Friday, September 19, 2014
Tweet[IWS] CRS: SOCIAL SECURITY REFORM: LEGAL ANALYSIS OF SOCIAL SECURITY BENEFIT ENTITLEMENT ISSUES [17 September 2014]
IWS Documented News Service
_______________________________
Institute for Workplace Studies-----------------Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor--------------------Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
This service is supported, in part, by donations. Please consider making a donation by following the instructions at http://www.ilr.cornell.edu/iws/news-bureau/support.html
Congressional Research Service (CRS)
Social Security Reform: Legal Analysis of Social Security Benefit Entitlement Issues
Emily M. Lanz, Legislative Attorney
Thomas J. Nicola, Legislative Attorney
September 17, 2014
http://fas.org/sgp/crs/misc/RL32822.pdf?
[full-text, 15 pages]
Summary
Calculations indicating that the Social Security program will not be financially sustainable in the
long run under the present statutory scheme have fueled the current debate regarding Social
Security reform. This report addresses selected legal issues that may be raised regarding
entitlement to Social Security benefits as Congress considers possible changes to the Social
Security program in view of projected long-range shortfalls in the Social Security Trust Funds.
Social Security is a statutory entitlement program. Beneficiaries have a legal entitlement to
receive Social Security benefits as set forth under the Social Security Act. The fact that Social
Security benefits are financed by taxes on an employee’s wages, however, does not limit
Congress’s power to fix the levels of benefits under the Social Security Act or the conditions upon
which they may be paid. Congress’s authority to modify provisions of the Social Security
program was affirmed in the 1960 Supreme Court decision in Flemming v. Nestor, wherein the
Court held that an individual does not have an accrued “property right” in his or her Social
Security benefits. The Court has made clear in subsequent court decisions that the payment of
Social Security taxes conveys no contractual rights to Social Security benefits.
Congress has the power legislatively to promise to pay individuals a certain level of Social
Security benefits, and to provide legal evidence of Congress’s “guarantee” of the obligation of the
federal government to provide for the payment of such benefits in the future. While Congress
may decide to take whatever measures necessary to fulfill such an obligation, courts would be
unlikely to find that Congress’s unilateral promise constitutes a contract which could not be
modified in the future. In addition, a congressional promise not to reduce a specific level of
Social Security benefits payable to certain eligible individuals would likely not overcome the
constitutional principle, subject to due process considerations, that one Congress may not bind a
subsequent Congress to legislative action or inaction.
The calculations concerning the possible future insolvency of the Social Security Trust Funds
raise a question relating to whether that result would affect the legal right of beneficiaries to
receive full Social Security benefits. While an entitlement by definition legally obligates the
United States to make payments to any person who meets the eligibility requirements established
in the statute that creates the entitlement, a provision of the Antideficiency Act prevents an
agency from paying more in benefits than the amount in the source of funds available to pay the
benefits. The Social Security Act states that Social Security benefits shall be paid only from the
Social Security Trust Funds, and the act appropriates all payroll taxes to pay benefits. Although
the legal right of beneficiaries to receive full benefits would not be extinguished by an
insufficient amount of funds in the Social Security Trust Funds, it appears that beneficiaries
would have to wait until the Trust Funds receive an amount sufficient to pay full benefits in the
case of a shortfall unless Congress amends applicable laws.
Contents
Congressional Authority To Modify Entitlements ........................................................................... 1
Congressional Guarantee of Social Security Benefit Payments ...................................................... 5
Congressional Power To Modify Its Own Contracts ................................................................. 5
Congressional Power To Promise Future Deference ................................................................. 7
Payment of Social Security Benefits From the Trust Fund in Case of Exhaustion.......................... 8
Conclusion ..................................................................................................................................... 11
Contacts
Author Contact Information........................................................................................................... 12
Acknowledgment ........................................................................................................................... 12
________________________________________________________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.