What Power Does The Federal Government Have Over Money

Ability of the Pocketbook

Historical Highlight

"All Bills for raising Acquirement shall originate in the Business firm of Representatives; but the Senate may propose or hold with amendments equally on other Bills."
— U.S. Constitution, Article I, department 7, clause 1

"No Coin shall exist fatigued from the Treasury, but in Consequence of Appropriations made past Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from fourth dimension to fourth dimension."
— U.S. Constitution, Commodity I, section nine, clause 7

/tiles/non-drove/i/i_origins_power_purse_approps_lc.xml Paradigm courtesy of the Library of Congress The House Appropriations Commission in 1918 featuring (from left to right) time to come Secretary of Country James F. Byrnes of South Carolina, quondam Speaker Joseph Cannon of Illinois, Chairman J. Swagar Sherley of Kentucky, time to come Speaker Frederick Gillett of Massachusetts, future Secretary of War James West. Good of Iowa, and future Speaker Joseph Byrns of Tennessee.

Congress—and in particular, the House of Representatives—is invested with the "power of the purse," the ability to tax and spend public money for the national government. Massachusetts' Elbridge Gerry said at the Federal Constitutional Convention that the House "was more immediately the representatives of the people, and it was a saying that the people ought to hold the purse-strings."

Origins

English history heavily influenced the Ramble framers. The British Business firm of Commons has the exclusive right to create taxes and spend that revenue, which is considered the ultimate check on royal authorisation. Indeed, the American colonists' weep of "No revenue enhancement without representation!" referred to the injustice of London imposing taxes on them without the do good of a vocalisation in Parliament.

Ramble Framing

Debate at the Constitutional Convention centered on ii problems. The first was to ensure that the executive would not spend money without congressional potency. The second concerned the roles the House and Senate would play in setting financial policy.

At the Convention, the framers considered the extent to which the Senate—similar the House of Lords—should be limited in its consideration of budget bills. The provision was part of a compromise betwixt the large and pocket-size states. Smaller states, which would exist over-represented in the Senate, would concede the power to originate money bills to the House, where states with larger populations would accept greater command. Speaking in favor of the provision, Benjamin Franklin of Pennsylvania said, "It was a saying that those who feel, can all-time judge. This end would . . . be best attained, if coin affairs were to be bars to the immediate representatives of the people." The provision in the committee's report to the Convention was adopted, v to three, with iii states divided on the question. The Convention reconsidered the affair over the course of 2 months, only the provision was finally adopted, nine to two, in September 1787.

The constitutional provision making Congress the ultimate authority on regime spending passed with far less debate. The framers were unanimous that Congress, equally the representatives of the people, should be in control of public funds—not the President or executive branch agencies. This strongly-held belief was rooted in the framers' experiences with England, where the rex had wide breadth over spending in one case the money had been raised.

The Early Appropriations Process

The Offset Congress (1789–1791) passed the beginning appropriations act—a mere 13 lines long—a few months after it convened. The law funded the regime, including important pensions for Revolutionary War veterans, with merely $639,000—an corporeality in the tens of millions in real terms. This simple procedure was short-lived. Over time, nine regular appropriation bills emerged and funded such priorities as pensions, harbors, the post role, and the armed services. These were considered on an almanac ground by the late 1850s. The Firm Committee on Ways and Means, which too had jurisdiction over tax policy, controlled the appropriations process. But legislation and funding were always kept dissever. Priorities were spelled out in one law and money appropriated for those priorities in some other. This has remained the practice, as substantive committees pattern say-so acts and the House and Senate Appropriation Committees fund authorized programs afterwards. Indeed, there are laws and parliamentary rules against making new police force in cribbing bills, although such rules are periodically waived.

Subsequent Reforms

In 1865, after the Ceremonious War had created a about $3 billion national debt and spending exceeded a billion dollars a year, Congress reformed its funding procedure to handle the regime's new demands. The House separated the Ways and Means Committee's taxing and spending functions. The Appropriations Committee was established to fund programs, while Ways and Means retained jurisdiction on tax policy. House leadership and other committees also tried to influence the appropriations process, and the lack of coordination over the years led to high deficits and the implementation of the federal income taxation in 1913. Congress passed the Upkeep and Accounting Human action in 1921 to address some of the coordination bug information technology faced funding government programs. This law centralized many of the budgeting functions with the President, who still has considerable calendar-setting ability with the federal budget and submits a draft budget to Congress at the commencement of every yr. The appropriations process has been reformed multiple times since 1921, including notable restructurings with the Congressional Budget and Impoundment Control Act of 1974 and the Gramm–Rudman–Hollings Acts of 1985 and 1987.

For Further Reading

Farrand, Max, ed. The Records of the Federal Convention of 1787. Rev. ed. 4 vols. (New Oasis and London: Yale Academy Press, 1937).

Garfield, James. "National Appropriations and Misappropriations," North American Review, 270: 572–586.

Kiewiet, D. Roderick and Mathew D. McCubbins. The Logic of Delegation: Congressional Parties and the Appropriations Procedure. (Chicago: The University of Chicago Press, 1991).

Kimmel, Lewis. Federal Budget and Fiscal Policy, 1789–1958. (Washington, D.C.: Brookings Institution, 1959).

Leloup, Lance. The Fiscal Congress. (Westport, CT: Greenwood, 1980).

Schick, Allen. Congress and Coin: Budgeting, Spending and Taxing. (Washington, D.C.: The Urban Constitute, 1980).

—. The Federal Budget: Politics, Policy, Process. (Washington, D.C.: Brookings Institution, 2000).

Selko, Daniel. The Federal Financial System. (Washington, D.C.: Brookings Institution, 1940).

Stewart, Charles H., III. Upkeep Reform Politics: The Blueprint of the Appropriations Process in the Business firm of Representatives, 1865–1921. (New York: Cambridge University Press, 1989).

Wildavsky, Aaron B. Budgeting and Governing. (Piscataway, NJ: Transaction Publishers, 2006).

—. The New Politics of the Budgetary Process. 5th ed. (New York: Longman, 2003).

Source: https://history.house.gov/institution/origins-development/power-of-the-purse/

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