What Is the U.S. Treasury?
Let me explain the U.S. Treasury directly to you: it's the government department created in 1789 that's responsible for issuing all Treasury bonds, notes, and bills. You'll find several key agencies under its umbrella, including the Internal Revenue Service (IRS), the U.S. Mint, the Bureau of the Fiscal Service, and the Alcohol and Tobacco Tax and Trade Bureau.
Key Functions
The Treasury handles essential tasks like printing bills, postage, and Federal Reserve notes, as well as minting coins. It collects taxes, enforces tax laws, manages all government accounts and debt issues, and oversees U.S. banks in cooperation with the Federal Reserve. Remember, the secretary of the Treasury also deals with international monetary and financial policy, including foreign exchange intervention.
Key Takeaways
- The U.S. Treasury is a government department in charge of managing all federal finances.
- It is responsible for collecting taxes, paying bills, managing currency, government accounts, and public debt.
- The Department of the Treasury enforces finance and tax laws, as well as issues treasury bonds, considered to be the safest and most liquid securities worldwide.
- Janet Yellen, former chair of the Federal Reserve, is the current Treasury secretary. She is the first woman to hold either position.
Understanding the U.S. Treasury
You should know that the U.S. Treasury is the Cabinet-level department responsible for promoting economic growth and security. It was established by the First Congress of the United States, which met in New York on March 4, 1789, after the Constitution was ratified. The secretary of the Treasury gets nominated by the president and confirmed by the U.S. Senate.
Establishment
The U.S. Constitution was ratified in 1788, replacing the Articles of Confederation that governed during and right after the American Revolution. This new framework created a stronger federal government, and setting up a centralized Treasury Department was a critical part of that. Alexander Hamilton served as the first secretary of the Treasury until 1795. During his time, he achieved things like the federal government assuming states' Revolutionary War debts, arranging payments for war bonds, and establishing a federal tax collection system.
Internal Revenue Service
In 1861, President Abraham Lincoln introduced an income tax to fund the Civil War, and in 1862, he created the commissioner of internal revenue position. That tax got repealed in 1872, but the office continued. The modern income tax started with the 1913 ratification of the 16th Amendment, and the IRS took over collection and enforcement duties.
Treasury Bills and Bonds
The Treasury borrows money by issuing shorter-term notes called bills and longer-term bonds, with maturities up to 30 years. These are backed by the full faith and credit of the U.S. government, making them popular investments for governments, companies, and individuals around the world. The Federal Reserve Bank buys and sells these to control the money supply and manage interest rates.
Who Runs the Treasury Department?
The Treasury Department is led by the secretary of the Treasury, nominated by the president and confirmed by the Senate. In the Biden–Harris administration, that's Janet Yellen, who was previously the Federal Reserve chair from 2014 to 2018. She's the first woman to hold either of those positions. Her top deputy is Adewale 'Wally' Adeyemo, a veteran of the Obama administration with expertise in macroeconomic policy, consumer protection, and national security.
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