Your team lost the battle over the Constitutionality of Social Security in 1937, dude.
The Supreme Court Cases
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 would issue rulings on all three on the same day.
Helvering vs. Davis:
George P. Davis was a minor stockholder in the Edison Electric Illuminating Company. Edison, like every industrial employer in the nation, was readying itself to start paying the employers' share of the payroll tax in January 1937. Mr. Davis objected to this arguing that by making this expenditure Edison was robbing him of part of his equity, so he sued Edison to prevent their compliance with the Social Security Act. The government intervened on Edison's behalf and the Commissioner of the IRS (Mr. Helvering) took on the lawsuit.
The attorneys for Davis argued that the payroll tax was a new type of tax not listed in the Constitution's tally of taxes, and so it was unconstitutional. At one point they even introduced into their argument the definitions of "taxes" from dictionaries in 1788 (the year before the Constitution was ratified) to prove how earnest they were in the belief that powers not explicitly granted in 1789 could not be created in 1935. Davis was also of the view that providing for the general welfare of the aged was a power reserved to the states. The government argued that this was too inflexible an interpretation of the powers granted to Congress, and (loosely) that if the country could not expand the interpretation of the Constitution as it stood in 1789 progress would be impossible and it would still be 1789.
Steward Machine Company:
In the Steward Machine Company case the unemployment compensation provisions of the Act were disputed. The Company dutifully paid its first unemployment tax installment ($46.14) and then sued the government to recover the payment, claiming the Social Security Act was unconstitutional. Steward made the same as points as Davis about the meaning of the word "tax," and argued in addition that the unemployment compensation program could not qualify as "providing for the general welfare."
Carmichael vs. Southern Coal & Coke Co. and Gulf States Paper:
This was also a case disputing the validity of the unemployment compensation program. In this variation the companies were challenging the state portion of the federal/state arrangement. Unwilling to pay their share of state unemployment compensation taxes the two companies sued the state of Alabama declaring that it was the Social Security Act, which they deemed unconstitutional, that gave Alabama its authority to tax them in this way and since they believed the Act to be invalid, they did not have to pay the tax. Alabama differed. It was again the same issues as in the two prior cases.
Mr. Justice Cardozo for the Court
On May 24, 1937 the Supreme Court handed down its decision in the three cases. Justice Cardozo wrote the majority opinion in the first two cases and he announced them on what was, coincidentally, his 67th birthday. (See sidebar on Justice Cardozo.)
Mirroring the situation in Congress when the legislation was considered, the old-age insurance program met relatively little disagreement. The Court ruled 7 to 2 in support of the old-age insurance program. And even though two Justices disagreed with the decision, no separate dissents were authored. The unemployment compensation provisions, by contrast, were hotly disputed within the Court, just as they had been the focus of most of the debate in Congress. The Court ruled 5 to 4 in support of the unemployment compensation provisions, and three of the Justices felt compelled to author separate dissents in the Steward Machine case and one Justice did so in the Southern Coal & Coke case.
Justice Cardozo wrote the opinions in Helvering vs. Davis and Steward Machine. After giving the 1788 dictionary the consideration he thought it deserved, he made clear the Court's view on the scope of the government's spending authority: "There have been statesman in our history who have stood for other views. . .We will not resurrect the contest. It is now settled by decision. The conception of the spending power advocated by Hamilton . . .has prevailed over that of Madison. . ." Arguing that the unemployment compensation program provided for the general welfare, Cardozo observed: ". . .there is need to remind ourselves of facts as to the problem of unemployment that are now matters of common knowledge. . .the roll of the unemployed, itself formidable enough, was only a partial roll of the destitute or needy. The fact developed quickly that the states were unable to give the requisite relief. The problem had become national in area and dimensions. There was need of help from the nation if the people were not to starve. It is too late today for the argument to be heard with tolerance that in a crisis so extreme the
use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose [other] than the promotion of the general welfare."
And finally, he extended the reasoning to the old-age insurance program: "The purge of nation-wide calamity that began in 1929 has taught us many lessons. . . Spreading from state to state, unemployment is an ill not particular but general, which may be checked, if Congress so determines, by the resources of the nation. . . But the ill is all one or at least not greatly different whether men are thrown out of work because there is no longer work to do or because the disabilities of age make them incapable of doing it. Rescue becomes necessary irrespective of the cause. The hope behind this statute is to save men and women 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."
With these cases decided, Justice Stone could then dispose of the third case in short order. "Together the two statutes now before us embody a cooperative legislative effort by state and national governments, for carrying out a public purpose common to both, which neither could fully achieve without the cooperation of the other. The Constitution does not prohibit such cooperation."
Social Security Online
