Today in Supreme Court History: August 14, 1935

8/14/1935: President Roosevelt signs into law the Social Security Act of 1935. The Supreme Court upheld the constitutionality of this law in Helvering v. Davis (1937).

President Franklin D. Roosevelt

Comments

[PeteRR]

In terms of the way it was structed (not a real pension system at all) this has to be one of the biggest mistakes ever enacted at the federal level.

I was talking to my wife's cousin, who emigrated to and now lives in Sweden, last week. In their system, you and your employer pays in, but it all goes to an individual account that is your money.

[Sarcastr0]

That seems to me to be either vulnerable to inflation, or an investment and thus vulnerable to market reversals.

A government IOU may not make the market crowd happy, but is super stable. Hence all the pushback when Bush tried to privatize SS.

[Michael D]

Just remember why social security was enacted in the first place: aside from the political reasons of creating a permanent base of Democrat voters, the purpose was to mitigate the detrimental effects of the Great Depression.

And for all those who think the Great Depression was some fluke event caused by the stock market crash of Oct, 1929, I have a bridge to sell you.

The recession which led to the Depression was the result of central bank, aka Federal Reserve, policies. The subsequent fiscal policies such as tariffs, a series of anti-market laws and other Mussolini-esque measures enacted by FDR took a recession and turned it into a multi-years long financial debacle that only ended after the death of FDR and the termination of many of his policies. No, WWII did not bring about an end to the recession.

But thanks to government intervention impoverishing millions, the “solution” is obviously more government intervention to “save” those impoverished by the first bit of intervention.

But this is the history of government. We can see the same results in healthcare and any number of other areas.

[DaivdBehar]

Jerome Powell, idiot traitor, is a lawyer.

[Sarcastr0]

The Great Depression was worldwide, and your understanding of the economics of the 1940s is just plain ahistorical.

[DaivdBehar]

2008, 100% the fault of the lawyer profession.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

You understanding of economics is stuck in Keynsian ignorance.

[Sarcastr0]

1. I didn't make any economic statements, I made historical statements.

2. I, and 90% of current economists agree with Keynes. Calling it ignorant is very silly. You have chosen a fringey (but maybe still valid) take based on it aligning with your ideology.

3. Economics is still not yet in the realm of easy predictions. We know government spending is stimulative, and we know markets are great at maximizing efficient distribution of resources, most of the time. But we also know efficiency is not everything.

Until we know more, we should not always use markets or always reject them, but think hard about when they are the right fit, when they can be regulated to be the right fit, and when they are not. Yelling about liberty is not helpful in that inquiry.

[DaivdBehar]

We said the law is pure feelings, self interest, and rent seeking. Economics involves math but is really the same as the law. They predict effects that go in a straight line, 7th grade math. Any graph that curves or changes direction is beyond their ability. That involves learning calculus, a 12th grade subject.

[Life of Brian]

I, and 90% of current economists agree with Keynes.

1. Reality is not a popularity contest.
2. What percentage of "current economists" are directly or indirectly sucking from the tit of Keynesian policy and thus are just singing for their supper?

[Sarcastr0]

1. I did say the Austrian School could be right, but to say everyone who doesn't agree with the Austrian School is ignorant is just being proud of your closed mindedness.

2. Countercyclical spending is not spent on the salary of economists.

[Life of Brian]

2. Countercyclical spending is not spent on the salary of economists.

Um, yeah. Money being the fungible thing it is, are you truly willing to die on the hill that government-funded economists don't benefit from pushing loose governmental fiscal policy?

[Sarcastr0]

Countercyclical spending is on infrastructure, not on grants.

Plus, economists don't get into the biz to juke their results in the hopes that they might get more grants. If they just want to be rich, there are plenty of ways they can go with that degree.

Finally, in your mania to discount this one branch of science, you have indicted literally all of basic research. Which is kinda amusing to post on the Internet.

[Life of Brian]

Finally, in your mania to discount this one branch of science, you have indicted literally all of basic research.

Only in your trollish dreams. Most if not all other areas of basic research do not concern the very levers that help lock in their own positions. See also self-licking ice cream cone.

[Sarcastr0]

Economics does not concern anything that lets them keep their decisions.

Not even political science does that.

You're just flailing now.

[Rev. Arthur L. Kirkland]

" are you truly willing to die on the hill "

Right-wingers are dying (figuratively) in the culture war. Their terminal condition may be ascribed partly to their rejected economic policies and party to their ugly social thinking (bigotry, backwardness, downscale superstition).

