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The conception of the spending power of Congress has prevailed. Yet difficulties are left when the power is conceded. The line must still be drawn between one welfare and another, between particular and general. Where this shall be placed cannot be known through a formula in advance of the event. There is a middle ground or certainly a penumbra in which discretion is at large. The discretion, however, is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment. This is now familiar law. When such a contention comes to the court, it naturally require a showing that by no reasonable possibility can the challenged legislation fall within the wide range of discretion permitted to the Congress. Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago may be interwoven in our day with the well-being of the nation. What is critical or urgent changes with the times.
Respondent shareholder of the Edison Electric Illuminating Company of Boston (“Edison”), a Massachusetts corporation, brought suit seeking to restrain the corporation from making the tax payments and deductions called for by Social Security Act, which the respondent argued to be void under the Constitution of the United States. According to the respondent, if the exactions shall ultimately be held void, Edison will have parted with money that would be impossible to recover, thereby resulting in irreparable loss to the corporation and to its shareholders. The United States Commissioner of Internal Revenue and the United States Collector for the District of Massachusetts were allowed to intervene, arguing that the employer, not being subject to tax under the challenged provisions, could not challenge their validity, and that the shareholder, whose rights were no greater than those of his corporation, had even less standing to be heard. The District Court held that the tax upon employers was constitutional, and accordingly denied the prayer for injunction. On appeal, the United States Court of Appeals for the First Circuit held that the portions of the Social Security Act were void as an invasion of powers reserved by the Tenth Amendment to the states or to the people. A petition for certiorari was filed by the defendants.
Were certain provisions of Social Security Act void as an invasion of powers reserved by the Tenth Amendment to the states or to the people?
The Court reversed the decision in favor of the shareholder, finding that the Act was a valid exercise of Congress for the good of all. The Court held that Congress was given the power to spend money for the public good under the Constitution and rejected the contention that the Act was promulgated in violation of the Tenth Amendment. The Court reasoned that with many people growing old and dependent, the Act was a protection and that the only way for it to succeed was for Congress to exercise a power that was national so that it could serve the interests of all.