What Is the Treasury Secretary?
The treasury secretary is the head of the U.S. Department of the Treasury. The secretary of the treasury is one of the most important in the executive branch, analogous to that of finance minister in other countries and responsible for all fiscal policy matters. The current secretary of the Treasury is former Federal Reserve chair, Janet Yellen, who was sworn in as the 78th Treasury secretary on Jan. 26, 2021. She is the first woman to hold either position.
- Treasury secretaries serve as head of the U.S. Department of the Treasury. The position was created in 1789 and was first held by Alexander Hamilton under President George Washington.
- Treasury secretaries are part of the president’s cabinet and are fifth in the line of succession to the president.
- Treasury secretaries are the primary economic advisor to the president and have a dramatic impact on various domestic and international policies.
- The U.S. Department of the Treasury is responsible for all matters relating to fiscal policy in the United States.
- The current Treasury secretary is Janet Yellen, former chair of the Federal Reserve. She is the first woman to hold either position.
Understanding the Treasury Secretary
The treasury secretary is a member of the president's cabinet and fifth in the line of succession to president. As head of the Department of the Treasury, the secretary is the president's principal economic adviser, having a dramatic impact on domestic and international policies with a particular focus on tax policy. The treasury secretary is appointed by the president and is subject to confirmation by the Senate.
The secretary of the treasury is often considered one of the four most important cabinet positions, along with the secretary of defense, secretary of state, and the attorney general. The treasury secretary is also a not-statutory member of the U.S. National Security Council, an organization tasked with advising and assisting the President of the United States on matters relevant to national security and foreign policy.
The treasury secretary focuses on fiscal policy, while the nation's monetary policy is the responsibility of its central bank, the Federal Reserve. While legislation governs the Fed's mission and its leadership is appointed by the president, it is an independent entity and, thus, not housed in any branch of the federal government.
The U.S. Department of the Treasury is separated into two major parts: the departmental offices, which are responsible for drafting fiscal legislation, and the operating bureaus, which are responsible for carrying out said legislation.
The Treasury of the United States issues the national debt in the form of Treasury securities. It collects the federal government's tax revenue through the Internal Revenue Service (IRS). From 1862 to 1971, the Treasury issued the nation's paper money, known as United States notes. Since 1971, U.S. paper currency has been issued by the Federal Reserve, but the treasury secretary must still sign these notes for them to become legal tender. The Bureau of Engraving and Printing, which manufactures the notes, is an agency of the Treasury; the U.S. Mint, another Treasury agency, produces the nation's coins.
Through the Office of Foreign Assets Control, the treasury enforces economic sanctions against foreign countries, companies and individuals.
Prior to 2003, the treasury held law enforcement responsibilities through the Customs Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Secret Service. Since 2003, these agencies have been merged with the newly created Department of Homeland Security.
History of the Treasury Secretary
The first treasury secretary was Alexander Hamilton, George Washington's aide-de-camp during the Revolutionary War, who served from Sept. 11, 1789, to Jan. 31, 1795. His contributions to the Treasury's development include the establishment of the U.S. Mint, the First National Bank—though its charter was allowed to lapse in 1811, and the full funding of the national debt—together with the assumption of cumulative state debts, which established the reputation of the U.S. as a reliable borrower. Today, treasury securities are considered among the safest investments in the world, and their interest rate is often used as a proxy for the theoretical risk-free rate of return.