Elmendorf Rule

[Guest Lester Weevils]

It would require a constitutional amendment to do that. The USSC ruled many years ago that SSI and the so-called lock-box was not constitutional. They said if the US Government wished to run such a program it would have to come from general funds, not by any sort of savings and investment of such. So the congress kept the program alive despite the ruling. A congressman was recently criticized for calling SSI a ponzi scheme, but in reality that is exactly what it is. Like happened with Madoff the scheme is nearing its critical mass point. A government run Ponzi scheme and I see no future end to the program.

Now the argument could have been made that the government simply not use those funds and allow them to ride. But we all know there was no way that is realistically possible. It's a good example of what happens when the government runs outside the parameters of what they were designed to do.

Thanks Warbird for the good info. Apparently known far and wide except by me.

I did some research and found this which fleshes out some details--

The Beacon Newspaper - Beaconcast.com

The SSA was passed in 1935, ostensibly to fund a "safety net" for retirees, the unemployed, accident victims, mothers with dependent children, etc. In 1937, however the Supreme Court Ruled in Helvering v.Davis that Social Security taxes "are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way." So much for "lock boxes." The nation's highest court has long since ruled that Social Security funds are just so much slop in the federal trough. This is to say that the government is under no obligation to use Social Security taxes to finance the program. It can squander them in any way it sees fit.

Fast-forward to 1960. While the country dreamed of "New Frontiers," the Supreme Court was up to the same old tricks. In Flemming v. Nestorit ruled that there is no individual, legal right to Social Security.

Time for a recap. You have no right to receive Social Security payments, while the government is under no obligation to spend Social Security taxes on Social Security -- or anything else, for that matter. What this means is that until congress scraps, amends or rewrites the SSA, or until the aforementioned Supreme Court decisions are reversed, nothing will change. Social Security will still be a general purpose slush fund, and you'll still have no legal right to receive payments, no matter how long you've been paying into it.

Helvering v. Davis, 301 U.S. 619 (1937)

Title VIII, as we have said, lays two different types of tax, an "income tax on employees" and "an excise tax on employers." The income tax on employees is measured by wages paid during the calendar year. ' 801. The excise tax on the employer is to be paid "with respect to having individuals in his employ," and, like the tax on employees, is measured by wages. ' 804. Neither tax is applicable to certain types of employment, such as agricultural labor, domestic service, service for the national or state governments, and service performed by persons who have attained the age of 65 years. ' 811(. The two taxes are at the same rate. '' 801, 804. For the years 1937 to 1939, inclusive, the rate for each tax is fixed at one percent. Thereafter the rate increases 1/2 of 1 percent every three years, until, after December 31, 1948, the rate for each tax reaches 3 percent. Ibid. In the computation of wages, all remuneration is to be included except so much as is in excess of $3,000 during the calendar year affected. ' 811(a). The income tax on employees is to be collected by the employer, who is to deduct the amount from the wages "as and when paid." ' 80a(a). He is indemnified against claims and demands of any person by reason of such payment. Ibid. The proceeds of both taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way. '

Social Security Online History Pages

The fact that workers contribute to the Social Security program's funding through a dedicated payroll tax establishes a unique connection between those tax payments and future benefits. More so than general federal income taxes can be said to establish "rights" to certain government services. This is often expressed in the idea that Social Security benefits are "an earned right." This is true enough in a moral and political sense. But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right.

[bigwakes]

We should start with everybody pays something and move away from the idea of the people already paying 90% of the bill already.We have countries that owe us money too right? Why can't we sell that debt to China and free up some breathing room. It's also insane that we still pay Hesbilah Billions of dollars a year. WHY?

[Guest nicemac]

We should start with everybody pays something...

Amen!

[Links2k]

I am finally starting to see through the looking glass that both parties are essentially the same. Both parties are more consumed with a lust for power than they are of serving their electorate. I do believe, however, that one party will lead us down the path of ruination at a much slower pace than the other, but nevertheless, it is still the same path. It is rather unfortunate that it has taking me so long to come to this realization.

Welcome to the real world brother. It stings a bit, but you will be stronger for it.