United States Senate Committee on Finance
The U.S. Senate Committee on Finance (or, less formally, Senate Finance Committee) is a
standing committeeof the United States Senate. It concerns itself with matters relating to the bonded debt of the United States; customs, collection districts, and ports of entryand delivery; deposit of public moneys; general revenue sharing; health programs under the Social Security Act (notably Medicare and Medicaid) and health programs financed by a specific tax or trust fund; national social security; reciprocal trade agreements; revenue measures generally and those relating to the insular possessions; tariffand importquotas, and related matters thereto; and the transportation of dutiable goods.
The Committee on Finance is one of the original committees established in the Senate. First created in 1815 as a select committee and known as the Committee on Finance and an [sic] Uniform National Currency, it was formed to alleviate economic issues arising from the War of 1812. On
December 10, 1816the Senate officially created the Committee on Finance as a standing committee. Originally, the Committee had power over tariffs, taxation, banking and currency issues and appropriations. Under this authority the committee played an influential role in the most heated topics of the era; including numerous tariffs issues and the Bank War[ [http://www.finance.senate.gov/history.pdf History of the Committee on Finance (pdf)] , via Finance. Senate.Gov] . The committee was also influential in the creation of the Department of Interior in 1849 [Simms, Henry Harrison. Life of Robert M.T. Hunter: A Study in Sectionalism and Secession. Richmond: William Byrd Press, 1935] . Under the Chairmanship of William Pitt Fessenden, the committee played a decisive role during the Civil War. Appropriating all funds for the war effort as well as raising enough funds to finance the war through tariffs and the nation's first income tax. Additionally, the committee produced the Legal Tender Act of 1862, the nation's first reliance on paper currency [Jellison, Charles A. Fessenden of Maine, Civil War Senator. Syracuse: Syracuse University Press, 1962.] .
In 1865 the House of Representatives created an Appropriations Committee to relieve the burden from the Committee on Ways and Means. The Senate followed this example by forming the Appropriations Committee in 1867 [ [http://www.finance.senate.gov/history.pdf History of the Committee on Finance (pdf)] , via Finance. Senate.Gov] .
Despite the loss of one of its signature duties the committee continued to play a prominent role in the major issues of the nation. The committee was at the center of the debate over the silver question in the latter half of the 19th Century. Passage of the
Bland-Allison Actand the Sherman Silver Purchase Actwere attempts to remedy the demand for silver, though the silver cause would eventually fail by the end of the century [Sherman, John. Recollections of Forty Years in The House, Senate, and Cabinet: An Autobiography. 2 vols. 1895. Reprint. New York: Greenwood Press, 1968.] . The committee also continued to play a role in the debate over income taxes. The repeal of the Civil War income taxes in the 1870s would eventually be raised in 1894 with the passage of a new income tax law. The Supreme Court's decision in "Pollack v. Farmers' Loan and Trust Company" ruled the income tax as unconstitutional, since it was not based on apportionment. The fight for an income tax finally culminated with the Payne-Aldrich Tariff Actof 1909. In order to pass the new tariff Senate leaders, including Chairman Nelson Aldrich, allowed for a Constitutional Amendment to be passed. Four years later the 16th Amendment was officially ratified and in 1913 the nation's first peacetime income tax was instituted [Stephenson, Nathaniel W. Nelson W. Aldrich: A Leader In American Politics. 1930. Reprint. New York: Kennikat Press, 1971.] .
Around that same time the committee lost jurisdiction over banking and currency issues to the newly created Committee on Banking and Currency. The committee did gain jurisdiction over veterans’ benefits when it successfully passed the War Risk Insurance Act of 1917. The act shifted pensions from gratuities to benefits and which served as one of the first life insurance programs created under the federal government [ [http://www.finance.senate.gov/history.pdf History of the Committee on Finance (pdf)] , via Finance. Senate.Gov] .
