By Douglas V. Gibbs
In 2007, working with fellow constitutional originalists, I calculated that approximately 85% of the federal budget was unconstitutional. Today, after examining the complete federal budget, I estimate that figure has dropped to 83%. Despite its nominal drop, it still remains at an alarming percentage that reveals how far we’ve strayed from our constitutional foundations.
The problem isn’t merely academic. It represents a fundamental betrayal of the constitutional design that once limited federal spending to under 5% of GDP for most of American history. The transformation from that limited government to today’s behemoth wasn’t accidental. It was the result of what I call “Hamilton’s Heist.”
The Founding Fathers, or at least the ones who debated against Alexander Hamilton’s ideas, envisioned a system where states would act as fiscal guardians of the Republic. Under Article I, Section 9 of the Constitution, direct taxes had to be apportioned among the states according to population, meaning that the states collected federal taxes and could theoretically refuse payment if Washington exceeded its constitutional authority. It gave the states a direct voice regarding the federal budget, a system that provided a natural check on federal power that kept spending remarkably constrained.
Alexander Hamilton changed everything. As early as 1779, at just 24 years old, he advocated for a national bank. By 1791, as Treasury Secretary, he articulated the doctrine of “implied powers” in order to achieve his aim. Thomas Jefferson argued against implied powers, correctly asserting that any powers possessed by the federal government must be expressly enumerated in the text of the United States Constitution. Hamilton countered with his radical idea, claiming that the Constitution’s “necessary and proper” clause granted Congress authority to do whatever it deemed necessary to achieve its ends, even if not explicitly enumerated.
This Hamiltonian philosophy directly contradicted the views of not only Thomas Jefferson, but Father of the Constitution James Madison, and other Founders who believed that if the Constitution had intended to grant such important powers as erecting corporations, “it would have been expressly mentioned.” Jefferson noted that one reason the Convention rejected granting Congress power to issue corporate charters was fear that “then they would have a power to erect a bank, which would render the great cities… adverse to the reception of the Constitution.”
The consequences of Hamilton’s victory were profound. His First Bank of the United States lasted only twenty years before constitutional challenges forced its closure, but it established the precedent for perpetual national debt as a feature rather than a bug in our system. Hamilton believed that “a central economic system with managed debt was critical to the United States’ ability to undertake commerce” and proposed that the federal government assume state debts, making them “equal partners in the federal debt.” He would later argue that the states would then be more likely not to secede at first sign of trouble, considering they shared responsibility in the overall debt.
The Hamiltonian transformation accelerated dramatically in 1913 with two constitutional changes: the 16th Amendment, which eliminated apportionment and allowed direct federal taxation of citizens; and the creation of the Federal Reserve System, which privatized money creation. Before these changes, federal revenue averaged just 3% of GDP. Today, federal receipts have increased to 16.5% of GDP, and expenditures have reached 24.0% of GDP.
The 17th Amendment was then put in place to remove the states’ voice from the U.S. Senate – a measure put in place to ensure the state legislatures no longer had the ability to challenge the heist of the American monetary system begun more than a century before by Alexander Hamilton.
The economic consequences extend beyond mere numbers. The Federal Reserve creates money to purchase government debt, which dilutes the dollar’s purchasing power and imposes what amounts to a hidden “inflation tax” on all citizens. When the Fed creates money to buy treasuries, the cost is distributed across the economy through price increases rather than through direct taxation.
Even if we eliminated all unconstitutional spending, a massive 83% of the budget, we would still need approximately 76% of current direct tax revenues to fund the remaining constitutional functions. This reveals how deeply dependent our government has become on direct taxation of its citizens.
Restoring our constitutional fiscal order would require a incremental methodical approach. First, we must gradually reduce unconstitutional spending through sunset provisions and attrition rather than abrupt cuts that would create economic upheaval. Second, we need to reform monetary policy by reducing the Federal Reserve’s balance sheet and implementing rules-based monetary policy. Third, we should transition from direct federal taxation back to state-based apportionment. Finally, we must consider constitutional amendments to restore these fiscal constraints.
This restoration would be more than an economic exercise. It would hearken a return to the constitutional design that once made America exceptional. The Framers of the Constitution understood that when government can tax and spend without constraint, liberty inevitably erodes. They created a system of checks and balances to prevent this outcome, but those checks have been systematically dismantled over the past century.
The urgency of this moment cannot be overstated. With the national debt exceeding $40 trillion and annual interest costs now surpassing defense spending, we are approaching a point of no return. The time has come to reverse Hamilton’s Heist and restore the constitutional fiscal framework that once kept federal power in check and preserved American liberty for future generations.
— Political Pistachio Conservative News and Commentary
