▶ 0:02:46Subcommittee on Financial Services and General Government will come to order. The hearing is titled the Oversight of the United States Department of Treasury. Members will have five legislative days within which to revise and extend their remarks and insert extraneous material into the record. I would note we have a hard stop today at 11:30. I now recognize myself for an opening statement. I would like to thank Secretary Bassant for being here today and for his leadership in his steady hand over the last several months.
▶ 0:03:13We are living in an increas increasingly complex world with no shortage of issues. Whether it be taxes or tariffs, right sizing regulation or creating a regulatory framework for digital assets, the Department of Treasury's role is fundamental to the resolution. If we think about it, this is why the Department of Treasury was created. The department is central to maintaining a strong economy, creating jobs, and promoting economic growth both here and abroad. It was created to bolster our national security and to asssure our economic stability.
▶ 0:03:42And it continues to thwart terrorists and criminals and protect the financial system from illicit activity every day. Fulfilling these responsibilities is no easy task. As the department's fiscical year 2025 spending plan reveals, it takes significant resources. It starts with a strong workforce, the most updated technology, and appropriate working conditions, including buildings that are sufficiently maintained. But this doesn't happen in a vacuum. It also takes cooperation, transparency, and accountability.
▶ 0:04:10As this committee looks to fund the department's future operations, we need to understand the priorities and how the department is deploying resources across its divisions and bureaus and why. There are definitely efficiencies to be identified, but chance but changes need to be thoughtful and deliberate to ensure the department's mission is still accomplished. We need to ensure our financial system, the economy, and leadership around the world is safe, secure, and thriving.
▶ 0:04:34Secretary Vent, there are and will be challenging times ahead, but I believe you are the right person at the right time to overcome uh those challenges. I look forward to working with you, and I now recognize the ranking member for his opening Thank you very much, Mr. Chairman, and welcome, Mr. Secretary. This is our first substantive hearing dealing with the devastating actions that the Trump administration has taken in the first three months of 2025. Actions planned and predicted by project 2025.
▶ 0:05:04I look forward to having more such hearings with other agencies under our jurisdiction, especially the principles of Doge, OM, GSA, and OPM, which are having such profoundly negative impact on our country. What we've seen in the first hundred days of this administration is unprecedented and so the polls tell us disturbing to the American people. An irresponsible, incoherent tariff policy has plunged the Americans and global economies into chaos.
▶ 0:05:32These past three months, the American economy shrank for the first time since the final days of the pandemic. The stock market fell more in the first 100 days of the Trump administration than in the first 100 days of any presidency in the past half century. Consumer confidence is at lowest since May of 2020, the height of CO 19. That uncertainty has also rattled the bond market with with investors dangerously starting to doubt the full faith and credit of the United States. Most importantly, Americans are hurting.
▶ 0:06:02Families see their costs going up. Retirees watch their life savings losing value. Small business owners and farmers risk going under as they struggle to navigate everchanging tariffs. Our economy is in chaos and so I think is our government. Donald Trump, Russell Vote, and Alon Musk are orchestrating an illegal purge of our federal employees. They clearly had a lot of ideas on how to remove these people and dismantle these programs as quickly as possible.
▶ 0:06:30Sadly, they had no clue in my view as to the devastating consequences of their actions on our country, our government, our allies, and the professionals we rely on to serve the American people. I am particularly concerned about the Internal Revenue Service, uh, which has been severely understaffed and underfunded for decades.
▶ 0:06:52So far, the Trump administration has forced the IRS to cut as many as 11,443 employees or over 11% of its staff. That includes 6,700 workers who were fired at the height of this most recent tax session. Now, the administration is planning to reduce the IRS workforce, I understand, by another 40,000 jobs or 40%. That includes up to half of the IRS enforcement staff.
▶ 0:07:21Additionally, Trump's 2026 budget cuts funding for the IRS by 20%. These actions at IRS, in my view, and every other government office, have bludgeoned morale, destroyed efficiency, and increased waste. Cutting back on IRS enforcement makes it easier for for the wealthiest individual and corporations to cheat on their taxes and get out of paying what they owe. That of course increases what others pay and explodes the deficit.
