BONUS: Should the US Treasury Be Independent from the President?

Liam Heffernan: 00:01:46

Hello and welcome to this bonus episode of America A History Recorded straight after our recently published episode. What is the U.S. treasury? I'm joined now by the guest from that episode, Sean Venatter, to discuss this a little bit more.

Sean, thanks for hanging on.

Sean Vanatta: 00:02:03

Absolutely. No, happy to.

Liam Heffernan: 00:02:05

Yeah. It was really great chatting to you in the main episode.

I think maybe I had a little bit of a personal bias in this subject because I worked in banking so long, but I, I do feel like it's such an important part of what makes the US tick day to day.

As uninteresting as it might seem at face value, there's actually so much going on in how the treasury is run and those sort of broader kind of geopolitics that we touched on as well, Right, Absolutely.

Sean Vanatta: 00:02:33

I mean, I think the episode in part was about the treasury, but it's also about the US financial system.

It's about what money is at a fundamental level in the US and there's no way, I think, to separate those things out because in part, right, it's the government that defines and creates money, but it's tied up in the private banking system. They're also creating money.

And so you're trying to think about what are the relationships between what the government is doing, what private bankers are doing, and then how that affects each of our kind of day to day lives.

Liam Heffernan: 00:03:03

Do you think that there is some merit to having a U.S. treasury that is completely separate from influence from the White House?

Because then you're removing the, of the personal values of the President of the moment, having these sort of quite significant impacts on how the US economy is run.

Sean Vanatta: 00:03:28

Yeah, I think we're at a really interesting moment for that question in the U.S. because the Treasury Secretary has always been closely tied to the President, is appointed by the President, term is coterminous with the President, So there's always been some political sort of tie in there and I think that's important.

And so you can say the management of government finances being tied to the administration does make sense, but there are functions of the treasury that you might want to separate out. The thing that makes this moment interesting is that for a while the US tried to create these independent agencies.

The Federal Reserve is kind of the biggest one, but we have the Federal Trade Commission, the Consumer Financial Protection Bureau, where the idea was to kind of create some separation between the President and these agencies so that they wouldn't be subject to such political influence.

And the U.S. supreme Court has taken the view that actually everything that's tied to the executive branch The President needs to have direct and unambiguous control over.

And so instead of a moment when we might be trying to move, sort of recognize that having more independence for certain kinds of functions, having more kind of technocratic expertise as against kind of political agendas, like we might want more of that, the Supreme Court is really swinging us back to a world where it's all about political control, and that political control comes from the executive branch.

The other way that that is maybe kind of creates a tension is that Congress created the Treasury Department to manage, basically Congress authorizing taxes and Congress authorizing spending. It's the Treasury Department that sits in between those things. But again, in the current environment, that seemed to be part of the executive branch.

And so it's under the President's control. So there are different ways within the US and we talked a bit about this too, within, like, US Federalism, sort of federal government versus state.

We talked about public versus private.

There's also just within the federal government, this tension between courts, executive and Congress that is kind of always being fought out over time. And right now, the kind of momentum is really towards the President and this President that we have in particular.

Liam Heffernan: 00:05:50

But I guess some people might argue that at the moment, it feels like the President is keeping the treasury in check when it could or maybe should be the other way around.

Sean Vanatta: 00:06:05

Yeah, I mean, it doesn't seem like anything is keeping the current president in check. It's hard to know that.

The thing is, the treasury, strictly speaking, isn't where the control is because the treasury, strictly speaking, just does what Congress says. So Congress authorizes the spending. So it's really Congress that should.

If anyone is keeping the President in check in terms of spending, in terms of finance, it's Congress that's authorizing those choices. The Treasury Department has a role to play in that it's trying to manage those choices.

It's trying to say, okay, you've told us to collect certain revenue, to spend certain revenue. It makes judgments about how to collect taxes. And so certainly it could ramp up or ramp down those choices. You know, it's one of these things.

The Treasury Department seems really, really powerful, and it is. And also it. It isn't. It. It can't. Like, this isn't a thing that it can do or that it's designed to do.

Liam Heffernan: 00:07:05

Yeah. Okay, so let's say tomorrow you are Secretary Venatta and you. You're in charge of the Treasury. What, if anything, would you do differently?

Sean Vanatta: 00:07:16

What would I do differently? So there's this effort, I think, even in the Obama administration to change the pictures on the currency.

So I would put Harriet Tubman, who's a famous sort of abolitionist, she was meant to replace Andrew Jackson on the currency.

I think it's hilarious that Andrew Jackson, a person who absolutely sort of hated paper currency, who hated banks, who would have been appalled at the very idea of a Federal Reserve System, is actually on our $20 bill. We should just scrap that. Otherwise. Yeah, I think empower the tax collecting agencies to fight to collect as much tax as possible.

I think we have for too long enabled, especially the wealthy, to hide their wealth from tax authorities. And so I think that would be a major priority.

Liam Heffernan: 00:08:05

Yeah, fair. And I, for one, I'm all in favor of Harriet Tubman, the US currency. We did an episode on the podcast, actually, exploring her life and legacy.

