The U.S. House of Representatives and Its Impact on the Economy

What It Does, How It Affects the Economy

Capitol Building speakers

The House of Representatives is the junior body in the U.S. Congress. The senior body is the U.S. Senate. ​It's part of the legislative branch of the federal government. The other two components are the executive and judicial branches.

Members

The Founding Fathers designed the House to represent the people rather than the states. For that reason, the number of representatives depends on the state's population. Every 10 years, the U.S. Census Bureau counts the population of the states to determine the number of Congressional districts. The total number of Representatives is fixed at 435 members.  The number of districts a state receives is based on its share of the population.

California has the most representatives at 53. Texas has 36, while Florida and New York each have 27 representatives. These states have the most power in the House. Article I, Section II of the Constitution mandates that every state has a least one representative. The four states in this category are Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont, and Wyoming. These states have the least power in the House.

Power in the House also depends on which party has the majority. Democrats and Republicans each have different economic philosophies, and tend to vote together. 

The House is led by the Speaker. There are also majority and minority party leaders, assistant leaders, and whips. Majority and minority leaders represent their respective parties on the House floor. Whips assist the party leaders. Each party also holds conferences, called caucuses, to determine how the party will stand on an issue.

How It Works

The House does all its work in committees. Committees determine which bills will go to the floor of the full House for a vote. They draft legislation. They also have access to expert information that provides an advantage when debating bills on the floor. Committee chairs have the most power.

There are five types of committees:

  1. Standing committees are permanent legislative committees. The House has 20 of them.
  2. Select committees are formed to deal with a particular issue or policy. 
  3. Special committees investigate problems and issue reports. 
  4. Joint committees are composed of members of the House and Senate. They handle matters that require joint jurisdiction. These include the Postal Service, the Government Printing Office, and the Joint Economic Committee.
  5. Subcommittees handle specialized aspects of legislation and policy.

There are 26 committees. The average Representative sits on five committees. At least one of them is a committee they request from the party leaders. 

The most influential assignments are Appropriations, Budget, Commerce, Rules, Ways and Means. These committees control spending, tariffs, and how the House functions.  A Representative can acquire more power by sitting on or chairing one of these strategically important committees.

Leaders of investigations also gain power by holding hearings that grab media attention. In 2002, the House Financial Services Committee held 13 hearings on the Enron Corporation. It uncovered how the company swindled investors and raised electricity rates in California.

Representatives get reelected by serving on committees affecting their constituents. For example, those from rural states would do well by sitting on the Agriculture Committee. 

What It Does

In addition to the functions of the U.S. Congress, the U.S. House of Representatives has a few functions only it can perform. These include:

  • Make laws that create new taxes.
  • Decide if a government official should be put on trial before the Senate if s/he commits a crime against the country.

How the House Affects the U.S. Economy

The House aids in determining fiscal policy. Like the Senate, it guides federal spending and taxation. It kicks off the federal budget process for Congress. All legislation concerning fiscal policy, such as the budget, appropriations, and taxes, must originate with it

The 1974 Budget Control Act gave it the power to:

  1. Create a standing budget committee that create the House's version of the budget. It bases this on the president's budget and on hearings held with agency officials.
  2. Meet in a Conference Committee with the Senate to create a final budget resolution.
  3. Prepare the spending appropriation bills for each federal government department, which it sends to the Senate for review. These then go to the president for signature. For more, see .

Congressmen prefer expansionary fiscal policy because voters like tax cuts and the benefits of more spending. However, they should switch to contractionary fiscal policy during the boom phase of the business cycle, Raising taxes and cutting spending would slow growth, and avoid irrational exuberance

In an ideal world, fiscal policy would work together with monetary policy in creating healthy economic growth. Why doesn't it? Legislators and voters disagree on the best way to do it. Conservatives prefer the tax cuts advocated in supply-side economics, while liberals would rather raise taxes on the rich and increase spending on programs for the poor.

The House Budget Committee relies on the Congressional Budget Office for its expertise in estimating the costs and consequences of budget decisions. 

In addition to the budgetary process, the House of Representatives affects the economy by submitting bills that will please the voters in their Congressional District. These bills may not be in the best interest of the economy at large. A great deal of negotiation occurs as Representatives try to get their bills passed. As a result, the budget may become overinflated, contributing to the budget deficit.

How It Affects You

In addition to how the House of Representatives affects the economy, a good representative can help you personally. To find out who your Representative is, go to the U.S. House of Representatives and enter your zip code. This site will also tell you what bills are being considered this week. You can research past bills, and view videos of past House floor proceedings. Most important, it will tell you how your Representative voted on any legislation.

History

In 1789, the House assembled for the first time in New York. In 1790, it moved to Philadelphia. The Permanent Seat of Government Act established the nation’s federal capital in Washington, DC. Congress moved there in 1800. The House moved into the south side of the Capitol in 1807. The wing was fully completed four years later.

The Constitution outlined how the House represents states based on population versus the Senate's equal representation. This agreement was part of the The Great Compromise