Omar Bennett
The funding of new projects is a complex process that is governed by a country's constitution. In the United States, the federal government has the legal authority to offer federal grant funds to states and localities, as per Article I, Section 8, Clause 1 of the U.S. Constitution, also known as the Spending Clause. This clause has been widely interpreted as a legislative check on the Executive Branch, requiring legislative appropriation before public funds are spent. The U.S. Constitution also specifies that appropriations must be spent within the time frame specified by Congress, with operating funds for federal agencies typically appropriated annually, while larger capital projects may have longer appropriation durations. The Supreme Court has also articulated limitations on the federal government's authority to distribute funds, stating that funding conditions must be unambiguous and germane to the federal interest in national projects or programs. Outside of the U.S., Algeria adopted a new constitution in 2020, and the Center for Democratic and Environmental Rights (CDER) has launched the New Constitution Project, an effort to crowdsource a new Constitution to address 21st-century challenges.
| Characteristics | Values |
|---|---|
| Power to fund | The power of the purse is vested in Congress |
| Spending authority | Congress can authorise agencies to "obligate" federal funds that have not yet been appropriated |
| Spending conditions | Funding conditions must be unambiguous, germane to the federal interest, not barred by a separate constitutional provision, and not coercive |
| Spending duration | Appropriations for the "army" are limited to two years, but larger capital projects may have longer durations |
| Spending limitations | "Backdoor" spending may be unlimited in amount or duration but has effective limitations as to object |
| Spending purpose | Appropriations must specify the powers, activities, and purposes for which funds may be used |
| Spending authorisation | Spending requires authorisation beyond the mere creation of an agency or authorisation of an activity |
| Spending legal authority | The Spending Clause provides the federal government with the legal authority to offer federal grant funds to states and localities |
Explore related products
$20.67 $29.99
![Constitutional Law [Connected eBook with Study Center] (Aspen Casebook)](https://m.media-amazon.com/images/I/61qrQ6YZVOL._AC_UY218_.jpg)
What You'll Learn
- Spending Clause: Federal government can offer federal grant funds to states and localities
- Spending authority: Congress authorises agencies to obligate federal funds
- Appropriations Clause: Specifies powers, activities, and purposes for which funds may be used
- Statutory entitlement programs: Social Security, unemployment payments, and agricultural subsidies
- Supreme Court limitations: Funding conditions must be unambiguous and germane to federal interest
Spending Clause: Federal government can offer federal grant funds to states and localities
The Spending Clause, also known as Article I, Section 8, Clause 1 of the U.S. Constitution, gives the federal government the authority to offer federal grant funds to states and local governments. These grants are provided for several reasons and are used to support a wide range of state and local programs. In 2021, the federal government directly transferred $988 billion to state governments and $133 billion to local governments, accounting for 18% of the federal budget for that fiscal year.
There are two main types of federal grants: categorical grants and block grants. Categorical grants are restricted to a specific purpose, such as providing nutrition under the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Block grants, on the other hand, give governments more flexibility in spending decisions and are typically limited to broad parameters. An example of a block grant is a grant for elementary and secondary education, where state governments receive funds from the federal government and then transfer the money to local governments for education programs.
Federal grant programs offer varying degrees of flexibility in how grant funds are used. While block grants provide broad guidelines, categorical formula grants impose more spending constraints. For instance, federal highway grant funds can only be used for specific types of road projects. Project grants offer the least flexibility, as they are typically limited to a specific project.
The federal government can impose conditions on the use of federal grant funds. For example, the federal government may require states and localities to engage in certain activities or refrain from others as a condition of receiving the funds. However, there are limitations to this power, as articulated by the Supreme Court. Additionally, some grants may require states and localities to contribute their own funds (matching requirements) or maintain previous spending levels (maintenance-of-effort requirements).
The Spending Clause plays a crucial role in allocating federal funds to state and local governments, enabling them to implement programs that align with local preferences and costs while also achieving specific goals or benefiting regions beyond their jurisdiction.
Bylaws and General Orders: What's the Voting Link?
You may want to see also
Spending authority: Congress authorises agencies to obligate federal funds
The US Constitution grants Congress the power of the purse, meaning that it is responsible for approving spending in the federal budget. This is outlined in the Appropriations Clause, which states that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law". This clause is not technically a grant of legislative power, but it does specify the activities on which public funds may be spent, thus defining the scope of federal power.
Congress has the authority to pass legislation that affects mandatory spending, such as renewing or creating new programs, changing eligibility, benefits, or funding, or modifying tax laws. It also adopts a budget resolution to guide its budgetary actions for the year. The budget resolution outlines the total amount of funding and the estimated level of expenditures. This resolution is typically submitted by the President as a detailed budget request for the upcoming fiscal year.
Budget authority is a term used to describe the amount of money available to a federal agency for a specific purpose. It represents how much money Congress allows an agency to commit to spending. Once budget authority is established, an agency can incur an obligation, which is a legally binding commitment. For example, the Department of Defense incurs an obligation when it enters into a contract to purchase equipment.
Congress has the power to authorise agencies to obligate federal funds that have not yet been appropriated. This obligation authority is necessary because agencies subject to annual appropriations often enter into multi-year contracts. As long as funds are not paid until appropriated, there is no violation of the Appropriations Clause. This practice is known as "backdoor" spending, which usually has effective limitations in terms of amount, duration, and object.
In summary, Congress plays a crucial role in funding new projects by authorising agencies to obligate federal funds. It does so through the power of the purse granted by the Constitution, specifically the Appropriations Clause. By passing legislation and adopting budget resolutions, Congress guides the allocation of funds and ensures they are used for their intended purposes.