So anyone listening should go and check that out. If you were to invent a currency, what would you call it?

Sean Vanatta: 00:08:21

I'm actually quite happy with the US dollar. I think what makes it interesting is its long history, going back to silver coins that were originally mined.

I think in what is now the Czech Republic, there's a kind of specific size and weight of coin that then becomes the Spanish piece of eight. So it's minted in potsy and these other kind of New World mines.

And it's that kind of long international legacy that gets us down to what becomes the US dollar. And so I think, like in and of itself, right, the dollar as a historical object is like worth preserving.

And in a world, right, where currencies are being invented every day, right. You can. It's easy to invent a currency, to name it whatever you want, and to sell it on the Internet or give it away for free.

Maintaining some sense of stability around the US dollar, I think is important.

Liam Heffernan: 00:09:12

Very, very sensible, diplomatic answer. I have to actually just touch on before I let you go. You mentioned in the main episode that you came from Savannah.

As a Brit, I have to ask, do you love your job that much that you're willing to stay in Glasgow from Savannah?

Sean Vanatta: 00:09:30

It's complicated. I really appreciate the Scottish summers, if you can call it. We have summer, right. It's. It's two things. So Savannah's fine. But it is hot.

It is so hot.

he morning, all the way until: 10:30

All the men take their shirts off and drink beer in the park. Like, I'm down for that. I'm here for that. And I also just appreciate not sweating through my clothes every single day.

Liam Heffernan: 00:10:11

Yeah. And I'm sure you get a nice kind of first person view of good old fashioned, like football hooliganism as well in Glasgow every Saturday.

Sean Vanatta: 00:10:20

Yeah, I mean, you know, like we have our own traditions of not quite hooliganism, but, you know, people get rowdy around American football too. So I definitely come from that culture. But it is nice. It's nice, it's nice.

At this stage of my life we've got young kids to just have a kind of international adventure and then we'll see how long it lasts. But for the moment, Scotland's great.

Liam Heffernan: 00:10:43

I'm sure it's lovely, but I think given the chance, I'd probably trade it for the nice consistent hot weather of southeast US anytime.

But one final question, because we've talked about Alexander Hamilton a lot, naturally, when we talk about the Treasury, I think he's gone through a bit of a kind of posthumous PR roller coaster where he's been villainized and he's also been martyred. So do you see Hamilton as a hero or a villain?

Sean Vanatta: 00:11:12

I would never, I would probably never call him either. I think I'd say Hamilton is important and deserves the recognition as an important figure.

So Hamilton ushered in what we might call a financial revolution in the US which made the US essentially a viable nation. Some of his legacy was kind of back and forth through the 19th century. Right. Like he really believed in having a central bank that got wiped out.

He wanted more kind of centralized finance. But.

And like in a, you know, you could take a macro view and say this enabled sort of the money power and you know, the concentration of financial wealth. I don't think we can pin that all on Hamilton.

He certainly had a vision of society where finance was important and that creates benefits for society and problems for society. But I also am sure we don't want to be living in Jefferson's agrarian republic either.

So given the choice, I'd rather have sort of finance and its downsides than live on a farm in the present.

Liam Heffernan: 00:12:18

Do you think Hamilton would have made a great president if he had ever won the White House?

Sean Vanatta: 00:12:24

I would need to know. So I'm not a Hamilton scholar and I have to confess I haven't seen the musical.

Liam Heffernan: 00:12:31

It's very good.

Sean Vanatta: 00:12:31

You should, by the way, I'm sure. No, my sense is he seems like a potentially kind of controversial and confrontational figure. I mean, he did die in a freaking duel.

So is that the guy that you want as president? And I would say, like an example of that is Andrew Jackson also was a frequent duelist.

And he's not like he was a powerful president, is he a great president, I think is also very debatable.

Liam Heffernan: 00:12:54

Well, I guess Jackson won his Jules, right? And he's the president. So yeah, maybe. There you go. But anyway, Sean, thanks for joining me for this and for the main episode as well.

It's been an absolute pleasure having you on. Do just remind everyone before you go how people can connect with you.

Sean Vanatta: 00:13:11

Yeah.

So, again, so I'm Sean Venata, I teach at the University of Glasgow and you can find me or you can email me at Sean Vanata, glasgow.ac.uk and thanks, Liam, this was great. I really appreciate it.

Liam Heffernan: 00:13:23

Oh no, the pleasure is all mine. I am just the idiot in the room for this podcast and it's an absolute pleasure talking to people like yourselves about this.

So thank you for joining me. And for anyone listening, if you haven't already, do listen to the full episode about the US treasury right now. It's just below this one on the feed.

And as always, links to everything that we discuss are in the show notes as well. Do also remember if you can, to rate and review. That really helps us out and follow the show if you like us so that you don't miss an episode.

And if you really love what we do, then there are links in the show notes as well to support us from as little as $1. But otherwise, thank you so much for listening and goodbye.