The pope is considered as the Vicar of Christ on Earth (spokesman for God) and the ultimate earthly authority. However, the pope gets his orders from above as he is guided in almost anything he does by the Holy Spirit. Peter was declared by Christ to be the first pope and was told by Our Lord that "Whatever you bind on earth shall be bound also in Heaven. What ever you loose on earth shall also be loosened in Heaven." In other words, he told Peter that it was up to him to "make the rules." As the church could never be left without leadership, it was assumed that Christ wanted to maintain someone in charge of his church at all times. Thus, the Catholic Church has continued to fill the position of pope for 2000 years.
The pope rarely makes decisions on his own and, in matters of great importance, usually consults with the bishops before he makes a major pronouncement concerning faith and morals. However, he is ultimately the responsible person. The "buck stops in his office" so to say.
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