Individuals may incorrectly believe that their Social Security benefits are a fixed property right ("vested") that cannot be modified or abolished. Without discussing the public policy, political, or economic aspects of Social Security, this comment briefly quotes some significant language from a 1960 Supreme Court decision. Of course, consult an experienced attorney in all retirement and Social Security situations.
In Flemming v. Nestor (1960) the Supreme Court 6:3 held that Social Security benefits were not a property right but rather were a "social welfare program" subject to modification by Congress. Nestor, having immigrated to the U.S. from Bulgaria in 1913, was deported from the U.S. in 1956, after 42 years of residence, for having been a member of the Communist Party from 1933-1939. He and his wife, who remained in the U.S., had their Social Security benefits terminated. A federal District Court held that the provision in the Social Security Act depriving him of benefits was unconstitutional.
The following quotations focus on the "property" and "due process" features of the Supreme Court's majority opinion and not the additional rejected arguments that Congress had created an ex post facto law (retroactive criminal law), a bill of attainder (legislation declaring someone guilty of a crime and punishing them without a trial), or otherwise created punishment without a trial.
Quoting at length from some sections of the Flemming majority opinion with citations omitted:
"It is hardly profitable to engage in conceptualizations regarding "earned rights" and "gratuities." The "right" to Social Security benefits is in one sense "earned," for the entire scheme rests on the legislative judgment that those who in their productive years were functioning members of the economy may justly call upon that economy, in their later years, for protection 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." But the practical effectuation of that judgment has of necessity called forth a highly complex and interrelated statutory structure. Integrated treatment of the manifold specific problems presented by the Social Security program demands more than a generalization. That program was designed to function into the indefinite future, and its specific provisions rest on predictions as to expected economic conditions which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the Nation's resources which evolving economic and social conditions will of necessity in some degree modify."
"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 "the right to alter, amend, or repeal any provision" 42 U. S. C. § 1304. That provision makes express what is implicit in the institutional needs of the program."
But what, the reader of this comment may ask, of the Fifth Amendment protection of property under the Due Process Clause: "No person ... [shall] be deprived of life, liberty, or property, without due process of law...."
The Flemming majority opinion stated:
"Particularly when we deal with a withholding of a noncontractual benefit under a social welfare program such as this, we must recognize that the Due Process Clause can be thought to interpose a bar only if the statute manifests a patently arbitrary classification, utterly lacking in rational justification."
In other words, any "rational" explanation for a change in Social Security benefits is legally sufficient.
Justices Black, Douglas, and Brennan dissented. Justice Black wrote:
"[The termination of Social Security benefits], it seems to me, takes Nestor's insurance without just compensation and in violation of the Due Process Clause of the Fifth Amendment. Moreover, it imposes an ex post facto law and bill of attainder by stamping him, without a court trial, as unworthy to receive that for which he has paid and which the Government promised to pay him. The fact that the Court is sustaining this action indicates the extent to which people are willing to go these days to overlook violations of the Constitution perpetrated against anyone who has ever even innocently belonged to the Communist Party."
Additionally, Social Security is not giving people "something for nothing," but is based upon employee and employer contributions.
Also, regarding the Due Process discussion in the majority opinion:
"... the Court's assumption of its power to hold Acts unconstitutional because the Court thinks they are arbitrary and irrational can be neither more nor less than a judicial foray into the field of governmental policy. By the use of this due process formula the Court does not, as its proponents frequently proclaim, abstain from interfering with the congressional policy. It actively enters that field with no standards except its own conclusion as to what is "arbitrary" and what is "rational." And this elastic formula gives the Court a further power, that of holding legislative Acts constitutional on the ground that they are neither arbitrary nor irrational, even though the Acts violate specific Bill of Rights safeguards."
Justice Black concluded his dissent by commenting on his perception of the "fear" that deprived individuals of clearly stated constitutional rights and forced the nation to reply instead on "a momentary majority" of the Supreme Court for protection:
"A basic constitutional infirmity of this Act, in my judgment, is that it is a part of a pattern of laws all of which violate the First Amendment out of fear that this country is in grave danger if it lets a handful of Communist fanatics or some other extremist group make their arguments and discuss their ideas. This fear, I think, is baseless. It reflects a lack of faith in the sturdy patriotism of our people and does not give to the world a true picture of our abiding strength. It is an unworthy fear in a country that has a Bill of Rights containing provisions for fair trials, freedom of speech, press and religion, and other specific safeguards designed to keep men free. I repeat once more that I think this Nation's greatest security lies, not in trusting to a momentary majority of this Court's view at any particular time of what is "patently arbitrary," but in wholehearted devotion to and observance of our constitutional freedoms."
Political history surrounds the power of Congress to create Social Security. Briefly, in 1923, the U.S. Supreme Court held 5:3 that a federal minimum wage law for women unconstitutionally restricted freedom of contract (Adkins v. Children's Hospital). In the 1930s the Supreme Court initially overturned much New Deal legislation. On Feb. 5, 1937, President Roosevelt proposed legislation that would grant the President the power to appoint additional judges to federal courts, including the Supreme Court, whenever sitting judges age 70 or older refused to retire. Suddenly, a Supreme Court majority began upholding the constitutionality of New Deal legislation, including minimum wage laws. On May 24, 1937, a Supreme Court majority in two decisions upheld the power of Congress to create Social Security as a Constitutional power to tax and spend for the "general welfare" (Article 1, Section 8, Clause 1) [Helvering v. Davis, 5:2], and furthermore that the unemployment compensation provisions in the legislation were permissible, also under the power to tax [Steward Machine Co. v. Davis, 5:4].
This brief and incomplete review of a single significant Supreme Court decision is not intended to provide legal advice. Always consult an experienced attorney in all specific Social Security and retirement matters.