The power of the purse is Congress’s constitutional authority to control how the federal government raises, borrows, and spends money. No federal dollar can be collected from taxpayers or paid out of the Treasury unless Congress has passed a law authorizing it. In fiscal year 2026, that authority reaches an estimated $7.4 trillion in federal outlays.1Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
Where the Power Comes From
Three provisions in Article I of the Constitution give Congress this authority. Read together, they cover the full financial cycle: raising revenue, spending it, and borrowing when revenue falls short.
The Appropriations Clause
Article I, Section 9, Clause 7 is the backbone. It says no money can be drawn from the Treasury unless Congress has passed a law authorizing the expenditure. The same clause requires the government to publish a regular accounting of all public money received and spent.2Cornell Law Institute. Article I, Section 9, Clause 7 – Appropriations Clause
The Taxing and Spending Clause
Article I, Section 8, Clause 1 gives Congress the power to levy taxes, duties, and other charges to pay the nation’s debts and provide for the national defense and general welfare.3Legal Information Institute. Overview of Spending Clause Without it, the government would have no means to raise the revenue it appropriates.
The Borrowing Power
Article I, Section 8, Clause 2 lets Congress borrow money on the credit of the United States. Once Congress borrows, the obligation to repay is binding and the terms cannot be changed after the fact.4Congress.gov. ArtI.S8.C2.1 Borrowing Power of Congress This is the constitutional root of the federal debt limit.
How Congress Actually Spends Money
Funding a federal program takes two separate laws, not one. First an authorization creates or continues the program and sets guidelines for how much it should receive. Then a separate appropriations bill provides the actual budget authority for agencies to spend. An authorization by itself does not release any money, and Congress sometimes appropriates funds for programs whose authorizations have expired, a practice known as “unauthorized appropriations.”5United States Senate Committee on Appropriations. Budget Process
Mandatory Versus Discretionary Spending
Not all federal spending runs through the annual appropriations process. In fiscal year 2026, mandatory spending accounts for about 61 percent of federal outlays, discretionary spending roughly 26 percent, and interest on the national debt the remainder.1Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
Mandatory spending flows from permanent laws that entitle eligible people to benefits. Social Security and Medicare are the biggest examples. Congress does not set benefit amounts each year; the authorizing statute itself directs payment.6Social Security Administration. Budget Estimates Changing it requires amending the underlying law.
Discretionary spending is what Congress debates and votes on every year through appropriations bills: defense, education, transportation, and most agency operations. Twelve separate appropriations bills fund this portion of government each fiscal year. The process starts when the President submits a budget request, typically on the first Monday in February, though the request is only a proposal and Congress can rewrite it entirely.7House Budget Committee. Time Table of the Budget Process Congress then drafts a budget resolution to set overall spending targets. The resolution is not a law and never goes to the President for signature; it is an internal agreement between the House and Senate.8Center For Children and Families (CCF) of the Georgetown University McCourt School of Public Policy. The Budget Resolution and Reconciliation Process Explained
How Congress Raises Money
Revenue bills follow their own constitutional rule. Article I, Section 7, Clause 1, the Origination Clause, requires that all bills raising revenue start in the House of Representatives. The Senate can amend them, but the House gets the first word on taxes.9Cornell Law Institute. Origination Clause
The House Ways and Means Committee is the chief tax-writing body and the oldest committee in the House, with jurisdiction over taxes, tariffs, and other revenue measures.10United States Committee on Ways and Means. About The Committee On the Senate side, the Finance Committee handles revenue legislation along with health programs under the Social Security Act, trade agreements, and the national debt.11The United States Senate Committee on Finance. Jurisdiction
Spending Hidden in the Tax Code
Congress also spends money without appropriating a dime, through the tax code itself. Tax expenditures are special deductions, credits, exemptions, or preferential rates that the Treasury Department defines as revenue losses caused by tax provisions that would otherwise function like direct spending programs.12U.S. Department of the Treasury. Tax Expenditures The mortgage interest deduction and the earned income tax credit are familiar examples. They shape federal finances but never appear in an appropriations bill.
