The distinctions, and they are extremely important if a little ill-defined, between the formulation and execution of foreign policy by the government of the United States are established in the United States Constitution. The authors of that remarkable document, mainly James Madison but with considerable assistance by John Adams, Thomas Jefferson, and other noteworthy Americans, were keen on ensuring that no one branch of the United States Government could emerge stronger than the others and lead the nascent republic in the direction of the very kind of dictatorship these individuals were determined to avoid. Toward that goal, they established the separation of powers that has remained a bedrock principle of government in this country.
While determined to prevent a consolidation of power in any one branch of government (let's not forget that very important third-leg of the governmental tripod, the Judicial Branch), the Constitution's authors, and those who met to debate its provisions, were cognizant of the difficulties inherent in conducting foreign policy across two or three branches of government. The final document, however, is explicit in its intent (buttressed by publication of the so-called Federalist Papers) to ensure that the nation's Chief Executive would not be able to take the nation to war without the express consent of that branch of government most directly reflective of the American public, the Legislature. Let's look, then, at the wording of the Constitution and the separation of powers represented in its provisions.
Article I of the United States Constitution is, of course, dedicated to establishment of the Legislative Branch, symbolic of the importance the authors placed in that representative body. Section 8 of Article I includes the following provisions intended to ensure that Congress would have a major role in the conduct of foreign policy despite the authors' awareness of the need for the nation to be led in foreign affairs by a single chief executive. The Congress, under the Constitution, shall have the power:
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;
[There was, obviously, no Air Force back then, so it wasn't included in the above provision]
In contrast, Article II of the Constitution, which establishes the office of the presidency, grants to that position the following authorities:
The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States;
He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties,
So, we can see by these provisions of the U.S. Constitution that the Founding Fathers were serious in wanting the branches of government to be in conflict to a certain degree so as to prevent any one branch from assuming too much power, especially in the conduct of foreign affairs and in that all-important role of taking the nation to war. Congress, and only Congress, has the power to pass budgets, including those that fund the Armed Forces (Navy, Air Force, and Army, the Marine Corps being a subordinate component of the Navy), and, only Congress can declare war against another nation. Congress cannot, however, order troops into combat, a huge distinction with respect to Executive Branch authorities. The president can order troops into combat, but he or she cannot provide the funds necessary for those troops to actually exist as soldiers, sailors and airmen. Only Congress can pass the budgets that include funding for guns, ammunition, tanks, ships, aircraft, and the many costs associated with training military personnel and ensuring for their and their families' well-being.
The Founding Fathers intended the president to represent the United States in diplomatic matters, but prevented him or her from being able to single-handedly enter into binding treaties. The Senate must vote to ratify those international agreements, and, since some changes to U.S. laws almost always accompany the execution of treaties, even the House of Representatives gets to play in that game, as no law can be passed by just one chamber of Congress.
This, in a nutshell, is how the federal government conducts foreign policy. The Departments of States, Defense, Treasury, and Commerce are all Executive Branch agencies that are guided by the instructions of the White House, but every one of those departments needs the money that can only be provided by Congress in order to carry out their missions.
This all sounds great, but, in practice, the president wields tremendous power over the conduct of foreign policy, even with respect to the commitment of American troops to foreign conflicts. Upset with the presidencies of Kennedy, Johnson and Nixon with regard to the conduct of the war in Vietnam (and Laos and Cambodia), Congress passed the War Powers Act of 1973, which was intended to place firmer restraints on the abilities of future presidents to go to war. For better or for worse, that law has proven largely useless because Congress has been unwilling to use its "power of the purse," in effect, its control of the budget, to restrain presidents in their foreign activities.
In marked contrast to the all of the above, the conduct of economic policy is a little simpler on paper, if no more simpler in practice. Economic policy is the product of numerous factors, many of which are beyond the control of the federal government, including, for the most part, economically-significant developments that exist as a product of the free-market system the United States maintains. The government can influence unemployment rates at the margins through control of interest rates (the province of the Federal Reserve System) manipulation of the currency and of tax rates, but economics is a tricky subject, with many imponderables. As an essential part of its constitutional responsibility for passing budgets, Article I of the Constitution notably gives to the legislature the power to "lay and collect Taxes." Those taxes, after all, provide the funds that are subsequently allocated among the aforementioned Executive Branch departments so that these agencies can perform their missions. As tax rates are more-than-a-little important in discussions of economics, this constitutional power obviously gives Congress a major role in economic policy. The president, however, enjoys a great deal of power in this area by virtue of the aforementioned free-market system in the United States. Publicly-traded corporations, which includes most major providers of jobs, are constantly subjected to manipulation by virtue of their membership in an exchange, such as the New York Stock Exchange. If the president utters the wrong comment, stocks of those corporations can tumble precipitously, with billions of dollars of value eliminated instantaneously.
Economic policy, unlike foreign policy, has a very powerful component the existence of which could not be known by the Founding Fathers, although some of them were known to remark upon the hazards or advantages of one. I'm referring here to the Federal Reserve System, the nation's central bank. Thomas Jefferson famously commented that [t]he central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution." Jefferson's warning aside, the federal government, after more than a century of debating about and experimenting with the notion of a central bank, formally established the Federal Reserve System in 1913. The Board of Governors and its chairman are enormously powerful in that they determine interest rates, regulate banks that agree to fall under the Fed's authority, and maintain "the stability of the financial system [while] containing systemic risk," a somewhat nebulous proposition and one that failed badly, albeit for myriad reasons not of the Fed's doing, in the 2007-2008 financial crisis. The bottom line, though, is that there is no 'fourth branch of government' at work in the conduct of foreign policy. The power of the Federal Reserve System does constitute such an additional branch with respect to the conduct of economic policy.
These are the main distinctions between foreign and domestic policy. It is, admittedly, over-simplified, but time and space demand some measure of restraint on the part of this educator.
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