The Supreme Court struck down the regulatory features of the Agricultural Adjustment Act (AAA) of 1933 as inconsistent with the Tenth Amendment, while at the same time interpreting the general welfare clause as providing an independent source of congressional power to spend public money for public purposes.
The first Agricultural Adjustment Act, in order to counter the devastating effects of the Great Depression on agricultural prices, authorized the payment of subsidies to farmers in exchange for a reduction in the production of agricultural commodities. The funding for the payments came from a processing tax levied on the processors of the commodities. William Butler and other receivers of a cotton processing company refused to pay the tax.
By a 6-3 vote, the Supreme Court ruled that the tax was unconstitutional. Speaking for the majority, Justice Owen J. Roberts
In a famous dissent, Justice Harlan Fiske Stone
Although Butler expressed a preference for limited government, its interpretation of the general welfare clause provided later justification for the Social Security Act and other federal programs. In Mulford v. Smith
Bailey v. Drexel Furniture Co.
General welfare clause
Mulford v. Smith
South Dakota v. Dole
Taxing and spending clause