Jefferson's Vision: A Constitution with an Expiry Date
You may want to see also
Appropriations Clause: Specifies powers, activities, and purposes for which funds may be used
The Appropriations Clause of the US Constitution places the "power of the purse" in Congress, meaning that public funds can only be spent in consequence of appropriations made by law. This means that Congress decides how much money can be spent, when it can be spent, and what it can be spent on. In doing so, Congress defines the contours of federal power.
The Clause requires that an appropriation be made by law before funds may leave the Treasury. This is a legislative check on the Executive Branch and hence on the exercise of federal authority. Congress has wide discretion with regard to the extent to which it may prescribe the details of expenditures for which it appropriates funds. An appropriation is more than a limitation on how much money may be spent; it also specifies the powers, activities, and purposes for which the funds may be used. This specification of objects is sometimes in an appropriations act itself (a "rider") but is usually in non-appropriations legislation establishing federal agencies or continuing particular programs ("authorization" acts).
The creation of an agency or authorization of an activity does not, by itself, permit the expenditure of federal funds. Spending requires another kind of authorization, i.e., an appropriation. The Clause governs the conduct of federal officers or employees, but it does not constrain Congress in its ability to incur obligations by statute. The Clause does not address whether Congress can incur an obligation directly by statute but rather constrains how federal employees and officers may make or authorize payments without appropriations.
There are a variety of other forms of federal spending authority besides statutes called "appropriations". For instance, Congress has often authorized agencies to "obligate" federal funds which have not yet been appropriated. Such obligation authority is necessary because federal agencies subject to annual appropriations often must enter into multi-year contracts. There is no violation of the Appropriations Clause as long as funds are not paid until appropriated.
Brain Pop's Guide to the US Constitution and Federal Government
You may want to see also
Explore related products
$14.99 $9.99
Statutory entitlement programs: Social Security, unemployment payments, and agricultural subsidies
The US Constitution's Appropriations Clause places the power of the purse in Congress, stating that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law". This means that Congress defines the activities on which public funds may be spent, thereby shaping federal power. This legislative appropriation is a prerequisite for spending public funds and acts as a check on the Executive Branch.
Statutory entitlement programs, such as Social Security, unemployment payments, and agricultural subsidies, are typically funded by an indefinite and permanent appropriation in the statute that creates them. Social Security, for instance, is part of the "Big Three" of federal spending, which also includes Medicare and Medicaid. Together, these programs comprised 48% of federal spending in 2017. The Social Security Act, passed in 1935, provides direct relief in the form of cash, food stamps, and unemployment insurance.
Unemployment insurance is another key entitlement program. While it is often included under the Social Security umbrella, it is a separate program that provides financial support to individuals who are unemployed. This program helps to ensure that individuals can meet their basic needs while seeking new employment. Unemployment compensation is another mandatory form of federal spending, accounting for a portion of the remaining 15% of federal spending in 2017.
Agricultural subsidies are another form of statutory entitlement, where the government provides financial support to farmers and agricultural businesses. This can take the form of direct payments, low-interest loans, or price supports. These subsidies aim to support the agricultural industry, ensure food security, and stabilize market prices for agricultural goods. They are often included in broader agricultural bills or as part of economic stimulus packages.
While these entitlement programs are constitutionally funded through the Appropriations Clause, it's important to note that their funding is also influenced by political and economic factors. Changes in administration, budgetary priorities, and economic conditions can all impact the funding levels for these programs over time.
Bolivia's Constitution: Two-Term Limit Explained
You may want to see also
Supreme Court limitations: Funding conditions must be unambiguous and germane to federal interest
The Constitution of the United States grants Congress the power of the purse, meaning that Congress defines the contours of federal power by specifying the activities on which public funds may be spent. This power is not unlimited, however, and the Supreme Court has articulated several limitations on the federal government's authority to distribute funds to non-federal entities.
In its 1987 decision in South Dakota v. Dole, the Supreme Court held that any conditions attached to the receipt of federal funds must be unambiguously established so that recipients can knowingly accept or reject them. This means that funding conditions must be clear and transparent, allowing states to make an informed choice about whether to accept the money and comply with the associated conditions.
The Supreme Court also requires that funding conditions be germane to the federal interest in the particular national projects or programs to which the money is directed. In other words, the conditions must be related to a federal interest and program. For example, in South Dakota v. Dole, the Court noted that South Dakota did not challenge the "germaneness" of the Secretary of Transportation withholding a percentage of highway funds from states that did not raise the drinking age to 21. The Court found that when Congress appropriates money to build a highway, it is entitled to insist that the highway be a safe one.
Funding conditions must also not violate other provisions of the Constitution, such as the First Amendment or the Due Process or Takings Clauses of the Fifth Amendment. Additionally, they must not cross the line from enticement to impermissible coercion, such that states have no real choice but to accept the funding and enact or administer a federal regulatory program. This limitation was highlighted in National Federation of Independent Businesses v. Sebelius, where the Court found that a state losing all Medicaid funding if it chose not to expand the program was "coercive" and akin to "a gun to the head."
J&K's Constitution: Secular or Sovereign?
You may want to see also
Frequently asked questions
The Appropriations Clause is a specification of the amount of money to be spent on a project, the time period within which the money is to be spent, and the purpose for which the funds are to be used.
The Spending Clause, Article I, Section 8, Clause 1 of the U.S. Constitution, provides the federal government with the authority to offer federal grant funds to states and localities, contingent on the recipients engaging in, or refraining from, certain activities.
Some projects funded by the U.S. Constitution include Project 2025, which involves the prioritization of nuclear weapons development and the reinstatement of service members discharged for not receiving the COVID-19 vaccine. Other examples include entitlement programs such as Social Security and unemployment payments, which are funded by an indefinite and permanent appropriation.
