U.S. Department of Treasury

The U.S. Department of Treasury was established by Congress in 1789. It employs about 117,000 people, and operates under a budget of $11 billion. It controls another $358 billion in tax credits and debt financing. Unlike most other departments, 98% of the work of the Treasury is done by its 12 Bureaus. These include the Internal Revenue Service, the U.S. Mint, and the Bureau of the Public Debt.

The remaining 2% of the work that is done by the Departmental Offices is also extremely important, in that it is the office of the Secretary of the Treasury. The Secretary is responsible for managing the U.S. current account deficit through selling Treasury notes and bonds. Since this controls the value of the dollar, it impacts the entire global economy.

The U.S. Department of Treasury manages Federal finances once the President, Congress and the Office of Management and Budget set fiscal policy. It does this by collecting taxes via the I.R.S., and financing the U.S. debt through Treasury bonds. It also advises the Office of the President on financial, trade and tax policy.

Treasury faces a critical role whenever Congress delays raising the debt ceiling. Once the public debt hits the ceiling, Treasury must stop auctioning new Treasury notes. It can extend its ability to pay bills by borrowing from federally-managed retirement funds except for Social Security. It then starts to borrow from the Treasury notes purchased by the Federal Reserve. Once these emergency measures are exhausted, Treasury must rely on incoming tax revenue to pay the government's bills. For most of the year, this is not enough to cover expenses like payments to recipients of Social Security and Medicare benefits. Federal employees may have to be furloughed. If the Treasury doesn't have enough to pay the interest on the debt, then the U.S., would go into debt default. Although it might seem that Congress would want to avoid this at any costs, it did create a debt crisis in 2011, and may do so again in 2013. For more, see U.S. Debt Crisis.

The Treasury Department is responsible for printing postage stamps, currency and coinage through the U.S. Mint. It also enforces Federal finance and tax laws, as well as investigates and prosecutes tax evaders, counterfeiters, and forgers. As part of this function it aids the war on terrorism by identifying and freezing funds of terrorists.

The most important way the U.S. Treasury Department affects the U.S. economy is through auctioning Treasury bills, notes and bonds to pay for the U.S.debt. The interest paid on the 10 year Treasury note, also called the yield, reflects the demand for this type of government debt -- the more demand, the lower the yield. The lower the yield on the 10-year note, the lower fixed-interest mortgage interest rates are.

Low mortgage rates strengthen the economy by:

1. Allowing homebuyers to buy more and bigger houses, thus stimulating the real estate industry,
2. Encouraging homeowners to borrow more against the equity in their house, which permits them to spend more on consumer products.

By issuing Treasury Bonds, Treasury affects you by influencing mortgage interest rates. This influences your ability to buy and sell your home, and to get equity loans. For more, see How Do Treasury Notes Affect Mortgage Interest Rates?.

It also affects the value of the dollar, which impacts the cost of imports and inflation. Over the long haul, the declining dollar will erode your retirement savings to the point that you may have to keep working past 65.

However, Treasury affects you more directly, as well. Every April, the I.R.S. expects a check from you, unless it has withheld enough from your paycheck. You may also have U.S. Savings Bonds, or, if you are concerned about inflation, you might own I Bonds which are from the Bureau of the Public Debt.

Last, but not least, Treasury affects you by printing bills, coins and postage stamps.

Strong demand for Treasury notes also means strong demand for U.S. dollars. This keeps the dollar strong, which keeps the price of imports low, reducing inflation. However, the large current account deficit threatens to reduce confidence in the dollar, which is starting to weaken. This will increase the cost of imports, aggravating inflation, but could also trigger a dollar crash.

The Treasury Department has a page devoted to helping you find unclaimed money. Obviously, you'd go here to file claims for IRS refund checks you didn't receive, and for Savings and other Treasury bonds. However, this page also provides helpful links if you want to track down property from states you've lived in, class action suits, and unclaimed shares from credit unions to which you've belonged. You can also send in mutilated currency for a refund. For more, see U.S. Treasury Unclaimed Money. Article updated January 9, 2013