Watch CBSN Live

The Treasury Secretary's Power

With Larry Summers recently taking over as the new U.S. treasury secretary, there has been at least a slight increase in interest about the power of the office, and the power of the president to create and carry out an economic strategy.

In general, an American president does not have the most power over the nation's purse strings. The constitution gives that to Congress.

In recent years, Congress, somewhat gutlessly in the opinion of many observers, has yielded some of this power to the presidency -- partly because Congress doesn't like taking the heat for decisions about spending. But still, it is the American legislative branch, not the executive, that has the most power over the budget and other finances -- the power to tax and spend.

The U.S. treasury secretary doesn't have quite the power compared to the finance ministers of other countries such as England and Germany. Controlling the money supply and interest rates belongs to the Federal Reserve, currently headed by Republican Alan Greenspan.

Remember: We Americans believe in balancing powers, spreading them out, not having them concentrated in any one branch, or even sub-branch of government. Domestically, the biggest responsibility of a treasury secretary is promoting the strength of the dollar and advising the president.

For example, former Treasury Secretary Bob Rubin's greatest accomplishment was convincing President Clinton of the need to balance the federal budget -- which, remarkably, the president led Congress into actually doing.

A treasury secretary's greatest authority is in foreign policy, where the United States can apply massive leverage through the World Bank and the International Monetary Fund.

Good stuff to be mindful of as we try to understand who's who and what's what with our economy.

View CBS News In