wit and ying Taxing and Spending Bills Reader's Guide Key Terms tex, closed rule, appropriation, authorization bill, entitiement Find Out 1 What authority does Congress have over how the national government will raise and spend money? iat is the procedure whereby Congress pro- vides money to the executive agencies and departments? Understanding Concepts Public Policy When Congress votes to begin a government program, what process is followed to fund that program? “bedi £1975 fo call public attention to spending, The first went to the oday, running the national government costs more than $1.2 trillion a year. The Constitution gives Congress the authori- ty to decide where this money will come from and in what ways it will be spent. Passing laws to raise and spend money for the national government is one of the most important jobs of Congress. The government could not operate successfully without money to carry out its many programs and services, Making Decisions About Taxes Bq The national government gets most of the money it needs to keep the government functioning from taxes. Taxes are money that peo- ple and businesses pay ta support the government, ‘The Constitution states: 44 The Congress shall have the power to lay and collect taxes, duties, imposts and ex- cises, to pay the debts and provide for the common defense and general welfare of the United States... 99 —Artide I, Section 8 The House’s Power Over Revenue Bills ‘The Constitution gives the House of Representa- tives the exclusive power to start all revenue measures. Almostall important work on tax laws ‘occurs in the Hlouse Ways and Means Commit- tee. The Ways end Means Committee decides whether to go along with presidential requests for tax cuts or increases. It also makes the numerous rules and regulations that determine who will pay how much tax. Some of these rulings are very simple while others are more complex. This committee, for example, influ- ences how much of a tax deduction parents are allowed on their income tax for each child living at home. It also decides what kind of tax benefit businesses can claim for building new factories (CHAPTER 7: CONGRESS ATWORK 189ay! ae Cheplr 7 fr a te aa, ‘Critical Thinking | Most of the Peers Ul peeameed ‘han the United States. What can you ee erate eta catalaee eer al aaa 490. CHAPTER 7: CONGRESS AT WORK For many years the committe’ tax bills wete achat on the House floor under a closed ste. plicated to be easy understood outside ‘the com- P iitee, Leaders also warned that representatives mite me under great pressore from speci ity coe fax bills could be revised from the loo terest Mendments they argued might upset che Foor a balanced legislation recommended Dy the committe. Tn the 1970s House members revolted against the Ways and Means Committee, In 1973 the Hibace allowed members to amend a tax btn cro or In 1974 it forced Chairperson Wilbr sects resgo fllowing.a personal scandal. Critics Gharged that tax ils soon became 2 collection of ceendments written to please special interests athe Senate no closed rule exists, and tax bills often do become collections of amendmen! ‘any tax bil are amended s0 often onthe Sonate er daey become “Christmas tee” bills smi to appropriations bills that include say riders The Senate’s Role in Tax ton bills startin the House. Article [, Section Tot the Constitution, however, says, “The Senate DEY propose... amendments...” Because ‘of this pro- aocee te Senate often tres to change tax bls the Vioues has passed, As 2 result, many people Vie the Senate as the place where interest groups ©% get House tax provisions they do not Tike changed or eliminated. “The Senate Committee on Finance has prin’: ry responsibilty for dealing with tax matte aosprase Ways and Means Committe, the Se He ece Committe is powerfal Although the SS rie Finance Committee has subcommittees the fall committze does most of the work on taxbills we aunult, the chairperson of the Finance Com ‘mittee is an extremely important igure none at eerie arenes nee Ste Contin, pages 774-799:Appropriating Money In addition to passing tax laws to raise 4 money, Congress has another important, power over government spending. The power of eppropriation, or approval of government spend- ing, is a congressional responsibility. In Article 1, Section 9, the Constitution states, "No moncy shall bbe drawn from the Treasury, but in consequence of [except by] appropriations made by law.” Thus, Congress must pass laws to appropriate money for the federal government. Congress's approval is needed before departments and agencies of the ex- ecutive branch such as the Department of Defense of the Federal Communications Commission can actually spend money. How Congress Appropriates Money Congress follows a two-step procedure in appro- priating money—an authorization bill and an ap- propriations