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Section 2: The Expressed Powers of Money and Commerce.

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Presentation on theme: "Section 2: The Expressed Powers of Money and Commerce."— Presentation transcript:

1 Section 2: The Expressed Powers of Money and Commerce

2 Objectives: * Summarize the key points to Congress’s power to tax. * Describe how Congress uses its power to borrow money. * Analyze the importance of Congress’s commerce power. * Identify the reasons that the Framers gave Congress the power to issue currency. * Explain how the bankruptcy power works

3 * Most all of the expressed powers of Congress are found in Article 1 Section 8 of the US Constitution. * There are 18 separate clauses and 27 different powers that are explicitly given to Congress. * The grants of power are brief, but their meaning is found in the ways that Congress has exercised their power and the way that the Supreme Court has ruled about their power.

4 * The Commerce Clause – “to regulate Commerce with foreign nations and among the several States, and with the Indian tribes” * What does this mean???? * Does Commerce mean people crossing State lines and entering or leaving the country? * What about business practices? Working Conditions? Radio and Television broadcasts? Can Congress ban shipments of certain goods from one State to another?

5 * Congress and the Supreme Court have defined and are still defining what powers Congress has in this regard. Power to Tax * The Constitution gives Congress the power to “lay and collect taxes, duties, imports, and excises, to pay the debt and provide for the common defense and general welfare of the US” * The Articles of Confederation did not give the national government the power to tax.

6 * The government had no way to get money to run the country, led to many problems. * Most States paid nothing to the national government. *The purpose of Taxes > The Federal Government takes in some $ 2 trillion+ each year. > Most of that money (about 90%) comes from taxes levied by Congress.

7 * a tax is a charge levied by government on persons or property to meet public needs. * The protective tariff is another type of tax. * It is the oldest example of a tax * Its goal is to “protect” domestic industries against foreign competition by increasing the cost of foreign goods. * It does not take in a lot of money. * Some taxes are levied to protect the public’ health and safety. * Gov’t regulation of narcotics (for example)

8 *Limits on the Taxing Power < Congress’s power to tax is not unlimited. < It must be used in accord with all other provisions of the Constitution. < Congress cannot lay a tax on church services, because it would violate the 1 st Amendment protection of the exercise of religion. < It could not lay a poll tax as a condition to vote in a general election.

9 * The Explicit limitations on taxing for Congress 1. Congress may tax only for public purposes, not for private benefits, to pay for the debts of the USA 2. Congress may not tax exports. Goods brought into the US can be taxes, not goods leaving the US. 3. Direct taxes must be apportioned among the States, according to their population.

10 - A direct tax is paid by the person on whom it is imposed, a tax on real estate. - It is a tax that the individual cannot avoid. - Income tax is a direct tax. 4. All Duties, imports, and excises must be uniform throughout the US - indirect taxes must be levied at the same rate in all parts of the country.

11 - Tax on cigarettes or alcohol is paid by the produce when they make the product and then paid by the consumer when they purchase it. Borrowing Power * Congress has the power to borrow money on the credit of the United States. * There are no constitutional limits on the amount of money that Congress may borrow or for what purposes.

12 * The Federal government used to practice what is called deficit financing – that is they spent more than they took in each year and borrowed the rest to make up the difference. * The government relied on deficit financing to deal with the Depression of the 1930s and World War II. * Our public debt has rose year after year up to the present day.

13 * Today (March 01 st, 2013), the debt of the US is $ 16,640,135,316,625.33 (16 Trillion+) * At the end of 2008, our debt was $ 10 trillion * This is an increase of 60% contributed to the current administration of government. * Each American would have to donate $ 37,467 * Public debt is all of the money borrowed by the government over the years and not yet repaid, plus the accumulated interest on that money. * US has only ONCE paid of their debt – 1835

14 * The Balanced Budget Act of 1997, passed by Congress and President Clinton agreed to abandon deficit financing and aim for a balanced budget by the year 2002. * Our government was able to balance the budget by 1998, but the economy was really good and now we have returned to practices of old.

15 The Commerce Power * Commerce Power – the power of Congress to regulate interstate and foreign trade – is as vital to the welfare of the nation as is the taxing power. * The weak power of the national government under the Articles of Confederation made it impossible get anything done. * The Critical Period of the 1780s, made it impossible for the national government to control the States and run the country.

16 * When the Framers wrote the Constitution, it gave Congress the power to “regulate Commerce with foreign nations, and among the several States, with the Indian Tribes”. * The Commerce Clause proved to be more responsible for the building of a strong and United States out of a weak confederation than any other provision in the Constitution.

17 Gibbons v. Ogden, 1824  The first case involving the Commerce Clause to reach the Supreme Court.  The case arose out of a clash over the regulation of steamboats by the State of New York, on the one hand, and the Federal Government, on the other hand.  In 1807, Robert Fulton’s steamboat, the Clermont, had made its first successful run up the Hudson River, from New York City to Albany, NY.  Fulton had a permit from the State of New York  Aaron Ogden was given a permit to run between New York City and New Jersey.

18 * Thomas Gibbons had a operating license from the Federal Government, began carrying passengers that competed with Ogden. * Gibbons sued Ogden in New York State Courts that his federal permit should have precedence over a State permit. * He lost and then sued at the Supreme Court. * The Court ruled in favor of Gibbons and made the Commerce Clause a broad term interpretation.

19 This decision has given Congress more power to made rules regarding the Commerce Clause. Limits on the Commerce Clause > The commerce power by the Congress is not unlimited. > It must be exercised in accordance with all other provisions.

20 * There are four explicit limits placed on Congress 1) they cannot tax exports 2) they cannot favor the ports of one State over those of any other in regulation of trade. 3) they cannot require that “vessels bound to or from one State, be obligated to enter, clear, or pay duties in another. 4) they could not interfere with the slave trade, until the year 1808.

21 The Currency Power * Congress has the power to coin money and regulate the value of it. * The government used sound backing of their currency in the early years of the country. * At first each of the 13 States issued their own currency. * Led to many problems at the time * The Constitution gave Congress the power to issue currency.

22 * The US has used Gold, Silver, and other metals to back their currency. * The US Government has the power to print legal tender – any kind of money that a creditor must by law accept in payment for debts. * First national currency were known as “Greenbacks” – color of ink used to print them

23 The Bankruptcy Power * Congress has the power to establish uniform laws on the subject of bankruptcy. * Bankruptcy is the legal proceedings in which the assets are distributed among those whom a debt is owed. * The proceedings frees the bankrupt person from legal responsibility for debts acquired before bankruptcy. * States and National Government have concurrent powers to regulate bankruptcy.


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