Strategic Initiatives
10850 stories
·
45 followers

How Washington Can Finally Get Back to Fiscal Sanity

1 Share

There’s reason to hope for at least a temporary move toward fiscal sanity in Washington. Ordinarily, a drive for a slimmed-down federal budget would last little longer than a New Year’s dieting resolution. What gives credibility to the current federal weight-loss plans is the commitment of some outsize personalities. By force of character, President Donald Trump, Elon Musk, and Vivek Ramaswamy may partly cut the budget—not by $2 billion, as originally planned, but maybe by $1billion.

Sheer will, however, is no substitute for the force of law. Trump and his tech allies are already running up against entrenched spending commitments. Even if they institute substantial savings, demands for federal largess will soon erode their efforts. The pressures for overspending seem inexorable—so if there is to be an enduring shift in fiscal direction, it will have to be secured in constitutional structure, not just in personalities.

What’s needed is to revive the Constitution’s crucial barriers against fiscal irresponsibility—primarily by persuading the Supreme Court to back down from wayward doctrines that invite misspending and worse. Here’s how.

First, federal spending should only be for federal purposes. The Constitution carefully avoided creating a general spending power. Instead, it confined the federal government to spending only through Congress’s specified powers, thus limiting federal outlays to federal purposes.

The Supreme Court, however, takes its own view of the matter. It turns the Constitution’s “general Welfare” language into a general spending power, thereby opening the floodgates for federal expenditures beyond federal ends.

The Constitution states, “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” The first half of this statement recites the power to tax; the second half, beginning with “to pay the Debts,” limits taxation to national purposes. But at the Constitutional Convention in 1787, the roguish Gouverneur Morris surreptitiously placed a semicolon between the two halves, just after the word “Excises.” His goal was to transform the second half, notably the language about providing for the general welfare, into a separate general spending power. The Constitutional Convention recognized his ruse. It promptly removed the semicolon, thereby making abundantly clear that the general-welfare language was merely a limit on taxing, not a general spending power. That meant Congress could spend only through its enumerated powers—in other words, only for those limited purposes.

Education, for example, did not lie within the scope of federal powers, whether to regulate or to spend, except in territories, the District of Columbia, and other special circumstances. But now that the Supreme Court calls the general-welfare limitation “the spending power,” Washington feels free to subsidize vast stretches of American education. This federal largesse contributes substantially to the national debt—and for what? The centralized funding distorts education and the choices made by parents and students. It even creates the risk of centralized influence and homogenization.

Similarly, health care did not fall within the enumerated federal powers, and from this perspective, health insurance under Medicaid, Medicare, and the Affordable Care Act is beyond the scope of federal spending, except as necessary for the military and other constitutional ends. As with education, federal funding often bureaucratizes health care, making it wasteful and expensive for everyone in the system—government and patients alike. Meanwhile, by subsidizing some drugs and treatments, the federal funding discourages research into other drugs and treatments. Accordingly, for both our personal health and the nation’s financial health, we should get the national government out of health care and leave it to the states.

Worst of all, the breadth of demands for federal funding creates a dangerous competition for limited federal dollars. Federal spending for non-federal ends, such as education and health care, deprives the government of the resources it requires for defense and other crucial federal priorities. The Supreme Court therefore needs to return to the Constitution’s vision, which confines federal tax funds to specialized federal purposes. Otherwise, the judiciary will be responsible for depriving essential federal ends of federal support.

Second, no federal tax funds for states and localities. If the general-welfare language wasn’t meant to create a general spending power, what was its function? Well, originally, it barred federal tax funds from flowing to states or localities. Of course, as spelled out by another clause of the Constitution (Article IV, Section 3), the federal government can distribute federal lands and their proceeds to the states. But even Alexander Hamilton, the greatest proponent of expansive federal power, agreed that Congress couldn’t spend federal tax funds on the states.

Photo by TING SHEN/AFP via Getty Images

Alas, the Supreme Court has treated the general-welfare limitation as nearly meaningless, thereby allowing massive federal tax dollars (more than $1 trillion a year) to be spent on the states. Thus, a further problem with federal outlays on education and health care is that much of it flows through the states. This allocation of federal taxation to state programs dissipates political accountability—so the natural response to failed education or health care programs is to send them even more federal money.

Third, restore the appropriations requirement. The Constitution assumes that money collected by the federal government must be paid into the Treasury, and it requires congressional appropriations before any money can be spent out of the Treasury. Congress thus enjoys firm control over spending.

The Supreme Court, however, has weakened congressional control over spending—notably by letting the Consumer Financial Protection Bureau escape regular congressional appropriations. By statute, the CFPB can simply draw from the Federal Reserve System whatever amount the agency’s director thinks the bureau needs, subject only to an inflation-adjusted cap. In a recent case (CFPB v. Community Financial Services Association of America), the Court upheld this evasion of congressional control, citing late eighteenth-century federal funding statutes as precedent.

