The Framers of the Constitution understood that the establishment and maintenance of republican governance required the placement in Congress of three cornerstone powers: lawmaking, war making and appropriations. Thus, they granted to Congress complete authority over the spending power. History reflects, however, that Congress often permits the President to share in the spending authority. While Congress, alone, appropriates funds, the actual expenditures depend to a large extent on decisions made within the executive department.
In Federalist No. 58, James Madison characterized the power of the purse “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just a salutary measure.” The development of the legislative appropriations power was marked by parliamentary struggle, as Madison explained, in the evolution of the English Constitution: “an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government.”
English history was constantly before the Framers’ eyes. Their familiarity with the struggles between the Crown and Parliament influenced their allocation of powers at every turn. This was certainly true of the spending power. The Kings’ long historical practice of seeking extra-parliamentary revenue for their wars and other foreign policy adventures, in the face of Parliament’s refusal to fund their causes, contributed to the English Civil Wars in the mid-17th Century. Indeed, Charles I lost both his office and his head. Later that century, King James II sought to circumvent parliamentary spending limits in soliciting foreign funds for a military initiative. Parliament was outraged by the King’s usurpation of power and, in a reaction that influenced the Framers’ configuration of the Impeachment Clause, it proceeded to impeach the King’s loyal Treasury Ministry.
Delegates to the Philadelphia Convention sought to avoid the assertions of power that led to the English Civil War. Accordingly, they vested the power of the purse in Congress. Article 1, Section 9 of the Constitution provides: “No money shall be drawn from the Treasury but in Consequence of Appropriations made by Law.” In Federalist No. 58, Madison explained that “the legislative department alone has access to the pockets of the people.” The grant to Congress of the power over the purse is reflected, moreover, in other provisions of Article 1, Section 9, which vest in the legislature the power to lay and collect taxes, duties, imposts and excises, and to borrow money on the credit of the United States, and coin money and regulate its value.
The republican principle that separated the power of the purse and the sword was a cornerstone of the Framers’ philosophy. Thus, they divided the power of funding war from the power to conduct it. Congress, alone, possessed the authority to finance war. The President, as Commander in Chief, had the duty of conducting it, subject to congressional instructions. In the Convention, George Mason stated: “the purse and the sword ought never to get into the same hands whether Legislative or Executive.” Madison reiterated the importance of lodging in the same hands the decision to go to war and the power to finance it, while separating those two powers and functions from the role played by the President as Commander in Chief: “Those who are to conduct a war cannot in the nature of things, be proper or safe judges, whether a war ought to be commenced, continued or concluded. They are barred from the latter functions by a great principle of free government, analogous to that which separates the sword from the purse, or the power of executing from the power of enacting laws.”
These constitutional principles and republican values were violated by the actions of President Ronald Reagan during the Iran-Contra Affair. In 1982, Congress enacted a series of statutory restraints on the Reagan Administration’s assistance to the right-wing Contras, who were trying to overthrow that Sandinista regime that governed Nicaragua. President Reagan had made very clear his support of the Contras, publicly likening them to the American colonists during the revolutionary period. Those measures appeared to be insufficient and so Congress in 1984, passed the Boland Amendments, which strictly prohibited all U.S. support—of any kind—for the Contras.
But the President’s enthusiasm for the Contras led members of Congress to suspect that the administration was seeking, or might seek, means of aiding and assisting the Contras. In the course of congressional hearings in the spring of 1985, administration witnesses testified that there were no efforts—public or private—to aid the Contras. At that very moment, however, when administration witnesses were offering assurances to two congressional committees, executive officials were, indeed, actively soliciting funds to aid the Contras. Private citizens and the government of Saudia Arabia were contributing money to purchase military weapons and supplies for the Contras.
The Reagan Administration’s circumvention of statutory prohibitions represented a parallel to the events in England that spurred the Civil War and, later, Parliament’s impeachment of the Earl of Danby, the Treasury Minister who, pursuant to the wishes of King James II, went hat-in-hand to foreign countries in search of funds to support the King’s military adventures. Those critical moments shaped the Philadelphia Convention’s design of the Impeachment Clause.
Of all of the revelations to emerge from the Iran-Contra Affair, one of the most alarming was the Reagan Administration’s theory that Congress could not use its power of the purse to restrict the President in foreign affairs. As a consequence, the exercise of the appropriations power, implemented through statutory restraints, was subordinate to the will of the President, who is free to search abroad for funds to support programs prohibited by American law. The Reagan Administration destroyed official documents related to the Iran-Contra Affair. As a result, we may never know whether President Reagan authorized the support of the Contras, in violation of statutes enacted by Congress. But if he had, he would have committed an impeachable offense by combining the power of the purse, with the power of the sword, an act which James Madison decried as a violation of a foundational principle of republicanism.
Congress has exercised its power over the purse to delegate to the President, in times of war and national emergency, broad authority over spending. During the Civil War, for example, passed legislation providing $50 million to pay two and three –year volunteers, $26 million for subsistence, $14 million for army transportation and supplies, and another $76 million for assorted items, to be divided among them “as the exigencies of the service may require.” As the Spanish-American War unfolded, President William McKinley asked from Congress and received $50 million “for the national defense, and for each and every purpose connected therewith, to be expended at the discretion of the President.”