▶ 0:07:51As the president and congressional Republicans undermine the ability to enforce our existing tax code, they are also pursuing massive tax cuts for the wealthiest among us. Furthermore, Doge operatives are rifling through IRS databases that contain Americans sensitive information, including their financial history, social security numbers, immigration status, and more. The story is the same across the federal government.
▶ 0:08:21Americans are reeling from this uncertainty in their economy and in their government. They need answers. More than that, they need an adult in the room. That is the role I hope uh the Treasury Department plays and Mr. Secretary in particular yourself. The economy and markets do not lie.
▶ 0:08:43We all depend on the Treasury Secretary to communicate clearly and transparently to the president, the Congress, the American people, and indeed the world. I've mentioned tariffs and the IRS, but I'm also to eager to hear, Mr. executive from you about our economic approach to the Russian Ukraine war especially in light of last week's mineral deal and recent questions about our sanctions regime on Russia.
▶ 0:09:09Former Secretary Minutuchin whom I believe you know sir and I disagreed on some things but we still found ways to work in a bipartisan fashion to inspire competence in the economy. Mr. Secretary, I look forward to doing the same with you. Thank you, Mr. Chairman. Thank you, Mr. Oyer. Today, we welcome the testimony of the Honorable Scott Basset, Secretary of the United States Department of Treasur.
▶ 0:09:39Secretary, without objection, your written testimony will be entered into the record. That in mind, we ask you to please summarize your opening statement in five minutes. Good. Thank you, Mr. Chairman, the Congressman Hoyer, ranking member, the chairman Joyce, ranking member Hoyer, and members of the subcommittee. I'm grateful to join you today.
▶ 0:10:02Treasury is e eager to work with members of Congress to fund key priorities to strengthen our economy, and we look forward to coordinating with you on the president's budget as soon as it is released. Today, I wish to highlight the department's efforts to boost US economic growth, improve government efficiency, and target illicit actors that threaten our national security. The core components of the Trump economic agenda are trade, tax cuts, and deregulation.
▶ 0:10:31These are not standalone policies. They are interlocking parts of an engine designed to drive economic growth and domestic manufacturing. Tax cuts and cost savings from deregulation raise real incomes for families and businesses. Tariffs create an incentive for reshoring jobs and fair trade. And deregulation complements tariffs by making it easier to invest in energy and manufacturing projects. Already this agenda is bearing fruit.
▶ 0:11:00In the first 100 days the new 464,000 new jobs were added to the economy. In April alone, over 177,000 American jobs were added, more than 40,000 more than economists predicted. All the while, unemployment remains low while real hourly wages continue to grow.
▶ 0:11:24As important as spurring job growth is wrangling inflation, and in this endeavor, the administration continues to make tangible process progress. The CPI for energy goods declined in March as did the price index for core goods and the CPI for all items declined for the first time since the COVID pandemic. While the cost of goods is decreasing, so are energy prices.
▶ 0:11:50Complimentary to our efforts to grow American prosperity, we are focused on improving efficiency across all levels of government, but especially the IRS. We just concluded a successful tax filing season, but the IRS still needs significant reforms to deliver efficient and costfriendly results for the American people. In this endeavor, we have successfully cut 2 billion from the IRS IT budget without any operational disruptions.
▶ 0:12:19We achieve these cost savings by eliminating, renegotiating, and descoping wasteful IT and professional services contracts and addressing longstanding inefficiencies such as autorenewed licenses unused for years. This intervention alone will save taxpayers hundreds of millions of dollars each year.
▶ 0:12:40We are also taking steps at the IRS to reduce administrative cost with a particular focus on paper processing which has been a longstanding bipartisan goal. Last year the IRS spent approximately 450 million on paper processing with nearly 6,500 full-time staff dedicated to the task. Through policy changes and automation, Treasury aims to reduce this expense to under 20 million by the end of President Trump's second term.
▶ 0:13:10In addition to making government more efficient, Treasury is committed to working alongside the White House to make America safe again. To that end, we have launched a maximum pressure campaign against violent cartels and terrorist networks. We have assessed tens of millions of dollars in civil pen penalties against organizations facilitating money laundering along the southern border.
