Malcolm Rivera
The constitutionality of social security was challenged in the US Supreme Court in 1937, in a case called Helvering v. Davis. The case was brought by a shareholder of the Edison Electric Illuminating Company, who argued that the Social Security Act of 1935 was unconstitutional and sought to prevent the company from making payments and deductions required by the Act. The Court, however, upheld the Act as a valid exercise of Congress's taxing and spending powers to promote the general welfare. This ruling was part of a series of decisions during the Roosevelt era that expanded the power of the federal government and upheld New Deal legislation.
| Characteristics | Values |
|---|---|
| Date of Supreme Court ruling | 24 May 1937 |
| Cases | Steward Machine Co. v. Davis, Helvering v. Davis |
| Decision | The Social Security Act of 1935 was constitutional |
| Reasoning | Proper use of spending power for "general welfare"; no violation of 10th Amendment |
| Justices in favour | Cardozo, Stone, Brandeis, Roberts, Hughes |
| Justices against | McReynolds, Butler, Van Devanter, Sutherland |
| Precedents | West Coast Hotel v. Parrish (March 1937), upholding Washington's minimum wage statute |
| Related cases | Helvering vs. Davis, Steward Machine Company v. Davis (1937), Flemming v. Nestor (1960) |
| Key individuals | Justice Benjamin N. Cardozo, Justice Harlan Stone, President Franklin Delano Roosevelt |
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What You'll Learn
The 1937 Supreme Court ruling on the Social Security Act
The constitutionality of the Social Security Act was settled in a set of Supreme Court decisions issued in March, April, and May 1937. Three Social Security cases made their way to the Supreme Court during its October 1936 term. One challenged the old-age insurance program (Helvering vs. Davis) and two challenged the unemployment compensation program of the Social Security Act. The Court issued rulings on all three on the same day—May 24, 1937—deciding that the Social Security Act of 1935 was constitutional.
In Helvering v. Davis, the Supreme Court upheld the constitutionality of the Social Security Act of 1935. The Court ruled that the Social Security Program to provide old-age benefits did not violate the Tenth Amendment because Congress is permitted to spend for the "general welfare". A shareholder of the Edison Electric Illuminating Company sought to restrain the corporation from making the tax payments and deductions from wages required by the Social Security Act.
In Steward Machine Co. v. Davis, the Court upheld the Act as a proper use of the spending power. The Court decided the federal government could treat some businesses differently from others for tax purposes, and any considerations of policy and practical convenience would not be condemned as arbitrary.
In West Coast Hotel v. Parrish, the Court upheld Washington's minimum wage statute. This case was most often connected to the "switch in time" whereby the Court's majority began upholding New Deal legislation under threat of court-packing from President Franklin Delano Roosevelt.
The Social Security Act cases produced a "constitutional revolution in the age of Roosevelt", with the Court sustaining a series of New Deal legislation.
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The constitutionality of social security
In Helvering vs. Davis, George P. Davis, a minor shareholder in the Edison Electric Illuminating Company, sought an injunction against the company from making payments and deductions required by the Social Security Act of 1935, on the grounds that it was unconstitutional. The Supreme Court, however, upheld the Act as a proper use of the spending power for the "general welfare". Justice Benjamin N. Cardozo, writing the majority opinion, stated that "Congress may spend money in aid of the 'general welfare'". He further added that "the discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment".
The Court's decision in Helvering vs. Davis was also based on the taxing power of the federal government. Justice Harlan Stone advised that the constitutionality of Social Security could be based on this taxing power. The Court decided that the federal government could treat some businesses differently from others for tax purposes, and any considerations of policy and practical convenience would not be condemned as arbitrary.
In addition to Helvering vs. Davis, the Supreme Court also ruled on Steward Machine Co. vs. Davis and West Coast Hotel vs. Parrish. These cases further upheld broad national power and marked a "constitutional revolution in the age of Roosevelt", as the Court began to uphold New Deal legislation. The Social Security Act of 1935 was thus deemed constitutional, and the Court's rulings had significant implications for social and political reforms, including social insurance programs.
