Social Security Warning Issued by Solicitor General

Newsweek

2 days ago

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The Department of Justice has warned that overturning tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA) would risk a "1929-style" crisis that could endanger the country's social welfare programs.
"In such a scenario, people would be forced from their homes, millions of jobs would be eliminated, hard-working Americans would lose their savings, and even Social Security and Medicare could be threatened," wrote the U.S. Solicitor General D. John Sauer, in a letter submitted to the U.S. Court of Appeals for the Federal Circuit on Monday.
Why It Matters
The federal appellate court is soon set to decide whether to uphold the Court of International Trade's (CIT) May ruling that President Donald Trump overstepped his executive authority when imposing the majority of his tariffs.
While this order invalidating Trump's actions, and another order from the District Court for the District of Columbia, have been temporarily stayed, the outcome of the legal battle, which Trump has called "America's big case," could hold wide-reaching implications for the president's trade agenda and the economy as a whole.
What To Know
The IEEPA is a federal law granting the president the power to regulate commerce to address "an unusual and extraordinary threat" to the United States during national emergencies. In the case of Trump, persistent trade deficits and fentanyl smuggling are among the emergencies invoked for his tariffs on Canada, Mexico and China, as well as the "reciprocal" duties placed on dozens of America's trading partners.
"The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder," the three-judge panel of the CIT wrote in its May ruling.
White House officials accused the CIT of mounting a "judicial coup," and immediately appealed the decision. The federal appeals court granted the White House a stay on May 29.
U.S. Solicitor General D. John Sauer testifies during his Senate Judiciary Committee confirmation hearing on February 26, 2025.
U.S. Solicitor General D. John Sauer testifies during his Senate Judiciary Committee confirmation hearing on February 26, 2025.
Tom Williams/CQ Roll Call via AP Images
The court heard oral arguments in the case earlier this month, and Reuters reports that the 11-judge panel was skeptical about the administration's rationale for using the 1977 law to justify the tariffs.
Since late May, the Trump administration has struck deals with a handful of trading partners hoping to bring down their tariff rates. These include agreements with the European Union, Japan and South Korea, and involve investment commitments together totaling well over $1 trillion.
In Monday's supplemental letter, rather than the potential legality of the CIT's ruling and the invocation of the IEEPA, the DOJ argued that overturning tariffs would jeopardize these deals and investments. The latter are not direct payments to the U.S., but rather financing for private-sector projects.
However, Sauer and Assistant Attorney General Brett Shumate said: "The President believes that our country would not be able to pay back the trillions of dollars that other countries have already committed to pay, which could lead to financial ruin."
"These deals for trillions of dollars have been reached, and other countries have committed to pay massive sums of money," they added. "If the United States were forced to unwind these historic agreements, the President believes that a forced dissolution of the agreements could lead to a 1929-style result."
The argument echoes those recently made by Trump over the "big case."
"If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor," the president posted on Truth Social last week.
What People Are Saying
Solicitor General D. John Sauer and Assistant Attorney General Brett Shumate, in Monday's letter, wrote: "There is no substitute for the tariffs and deals that President Trump has made. One year ago, the United States was a dead country, and now, because of the trillions of dollars being paid by countries that have so badly abused us, America is a strong, financially viable, and respected country again. If the United States were forced to pay back the trillions of dollars committed to us, America could go from strength to failure the moment such an incorrect decision took effect."
Scott Lincicome, economist at the Cato Institute, posted on X in response to the letter: "This is a letter signed by the US government's top lawyer and submitted today in federal court (in VOS Selections v Trump). I'm honestly struggling to believe it's real, but here we are."
Economist David L. Ortega told Newsweek: "Ending the tariffs would not threaten Social Security or Medicare, which are funded through payroll taxes, not tariff receipts. Historically, high and sustained tariffs have posed greater economic risks than their removal. We saw this with the Smoot-Hawley Tariff Act in 1930. In fact, lifting these tariffs would more likely lower costs for U.S. producers and consumers than trigger a 1929-style collapse."
Robert B. Koopman, a senior lecturer in Politics, Governance and Economics at the American University, told Newsweek that the letter was "factually incorrect" and "a pure political statement with no factual basis in economic or political reality."
"This set of arguments [regarding Social Security] has no basis in fact or considered economic analysis—pure hyperbole."
He added: "More economists are worried that the current set of [trade] agreements are likely to lead to economic slowdown and that U.S. growth would be stronger without them. No one is actually predicting a 1929 result with them or without them."
What Happens Next
In the letter, Trump's lawyers said that there exist alternative "tariff authorities" beyond the IEEPA that the president could employ depending on the outcome of the case. However, they described them as "short-term" and "not nearly as powerful," and said employing these would "render America captive to the abuses that it has endured from far more aggressive countries."
It is unclear when the appellate court will issue its final ruling, but the case could potentially progress to the Supreme Court regardless of the outcome. Last week, former House Speaker Paul Ryan said the court was "more than likely" to strike down the president's use of the IEEPA for the bulk of his tariffs.