Historically, economists have paid little attention to national constitutions, leaving that to legal scholars. But questions about the constitutionally proper economic role of government arise frequently now, at least among the general populace, if not among economists. So the issue merits some attention in our discipline.
Many people now want both lower taxes and no more budget deficits. That implies significantly smaller government. Ask them what they would cut, and answers often fall into two categories.
One group demonstrates ignorance of the makeup of federal spending by suggesting cuts in programs that are such a small proportion of the total budget that their elimination would make little difference. Cutting all foreign aid is one favorite. Stopping welfare payments to illegal immigrants is another. People in this group need to educate themselves on the true size of different categories of federal spending.
A second group argues along the following lines: The U.S. Constitution doesn’t say anything about a federal role in education, housing or energy, so our elected officials ought to take their oaths of office seriously and abolish the relevant Cabinet departments forthwith, along with any other federal agency or program not specifically authorized in our nation’s most fundamental document. That will radically downsize government, allowing lower taxes, balanced budgets and faster economic growth.
What about this? Would a “correct” interpretation of the constitutionally mandated economic role of government solve out nation’s fiscal problems? Would it make our nation better off economically? And are there other aspects of the U.S. constitution that affect our nation’s economic performance?
The practical constraint on all this is that we have a policy established 207 years ago that the Supreme Court decides what is constitutional. No constitutional challenges to the departments cited above have ever gotten far in the federal court system, under either conservative- or liberal-dominated courts. Until that changes, such departments are, in fact, constitutional.
But the basic argument that the constitution makes no provision for a federal role in education, energy or housing is correct. Nor, however, does it make any for health, agriculture or “the interior,” and there are only vague references to transportation and commerce. Moreover, the constitution makes no references to “cabinet departments” at all. As in many areas, the document has few specifics.
Article Two stipulates the president “may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any Subject relating to the Duties of their respective Offices,” but nowhere does it specify what those departments are. It goes on to say the president “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint … other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law.”
Thus, while there is no mandate for a federal role in education or energy, neither is there any provision for government-mandated old age, survivors and disability insurance or Medicare. There is no provision for the National Institutes of Health, rural electrification, meat inspection, air traffic control, topographic mapping, scientific research, tornado warning or subsidies to farmers or college students.
References to economic functions are few. Article One, Section 8 gives Congress power to tax and spend for “defense and general welfare,” to borrow, to regulate commerce, to “coin money and regulate the value thereof,” to “establish post offices and post roads” and to protect intellectual property rights.
The Bill of Rights adds one other bit, with the Fifth Amendment implicitly establishing government’s right of eminent domain by requiring “just compensation.”
And then there is the 10th Amendment specifying “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” That is the clause cited by those who want to abolish the departments of Education, Energy, Health and Human Services, Housing and Urban Development and others. Clashes between this amendment and broad interpretations of the commerce clause have gone on for more than a century.
Perhaps we should radically re-interpret the Constitution to reduce the role the federal government plays in our economy. That is a slow process. Despite the commerce clause, it was a 50-year process to establish federal powers to regulate child labor and working conditions, ones that modern libertarians would like to reverse.
But as humorist Peter Finley Dunne observed a century ago, “the Supreme Court follows the election returns.” The current activist Roberts court is demonstrating it is not scared of overturning long-established precedent. But citizens need to think long and hard about where we really want to go with this. Consistent narrow interpretation of the Constitution would eliminate many programs sacred to both parties.
© 2010 Edward Lotterman
Chanarambie Consulting, Inc.