PolicyMarket noteWednesday 4 November 2026, 07:54
The power of the purse is Congress's control of federal money. In practice it means a yearly vote on about a quarter of spending, shutdowns and the debt limit.
The power of the purse is the US Congress’s control over federal money: no dollar can leave the Treasury unless a law passed by Congress provides it, under Article I of the Constitution. In practice it works through the yearly spending bills, which covered $1.9tn of the $7.01tn the government spent in fiscal 2025, through the debt limit, and through the threat of a shutdown when the money runs out.
The Constitution gives Congress three money powers, all in Article I. Section 8 lets it “lay and collect Taxes” and “borrow Money on the credit of the United States”. Section 7 says that “All Bills for raising Revenue shall originate in the House of Representatives”. And Section 9 holds the line that gives the power its force: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law”.
The idea is older than the United States. The English Parliament won control of taxes from the Crown in the 17th century, and the authors of the Constitution put the purse in the hands of the elected legislature on purpose. The president proposes a budget each year, but it is only a proposal. Congress decides what is spent.
Through appropriations: laws that let agencies spend set amounts for set purposes in a fiscal year, which runs from 1 October to 30 September. Congress splits the work into 12 regular bills, from defence to homeland security. When they are not done by 1 October, which is the usual case, it passes a stopgap called a continuing resolution, which keeps spending at the old levels for a few weeks or months.
Most federal spending never comes up for a yearly vote. Discretionary spending, the part Congress votes on each year, was $1.9tn in fiscal 2025, the Congressional Budget Office says, more than half of it outside defence. Mandatory spending, which runs under permanent laws such as those for Social Security and Medicare, was $4.2tn, CBO says. Total outlays were $7.01tn that year and $7.40tn in fiscal 2026, by the Monthly Treasury Statement, which also shows $1.05tn of net interest in fiscal 2026. Interest is paid without any vote at all.
So the yearly vote covers about a quarter of the budget, by our calculation. Changing the rest takes a new law, which needs the president’s signature or a two-thirds vote of both chambers to override a veto.
The money stops. A law called the Antideficiency Act bars agencies from spending without an appropriation, so when a deadline passes without a bill, the government shuts down, except for work that protects life and property. There have been 23 funding gaps since fiscal 1977, the Congressional Research Service counts, from 1 to 75 full days. About half lasted three days or less.
Fiscal 2026 was the worst on record. Three funding gaps added up to 120 full days: a government-wide shutdown of 42 full days from 1 October to 12 November 2025, a gap of three days from 31 January 2026, and a lapse for the Department of Homeland Security of 75 full days from 14 February to 30 April 2026, the longest ever.
Shutdowns are the purse at its bluntest. Either side can use the deadline as leverage: the majority in Congress to force its priorities into a bill, and the president to refuse to sign one. The present stopgap runs “through December 11, 2026”, the White House says.
Not on his own, under the Impoundment Control Act of 1974, which Congress passed after President Richard Nixon held back funds it had voted. A president who wants to cancel spending must send Congress a special message proposing a rescission. Congress then has 45 days of session to agree. If it does not, the money must be spent.
The limits are being tested. On 28 August 2025 the president proposed cancelling funds from 15 accounts that expired at the end of September, after the 45 days would run out. The Government Accountability Office, Congress’s watchdog, said its position is that the law “does not permit the withholding of funds past their date of expiration”, even if Congress’s 45 days have not passed. This tactic is known as a pocket rescission. GAO’s view does not bind the president, and only a court ruling would settle the question.
Yes, through Congress’s power to borrow. Congress sets a legal limit on federal debt, and it must raise or suspend that limit when spending and tax laws it has already passed require more borrowing. On 2 November 2026 the debt subject to the limit was $40.31tn against a limit of $41.10tn, Treasury’s Daily Treasury Statement shows: $797.7bn of room.
The limit does not control spending, which Congress has already approved, but it gives whichever side needs the other’s votes a second deadline to bargain over. A failure to raise it would leave the Treasury unable to pay every bill on time.
The same Congress, with a new majority. Democrats won both the House and the Senate in the midterms of 3 November 2026, CBS News projects, and the new Congress sits from 3 January 2027. As we reported on 4 November, what the Democrats’ win means for money runs mainly through this power: the funding deadline of 11 December and a debt limit that will bind in 2027. The gap the purse has to fill is large: as we explained in October, the budget deficit was almost $2tn in fiscal 2026.
This is analysis and opinion, not investment advice.
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