President  |  Vice President  |  First Lady  |  Mrs. Cheney  |  News & Policies 
History & ToursKids  |  Your Government  |  Appointments  |  JobsContactGraphic version

Email Updates  |  Español  |  Accessibility  |  Search  |  Privacy Policy  |  Help


The President’s Proposal:
The Department's Major Challenges:

Department of the Treasury
Kenneth Dam, Acting Secretary     202–622–2000
Number of Employees: 116,675
2003 Spending: $11.1 billion (debt financing and tax credits account for another $357.7 billion)
Organization: Nine bureaus—Internal Revenue Service; Financial Management Service; Financial Crimes Enforcement Network; Alcohol and Tobacco Tax and Trade; Public Debt; Mint; Engraving and Printing; Comptroller of the Currency; and Office of Thrift Supervision.

   The Department of the Treasury’s core responsibilities are:

  • managing our nation’s finances;
  • fighting the financial war on terrorism; and
  • safeguarding our nation’s currency.
  •    2003 will be a year of great change for the Department of the Treasury.  The Homeland Security Act of 2002 transferred the U.S. Customs Service, the U.S. Secret Service, and the Federal Law Enforcement Training Center to the Department of Homeland Security and transferred the firearms, arson, and explosives functions of the Bureau of Alcohol, Tobacco, and Firearms (ATF) to the Department of Justice.  Formerly part of ATF, Treasury’s Alcohol and Tobacco Tax and Trade Bureau administers and enforces the alcohol and tobacco laws.  (The President's Budget proposals concerning these bureaus are discussed in the Departments of Homeland Security and Justice chapters.)  Treasury will have transferred almost a third of its resources as part of this reorganization, including most of its law enforcement functions.  Streamlining the department to its core financial responsibilities will better enable Treasury to meet its challenges.

    Performance Evaluation of Select Programs

       Treasury performance evaluations this year showed both effective and ineffective programs.  The results and policy proposals for two critical programs are summarized in the following table.  For further details on these and other Treasury programs, please see the Department of the Treasury chapter in the Performance and Management Assessments volume.

    Program Rating Explanation Recommendation
    Internal Revenue Service (IRS) Tax Collection Results Not Demonstrated This program secures known delinquent tax debt.  While it yields $18 billion per year, it fails to collect far more, and does not effectively enforce fair tax compliance. The budget includes an initiative to use private collection agents to help secure delinquent tax debt and includes an increase in IRS enforcement funding.
    Office of Foreign Assets Control (OFAC) Results Not Demonstrated This program administers and enforces economic and trade sanctions against targeted foreign countries, terrorism sponsoring organizations, and international narcotics traffickers.  Treasury’s OFAC and our allies have frozen over $124 million in terrorist assets since September 2001, but the program does not have strong annual and long-term performance goals. OFAC is in the process of establishing annual and long-term performance goals that directly tie to their core missions.  This will enable program partners and the public to evaluate more precisely OFAC’s success in enforcing economic and trade sanctions.

    Managing Our Nation’s Finances

       The IRS is the government’s principal revenue collector.  Although IRS has improved performance over the past few years, further improvement is needed: only 68 percent of taxpayer calls were answered in 2002, only 81 percent of tax law answers met IRS quality standards, and compliance efforts are too low.  IRS needs to improve the way it does business and modernize its computer systems to achieve vital performance breakthroughs.  To this end, the IRS is in the midst of a major effort to reengineer its work processes and modernize its technology.  In 2003 and 2004, IRS will roll out the first two phases in a multiyear effort to replace the taxpayer database. This new database will allow accurate tax account answers on a real time basis.  The new database also will allow the IRS to develop new approaches to improve tax collection and improve taxpayer assistance.  The budget proposes $10.4 billion for IRS and includes four major efforts to improve performance:

    Ensuring Earned Income Credits go to the Right People

    The Earned Income Tax Credit (EITC) provides $32 billion each year to 20 million hard-working, lower-income Americans.  It rewards work and lifts families out of poverty.  Unfortunately, it is also far too complex and is prone to error and fraud.  Its 54-page instruction book confuses even tax professionals.  More than one dollar in four is paid in error.  EITC reforms effective in 2002 simplify eligibility rules and the computation of benefits.  This should reduce errors.  In addition, the budget includes a $100 million increase to help ensure only eligible taxpayers receive payments and to clarify EITC rules.

