ArtI.S8.C1.2 Spending Power

Article I, Section 8, Clause 1:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . .

The grant of power to provide . . . for the general welfare raises a two-fold question: how may Congress provide for the general welfare and what is the general welfare that it is authorized to promote? The first half of this question was answered by Thomas Jefferson in his opinion on the Bank as follows: [T]he laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They [Congress] are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose.1 The clause, in short, is not an independent grant of power, but a qualification of the taxing power. Although a broader view has been occasionally asserted,2 Congress has not acted upon it and the Court has had no occasion to adjudicate the point.

With respect to the meaning of the general welfare the pages of The Federalist itself disclose a sharp divergence of views between its two principal authors. Hamilton adopted the literal, broad meaning of the clause;3 Madison contended that the powers of taxation and appropriation of the proposed government should be regarded as merely instrumental to its remaining powers; in other words, as little more than a power of self-support.4 From early times, Congress has acted upon Hamilton's interpretation. Appropriations for subsidies5 and for an ever-increasing variety of internal improvements6 constructed by the Federal Government, had their beginnings in the administrations of Washington and Jefferson.7 Since 1914, federal grants-in-aid, which are sums of money apportioned among the states for particular uses, often conditioned upon the duplication of the sums by the recipient state, and upon observance of stipulated restrictions as to their use, have become commonplace.

The scope of the national spending power came before the Supreme Court at least five times prior to 1936, but the Court disposed of four of the suits without construing the general welfare clause. In the Pacific Railway Cases8 and Smith v. Kansas City Title & Trust Co.,9 it affirmed the power of Congress to construct internal improvements, and to charter and purchase the capital stock of federal land banks, by reference to its powers over commerce, post roads, and fiscal operations, and to its war powers. Decisions on the merits were withheld in two other cases, Massachusetts v. Mellon and Frothingham v. Mellon,10 on the ground that neither a state nor an individual citizen is entitled to a remedy in the courts against an alleged unconstitutional appropriation of national funds. In United States v. Gettysburg Electric Ry.,11 however, the Court invoked the great power of taxation to be exercised for the common defence and general welfare12 to sustain the right of the Federal Government to acquire land within a state for use as a national park.

Finally, in United States v. Butler,13 the Court gave its unqualified endorsement to Hamilton's views on the taxing power. Justice Roberts wrote for the Court: Since the foundation of the Nation sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view the phrase is mere tautology, for taxation and appropriation are or may be necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. Each contention has had the support of those whose views are entitled to weight. This court has noticed the question, but has never found it necessary to decide which is the true construction. Mr. Justice Story, in his Commentaries, espouses the Hamiltonian position. We shall not review the writings of public men and commentators or discuss the legislative practice. Study of all these leads us to conclude that the reading advocated by Mr. Justice Story is the correct one. While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of § 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.14

By and large, it is for Congress to determine what constitutes the general welfare. The Court accords great deference to Congress’s decision that a spending program advances the general welfare,15 and has even questioned whether the restriction is judicially enforceable.16 Dispute, such as it is, turns on the conditioning of funds.

As with its other powers, Congress may enact legislation necessary and proper to effectuate its purposes in taxing and spending. In upholding a law making it a crime to bribe state and local officials who administer programs that receive federal funds, the Court declared that Congress has authority to see to it that taxpayer dollars . . . are in fact spent for the general welfare, and not frittered away in graft or on projects undermined when funds are siphoned off or corrupt public officers are derelict about demanding value for dollars.17 Congress’s failure to require proof of a direct connection between the bribery and the federal funds was permissible, the Court concluded, because corruption does not have to be that limited to affect the federal interest. Money is fungible, bribed officials are untrustworthy stewards of federal funds, and corrupt contractors do not deliver dollar-for-dollar value.18

Earmarked Funds

The appropriation of the proceeds of a tax to a specific use does not affect the validity of the exaction, if the general welfare is advanced and no other constitutional provision is violated. Thus a processing tax on coconut oil was sustained despite the fact that the tax collected upon oil of Philippine production was segregated and paid into the Philippine Treasury.19 In Helvering v. Davis,20 the excise tax on employers – the proceeds of which were not earmarked in any way, although intended to provide funds for payments to retired workers – was upheld under the general welfare clause, the Tenth Amendment's being found inapplicable.

