U.S. House of Representatives

What It Does, How It Affects the Economy

Capitol Building speakers

What Is the U.S.House of Representatives?

The House of Representatives is the junior body in the U.S. Congress, which is the legislative branch of the federal government. It consists of delegates from each state's congressional district. Every ten years, the U.S. Census Bureau counts the population of the states to determine the number of districts, hence the number of Representatives.

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. 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 Federal Budget Process

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.