Flail away, clingers. Celebrate every ankle-nip, right up to your day of replacement.

[Kleppe]

Rev. Arthur L. Kirkland: "Flail away, clingers. Celebrate every ankle-nip, right up to your day of replacement."

I was told this is a white supremacist conspiracy theory.

[Queen Amalthea]

" Reality is not a popularity contest."

Lol, this is the 'go to' kind of line for people who keep finding themselves in disagreement with the vast majority of people who have studied, worked and accomplished more in the relevant fields than they have. It's like the thrice divorced guy who goes "what is wrong with women today!"

[Life of Brian]

Hi, Queenie! It's been a while. Tagging in to try to help Sarc dig his way out of his current hole?

Lol, this is the ‘go to’ kind of line for people who keep finding themselves in disagreement with the vast majority of people

Yes, yes -- we know. Now that the LBGTQWERTYXYZ+& lifestyle is in the mainstream, it's time to snap back to majority rule. So predictable.

[Rev. Arthur L. Kirkland]

Do you understand why your side is no longer competitive in the American culture war, Life of Brian? Why right-wingers are so desperate, disaffected, and cranky? Why your preferences are stuck in a hole from which they will never emerge?

[Life of Brian]

And the trolls they just keep piling on! Whiny sappy people holding hands.

[Queen Amalthea]

"this is the ‘go to’ kind of line for people who keep finding themselves in disagreement with the vast majority of people"

Wow, what a transparent and pathetic elision of the rest of that sentence of mine: "*who have studied, worked and accomplished more in the relevant fields than they have*."

But, I guess if I were the one choosing to argue that most people with relevant experience, education and accomplishment in a subject probably don't know more about it than those who don't have the same I'd maybe find such sad dodges appealing as well.

[DaivdBehar]

Artie, do you understand, your kind is getting rounded up in 2025?

[Life of Brian]

Nice try at a save, Queenie, but setting aside the fact that you know absolutely nothing about my background and experience, you also know nothing about the background and experience of this hypothetical 90% as opposed to the hypothetical 10% (both numbers pulled straight from Sarc's nether regions).

You were arguing flat majority and you know it.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

1. I didn’t make any economic statements, I made historical statements.

Bushwa! What do you call this, that I was replying to?

your understanding of the economics of the 1940s is just plain ahistorical.

[Sarcastr0]

The subsequent fiscal policies such as tariffs, a series of anti-market laws and other Mussolini-esque measures enacted by FDR took a recession and turned it into a multi-years long financial debacle that only ended after the death of FDR and the termination of many of his policies. No, WWII did not bring about an end to the recession.

I should have perhaps said the economy of the 1940s, but I think this was pretty clear what I was taking issue with.

[Titus PUllo]

Explain the Great Recession of 1920 and the rapid recovery?

The causes of the Great Depression started with the post WWI countries wanting to not pay the bill which meant depreciating their currencies..and going to a fake gold standard system. Old Ben Strong reduced rates (kicking off the boom) to help the Bank of England by propping up the pound. Once the recession hit, old Hoover then FDR did the wrong thing..they refused let the maleinvestments be liquidated, propped up prices, started deficit spending..even old Reg Turgwell (FDR's) new deal boy admitted they just did what Hoover started.

As for Keynes..his theories are bunk..he had to rationalize some way to inflate the rigid wage escalations labor won from the Govt during WWI.."aggregate demand" what bs..what does that even mean? How do you recover from a recession when govt keep propping up failed industries. Old JMK was that classic upper class socialist pedo who seemed to dominate the upper crust civil service in the UK..

[Sarcastr0]

You think Hoover was into countercyclical spending? Because that's the opposite of what happened.

Keynes was a pedophile is not something I had on my bingo card, so congrats on that unexpected bit of crazy.

[Titus PUllo]

Read you history.yes on both counts.

Hoover was a progressive in economics...and yes JMK was a pedophile..he and his little group of "upper crust intellectuals" liked going down to Italy/Sicily where they raped young "brown" boys

Keynes has been discredited by Hazlitt, Mises, Hayek, Rothbard, and many many others..what he gave was a pseudoscience to allow politicians to deficit spend which they needed "economist" cover for...please show me a keynsian who can explain the business cycle, understand what an opportunity cost is, marginal analysis, and has any idea on monetary policy..the guy literally is right there with Pol Pot in terms of an evil person

[bernard11]

Ah yes.

