"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
-- First Amendment to the United States Constitution
Although the phrase "separation of church and state" is a popular rallying cry and oft-respected principle of United States law, it does not actually appear in the Constitution. What the First Amendment does do is forbid the establishment of a state church or religion by Congress. The phrase "separation of church and state" actually comes to us by way of Thomas Jefferson, who used it to describe his feelings on the ideal relationship between religion and the government. Note, however, that while we today are concerned about religion's influence on the government, he looked with a wary on eye on the history of the Church of England and was more concerned with the opposite, that is, the influence Congress might have on religious belief.
Toeing the hard-to-define line between these two principles, the Supreme Court recognizes certain trappings of Christianity within the government as legal under a principle called "ceremonial deism." According to the Court, certain phrases and actions are more custom than religion and too minor to be considered as advocation of a particular State Religion. Examples of ceremonial deism include the phrase "In God We Trust" on money, the swearing on a Bible in a court of law before one gives testimony (although most states permit you to not use a Bible, now) and the phrase "under God" in the pledge of allegiance. The principle of ceremonial deism has kept such things legal despite numerous challenges in court not only by atheists but also by Quakers and other religious sects who believe in God but consider such proclamations sinful idolatry.
Needless to say, the principle of ceremonial deism has led to a great deal of contradictory rulings about such things as courthouse Nativity displays, even despite the fact there is now a decade and a half of court cases clarifying what practices fall under this heading. According to the Supreme Court, a practice must be:
To fall under legal protection of this sort. Whether you find such a principle just or ludicrous, it seems unlikely that ceremonial deism will ever be ruled illegal in our lifetime--remember that to this date the Supreme Court still begins its sessions with the marshal announcing, "God save this honorable court" as the justices enter their chamber (its doors carved with the Ten Commandments) and sit beneath another carving, of Moses. | 
