Although the Treasury Department doesn’t set financial policy, Treasury secretaries throughout our nation’s history have played crucial roles in the U.S. economy. Yellen was formerly the Chair of the Federal Reserve between Feb. 3, 2014, and Feb. 3, 2018. She was the first female chair and is the first woman Secretary of the U.S. Treasury. Yellen’s experience as a Fed chair gives her a unique advantage as Treasury secretary. She will coordinate U.S. fiscal policy with the monetary policy of current Fed Chair Jerome Powell. They’ve already worked closely together while both were on the Fed board. She took office during extremely challenging times. The COVID-19 pandemic has forced businesses to shut down, causing rising unemployment and shrinking tax revenue. Government spending to combat the recession has sent debt levels skyrocketing to record levels. Hamilton paid off the debt by issuing the first U.S. Treasury bonds and by establishing the first taxes: on liquor. He created the first federal mint to issue a national currency. He also successfully argued for the first central bank of the United States so the federal government would have a safe place to store funds. Hamilton’s vision was for the federal government to have political dominance over the states. He also pushed the new country to move toward an industrial economy. He was in favor of tariffs to protect these new industries and of increasing liquidity to help start new businesses. Chase created the first paper dollar bill in 1861 and made sure the phrase “In God We Trust” was stamped on it. In his memory, the $10,000 bill was printed with his face on it from 1928 to 1946. His name lives on in the name of JPMorgan Chase, since the Chase Manhattan Bank was originally named after him. He first proposed the supply-side theory in 1924 in his book, Taxation: the People’s Business. He said the rich would use tax cuts to hire more people. That would boost the economy more than tax cuts to the poor. Lowering the rates would also more people to follow the law and pay their taxes. He cut the top marginal rate from 73% in 1921 to 25% in 1929. That lowered the debt from $24 billion in 1921 to $16 billion in 1930. As an ex-officio member of the Federal Reserve Board, Mellon favored interest rate hikes to curtail speculation in 1929. The Fed kept raising rates even though the economy entered a recession in August. That led to the stock market crash in October. After the war, he proposed the Morgenthau Plan to prevent Germany from building up the economic strength to ever be a military threat again. It was very harsh. It suggested that Germany be divided into two states, its industries annexed by neighboring countries, and its standard of living sharply reduced. Truman opposed the severity of the plan, but the last part was implemented. A Directive banned assistance to German farmers and prohibited the production of oil, rubber, merchant ships, and aircraft until 1947. Summers also was a strong advocate for the deregulation of derivatives. That was one reason why government officials had no idea that the subprime mortgage crisis would spread to the general economy. No one knew how pervasive the use of credit default swaps and other unregulated derivatives had become. Paulson, along with Federal Reserve Chair Ben Bernanke, spearheaded the bailout efforts. He used his personal relationships in the banking industry to force them to accept government ownership. That shielded the weaker banks with the credibility of the stronger ones. Geithner oversaw the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It regulates banks to prevent another financial crisis. It also protects borrowers with the Consumer Financial Protection Bureau (CFPB). Prior to serving as Treasury secretary, Geithner was head of the New York Federal Reserve Bank. In this role, he was intimately involved in guiding the bank bailouts intended to soften the 2008 financial crisis. He also guided European leaders during the financial crisis. Lew was Obama’s former Chief of Staff, Director of the Office of Management and Budget (OMB), and Chief Operating Officer for Management and Resources in the State Department. He served as OMB Director under President Clinton, where he helped negotiate a bipartisan transition to a balanced budget. Lew previously worked for Citi Global Wealth Management and Citi Alternative Investments. He also was the chief operating officer of New York University. Mnuchin co-authored and implemented the Tax Cuts and Jobs Act. He also oversaw the subsequent increase in the national debt. He eliminated Dodd-Frank regulations on small banks. Steve Mnuchin was Donald Trump’s campaign finance chairman. Mnuchin earlier was chief information officer at Goldman Sachs. He also worked in mortgage securities. In 2002, he set up his own hedge fund, Dune Capital. The Treasury secretary manages all the various functions of the Treasury Department. The most important is funding the public debt by overseeing the Treasury auction process. Taxpayers are most affected by federal tax policy and collecting income taxes through the Treasury’s Internal Revenue Service (IRS). The Treasury secretary also oversees the department’s function of manufacturing coins and currency, which affects everyone.
How the U.S. Treasury Department Works
You have the U.S. Department of Treasury to thank for the IRS, the U.S. Mint, and the Bureau of the Public Debt. These bureaus, along with nine others, are responsible for 98% of the department’s workforce. The remaining 2% of the workforce is in the Treasury secretary’s office. Although small in numbers, it is very influential in the global economy.