The Finance Committee continued to play an increasingly important role in the lives of the nation's veterans. The committee helped to consolidate the veteran bureaucracy by streamlining the various responsibilities into a Veterans' Bureau which ultimately would become the Veterans' Administration. In 1924 the committee passed a "Bonus Bill" for
World War Iveterans which compensated veterans of that war for their service [The Provision of Federal Benefits for Veterans. House Committee Print 171, 84th Congress, 1st Session, December 28, 1955] . These series of increasing and providing better benefits for veterans reached a crescendo in 1944 with the passage of the Servicemen's Readjustment Act. Senator Bennett "Champ" Clark, who served as the Chairman of the Subcommittee on Veterans, assured smooth sailing of the bill through the Senate. The bill not only ended the usual demands from returning veterans which had been seen in nearly every war America had participated in. But also provided the most generous benefits that veterans had ever received, including continuing education, loans and unemployment insurance [Bennett, Michael. When Dreams Come True: The G.I. Bill and the Making of Modern America. Washington: Potomac Books, Inc., 1999.] .
Not all Finance Committee legislation was as well received as the G.I. Bill. At the beginning of the
Great Depressionthe committee passed the Smoot-Hawley Tariff Act. The act greatly increased tariffs and had a negative effect on the nation's economy. Following traditional economic practices the members of the committee, including Chairman Reed Smoot, felt that protection of American businesses was required in order to buoy them during the dire economic times. The effort backfired and the economic situation worsened. The Smoot-Hawley Tariff would eventually be replaced by the Reciprocal Tariff Actof 1934 which authorized the President to negotiate trade agreements. This act not only set up the trade policy system as it exists today but also effectively transferred trade making policy from the Congress to the President [Dobson, John. Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission. Washington:U.S. Government Printing Office, 1976.] .
The committee also played an important role in two major acts created under the
New Deal. The committee received jurisdiction over the National Industrial Recovery Actbecause of tax code changes in the bill. The new bureaucracy was President Roosevelt's attempt to stimulate the economy and promote jobs for unemployed Americans while also regulating businesses. The National Recovery Administration would ultimately fail as it lost public support but the act served as a springboard to the Wagner Actand the National Labor Board[Ratner, Sidney. Taxation and Democracy in America. Octagon Books, 1980.] .
Probably the single biggest, and by far one of the most lasting, piece of legislation enacted by the Finance Committee during the New Deal was the Social Security Act. Once again the committee received jurisdiction owing to the payroll taxes that would be enacted to pay for the new program. The act was the first effort by the federal government to provide benefits to the elderly and the unemployed. The act greatly enhanced the economic welfare of many elderly Americans [Swain, Martha H. Pat Harrison: The New Deal Years. Jackson: University Press of Mississippi, 1978.] .
In 1981, a Senate Resolution required the printing of the History of the Committee on Finance. [ [http://www.finance.senate.gov/history.pdf History of the Committee on Finance (pdf)] , via Finance. Senate.Gov]
The role of the Committee on Finance is very similar to that of the
House Committee on Ways and Means. The one exception in area of jurisdiction is that the Committee on Finance has jurisdiction over both Medicare and Medicaid, while the House Ways and Means Committee only has jurisdiction over Medicare. (The House Energy and Commerce Committee has jurisdiction over Medicaid.) The other difference in terms of power is that all revenue raising measures must originate in the House giving the Ways and Means committee a slight edge in setting tax policy. In addition to having jurisdiction over legislation the Committee has extensive oversight powers. It has authority to investigate, review and evaluate existing laws, and the agencies that implement them.
Due to the Committee's wide jurisdiction, it is often considered an influential committee. A wide array of Senators with differing policy concerns seek membership on the Committee because of its role in setting tax, trade, and health policy.
=Members, 110th Congress=
The Committee is chaired by Democrat
Max Baucus, of Montana, and the Ranking Minority Member is Republican Chuck Grassleyof Iowa.
The committee has five subcommittees. [ [http://finance.senate.gov/sitepages/baucus.htm “Finance Panel Announces New Subcommittees”] (Feb. 28, 2007).]
Chairmen, 1815 - Present
* [http://finance.senate.gov Finance.senate.gov Official website]
*" [http://finance.senate.gov/history.pdf History of the Committee on Finance; United States Senate (pdf)] ". 4th ed. Washington, D.C.:
Government Printing Office, 1981.
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