Congress Should Not Give Any Government Agency Financial Free Rein

Can Congress give away its power of the purse to a regulatory agency? That’s the important constitutional question the Supreme Court decided it will take on earlier this week. Regrettably, the Court can’t answer the obvious follow-up question: Why would a legislature give away its own core authority?

Congress created the Consumer Financial Protection Bureau (CFPB) in 2010, in the wake of the Great Recession. The agency wields sweeping authority over “consumer finance,” including everything from credit cards and car payments to mortgages and student loans. To this end, the agency writes and enforces rules imposing even billion-dollar penalties. Thus, the CFPB regulates millions of private citizens and businesses.

In this manner, the CFPB is no different than scores of other alphabet-soup agencies—the EPA, the SEC, etc.—with similar powers over different sectors of the economy (alas). With the CFPB, however, Congress tried something new: They gave a blank check to the regulatory powerhouse. 

Rather than pleading with Congress for appropriations, like other agencies of its ilk, the CFPB simply takes what it wants from the Federal Reserve (up to 12 percent of the Federal Reserve’s operating expenses, or $734 million in 2022). The CFPB, moreover, may roll over any unused funds into the next year. Last year, the CFPB took $641.5 million, and the agency has another $340 million in rollover money. Indeed, the CFPB’s architects believed it was “absolutely essential” that the new regulator be “independent of the Congressional appropriations process.” 

But does the Constitution allow this sort of bureaucratic “independence” from Congress? 

The Constitution’s appropriations clause gives the power of the purse exclusively to Congress. On this, the Framers were quite deliberate. “The legislative department alone has access to the pockets of the people,” explained James Madison in The Federalist Papers: No. 48. The general idea was that the people, through their representatives, should have a say in the disposition of their money. In add