The power to “provide for the common Defense and general Welfare of the United States,” more briefly called the spending power, is significantly lodged in the first delegated power along with the powers to tax and pay the debts, and is one of the greatest powers in the Constitution, particularly since the Sixteenth Amendment enormously broadened the tax base of the national government and hence its ability to spend. Obviously, the framers emphasized with its location their desire to overcome one of the most embarrassing weaknesses of the Articles of Confederation, the inability to pay for virtually anything due to the lack of a tax power. While disputes over its scope have occurred throughout the Constitution’s history, the greatest challenges to federalism have arisen, not surprisingly, since the great increase in federal spending for grants to state and local governments from the time of the New Deal.
Debates over this power stem from the early days of the republic. James Madison’s narrow position from The Federalist No. 41, joined later by Thomas Jefferson, is that the federal government can spend only for activities clearly within the scope of the delegated powers. However, this seems to make the clause redundant because common sense as well as the Necessary and Proper Clause would imply the ability to spend to accomplish the delegated powers. The intermediate position, spelled out by Alexander Hamilton in the Report on Manufactures, is that the federal government can spend for activities within the delegated powers as well as for activities that are within the very broad meaning of the “general welfare” and “common defense.” This means that the reach of the spending power is largely limited by the willingness of Congress to raise taxes to pay for spending. The broadest position is that the “Provide” Clause is an independent delegated power that allows the federal government to do whatever falls under the “general welfare” and “common defense,” whether based on spending or not. The last position would seem to make the rest of the delegated powers redundant, however, and would obviously go far toward extinguishing federalism and making the national government a general government; it has never been authoritatively adopted.
Spending power issues surfaced throughout the history of the republic, but these were resolved between the elective branches until the New Deal era. Before the Civil War, there were many disputes between and within Congress and with presidents over federal spending for internal improvements, but also many instances of spending beyond the delegated powers. As president, Madison is famous for his veto of a spending bill on constitutional grounds just before he left office, but obviously Jefferson overcame his constitutional concerns in the Louisiana Purchase. James Monroe took a somewhat more expansive view, as did John Quincy Adams. Abraham Lincoln took an expansive view of the spending power, and so did some other presidents after him before the New Deal. As a result, by the time of the New Deal, the Hamiltonian position had become more or less accepted by the political branches, but it was not until the mid-1930’s that the Court first provided major interpretations of this power.
In the first case, United States v. Butler, the Court in 1936 considered Agricultural Adjustment Act policies to contract with farmers to reduce planting in return for payments. The Court first adopted the Hamiltonian position as endorsed by Justice Joseph Story as the correct meaning of the power, though it then somewhat paradoxically overturned the act on Tenth Amendment grounds because it dealt with production, which the Court then considered beyond the reach of federal power, a conclusion the Court rejected the next year in interpreting the power over commerce. Then, in 1937, in Steward Machine Company v. Davis, the Court reviewed provisions of the Social Security Act imposing a payroll tax for unemployment compensation and offering employers a credit if they contributed to state programs meeting federal standards. In upholding the law, the Court again took the Hamiltonian position and rejected charges that these provisions were coercive of the states, unrelated to the general welfare, and invasive of state sovereignty. This decision paralleled a major change in the Court’s view of the federal power over commerce among the states and is part of the great change in the view of the Court toward the power of the national government at that time. A companion 1937 case, Helvering v. Davis, upheld the old-age pension tax aspects of the Social Security Act from Tenth Amendment challenges and broadly deferred to the judgment of Congress as to what constituted “the general Welfare.”
The leading modern case on this power, ironically authored by Chief Justice William Rehnquist, in other areas identified with a more profederalism viewpoint, South Dakota v. Dole, allows federal spending for purposes not within the actual delegated powers and to achieve purposes indirectly that would not be constitutional if attempted directly by the federal government. This case dealt with whether South Dakota had to raise its alcoholic beverage drinking age from 18 to 21 years of age in order to keep a portion of its federal highway grant money after Congress amended the Interstate Highway Act to require the raising of state drinking ages. An additional issue was the fact that the Twenty-first Amendment seemingly protected the right of the state to regulate its own drinking age. The Rehnquist majority opinion said that the federal government could attach provisions to its grants under the spending power, even if they seemed to intrude on what otherwise might seem to be the internal police power of the state. The Twenty-first Amendment was found not to bar the grant condition because the condition was not coercive and was related to the purpose of the grant. Dole set out four limits to federal spending and conditions on it: (1) the condition must not be coercive; (2) it must be reasonably related to the purpose of the spending (germaneness), though substantial deference will be given to the determination of Congress; (3) it must be clearly stated (the “clear statement” rule); and (4) it must not be otherwise barred by the Constitution (also called the “independent constitutional bar” requirement). Only the clear statement rule has so far proven to place any real limits on Congress. The coerciveness requirement seems largely to be met as long as the state has the ability not to accept the grant or the grant condition in the first place, since the grant is then usually viewed under the aspect of contract law. In addition, Dole affirmed earlier holdings that the Tenth Amendment is not a limit to conditions to grants. The reasonably related requirement was restated in 1992 in New York v. United States to the requirement that a condition must “bear some relationship to the purpose of federal spending,” though this obviously is not much of a limit either.
Though the spending power has not come under as much judicial scrutiny in recent years for possibly adverse effects on federalism as the power to regulate commerce or the Fourteenth Amendment, and some are suggesting that it should, it obviously has had a major effect on federalism, perhaps as much as the other powers. The major expansion of federal spending beginning in the New Deal and especially spending through grants-in-aid has transformed federalism into the modern “cooperative” federalism that we have known for generations and that is a major factor in the level and kind of services provided by state and local governments, with all the attendant administrative complexities, costs, and conflicts; the increasing tendency of Congress to attach crossover or other sanctions to grants; and concerns about which level of government is most efficient for performing services or raising revenues. At the same time, it seems that federal spending is shifting to payments to individuals and away from grants to cities and local governments, so with all the problems of cooperative federalism, its intergovernmental fiscal dimension is changing. Lingering questions remain, however, as to whether there are any limits to “the general welfare”; what is a reasonable connection to the initial purpose of the grant, or to what is “coercive” of states; how far the conditions that Congress attaches, or the interpretation an administrative agency makes of the conditions, are constitutional; and, ultimately, whether federal spending is good or bad for federalism.
Erwin Chemerinsky, “Spending Clause Symposium: Protecting the Spending Power,” Chapman Law Review 4 (Spring 2001): 89; Daniel J. Elazar, American Federalism: A View from the States, 3rd ed. (New York: Harper & Row, 1984); John Kincaid, “De Facto Devolution and Urban Defunding: The Priority of Persons over Places,” Journal of Urban Affairs 21 (1999); Theodore Sky, To Provide for the General Welfare: A History of the Federal Spending Power (Newark: University of Delaware Press, 2004); Laurence H. Tribe, American Constitutional Law, 3rd ed. (New York: Foundation Press, 2000); and Joseph F. Zimmerman, Contemporary American Federalism: The Growth of National Power (Westport, CT: Praeger, 1992).