The Spending Clause

The Congress shall have Power . . . to pay the Debts and provide for the common Defence and general Welfare of the United States. . . .

—James C. Phillips

Introduction

The Constitution contains no express general spending power. Article I, Section 8, Clause 1 authorizes Congress to “lay and collect Taxes” for two purposes only: “to pay the Debts and provide for the common Defence and general Welfare of the United States.” Taken together, these purposes traditionally have been held to imply and constitute Congress’s spending power.

As a matter of original meaning, there is some doubt that the federal spending power flows from this clause. The clause grants only the power to tax: Any inference of a spending power from the clause’s language about the “general Welfare” leaves unexplained where Congress obtains the power to spend money not obtained from taxes, such as borrowed money or the proceeds from land sales. It is more plausible to locate the general federal spending power in the Necessary and Proper Clause. Many legal scholars and jurists today believe that the two purposes of the Spending Clause are so broad as to amount to no limitation at all. Under that view, Congress’s power to provide for the “general Welfare” is a power to spend for virtually anything that Congress itself views as helpful.

History Before 1787

Without a written constitution, Great Britain lacked a spending or taxing or general welfare clause. Instead, the idea of the government as a fiduciary held sway.¹ Thus, both the king and Parliament were deemed, as Oliver Cromwell put it, “servants and trustees of the people.”² The notion of “public trust” began to appear in English constitutional documents around the mid-1600s, and the doctrine made its way across the Atlantic in royal charters, such as those for New England in 1662 and Georgia in 1732.³

Many of the political philosophers who influenced the American Founders, such as Locke, Montesquieu, and Blackstone, discussed the public trust doctrine.⁴ The doctrine appeared in early state constitutions, such as those of Maryland, Pennsylvania, Virginia, and Vermont.⁵ As one scholar has argued, the language of the so-called Spending Clause—“to pay the Debts and provide for the common Defence and general Welfare of the United States”—was actually limiting language. This text “implement[ed] the fiduciary duty of impartiality by assuring that Congress could acquire revenues designated only for projects of general benefit, not for projects benefiting primarily localities or special interests.”⁶

The Americans’ first effort to create a government beyond just the individual states, the Articles of Confederation, imposed few restrictions on spending. The charter provided that “[a]ll charges of war, and all other expenses that shall be incurred for the common defence or general welfare, and allowed by the united states in congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several states.”⁷ This text gave the national government an express power to spend money for two purposes: “common defence” and “general welfare.” The primary limitation was politics: Congress could only “ascertain the sums and expences necessary for the defence and welfare of the united states” if nine of the thirteen states agreed.⁸ Both this language and subsequent practice led one scholar to argue that “[u]nder the Articles of Confederation the central government[] . . . had ample authority to spend any funds it collected” and that this spending power was in fact “virtually unrestricted.”⁹ Thus, for example, in January 1778, Congress approved $1,000 for gifts for destitute but peaceful and friendly Pennsylvania Indians.¹⁰

The Constitutional Convention

At the Constitutional Convention, the issue of spending was first raised in the New Jersey Plan, which, declared that revenue raised by the federal government could “be applied to such federal purposes as [Congress] shall deem proper & expedient.”¹¹ Similarly, notes from the Committee of Detail referred to paying for (besides past and future debts) the “necessities of the union.”¹² And a committee with a member from each state—the “grand committee”—reported that the following language should be added after congressional authorization to raise revenue: “for payments of the debts and necessary expences of the United States.”¹³

In the Committee of Detail’s August 6 report, any reference to spending was eliminated. Several weeks later the “grand committee” proposed that, “The Legislature of the United-States shall have power to fulfil the engagements which have been entered into by Congress, and to discharge as well the debts of the United States, as the debts incurred by the several States during the late war, for the common defence and general welfare.”¹⁴ Some express, enumerated language authorizing spending was thought necessary by Edmund Randolph of Virginia. He argued that “the new Govt. will have no authority in the case unless it be given to them.”¹⁵ James Madison of Virginia “thought it necessary to give the authority in order to prevent misconstruction.”¹⁶

