The Federal Power to Spend
The Issues: How far does the power of Congress to spend tax dollars
extend?
Introduction
The United States is a government of
enumerated powers. Congress, and the other
two branches of the federal government, can
only exercise those powers given in the
Constitution.
The powers of Congress are enumerated in
several places in the Constitution. The most
important listing of congressional powers
appears in Article I, Section 8 (see left) which
identifies in seventeen paragraphs many
important powers of Congress. In this
section, we consider how the federal
government's power to spend tax dollars has
been interpreted by the Supreme Court..
SPENDING POWER
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...
The power to spend:
South Dakota vs Dole
(1987)
National Federal of
Independent Business v
Sebelius (2012)
In the 1987 case of South Dakota vs Dole, the
Supreme Court considered a federal law that
required the Secretary of Transportation to
withhold 5% of a state's federal highway
dollars if the state allowed persons less than
21 years of age to purchase alcoholic
beverages. South Dakota, which allowed 18year-olds to drink and stood to lose federal
funds for highway construction, sued
Key Constitutional Grants
of Powers to Congress
Article I, Section. 8.
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;
To borrow Money on the credit of the United
States;
To regulate Commerce with foreign Nations, and
among the several States, and with the Indian
Tribes;
To establish an uniform Rule of Naturalization, and
uniform Laws on the subject of Bankruptcies
throughout the United States;
To coin Money, regulate the Value thereof, and of
foreign Coin, and fix the Standard of Weights and
Measures;
To provide for the Punishment of counterfeiting the
Securities and current Coin of the United States;
To establish Post Offices and post Roads;
To promote the Progress of Science and useful
Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective
Writings and Discoveries;
To constitute Tribunals inferior to the supreme
Court;
To define and punish Piracies and Felonies
committed on the high Seas, and Offences against
the Law of Nations;
Secretary Dole, arguing that the law was not a
constitutional exercise of the power of
Congress to spend--but rather was an attempt
to enact a national drinking age. In upholding
the federal law, the Court announced a fourpart test for evaluating the constitutionality of
conditions attached to federal spending
programs: (1) the spending power must be
exercised in pursuit of the general welfare, (2)
grant conditions must be clearly stated, (3) the
conditions must be related to a federal interest
in the national program or project, and (4) the
spending power cannot be used to induce
states to do things that would themselves be
unconstitutional. The Court considered-perhaps unrealistically--the grant condition to
be a financial "inducement" for South Dakota
to enact a higher drinking age rather than
financial "compulsion" to do so--suggesting
the possibility of a different result if a higher
percentage of funds had been withheld. In
dissent, Justice O'Connor argued that
spending conditions should be found
constitutional only if they related to how the
federal grant dollars were to be spent.
Opponents of the Affordable Care Act ("Obamacare")
won a small victory when the Court held that states
which refuse to expand Medicaid coverage
cannot be denied federal funds for their more limited,
existing, programs.
In 2012, the Court considered whether
provisions of the Affordable Care Act, which
withheld federal funds from states that failed
to expand Medicaid coverage in specified
ways, was within the power of Congress under
the Spending Clause. In National Federation of
Independent Business v Sebelius, the Court
held that it was unconstitutional to threaten
states with the withholding of all federal
Medicaid funding, including their existing
funding, for failing to expand coverage in the
ways Congress sought to encourage. Chief
Justice Roberts, in a part of his opinion joined
by Justices Breyer and Kagan, concluded that
federal funds withheld, representing perhaps
10% of a state's entire budget, was so
substantial that states would have no real
choice but to give into Congress's
demands. As a result, seven justices agreed
that the Affordable Care Act's Medicaid
expansion provisions violated the principle
To declare War, grant Letters of Marque and
Reprisal, and make Rules concerning Captures on
Land and Water;
To raise and support Armies, but no Appropriation
of Money to that Use shall be for a longer Term
than two Years;
To provide and maintain a Navy;
To make Rules for the Government and Regulation
of the land and naval Forces;
To provide for calling forth the Militia to execute
the Laws of the Union, suppress Insurrections and
repel Invasions;
To provide for organizing, arming, and
disciplining, the Militia, and for governing such Part
of them as may be employed in the Service of the
United States, reserving to the States respectively,
the Appointment of the Officers, and the Authority
of training the Militia according to the discipline
prescribed by Congress;
To exercise exclusive Legislation in all Cases
whatsoever, over such District (not exceeding ten
Miles square) as may, by Cession of particular
States, and the Acceptance of Congress, become the
Seat of the Government of the United States, and to
exercise like Authority over all Places purchased by
the Consent of the Legislature of the State in which
the Same shall be, for the Erection of Forts,
Magazines, Arsenals, dock-Yards, and other needful
Buildings;--And
To make all Laws which shall be necessary and
proper for carrying into Execution the foregoing
Powers, and all other Powers vested by this
Constitution in the Government of the United
States, or in any Department or Officer thereof.
Questions
SPENDING POWER-- QUESTIONS
that the spending power can not be used to
coerce states into enacting legislation or
participating in a federal program. The Court
distinguished South Dakota v Dole, noting that
the funds potentially lost by South Dakota in
that case representing only one-half a percent
of the state's budget.
Other Pages Relating to the
Powers of Congress:
The Necessary and Proper
Clause
The Taxing Power
The Federal Commerce Power
Power to enforce the
protections of the 13th, 14th,
and 15th Amendments
10th and 11th Amendment
Limitations on the Powers of
Congress
The Commerce Clause as a
Limitation on State Power
1. In South Dakota vs Dole, is it clear that
South Dakota's lower drinking age
jeopardized federal interests in the national
highway program? If so, how substantially?
2. Could Congress condition the receiving of
federal dollars to fight crime on a state's
having enacted the death penalty? How--if at
all--would such a condition differ from the
condition upheld in South Dakota vs Dole?
3. What result in South Dakota vs Dole if
South Dakota stood to lose all federal
highway money if it didn't raise its drinking
age? What if it stood to lose 30%?
4. Does the Court's ruling in the Affordable
Care Act case suggest the Court will be
closely scrutinizing large federal grant
programs in the future? Note that SEVEN
justices agreed that withholding federal funds
from states that failed to expand their
Medicaid coverage was outside of Congress's
Spending Clause power.