▶ 0:13:34And by leveraging sanctions, we are choking off the financial lifelines of terrorists, criminals, and hackers from Mexico and Guatemala to China and Iran. In the first 100 days of the new administration, we have set the table for a robust economy that allows Main Street to grow. With Congress and the White House working hand in hand, we expect to see even more positive results over the next few months. Key to expanding economic opportunity for all Americans is making the Trump tax cuts permanent.
▶ 0:14:04We look forward to working closely with the members of this committee to pass this bill into law. Together, we can build a stronger, safer, and more prosperous America. Thank you. Thank you, Mr. Secretary. I now recognize myself for the first questions. Uh, Secretary, let's fast forward a year. Where do you see the US with respect to tariffs and the overarching strategy?
▶ 0:14:29You anticipate all trade deals being bilateral or could there be multi-country trade packs of which groups of countries agree to a tariff schedule? Uh, Mr. Chairman, this will be path dependent on our trade partners. Uh as I've said before, there are 18 very important trading relationships. Uh we are currently uh negotiating with 17 of those trading partners.
▶ 0:14:58Uh China we have not engaged in negotiations with as of yet. uh so I I expect that we can see a substantial reduction uh in the tariffs that we are being charged as well as non-tariff barriers, currency manipulation and the uh subsidies of both labor and uh capital investment. So that is proceeding very well.
▶ 0:15:27uh many of our trading partners have approached us with very good offers and we we are in the process of renegotiating those with the economy. You know, I I would say that this is a three-legged stool. Trade, tax, and deregulation. Trade was first.
▶ 0:15:47the this uh the House according to Speaker Johnson expects to move their portion of the bill over to the Senate on or about the Memorial Day. So, we're looking forward to that.
▶ 0:16:03And then deregulation necessarily takes longer to affect the economy, but I would expect in the third and fourth quarters uh we would see uh substantial benefits from deregulation that by this time last year could be at full force. We've seen a few numbers discussed in terms of how many countries with whom you have started tariff negotiations. What is the actual number? What is the status of those negotiations?
▶ 0:16:29How many deals do you anticipate by the end of the year in the first quarter of 2026 or the second quarter? And what are the biggest challenges you see to negotiating tariffs and getting trade deals done? Again, sir, approximately 97 or 98% of our trade deficit is with 15 countries, 18% of the countries are our major trading partners.
▶ 0:16:55And I would be surprised that if we don't have more than 80 or 90% of those wrapped up by the end of the year and that may be much sooner that I I would think that perhaps as early as this week we will be announcing trade deals uh with some of our largest trading partners. They have come to us with very good offers.
▶ 0:17:21And you know what what I will tell you is that in negotiating with some of them, they may not like the tariff wall that President Trump has put up, but they have them. So if tariffs are so bad, why do they like them? And then more insidious, we can see that from a practical matter and from academic research are the non-tariff barriers. If if you were to look uh prior to the escalation, I believe Chinese tariffs are only 5%.
▶ 0:17:51So clearly there's something else going on. Uh if they're accumulating these gigantic the president released his skinny budget for the year uh school year 2026 on Friday. Budget calls for approximately two and a half billion dollar cut to the IRS. As you know, Congress has been pulling back money from the IRS over the last several years, somewhere in the range of about 41.7 billion. Some may ask what's left to cut from the IRS.
▶ 0:18:16What would you talk about your vision for the IRS and why streamlining operations will benefit taxpayers and not hurt them? Uh well, Mr. Chairman, uh the IRS is 30 years behind, 30 years behind on an IT modernization project. Uh where perhaps up to $50 billion of taxpayer money has been wasted. Uh we are rightsizing that.
▶ 0:18:41So the substantial decrease uh in the IRS budget is largely in it. Uh we have had a large number of employees uh take the uh take the option for early retirement or for retirement. And again let let's look at the numbers.
▶ 0:19:03uh we are just taking the IRS back to where it was uh before the IR bill substantially bloated the personnel and the Thank you. And now recognize ranking member Hoyer for any questions he may Mr. Chairman, um let me ask you a broader question, Mr. Secretary, at the outstat.