What do all these people who have spent their lives studying macroeconomics, know?

It's obvious that some anonymous internet commenter, who has read a crackpot post or two, is way ahead of them.

[Titus PUllo]

Bernanke, Greenspan, Yellen...yep they have a great track record in predicting economic cycles and explaining ("animal spirits")..micro economics is a serious field of study..macro is political ideology nothing more..except for what the Austrian School brings to the table..

[bernard11]

The Austrian School is full of it.

Praxeology? Rejection of empirical approaches? Nonsense.

As for Keynes..his theories are bunk..he had to rationalize some way to inflate the rigid wage escalations labor won from the Govt during WWI..”aggregate demand” what bs..what does that even mean? How do you recover from a recession when govt keep propping up failed industries. Old JMK was that classic upper class socialist pedo who seemed to dominate the upper crust civil service in the UK..

This is bunk.

[bernard11]

Utter nonsense.

[bernard11]

No, WWII did not bring about an end to the recession.

Real GDP grew dramatically in the early 1940's, with an annual growth rate of 17-19% in 1942-44.

[Jmaie]

There was quite a bit more pushback based on motive, i.e. that this was another way to enrich Bush's friends on wall street. Not to say stability wasn't discussed, I recall a statement by Ms. Pelosi to the effect that a 1.2% stable return was better than risking retiree's income. Not a great argument from my perspective, YMMV.

[Sarcastr0]

Attacking motives and attacking consequences go hand in hand. Though the motives issue wouldn't have found a lot of purchase unless people feared the consequences of change.

Market returns require taking on some risk. Caring for our retired and elderly really don't want risk. The market doesn't seem the right vehicle at the baseline. (Though obviously I and many supplement with market-based 401Ks or what-have-you.)

[Jmaie]

"Attacking motives and attacking consequences go hand in hand."

No doubt, but the potential consequences were overblown as well. IIRC the proposed percentage was only a couple percent, Bush didn't specify a number but the discussions at the time suggested that range. Might be painful for a few at the margins but even someone retiring at the height of the financial crisis would see a very small reduction in payout. And that wouldn't last either.

[DaivdBehar]

If you invested your SSA payments and those of your employer in a stock index fund, with no decisions allowed, the monthly retirement or disability payments would be triple.

The government is the lawyer profession. They make 99% of policy, no matter the elected figurehead. It does nothing well. Government and the lawyer profession stink, except at one thing, the collection of the rent to themselves. They are doing very well. The lawyers take our $trillion and provide nothing of any value.

[Dan Schiavetta]

One of the most successful government programs in history.

[DaivdBehar]

Are you including the future effects of its unfunded liabilities?

[Dan Schiavetta]

Though unfortunately regressive. The rich should pay their fair share.

[BillyG]

I agree, the benefits are very regressive. Those who put in the least get out the most. I'll be lucky if I ever get back as much as I paid in to social security. I'd be much better off managing it myself. And I would prefer to pay my fair share, which I estimate at about 1/4 what I pay now.

[bernard11]

I’d be much better off managing it myself.

Amazing how the finsncial geniuses come out of the woodwork when SS is discussed.

[Sebastian Cremmington]

We need to have a privatized component of SS and the way to do that is we should give every baby an account with $5k in it that is invested in an S&P index fund tax free until they turn 65. We could then tax the account in such a way that people that make max SS get 100% tax on the money which would raise several hundred billion dollars a year in today’s dollars. The other thing this allows are higher Medicare copays and premiums because everyone would turn 65 with at least $200k (today’s dollars) in savings in addition to SS. Then when they die tax whatever is left at 40% and the rest goes to one’s heirs. That would be the best $20 billion a year program in history. I’m sure publicly traded companies would love to be taxed knowing the money will go straight to the stock market.

[DaivdBehar]

Good idea. Will never happen due to lawyer rent. You can only take money from people by force.

[TTT]

I don't consider running out of money "successful".

[Dan Schiavetta]

? It isn't running out of money.

[PeteRR]

It's been out of surplus money for more than a few years and has been requiring the general budget to make up the short fall.

You can call it IOUs and treasury bills all you want, but it can't meet its obligations and is receiving money from fed.gov. Money, because our federal budget is so fuxxored, that we're borrowing.

