Senate Investigates Felons Receiving Social Security Benefits

May 3, 2001

In a non-reform related story, the Senate Finance Committee begin hearings into the estimated $831 million annual payment of Social Security and Medicare benefits to felons, fugitives and the deceased. One witness at the hearing was Jerome Horn, a convicted bank robber and fugitive from justice. The police couldn't find him but the Social Security Administration could, and paid him thousands of dollars in benefits. Eventually, however, the police and SSA compared notes. "Everything was going along just fine until last month when the police showed up to arrest me," Horn said.

Certainly, the SSA and the police should work together to enforce the law, and Sen. Charles Grassley (R-IA), the Finance Committee chairman, rightly states that, "Social Security and Medicare programs don't have a penny to spare for undeserving people."

But this nevertheless raises an interesting question. If, as many defenders of the current system claim, Social Security benefits are an earned right established by the payment of Social Security taxes, then it is hard to justify taking benefits away from individuals even if they have committed crimes. After all, a prisoner does not lose the savings in his 401(k) account upon conviction of a crime.

If, on the other hand, Social Security is simply a welfare benefit paid to those the law considers "deserving" then we should reconsider the rhetoric that calls Social Security a "right" or a "sacred compact."

The Supreme Court ruled in 1960 that Social Security is a welfare program and not an earned property right, so benefits can be cut for retirees tomorrow as easily as for convicted criminals today. With Social Security's day of financial reckoning just 15 years away and $22 trillion in future deficits, the definition of "undeserving" is likely to extend far past merely felons and fugitives. The system will have to cut costs somehow and the lack of property rights makes it alarmingly easy to do so.

For more details on these issues, see "Property Rights: The Hidden Issue of Social Security Reform," by Prof. Charles E. Rounds Jr.

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