▶ 0:19:27The president has been talking about recession and the acceptance of a recession in the short term. Do you believe we're in a now? Uh Congressman, uh I believe in data and there is nothing in the data that shows that we are in a recession. As a matter of fact, the jobs report has surprised to the upside.
▶ 0:19:51Uh the job report was of course less than the average uh uh for the Biden administration last in Um but the GDP uh went down this first quarter of the Trump administration.
▶ 0:20:12Um, if we have a negative growth in the second quarter, which is, I suppose, the traditional definition of a recession, would you agree that we are in that recession of which the president speaks? Congressman, these economic numbers are noisy and subject to substantial revision.
▶ 0:20:35So I having looked at a detailed analysis would believe that the first quarter GDP would be revised upward and you I would also with regards to your remark about where we were last year. Uh last year uh we were spending 6.7% the we had a 6.7% fiscal deficit the largest we've ever had during peace time or non-recessionary times.
▶ 0:21:02So the easy thing would be to do would be to keep spending to keep the economy running on an unsustainable path of spending. Uh let me remark because I you you mentioned this uh I think in our meeting uh we had a spending problem uh not a revenue problem. I want to talk about the revenue problem. Let me suggest to you my view is it's neither a revenue nor a spending problem.
▶ 0:21:32It's a pay for problem. If we would pay for what we buy, whether it's defense or non-defense, we wouldn't increase the deficit. So I think looking at I'm a big proponent of paying as you go. Unfortunately, we haven't pursued that on either side of the aisle, maybe for objectives. Let me go to IRS.
▶ 0:21:53Um I want to you you probably know these figures and these are somewhat old at this point in time but what they reflect as you will see is a substantial decrease in the resources of the IRS particularly in enforcement.
▶ 0:22:11Um as the blue representing an increase uh in filings, the orange uh representing the nominal and the dotted line the uh net actual value of the funding for IRS particularly enforcement. Um the budget proposes substantial cuts.
▶ 0:22:41Have you or anybody done a analysis of the ramifications of those cuts both in the short term and in the long term in terms of your ability to collect revenue. Let me paraphrase not paraphrase but give a in your discussions you said you were not going to sabotage that we had in my office sabotage collections.
▶ 0:23:07Um, are you confident in light of the fact that any IT, and I agree with you, we've wasted a lot of money on it, that any IT will be accomplished within the next 36 to 48 months and therefore justify a reduction in Congressman, let let me work backwards there.
▶ 0:23:31So uh I I am confident that we will make substantial progress in the IT and uh rightsize the payments the payment system the collection system as I've repeatedly said my priorities are collections privacy and customer service and you know again the the substantial increase the in the enforcement group There is
▶ 0:24:02nothing that shows historically that by bringing in unseasoned the collections agents that that the results in more collections or high-end collections. It would be like sending in a junior high school student to try to do a college level class. that the uh becoming a high-end IRS collections agent uh is something that one grows into.
▶ 0:24:31So I believe through smarter IT through this AI boom that we can use that uh to enhance collections and you know I I would expect that collections would continue to be very robust as they were this year. Chair now recognizes the gentleman from Arkansas, Mr. Wack, for any questions he has. Thank you, Mr. Chairman. Um, and thank you, Mr.
▶ 0:24:58Secretary, for your service and for being here today uh in front of my colleagues. U I'm going to ask a question that I'm sure you've never been asked before, but I'll give it a a try here. When is X Uh, Congressman, we are, as I said earlier, we still take in a large amount of the paper returns.
▶ 0:25:23So, every every Friday I I get a summary and if you can believe it, as you know, uh, tax day was April 15th. We are still tallying that. uh so that we don't have we will share with Congress when we believe we are approximating that date. Uh so that that will be forthcoming.
▶ 0:25:48But I will tell you uh just as an outfielder running for a fly ball uh we are on the warning track and when you're on the warning track it means the wall is not far away.
▶ 0:26:04So it's not today u may not be next week but it is fast approaching and and of course uh the United States government will never default that we will raise the debt ceiling and Treasury will not use the any gimmicks. Uh we will make sure that the debt ceiling is raised.
