The Awful Truth Behind Fleming vs Nestor

Blog Post - The Awful Truth Behind Fleming vs Nestor

In 1966, a man named Ephram Nestor was deported from the United States for having been a member of the Communist Party, and his Social Security benefits were terminated. Nestor went to court to get his benefits back, arguing that a contract existed between himself and the United States government, since he had paid into the Social Security for 19 years.

But the Supreme Court ruled in Fleming vs. Nestor that you have no contractual right to receive the Social Security you've been paying into. Congress reserved to itself the power to amend and revise the schedule of benefits. Payments due under Social Security are not “property” rights and are thus not protected by the Takings Clause of the Fifth Amendment. For this reason, Social Security benefits can be slashed or cancelled if ever congress sees fit.

This is why you hear people say that they doubt they'll get back what they put into social security once they retire.  By that time, many believe our mounting fiscal issues will essentially bankrupt the program, leaving millions without the nest egg they were told they'd receive from Social Security.

Indeed if you look at the bottom of your Social Security statement, you'll see that the government is already admitting this possibility:

The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.

The government is telling us what we all know. They will be unable to fulfill their part of the deal. And although they currently claim to have enough to pay out full benefits until 2032, just six years ago they said they'd be able to pay full benefits until 2040. If we have another recession, or their estimates keep shrinking at the same rate, Social Security will have to cut benefits by 2022, just seven years from now.

All of this is made possible 50 years ago when a man named Ephram Nestor lost his case in the Supreme Court and American citizens lost the right to their hard earned retirement savings.

 

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