The Debt Limit
The debt limit is the maximum amount the federal government is authorized to borrow to meet obligations Congress has already approved. It covers Social Security and Medicare benefits, military salaries, interest on existing debt, tax refunds, and other legal commitments. Raising or suspending the debt limit does not authorize new spending. It allows the Treasury to pay for commitments Congress already made.13U.S. Department of the Treasury. Debt Limit
When the limit is reached and Congress has not acted, the Treasury can use what it calls “extraordinary measures” to keep paying the bills temporarily. These include suspending investments in certain federal retirement funds. By law, those funds must be made whole once the limit is raised or suspended.14U.S. Department of the Treasury. Secretary of the Treasury Janet L. Yellen Sends Letter to Congressional Leadership on the Debt Limit If those measures run out before Congress acts, the government would default on its legal obligations, which the Treasury has described as potentially catastrophic, warning it could trigger a financial crisis and threaten the savings and jobs of ordinary Americans.13U.S. Department of the Treasury. Debt Limit
When Congress Cannot Agree
Congress rarely finishes all 12 appropriations bills on time. When it doesn’t, two things happen in sequence.
First, a continuing resolution. This is a temporary spending bill that keeps the government running when final appropriations are not in place. Continuing resolutions generally maintain funding at the prior year’s levels and expire on a set date, at which point Congress either passes final appropriations, extends the resolution, or lets funding lapse.15U.S. Government Accountability Office. What is a Continuing Resolution and How Does It Impact Government Operations
Second, if there is no final law and no continuing resolution, a funding gap triggers a government shutdown. Federal employees whose work is funded by annual appropriations and is not considered essential are furloughed, placed in a temporary nonduty, nonpay status. Employees performing emergency work involving human safety or property protection continue working but may not receive pay until the shutdown ends.16Office of Personnel Management. Guidance for Shutdown Furloughs Programs funded through mandatory spending, like Social Security, generally keep operating because they do not depend on annual appropriations.
The reason agencies cannot simply keep running through a funding gap is the Antideficiency Act. It prohibits any federal employee from spending or committing government funds before Congress appropriates them, or from spending more than Congress appropriated.17U.S. Government Accountability Office. Antideficiency Act A federal employee who knowingly and willfully violates the law faces a fine of up to $5,000, up to two years in prison, or both.18Office of the Law Revision Counsel. 31 U.S. Code 1350 – Criminal Penalty Administrative discipline, including removal from office, can also follow.
Limits on the Power
The power of the purse is Congress’s, but it doesn’t operate in a vacuum. The President and the courts both constrain how Congress uses it.
The Presidential Veto
The President can veto any appropriations bill. If vetoed, the bill goes back to the originating chamber, and Congress can override only if two-thirds of both the House and Senate agree.19Congress.gov. Article 1, Section 7, Clause 2 Because that threshold is hard to reach, even the threat of a veto shapes what Congress puts in a spending bill.
The Impoundment Control Act
Once Congress appropriates money, the executive branch cannot simply refuse to spend it. The Impoundment Control Act of 1974 creates two narrow paths for the President to withhold funds. A deferral temporarily delays spending but cannot extend past the end of the fiscal year and is only permitted for limited reasons like achieving savings through operational efficiency. A rescission is a proposal to cancel funding entirely. When the President proposes a rescission, funds can be withheld for up to 45 days of continuous congressional session while Congress decides. If Congress does not pass a bill approving the rescission in that window, the money must be released for spending.20U.S. Government Accountability Office. Impoundment Control Act The default favors spending: Congress does not have to act to make the President spend appropriated funds; the President has to get Congress to agree before canceling them.
Watching Where the Money Goes
Appropriating money is only half the job. Congress also monitors whether agencies spend their funds as intended, primarily through committee hearings, investigations, and the work of the Government Accountability Office. The GAO is Congress’s investigative arm, conducting audits of federal programs and providing independent assessments of how agencies manage their budgets.21house.gov. Government Accountability Office The GAO cannot force agencies to comply with its recommendations. It reports findings to Congress, the President, the agency, and other relevant bodies like the Department of Justice, and enforcement depends on those institutions choosing to act.22U.S. Government Accountability Office. What GAO Does Congress can tell where the money went, but making agencies answer for it is Congress’s own follow-through.