Debts of the United States
SPENDING FOR THE GENERAL WELFARE
Scope of the Power
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.581 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,582Congress 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;583 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.584
581 3 WRITINGS OF THOMAS JEFFERSON 147–149 (Library Edition, 1904).
582 See W. CROSSKEY, POLITICS AND THE CONSTITUTION IN THE HISTORY OF THE UNITED STATES (1953).
583 THE FEDERALIST, Nos. 30 and 34 (J. Cooke ed. 1961) 187–193, 209–215.
584 Id. at No. 41, 268–78.
From an early date Congress has acted upon the interpretation espoused by Hamilton. Appropriations for subsidies585 and for an ever increasing variety of internal improvements586 constructed by the Federal Government, had their beginnings in the administrations of Washington and Jefferson.587 Since 1914, federal grants-in-aid, 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 its use, have become commonplace.
The scope of the national spending power was brought 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 Cases588 and Smith v. Kansas City Title Co.,589 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,590 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 Railway,591 however, the Court had invoked the great power of taxation to be exercised for the common defence and general welfare592 to sustain the right of the Federal Government to acquire land within a State for use as a national park.
585 1 Stat. 229 (1792).
586 2 Stat. 357 (1806).
587 In 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).
588 California v. Pacific R.R., 127 U.S. 1 (188).
589 255 U.S. 180 (1921).
591 160 U.S. 668 (1896).
592 160 U.S. at 681.
Finally, in United States v. Butler,593 the Court gave its unqualified endorsement to Hamilton’s views on the taxing power. Wrote Justice Roberts 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 numerated 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 had noticed the question, but has never found it necessary to decide which is the true construction. 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 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.594
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,595 and has even questioned whether the restriction is judicially enforceable.596 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.”6 Congress’ 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.”7
594 United 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).
7 605541 U.S. at 606.
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.’’6 Congress’ 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.’’7
Social Security Act Cases.—Although holding that the spending power is not limited by the specific grants of power contained in Article I, § 8, the Court found, nevertheless, that it was qualified by the Tenth Amendment, and on this ground ruled in the Butler case that Congress could not use moneys raised by taxation to purchase compliance with regulations of matters of State concern with respect to which Congress has no authority to interfere.597 Within little more than a year this decision was reduced to narrow proportions by Steward Machine Co. v. Davis,598 which sustained the tax imposed on employers to provide unemployment benefits, and the credit allowed for similar taxes paid to a State. To the argument that the tax and credit in combination were weapons of coercion, destroying or impairing the autonomy of the States, the Court replied that relief of unemployment was a legitimate object of federal expenditure under the general welfare clause, that the Social Security Act represented a legitimate attempt to solve the problem by the cooperation of State and Federal Governments, that the credit allowed for state taxes bore a reasonable relation to the fiscal need subserved by the tax in its normal operation,599 since state unemployment compensation payments would relieve the burden for direct relief borne by the national treasury. The Court reserved judgment as to the validity of a tax if it is laid upon the condition that a State may escape its operation through the adoption of a statute unrelated in subject matter to activities fairly within the scope of national policy and power.600
Conditional Grants-in-Aid.—It was not until 1947 that the right of Congress to impose conditions upon grants-in-aid over the objection of a State was squarely presented.601 The Court upheld Congress’s power to do so in Oklahoma v. Civil Service Commission.602 The State objected to the enforcement of a provision of the Hatch Act that reduced its allotment of federal highway funds because of its failure to remove from office a member of the State Highway Commission found to have taken an active part in party politics while in office. The Court denied relief on the ground that, [w]hile the United States is not concerned with, and has no power to regulate local political activities as such of State officials, it does have power to fix the terms upon which its money allotments to states shall be disbursed.... The end sought by Congress through the Hatch Act is better public service by requiring those who administer funds for national needs to abstain from active political partisanship. So even though the action taken by Congress does have effect upon certain activities within the State, it has never been thought that such effect made the federal act invalid.603
597 Justice Stone, speaking for himself and two other Justices, dissented on the ground that Congress was entitled when spending the national revenues for the general welfare to see to it that the country got its money’s worth thereof, and that the condemned provisions were necessary and proper to that end. United States v. Butler, 297 U.S. 1, 84–86 (1936).
598 301 U.S. 548 (1937).
599 301 U.S. at 591.
601 In the Steward Machine Company case, it was a taxpayer who complained of the invasion of state sovereignty, and the Court put great emphasis on the fact that the State was a willing partner in the plan of cooperation embodied in the Social Security Act. 301 U.S. 548, 589, 590 (1937).
602 330 U.S. 127 (1947).
603 330 U.S. 127, 143 (1947). This is not to say that Congress may police the effectiveness of its spending only by means of attaching conditions to grants; Congress may also rely on criminal sanctions to penalize graft and corruption that may impede its purposes in spending programs. Sabri v. United States, 541 U.S. 600 (2004).
