Preamble

The Preamble ("preamble" is basically a fancy term for "introduction") to the United States Constitution is only one sentence long, but it's one of the most famous and important sentences in American history. "We the People," it begins, establishing the principle of popular sovereignty before then going on to explain the purposes of the Constitution: "to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity."

An introduction or preface (The most famous is of the Constitution)

Not the moment before you casually stroll over to talk to the cute girl, but the introduction of a document, stating its purpose, aims, philosophy, and justification

A preamble is basically just an introduction. It might tell you what's coming up and why the author decided to write it. The U.S. Constitution has one. It's kind of famous, maybe you've heard of it?

Article

The Constitution is divided into seven sections, each one called an "Article." The first three articles describe the structures and powers of the three branches of government— legislative, executive, and judicial. Article IV establishes ground rules for interactions among the states, as well as between the states and the federal government. Article V creates a process for amending the Constitution; Article VI is a bit of a hodgepodge of important principles that don't obviously fit in anywhere else; and Article VII lays out the procedure for the Constitution's ratification.

A clause or section of a legal document that specifies a rule or regulation.

Amendment

Amendments are formal changes to the Constitution. Article V creates a process that makes it difficult but not impossible to amend the Constitution; an amendment can only take effect if it first passes Congress by a two-thirds supermajority (or is passed by the legislatures of two-thirds of all the states), then is subsequently ratified by three-fourths of the states. In the 230+ years since the Constitution took effect, thousands of amendments have been proposed but only 27 have been ratified. The first ten amendments, all passed by the very first Congress, are known as the Bill of Rights.

A change to the Constitution or to a specific law. Congress routinely amends ordinary laws by majority vote; amending the Constitution is considered to be a much more serious matter and requires approval by a two-thirds vote of Congress, followed by ratification from three-fourths of the states.

We'll assume you're an expert on the U.S. Constitution and, by extension, the Bill of Rights and the other amendments...you know, the first amendment (freedom of press, religion, etc.), the fifth amendment (don't talk to the police) and, of course, the twenty-third amendment (we don't have to explain that one, do we?).

The same idea behind Constitutional amendments applies to amendments in the financial world. A contract exists (like the Constitution). The parties want to change the contract ("hey, it looks like you guys forgot to guarantee free speech...let's fix that before we really get going on this government thing"). So amendments are added to the contract to enact the changes.

In business, companies can amend contracts to update information and alter terms. New prices, an updated end date, altered delivery expectations, even things like changed addresses can get worked into the original contract through amendments. A change or addition to a legal document such as the Constitution or the Christmas list you gave to your grandma last week.

Federalism

Federalism is the system of government which divides power between one centralized national government and many decentralized state governments. The Constitution explicitly protects the principle of federalism, granting the national government many specific powers and responsibilities but also reserving many other powers to the various state and local governments, or to the people as individuals.

A system of government where powers and responsibilities are shared among national, state, and local governments.

The division of power between the state governments and the federal (centralized) government. It's another form of checks and balances that counteracts the federal government with local control (and vice versa), so neither can be almighty. The tricky wording in the Constitution, though, has fueled the debate over states' rights and the power of federal government in today's politics.

A system of government in which power is divided and shared between the national, state, and local governments.

Federalism, a.k.a. AP GO PO's VIP, is the division of power between the national (federal) government and the state or local governments.

Checks And Balances

The system of checks and balances is designed to prevent any one branch of the government from gaining tyrannical power. The Constitution divides the government into three branches, each of which is expected to keep the others in check. Congress's power of impeachment, for example, allows it to check and balance the power of the executive branch. The president's veto, meanwhile, allows the executive to check and balance the legislative.

The principle outlined in the Constitution that the branches of government will counterbalance each other, so that no single branch gets too powerful.

This is strongly related to the separation of powers—each branch of government has built-in limits to its power (checks) and ways to limit the power of other branches (balances). For instance, Congress can introduce laws, but the President has the final say over whether to approve or veto it. If the President does veto a law, Congress still has a chance to override the veto with a two-thirds majority. It's just one of the many ways that the Constitution prevents one person or branch from ruling over everything.

Let's travel back in time for a moment. Back to the late 1700s, when the founding fathers were trying to reach a compromise on how the federal government should work. They wanted to avoid the monarchies that called all the shots in Europe at the time. They wanted a Republic responsive to people's needs. But, the government had to be strong enough to get things done. The challenge was to balance power and make sure different parts of the government checked the power of the others. Get it...checks and balances.

