What Is the Treasury Department? Responsibilities & History
What Is the U.S. Department of the Treasury?The U.S. Department of the Treasury oversees the management of the U.S. government’s finances and helps to set fiscal policy. The Treasury Department collects revenue in the form of taxes via the Internal Revenue Service and raises funds with the sale of ...
What Is the U.S. Department of the Treasury?
The U.S. Department of the Treasury oversees the management of the U.S. government’s finances and helps to set fiscal policy. The Treasury Department collects revenue in the form of taxes via the Internal Revenue Service and raises funds with the sale of government securities. Spending at the national level from these sources can influence the direction and strength of the economy.
The Treasury Department’s importance is similar to that of the Federal Reserve, which oversees monetary policy and aims to keep inflation under control and to maximize employment. One of the Treasury Department’s stated missions is “to maintain a strong economy and create economic and job opportunities.” The department—which operates as part of the executive branch of government—and the Fed often work together to ensure that the U.S. economy is on sound footing.
What Are the Treasury Department’s Responsibilities?
The Treasury Department’s primary responsibilities range from managing the federal government’s finances to overseeing currency and coinage to collecting taxes and enforcing the nation’s finance and tax laws. The Treasury Department’s lists its basic functions as such:
- Economic, international economic, and fiscal policy
- Government accounting, cash, and debt management
- Promulgation and enforcement of tax and tariff laws
- Assessment and collection of internal revenue
- Production of coin and currency
- Supervision of national banks and thrifts
A Brief History of the Treasury Department
Created by Congress in September 1789, the Treasury Department is the second-oldest agency of the U.S. government. The Department of State is the oldest, founded a few months earlier in the same year.
The first Treasury secretary was Alexander Hamilton, who served from 1789 to 1795. Tasked with managing the country’s debt that had accumulated to finance the war with England, Hamilton proposed a dollar-for-dollar repayment of $75 million in borrowings to strengthen the republic’s public credit standing.
The nation’s capital relocated to Washington, D.C. in 1800, and the Treasury Department moved into a building that was subsequently burned by the British in 1814. A new building was constructed on the same spot, but a fire destroyed it in 1833. A granite structure in the Greek revival architectural style was built between 1836 and 1869, and it remains the headquarters of the Treasury to this day, The neoclassical style influenced the design of other government structures in the capital. The Treasury building’s front facade is featured on the back of the $10 bill.
From the start, the Treasury Department was tasked with many responsibilities and had cast a wide net over the temporary supervision of other agencies, including the postal service, the Department of the Interior, and the Coast Guard. Historical events also forced the department to adapt to the needs of the times. The Civil War necessitated the printing of paper currency, the development of a national banking system, and the creation of the Bureau of Internal Revenue to make up for lost revenue from seceding states.
In the 1940s, the Treasury Department took the lead in the establishment of the Bretton Woods System in preparation of a new global economic order following the end of World War II, and that paved the way for the creation of the International Monetary Fund and the World Bank.
During the financial crisis of 2007–2008, the Treasury Department coordinated with the Federal Reserve and the Federal Deposit Insurance Corporation to ensure that banks had ample assets to meet withdrawals in case of a run on deposits and to prevent a collapse in financial institutions from spreading.
What Are the Bureaus Under the Treasury Department?
The Treasury Department is broken down into 11 bureaus that have specific functions. It describes those bureaus’ responsibilities as such, according to its website:
The Bureau of the Fiscal Service
This bureau promotes the financial integrity and operational efficiency of the U.S. government through accounting, financing, collections, payments, and shared services.
The Internal Revenue Service
The largest of the Treasury's bureaus, the IRS is responsible for determining, assessing, and collecting revenue. It also upholds the Internal Revenue Code.
The U.S. Mint
This bureau designs and manufactures domestic, bullion, and foreign coins as well as commemorative medals and other numismatic items. Its facilities also house the country’s gold and silver assets.
The Bureau of Engraving & Printing
This bureau designs and produces the nation’s currency, securities, and other official certificates and awards.
The Office of the Comptroller of the Currency
This bureau charters, regulates, and supervises national banks.
The Financial Crimes Enforcement Network
This bureau supports law enforcement investigative efforts and fosters interagency and global cooperation against domestic and international financial crimes. It also provides U.S. policymakers with strategic analyses of domestic and worldwide trends and patterns.
The Treasury Inspector General for Tax Administration
This bureau recommends setting policy for activities designed to promote economy, efficiency, and effectiveness in the administration of the internal revenue laws. It also recommends policies to prevent and detect fraud and abuse in the programs and operations of the IRS and related entities.
The Alcohol And Tobacco Tax And Trade Bureau
This bureau is responsible for enforcing and administering laws covering the production, use, and distribution of alcohol and tobacco products. It also collects excise taxes for firearms and ammunition.
The Inspector General
This bureau conducts independent audits, investigations, and reviews to help the Treasury Department accomplish its mission.
Frequently Asked Questions (FAQ)
The following are answers to some of the most common questions investors ask about the Treasury Department.
Why Does the Treasury Department Sell Bonds?
The Treasury Department sells bonds to provide financing to the U.S. government. Large purchases are usually conducted via primary dealers, but the department also sells bonds in small denominations to investors via its website, TreasuryDirect.
Is the Secret Service a Part of the Treasury Department?
From its founding in 1865 until 2003, the Secret Service operated under the jurisdiction of the Treasury Department. Its task, in addition to providing security and protection to the president and other high-ranking government officials, was to prevent forgeries and to arrest counterfeiters.
As part of a reorganization in federal law enforcement in the fight against terror after the September 11 attacks, the Secret Service was transferred under the newly established Department of Homeland Security. Other law enforcement bureaus—namely the Federal Law Enforcement Training Center and U.S. Customs—were also moved to Homeland Security.
The law-enforcement functions of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) were transferred to the Department of Justice, while the tax functions remained with the Treasury Department.
Does the Treasury Department Set Fiscal Policy?
It’s the duty of the legislative and executive branches of the U.S. government to set fiscal policy, which is the use of government spending and taxation to influence the economy, and the Treasury Department—as part of the executive branch—assists and advises the president and administration on creating sound fiscal policy measures.
What Is the Budget of the Treasury Department?
The department has a budget of about $13 billion and oversees more than 100,000 employees.