After this proposal was rejected, the delegates approved language from Gouverneur Morris of Pennsylvania: “The Legislature shall fulfil the engagements and discharge the debts of the United States.”¹⁷ The next day, this language was added to the Taxing Clause: “The Legislature shall fulfil the engagements and discharge the debts of the United-States, and shall have the power to lay and collect Taxes, duties, imposts, and excises.”¹⁸ There was some objection to the word “shall,” which seemed to impose an obligation. On August 25, the language was changed to “all debts contracted and engagements entered into, by or under the authority of Congress shall be as valid against the United States under this constitution as under the confederation.”¹⁹

A few days later, the “general welfare” language was added to the Taxing Clause. Roger Sherman of Connecticut argued that the Taxing Clause and the provision on paying old debts should be connected. This led ultimately to a combination of the two provisions that was adopted with no discussion and is nearly identical to the Constitution’s language: “The Legislature 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.”²⁰ As one scholar has concluded, “the ‘general Welfare’ phrase in the Taxing Clause of the Constitution alludes to the vast generality of purposes to which tax revenues, as well as other federal receipts, might be put, but does nothing to empower Congress to spend.”²¹

Not all viewed the clause that way. About a week after the Constitution was signed, Connecticut delegates Roger Sherman and Oliver Ellsworth took a broad view of the spending power. They wrote to their governor that “the objects, for which congress may apply monies, are the same mentioned in” Article VII of the Articles of Confederation—“for the common defence and general welfare, and for the payment of the debts incurred for those purposes.”²² This broad reading, however, is in some tension with the fact that the Convention rejected giving Congress the power to legislate for the nation’s “common interests,” “general welfare,” and “general interest.”²³

Alexander Hamilton also took a broad view and argued that Congress should be given plenary spending power, but his proposal did not include “general welfare” language.²⁴ Professor Robert G. Natelson has noted that the term “general welfare” had “appeared (1) in Benjamin Franklin’s proposed articles of confederation of 1775, (2) in John Dickinson’s first draft of the eventually-adopted Articles, (3) in the Articles themselves (and therefore, by reference, in the New Jersey Plan to strengthen the Articles), (4) in the centralized Virginia Plan, (5) in Roger Sherman’s proposal for a government less powerful than that contemplated by the Virginia Plan, (6) in proposals to have the federal government pay confederation debts, and (7) in the finished Constitution.” Therefore, Natelson concludes, the “general welfare” language was not included in Hamilton’s plan because “it was essentially not a phrase of power, but of limitation,” and “Hamilton wanted the national legislature to have power to legislate on matters of local and private as well as general welfare.”²⁵

The Ratification Debates

In Federalist No. 41, James Madison noted the connection between the language in the Constitution and the language in the Articles of Confederation. Given that the Articles Congress had a limited spending power, Madison wrote, it was a “misconstruction” to assert that the Constitution gave Congress an unlimited spending power. Madison and Hamilton may have disagreed on the scope of the power, but both implied that Congress had the power to spend money: Madison in Federalist No. 58 and Hamilton in Federalist No. 78 referred to Congress’s power of the “purse.”

Other Framers from the Convention also disagreed over the scope of the spending power. For instance, New York’s Robert Gates took a more Hamiltonian view. He argued that the “general welfare” language provided Congress with a plenary spending power.²⁶ In the Connecticut convention, however, Ellsworth expounded a Madisonian view that Congress’s enumerated powers limited its spending power.²⁷ Ellsworth may have been recanting his position from the transmittal letter to his governor.

The Anti-Federalists warned primarily about the dangers of the taxing power and discussed how that taxed money would be spent. Melancton Smith observed “a general maxim, that all governments find a use for as much money as they can raise” and added as “a settled truth, that they will all spend as much as their revenue; that is, will live at least up to their income.”²⁸ Another Anti-Federalist, a Federal Republican, warned that “Congress will be the judges of what is necessary for the general welfare of the United States, and this will open the door to any extravagant expence which they shall be pleased to incur.”²⁹ An Anti-Federalist Impartial Examiner identified two limitations on the clause: (1) Congress could spend on the “general good” as opposed to “private interest” and (2) Congress must “take equal care of the whole body of the community, so as not to favor one part more than another.”³⁰ Such limitations could stem textually from two different senses of the clause’s term “general,” although they seem to derive from a more general maxim of government.³¹

