(4/2017) The House of Representatives approved a $ 584 billion defense bill in early March demonstrating strong bipartisan support in a 381-48 vote. It now goes to the Senate and White House facing some changes and then approval. No bill of that type has been rejected out of committee since the Eisenhower administration in the early 1960s. At issue now
is the delineation of executive and legislative powers as the Constitution is either vague on the subject or redirected by statute from its original civil, economic role.
A brief but relevant look at the American Constitution of 1789 affords Congress almost absolute control over daily running of the nationís economy. Within Article 1 Section 8 of the document, Congress was given the authority to " collect taxes, duties, imposts and excises, pay debt...borrow money, regulate commerce with foreign nations and (domestic)
states, It may coin money, regulate the value thereof as well as foreign coin."
Despite that legal mandate - almost all these powers have been devolved from the Legislature to the Executive within a broad standard of compliance. That may reflect the transient nature of the lawmakers relative to standing civil structure that can develop expertise in those finance directives. The Treasury department was one of the three, original
U.S. Presidential Cabinet positions, however its ascribed duties in the Constitution appear to be limited to simple storage of the nationís sovereign, government wealth. While involving mostly tax and duty receipts of the era- the system has expanded now to include private sector storage and that is largely done through the Federal Reserve banks.
A taxation role for excise taxes that target specific goods (e.g. gasoline or cigarettes) was allowed as were import and export of duties and tariffs. These taxes often last longer than originally intended and can distort the patterns or costs to the consumer as well as the industry producing such goods or services. While these are a concern, the real
process with potentially greatest impact is the storage of private sector funds.
The credit and cash storage potential in the 12 Federal Reserve banks may not have been foreseen by the framers of the Constitution in 1789 nor Congress when it created the Federal Reserve System in 1913. It was designed for bank regulation, but also linked a centralized, money supply provision and its regulation needs amid increased economic
complexity and credit requirements. The Fed by statute was nominally independent of both the President and Congress, but there has been such a leap in storage capacity with financial metadata of all relevant systems, that it is dangerously prone to manipulation and theft. This has seemed the case without a clearer definition of the Fedís roles and responsibilities. The money
should remain in the private sector as monitored by the Fed team in its regulatory role for investment competence.
Since the 2002 Department of Homeland Security Act was passed- various executive programs were realigned to ostensibly provide for streamlined security product used by policy makers for defense concerns. The Treasury Department was affected. For example, the Secret Service was spun out - as were the ATF and others. Linked legislation defined the
Treasuryís functions to " manage United States government finances and resource, produce all currency, collect taxes, duties, money paid to and due the United States, pay bills owed by the government, manage federal finances and accounts of the US public debt." It almost exactly mirrors the 1789 document, but again has enough leeway that without a clearer delineation of
specific powers, can be used by either lawmakers or law compliers in various executive agencies.
The technology aspect of the stored wealth trust presumes that the private sectorís access agents are legally compliant in their legal, investment strategies and that supposition is very suspect given current personality profiles and actions. Fiscal spending discretion of the stored funds is also a concern as few developed nations require a national
budget be balanced. This is to ensure program competition or justify its need amid ideological largesse that now affords almost unlimited billing. It appears that the colonists did borrow, but quickly settled with consolidation of the new nation. Last yearís national budget stood at just under $4 trillion. The economy generated just over $17 trillion
So, at present, about 25% of the private sectorís spending- including social programs linked to the Executive Branch- are directed by Washington. This involves tax receipt funding and distribution, as well as the various duties previously discussed. The issue now is that, while the money is then reinjected into conventional private concerns, government
spending directives invariably are not the spending types that consumers would undertake if they could control their own funds. We won't starve, but it's just not optimal. There'd clearly be a draw down of directed spending and increased consumer discretionary purchases with more accountability as to fiscal need.
Much of the current spending is tied to interest on the national debt. The latter continues to expand. The interest on the debt is paid- as is the federal debt that does logically lead to the conclusion that the budget is balanced as almost none of the debt principle is paid beyond links to money supply, tied bonds or bills. Of concern is the
Constitutional directive affording Congress the financial management role and that has not been amended. Rather, it has been legally "worked around". That is done one law at a time and the duty is now under executive control by standing bodies that are vetted for this purpose.
Congress still establishes the legal parameters for the spending itself. That is how the system has evolved so the Constitution wasn't that far removed from current spending pressures. Ideally, they could have limited government handling of public money closer to administration needs. This, with a sound regulatory role that doesn't actually interfere
with corporate strategies. It ensures a competitive framework of the propriety. All this, while meeting inelastic or survival needs of a well scrutinized, balanced budget would help as well.
Ralph Murphy is a former member of the CIA Headquarters Staff in Langley, VA.
Read past editions of Ralph Murphy's Common Cents