A Brief History of American Welfare State
According to deficit forecasts in President Barack Obama’s latest budget, the national debt will surpass $20 trillion by 2016. If this occurs (and it is almost certain to occur), then Obama will add more to the national debt during his presidency than all prior presidents combined, despite collecting projected record-high tax receipts each year of his last term in office.
Obviously, there is a spending problem in Washington, D.C., and the reason for it is no mystery. The largest expenditure in Obama’s budget — and the largest federal outlay in every budget since 1970 — is an expense item labeled “payments for individuals,” which includes spending on Social Security, Medicare, Medicaid, unemployment benefits, disability payments, and other federal welfare subsidies. These payments comprised 65 percent of all federal spending in 2012 and are expected to grow to 70 percent in 2016. (By contrast, national defense spending was 19 percent of the federal budget in 2012 and will decrease to only 14 percent in 2016.)
The federal government has essentially become a wealth redistribution center, for it collects enormous sums of money through taxation ($2.45 trillion total in 2012), and then distributes this money to select people in countless “payments for individuals” ($2.3 trillion spent in 2012). The leftover money isn’t nearly enough to pay for the interest on the national debt, not to mention the other government functions that must also be funded, like national defense. So the federal government borrows more and more money by the day just to keep operating.
This level of spending and borrowing simply cannot be sustained, according to Obama’s Treasury Secretary, Tim Geithner. Sitting before the Senate Budget Committee last year to discuss Obama’s 2013 budget, Geithner confessed that the federal government’s level of social welfare spending could not endure for long. He said, “Even if Congress were to enact this budget, we would be left with — in the outer decades as millions of Americans retire — what are still unsustainable commitments in Medicare and Medicaid.”
These welfare commitments are not just unsustainable; they are also unconstitutional, for the Constitution grants no power to the federal government to redistribute national wealth. James Madison explained that “the government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.”
In spite of the Constitution’s limits, federal welfare spending began in earnest in the 1930s with President Franklin Roosevelt’s New Deal programs. And in the face of many legal challenges, the Roosevelt Administration defended the government’s broad spending authority under the “general welfare” clause in Article I, section 8, which states, “The Congress shall have the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States; ... .” Basically, Roosevelt argued that any kind of federal spending is permissible under the Constitution as long as it aims to provide for the general welfare. This is not what our founders intended.
James Madison assured during the ratification debates in 1787–88 that the “general welfare” reference in the Constitution was never meant to stand alone as a broad grant of federal power to spend at will. He explained in The Federalist No. 41 that it was an “absurdity” to suggest that Congress’ spending powers were unlimited by the “general welfare” clause when the Constitution identified in the very same sentence — “not even separated by a longer pause than a semicolon” — the specific, narrow powers of the federal government. He stated, “Nothing is more natural or common than first to use a general phrase, and then to explain or qualify it by a recital of particulars.” Congress’ ability to spend was to be confined by the more specific enumerated powers that immediately followed the “general welfare” clause.
As a Congressman, Madison continued to stress the Constitution’s limitations on federal spending, writing in 1792, “If Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions.” He later said, “I cannot undertake to lay my finger on that article of the Constitution which grants a right to Congress of expending, on objects of benevolence, the money of their constituents.”
Similarly, Thomas Jefferson insisted that elected representatives had no power under the Constitution “to do anything they please to provide for the general welfare.” The reason for this limitation was clear, for he explained that “giving a distinct and independent power [to Congress] to do any act they please, which might be for the good of the Union, would render all the preceding and subsequent enumerations of power completely useless. It would reduce the whole instrument to a single phrase.”
For some time, the Supreme Court shared this understanding of the Constitution’s limits on federal spending, ruling that Congress could only spend money in support of the Constitution’s enumerated powers. For example, in Carter v. Carter Coal (1936), the Court wrote that the Constitutional Convention “made no grant of authority to Congress to legislate substantively for the general welfare, and no such authority exists, save as the general welfare may be promoted by the exercise of the powers which are granted.”
But in 1937, the Supreme Court suddenly reversed its position and sanctioned Roosevelt’s broad spending power. And since that time, politicians peddling in “payments for individuals” have expanded federal social welfare programs without regard for their sustainability or their actual constitutionality — and without any real accountability.
So it should come as no surprise that President Obama—a long-time advocate for “redistributive change” in America—would ignore his Treasury Secretary’s warning about our nation’s dangerous fiscal course and instead accelerate federal welfare spending in his 2014 budget. Obama has proven to be just another pandering politician, eager to satisfy the fleeting wants of the people today, no matter what the cost may be tomorrow.