1. United States v. Butler, (1936)
2. Facts: Butler was a processor of cotton. In 1933, the Congress passed the Agricultural Adjustment Act as one of the New Deal measures intended to raise agricultural prices by limiting farm production. In return for limiting their production, the government would give the farmers a subsidy that was raised by taxing the processing stage of the agriculture.
3. Procedural Posture: Butler attacked the tax on the grounds that it was an integral part of an unconstitutional program to control agricultural production.
4. Issue: Whether the Act was a valid exercise of the power to spend for the general welfare.
5. Holding: No.
6. ∆ Argument: Congress has the right to tax and spend to “provide for the general welfare.” This phrase should be liberally construed to cover anything conducive to the national welfare. The decision as to what is conducive to the national welfare is the function of Congress alone, unreviewable by the courts, and this Act was for the “general welfare.” Furthermore, it is not coercive, because it provides for voluntary compliance through payment of benefits.
7. Majority Reasoning: Looking to the framer’s intent, the Court accepted Hamilton’s view that Congress has a substantive power to tax and to spend, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. However, the Court did not reach the determination of whether the Act was for the general welfare, because it invades the rights reserved to the states. The attempt by congress to regulate the production of agriculture is unconstitutional, thus any laws passed as a means to this unconstitutional end are enacted under a pretext. The taxing power can not be used to interfere with the states’ rights, so the spending power should not either. The Act is coercive, because it does not provide the farmers with a practical choice, since their non-compliance would result in their financial ruin. Furthermore, the power of Congress to contract with individuals is limited by whether its federal power reaches the subject matter of the contract. In this case, the federal power does not reach so far.
8. Dissent: The court should only be concerned with the power to enact statutes, not their wisdom. The court here may be overstepping its bounds by trying to pass judgment on the policy of the law, not its consitutionality. The coercion argument is unconvincing because Congress must be able to have the power to condition funding on proper use of the funding, otherwise, its broad powers would be defeated.
