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There's a Constitutional Limit on Borrowing by Congress Even Without a Balanced Budget Amendment
Andrew Hyman  

Just because there’s no balanced-budget amendment in the U.S. Constitution doesn’t mean there’s no limit on Congress’s power to borrow money.  This point deserves special mention now, as we may be on the verge of another large spending bill that would necessitate much more borrowing.  The first two enumerated powers of Congress are all about money.  Here they are:  

[1] 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; but all Duties, Imposts and Excises shall be uniform throughout the United States; [and]

[2] To borrow money on the credit of the United States….<

Professor Mike Rappaport recently wrote a post discussing the long-running controversy about whether or not the first of these two clauses allows Congress to spend money on aspects of general welfare that are not covered by the enumeration later in the Constitution.  I will assume here that the first clause above does allow Congress to spend money on aspects of general welfare not covered by the enumeration of powers later in the Constitution.  This has been the predominant view for centuries, though Professor Rappaport points out some reasons for skepticism.  President James Monroe had a policy of spending for “purposes of common defense, and of general, national, not local, or state, benefit.”  Admittedly, Monroe’s view of the spending power was not as expansive as Alexander Hamilton’s, but still Monroe favored going beyond the enumerated aspects of the general welfare, and Monroe’s approach prevailed among later administrations as well.  

A big difference between the first and second clauses above is that the second clause does not broaden how the money can be spent.   Accordingly, Congress can use either borrowed money or tax revenue to pay for the armed forces, but can only use tax revenue to pay for things like entitlements (e.g. Social Security, Medicare, and Medicaid which presumably do not fall under any congressional power enumerated later in the Constitution).  

In FY2019, Congress spent about 4.5 trillion dollars, while collecting about 3.5 trillion dollars in taxes.  About half of the spending went toward Social Security, Medicare, and Medicaid. So that’s fine because half of 4.5 is less than 3.5.  But this year, we may well exceed the constitutional limit, assuming that checks in the mail from Uncle Sam do not regulate interstate commerce (checks are not regulations, and they do not help implement any regulations either).  

I haven't found much discussion of this subject so far.  A commenter at the Volokh Conspiracy blog (not me) wrote: "Even if the spending clause authorized Congress to spend *tax* money for unenumerated purposes, there is no general authorization to spend *borrowed* money – that has to come from the enumerated powers (eg, Congress can regulate interstate commerce, so it can spend borrowed money to enforce the regulations).  It’s fair to say that a lot of government spending involves borrowed money – how to justify spending borrowed money on all the programs not mentioned in the Constitution?"  That's a good question!   

And there’s another twist to this story.  To the extent that Congress relies upon the 16th Amendment to collect income taxes, that revenue may need to be spent much like borrowed money, because the 16th Amendment does not explicitly authorize spending on unenumerated objects.  So Congress may well have already overstepped its spending limit, and if Congress wants to keep spending as much on unenumerated stuff as it spends now, then it would have to dramatically increase taxes under Article I, Section 8, Clause 1 which (I assume) authorizes spending on anything pertaining to the general welfare.  Alternatively, Congress may have meant the word “taxes” in the 16th Amendment to be a subset of the “taxes” mentioned in Article I, Section 8, Clause 1 in which case the income tax revenue could be spent on unenumerated aspects of the general welfare.