The U.S. Senate and Its Powerful Impact on the Economy

What It Does and How It Affects You

Senator Rob Portman and Mitch McConnell
••• Photo by Mark Wilson/Getty Images

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

Number of Senators

There are 100 elected Senators, two from each state. Two Senators were chosen for logical reasons. One would not be enough, because the state would have no representation if he became ill. Three or more was too expensive for states at that time.

Some of the Founding Fathers argued that the Senate should be representational like the U.S. House of Representatives. But smaller states realized they would have little input in what happened. They threatened to leave unless they received the same number of Senators as the larger states.

Each Senator is elected for a six-year term. There are limits on the number of terms. The length is longer than that in the House to provide stability. Longer terms also made the Senate less political, and subject to vagaries in the voting population. Very few Founding Fathers wanted terms longer than six years. It would be too similar to the life-long terms in the British Parliament.

The head of the Senate is the Vice-President. He only casts a vote in case of the tie. This removes the partiality or threats of political favoritism if the head of the Senate were elected from that body. 

What It Does

The Senate, in addition to the other functions of Congress, has a few functions only it can perform. These include:

  • Confirm or disapprove any treaties the president drafts.
  • Confirm or disapprove the presidential appointments. These include the Cabinet, officers, Supreme Court justices, and ambassadors.
  • Hold a trial for a federal official who commits a crime against the country.

How It Works

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

There are 26 committees. The average Senator sits on  committees. At least one of them is a committee they request.

There are five types of committees:

  1. Standing committees are permanent legislative committees. 
  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.

The most influential assignments are Appropriations, Armed Services, Commerce, Finance, and Foreign Relations. These committees control spending and crucial government functions.  Every Senator sits on at least one of them. 

Leaders of investigations also gain power by holding hearings that grab media attention. In 1973, a special committee held hearings on the Watergate burgleries and coverup. The hearings resulted in the conviction of several of President Nixon’s aides for obstruction of justice. As a result, Nixon resigned from office.

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

How It Affects the U.S. Economy

The Senate is a major force is determining fiscal policy by guiding federal spending and taxation. The 1974 Budget Control Act gave it that power.  It also gives Congress three additional powers:

  1. Have its own standing budget committee to create its own 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 House to create a final budget resolution.
  3. Review the spending appropriation bills prepared by the House for each agency. The revised and approved bills go to the president for signature. For more, see Federal Budget Process.

Like most elected officials, Senators usually advocate expansionary fiscal policy. That's because voters like tax cuts and the benefits of more spending. But during the boom phase of the business cycle, they should raise taxes and cut spending to slow growth. This is known as contractionary fiscal policy.

Fiscal policy should work with monetary policy to create healthy economic growth, but usually doesn't. Why? Legislators and their constituents have different ideas of the best way to create a healthy economy. Republicans usually believe in supply-side economics, which advocates tax cuts. Democrats prefer increased spending, paid for by taxing the wealthy.

The Senate Budget Committee relies on the expertise of the Congressional Budget Office for estimates of the costs and consequences of budget decisions.

How It Affects You

A good Senator can help you personally. To find out who your Senator is, go to the Senators of the 110th Congress. To find out how your Senator has been affecting you, go to the link on that page.