bill. Suppose the president signs « bill to build xecreational facilities in the inner cities. {LD See to foning otnoed mtr ne Rofrene Hanboke 4 The Constution, pages 774-799. Congressional Funding An atst, commissioned by the Works Progress Administration, epicted California's mut ethnic workforce. In the mig. 4930s, President Frenklin D. oasevelt convinced Congress to appropriate funds to a relief program for the unemployed. WPA artists cteated hundreds of pleces documenting the times. Way must agency heads testify before Con- ress to receive funding? Former head of the Na- tional Endowment for the Arts, Jane Alexander, tes» fifies before the Senate Labor Committee, ‘This first step in the legislation is an authorization bill. An authorization bill sets up a federal pro- ‘gram and specifies how much money may be ap- propriated for thet program. For example, one provision of this law limits the amount of money that can be spent on the program to $30 million a year. The recreation bill also specifies that the De- partment of Housing and Urban Development (HUD) will administer the program. HUD, how- ever, does not yet actually have any money to carry ut the program. ‘The second step in the appropriations proce- dure comes when HUD requests that Congress provide the $30 million, This kind of bill is an appropriations bill and provides the money needed to carry out the many laws Congress has passed. HUD's request for the $30 million for the recreational facilities will be only one small item in the multibillion-dollar budget HUD vwill send to Congress for that year. HUD's budget, in turn, will be part of the president's total annual budget for the executive branch. Each year the president presents his budget to Congress. There the appropriations committees create their own, appropriations bills. Congress might decide togrant HUD only $15 million to carry out the Stelling program. Next yeas, HUD would have peal for another appropriation to continue the program. The Appropriations Committees The House and Senate appropriations committees and their subcommittees handle appropriations bills Both the House and Senate eppropriations com- mittees have 13 subcommittees that deal with the same policy areas in each house. Thus, the same appropriations subcommittees in the House of Representa- tives and the Senate would review the HUD budget, indud- ing its recreational fa- cility program és presented. ‘Bvery year heads of departments and agencies and program director testify before the House end Senate appropriations subcommittees labour their budgets. During the budget hearings, these officials explain why they need the money they have requested. Each year agency officials must return to Congress to request the money they need to operateiin the coming yeat.In this way law- ‘makers have a chance to become famiiar with the federal agencies and their programs. Checking for Understanding 1. Main Idea Using @ graphic organizer tke the one to the right, show the 2 two-step procedure thet 4, Congress follows wren appropriating money. 2. Define tex, closed rule, appropriation, authoriza, tion bill, entitlement. 3, Mdentify Ways and Means Committee, HUD. ‘4, What control does the House Ways and Means Committee exert over presidential requests for changes in tax laws? ‘A Social Security card “Appropriations subcommittees often develop dose relationships with certain agencies and pro- jects that they tend to favor in ‘appropriating funds. Heo jdition, powerful interest groups try hard to Pquence Congress and the appropriations sub vomuittees to give these agencies all the money they request. Uncontrollable Expenditures The House and Senate appropriations committees, howeves do not have a voice in all ‘the current spending of the federal government. By previous legislation, some of which estab- lished many long-stand- ing programs, about 70 percent of the money the federal government spends cach year is al- ready committed to cer- tain uses and, therefore, not controlled by these committees. These expenditures are termed Uuncontrollables because the government is legally committed to spend this money. Such required spending includes Social Security pay. weante, interest on the national debt, and federal ‘contracts that already are in force. Some of these expenditures are known as entitlements because ‘hey are social programs that continue from one year to the next. sana Critical Thinking 5, Synthesizing Information Do you think Congress should have the poner both to raise and to spend money? Support your answer. Policy Using the library or the Internets research the major categories of revenue and 2 penditure in the current fedoral budget. Find out Minat amounts of money the government pians to raise and spend in each category. Create an ilustrated report or series of graphs and charts: