The Founders' Purse

46 Pages Posted: 20 Jun 2023 Last revised: 13 Feb 2024

Date Written: June 19, 2023

Abstract

This Article addresses a new and impending war over the constitutionality of broad delegations of spending power to the executive branch. In an opening salvo, the Fifth Circuit held that Congress unconstitutionally delegated its power of the purse to the Consumer Financial Protection Bureau, and the Supreme Court is about to rule on the Fifth Circuit’s decision. Although Congress authorized the Bureau’s budget “by law,” the Fifth Circuit held that this law violated the Appropriations Clause because it granted the Bureau excessive budgetary independence in two key respects: first, it afforded the Bureau broad discretion to self-direct its budget for an indefinite period of time, and second, the Bureau drew this budget outside of annual appropriations and from interest-based earnings of the Federal Reserve system. The Fifth Circuit supported this conclusion with an ambitious but highly selective originalist interpretation of Article I, section 9’s Appropriations Clause. The broader debate about delegation of spending power extends beyond the Bureau. It calls into question laws awarding similar budgetary independence to the Federal Reserve and other financial regulators as well as major spending initiatives such as the Biden Administration’s forgiveness of student loans “without specific statutory authorization.”

Originalist claims to constitutional limits on the duration, generality, and source of spending in laws passed by Congress have missed a critical body of contrary historical evidence introduced by this Article. First, records of the Constitutional Convention show that the delegates approved new and durable congressional revenue and spending powers to support the U.S. government and its credit while declining proposals for temporal limitations on Congress’s revenue and spending powers. Second, early Congresses repeatedly put these new and durable spending powers to use in laws that bypassed all three proffered limitations on duration, generality, and source of funding. To support U.S. credit while paying down the debt, the First Congress delegated to an agency known as the Sinking Fund Commission indefinite power to self-direct purchases of debt with a generous award that in current terms exceeds $400 billion. Within two years the debt instruments purchased by the Commission generated sufficient interest for Congress to award the Commission power to self-direct a permanent fund drawn outside of annual appropriations. To establish an affordable new federal government, early Congresses also funded a majority of federal officers including core law enforcement officials and even a new agency through independently directed fees that were paid by private parties and operated without temporal limits. This history shows that Article I, section 9 means what it says and requires only that Congress authorize spending through “[a]ppropriations made by law.” Critics who have questioned the constitutionality of broad delegations of spending power have strayed from the lessons of both text and history. Their errors undermine originalism’s goal of providing an objectively verifiable standard for determining constitutional meaning.

Keywords: Appropriations Clause, Nondelegation Doctrine, Consumer Financial Protection Bureau, Originalism, Founding Era, Sinking Fund Commission, Alexander Hamilton, Separation of Powers, Constitutional Law, Administrative Law

JEL Classification: K23, K40

Suggested Citation

Chabot, Christine Kexel, The Founders' Purse (June 19, 2023). Virginia Law Review, Forthcoming, Marquette Law School Legal Studies Paper No. 23-03, Available at SSRN: https://ssrn.com/abstract=4484920 or http://dx.doi.org/10.2139/ssrn.4484920

Christine Kexel Chabot (Contact Author)

Marquette University - Law School ( email )

Eckstein Hall
P.O. Box 1881
Milwaukee, WI 53201
United States

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