Simone Lawson
The US Constitution grants Congress the power to tax and spend money for the general welfare of the United States. This power is commonly referred to as the power of the purse. Article I, Section 8, Clause 1, also known as the taxing and spending clause, enumerates the powers of Congress, including the ability to lay and collect taxes, duties, imposts, and excises, to pay debts, and provide for the common defence and general welfare of the nation. The power of the purse is a crucial check on the executive branch, ensuring that Congress, as the immediate representative of the people, has control over government expenditures and can hold the executive accountable for its spending decisions.
| Characteristics | Values |
|---|---|
| Name of the power | Power of the purse |
| Who holds the power | Congress |
| Who is invested with the power | The House of Representatives |
| Who is in control of public funds | Congress, not the President or executive branch agencies |
| What the power allows Congress to do | Offer federal funds to states |
| What the power allows Congress to do | Induce states to adopt policies that the federal government cannot impose directly |
| What the power allows Congress to do | Enact laws that raise revenue through taxes and import duties |
| What the power allows Congress to do | Spend money for "the common Defence and general Welfare" |
| What the power allows Congress to do | Spend money on federal programs such as Social Security, Medicaid, and federal education programs |
| What the power allows Congress to do | Spend money on laws regulating local land-use decisions and the treatment of persons institutionalized by states |
| What the power allows Congress to do | Spend money on statutes prohibiting discrimination on certain protected grounds |
| What the power allows Congress to do | Spend money on the Army, Navy, and Air Force |
| What the power does not allow Congress to do | Spend any government money unless a statute "appropriates", or makes available, specific funds for the relevant purpose |
| What the power does not allow Congress to do | Interfere with indispensable executive (or judicial) functions |
| What the power does not allow Congress to do | Spend money on an appropriation for the Army that lasts longer than two years |
| What the power does not allow Congress to do | Spend money without an appropriation providing the necessary funds (as per the Anti-Deficiency Act) |
| What the power does not allow Congress to do | Delay or withhold spending that Congress has mandated (as per the Impoundment Control Act) |
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What You'll Learn
The Spending Clause
> 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 interpretation of the Spending Clause has been a source of debate since the inception of the federal government. Two conflicting interpretations emerged, led by James Madison and Alexander Hamilton, the authors of the Federalist Papers. Madison argued that the Spending Clause authorizes Congress to spend money based on the other enumerated powers listed in Article I, Section 8, thus limiting spending measures to those powers listed within that section. He and the Democratic-Republicans contended that spending must be at least tangentially tied to one of the specifically enumerated powers, such as regulating interstate or foreign commerce, or providing for the military.
On the other hand, Alexander Hamilton, along with the Federalists, argued for a broader interpretation, viewing spending as an enumerated power that Congress could exercise independently. He believed that the Clause authorized a wide range of spending for purposes that go beyond Congress's other enumerated powers, as long as they were sufficiently "general". Whig leader Henry Clay, for example, argued that the Clause authorized his proposal for a wide-ranging "American System" of canal and road building.
The debate between the Madisonian and Hamiltonian views continued throughout the nineteenth and early twentieth centuries, with Democratic presidents and members of Congress generally adopting positions similar to Madison's, or slightly broader. The US Supreme Court initially imposed a narrow interpretation of the Clause, as seen in the 1922 holding in Bailey v. Drexel Furniture Co., which ruled that a tax on child labour was an impermissible attempt to regulate commerce. However, in United States v. Butler (1936), the Court took Hamilton's side of the debate, declaring 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".
In modern times, the Spending Clause is considered one of Congress's most important powers. The Supreme Court has continued to outline the limitations of Congress's spending power, especially regarding the conditions placed on appropriations. In NFIB v. Sebelius (2012), the Court held that Congress could offer federal funds to states, but if Congress places conditions on the receipt of federal funds, it must do so unambiguously, allowing states to "exercise their choice knowingly, cognizant of the consequences of their participation".
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The Taxing and Spending Clause
The interpretation of the Taxing and Spending Clause has been a source of debate since the inception of the federal government. The dispute centres around two main questions. Firstly, whether the General Welfare Clause grants an independent spending power or simply restricts the taxing power. Secondly, what exactly is meant by the phrase "general welfare".
