What is the challenge confronting modern spending power doctrine? And what is the Court's spending power doctrine after National Federation of Independent Business v. Sebelius (1) (NFIB)? This Essay takes up these questions, and concludes by posing two further questions.
Prior to the Supreme Court's 1992 decision in New York v. United States, (2) which kicked off the so-called federalist revival, (3) there was not much reason to care about the spending power. In a world in which Congress had virtually plenary direct regulatory power over the States, there was little reason to worry about any limits that might exist on indirect federal regulation of the States via conditional spending. (4)
The task for a modern spending power doctrine, however, is not as simple as, for example, prohibiting any conditional offer of federal funds to the States that, if accepted, might regulate the States in a way that Congress could not directly mandate. Since at least 1936, in United States v. Butler, the Court has been clear that Congress's power to spend is greater and broader than its power to regulate the States. (5)
At the same time, however, our spending power doctrine cannot permit Congress to impose any conditions it chooses on its offers of federal funds to the States on the simplistic ground that a state that does not like the conditions can always decline the offer. Such a doctrine would strip all meaning from the Constitution's notion of a federal government of limited, enumerated powers. (6)
Simply put, the problem for modern spending power doctrine is this: How can the courts distinguish and invalidate those conditional offers of federal funds to the States that threaten to render meaningless the Tenth Amendment and its notion of a federal government of limited powers, while at the same time affording Congress a power to spend for the general welfare that is greater than its power to directly regulate the States?
In its 1987 derision in South Dakota v. Dole, the Court provided a controversial and highly imperfect doctrine as a response to this problem. (7) Until the Court's 2012 decision in NFIB, the Dole doc trine was thought to be essentially toothless, particularly with regard to the coercion prong of its test. (8) Never before had the Court invalidated any offer of federal funds to the States on the grounds that it was unconstitutionally coercive. (9) It is also significant that the NFIB Court, while claiming to be applying the Dole doctrine and finally giving its "coercion" inquiry some bite, has unquestionably left us with a substantially altered doctrine. (10)
The spending power question raised in NFIB involved the "Medicaid expansion" provision of the Affordable Care Act (ACA), which would have increased the number and categories of individuals that participating states must cover. (11) The ACA would increase federal funding to cover some, but arguably not all, of the States' cost of expanding Medicaid coverage in the specified ways. (12)
If a state did not comply with the ACA's new coverage requirements, it would lose not only the federal funding for those new requirements but all of its federal Medicaid funds. (13) The 26 states and others who challenged the ACA contended that this Medicaid expansion provision exceeded Congress's authority under the Spending Clause, and seven Justices across two opinions agreed. (14)
The two opinions were signed by the Roberts group, which includes Chief Justice Roberts and Justices Breyer and Kagan, and the so-called joint dissenters (who actually agree with the Roberts group on this issue), which include Justices Scalia, Kennedy, Thomas, and Alito. (15)
In reaching their decisions in NFIB, both groups of Justices claimed to be applying the test set out in the Court's 1987 decision in Dole. (16) In fact, however, both opinions deviate significantly from that decision. At issue in Dole was a federal statute that famously withheld five percent of federal highway funds from any state that did not have a minimum drinking age of 21. …