But the closest example the Court could cite was the early statute allowing the postmaster general to pay expenses out of fees collected by the Post Office. (He was to pay his own statutory salary, his subordinates’ statutorily limited commissions, and “defray the expense” of carrying the mail out of collected fees.) Similarly, another early statute gave customs collectors statutory commissions—again, to be paid out of collected fees. These fee-based arrangements merely show that early officers could subtract specific types of statutorily authorized expenses before transferring collected funds to the Treasury. It doesn’t mean that the CFPB, or any other agency, can simply demand whatever funds it wishes from another agency. Allowing federal agencies to do this releases them from congressional accountability. So, the Supreme Court should reconsider its holding—or, barring that, Congress should just shut down the CFPB and affirm that agencies shouldn’t be allowed to shirk fiscal accountability.

Fourth, sustain the anti-commandeering doctrine. The Constitution establishes the federal and state governments as independent sovereigns, in which different sets of the people have agency in governing themselves. Accordingly, as Chief Justice John Marshall recognized in McCulloch v. Maryland, state laws can’t tax or otherwise impede federal instrumentalities. By the same token, the federal government can’t direct state policy.

Nowadays, however, the Supreme Court largely permits the federal government to direct state policy. Though the Court has an anti-commandeering doctrine that bars such federal interference, the doctrine only prohibits the federal government from using coercion to direct state policy—letting Washington use other, superficially non-coercive mechanisms, such as conditions on federal spending. The Court’s doctrine also lets the federal government direct state policy, as long as its directions also apply to private persons. Thus, when the federal government imposes environmental and labor regulations on all Americans, it can get away with directing state policy on the environment and state employees.

These loopholes are without constitutional justification and largely permit what the Constitution forbids. The federal government thereby can subject the states to a host of financially burdensome policies.

Among the conditions the federal government places on its funding for the states are requirements that they match or otherwise add to the federal funds. Federal conditions thus “commandeer” state fiscal policy, facilitating federal funding and forcing the states to spend when they otherwise wouldn’t.

All these problems arise, fundamentally, from the Supreme Court’s reluctance to enforce the Constitution’s limits on the federal government. But there’s a further danger, which has another source and thus needs a solution outside the Court.

Fifth, a constitutional amendment recalibrating the income tax. Ever since 1913, the Sixteenth Amendment has permitted Congress to impose income taxes without apportionment, thereby enabling federal taxation of productivity and the benefits of labor. In 1915, the top marginal tax rate was 15 percent. Now, it is 37 percent, thus more than doubling the disincentive for work. It’s therefore essential to recalibrate the income tax.

Of course, all systems of taxation distort economic decisions and thus are apt to be unjust in one way or another. A value-added tax, for example, burdens consumers and their purchases. Consequently, there’s no ideal tax system. The best we can hope for is a combination of taxes that avoids overreliance on any one of them. A simple cap on income tax rates would be unwise, as it may be necessary to hike rates during a genuine emergency, such as wartime (as occurred when the U.S. entered World War I). But it would be beneficial to place a political drag on high rates.

To this end, a constitutional amendment could limit the top income tax rate to 15 or 20 percentage points above the lowest rate. That would keep the rate near the stated number unless a majority were willing to pay more. Such an amendment would preserve flexibility, while creating political pressure for the low rates that are apt to produce economic growth. (Of course, there would be complex questions about allowable deductions and what counts as taxable income, but such issues could be resolved.)

These constitutional changes—in Supreme Court doctrine and a constitutional amendment—are not beyond our reach. Only a decade ago, the constitutional case against the administrative state seemed quixotic; my arguments in 2014 against administrative power were dismissed as unrealistic. Ten years on, we seem to be living in another world. The Supreme Court has declared that you have the right to be heard in an Article III court (Axon, Corner Post, and Jarkesy), that agencies can’t deny you jury rights (Jarkesy), and that Chevron deference is dead (Loper Bright). Even delegation is in line for the chopping block. Evidently, constitutional ideals can revive the Constitution. They can set our eyes on worthy goals and, by focusing our attention, can bring seemingly improbable objectives into the realm of possibility.

So, it’s time to start thinking about the constitutional ideals that can put the nation’s finances on a sound footing. If we are to avoid being dragged down by our profligacy, we need to restore the structural foundations of fiscal responsibility.

Top Photo by Christopher Furlong/Getty Images

Donate

City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Read the whole story
· · · · · ·
bogorad
8 hours ago
reply
Barcelona, Catalonia, Spain
Share this story
Delete

How Washington Can Finally Get Back to Fiscal Sanity

1 Share
It's time to start thinking about the constitutional ideals that can put the nation's finances on sound footing.
Read the whole story
bogorad
10 hours ago
reply
Barcelona, Catalonia, Spain
Share this story
Delete

Barcelona pays homage to Cerdà with a plaque at 49 Bruc Street, the urban planner's residence.