Debts of the United States

The power to pay the debts of the United States is broad enough to include claims of citizens arising on obligations of right and justice.21 The Court sustained an act of Congress which set apart for the use of the Philippine Islands, the revenue from a processing tax on coconut oil of Philippine production, as being in pursuance of a moral obligation to protect and promote the welfare of the people of the Islands.22 Curiously enough, this power was first invoked to assist the United States to collect a debt due to it. In United States v. Fisher,23 the Supreme Court sustained a statute that gave the Federal Government priority in the distribution of the estates of its insolvent debtors. The debtor in that case was the endorser of a foreign bill of exchange that apparently had been purchased by the United States. Invoking the Necessary and Proper Clause, Chief Justice Marshall deduced the power to collect a debt from the power to pay its obligations by the following reasoning: The government is to pay the debt of the Union, and must be authorized to use the means which appear to itself most eligible to effect that object. It has, consequently, a right to make remittances by bills or otherwise, and to take those precautions which will render the transaction safe.24

Footnotes

  1.  Jump to essay-13 Writings of Thomas Jefferson 147–149 (Library Edition, 1904).
  2.  Jump to essay-2See W. Crosskey, Politics and the Constitution in the History of the United States (1953).
  3.  Jump to essay-3The Federalist Nos. 30, 34, at 187–93, 209–15 (Jacob E. Cooke ed., 1961).
  4.  Jump to essay-4Id. No. 41, at 268–78.
  5.  Jump to essay-51 Stat. 229 (1792).
  6.  Jump to essay-62 Stat. 357 (1806).
  7.  Jump to essay-7In an advisory opinion, which it rendered for President Monroe at his request on the power of Congress to appropriate funds for public improvements, the Court answered that such appropriations might be properly made under the war and postal powers. See Albertsworth, Advisory Functions in the Supreme Court, 23 Geo. L. J. 643, 644–647 (1935). Monroe himself ultimately adopted the broadest view of the spending power, from which, however, he carefully excluded any element of regulatory or police power. See his Views of the President of the United States on the Subject of Internal Improvements, of May 4, 1822, 2 Messages and Papers of the Presidents 713–752 (Richardson ed., 1906).
  8.  Jump to essay-8California v. Pacific R.R., 127 U.S. 1 (1888).
  9.  Jump to essay-9255 U.S. 180 (1921).
  10.  Jump to essay-10262 U.S. 447 (1923). See also Alabama Power Co. v. Ickes, 302 U.S. 464 (1938). These cases were limited by Flast v. Cohen, 392 U.S. 83 (1968).
  11.  Jump to essay-11160 U.S. 668 (1896).
  12.  Jump to essay-12160 U.S. at 681.
  13.  Jump to essay-13297 U.S. 1 (1936). See also Cleveland v. United States, 323 U.S. 329 (1945).
  14.  Jump to essay-14United States v. Butler, 297 U.S. 1, 65–66 (1936). So settled had the issue become that 1970s attacks on federal grants-in-aid omitted any challenge on the broad level and relied on specific prohibitions, i.e., the religion clauses of the First Amendment. Flast v. Cohen, 392 U.S. 83 (1968); Tilton v. Richardson, 403 U.S. 672 (1971).
  15.  Jump to essay-15Id. at 207 (citing Helvering v. Davis, 301 U.S. 619, 640, 645 (1937)).
  16.  Jump to essay-16Buckley v. Valeo, 424 U.S. 1, 90–91 (1976); South Dakota v. Dole, 483 U.S. 203, 207 n.2 (1987).
  17.  Jump to essay-17Sabri v. United States, 541 U.S. 600, 605 (2004).
  18.  Jump to essay-18541 U.S. at 606.
  19.  Jump to essay-19Cincinnati Soap Co. v. United States, 301 U.S. 308 (1937).
  20.  Jump to essay-20301 U.S. 619 (1937).
  21.  Jump to essay-21United States v. Realty Co., 163 U.S. 427 (1896); Pope v. United States, 323 U.S. 1, 9 (1944).
  22.  Jump to essay-22Cincinnati Soap Co. v. United States, 301 U.S. 308 (1937).
  23.  Jump to essay-236 U.S. (2 Cr.) 358 (1805).
  24.  Jump to essay-246 U.S. at 396.