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Answered 2012-03-22 04:50:01

To regulate interstate commerce, and to transact international relations.

Currently, the US Federal Government plays these roles in the US domestic economy:

  1. It regulates how trade is conducted BETWEEN individual US States
  2. It regulates all trade between the US and other sovereign nations
  3. Congress decides WHICH economic activities it wishes to restrict or forbid.
  4. The Independent Regulatory Agencies (EPA, FCC, et al.) are agencies which have been set up by Congressional law to monitor and enforce economic laws in their particular area of responsibility (e.g. Pollution, Radio Spectrum, etc.)
  5. The Federal Judiciary arbitrates disputes between individuals, government entities, and/or fictional entities (corporations, unions, etc.) with regards to contract law, and as to compliance with regulatory rules.
  6. The Federal Reserve and Treasury department manage US Currency and the money supply (i.e. monetary policy)
  7. The IRS oversees the collection of Federal taxes
  8. Congress passes laws which spend taxes for a variety of purposes, including many social welfare programs, economic incentive programs, and infrastructure projects.
  9. Congress provides for certain non-regulatory policing functions (border security, the FBI, US Marshalls, etc.)
  10. Congress appropriates money for the defense of the nation.

The individual State governments perform similar duties (generally #3 through #9) inside each state using state departments and agencies, which are generally paid for with taxes levied by the state government itself (though, also with some funding passed down from the Federal government).

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