United States v. Butler
297 U.S. 1 (1936)

  • As part of the Agricultural Adjustment Act, Congress implemented a tax on agricultural commodities. Then the funds generated from that tax would be given to farmers who promised to reduce their acreage.
    • Congress passed the Act in order to solve the crisis in agricultural commodity prices which was causing many farmers to go under. This Act took money from the big agrobusiness and gave it to the little guy.
    • Congress is generally authorized to give money to people via the Spending Clause (Article I, Section 8).
  • The US Supreme Court found the Act unconstitutional because it attempted to regulate and control agricultural production, an arena reserved to the States.
    • The US Supreme Court found that even though Congress does have the power to levy taxes and spend money, in this case they were using those powers as a “means to an unconstitutional end.” That violated the 10th Amendment.
    • The Court found that the payments to farmers were a form of unlawful and oppressive coercive contracts, and the proceeds were earmarked for the benefit of farmers complying with the prescribed conditions.
      • Making the payment of a government subsidy to a farmer conditional on the reduction of his planned crops went beyond the powers of the Federal government.
      • The Court found that this was not really voluntary, because the farmers couldn’t afford to say no.
      • The Court felt that this was a way for the Federal government to essentially buy their way into powers that they couldn’t Constitutionally have.
        • Basically, Congress couldn’t pass a law making people reduce the amount of land they owned, so they couldn’t give people piles of money if they promised to reduce their land.
  • In a dissent, it was argued that the Courts should be concerned with the power to enact Statutes, not their wisdom.
    • The dissent felt that it was ridiculous that the Federal government can provide subsidies and seeds to farmers, and yet has no power to regulate what crops they grow.