Podcast Summary: Statecraft – "How to Run the Treasury Department"

Release Date: May 29, 2025
Host: Santi Ruiz with guest host Kyla
Guest: Wally Adeyemo, Former Deputy Secretary of the Treasury, Biden Administration

Introduction

In this insightful episode of Statecraft, host Santi Ruiz is joined by Kyla, an economic commentator and author, to engage in a comprehensive discussion with Wally Adeyemo, the former Deputy Secretary of the Treasury under the Biden administration. The conversation delves into the intricacies of policy implementation, the challenges within the Democratic Party, the IRS Direct File program, technological advancements in government, financial sanctions, economic outlook, and housing policy reforms.

Democratic Party: Communication and Policy Execution

Wally Adeyemo begins by sharing his perspective on the current state of the Democratic Party. He emphasizes the party's dedication to supporting working-class Americans but highlights a significant communication gap.

“We continue to be the party that cares deeply about working-class people, but we haven't done a good job of communicating that to people, especially when it comes to the things that matter most to them.”
— Wally Adeyemo [03:23]

Adeyemo points out that the party has struggled to present a clear agenda focused on improving the standard of living, a crucial issue for 81% of Americans earning under $100,000 annually. He contrasts this with the opposing party's approach, which, according to him, favors tax cuts for higher earners while increasing costs for the average American.

Implementation and Execution in Government

The discussion shifts to the challenges of policy implementation within the government. Adeyemo underscores the importance of effective execution alongside policy formulation.

“The challenge with execution in the government is that we don't spend a lot on our systems and on making execution as easy as possible.”
— Wally Adeyemo [05:35]

He cites the IRS Direct File program and the Child Tax Credit as examples where implementation hurdles, such as outdated IRS infrastructure, impeded the timely and effective delivery of these initiatives. Adeyemo advocates for investing in execution mechanisms to ensure policies are not only well-crafted but also efficiently executed.

IRS Direct File Program: Successes and Challenges

A significant portion of the conversation centers on the IRS Direct File program, a system allowing Americans to file taxes for free directly through the IRS. Adeyemo discusses its successful implementation, user adoption, and the subsequent threats to its continuity.

“In the first year, we launched late in the filing season... more than 300,000 people used it, and the user scores were also really above 85% in terms of the product.”
— Wally Adeyemo [22:01]

He highlights the program's benefits, including reduced filing time and cost savings for taxpayers. Despite its success, the Trump administration considered discontinuing the program, raising concerns about potential setbacks in government efficiency and taxpayer support.

DOGE and Technological Advancements in Government

Kyla introduces the topic of DOGE (Department of Government Enhancement), aiming to infuse modern technology into federal operations. Adeyemo expresses mixed sentiments about DOGE's impact, particularly regarding workforce reductions and technological integration.

“Productivity enhancing, it's not just that it's going to make the employees who are currently doing the job more productive. It's going to mean you're going to need fewer employees.”
— Wally Adeyemo [17:58]

He underscores the need for technological investments to streamline processes like tax filing, arguing that such advancements can significantly reduce manual workloads and improve service delivery. However, he also acknowledges the resistance and mistrust surrounding governmental use of advanced technologies.

Financial Sanctions and Foreign Policy

Adeyemo elaborates on the Treasury Department's role in financial sanctions as a tool of national security and foreign policy.

“We use these tools called financial sanctions to try and change the behavior of foreign actors taking steps that aren't consistent with our national security interest.”
— Wally Adeyemo [34:01]

He discusses the effectiveness of sanctions against Russia following its invasion of Ukraine, noting improvements in Russia's economy but acknowledging the limitations due to support from allies like China. Adeyemo emphasizes that sanctions must be part of a broader, multilateral strategy to influence foreign behavior effectively.

Economic Outlook: Potential Recession

Addressing domestic economic concerns, Adeyemo warns of a self-inflicted recession resulting from tariffs imposed by the current administration.

“The economy has done quite well... the biggest headwind the US Economy faces has been self inflicted by the tariffs the President has put on.”
— Wally Adeyemo [42:04]

He explains how tariffs increase costs for consumers and businesses, creating uncertainty and hindering economic planning. Adeyemo predicts that these factors could lead to increased living costs and a potential recession if not addressed.

Housing Policy: Urgency and Reforms Needed

A critical part of the conversation focuses on the housing crisis in the United States. Adeyemo advocates for radical zoning reforms and proactive measures at the state and local levels to increase housing supply.

“We've got to find more radical things that we can do to get housing built, because if we don't, we're going to end up in a place where we're just going to continue to see cost rise faster than people's incomes.”
— Wally Adeyemo [47:59]

He argues that without significant changes in zoning laws and permitting processes, the housing shortage will persist, exacerbating the cost of living crisis. Adeyemo suggests incentivizing states and localities to ease restrictions as a necessary step toward resolving the generational housing challenges.

Conclusion

In wrapping up, Wally Adeyemo reflects on the interconnectedness of policy execution, technological innovation, and public trust. He emphasizes the need for local engagement and incremental successes to rebuild trust in governmental institutions.

“The key has got to be how do you earn that trust over time? And we can't expect that if we put out a product that looks like something that the Estonian government would put out... that people would trust it.”
— Wally Adeyemo [30:02]

Adeyemo's insights provide a nuanced understanding of the complexities involved in running the Treasury Department and implementing effective policies. His emphasis on execution, trust-building, and technological advancement offers valuable lessons for future administrations aiming to enhance governmental efficiency and public welfare.

Notable Quotes

• On Democratic Party Communication Challenges:
  “We continue to be the party that cares deeply about working-class people, but we haven't done a good job of communicating that to people...”
  — Wally Adeyemo [03:23]

• On Implementation Hurdles:
  “The challenge with execution in the government is that we don't spend a lot on our systems and on making execution as easy as possible.”
  — Wally Adeyemo [05:35]

• On IRS Direct File Success:
  “In the first year, we launched late in the filing season... more than 300,000 people used it, and the user scores were also really above 85%...”
  — Wally Adeyemo [22:01]

• On Financial Sanctions as Foreign Policy:
  “We use these tools called financial sanctions to try and change the behavior of foreign actors taking steps that aren't consistent with our national security interest.”
  — Wally Adeyemo [34:01]

• On Potential Recession Causes:
  “The biggest headwind the US Economy faces has been self inflicted by the tariffs the President has put on.”
  — Wally Adeyemo [42:04]

• On Housing Policy Reforms:
  “We've got to find more radical things that we can do to get housing built, because if we don't, we're going to end up in a place where we're just going to continue to see cost rise faster than people's incomes.”
  — Wally Adeyemo [47:59]

Resources and Further Information

• Subscribe to Statecraft: Get interview transcripts in your inbox weekly at www.statecraft.pub.

• Kyla's Newsletter: Stay updated on economic insights at kyla.substack.com.

This episode of Statecraft offers a deep dive into the operational challenges and strategic considerations of running a key governmental department. Wally Adeyemo's candid reflections provide listeners with a richer understanding of the interplay between policy-making, implementation, and the broader socio-political landscape.