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About that External Revenue Service [1]
['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']
Date: 2025-01-23
Now is the time to understand what Obama (and Biden) did after the crash of 2008. I will summarize the explanation given here by the Federal Reserve, and then explain why Trump now cannot touch the revenue that comes into the Treasury unless he privatizes the IRS.
In the header diagram, find the Treasury and then find the two arrows leading into the Treasury marked “Tax” and “Bonds and Bills”. When we pay our taxes or buy bonds or bills, our checks are deposited directly into the Federal Reserve. When the Federal Government funds expenses, it drafts checks directly on the Federal Reserve. The Federal Reserve will only fulfill these checks if Congress has approved.
Before 2008, the Treasury actually had accounts at commercial banks where revenue collected by the Treasury would reside before being deposited into the Federal Reserve. But now, there are no interim bank accounts between our banks and the Federal Reserve. The Federal Reserve describes this here:
“A dollar paid to the Treasury in taxes directly reduces the amount of reserves in the banking system by one dollar, while a dollar paid by the Treasury directly increases the amount of reserves in the banking system by one dollar. This has not always been the case; prior to the financial crisis, tax receipts were held in (and expenditures paid from) the Treasury's accounts at commercial banks...”
So, today the president is completely dependent upon Congress for funding. The president cannot get funding without congressional consent, and the president cannot intercept any revenue coming into the Treasury because the money goes directly to the Federal Reserve.
Now, it is obvious why Trump wants to privatize the IRS. He wants the money paid to the Treasury to go to an interim bank again. An interim bank is obviously inefficient if your goal is to move money to the Federal Reserve. But if your goal is to hijack that money, an interim bank is necessary.
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