Protecting Taxpayers: Burdens of Proof in Gov't Spending

“Charity is no part of the legislative duty of the government.”

-- Annals of the Third Congress, 794, paraphrasing a speech from James Madison

In the first session of the Third Congress in 1794, the House of Representatives engaged in a robust debate about whether to allocate $15,000 for the assistance of refugees fleeing the Haitian Revolution. The Annals of that debate showcase how James Madison (pictured), the author of the Constitution and one of the most influential voices on the shape of early American government, envisioned how debates over taxpayer-funded projects should transpire.

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Mr. Madison wished to relieve the sufferers, but was afraid of establishing a dangerous precedent, which might hereafter be perverted to the countenance of purposes very different from those of charity. He acknowledged, for his own part, that he could not undertake to lay his finger on that article in the Federal Constitution which granted a right of Congress of expending, on objects of benevolence, the money of their constituents.

Despite Madison’s consternations, Congress allocated the funds and would later go on to make similar appropriations for the citizens of Venezuela ($50,000, 1812). Today, the U.S. government continues to invest taxpayer dollars in foreign aid—a total of roughly $55 billion in FY 2012 (divided roughly 60-40 between economic and military aid, respectively). While this provision is less than 1 percent of the American budget, it consistently draws the ire of the public and politicians on both ends of the political spectrum (though louder opponents tend to be on the Right).

This column is not about the pros and cons of the American foreign aid budget—a topic for another time—but rather, as Madison grappled with 220 years ago, the process by which we make decisions about how to allocate scarce taxpayer dollars and who bears the burden of proof in the case about whether or not to spend.

While I’ve struggled to understand the “First Principles” of spending for years, I began to get some clarity last week during a group budget exercise that I took part in as part of an interview for Community Board 8 on the Upper East Side of Manhattan. For my loyal Bay State readers, community boards are the closest NYC gets to the traditional New England “town meeting.” There are between 3-18 boards in each of the five boroughs, with 50 volunteer members appointed to each board. The boards discuss an array of local issues, from land use/zoning to transportation and education.

The budget exercise involved dividing $100 million of “new” money between 10 priorities. While there was some consensus among the group that transportation, affordable housing, and social assistance (SNAP, etc.) were more important than parks and cultural institutions, there was a significant divide on the question of whether each of the 10 priorities should receive some of the $100 million.

I asked people who wanted to give each priority some funding to explain their position, given that we had agreed that certain priorities were much more important than others. Before answering my question, a fellow interviewee turned the question around on me, asking me to state why each priority should not receive some of the funds.

Luckily for the rest of the group, we did not have time to explore the subject further. However, the exchange felt familiar to me as a lawyer—a profession where questions about the appropriate burden of proof and who bears that burden are commonplace.

I posit the following first principle, in the spirit of Madison’s judgment above: that those who seek to spend taxpayer money (as opposed to not spend taxpayer money) have the burden of proof, and that they must prove that such an expenditure will address a specific, quantifiable problem that government is either uniquely or appropriately suited to combat.

I say this as a Liberal, who believes that government should invest heavily in infrastructure, both physical (roads, rails, dams, electric grids) and human (education, R&D, Social Security, Medicare). But Americans, for better and worse (and I think, generally, for better), have a historic suspicion of government overreach.

Furthermore, we’ve seen time and time again that Americans will actually embrace taxes if they believe that the funds are being spent efficiently on a priority of utmost importance. This is true in red states and blue. Just this year, Jackson, Mississippi voters overwhelmingly approved a 1 percent increase in the sales tax to fund critical infrastructure improvements. Even traditionally-car-crazed Los Angeles recently approved a sales tax increase to fund public transportation.

The bottom line is that officials should have to justify every penny of spending to the public. In so doing, we will not only root out programs that are inefficient and ineffective, we’ll also bring transparency to a budget process that has eroded public confidence in our government, creating a vicious cycle of disinvestment in our public assets.