1. Chapter 11: Powers of Congress Section 1

2. Objectives Describe the three types of powers delegated to Congress.
Analyze the importance of the commerce power.
Summarize key points relating to the taxing power.
Explain how the bankruptcy and borrowing powers work.
Explain why the Framers gave Congress the power to issue currency.

3. What factors limit the powers of Congress?
Delegated Powers – Congress can only do what the Constitution gives it power to do.
It cannot do what is not in the Constitution.
Federalism – Those powers not in the Constitution are granted to the states or to the people.

4. Key Terms
commerce power: the power of Congress to regulate interstate and foreign trade
tax: a charge levied by government on persons or property to raise money to meet public needs
public debt: all of the money borrowed by the Federal Government over the years and not yet repaid
deficit financing: the act of spending more than is taken in during a year and borrowing money to make up the difference
bankruptcy: the distribution of a bankrupt individual or company’s assets among those to whom a debt is owed
legal tender: any kind of money that must be accepted by law in payment for debts

5. Introduction
What powers over money and commerce does the Constitution give to Congress and what limits does it put on these powers?
The commerce power gives Congress the authority to regulate interstate and foreign trade, but not trade within a state.
Congress has the power to tax income and imported goods, but not exports.
Congress can set bankruptcy laws.
Congress can coin and print money.

6. Delegated Powers
There are three types of powers granted by the Constitution.
Article I gives 27 specific powers to Congress.
The Constitution also denies many powers to Congress, banning some and reserving others to the states.

7. Why a Commerce Clause?
The weak Congress created under the Articles of Confederation had no power to regulate interstate trade and little authority over foreign commerce.
The circumstances led the Framers to write the Commerce Clause into the Constitution.
The Commerce Clause allows for the free
trade of goods throughout the several
states, leading to the greatest free market
in the world.

8. The Commerce Power
The federal government gains great power from the broad interpretation of the commerce power.
However, there are limits to the commerce power.
Congress cannot tax exports,
favor the ports of one state over another,
require vessels to pay duties when traveling from one state to another.
The commerce power is even used to ban discrimination in public businesses.

9. Gibbons v. Ogden
Ogden had a monopoly, from the State of New York, to steam between NYC and N.J.
Gibbons had a license from the Federal Gov’t to coast between NYC and N.J.
Ogden sued Gibbons in NY courts to cease business.
Ogden wins, of course.
Gibbons appealed to Supreme Court, and wins based on Commerce Clause of Constitution and Supremacy Clause.
Checkpoint Answer: The Court interpreted “commerce” to include all commercial exchanges between nations and parts of nations. 9

10. Gibbons v. Ogden, cont’d
The Court interpreted “commerce” to include all commercial exchanges between nations and parts of nations, not just the buying and selling of goods.
This broad interpretation of commerce brought an extension of federal power into many areas of American life, beyond what the framers intended.
The Commerce Power is the basis for the Civil Rights Act of 1964
It prohibits discrimination in public accomodations on grounds of race, color, religion or national origin.

11. Americans with Disabilities Act
Based on the commerce power, Congress passed the Americans with Disabilities Act in It prohibits against discrimination against people with disabilities in areas such as employment, public accommodation, public transportation, and access to commercial buildings.

12. Limits on Commerce Power
U.S. v. Lopez
Struck down Gun-Free School Zone Act as unconstitutional.
No connection between guns at school and commerce.

13. Four explicit limits on the use of the Commerce Clause
1. Cannot tax exports
2. Cannot favor ports of one state over others in the regulation of trade
3. Cannot require vessels moving between states to clear customs or pay duties
4. Cannot interfere with the slave trade until after 1808

14. Commerce Quiz
1. Choose one of the following, briefly describe it, and explain how it relates to the interstate commerce clause:
Americans with Disabilities Act,
Civil Rights Act of 1964,
Lopez v. U.S.
2. Some people say the use of the interstate commerce clause by Congress has led to the protection of individual rights. Others say it has led to the taking away of rights. What do you think? Include an example of Congress using the commerce clause in your response.

15. The Power to Tax
Most government taxes on people or property are levied to raise money for public needs.
In what way does this cartoon show a negative attitude toward taxes?
Interpreting Cartoons Question Answer: The cartoon reinforces the idea that the government is taking money away from the taxpayer and keeping it for itself, rather than the idea that the government is taking the money from the taxpayer and then spending it to provide services that benefit the taxpayer and other citizens.

16. Taxation-purposes
To raise revenue to meet public needs.
To protect domestic industries from foreign competition.
Tariffs
To protect public health and safety.
Licenses and regulations.
Name three purposes for which the government collects taxes.
Chart Question answer: The categories in yellow represent new spending that was not part of the federal budget in 1900, and they deal with education and research.
Answer: To protect domestic industries, to protect public health and safety, and to raise money for public projects and services.

17. Limits on Taxation
Congress can tax only for public needs, not for the benefit of private businesses or individuals.
Congress cannot tax exports.
Direct taxes, those paid directly by the person paying the tax, except for income taxes, must be divided among the states in proportion to their populations.
Example: Property taxes, livestock, wages

18. Limits on Taxation, cont.
An indirect tax is one in which one person pays the tax but then passes along the cost of the tax to others. This is done by charging them higher prices for the good or service that is taxed.
All indirect taxes levied by the federal government must be uniform, or the same, across the United States.

19. Borrowing
There are no constitutional limits on how much money Congress can borrow or for what purposes.
The Treasury borrows money by issuing securities like T-bills and bonds that it promises to repay later, with interest.
Congress routinely spends more than it takes in, borrowing money to make up the difference. This deficit spending increases the public debt.
Deficit- spending more than one collects in revenue in a year.
Debt – accumulated deficits left unpaid carried over from year to year.

20. Bankruptcy
Declaring bankruptcy frees a person or company (debtor) from debts they cannot pay back to their creditors.
Filing Chapter 7: A debtor gives up property to pay creditors.
Filing Chapter 11: A business debtor works out a long-term plan to repay creditors, little or no property forfeited.
Filing Chapter 13: An individual form of Chapter 11.
The creditors and debtor meet to agree how much each creditor will be repaid.
Most bankruptcies are handled in federal courts. 20

21. Currency
Congress now has the sole power to create legal currency in the United States. This creates a more stable money supply.
Congress did not create legal paper money until 1862.
This power to print money was challenged in the courts but finally upheld by the Supreme Court in 1871 and 1884.