Originally written on 9/24/2024

On social media, people regularly argue that Americans earn their Social Security benefits by paying into the system and that Social Security is not a handout or government gift. They imply that receiving Social Security is a right and any reduction in the amount or growth of Social Security benefits is morally wrong. Of course, the posts usually garner quite a few “likes,” especially from older folks who are on Social Security. Indeed, as Bohanon soon plans to file for his benefits, he is becoming increasingly sympathetic to this view.  

Nevertheless, it seems to us the Supreme Court settled the issue in 1960, in Fleming vs. Nestor. Ephram Nestor, a legal USA resident who had migrated from Bulgaria in 1913, had paid into the Social Security systems for 19 years. He was deported from the United States in 1956 because of his affiliation with the Communist Party in the 1930s. In 1954, Congress amended the original Social Security legislation to terminate benefits for recipients deported on such grounds. Nestor’s lawyers appealed, claiming his Social Security benefits were an “accrued property right” protected by the “taking clauses” of the 5th Amendment. A lower court agreed, but the government appealed to the Supreme Court of the United States (SCOTUS).  

In a 5-4 decision, the SCOTUS said no. Congress defines Social Security and can change the benefits. Speaking for the majority, Justice Harlan argued, “To engraft upon the Social Security system a concept of “accrued property rights” would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands…. It was doubtless out of an awareness of the need for such flexibility that Congress included in the original Act, and has since retained, a clause expressly reserving to it “[t]he right to alter, amend, or repeal any provision of the Act.”  

The most recent estimate by the Social Security Trustees is that in 2033, the Old Age and Survivors portion of the Trust Fund will be depleted, and the revenue from Social Security taxes will be sufficient to cover just 79% of the promised benefits if Congress takes no action. Of course, there are numerous ways to mitigate a 21% benefit cut. However, they must either raise taxes, reduce benefits, or both. We conclude that reducing benefits is more of a matter of arithmetic than righteous indignation. But who knows? The SCOTUS has previously overturned its own rulings and might do so again.