Three Views on the Spending Power

In the early Republic, three competing views of the spending power were debated. First, Hamilton revived his broad view after its apparent defeat in the Constitutional Convention. He contended that the only limits on the tax-and-spend power were the requirements that duties be uniform, that direct taxes be apportioned by population, and that no tax should be laid on articles exported from any state. The power to raise money was otherwise “plenary, and indefinite,” Hamilton argued in his Report on Manufactures, “and the objects to which it may be appropriated are no less comprehensive.”³²

Second, James Madison and Thomas Jefferson advanced the narrow view. They argued that the Constitution did not confer on Congress the power to do whatever it thought might be in the best interests of the nation. Rather, the power to tax and spend conferred on Congress only the power to further the ends specifically enumerated elsewhere in the Constitution. In the Virginia Report, Madison explained that “Whenever . . . money has been raised by the general authority, and is to be applied to a particular measure, a question arises whether the particular measure be within the enumerated authorities vested in Congress.”³³ Jefferson articulated a similar perspective when advising President Washington that the national bank was unconstitutional: “The incorporation of a bank, and other powers assumed by this bill have not, in my opinion, been delegated to the U.S. by the Constitution” and “are not among the powers specially enumerated.”³⁴

There was also a third interpretation, recognized later even by Hamilton. According to this intermediate view, the “common Defence and general Welfare” language contains its own limitation: Spending under the clause must be for the “general” (that is, national) welfare and not for purely local or regional benefit. President James Monroe adopted this position, albeit with more teeth than Hamilton had been willing to give it. In 1822, Monroe vetoed a bill to preserve and repair the Cumberland Road. In Monroe’s veto message, he contended that Congress’s power to spend was restricted “to purposes of common defence, and of general, national, not local, or state, benefit.”³⁵

Early Congressional Views on the Spending Power

During the early Congresses, the relatively few debates about the scope of the spending power seem to reject the broad Hamiltonian view. For example, the First Congress refused to make a loan to a glass manufacturer after members “doubt[ed] the constitutionality of the power of Congress to loan the money” and argued that this was a matter for state government.³⁶ The Fourth Congress did not believe it had the power to provide relief to the citizens of Savannah, Georgia, after a devastating fire destroyed the entire city. Representative Macon of North Carolina epitomized this view, “wish[ing] gentlemen to put their finger upon that part of the Constitution which gave that House power to afford them relief. . . .” Macon “felt for the sufferers . . . but he felt as tenderly for the Constitution; he had examined it, and it did not authorize any such grant.”³⁷

It is true that early Congresses approved some appropriations for apparently local projects. In 1790, for example, the First Congress approved an appropriation for a lighthouse at the entrance of the Chesapeake Bay. Yet this lighthouse would benefit the coastal trade of the entire nation, was to be on property ceded to the United States, and would be directed by the President. Thus, it would be a federal lighthouse authorized under the Federal Enclave Clause.³⁸ (See Essay No. 65.) This project and other similar expenditures were arguably of general benefit or specifically tied to other enumerated powers and therefore within the authority conferred by Article I, Section 8.

To illustrate this principle, the Ninth Congress approved various appropriations to fund a road across the Cumberland Gap in the Appalachian Mountains. These appropriations were based on a compact in Ohio’s Enabling Act that Congress had entered into with Ohio. The compact specified that the state would not tax any federal lands sold for five years in exchange for building the road, which Ohio would then have responsibility to maintain. Congressional authority for this arrangement arguably flowed either from the Territories Clause or the fact that the road served the country’s purposes.³⁹ (See Essay No. 144.) In debate over the bill, Representative Bedinger of Kentucky argued that the bill would serve the “general interests of the Union.”⁴⁰ Similarly, President Washington had viewed a “smooth way” to the west as important for the national interest because it bound the western settlers to the nation and protected against encroachment from Great Britain and Spain.⁴¹

Early Presidential Views on the Spending Power

A key issue in the presidential election of 1800 between Jefferson and incumbent Federalist President John Adams was the different interpretations of the Spending Clause. Jefferson would explain that this issue was “almost the only landmark which now divides the federalists from the republicans.”⁴² Jefferson won that election and rejected the more expansive interpretation of the spending power. His successors usually adopted the narrow perspective. Jefferson’s 1806 State of the Union Address proposed a constitutional amendment to permit funding for “the great purposes of the public education, roads, rivers, canals, and such other objects of public improvement as it may be thought proper to add to the constitutional enumeration of the federal powers.” Jefferson stated that these objects were “not among those enumerated in the Constitution, and to which it permits the public moneys to be applied.”⁴³ The proposed amendment was ignored by Congress.⁴⁴

President James Madison vetoed an internal improvements bill because a broad reading of the Spending Clause would render “the special and careful enumeration of powers, which follow the clause, nugatory and improper.”⁴⁵ President Monroe initially adopted the Madison–Jefferson position. But, as noted above, Monroe later adopted an intermediate position that “general” was a limitation on spending that did not benefit the entire nation, but Congress otherwise had spending authority under the clause.