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The Social Security Act of 1935
In January 1935, Roosevelt proposed the Social Security Act, which he presented as a more practical alternative to the Townsend Plan. The Social Security Act of 1935 was signed into law on 14 August 1935. The Act aimed to provide for the general welfare of citizens by establishing a system of federal old-age benefits and enabling states to make provisions for aged persons, blind people, dependent and crippled children, maternal and child welfare, public health, and the administration of unemployment compensation laws. It also established a Social Security Board, which would consist of three members appointed by the President, with the advice and consent of the Senate.
The Social Security Act also established an unemployment insurance program and the Aid to Dependent Children, which provided aid to families headed by single mothers. Roosevelt believed that social security should be universal, stating that everyone should be part of a social insurance system from "cradle to grave". Compared to Western Europe, the Social Security Act of 1935 was conservative.
The Act was later amended by acts such as the Social Security Amendments of 1965, which established two major healthcare programs: Medicare and Medicaid. The initial act had ten major titles, with Title XI outlining definitions and regulations. Title I was designed to provide money to states to assist aged individuals, while Title II established the Treasury account for paying Social Security benefits. Title III concerned unemployment insurance, and Title IV addressed Aid to Families with Dependent Children. Title V focused on maternal and child welfare, and Title VI on public health services, granting the Surgeon General the power to distribute funds to states with the approval of the Secretary of the Treasury.
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The Supreme Court's decision in Helvering v. Davis
In Helvering v. Davis, 301 U.S. 619 (1937), the U.S. Supreme Court upheld the constitutionality of the Social Security Act of 1935. The Court ruled that the Social Security Program to provide old-age benefits did not violate the Tenth Amendment as Congress is permitted to spend for the general welfare.
A shareholder of the Edison Electric Illuminating Company of Boston sought to restrain the corporation from making the tax payments and deductions from wages required by the Social Security Act. He sought an injunction and a declaration that the Social Security Act was unconstitutional.
The Supreme Court's decision, written by Justice Benjamin N. Cardozo, supported the right of Congress to interpret the "general welfare" clause in the Constitution. The decision affirmed that Congress may spend money in aid of the 'general welfare' and that the discretion to determine what constitutes 'general welfare' belongs to Congress. Justice Cardozo noted that the concept of "general welfare" is not static but adapts to the crises and necessities of the time.
The Court's 7-2 decision defended the constitutionality of the old-age benefit program of the Social Security Act of 1935 by requiring only welfare spending to be for the common benefit, as distinguished from some mere local purpose. It affirmed a District Court decree that held that the tax upon employees was not properly at issue and that the tax upon employers was constitutional.
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The taxing power of the federal government
One of the key cases was Helvering vs. Davis, which challenged the old-age insurance program. A shareholder of the Edison Electric Illuminating Company, George P. Davis, argued that the Social Security Act of 1935 was unconstitutional and sought to prevent the company from making the required payments and deductions. Justice Benjamin N. Cardozo, writing for the majority, upheld the Act as a proper use of the federal government's spending power for the "general welfare." Cardozo's decision was based on the principle that Congress has the discretion to interpret the "general welfare" clause in the Constitution and spend money accordingly.
Justice Harlan Stone, who joined Cardozo's decision, advised that the constitutionality of social security could be based on "the taxing power of the Federal Government." This power, according to Stone, was sufficient to support the social security program. The Court's decision in Helvering vs. Davis was part of a broader shift in which the Court began to uphold New Deal legislation and expand the powers of the federal government.
The Social Security Act's taxing and spending provisions were strategically placed in separate titles to argue that they were independent of each other. However, this strategy was questionable, and the Court's shift in composition ultimately rendered it moot. The 1937 rulings on social security were preceded by decisions that struck down major social and political reforms, including the Railroad Retirement Act and the National Industrial Recovery Act. The Social Security Act cases, on the other hand, marked a turning point, with the Court sustaining a series of New Deal legislation and expanding the federal government's role in social welfare programs.
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Frequently asked questions
The constitutionality of social security was first challenged in 1936.
The 1936 challenge was unsuccessful, with the Supreme Court ruling in 1937 that the Social Security Act of 1935 was constitutional.
The main argument in favour of the constitutionality of social security was that it was a proper use of the spending power for the "general welfare". Justice Cardozo wrote that "Congress may spend money in aid of the 'general welfare'".
Yes, there have been several subsequent challenges to the constitutionality of social security, including the Steward Machine Co. v. Davis and Flemming v. Nestor cases. However, these challenges have also been unsuccessful, with the Supreme Court continuing to uphold the constitutionality of social security.
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