Pensions and Other Entitlements: Pt. 1 (April 14, 2008)

Today’s adults have “discounted” and now disregard the Bush Wars.  After all, the wars are being fought by the children of the underclass and will be paid for by the children of all classes in the future.  Everything is very tidy and antiseptic, except that this belief is a delusion.  Today’s adults likely will pay for some of the cost of the Crusades.

As a general proposition, the Constitution protects “life,” “liberty,” and “property.”  The United States Supreme Court has often recognized: “[p]roperty interests are not created by the Constitution, ‘they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law . . . .’”  Cleveland Bd. Of Educ. v. Loudermill, 470 U.S. 532, 538 (1985).  There are many adults who believe they have been promised payments in the future for their efforts today.  The funds to make the future payments are not being provided today, so there is no binding social contract.  The Older Generation offers to provide a pension; the Older Generation accepts the offer; however, if the Older Generation does not fund the promise, there is no legal “consideration” for the contract.  The Younger Generation can note simply that they were not a party to the contract and did not make any promises or representations to the Older Generation.  The pensions and other obligations are nudum pactum, a naked contract.

These issues wander into the courts.  That is where things get curious.  An individual takes a judgeship for a variety of reasons—a steady pay check, prestige, power, the possibility of doing good and making a difference, they look good in black, and, of course, the promise of the almighty pension.  For that reason, courts have an inherent conflict of interest whenever they are presented with any challenge involving pensions of any kind.  Courts often make very public displays of some usually minor or irrelevant conflict of interest, yet on the fundamental economic issues they address cases and protect their economic interests.  Most of the courts today have protected pensions in cases before them to protect their own pensions without even obliquely noting in a passing footnote a clear and blatant conflict of interest.  They contend that the pension is a binding contract and/or a property right.  It is neither.

In Flemming v. Nestor, 363 U.S. 603 (1960), the United States Supreme Court upheld a provision in the Social Security Act of 1935 in which Congress reserved to itself the power to amend and revise the schedule of benefits.  The Court held that a social security recipient does not have a property interest in a social security payment.  “We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of ’accrued’ interests violative of the Due Process Clause of the Fifth Amendment.”  Id. at 611.  Justice Hugo Black in dissent observes that the decision represent an anti-communist bias by the members of the Court.  Id. at 628-28.  In addition and of more insight, the Justices were not entitled to participate in Social Security, so the decision is not surprising.

Bumper sticker of the week:

Social Security?

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