James Madison, in Federalist 41, argued for a narrow interpretation of the clause, asserting that spending must be tied to another specifically enumerated power, such as providing for the military or regulating interstate commerce. Alexander Hamilton, on the other hand, put forward a broad interpretation, viewing spending as an enumerated power that Congress could exercise independently. In 1936, the Supreme Court sided with Hamilton in United States v. Butler, determining that Congress faces fewer constitutional limitations when using its spending power compared to when it creates regulations.
The Spending Clause has been interpreted as legislative authority for consequential federal programs such as Social Security, Medicaid, and federal education programs. The clause also underlies laws regulating local land-use decisions and the treatment of institutionalized persons. The Supreme Court has placed limitations on the spending power, including factors that ensure the voluntary and informed acceptance of funding conditions by recipients.
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The Borrowing Clause
The power to tax and spend money is granted to Congress by the US Constitution's Article I, Section 8, Clause 1, also known as the "taxing and spending clause." The subsequent Clause 2 is known as the "borrowing clause."
> [2] To borrow Money on the credit of the United States;
This clause allows Congress to borrow money through various means, such as issuing bonds, treasury bills, and notes, as well as US Savings Bonds. When the US borrows money, it creates a binding obligation to repay the debt as stipulated and cannot unilaterally change the terms of its agreement. This obligation is a crucial aspect of maintaining the country's creditworthiness and financial integrity.
The inclusion of the Borrowing Clause in the Constitution was not without debate. During the drafting of the Constitution, Gouverneur Morris moved to strike out the phrase "and emit bills on the credit of the United States." James Madison suggested that simply prohibiting the making of such bills as legal tender might be sufficient. The debate on paper money was spirited, and the convention ultimately voted nine states to two to delete the words "and emit bills."
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The Appropriations Clause
The clause serves as a check on executive power, restricting the executive branch's ability to withdraw funds from the Treasury without congressional approval. This restriction was intentionally designed to prevent the executive from spending money without the necessary authorisation from Congress. By requiring legislative approval for fund disbursement, the clause reinforces the separation of powers between the legislative and executive branches of the US government.
The clause also ensures that the President and federal agencies spend funds only as appropriated by Congress. While the President has the power to veto appropriations bills, they do not have line-item veto authority, meaning they must either approve or reject the entire bill. In rare cases, such as during emergencies or to fulfil specific executive powers, the President may spend funds without prior congressional approval.
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The Power of the Purse
The "power of the purse" is a term used to refer to the ability of a government body to tax and spend public money. In the United States, this power is vested in Congress by the Constitution.
Article I, Section 7, Clause 1 of the US Constitution states:
> "All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills."
This is followed by Article I, Section 9, Clause 7, which reads:
> "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time."
These clauses are known as the "taxing and spending clause" and the "appropriations clause", respectively. Together, they grant Congress the broad power to tax, borrow, and spend money for the general welfare of the United States. The "power of the purse" is a significant check on the executive branch, as it allows Congress to control government expenditures and prevent the executive from spending money without congressional authorization.
The "power of the purse" has been a point of debate, with some arguing for a broad interpretation, like Alexander Hamilton, who believed that the "general welfare clause" allowed Congress to spend money on anything that would advance the general welfare of the people. Others, like James Madison, took a narrower view, suggesting that the spending clause only authorized Congress to spend money based on the other enumerated powers listed in Article I, Section 8. The Supreme Court endorsed Hamilton's view in United States v. Butler (1936), determining that when Congress uses its spending power, it faces fewer constitutional limitations than when it creates regulations.
The "power of the purse" has been a topic of discussion in recent years, with the Trump administration's efforts to cut staff and spending leading to legal challenges in court.
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Frequently asked questions
The Congress has the power to spend money. This is commonly referred to as the "power of the purse".
Article I, Section 8, Clause 1, also known as the "taxing and spending clause", grants Congress the power to tax and spend money for the general welfare of the United States.
The Spending Clause appears first in Article I, Section 8's list of enumerated legislative powers. It states that Congress has the 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.
