Introduction: When deciding Constitutional cases the Supreme Court has duties to inform both plaintiff and respondent how the rule of law is applied to their case. Such was the Court’s decision on the Agricultural Adjustment Act (1933). That case is United States v Butler (1936). Butler protected the Rule of Law, and the Court’s opinion was to play an important role in a case decided five months later when the Social Security Act of 1935 (“SSA”) was tried in Helvering v. Davis (1937). Many of the same Constitutional principles applied to both cases, but they were decided in very different manners, not just outcomes. This essay presents the differences in application of the law and Justices opinions in the two cases.
Facts of the Subject Case: The Social Security Act (“SSA”) consists of two statutes, only one of which is the Old-age Pension Benefit (“OAPB”); it is this statute that is the main subject of this essay. The case citation is Helvering v. Davis (1937). The other statute in the SSA is Steward Machine Co. v. Davis. It is cited only a few times, but the majority opinion in Helvering contains numerous citations to Butler. The OAPB applies to employers nationwide except agricultural labor, employees of the government (federal and state), domestic employees and employees age 65 and over. It was stated in the case that 56% of employed persons of every condition were covered by the plan. This equates to 22% of all the people of the U.S. The SSA levies an excise upon employers based on labor wages paid, and an income tax to be withheld from employee wages earned. The monies collected are invested in Special Treasury Notes and held in a Trust Fund earning interest. When a covered employee reaches age 65 a benefit payment is charged to the benefited’s separate account, and the funds to the benefited may be from either current tax revenues of SSA or by disinvestment of Treasury securities in the Trust Fund (or both, as today).
Reasons for Challenging the case as Wrongly Decided: On the same day as the Supreme Court decided Helvering v. Davis, it also decided Steward. Both cases levied an excise upon labor wages. Respondents’ claimed the definition of an “excise” was exclusively a levy upon tangible personal property upon a change in ownership. The definition of an excise is the same in 1789 when the Constitution was ratified as today, and thus, the tax is illegal upon employers, as claimed by respondent. Congress could have used another type of levy on wages, but did not do so. A probable reason is the scheme devised for Steward would not work as well in its federal administration of the plan as using the disparate excise. As the excise was stated in the statute, the Supreme Court could not ignore the issue. The Court Justices cited a handful of cases decided prior to the Constitution’s ratification where excises were levied upon other property, as reason for finding the excise legal in Steward. The problem ignored by the Court is the law was not of the United States of America at that time, but of England. Helvering then cites Steward as good law in Helvering levying excises upon employers’ wages paid. Is it a mistake or dishonesty?
Of greatest importance is the Court’s Justices maneuvering in Helvering to establish the Old-age Pension Benefit (OAPB) as spending for the general welfare. It was commonly accepted knowledge that the only basis for the Constitution to uphold it was in the spending clause’s (Article I, Section 8, Clause 1 of the Constitution) definition of “general welfare.” The maneuvering by the Helvering court justices was in their claiming the “general welfare” was defined in Butler and that definition gave a pass to the OAPB. The claim about Butler was only partially correct; Butler’s petitioners presented their case as relying upon the spending clause’s “general welfare” requirement. The Butler case never reached a decision on the “welfare” payments to farmers because the Justices found the entire scheme was a means of regulating agriculture (regulating farmers’ land use). Such a finding meant the court was obliged to find this power was beyond Congress, and invaded powers reserved to the States by the Tenth Amendment. The whole of the AAA was unconstitutional; at this point. Therefore the Butler Court had no reason to define the meaning of “general welfare” even though it had not been previously defined by any Supreme Court. (An axiom of federal courts is to not define the Constitution without a need to do so; and the Butler Court observed it). But a majority of Justices determined the definition of the single word “general” was already previously defined by Hamilton, Monroe and former Chief Justice Story as meaning for all the states and all the people. It could not be anything Congress could dream up, and could not be local, said Monroe. There is only five months’ time between Butler and Helvering, so if general “welfare” had been defined during the interim, the Helvering Justices would have decided it. Here is what the Helvering Court stated: “Congress may spend money in aid of the “general welfare.”’ (Citation to the Constitution and to United States v. Butler (page 65)). Recall Butler defined “general,” but not how it applied to “welfare” and the two together are what the Constitution requires to be defined. What is said on page 65? “…Public funds may be appropriated ‘to provide for the “general welfare” of the United States.’ Here are the true words Butler spoke about the meaning of the two words, “These words [general welfare] cannot be meaningless; else they would not have been used. The conclusion must be that they were intended to limit and define the granted power to raise and to expend money. How shall they be construed to effectuate the intent of the instrument?” The Helvering Court was now in unprecedented waters. It did not have a precedent from Butler or thereafter, and nothing before Butler had ever existed. It must explicate it itself, but instead observed: “Difficulties are left when power is conceded” [it has not been conceded; there is no definition of what the power is]. “The line must still be drawn between particular and general” [no again, particular is outside the Constitution’s limit, only general exists]. “The discretion, however, is not confided to the courts, [Correct] discretion belongs to Congress.” [No, this is false; power is limited by the Constitution, not Congress]. It is no wonder the Court does not release discussion of its opinions; this one must have been rowdy! Only the above findings are written in the decision on which to uphold the Court of Appeals’ decision by 7-2. OAPB benefits only twenty-two percent of the people as pensioners. By no means is that close to being “general.” This opinion is a product of legerdemain politics.
I define the General Welfare Clause as I believe the Founders would have agreed:
General (requiring both):
Benefitting all the States of the union
Benefiting all the people of the States
Pertaining to one or more welfares:
Publiustoo.com October 14, 2020