As part of the 1933 Agricultural
Adjustment Act, Congress
implemented a processing tax on agricultural commodities, from which funds
would be redistributed to farmers who promised to reduce their acreage.
The Act intended to solve the
crisis in agricultural commodity prices which was causing many farmers to
go under.This Act took
money from the big agrobusiness and gave to the little guy.
The US Supreme Court found the
Act unconstitutional because it attempted to regulate and control
agricultural production, an arena reserved to the States.
Even though Congress does have
the power to tax and appropriate funds, in this case those activities
were, "but means to an unconstitutional end," and violated the 10th
Amendment.
The
Court held that the so-called tax was not a true one because the payments
to farmers were coupled with unlawful and oppressive coercive
contracts, and the proceeds were earmarked for the benefit of farmers complying
with the prescribed conditions.
Making the payment of a government subsidy to a farmer conditional
on the reduction of his planned crops went beyond the powers of the
Federal government.
It was argued by Jusitce Roberts that this was not voluntary (although
it really was).
Justice Roberts felt that even if it was voluntary, this was a way
for the Federal government to essentially buy their way into powers that
they couldn't Constitutionally have.
This
case was a continuation of the Hamiltionian, Madisonian argument of
Federal vs. State powers.
In
a dissent, Justice Stone argued that the Courts should be concerned with
the power to enact Statutes, not their wisdom (similar argument to some
of the early Interstate Commerce Clause arguments.)
In addition, Justice Stone felt that it was ridiculous that the
Federal government can provide subsidies and seeds to farmers, and yet
has no power to regulate what crops they grow.
Although it struck down the Act, the Court was not
unsympathetic to the idea of congress using tax and spend to advance
the general welfare as specified in Article
I Section 8 of the Constitution. The Court stated that the
issue, "presents the great and the controlling question in the
case." After comparing expansive vs. restrictive interpretations of
the Spending Clause, the Court
adopted the philosophy that:
"The clause confers a power separate and distinct from
those later enumerated, is not restricted in meaning by the grant of
them, and Congress consequently has a substantive power to tax and to
appropriate, limited only by the requirement that it shall be exercised
to provide for the general welfare of the United States.It results that the power of
Congress to authorize expenditure of public moneys for public purposes is
not limited by the direct grants of legislative power found in the
Constitution."
Article 1 Section 8
states that Congress can use tax and spend to "provide for the general
welfare."
You might be able to read that to say that Congress can use
tax and spend to do pretty much anything.This is in conflict with the 10th
Amendment.
The idea that Congress has authority separate and distinct from
powers granted by enumeration was (and still is) controversial.
The fact that the Court struck down the Act despite an
expansive interpretation of the Spending Clause reflects the turmoil in the Court's thinking
at this critical time.
Indicating that turmoil and the fact that this case was a
turning point in the Court's thinking, in later jurisprudence this case
has been referenced to support expansion of authority under the Spending
Clause (e.g., Steward Machine
Company v. Davis) and to dissent from such expansion (e.g. South
Dakota v. Dole)
United States v. Butler was the last case in which the Supreme Court struck down an Act of Congress as beyond the authority
granted by the Spending Clause.Soon after, Justice Roberts
shifted his vote and began to embrace the concept of Federalism (see)Steward Machine Co. v. Davis).
Interestingly, a lot of the 'absurd cases' that Justice
Roberts mentions in order to show that the law is bad would all be
perfectly legal under today's interpretation of the Spending Clause.
