Presidential budgetary duties.

Author:Fisher, Louis
Position:Report
 
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When the framers drafted and debated the Constitution, the powers over war and spending were considered essential to legislative prerogatives and republican government. Much of the war power has drifted to the president, especially after World War II. Beginning with Harry Truman's war against North Korea in 1950, presidents have repeatedly insisted that they may obtain authority to use military force not from Congress but from the UN Security Council and the North Atlantic Treaty Organization (NATO) (Fisher 1997). The most recent example of this exercise of presidential power is the military operation by President Barack Obama in Libya in 2011 (Fisher 2012). Unilateral presidential decisions to commit U.S. troops to hostilities result in financial obligations that must be paid by Congress, even if it had no role in the commitment.

Power of the Purse

In Federalist No. 58, James Madison called the power of the purse "the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure" (Wright 2002, 391). He understood the essential tie between this power and republican government. In that same essay he explained the evolution of the spending power in the British Constitution: "an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government."

After a centuries-long struggle, the British Parliament used the power of the purse to gradually place limits on the monarch. English kings tried to circumvent Parliament by reaching to outside sources to finance military expeditions and other initiatives. Some of those funds came from private parties and foreign governments. Fueled by those transgressions, England lurched into a bloody civil war, and Charles I lost both his office and his head (Einzig 1959, 57-62, 100-06). With Iran-Contra, President Ronald Reagan also decided to pursue executive policies by relying on private and foreign money. As explained later in this article, he managed to escape impeachment.

Madison spoke plainly in Federalist No. 58: "the legislative department alone has access to the pockets of the people" (Wright 2002, 345). Language in Article I, section 9, of the U.S. Constitution reflects that principle: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Other provisions in Article I underscore legislative control over the purse. Congress is empowered to lay and collect taxes, duties, imposts, and excises; borrow money on the credit of the United States; and to coin money and regulate its value. Madison argued against placing the power of commander in chief in the same hands as the power to go to war: "Those who are to conduct a war cannot in the nature of things, be proper or safe judges, whether a war ought to be commenced, continued, or concluded. They are barred from the latter functions by a great principle in free government, analogous to that which separates the sword from the purse, or the power of executing from the power of enacting laws" (Hunt 1906, 6:148, emphasis in original).

Notwithstanding the clarity of Article I, section 9, presidents have attempted to wrest the spending power from Congress by entering into financial obligations not authorized by law. An example is President Thomas Jefferson and the Louisiana Purchase, but he understood that his initiative required the approval of Congress for additional funds and Senate consent to a treaty (Sofaer 1976, 185-86, 196-98). Other presidential actions pose much graver threats to constitutional government, such as initiating wars, refusing to spend money that Congress appropriates, and seeking funds from foreign governments and private citizens in violation of statutory policy, as with Iran-Contra.

Covert Spending

Underscoring the power of the purse, the framers added this language to Article I, section 9: "A regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time." This provision, although essential to republican government, democratic budgeting, and financial accountability, did not appear in the draft constitution until the final few days. On September 14, 1787, George Mason proposed that "an Account of the public expenditures should be annually published." Gouverneur Morris objected that publication would be "impossible in many cases" (Farrand 1966, 2:618). A strong supporter of executive authority, Morris might have believed in some level of secrecy and confidentiality.

Rufus King also faulted Mason's proposal: "the term expenditures went to every minute shilling. This would be impracticable. Congs. might indeed make a monthly publication, but it would be in such general Statements as would afford no satisfactory information" (Farrand 1966, 2:618). Unlike Morris, King seemed more concerned about impractical detail and frequency of publications than the need for secrecy and confidentiality. James Madison proposed to delete "annually" and insert "from time to time," giving Congress some discretion over the timing of public disclosure. Other statements during the debate point to the need for secrecy. James Wilson remarked that many operations of finance "cannot be properly published at certain times." Thomas FitzSimons insisted it was "absolutely impossible to punish expenditures in the full extent of the term." The convention accepted Madison's amendment without a dissenting vote. Mason's proposal, as amended, included an accounting for receipts as well as expenditures and applied the requirement for publication to "all public Money" (Farrand 1966, 2:619).

An early exception to public access to expenditures appeared in 1790. Congress provided the president with $40,000 to be used for foreign intercourse, leaving to his judgment the extent to which the expenditure would be made public. Legislation three years later authorized the president to make a certificate of the amount of expenditures in foreign intercourse "he may think it advisable not to specify" (1 Stat. 129, 300). A certificate states that funds have been spent without providing any details. This type of spending is referred to as unvouchered funds.

In 1811, Congress passed a secret statute giving President Madison $100,000 to take temporary possession of territory south of Georgia. The law was not published until 1818 (3 Stat. 471-72). Throughout the nineteenth century, the only annual exception to the Statement and Account Clause was the president's contingency account in foreign intercourse. By 1899, the yearly amount had reached $63,000 (30 Stat. 826). A second exception appeared in 1916, authorizing the secretary of the navy to make a certificate of expenses for "obtaining information from abroad and at home" (39 Stat. 557). A third precedent became law in 1935, giving the Federal Bureau of Investigation a confidential fund of $20,000. The level was later raised to an amount specified in an appropriations bill (49 Stat. 78). For the first 146 years, Congress departed from the Statement and Account Clause on only rare occasions and for relatively modest amounts of money.

With World War II, the magnitude of confidential funds increased dramatically. Congress provided billions of dollars to develop and produce the atomic bomb. Only a few lawmakers knew that secret funds had been tucked away in two appropriation accounts: "Engineer Service, Army" and "Expediting Production" (Fisher 1975, 214; Groves 1962, 360-61). Later, a number of agencies received confidential and unvouchered funds, including the White House, the Defense Department, the District of Columbia, the attorney general, the Bureau of Narcotics and Dangerous Drugs, the Secret Service, the Coast Guard, the Bureau of Customs, and the Immigration and Naturalization Service (Fisher 1979).

Overshadowing those funds in dollar amounts are the agencies that make up the U.S. intelligence community: the Central Intelligence Agency (CIA), the Defense Intelligence Agency, the National Security Agency, and many others. Appropriations accounts made no mention of those agencies. Instead, their funds were included in other accounts. After the bills became law, the Office of Management and Budget (OMB) transferred the funds to the particular intelligence agencies (Elliot 1975).

William Richardson, an attorney in Pennsylvania, asked the judiciary in the 1960s to declare this method of secret funding a violation of the Statement and Account Clause. A district court in 1968 ruled that he failed to establish standing to raise a justiciable controversy. (1) The Third Circuit affirmed, deciding that courts lack jurisdiction to hear such cases. (2) The Supreme Court declined to take the case. Justice Douglas thought the case should be heard. (3)

Richardson initiated a new suit in 1970, this time asking that a three-judge court be convened to determine the constitutionality of the CIA budget. Once again a district court said he lacked standing. Moreover, the subject matter raised "political questions in a governmental sense and the subject is not open to a United States District Court for adjudication in any manner." (4) This time, the Third Circuit saw merit to his lawsuit. On July 20, 1972, by a 6 to 3 vote, the appellate court vacated the district court ruling and directed that a three-judge court be designated to adjudicate the issue. Judge Max Rosenn, writing the opinion, underscored the importance and purpose of the Statement and Account Clause: "A responsible and intelligent taxpayer and citizen, of course, wants to know how his tax money is being spent. Without this information he cannot intelligently follow the actions of the Congress or of the Executive. Nor can he...

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