President John Quincy Adams favored the Hamiltonian position. He argued that Article I, Section 8, Clause 1 provided a separate grant of spending authority to Congress.⁴⁶ In response to Adams’s position, former President Madison advocated a constitutional amendment that either would remove the phrase “common defence & general welfare” or add to it “in the cases required by this Constitution.”⁴⁷

Every other antebellum President rejected the more expansive interpretation of spending power. President Andrew Jackson, for example, rejected as a “fallacy” and “dangerous doctrine” the contention that the Spending Clause conferred upon Congress the power to do whatever seemed “to conduce to the public good.”⁴⁸ President James Buchanan likewise assumed that funds from taxation were “confined to the execution of the enumerated powers delegated to Congress.”⁴⁹ Before the Civil War, some members of Congress advocated an expansive spending power, as evidenced by the improvement bills they passed. But at least in the executive branch, a narrow interpretation was the majority position for the first seven decades after ratification.

Judicial Precedent

Before the New Deal, fights over congressional spending power tended to be between Congress and the Executive, with the legislature favoring a broader reading and the President favoring a narrower reading. That dynamic changed with United States v. Butler (1936), which launched modern Spending Clause jurisprudence.⁵⁰ In Butler, both the federal government and those challenging the Agricultural Adjustment Act relied upon the Hamiltonian position. Both the majority and dissenting opinions of the Court facially accepted the correctness of Hamilton’s position, but the Court also acknowledged Madison’s federalism-based concerns. The majority found that the regulation of agricultural production was unconstitutional because its purpose was to regulate “a matter beyond the powers delegated to the federal government.”⁵¹

Moreover, the Hamiltonian position purportedly adopted by the Court was not the expansive view that Congress could do whatever it deemed to be in the public interest. Rather, the Court favored the more limited view that the limits on spending were contained in the Spending Clause itself and not in the remainder of Article I, Section 8. In other words, the only limitation on Congress’s power to tax and spend was that the spending must be for the “general Welfare”—the intermediate position actually advocated by James Monroe. What really made Butler a departure from the early interpretation of the clause, then, was that it gave Congress virtually unlimited discretion to determine what was in the “general Welfare.” This holding was much more in line with the expansive Hamiltonian position than it was with the positions advocated either by Monroe or by Madison and Jefferson.

For nearly eight decades after Butler, the courts treated whatever limitation the clause might impose as essentially a nonjusticiable political question.⁵² Instead, the courts focused on whether various conditions imposed on the receipt of federal funds were constitutionally permissible. In other words, conditions designed to achieve ends concededly not within Congress’s enumerated powers could still be valid.

South Dakota v. Dole (1987) adopted a four-pronged test to assess the constitutionality of spending conditions.⁵³ The Court also applied another test: whether the “financial inducement” is so coercive that it compels rather than pressures.

NFIB v. Sebelius (2012) held for the first time that a congressional spending program violated the coercion principle. By a 7–2 vote, the Court found that Congress’s threat to withhold all existing Medicaid program funds from states that chose not to participate in the significant expansion of that program’s mandate was unduly coercive. The 2010 Affordable Care Act was like a “gun to the head” of the states and amounted to “economic dragooning” that left “the States with no real option but to acquiesce in the Medicaid expansion.”⁵⁴

