1. The Powers Of Congress: Money and Commerce Powers
United States Government
Chapter 11, Sections 1 & 2

2. Section 1: The Powers of Congress (This is a Review of Chapter 4)!!
ANYTHING Congress has the power to do comes from Article I of the Constitution.
Article I, Section 8, clauses … Give Powers to Congress.

3. Terminology Review
Expressed Powers (listed in the Constitution in clauses 1–17 )
Implied Powers (necessary & proper clause, aka – “Elastic Clause” clause 18)
Inherent Powers (immigration law)
Strict Constructionists – against implied powers, for state supremacy
Liberal (or Loose) Constructionists – for implied powers, and national supremacy
Consensus – compromise! (fiscal cliff?)

4. Section 2: Where do the Money & Commerce Powers come from?
Money Powers:
Art. I, Sec. 8, Cl. 1 (power to Tax)
Art. I, Sec. 8, Cl. 2 (power to borrow money)
Art. I, Sec. 8, Cl. 4 (Bankruptcy power)
Art. I, Sec. 8, Cl. 5 (Currency power)
Commerce Powers:
Art. I, Sec. 8, Cl. 3
Interstate commerce – trade between states
Foreign commerce – trade with foreign countries

5. Where does the Federal Government get most of its money?
The sale of public lands under Articles of Confederation
Taxes prescribed in Art. I, Sec. 8, Cl. 1
Income tax was prescribed in the
16th Amendment (1913)

6. Taxation (at the Federal Level)
Taxation is limited. Federal taxation MUST be approved by Congress
Taxation can NOT apply to EXPORTS!
Commerce Compromise of the Constitutional Convention
Exports are good for a nation’s economy!!

7. Direct vs. Indirect Taxes
Direct Tax: Paid by the person it is being levied against (e.g., Income Tax)
Indirect Tax: Paid by the person being taxed, but they pass along those fees to others
Tariff: Paid on imports from other countries
Protective – designed to help American businesses by increasing the cost of foreign goods (HIGH)
Revenue – designed to raise money for the Federal government (LOW)

8. Borrowing Power
Even though Governmental bodies at all levels can tax, the Federal Government is the only one allowed to run a deficit.
Congress can borrow money to cover its deficit
The federal government sells/issue bonds in order to borrow money, such as:
Treasury notes
Treasury bonds
Series EE bonds

9. Public Debt (Deficit)
All of the money borrowed by the Federal Government over the years.
The Debt Clock:

10. The Commerce Power Article I, Sec. 8, Cl. 3.
That power that allows the federal government to regulate trade with foreign nations and trade between the states.
However, Congress cannot:
Tax Exports (Art. 1, Sec. 9, Cl. 5)
Favor the ports of one State over another (Art. 1, Sec. 9, Cl. 6)
Permit the taxation of vessels as they cross through various states to get to their destination. (Art. 1, Sec. 9, Cl. 6)
Interfere with the slave trade until 1808 (Art. 1, Sec. 9, Cl 1.) – later became obsolete

11. Famous Commerce Clause Case
Gibbons vs. Ogden (1824) – Supreme Court affirmed the federal government’s ultimate authority to regulate interstate trade, and used the “supremacy clause” to invalidate regulations made by New York & New Jersey over riverboat traffic on the Hudson River.

12. The Currency Power
Art. 1, Sec. 8, Cl. 5 – Congress has the sole power to coin money and regulate its value
States cannot create their own currency
Legal Tender must be accepted for payment of a debt

13. The Bankruptcy Power
Being bankrupt is being unable to pay your debts in full.
Bankruptcy is the legal proceedings by which a bankrupt person’s assets are distributed among those whom are owed money
Bankruptcy law is the same in all 50 states and laws are made by Congress based on Art. 1, Sec. 8, Cl. 4
These cases are handled in federal court,
The closest bankruptcy court is in
downtown Cleveland