Article I, Section 8, of the U.S. Constitution entrusts Congress with the spending power. It reads, “The Congress shall have Power . . . to pay the Debts and provide for the common Defence and general Welfare of the United States.” Simply put, the spending power involves the authority of Congress to spend federal funds and place conditions on their disbursement. With respect to federalism, the spending power, together with its counterpart, the taxing power, and the power to regulate interstate commerce have played a major role in expanding the scope of the federal government’s authority, permitting Congress to exercise what approximates nationwide police power.
|ARTICLE I, SECTION 8, CLAUSE 1|
|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.|
James Madison maintained that the spending power only permitted the funding of activities arising under Congress’s constitutionally enumerated powers (e.g., the power to establish uniform weights and measures). Alexander Hamilton put forth a contending position: that Congress could spend funds for activities that transcended Congress’s enumerated powers, provided the funds were for general and not local purposes. Judicial precedent and long-standing practice have made clear that the broader Hamiltonian vision has not only prevailed but also been expanded upon to include funding for virtually any object, local or otherwise.
There are generally thought to be four limitations on the spending power: (1) the funds must serve the general welfare, (2) Congress must make clear its intentions if it wishes to condition the use of funds, (3) the funding and any conditions placed upon it must bear some relationship to one another, and (4) neither the expenditure nor its conditions may violate other constitutional provisions. The final limitation is the most significant of the four, but even it has proved only a minor obstacle to Congress, as the courts have generally displayed an unwillingness to invalidate spending provisions on constitutional grounds.
Through the spending power, Congress is capable of effecting policy outcomes at the state level both directly and indirectly. Congress can have a direct impact simply by spending or not spending federal funds in certain areas, including activities that also fall under the purview of state and local governments, such as social welfare programs. In addition, Congress can work its will by indirect means through conditional grants. By either offering or threatening to withhold funds, Congress can pressure the states into adopting policies the former deems prudent. The Supreme Court has held that, while Congress may not coerce the states through indirect means (hinting at a fifth restriction on the spending power), it may offer inducements through federal largesse; if states voluntarily accept federal funds, they must comply with any attached conditions.
David E. Engdahl, “The Spending Power,” Duke Law Journal 44, (1994): 1–109; and Laurence Tribe, American Constitutional Law, vol. 1, 3rd ed. (New York: Foundation Press, 2000), 833–41.