U.S presidents do not have the authority to spend money from the federal Treasury. That is primarily a congressional function. Keep that in mind as presidential candidates from any party tout what they will do if elected. History shows us that Congresses rarely go along with the pre-election campaign promises presidents make.
Remember, however, that whatever spending bills Congress does pass must be signed by the president to take effect. This is one of the famous “checks and balances” contained in our Constitution. The president has no unilateral control over spending, but his veto power does give him some bargaining clout.
All of this is like the ABCs to people who remember middle school civics lessons, but given comments one frequently hears and queries I get from readers, not everyone understands these basics. Even politicians we hear touting that they will provide this or that seem confused.
The Constitution is a conservative document, with provisions written to slow government action. But as recent years have shown, House and Senate rules not mentioned in the Constitution can bring fiscal actions to a near-impasse. Think “vetoes,” “cloture,” Senate “holds” or the “Hastert rule.” These are not even established by legislation.
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All this leads to confused politics and the feeling we’ve been repeatedly sold out by the politicians we’ve voted for.
A primer on fiscal terms and processes is a good start.
Our Constitution specifies that before any money can be spent, Congress must “authorize” the thing or program needing funding, whether an aircraft carrier or a food program for low-income people. An authorization bill that passes both houses of Congress and is signed by the president simply says that the government has decided to do something.
That is only the first step, however. Congress must also “appropriate” specific sums to be spent building the hardware or infrastructure or implementing the program. Just because something is authorized does not mean Congress will appropriate money to carry it out.
For example, in the 1940s and 1950s, we built dams on the Missouri River in the Dakotas and Montana to control flooding in states to the south. Doing so inundated prime farmland. A deal was struck with North Dakota that federal money would fund irrigation of a million acres of land in compensation for 300,000 acres flooded out. Congress authorized this Garrison Diversion Project in 1965. But it never appropriated more than token amounts for planning. The project still has not died completely, but the failure to actually appropriate the amounts necessary for construction turned it into a historical footnote.
This authorization-appropriation nexus is the source of a silly but persistent misunderstanding in policy debates. Authorizations for aircraft carriers and foreign aid are one-of-a-kind deals. Every time new ships are built, there must be a new authorization.
But some programs, such as Social Security, are meant to be permanent. The legislation establishing the program creates an ongoing authorization that does not have to be renewed. And the legislation is such that it commits future Congresses to appropriate whatever sums are necessary to pay benefits according to criteria established in the act.
The only way to reduce this would be to pass legislation amending or terminating the program itself. The program is “mandatory” and is an “entitlement.” Many now think this last term is somehow pejorative, but all it ever meant was the administrative detail that the programs and spending for them were ongoing with no need for annual action.
“Authorization” and “appropriation” are two steps required by our Constitution. The third step, actual “outlays” of money from the Treasury, is merely administrative. They occur when conditions are met so that a Treasury payment occurs.
One bill may authorize the building of a new aircraft carrier. But specific amounts for this multiyear project are appropriated in separate annual spending bills. The actual outlays then trail these appropriations and are spread out over several years as progress on design and construction occurs.
Under the Constitution, the only thing the president is required to do is sign or veto these bills. There is no mention of the executive preparing a budget or even requesting spending. He cannot spend if Congress does not authorize and appropriate. Moreover, once these bills are signed, the president cannot unilaterally refuse to spend the money. Presidents had some power to do this through impoundment, but when Richard Nixon tried this more than 40 years ago, Congress passed a bill prohibiting it and was supported by the Supreme Court. The court also struck down a line-item veto in 1998, two years after it was enacted.
Congress has not passed a “new” budget by writing new appropriations from scratch for many years now. It continues to authorize and appropriate all dollars spent, however. The legislation is simply called a “continuing resolution” since it supposedly just “continues” the spending of the current fiscal year into the next. There are tweaks, however, and all sorts of games with “supplemental” appropriations. Congress still has basic control over the purse, but millions are now convinced that the president is unconstitutionally spending money on his own whim.
While the Constitution does not mention it, the document assumes that opposing forces in Congress will have to compromise to pass authorization and appropriations bills with a majority vote. And Congress must explicitly or implicitly negotiate with the president to pass a bill he is willing to sign. There is no way, however, to guarantee good-faith bargaining.
Yet programs are authorized, appropriations are made and outlays occur. Social Security payments land in people’s checking accounts. We buy new Hellfire missiles.
It’s just that the process has become politically and economically twisted.
St. Paul economist and writer Edward Lotterman can be reached at firstname.lastname@example.org.