Spending Power

• Author: Jeffrey Lehman, Shirelle Phelps

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The power of legislatures to tax and spend.

Spending power is conferred to state and federal legislatures through their constitution. JUDICIAL REVIEW of legislative spending varies from state to state, but the law of federal spending informs courts in all states.

The power of the U.S. Congress to tax and spend for the GENERAL WELFARE is granted under Article I, Section 8, Clause 1, of the U.S. Constitution: "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." This clause is known as the Spending Power Clause or the General Welfare Clause. The Spending Power Clause does not grant to Congress the power to pass all laws for

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the general welfare; that is a power reserved to the states under the TENTH AMENDMENT. Rather, it gives Congress the power to control federal taxation and spending.

Before 1913, federal spending was relatively minuscule and was generally reserved for military support in time of war. Federal revenues were generated through tariffs on imports, excise taxes on certain activities and professions, and state and local property taxes. In 1913, the States ratified the SIXTEENTH AMENDMENT to the Constitution, which guaranteed to Congress the power to lay and collect income taxes on individuals. The federal INCOME TAX, hailed for its uniformity and fairness, paved the way for a massive expansion in the scope of the federal government.

Federal spending increased dramatically in the 1930s. Congress created new federal agencies and spending programs to manage the economic effects of the Great Depression, and the U.S. Supreme Court was forced to decide a spate of challenges to federal spending programs.

In 1936, the Court construed the Spending Power Clause as giving Congress broad power to spend for the general welfare (United States v. Butler, 297 U.S. 1, 56 S. Ct. 312, 80 L. Ed. 477). According to the Butler decision, under the Spending Power Clause Congress was not limited to spending money to carry out the direct grants of legislative power found elsewhere in the Constitution; rather, it could tax and spend for what it determined to be the general welfare of the country. Because Congress has discretion to determine what is the general welfare, no court since Butler has ever invalidated a federal spending program on the ground that the general welfare of the country was not being...