Power of the purse

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{{Short description|Capacity to control groups based on ownership of fund}}
{{More citations needed}}
The '''power of the purse''' is the ability of one group to control the actions of another group by withholding funding, or putting stipulations on the use of funds. The power of the purse can be used [[positive reinforcement|positively]] (e.g. awarding extra funding to programs that reach certain benchmarks) or [[negative punishment|negatively]] (e.g. removing funding for a department or program, effectively eliminating it). The power of the purse is most often utilized by forces within a government that do not have direct [[executive power]], but have control over [[budget]]s and [[taxation]].

== Canada ==
{{Further|fiscal federalism}}
In colonial Canada, the fight for "[[responsible government]]" in the 1840s centered on question of whether elected parliaments or appointed governors would have control over the purse strings, mirroring earlier fights between [[Parliament of Great Britain|Parliament]] and [[the Crown]] in [[United Kingdom|Britain]].

After confederation, the phrase "power of the purse" took on a particular meaning. It now primarily refers to the federal government's superior tax-raising abilities compared to the provinces, and the consequent ability of the federal government to compel provincial governments to adopt certain policies in exchange for [[Canadian transfer payments|transfer payments]]. Most famously, the [[Canada Health Act]] sets rules that provinces must follow to receive health transfers (the largest of all such transfers). Opponents of this arrangement refer to this situation as the "[[fiscal imbalance in Canada|fiscal imbalance]]", while others argue for the federal government's role in setting minimum standards for [[social programs in Canada]].

==United Kingdom==
The power of the purse's earliest examples in a modern sense occurred in the [[English Parliament]], which gained the exclusive power to authorise taxes and thus could control the nation's cash flow. Through this power, Parliament slowly subverted the executive strength of the crown; [[Charles II of England|King Charles II]] was limited in his powers to engage in various war efforts by a refusal by Parliament to authorise further taxes and by his inability to secure loans from foreign nations, making him much less powerful.

In recent years as a result of [[Devolution in the United Kingdom|devolution]], funding for devolved issues to the [[Scottish Parliament]], [[Welsh Parliament]] and the [[Northern Ireland Assembly]] has been determined through the [[Barnett formula|Barnett Formula]]. This formula determines the overall budget of the devolved parliaments for devolved issues proportionally relative to spending on those issues in England. As a result, while responsibility for funding of devolved matters rests with the devolved bodies themselves, they in effect must enact policies of a broadly similar cost to those decided by the [[Parliament of the United Kingdom|UK parliament]] for England and maintain that broad proportionality in order to ensure the long-term financial viability of such policies.

==United States==
In the federal government of the United States, the power of the purse is vested in the [[United States Congress|Congress]] as laid down in the [[Constitution of the United States]], Article I, Section 9, Clause 7 (the [[Appropriations bill (United States)|Appropriations Clause]]) and Article I, Section 8, Clause 1 (the [[Taxing and Spending Clause]]).

The power of the purse plays a critical role in the [[separation of powers|relationship]] of the [[United States Congress]] and the [[President of the United States]], and has been the main historic tool by which Congress has limited executive power. One of the most prominent examples is the [[Foreign Assistance Act of 1974]], which eliminated all military funding for the government of [[South Vietnam]] and thereby ended the [[Vietnam War]]. Other recent examples include limitations on military funding placed on [[Ronald Reagan]] by Congress, which led to the withdrawal of [[United States Marines]] from [[Lebanon]].

The power of the purse in military affairs was famously subverted during the [[Iran-Contra scandal]] in the 1980s.<ref>{{cite news|title=Cutting Off Nicaragua's Contras|url=http://www.time.com/time/magazine/article/0,9171,950076,00.html|archive-url=https://web.archive.org/web/20090820032527/http://www.time.com/time/magazine/article/0,9171,950076,00.html|url-status=dead|archive-date=August 20, 2009|author=Barrett Seaman|author2=Alessandra Stanley |magazine=TIME|access-date=2011-03-03}}</ref> Congress denied further aid to the [[Contras]] in [[Nicaragua]]. Unwilling to accept the will of Congress, members of the [[Reagan administration]] solicited private [[donation]]s, set up elaborate corporate schemes and brokered illegal arms deals with Iran in order to generate unofficial funds that could not be regulated by Congress.

More recently, budget limitations and using the power of the purse formed a controversial part of discussion regarding Congressional opposition to the [[Iraq War]]. On March 23, 2007, the [[U.S. House of Representatives]] passed a supplemental war budget that imposed a timeline on the presence of American combat troops in Iraq, but the legislation was not passed.

The power of the purse has also been used to compel the [[U.S. state]]s to pass laws, in cases where Congress does not have the desire or [[U.S. constitution|constitutional]] power to make it a federal matter. The most well-known example of this is regarding the [[drinking age]], where Congress passed a law to withhold 10% of federal funds for highways in any state that did not raise the age to 21. The law was upheld by the [[U.S. Supreme Court]] in the ''[[South Dakota v. Dole]]'' case. Congress was not allowed to change the drinking age directly because the [[Twenty-first Amendment to the United States Constitution|21st Amendment]] (which ended [[Prohibition in the U.S.]]) gave control of alcohol to the states. In 2009, Congress considered similar legislation regarding [[texting while driving]].

This power was curtailed somewhat in a case regarding the [[Affordable Care Act]], in which the Supreme Court ruled in June 2012 that the law's withholding of all existing [[Medicaid]] funding for states that failed or refused to expand their Medicaid programs to cover the uninsured [[poverty|poor]] was "unduly [[coercive]]", despite the fact that the federal government would pay the entirety of the states' expansion for the first years, and 90% thereafter. It was left unclear what percentage would be considered acceptable.

===Other uses===
In the US House or Senate, the chairperson of a [[legislative committee]] may refuse to give funding to a senator or other delegate or representative, or deny his or her appropriations bill or amendment a vote, because he or she refused to support a bill which the chairperson wanted (a [[tit-for-tat]] retaliation). While typically applied to "[[pork barrel]]" spending for [[special interest]]s, it may also block funding for genuine needs of a [[constituency]] or the general [[public]].

The administration or [[student government]] at a college or [[university]] may revoke some or even all funding for a [[student newspaper]] or [[student radio]] station, because it has printed or aired an [[editorial]] or a [[news]] article or [[segment (broadcasting)|segment]] critical of it. This is also an example of [[censorship]].

==See also==
*[[Loss of supply]]
*[[Handbag|Purse]]
*[[Taxing and Spending Clause]]
*[[Tax choice]]
*[[Appropriation bill]]

==References==
{{Reflist}}

[[Category:Government finances]]

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Power of the purse