The general principle is firmly established. Congress has frequently employed the Spending Power to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives. This Court has repeatedly upheld against constitutional challenge the use of this technique to induce governments and private parties to cooperate voluntarily with federal policy.604
The Court has set forth several standards purporting to channel Congress’s discretion in attaching grant conditions.605 To date no statutes have been struck down as violating these standards, although several statutes have been interpreted so as to conform to the guiding principles. First, the conditions, like the spending itself, must advance the general welfare, but the determination of what constitutes the general welfare rests largely if not wholly with Congress.606 Second, because a grant is much in the nature of a contract offer that the States may accept or reject,607 Congress must set out the conditions unambiguously, so that the States may make an informed decision.608 Third, the Court continues to state that the conditions must be related to the federal interest for which the funds are expended,609 but it has never found a spending condition deficient under this part of the test.610 Fourth, the power to condition funds may not be used to induce the States to engage in activities that would themselves be unconstitutional.611 Fifth, the Court has suggested that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion,612 but again the Court has never found a congressional condition to be coercive in this sense.613 Certain federalism restraints on other federal powers seem not to be relevant to spending conditions.614
604 Fullilove v. Klutznick, 448 U.S. 448, 474 (1980) (Chief Justice Burger announcing judgment of the Court). The Chief Justice cited five cases to document the assertion: California Bankers Ass’n v. Shultz, 416 U.S. 21 (1974); Lau v. Nichols, 414 U.S. 563 (1974); Oklahoma v. Civil Service Comm’n, 330 U.S. 127 (1947); Helvering v. Davis, 301 U.S. 619 (1937); and Steward Machine Co. v. Davis, 301 U.S. 548 (1937).
606 483 U.S. at 207 (1987). See discussion under Scope of the Power, supra.
607 Barnes v. Gorman, 122 S. Ct. 2097, 2100 (2002) (holding that neither the Americans With Disabilities Act of 1990 nor section 504 of the Rehabilitation Act of 1973 subjected states to punitive damages in private actions).
608 South Dakota v. Dole, 483 U.S. at 207 (1987). The requirement appeared in Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1, 17 (1981). See also Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 246-47 (1985) (Rehabilitation Act does not clearly signal states that participation in programs funded by Act constitutes waiver of immunity from suit in federal court); Gonzaga Univ. v. Doe, 122 S. Ct. 2268 (2002) (no private right of action was created by the Family Educational Rights and Privacy Act). Arlington Central School Dist. Bd. of Educ. v. Murphy, 548 U.S. 291 (2006) (because Individuals with Disabilities Education Act, which was enacted pursuant to the Spending Clause, does not furnish clear notice to states that prevailing parents may recover fees for services rendered by experts in IDEA actions, it does not authorize recovery of such fees).
610 The relationship in South Dakota v. Dole, 483 U.S. 203, 208–09 (1987), in which Congress conditioned access to certain highway funds on establishing a 21– years-of-age drinking qualification was that the purpose of both funds and condition was safe interstate travel. The federal interest in Oklahoma v. Civil Service Comm’n, 330 U.S. 127, 143 (1947), as we have noted, was assuring proper administration of federal highway funds.
613 See North Carolina ex rel. Morrow v. Califano, 445 F. Supp. 532 (E.D.N.C. 1977) (three-judge court), aff’d 435 U.S. 962 (1978).
614 South Dakota v. Dole, 483 U.S. 203, 210 (1987) (referring to the Tenth Amendment: the ‘independent constitutional bar’ limitation on the spending power is not . . . a prohibition on the indirect achievement of objectives which Congress is not empowered to achieve directly).
If a State accepts federal funds on conditions and then fails to follow the requirements, the usual remedy is federal administrative action to terminate the funding and to recoup funds the State has already received.615 While the Court has allowed beneficiaries of conditional grant programs to sue to compel states to comply with the federal conditions,616 more recently the Court has required that any such susceptibility to suit be clearly spelled out so that states will be informed of potential consequences of accepting aid. Finally, it should be noted that Congress has enacted a range of laws forbidding discrimination in federal assistance programs,617 and some of these laws are enforceable against the states.618
616 E.g., King v. Smith, 392 U.S. 309 (1968); Rosado v. Wyman, 397 U.S. 397 (1970); Lau v. Nichols, 414 U.S. 563 (1974); Miller v. Youakim, 440 U.S. 125 (1979). Suits may be brought under 42 U.S.C. § 1983, see Maine v. Thiboutot, 448 U.S. 1 (1980), although in some instances the statutory conferral of rights may be too imprecise or vague for judicial enforcement. Compare Suter v. Artist M., 503 U.S. 347 (1992), with Wright v. Roanoke Redevelopment & Housing Auth., 479 U.S. 418 (1987).
617 E.g., Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d; Title IX of the Educational Amendments of 1972, 20 U.S.C. § 1681; Title V of the Rehabilitation Act of 1973, 29 U.S.C. § 794.
618 Here the principal constraint is the Eleventh Amendment. See, e.g., Board of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356 (2001) (Americans with Disabilities Act of 1990 exceeds congressional power to enforce the Fourteenth Amendment, and violates the Eleventh Amendment, by subjecting states to suits brought by state employees in federal courts to collect money damages).
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.619 In
Helvering v. Davis,620 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 being found to be 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.621 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.622 Curiously enough, this power was first invoked to assist the United States to collect a debt due to it. In United States v. Fisher,623 the
Supreme Court sustained a statute which 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.624
619 Cincinnati Soap Co. v. United States, 301 U.S. 308 (1937).
620 301 U.S. 619 (1937).
622 Cincinnati Soap Co. v. United States, 301 U.S. 308 (1937).
623 6 U.S. (2 Cr.) 358 (1805).
624 6 U.S. at 396.