In practice, this process involved finding a sweet spot between states’ rights and a strong federal government, while on the federal level, not giving too much power to any one branch: the President (executive), Congress (legislative) or the Supreme Court (judicial). So a system of checks and balances was implemented and it still works (most of the time) today.

Examples: a president vetoing legislation passed by Congress; Congress overriding the veto by a two thirds majority in both the House and the Senate; and the Supreme Court striking down any legislation it believes is unconstitutional.

As just one specific example, in the 1930s, Congress passed a law forming the Civilian Conservation Corps (CCC) to create jobs for Americans who were out of work during the Depression. It was signed by President Franklin Roosevelt, but then a new Congress was elected who voted to close down the CCC. President Roosevelt vetoed that legislation but it was overridden by Congress. Then the Supreme Court decided it was unconstitutional anyway, so that was the end of that program.

Limited Government

The principle of limited government holds that the government is not all-powerful, but instead has the right to exercise its authority only in certain limited areas. The Constitution grants the US government the power, for example, to levy taxes and to declare war… but it explicitly restricts the government's power to establish a national religion or imprison people without trial.

A governmental system that promotes minimal governmental involvement in the economy or personal liberties. In other words, the power of the government is, well, limited.

See: Laissez Faire. Then see any zombie movie. Then watch The Purge.

Free market. Loose. All's good. Chill. Hands-off. Montessori. Let the kids roam free. Rock on. Let the good times roll.

Wouldn't you guess it? This is when the government is limited—it can only do what the people have given it power to, through the Constitution. Yeah, the government has to follow rules too.

Rule Of Law

The principle of the rule of law simply means that the law applies equally to everyone, and that no one is above the law. All officials of the US government (including the President, justices of the Supreme Court, and members of Congress) must take an oath pledging to uphold the Constitution—that is, to respect the rule of law.

Separation Of Powers

The separation of powers seeks to prevent tyrannical abuses of authority by dividing the most important powers of the state among different branches of government. The Framers of the US Constitution, following models first developed in Ancient Greece and the Roman Republic, gave the legislative branch the sole power to make the law, the executive branch the sole power to implement the law, and the judicial the sole power to judge the law.

Also known as "checks and balances," the political doctrine that divides power amongst the three branches of government. The legislative branch makes laws; the executive branch carries out laws; the judicial branch decides the outcome of disputes under the law.

The idea that political authority should be divided into different branches of government, instead of concentrating power in one branch. In the U.S., that means the Executive, Legislative, and Judicial branches all have different, but equally significant, powers. The President can't randomly decide to make every Monday free ice-cream day (sadly)—he or she has to get Congress and the Supreme Court's approval.

In the U.S., we’ve got the Prez, Congress, and the Supremes. We’ve also got the Fed, which is independent-ish of those three main branches of government. Why’s the federal government gotta make things so complicated?

The separation of powers...that’s why. By distributing different “powers” (the ability to do things legally) among different groups, we can avoid tyranny. Thanks to the separation of powers, each branch can be a check on the other branches, i.e. “checks and balances.”

Remember King Henry the 8th? The only thing people really remember him for was killing all his wives when he got bored and wanted a new one. And when Marie Antoinette tried to solve a major food shortage with “cake”? That didn’t really work out for the people (nor for her).

We separate legal powers among multiple branches to avoid stuff like that. If one branch tries to do something sketch, the others can step in and say “Really, man? Really?”

Even businesses these days have a separation of powers. The board of directors is a check on corporate governance, having the backs of shareholders. At least in theory. And yes, oh so many Boards are just living in the back pockets of their mercurial founders.

In the U.S., we’ve got the Prez, Congress, and the Supremes. We’ve also got the Fed, which is independent-ish of those three main branches of government. Why’s the federal government gotta make things so complicated?

The separation of powers...that’s why. By distributing different “powers” (the ability to do things legally) among different groups, we can avoid tyranny. Thanks to the separation of powers, each branch can be a check on the other branches, i.e. “checks and balances.”

Remember King Henry the 8th? The only thing people really remember him for was killing all his wives when he got bored and wanted a new one. And when Marie Antoinette tried to solve a major food shortage with “cake”? That didn’t really work out for the people (nor for her).

We separate legal powers among multiple branches to avoid stuff like that. If one branch tries to do something sketch, the others can step in and say “Really, man? Really?”

