From Wikipedia, the free encyclopedia

The power of the purse is the ability of one group to manipulate and 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 positively (e.g. awarding extra funding to programs that reach certain benchmarks) or 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 budgets and taxation.

The power of the purse's earliest examples in a modern sense is by the English Parliament, which was given the exclusive power to levy taxes and thus could control the nation's cash flow. Through this power, Parliament slowly subverted the powers of the English monarchy and limited the powers of the king. For example, King Charles II was limited in his powers to engage in various war efforts by a refusal by Parliament to levy further taxes and his inability to secure loans from foreign nations.

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

The power of the purse was famously subverted during the Iran-Contra scandal in the 1980s. Congress denied further aid to the Contras in Nicaragua. Unwilling to accept the will of Congress, members of the Reagan Administration solicited private donations, 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.

Presently, budget limitations and using the power of the purse form 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 imposes a timeline on the presence of American combat troops in Iraq.

• Taxing and Spending Clause