If there’s anything good about the current Administration’s relentless raid on the public fisc to give away billions of taxpayer dollars to relatively well-educated and affluent student-loan debtors—and let’s face it, there really isn’t—it should be a serious rethinking of century-old Supreme Court precedent that categorically bars taxpayers from suing to stop this kind of reckless and unconstitutional spending.
Despite the Supreme Court’s halt of the Administration’s initial half-trillion-dollar student loan giveaway scheme in June 2023, it seems like every few weeks some bureaucrat in the Department of Education is announcing yet another taxpayer-funded bailout of college graduates so they never have to pay back their student loans. Instead, those loans will be paid by other taxpayers who either never went to college, exhausted their family savings to avoid student debt, or borrowed money but responsibly paid it back.
Most of these vote-buying bailouts are blatantly unconstitutional, but the Administration forges ahead undeterred and defiant. The President even bragged that the Supreme Court decision “didn’t stop me.” Apparently not.
Yet even the since-evaded Supreme Court halt was by no means a foregone conclusion because there were serious questions about whether any of the plaintiffs in the case—several state governments, a state-controlled loan processing company, and two student-loan debtors who didn’t qualify for the giveaway—had legal “standing” to sue. Standing to sue means, in a nutshell, that the plaintiff has suffered or will suffer concrete harm from a challenged action and that a court can do something meaningful to prevent or remedy that harm. With its student-loan giveaways and countless other lawless expenditures of taxpayer dollars, the current Administration is taking the calculated gamble that nobody has legal standing to stop them.
If you’re thinking taxpayers obviously should have standing to sue—after all, taxes eat away a huge portion of many Americans’ earnings and wealth, and runaway government spending inevitably raises those taxes—go to the head of the class. Who better to blow the whistle on unconstitutional spending than one or more of the taxpayers involuntarily forced to foot the bill under threat of incarceration?
Aye, there’s the rub. Just over 100 years ago, in a 1923 case called Frothingham v. Mellon, the Court effectively slammed the courthouse doors on the fingers of U.S. taxpayers who object to lawless government spending for unconstitutional purposes. Mrs. Frothingham sued then-Treasury Secretary Andrew Mellon to stop implementation of the Maternity Act of 1921, a law that created a new federal bureaucracy to apportion federal funds among various states to help reduce maternal and infant mortality. In Mrs. Frothingham’s view, the Act exceeded the outer limits of congressional power under Article I of the Constitution. She asserted standing to sue as a federal taxpayer, arguing that the act would increase her tax burden and thereby deprive her of her property without due process of law.
But the Justices would have none of it. They unanimously held that Mrs. Frothingham’s stake as a federal taxpayer in the overall cost of the program was too “minute and indeterminable” to give her standing to sue. Moreover, they feared that if a single taxpayer could sue to stop implementation of the Maternity Act, “then every other taxpayer may do the same … in respect of every other appropriation act and statute whose administration requires the outlay of public money, and whose validity may be questioned.”
But the Court’s fears were a bit exaggerated. Mrs. Frothingham never suggested that a single taxpayer could challenge any federal expenditure they disagreed with. The Court easily could have limited such standing only to taxpayers, like Mrs. Frothingham, who could articulate a credible claim that the federal government lacks any constitutional power to make the challenged expenditure.
Yet since Frothingham, the Court has largely adhered to its categorical bar against taxpayer challenges to government spending—even when the spending is obviously unconstitutional and nobody else may have standing or motivation to challenge it. One notable exception was Flast v. Cohen, where the Court bizarrely carved out a one-time exception for taxpayers who complain that an expenditure of federal funds violates the First Amendment’s prohibition against the establishment of religion and protection for the free exercise of religion. Perhaps more bizarre—given that the Constitution explicitly grants Congress the power of the purse, whereas executive agencies can lawfully spend only what Congress appropriates to them—was the Court’s reasoning that the bar against taxpayer standing could be relaxed when the taxpayer challenges a spending law passed by Congress rather than “an incidental expenditure of tax funds in the administration of an essentially regulatory statute.”
Importantly, however, Chief Justice Earl Warren’s majority opinion in Flast clarified that Frothingham’s bar on taxpayer standing was not grounded in the Constitution, but rather was a matter of judicial prudence and administration. Moreover, Justice William O. Douglas issued a concurring opinion saying the Court should have overturned Frothingham entirely—“here and now”—adding that Frothingham “denied effective machinery” to restore “fences” the Constitution had designed “to keep government out of private domains.” He further noted that most states allow taxpayer lawsuits and that taxpayers can be “vigilant private attorneys general” who vindicate the public interest even when their pecuniary interest in a case is de minimis.
Justice Douglas also dismissed the Frothingham court’s fear of “inundation” of the federal courts if taxpayer suits were allowed:
“There is a wise judicial discretion that usually can distinguish between the frivolous question and the substantial question, between cases ripe for decision and cases that need prior administrative processing, and the like. When the judiciary is no longer “a great rock” in the storm, as Lord Sankey once put it, when the courts are niggardly in the use of their power and reach great issues only timidly and reluctantly, the force of the Constitution in the life of the Nation is greatly weakened.”
The case for jettisoning Frothingham is equally plausible today, particularly after the Supreme Court’s 2021 ruling in Uzuegbunam v. Preczewski that even a demand for “nominal damages”—for example, one dollar—will ordinarily suffice to confer standing on a plaintiff who has suffered concrete harm that is fairly traceable to the conduct being challenged. The financial impact of a nearly half-trillion-dollar federal spendathon—which most experts agreed was a fair cost estimate for just the initial student loan giveaway attempt that the Court struck down—would unquestionably exceed a single dollar for many taxpayers. Moreover, allowing such taxpayers to challenge unconstitutional spending might have at least some deterrent effect on profligate spenders.
Perhaps Frothingham should live on. But perhaps it’s time to bid that century-old precedent a fond adieu. Either way, with runaway federal spending having produced a staggering $34 trillion nation debt (and counting), thoughtful reassessment is overdue.