Evening star., 1936-10-04
The Real Issue.


Institution of another suit in Federal
courts testing validity of the social Sc
curity act comes as further evidence OF
the fact that the fate of this far-reaching
legislation is more likely to rest in the
hands of the United States Supreme
Court than with the electorate which
makes its choice between the presiden-
tial candidates in November. President
Roosevelt and Governor Landon may
debate the law. its objectiveS and its
workability, until the cows come home.
But the chief question is whether the
law has been enacted within the limits
defined by the Constitution. That is
yet to be settled.
The latest attempt to test the law has
come in Alabama, where United States
District Judge C. B. Kennamer has
granted a temporary restraining order
halting the collection of the one per
cent pay roll tax from employers. Next
year this tax becomes two per cent, and
the year after three per cent. Next year,
also, begin the one per cent tax on
pay rolls and salaries for old-age bene-
fits, to be followed at three-year inter-
walls by an increase of half of one per
cent until the maximum of three per
cent is reached. The plaintiff in Ala
bama, steel corporation, will, it is re-
ported, be joined by employers of
eeventy-fv per cent of Alabama labor
in pressing the suit.
This case has been preceded by two
other important tests, one attacking the
constitutionality of the New York unem-
ployment-benefit law, in which the State
has been upheld by the New York Court
of Appeals and which has been appealed
to the United States Supreme Court,
The other originated in New Jersey,
challenging validity of the Federal
statute. AS taxes begin to bear down on
employers other suits are anticipated.
The Supreme Court may reach none of
them during the term just begun.
Governor Landon has centered much
OF his criticism of the act on its un-
workability, particularly the old-age re-
serve fund which. under existing terms,
would reach the stupendous sum of Sat-
0o0,o00,o00 in forty-four years. He has
had able support for his criticism of
this feature of the act and the dangers
1t presents for wild extravaganza by
Congress in the use of large amounts of
idle cash. Other criticism of the act
has been voiced by men sympathetic
with what it sets out to achieve, but
skeptical Of the methods. But the great
est hurdle yet to be overcome is the
Supreme Courts judgment as to the
application of several principles which
In the past 1t has declined to sanction.
The only provisions of the social Sc
eurity act which. seemingly. are directly
authorized by the Constitution are pro-
motion of the general welfare and the
raising of revenue. A legal fiction en-
ployed In the act is that the unemploy-
ment taxes collected and paid into the
Treasury are not, in reality, Federal
funds at all, although ten per cent of the
Federal tax is retained to defray admin
istrative costs Of State agencies. The
administrative grants to States and the
requirement that State tax collections
be deposited in the Federal Treasury are
regarded as of doubtful constitutionality,
the Supreme Court having held in the
A. A. A. case that the Federal Govern
ment had not power to accomplish indi-
rectly what 1t was not authorized to carry
out directly. AS far as old-age annuities
are concerned, the Supreme Courts chief
objection to the railroad pension act,
which it held invalid, was that fa-
vored class of workers had been singled
out for special benefits from pool" of
funds which were contributed by ali rail-
road employers, without taking into
account the different conditions of en-
ployment on the various lines. In en-
acting a new railroad pension measure,
Congress not only did not directly con-
meet taxes and benefits, but passed one
law imposing taxes, another establishing
benefits. The District Court here re-
fused to consider the separation, how
ever, and held the law invalid.
Because of the complicated, vast ma
chinery in the course Of assembly to
administer the social security actin
Washington and in the States-it would
seem advisable that plaintiffs and the
Government should join in efforts to
expedite the tests of constitutionality.