On the Use of the People’s Money

by Derrick G. Jeter

By the time the depression settled into the United States economy, president Franklin Roosevelt and his treasury secretary, Henry Morgenthau Jr., threw open the public treasury and threw money at public works—all in an effort to jump start the economy and boost sagging employment. And by the mid- and late 1930s the average American citizen was willing to accept any action over inaction from the federal government, even if that action proved wrongheaded, increased the power of the state, and bloated the national deficit and debt. This attitude prompted humorist Will Rogers to quip that if Roosevelt had “burned down the capital, we would cheer and say, ‘Well at least we got a fire started, anyhow.’”
By the time the recession of 2009 and 2010 settled into the United States economy, president Barack Obama, his treasury secretary, Timothy Geithner, and a compliant Congress were set to spend a $850 billion stimulus package (sometimes known as QE1 for Quantitative Easing). Much of this money was to go to “shovel ready” projects in the hopes of easing high unemployment and stimulate an economic upswing. Not all the money was spend, and what was spend has moved the economic bill but little. Now (as of the date of this writing) the Federal Reserve is contemplating an additional 650 billion in taxpayer’s dollars on QE2.
Governments have a warped sense of reality. They’ll throw good money after bad and then try to convince you that it was a necessary and wise investment of the people’s money. And in the seventy or so intervening years between the 1930s and 2010, Americans, and their leaders, have grown accustom to such “wise” investments of the people’s money on public works. But this was not always so.
In 1816, after the Untied States had won the War of 1812, president James Madison went before Congress and called for “a comprehensive system of roads and canals, such as will have the effect of drawing more closely together every part of the country.” Congress, led by representative John C. Calhoun of South Carolina, passed what was known as the Bonus Bill, earmarking $1.5 million for internal improvements. Madison, however, had insisted that the Constitution must be amended before such a bill could be proposed and voted on in Congress. When the Bonus Bill passed and arrived on president Madison’s desk in 1817 he had no choice but to veto it.
Here’s president Madison’s message to Congress on the veto, delivered on March 3, 1817.
To the House of Representatives of the United States
Having considered the bill this day presented to me entitled “An act to set apart and pledge certain funds for internal improvements,” and which sets apart and pledges funds “for constructing roads and canals, and improving the navigation of water courses, in order to facilitate, promote, and give security to internal commerce among the several states, and to render more easy and less expensive the means and provisions for the common defense,” I am constrained by the insuperable difficulty I feel in reconciling the bill with the Constitution of the United States to return it with that objection to the House of Representatives, in which it originated.
The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers, or that it falls by any just interpretation within the power to make laws necessary and proper for carrying into execution those or other powers vested by the Constitution in the Government of the United States.
“The power to regulate commerce among the several states” cannot include a power to construct roads and canals and to improve the navigation of water courses in order to facilitate, promote, and secure such a commerce without a latitude of construction departing from the ordinary import of the terms strengthened by the known inconveniences which doubtless led to the grant of this remedial power to Congress.
To refer the power in question to the clause “to provide for the common defense and general welfare” would be contrary to the established and consistent rules of interpretation, as rendering the special and careful enumeration of powers which follow the clause nugatory and improper. Such a view of the Constitution would have the effect of giving to Congress a general power of legislation instead of the defined and limited one hitherto understood to belong to them, the terms “common defense and general welfare” embracing every object and act within the purview of a legislative trust. It would have the effect of subjecting both the Constitution and laws of the several states in all cases not specifically exempted to be superseded by laws of Congress, it being expressly declared “that the Constitution of the United States and laws made in pursuance thereof shall be the supreme law of the land, and the judges of every state shall be bound thereby, anything in the constitution or laws of any state to the contrary notwithstanding.” Such a view of the Constitution, finally, would have the effect of excluding the judicial authority of the United States from its participation in guarding the boundary between the legislative powers of the general and the state governments, inasmuch as questions relating to the general welfare, being questions of policy and expediency, are unsusceptible of judicial cognizance and decision.
A restriction of the power “to provide for the common defense and general welfare” to cases which are to be provided for by the expenditure of money would still leave within the legislative power of Congress all the great and most important measures of government, money being the ordinary and necessary means of carrying them into execution.
If a general power to construct roads and canals and to improve the navigation of water courses, with the train of powers incident thereto, be not possessed by Congress, the assent of the states in the mode provided in the bill cannot confer the power. The only cases in which the consent and cession of particular states can extend the power of Congress are those specified and provided for in the Constitution.
I am not unaware of the great importance of roads and canals and the improved navigation of water courses, and that a power in the national legislature to provide for them might be exercised with signal advantage to the general prosperity. But seeing that such a power is not expressly given by the Constitution, and believing that it cannot be deduced from any part of it without an inadmissible latitude of construction and a reliance on insufficient precedents; believing also that the permanent success of the Constitution depends on a definite partition of powers between the general and the state governments, and that no adequate landmarks would be left by the constructive extension of the powers of Congress as proposed in the bill, I have no option but to withhold my signature from it, and to cherishing the hope that its beneficial objects may be attained by a resort for the necessary powers to the same wisdom and virtue in the nation which established the Constitution in its actual form and providently marked out in the instrument itself a safe and practicable mode of improving it as experience might suggest.
Would that we had a president who took such great care and concern over the limited powers of the Congress as outlined in the Constitution and over the people’s money—Republican or Democrat. Would that we were a people who knew and honored the Constitution as Madison did and would elect such a president.
James Madison, “Veto of the Internal Improvements Bill,” March 3, 1817, in Liberty and Order: The First American Party Struggle, ed. Lance Banning (Indianapolis: Liberty Fund, 2004), http://oll.libertyfund.org/title/875/64059 (accessed November 4, 2010).