1. Robert G. Natelson, The Constitution and Public Trust, 52 Buff. L. Rev. 1077, 1108–23 (2004). ↩︎
2. 5 David Hume, The History of England from the Invasion of Julius Caesar to the Revolution in 1688, at 529 (1983) (1778). ↩︎
3. Natelson, The Constitution and Public Trust, supra at 1108–12. ↩︎
4. Id. at 1113–34; Md. Const. of 1776, art. IV; Pa. Const. of 1776, art. IV; Va. Const. of 1776, § 2; Vt. Const. of 1786, ch. I, art. VI. ↩︎
5. Id. at 1134–36. ↩︎
6. Id. at 1169–70. ↩︎
7. Articles of Confederation, art. VIII. ↩︎
8. Id. at Art. IX, § 6. ↩︎
9. David E. Engdahl, The Basis of the Spending Power, 18 Seattle U. L. Rev. 215, 235 (1995). ↩︎
10. 7 Journals of the Continental Congress 62–63 (1777). ↩︎
11. 1 Farrand’s 243; 2 Farrand’s 157. ↩︎
12. 2 Farrand’s 142. ↩︎
13. Id. at 366. ↩︎
14. Id. at 352. ↩︎
15. Id. at 377. ↩︎
16. Id. at 377. ↩︎
17. Id. at 368, 377. ↩︎
18. Id. at 382, 392. ↩︎
19. Id. at 408, 414. ↩︎
20. Id. at 495, 499. ↩︎
21. Engdahl, supra at 243. ↩︎
22. 3 Farrand’s 99. ↩︎
23. 2 Farrand’s 21. ↩︎
24. 1 Farrand’s 291–93. ↩︎
25. Robert G. Natelson, The General Welfare Clause and the Public Trust: An Essay in Original Understanding, 52 Kan. L. Rev. 1, 29, 30 (2003). ↩︎
26. 1 The Debate on the Constitution 3–6, 167, 501 (1993); 2 The Founders’ Constitution 419 (Philip B. Kurland & Ralph Lerner eds., 1987). ↩︎
27. 2 Elliot’s 190–97. ↩︎
28. Storing 6.12.37. ↩︎
29. Storing 3.6.19. ↩︎
30. Storing 5.14.6. ↩︎
31. Id. ↩︎
32. 2 The Founders’ Constitution, supra at 446–47. ↩︎
33. The Virginia Report of 1799–1800, at 201 (J.W. Randolph ed., 1850). ↩︎
34. Thomas Jefferson, Opinion on the Constitutionality of the Bill for Establishing a National Bank (Feb. 15, 1791), https://perma.cc/5C66-GECC. ↩︎
35. 46 Annals of Cong. 1838, 1849 (1822). ↩︎
36. 2 Annals of Cong. 1686–88 (1790). ↩︎
37. 6 Annals of Cong. 1717 (1796). ↩︎
38. Act of July 22, 1790, 1 Stat. 53, 54; Lighthouses Act of 1789, Pub. L. No. 1-54, 1 Stat. 137 (1790). ↩︎
39. 2 Stat. 173, 175 (Apr. 30, 1802); Act of Mar. 29, 1806, Pub. L. No. 9-280, 2 Stat. 357; 29 Annals of Cong. 1252 (1816); Theodore Skye, The National Road and the Difficult Path to Sustainable National Investment 15 (2011). ↩︎
40. Skye, supra at 16. ↩︎
41. Id. at 14. ↩︎
42. Letter from Thomas Jefferson to Albert Gallatin (June 16, 1817) in 2 The Founders’ Constitution, supra at 452. ↩︎
43. 16 Annals of Cong. 14–15 (1806). ↩︎
44. Forrest McDonald, The Presidency of Thomas Jefferson 130 (1976). ↩︎
45. 32 Annals of Cong. 211, 212 (1817). ↩︎
46. Stephen Minicucci, Internal Improvements and the Union, 1790–1860, 18 Stud. in Am. Pol. Dev. 160, 165 (2004) (citing John Quincy Adams, First Annual Message to Congress (Dec. 6, 1825)). ↩︎
47. Letter from James Madison to Martin Van Buren (Sept. 20, 1826), in 9 The Writings of James Madison 255 (Gaillard Hunt ed., 1910). ↩︎
48. Andrew Jackson, Veto to an Act to Improve the Navigation of the Wabash River, 1834, State of the Union History, https://perma.cc/4HT7-549C. ↩︎
49. H.R. Journal, 35th Cong., 2nd Sess. 506 (Feb. 26, 1859). ↩︎
50. 297 U.S. 1 (1936). ↩︎
51. Id. at 68. ↩︎
52. South Dakota v. Dole, 483 U.S. 203, 207 n.2 (1987). ↩︎
53. Id. at 207–08. ↩︎
54. 567 U.S. at 581, 582. ↩︎