[Sarcastr0]

That depends on how you think of the program. One can easily argue it's not been an insurance program for quite some time.

[PeteRR]

It's always been a Ponzi scheme. A Ponzi scheme run by someone who can't indicted.

[Sarcastr0]

National budgets are not personal budgets. Particularly given our worldwide economic hegemony.

[MatthewSlyfield]

It never was an insurance program.

[bernard11]

It’s been out of surplus money for more than a few years and has been requiring the general budget to make up the short fall.

Do you have a cite, because I think this is simply not true?

[TTT]

I don't know where you are getting that from.

"{T}he Social Security Administration estimates in its 2020 Annual Report that all the money in the Social Security “bank account” will be exhausted in 2035, when it will have only about 79% of what it should pay out that year. "

https://www.investopedia.com/ask/answers/071514/why-social-security-running-out-money.asp

[Dan Schiavetta]

That's only if everybody stops paying payroll taxes tomorrow. Which of course isn't going to happen.

Of course the problem is easily solved if we eliminate the payroll tax cap. Who knows? Maybe someday billionaires might even pay the same tax rate as the secretaries they sexually harass.

[Rev. Arthur L. Kirkland]

These clingers -- believe it or not -- still seem not to understand what is coming . . .which is strange, because it is quite similar to what has been occurring for five, six, seven decades.

Talk about slow . . .

[Michael P]

One of the big selling points of Social Security is that a person "pays into" the system in a way similar to the benefits they get from it. Social Security benefits are capped, so the payroll tax inputs should also be taxed. Otherwise it's a bait and switch.

[Sarcastr0]

Bait and switch over multiple generations isn't a thing. If our elected representatives want to change something about a program, that's completely legitimate.

[TTT]

> That’s only if everybody stops paying payroll taxes tomorrow.

cite please.

According to the linked article, the problem with SS is 1) retiring baby boomers, 2) people living longer, 3) lower birth rates, and 4) a shrinking working-age population.

> the problem is easily solved if we eliminate the payroll tax cap

cite pleas.

I have seen a lot of people make that claim; but, I haven't seen anyone actually show how they arrived at that conclusion.

[Life of Brian]

One of the most successful government programs in history.

One of the most succinct takes on the general ineptitude of government in history.

[Sarcastr0]

You yearn for old people to be eating catfood again?

Do you plan to take advantage of social security?

[DaivdBehar]

I am spending my social security payments on federal litigation.

[Life of Brian]

Do you plan to take advantage of social security?

See above -- I'm not counting on there being (m)any Ponzi dollars left for me at that point. The math on this is sadly inevitable.

[Sarcastr0]

Sure. But say you're wrong and it still is around in some form.

Is your courage in your convictions as thin as those convictions appear to be?

[Life of Brian]

But say you’re wrong and it still is around in some form.

Of course it will be around "in some form," silly rabbit. That's a completely different question than whether there will be any dollars out of the inevitably shrinking bucket allocated to me at that point.

Is your courage in your convictions as thin as those convictions appear to be?

It just wouldn't be a Saturday morning without a classic Sarcastr0 false choice. My cashing a (very small if any) SS check 20+ years from now does not suddenly transform the program from a poorly-planned, poorly-executed disaster into puppies and rainbows. It just means I'm getting back some small pittance of my gunpoint "contributions" that might happen to remain after decades of waste, fraud, and political football.

[Sarcastr0]

It's been a generational success. And one you would not turn down.

Some disaster.

[Jimmy the Dane]

A survey found that of the 90% of commenters that are not partial to Sarc found he was nothing but a troll with 100% believing he routinely lies and gaslights to make his point....

[Life of Brian]

And one you would not turn down.

Some disaster.

So if I pay in $1MM and take back the $10 that's left, that somehow proves it's not a disaster.

I don't know if you're particularly useful, but you certainly play the idiot to a T.

[Sarcastr0]

What you describe is not what's happening, though.

You seem convinced that is going to happen, but your main support seems to be insults to anyone who questions that.

[Life of Brian]

You seem convinced that is going to happen

Yup, because I'm not a math denier.

[Sarcastr0]

Policy is never purely about math.

But you don't care to actually learn about the many ways to reindex social security, because you aren't doing facts, all you have or need is ideology.

[Life of Brian]

the many ways to reindex social security

All of which involve either adding money to the pot (good luck with that) or reallocating that which remains (as I've been discussing). The system as designed is augering itself into the ground, because it was poorly designed and the political will has not existed to fix it for my lifetime and yours.

