No Social Security Benefits, Mr. Obama?

President Obama has warned the public that Social Security benefits may not be paid in August if he doesn't get the trillion dollar tax increase he is asking for in the debt ceiling negotiations. That isn't quite how he said it, but that is what he means. His deficit reduction plan calls for a trillion dollar revenue enhancement and increased government spending. Democrats have also talked about borrowing for a possible new and larger government stimulus program to enhance the economy and improve the jobless rate. Their last stimulus, they say, might not have been large enough, since the jobless rate went up instead of down.

The Social Security Administration isn't really supposed to be part of the general Treasury fund of the United States. Under the Social Security Act of 1935, the Treasury was required in Section 201(a) to set up a separate fund called the "Old-Age Reserve Account" and that account was separately managed by a Social Security Board (Section 701). The funds are managed like a trust, and the law requires that those funds be used to pay benefits first and then invested. As I understand it, excess receipts of social security taxes have traditionally been "invested" into general revenue funds of the federal government. Most administrations, with the apparent exception of the Clinton administration, have recognized that the funds borrowed from Social Security count as part of the outstanding debt owed by the federal government.

In other words, it is illegal for the President to interfere with social security benefits. By law, they must be paid out of the social security fund. It is illegal for the President to directly access or control social security funds. By law, that fund is not part of the general treasury funds included in the federal budget.

The real question is whether that great constitutional lawyer Obama is utilizing this "threat" as a scare tactic, or whether he will proceed illegally as he has done in other matters and fraudulently order the payments withheld.

It's a real concern, because there would be little chance of recourse for defrauded social security beneficiaries in any federal court. Most judges are graduates of our liberal law schools and won't allow actions against the government when liberal causes are at stake, and even if a judge does rule against the administration, the Obama administration has shown a notable contempt for court orders it disagrees with.