    Web Applications Improve Service to Taxpayers

       IRS is expanding its use of web applications to improve service to taxpayers.  Private industry partnered with IRS in 2002 to provide free Internet filing of federal tax forms starting in early 2003.  Additionally, taxpayers are able to check the status of their refund on the web.  IRS also is partnering with the Social Security Administration to provide online employer identification numbers.

       Treasury manages the government’s payments through the FMS.  Each year FMS issues nearly 950 million non-Defense payments, with a dollar value of more than $1.2 trillion, to a wide variety of recipients, such as those who receive Social Security, IRS tax refunds, and veterans’ benefits. In 2002, FMS issued 666 million payments (73 percent) by electronic funds transfer and 253 million paper checks.  FMS also collected $2.3 trillion in federal receipts, of which $1.8 trillion (79 percent) was received electronically.

       The budget also proposes to repeal a Treasury-administered provision in the 2001 Agriculture Appropriations Act, the Continued Dumping and Subsidy Offset Act of 2000, that annually pays approximately $230 million to complainants in antidumping/countervailing-duty cases.  These corporate subsidies effectively provide a significant “double-dip” benefit to industries that already gain protection from the increased import prices provided by countervailing tariffs.  While the Administration does not believe that these payments are inconsistent with U. S. treaty obligations, repeal of the provision would allow the funds to be directed to higher priority uses.

    The Bureau of Public Debt is phasing out paper bonds in favor of web-based electronic bonds.

       Treasury manages the nation’s debt through the Bureau of Public Debt (BPD).  BPD oversees the $6.3 trillion federal debt, including the $3.6 trillion held by the public.  Last year, BPD issued approximately $3.7 trillion of debt by auctioning marketable Treasury securities and selling savings bonds, and paid off $3.5 trillion in securities. BPD introduced its new TreasuryDirect system in 2002, by offering the first ever all electronic Series I inflation-indexed savings bond (   This is the first step of an E-Government initiative to offer retail investors a direct all-electronic means to buy and hold Treasury securities.   A key factor in achieving this important goal is the multiyear effort to convert all savings bond holdings to paperless form.

    Fighting the Financial War on Terrorism

       Treasury combats terrorist financing through the Internal Revenue Service-Criminal Investigation Division, the Financial Crimes Enforcement Network (FinCEN), and Office of Foreign Assets Control (OFAC).  These organizations are invaluable in detecting, disrupting, dismantling, and blocking terrorist financing operations.  Since September 2001, OFAC and our allies have blocked terrorist-related assets totaling $124 million worldwide.

       IRS’s Special Agents are experts at gathering and analyzing complex financial information from numerous sources and applying the evidence to tax, money laundering, and Bank Secrecy Act violations.  They apply their training, skills, and expertise to support the national effort to combat terrorism, including participation in the Joint Terrorism Task Forces and similar joint efforts focused on disrupting and dismantling terrorist financing.

       The most visible and immediately effective tactic of our comprehensive terrorist financing strategy has been designating and blocking the accounts of terrorists and those associated with financing terrorist activity.

       FinCEN's unique role in linking the law enforcement and intelligence communities with financial institutions and regulators helps these entities uncover illegal activities and schemes.  The President’s proposal provides FinCEN with significant budgetary increases to improve information sharing between the financial services and law enforcement communities.  FinCEN will use these resources to expand the Patriot Act Communications System, a highly secure network that allows financial institutions to electronically file Bank Secrecy Act forms.