[Sarcastr0]

Your version of reallocation is that you only get $10, or at least no amount worth caring about.

This is far from inevitable.

Which you now seem to realize.

[Life of Brian]

This is far from inevitable.

Which you now seem to realize.

Honest question: would you be able to pretend to carry on any sort of debate at all without stuffing words in your opponent's mouth?

Just so we're all clear:
1. It is utterly inevitable that the current system is currently insolvent, much less when we get to the point where it would be paying anything to me.

2. The political will has not existed to make the program solvent in the past several decades, in much better times than these.

3. No small part of the reason for (2) is that making the program solvent would make far clearer exactly what its effective rate of return is over time, compared to alternative retirement vehicles not administrated by the functional equivalent of the DMV.

Twist that.

[Sarcastr0]

Look at your new goalposts.

You started out saying the system was fundamentally broken and an example of government ineptitude.

Now you're saying the system as it currently is needs to change, and politics are the problem.

Which is nowhere near the same thesis. Your backpedaling is epic.

[Life of Brian]

And the answer is, ladies and gentlemen -- no. No, Sarc can't debate the person in front of him, so he has to create gross caricatures and tilt against those.

I started out by saying the system as created and maintained through its 70+ years of existence is fundamentally broken and an example of governmental ineptitude.

I ended there as well.

The thread speaks for itself.

And that's the last time the rattle is going back on the high chair for today.

[PeteRR]

It's a transfer program that is on the brink of swallowing the federal budget.

On top of that, the rate of return is worse than if SS had just purchased treasury notes and given them to the individual people paying in.

[Sebastian Cremmington]

Except Medicare is a great deal…so it evens out.

[PeteRR]

Medicare is even more of a budget catastrophe than SS is. Unfunded liabilities for it exceed $37,000,000,000,000. That is money that we have no idea where we're going to get to pay medical benefits for the next 75 years.

[Sarcastr0]

You do realize how Medicare and all nondiscretionary spending appears in the budget is not actually unfunded, right?

The law is not pay-for-play. That doesn't mean it's completely unfunded - it's not like revenue only pays for discretionary programs. Nor does it mean we have no idea how to pay. We do know how to raise revenue, and we also are learning about how sovereign debt works.

Plenty of other countries have universal healthcare, and aren't bankrupt.
Saying our nondiscretionary spending system needs addressing is one thing; saying it's unaddressable is just the usual 'now that a Dem is in office I worry about debt and insist on austerity' which is such obvious bad faith after Trump that it's going to convince only yourself.

[Titus PUllo]

for buying votes..yep you are right

[Sarcastr0]

The New Deal and Social Security were both quite politically risky at the time.

Or just look at partisan voting patterns after the war.

Buying votes it was not.

[Cal Cetín]

...and in Flemming v. Nestor the Supreme Court said Social Security wasn't a real insurance program, and Congress could screw over beneficiaries in ways that would put private insurance executives in prison.

https://www.law.cornell.edu/supremecourt/text/363/603

[Jmaie]

SSI is given 12.4% of my income, my private invesments a bit under 17%. Those private investments are on track to pay 3x what SSI will. So 36% more in and 200% more out. A standard mix of stocks and bonds, no financial acumen required.

[Jmaie]

Not sure what happened, this was meant as a reply to Bernard's "genius" comment above...

[Sebastian Cremmington]

Medicare is the good deal…SS is essentially insurance backed by the best “company” in existence—US federal government with access to the world’s best printing press…so it shouldn’t be judged against stock market returns. That said we should add a private component by simply giving every baby $5k that is invested in an S&P index fund and grows tax free until age 65. You can pay for it several ways either taxing publicly traded companies or increasing payroll tax for 18-30 year olds.

[Cal Cetín]

"You can pay for it several ways either taxing publicly traded companies or increasing payroll tax for 18-30 year olds."

There's a puzzle...I wonder which option Congress would take?

They'd probably tack on a payroll-tax increase onto a bill proclaiming National Cute Puppies Day.

[DaivdBehar]

JMale. The whole country should be doing what you are doing. Government is too stupid to do the obvious.

[DaivdBehar]

The government, which means, the lawyer profession, does nothing well. Half the COVID unemployment money has gone to foreign scammers. The scumbag lawyer gave $400 billion to the enemy.