Congress has recognized the need, during these periods of crisis, to grant to the President the authority to make transfers of funds from one appropriations account to another. Thus, in 1932, as the bottom fell out of the economy as the nation fell into the Great Depression, and spending was slashed so quickly and indiscriminately, the 1932 Economy Act authorized the President to shift funds from one administrative agency to another.
While the Constitution allocates the spending authority to Congress, there have been occasions in American history when Presidents have entered into financial obligations not authorized by Congress. In 1796, during debate on Jay’s Treaty, the House of Representatives warned both the President and the Senate that the treaty making power could not be exercised to usurp the constitutional powers of the House, including the authority to regulate foreign trade. The House adopted a resolution stating that it retained full discretion in deciding whether to provide appropriations and legislation to carry treaties into effect.
The Louisiana Purchase involved another conflict between the President and congressional power over the purse. In 1803, President Thomas Jefferson accepted an offer from France to sell Louisiana for $11,250,000, in addition to an extra $3,750,00 to cover private claims against France, despite the fact that the purchase price exceeded the instructions of Congress. After members of Congress reviewed the deal, they decided that it was in the interest of the United States and allocated the funds.
As we have seen, both Presidents Jefferson and Lincoln faced crises that compelled them to spend money from the U.S. Treasury, while Congress was not in session, as means necessary to the defense of the nation. In 1807, a British vessel fired on the American ship, The Chesapeake, while Congress was in recess. Without authorization from Congress, Jefferson ordered a variety of military purchases, and then informed Congress what he had done, when it returned. As we have seen from a previous discussion, Jefferson sought, and received from Congress retroactive ratification for his expenditures. In 1861, after the firing on Fort Sumter and while Congress was in recess, Lincoln spent money from the Treasury for military and naval measures. On July 4, when Congress returned, Lincoln explained his actions, and Congress provided retroactive approval. Without that approval, Lincoln’s acts would have remained illegal—and unconstitutional—and he might have faced censure or, worse, impeachment.
Another example of executive discretion over the execution of expenditures involves the practice of impoundment. Since the days of George Washington, Presidents have not been required to spend every dollar appropriated by Congress. Where contingency funds are involved, Presidents have discretionary authority to exercise discretion and not spend all of the money allocated. In 1803, Jefferson withheld $50,000 of funds allocated for the purchase of gunboats. Congress understood his rationale for impounding funds. As he explained it, the Louisiana Purchase had rendered unnecessary the expenditure of funds for such military measures.
The impoundment of funds, however, may not interfere with the authority of Congress to determine budget and policy priorities. Typically, Congress will not object to a presidential decision to impound funds in the name of economy and fiscal prudence, but abandonment of a congressional program crosses the line. Presidents of both parties, from the 1940s through the 1960s, frequently impounded funds allocated for defense and military matters. Harry Truman, for example, impounded Air Force funds and canceled a super carrier. When conflicts arose, political accommodations were made; litigation and crises were avoided.
The Nixon Administration used impoundment in new and dramatically different ways—shifting spending from congressional priorities to presidential priorities. President Nixon invoked an expansive, and unprecedented, assertion of authority to impound funds—the power of the President to refuse to spend money to prevent “increasing prices or increasing taxes.” He would impound funds “if Congress overspends.” Nixon grounded his view of broad presidential power to impound funds on the Commander in Chief Clause, the Take Care Clause, the Vesting Clause and the Sole Organ Doctrine. The Justice Department went so far as to declare that Congress could not interfere with the President’s impoundment authority to cut programs and eliminate them altogether.
President’s Nixon’s assertions of impoundment authority frustrated congressional policies. He impounded funds allocated for numerous programs, including the Rural Environmental Assistance Program, the Water Bank Program, the emergency loan program of the Farmers Home Administration and the Rural Electrification Administration, rural water and sewer grants, housing projects and other federal programs. The largest amount of funding impounded by Nixon was $18 billion from the clean water program, exactly 50 percent of what Congress had allocated over a three-year period.
Nixon’s capacious understanding of impoundment generated dozens of lawsuits, asserting that the President had usurped congressional authority. Federal courts delivered roughly 80 decisions on Nixon’s theories of impoundment authority. The administration lost in all but three cases. In 1975, the Supreme Court, in Train v. City of New York, also rejected Nixon’s theories.
As a result of Nixon’s abuse of power, Congress enacted the Impoundment Control Act of 1974, which restricted the President’s power to withhold expenditures of appropriations. Under this statute, the President was ordered to submit reports to Congress on two types of impoundment: rescissions, which are proposals to terminate funds, and deferrals, which are proposals to delay the expenditure of funds. For a rescission, the President requires the support of both houses of Congress through a regular bill or a joint resolution. The statute provides that the President must obtain that support within 45 days of continuous session. Under that measure, moreover, either house of Congress could pass a resolution to disapprove deferrals, but that type of legislative veto was held unconstitutional by the Supreme Court in INS v. Chadha (1983). As a consequence of that ruling, deferrals are now limited to managerial actions. Presidents are thus barred from impounding funds merely because they disagree with congressional policies.