The Spending Power

The same clause that lets Congress tax lets it spend: taxes are laid "to pay the Debts and provide for the common Defence and general Welfare." But what does "general Welfare" limit? Madison and Hamilton, coauthors of the Federalist, gave different answers, and the Supreme Court did not choose between them until 1936.

Two founders, two readings.
View	Who held it	What "general Welfare" means for spending
Narrow (Madisonian)	James Madison	Spending must carry out one of Congress's other enumerated powers; "general Welfare" summarizes them and adds nothing.
Broad (Hamiltonian)	Alexander Hamilton (Report on Manufactures, 1791); Joseph Story	Congress may spend on any purpose that serves the general welfare, even if it could not regulate that subject directly.

Why it works

Why would Butler adopt the broad view and still strike down the law? The two holdings answer different questions. The first asks what Congress may spend money on: any general-welfare purpose. The second asked whether Congress could use spending to regulate what it could not regulate directly. Within a year that second holding faded: the Court upheld the Social Security Act in 1937, and later cases treated Butler's Tenth Amendment reasoning as abandoned while keeping its Hamiltonian reading.

Key idea

Congress may spend for the general welfare, a power not limited to the subjects of its other enumerated powers (United States v. Butler, 1936, adopting Hamilton's view over Madison's). Helvering v. Davis (1937) upheld Social Security's old-age benefits.

Worked example: Butler's two holdings

A classmate says, "Butler upheld the farm program because it adopted the broad view of spending." Correct it.

Holding 1: the spending power is not limited to the other enumerated powers (Hamilton's view). Good for Congress.
Holding 2: the AAA used taxing and spending to regulate farm production, invading powers reserved to the states. Bad for this law.
Result: the AAA was struck down, 6 to 3.

Answer: Butler accepted the broad view of spending but struck down the Act.

Worked example: Who decides what is "general welfare"?

Congress funds a national program to fight a disease. A taxpayer argues it serves only some regions. How would a court applying Helvering respond?

Helvering says the line between general and particular welfare is for Congress to draw, not the courts, unless the choice is clearly arbitrary.
A disease program can serve the nation even if some places benefit more.
The taxpayer would probably also lack standing to sue.

Answer: Courts defer heavily to Congress's judgment of the general welfare.

Common mistake

Thinking Butler upheld the farm program it reviewed. Butler accepted the broad, Hamiltonian view of spending but struck down the Agricultural Adjustment Act on Tenth Amendment grounds. Check which question each holding answers: what may Congress spend on, and may it use spending to regulate?

Madison's narrow reading is in Federalist No. 41, where he calls the claim that the words grant an unlimited power a "misconstruction." Note that Madison was answering a claim about a power to regulate; whether Congress may spend beyond the other powers is the question Butler took up. The same year as Helvering, Steward Machine Co. v. Davis (1937) upheld the Act's unemployment insurance tax and credit. See the debate on the ratification debate page.

This is an educational course, not legal advice.

The Spending Power

Practice

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Sources and further reading