    Safeguarding Our Nation’s Currency

       The United States Mint and the Bureau of Engraving and Printing (BEP) are responsible for assuring that our nation retains its status as producing the world’s most accepted currency. According to the U.S. Secret Service, $47.5 million in counterfeit money was discovered in circulation in 2002. Of this amount, 39 percent was computer generated, compared with only 0.5 percent of the counterfeit currency seized in 1995.  The rapid growth of desktop publishing and other computer technologies have contributed to this increase in counterfeiting.

       BEP is in the process of redesigning our nation’s currency to counter this trend. The new design, known as NexGen, will affect the $100, $50, and $20 notes. Introduction of the NexGen $20 bill could begin as early as fall 2003, with introduction of the other notes 12 to 18 months later. The NexGen notes will remain the same size and use similar portraits and images to maintain their unique and accepted appearance. The NexGen design will build on past security features with the addition of subtle background colors and other new security features that are designed to deter counterfeiting.  The redesign effort will be introduced with an extensive public education campaign to inform the public and business sector about the NexGen currency and also how to detect counterfeit currency.

    Update on the President’s Management Agenda

      Human Capital Competitive Sourcing Financial Performance E-Government Budget and Performance Integration
    Treasury is exploring competition of more than 5,000 commercial positions to determine the best means of delivering services such as IRS tax form distribution centers (500 positions), IRS building maintenance (100 positions), and Mint customer service (48 positions).  These competitions should begin to yield savings in 2003 and 2004.  Treasury can now produce accurate financial reports three days after the end of each month.  In 2001, Treasury met the goal to produce audited financial statements by November 15th, two years ahead of the Administration’s goal to require agency financial statements 45 days after the end of the year.  However, the Department will not be able to correct significant weaknesses in IRS’s tax accounting systems until late 2006.  In addition, the Department must improve its ability to manage its critical technology investment programs.  Finally, IRS is developing outcome measures and working to rationalize its budget structure.  These efforts, and other improvements in performance measures, will make it easier to manage Treasury’s programs to yield maximum results.

    Department of the Treasury
    (In millions of dollars)
    2003 2004
       Discretionary Budget Authority:      
          Internal Revenue Service 9,485 9,917 10,437
          Financial Management Service 199 221 229
          Financial Crimes Enforcement Network 48 51 58
          Alcohol and Tobacco Tax and Trade Bureau 73 80 80
          Public Debt 188 191 174
          Mint 13
          Interagency Law Enforcement 108 108
          Departmenal Offices 431 443 419
       Total, Discretionary budget authority 10,545 11,011 11,397
       Mandatory Outlays:      
          Internal Revenue Service 32,966 36,551 37,523
             Internal Revenue Service - Legislative Proposal 300 1,289
          Financial Management Service 2,316 1,590 1,443
             Financial Management Service - Legislative Proposal 386
          Alcohol and Tobacco Tax and Trade Bureau 341 355 307
             Alcohol and Tobacco Tax and Trade Bureau - Legislative Proposal 57
          Public Debt 130 131 131
          Comptroller of the Currency -36 -21 -22
          Office of Thrift Supervision -10
          Federal Financing Bank 51 50 58
             Federal Financing Bank - Legislative Proposal 2 5
          Departmental Offices -136 231 -100
             Departmental Offices - Legislative Proposal -221
          All other programs -2,419 -2,534 -2,522
             Other - Legislative Proposal -1,851
       Total, Mandatory outlays 33,203 36,655 36,483
    Credit activity      
       Direct Loan Disbursements:      
          Community Development Financial Institutions Fund 18 10 10
       Total, Direct loan disbursements 18 10 10
       Guaranteed Loans:      
          Air Transportation Stabilization Guaranteed Loan Financing 429 1,433
       Total, Guaranteed loans 429 1,433

    Previous Table of Contents Next


    More Issues


    RSS Feeds

    News by Date


    Federal Facts

    West Wing