Even businesses these days have a separation of powers. The board of directors is a check on corporate governance, having the backs of shareholders. At least in theory. And yes, oh so many Boards are just living in the back pockets of their mercurial founders.

The super-strong branches of the federal government are broken up (separated, even) into legislative, executive, and judicial branches, each of whom, like the members of Captain Planet, have their own responsibilities.

Popular Sovereignty

The doctrine of popular sovereignty holds that the legitimacy and authority of government derives only from the consent of the people, who are the ultimate source of political power. The Constitution of the United States (which famously begins with the words, "We the People") is built upon the principle of popular sovereignty.

The idea that the state is created and sustained by and for the people. The people are the sovereigns of the government.

Enacted by the Kansas-Nebraska Act, this principle held that each state could decide on its own whether to allow slavery. This was popular among Southerners, not so much among Northerners.

The idea that authority resides with the people, not the king. It's why the Constitution starts with "we the people" and not "King George III says…"

A government where the people have power and authority over the government—usually, through elections.

Popular sovereignty is when the power to rule belongs to the people. Pretty simple stuff…right? (Cricket noises.)

Judicial Review

The right of the Supreme Court to review and take action against any legislation—local, state, or federal—it deems to be unconstitutional.

Judicial review is the idea that the judicial branch of government (in the United States, the Supreme Court) has the right and responsibility to invalidate actions by the other branches of government if they are judged to be unconstitutional. If Congress passes a law or the President undertakes an executive action that a majority of the Supreme Court believes to run afoul of the Constitution, the Court can overturn that law or executive action. Judicial review is a critical part of the American system of checks and balances, giving the judicial branch its most powerful tool to limit the executive andlegislative branches. Interestingly, the power of judicial review is not explicitly named in the Constitution; the Supreme Court itself declared that it had the power of judicial review for the first time in the 1803 case of Marbury v. Madison.

The authority of the courts to rule on the constitutionality of legislative actions. This power wasn't expressly granted in the Constitution and wasn't universally acknowledged with the ratification of the Constitution in 1789. Alexander Hamilton argued in Federalist #78 that it was implied by Article III of the Constitution. But others argued that this claim placed the judiciary above the legislative branch and contradicted the democratic premises of America's political system. 

In Marbury v. Madison (1803), the Supreme Court asserted this power for the first time. Chief Justice John Marshall's Court would assert the same power in 15 additional cases. Some continued to challenge the court's authority to do so, but the principle of judicial review was widely established by Marshall's death in 1835.

The power of federal judges to strike down Congressional laws that violate the Constitution

This is the power exercised by the Supreme Court to determine the constitutionality of laws. This right was not specifically provided by the Constitution, but was exercised in the famous case of Marbury v. Madison and has been the precedent followed since.

When the Supreme Court decides whether a legislative or executive action is constitutional, it's practicing judicial review. It's the most important check the judicial branch has over the other branches.

Judicial review is the Supreme Court's power to declare acts of Congress (or States) as unconstitutional, thus nullifying them. Boom.

Unconstitutional

The Constitution of the United States is, in its own words, the "supreme Law of the Land." That means that no other law can counteract or override the Constitution itself. If Congress passes a law (or the President undertakes an executive action) that runs afoul of the Constitution, the Supreme Court can use its power of judicial review to rule that such a law (or executive action) is unconstitutional and therefore should be overturned.

A legislative act or executive action which violates the terms of the constitution is said to be unconstitutional. The Supreme Court has the authority to overturn laws or executive orders that it finds to be unconstitutional.

Bill Of Rights

The Bill of Rights is the name given to the first ten amendments to the United States Constitution, passed by the first US Congress and ratified in 1791. The Bill of Rights includes explicit guarantees of many of the most important rights and liberties held by American citizens: freedom of speech, freedom of religion, freedom of assembly, freedom of the press, the right to bear arms, freedom from unreasonable search and seizure, etc.

Americans call the first ten amendments to our Constitution the Bill of Rights. And no, it does not include your right to get a tattoo without asking your parents' permission. (Maybe you should propose that.)

Added to the Constitution as the first ten amendments, our Bill of Rights outlines the many personal freedoms we are guaranteed as citizens of the United States.

The first ten amendments to the Constitution, which were proposed all at once in 1789 before many states had even ratified the Constitution. Don't think of the Bill of Rights as an afterthought, though—it protects our freedom of speech, religion, the press, and our right to bear arms, among other important things.