What does this have to do with government accounting? Why should I care about something from 1960 as a busy holiday season kicks into gear?
Ephram Nestor moved from Bulgaria to the United States in 1913. In 1956, amidst the “Red Scare,” he was deported, given his ungodly choice to become a member of the Communist Party from 1933 to 1939 – about twenty years earlier, and at a time when that membership was legal.
While he was in the United States, Mr. Nestor worked and paid taxes, including FICA (Social Security) taxes. After decades of contributions, Congress passed a law determining that he and others like him were not allowed to receive Social Security benefits.
A federal court agreed he was due his benefits. But in 1960, the Supreme Court of the United States ruled against him, reversing that court, and finding that Congress has the right to change the Social Security program by law without being constrained by unjust takings or due process claims.
This decision has had broad implications for Social Security, and has been cited as one of the reasons why the federal government chooses not to include the tens of trillions of dollars of unfunded future Social Security obligations as a liability on its balance sheet – where Truth in Accounting believes they still belong.
The Flemming v. Nestor decision was a majority decision – barely. Justices Warren, Black, Brennan, and Douglas dissented. Here are some quotes from dissenting opinions.
Justice Hugo Black, “I agree with the District Court that the United States is depriving appellee, Ephram Nestor, of his statutory right to old-age benefits in violation of the United States Constitution. … In Lynch v. United States … this Court unanimously held that Congress was without power to repudiate and abrogate in whole or in part its promises to pay amounts claimed by soldiers under the War Risk Insurance Act of 1917. … This Court held that such a repudiation was inconsistent with the provision of theFifth Amendment that 'No person shall be * * * deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.' The Court did not permit the Government to break its plighted faith with the soldiers in the Lynch case; it said the Constitution forbade such governmental conduct. I would say precisely the same thing here.”
Justice William O. Douglas -- “This 1954 law seems to me to be a classic example of a bill of attainder, whichArt. I, § 9 of the Constitution prohibits Congress from enacting. A bill of attainder is a legislative act which inflicts punishment without a judicial trial.”
The entire Flemming v. Nestor decision is available here.
Are we really due our Social Security? Even if the government can change the law, a strong case can be made that it should include it as a liability under current law.