U.S. Supreme Court Hears Arguments on Federal Benefits for Territories

The U.S. Supreme Court heard oral arguments Tuesday on whether it is constitutional to deny Supplemental Security Income benefits to American citizens living in Puerto Rico, and by extension the U.S. Virgin Islands and Guam, under a decades-old decision by Congress.

Representing the U.S. Justice Department, Deputy Solicitor General Curtis Gannon said the intent of the 1972 decision – creating SSI for the states and D.C. only — was to promote economic and political autonomy in Puerto Rico, and that because its residents don’t pay federal income and some other taxes, it can fund its own safety net programs.

That leaves U.S. citizens of most American overseas territories, including the U.S. Virgin Islands, to rely on Aid to the Aged, Blind and Disabled, which in Puerto Rico delivers a benefit of about $58 a month versus $418 if its residents were eligible for SSI.

The case that led to Tuesday’s hearing centers on José Luis Vaello-Madero, whom the U.S. Justice Department sued in 2017 to recover $28,081 in SSI benefits it said he continued to receive illegally when he moved from New York State to Puerto Rico in 2013 to be closer to family.

The DOJ lost its case in the District Court of Puerto Rico, and again on appeal to the U.S. Court of Appeals for the First Circuit in April 2020, which found that barring residents of the territory from SSI payments violates the equal protection clause of the Constitution. The DOJ appealed to the Supreme Court, which granted review of the case in March.

Should Vaello-Madero prevail, Puerto Rico will stand to gain about $2 billion in SSI funding – benefits that could in turn also extend to the U.S. Virgin Islands and Guam.

The justices asked some pointed questions Tuesday as they grappled with whether federal contributions should determine SSI eligibility, and the status of territories versus states. Many questions posed to Gannon came from the three liberal justices: Stephen Breyer, Elena Kagan and, notably, Sonya Sotomayor, whose parents are from Puerto Rico.

“Most of the SSI recipients, if not all of them, don’t pay taxes. So it’s not as if the recipients of this money are any different among themselves. Puerto Ricans are citizens, and the Constitution applies to them. Their needy people are being treated different than the needy people in the 50 states, the District of Columbia, and the Northern Mariana Islands,” said Sotomayor.

“So explain how those people, none of whom pay taxes to the federal government, how are they different,” the justice said.

Because they live in a community where less tax money is going to the federal government, which is distributed through various federal benefit programs, said Gannon.

Sotomayor questioned that argument. “I’m looking at the record, and it shows Puerto Ricans as a community, and all the other taxes they pay, pay more than many states of the union,” she said.

Gannon’s response, that Puerto Ricans pay less per capita than 33 states, and receive benefits under other federal programs, led to questions from Breyer about whether the law is reasonable, rational or arbitrary.

“The rationale is that … it is always appropriate for Congress to take account of the general balance of benefits and burdens associated with a particular federal program. … And when the locality at issue pays in less into that income stream than others do, that means that there is more money left in the community,” thereby promoting autonomy, said Gannon.

Puerto Rico is in fact bankrupt and being run by a federal oversight board under a 2016 statute commonly known as PROMESA — the Puerto Rico Oversight, Management and Economic Stability Act — Breyer said.