Objection 1. It would seem that an indulgence cannot remit any part of the punishment due for the satisfaction of sins. Because a gloss on 2 Timothy 2:13, "He cannot deny Himself," says: "He would do this if He did not keep His word." Now He said (Deuteronomy 25:2): "According to the measure of the sin shall the measure also of the stripes be." Therefore nothing can be remitted from the satisfactory punishment which is appointed according to the measure of sin.
Objection 2. Further, an inferior cannot absolve from an obligation imposed by his superior. But when God absolves us from sin He binds us to temporal punishment, as Hugh of St. Victor declares (Tract. vi Sum. Sent. [Of doubtful authenticity]). Therefore no man can absolve from that punishment, by remitting any part of it.
Objection 3. Further, the granting of the sacramental effect without the sacraments belongs to the power of excellence. Now none but Christ has the power of excellence in the sacraments. Since then satisfaction is a part of the sacrament of Penance, conducing to the remission of the punishment due, it seems that no mere man can remit the debt of punishment without satisfaction.
Objection 4. Further, the power of the ministers of the Church was given them, not "unto destruction," but "unto edification" (2 Corinthians 10:8). But it would be conducive to destruction, if satisfaction, which was intended for our good, inasmuch as it serves for a remedy, were done away with. Therefore the power of the ministers of the Church does not extend to this.
On the contrary, It is written (2 Corinthians 2:10): "For, what I have pardoned, if I have pardoned anything, for your sakes have I done it in the person of Christ," and a gloss adds: i.e. "as though Christ Himself had pardoned." But Christ could remit the punishment of a sin without any satisfaction, as evidenced in the case of the adulterous woman (John 8). Therefore Paul could do so likewise. Therefore the Pope can too, since his power in the Church is not less than Paul's.
Further, the universal Church cannot err; since He Who "was heard for His reverence" (Hebrews 5:7) said to Peter, on whose profession of faith the Church was founded (Luke 22:32): "I have prayed for thee that thy faith fail not." Now the universal Church approves and grants indulgences. Therefore indulgences have some value.
I answer that, All admit that indulgences have some value, for it would be blasphemy to say that the Church does anything in vain. But some say that they do not avail to free a man from the debt of punishment which he has deserved in Purgatory according to God's judgment, and that they merely serve to free him from the obligation imposed on him by the priest as a punishment for his sins, or from the canonical penalties he has incurred. But this opinion does not seem to be true. First, because it is expressly opposed to the privilege granted to Peter, to whom it was said (Matthew 16:19) that whatsoever he should loose on earth should be loosed also in heaven. Wherefore whatever remission is granted in the court of the Church holds good in the court of God. Moreover the Church by granting such indulgences would do more harm than good, since, by remitting the punishment she had enjoined on a man, she would deliver him to be punished more severely in Purgatory.
Hence we must say on the contrary that indulgences hold good both in the Church's court and in the judgment of God, for the remission of the punishment which remains after contrition, absolution, and confession, whether this punishment be enjoined or not. The reason why they so avail is the oneness of the mystical body in which many have performed works of satisfaction exceeding the requirements of their debts; in which, too, many have patiently borne unjust tribulations whereby a multitude of punishments would have been paid, had they been incurred. So great is the quantity of such merits that it exceeds the entire debt of punishment due to those who are living at this moment: and this is especially due to the merits of Christ: for though He acts through the sacraments, yet His efficacy is nowise restricted to them, but infinitely surpasses their efficacy.
Now one man can satisfy for another, as we have explained above (Question 13, Article 2). And the saints in whom this super-abundance of satisfactions is found, did not perform their good works for this or that particular person, who needs the remission of his punishment (else he would have received this remission without any indulgence at all), but they performed them for the whole Church in general, even as the Apostle declares that he fills up "those things that are wanting of the sufferings of Christ... for His body, which is the Church" to whom he wrote (Colossians 1:24). These merits, then, are the common property of the whole Church. Now those things which are the common property of a number are distributed to the various individuals according to the judgment of him who rules them all. Hence, just as one man would obtain the remission of his punishment if another were to satisfy for him, so would he too if another's satisfactions be applied to him by one who has the power to do so.
Reply to Objection 1. The remission which is granted by means of indulgences does not destroy the proportion between punishment and sin, since someone has spontaneously taken upon himself the punishment due for another's guilt, as explained above.
Reply to Objection 2. He who gains an indulgence is not, strictly speaking, absolved from the debt of punishment, but is given the means whereby he may pay it.
Reply to Objection 3. The effect of sacramental absolution is the removal of a man's guilt, an effect which is not produced by indulgences. But he who grants indulgences pays the debt of punishment which a man owes, out of the common stock of the Church's goods, as explained above.
Reply to Objection 4. Grace affords a better remedy for the avoidance of sin than does habituation to (good) works. And since he who gains an indulgence is disposed to grace through the love which he conceives for the cause for which the indulgence is granted, it follows that indulgences provide a remedy against sin. Consequently it is not harmful to grant indulgences unless this be done without discretion. Nevertheless those who gain indulgences should be advised, not, on this account, to omit the penitential works imposed on them, so that they may derive a remedy from these also, even though they may be quit of the debt of punishment; and all the more, seeing that they are often more in debt than they think.
Source: Summa Theologica (New Advent)