1 Comment

The City Council of Barcelona and the College of Engineers of Roads, Canals and Ports of Catalonia have discovered a commemorative plaque in honor of the engineer and urban planner Ildefons Cerdà in the building where he resided, at number 49 Bruc Street.

Accompanied by the Dean of the College, Pere Calvet, the Mayor of Barcelona, Jaume Collboni, has highlighted that they have "the duty to recognize the figure of Cerdà" during the presentation ceremony on Monday, as reported by the City Council in a statement.

This is why the City Council wants to remember and pay tribute to the designer of the urban reform of the city, in which the current Eixample neighborhood was drawn, with a greater tribute.

In this sense, Collboni has stated that Barcelona has pending "thinking of a space and a piece that is worthy of the great legacy that he left us".

Beyond the project that expanded the Catalan capital in the 19th century, "Cerdà's general theory of urban planning focuses on improving the quality of life of the people who live in a city", the mayor added.



Read the whole story
· ·
bogorad
23 hours ago
reply
my street!
Barcelona, Catalonia, Spain
Share this story
Delete

URGENT: Biden pardons Fauci

1 Share

Turns out the Covid vaccines provide immunity after all.

This morning, in the final benighted act of his zombie administration, President Joseph Robinette Biden Jr. pardoned Dr. Anthony S. Fauci, supposedly to protect him from “unjustified and criminally motivated prosecutions.”

Biden also pardoned retired Gen. Mark Milley, Representative Liz Cheney, and other members of the committee that investigated the Jan. 6 riots.

There’s no other way to say it: these pardons are a stain on the rule of law and an abuse of presidential power. Rand Paul has made a strong case that Fauci lied to Congress about his role in supporting the risky research that likely led to Covid. Why should he face no consequences?

(Truth. And consequences. Because this isn’t over yet.)

Subscribe now

Fauci is now 84 years old.

Mercy might suggest he not face criminal prosecution - which could even include an imprisonment that would lead him to be separated from his family in his last years. Of course, Fauci and his acolytes did not show similar mercy when they pushed nursing homes and hospitals to shut their doors to visitors in 2020, preventing Americans from seeing elderly and sick relatives.

Either way, the decision is not for Joe Biden - or whoever is actually running his administration while he eats ice cream and naps - to make. It’s for federal prosecutors.

Instead, Biden has given Fauci what appears to be a blanket pardon. The White House statement announcing today’s pardons doesn’t even make clear what crimes or periods they cover - if Fauci cheated on his taxes in 2018, is that included?

After revealing the pardons, the statement adds this pathetic note:

The issuance of these pardons should not be mistaken as an acknowledgment that any individual engaged in any wrongdoing, nor should acceptance be misconstrued as an admission of guilt for any offense.

But, of course, that’s exactly how they will be viewed. And rightly.

As I wrote last month when the White House first floated this balloon:

Despite years of Congressional inquiries into Fauci, Daszak, and Covid’s origins, stonewalling by the National Institutes of Health means that we still do not know exactly what Fauci knew or suspected about Covid’s origins. A criminal investigation that carries the real possibility of prosecution or prison time is our last, best hope to get to the full truth.

If Biden makes that investigation impossible, Americans will become even more distrustful of the public health mandarins who brought us Covid lockdowns and mRNA vaccine mandates.

As they should.

(Guess we’ll never know how he’d look in orange.)

I’ll have more to say about this, but one final note for now: the pardon makes Berenson v Biden even more important.

We did not name Fauci as a defendant, because we didn’t have direct evidence in his involvement of the censorship conspiracy, and my lawyer James Lawrence and I don’t sue people for kicks.

But in 2021, Fauci talked regularly to Andy Slavitt, the White House functionary at the core of the conspiracy to censor me. They both were desperate to get mRNA jabs in the arms of as many Americans as they could, the First Amendment and individual rights notwithstanding.

Even more than it was before this morning, Berenson v Biden is the only legal effort to hold anyone accountable for the censorship and lies around the Covid jabs with a chance to go anywhere.

Keep your fingers crossed. (And if you want to donate, you can do so here:)

On GiveSendGo

On GoFundMe

You can also Venmo me at Alex-Berenson-3

Or send a check to James Lawrence at Envisage Law, 2601 Oberlin Rd # 100, Raleigh, NC 27608

Onward.

Read the whole story
· · · · · · · ·
bogorad
1 day ago
reply
Barcelona, Catalonia, Spain
Share this story
Delete

Decision To Move Inauguration--Weather or Security Related?

1 Share
Read the whole story
bogorad
2 days ago
reply
Barcelona, Catalonia, Spain
Share this story
Delete

Grooming Gangs: The Making of a Scandal

1 Share
How elite fears of social unrest and accusations of racism led the state to look away from industrial-scale abuse.
Read the whole story
bogorad
2 days ago
reply
Barcelona, Catalonia, Spain
Share this story
Delete
Next Page of Stories
Loading...