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The Upside Down Constitution: Part II (The Spending Power)

Having explained some of what I like about Michael Greve’s new book, The Upside Down Constitution, I will now offer one criticism of the book.  Michael believes that Congress has a spending power that allows it to spend money even if there is no other enumerated power.  This is the Hamiltonian interpretation, which allows spending for the general welfare, rather than the Madisonian interpretation, which limits Congress to spending on the enumerated powers.

The Madisonian interpretation would further the competitive federalism that Michael desires much more than the Hamiltonian interpretation in two ways.  First, Michael believes that programs where the federal government raises the funds and then shares those funds with the states – such as Medicaid – are a significant problem.  He seems to believe they are a bigger problem than programs like Medicare, which are exclusively federal.  He believes that the states drive such Medicaid funding and make it bigger than it otherwise would be.

Well, assuming that is true, the best way to stop such programs is to adopt the Madisonian interpretation, which would prevent the federal government from spending for the general welfare.  That would stop federal funding of Medicaid.  Instead, the states would have to raise the funds themselves.

But there is a second way that the Madisonian interpretation would help with competitive federalism.  It would also stop exclusively federal programs, such as Medicare and Social Security, which I believe are bigger and worse than Medicaid.  Under the Madisonian interpretation, Medicare and Social Security could also not be enacted at the federal level.  They would have to occur at the state level, but competitive federalism – without any Supreme Court intervention – would significantly constrain them.  If any state sought to redistribute from the young to the old the way that Medicare or Social Security does, people would leave that state in droves.  Thus, the most problematic features of Medicare and Social Security could not occur if they were required to exist at the state level.

The Madisonian interpretation of the spending power thus would address not only Michael’s problem with grants to the states, but also much exclusively federal spending. Somehow, though, Michael misses this opportunity.  While he justifies his position in the book as saying that federal spending can sometimes produce net benefits, in the real world the costs are enormous and greatly outweigh the benefits.  The only reason that I can figure for why Michael rejects the Madisonian interpretation – and here I am only half kidding – is that he is a neo-Hamiltonian and can’t bear to reject Hamilton’s reading.

Despite this one criticism, let me conclude by repeating my strong praise for Michael’s book.  It is essential reading for anyone who views the Constitution as a means of promoting the liberty and wealth of the nation.

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