▶ 0:26:30you um have already answered a couple of questions about the the president's budget and and I'm going to ask u maybe a little differently. Um the president's budget request for fiscal 26 looks very different from President Biden's budget just last year and I have been a longtime proponent of getting our fiscal house in order and I applaud the president's attempt uh to get our fiscal house in order.
▶ 0:27:00During my tenure as chairman of the House Budget Committee many years ago, I co-chared the Joint Select Committee on Budget and Appropriations Process Reform, and many of our recommendations are included in Trump's requests. It's no secret we're heading toward big and needed change within the federal bureaucracy. That said, his budget request for the Treasury is 11.5 billion uh compared to FY25 enacted at 14.2.
▶ 0:27:29Now that's a 19% decrease. You've already mentioned that we have savings achieved in uh contracts regarding uh IT services and this sort of thing and we've saved the American public a lot. But you've also said that it remains one of our biggest challenges particularly within the IRS. Uh so how is it that you're going to operate with a smaller budget that still serves the needs of the American people?
▶ 0:27:59Uh sir, part of that has been bringing people back to the office. So on March 10th, the we reinstituted a work from your your office program and again I think it's going to be efficiency. Uh we have raised we have asked for more money for many of the priorities.
▶ 0:28:22uh the Treasury uh foreign intelligence network and the office of foreign asset control OFAC. that we will be keeping the American people safer. And again, we think through efficiency gains, the the federal government historically does not have productivity increases.
▶ 0:28:44And as I've continually pointed out, Doge is the office of government efficiency, not the office of government extinction, the or eradication. So I think that it is the not a big leap to do much more with Are there two half billion dollars worth of efficiencies?
▶ 0:29:08Well again uh just two of two of it is in the IT department and if you were to look uh Treasury processes about 1.5 billion payments per year which is like a midsize US regional bank. We have had many of these banks come in and talk to us about their payment programs and their departments are onetenth the size and onetenth the budget.
▶ 0:29:36So allowing for the redundancies that we would need as a government agency then you know we think that we do need to be bigger and more wholesome but there are substantial savings to be had. I I want to ask one more quick question because I know we're not we're probably not going to have a second round.
▶ 0:29:52you have been a proponent for better financial literacy in this country and and your background is uh you know is evidence of that quickly um can we do a better job in this country of educating young people on matters of financial literacy uh s any any increase that we do would be a a better job we just hosted financial literacy month the at the treasury uh I only had the two months to get ready for it.
▶ 0:30:23I I can tell you that every April we're going to do more and more, but the key to financial independence is financial literacy, making good choices and not, you know, I don't think it comes from more regulation. I think it comes from more financial education. Thank you very much. The chair now recognizes a gentleman from Wisconsin, Mr. Pokean, for five minutes. Great. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being with us.
▶ 0:30:47Um you my main concern is I think what's uh what people are looking at the economy you know first the first 100 days lowest stock market since Richard Nixon not usually a measure people are shooting for um on tariffs the fact that last year uh we had an effective rate about 2 and a half% I think the Yale budget lab and I believe you went to Yale has said that effective rate is closer to 28% the highest since 1901 I know some of that's changed because the tariffs are on again off again some on again some off uh
▶ 0:31:18somewhat chaotic. I I believe as your term is what crazy Ivan uh style. Um I I compare them to how a monkey throws dung. You're not exactly sure where they're going to land. Um and that's the concern I have as a small business owner and I know Miss Luzen Camp Perez is as well. You know, I've got small businesses really worried.
▶ 0:31:37Um, you made a comment about, uh, while cargo volumes have dropped 60%, you see this as a temporary detox, but for a small business that's getting by day-to-day, uh, that's much bigger. You talked about Main Street. Um, we want to finally focus on Main Street, not Wall Street. Uh, I think you were at a global investor conference in Beverly Hills yesterday. That's the cocktail party where you mentioned the crazy Ivan theory.
▶ 0:32:03Um and before that you were at a JP Morgan Chase World Bank investor private investor summit. All those things are not Main Street, right? Main Street is uh an auto body repair, a specialty printer. So my concern is on the tariffs. Who pays tariffs, Mr. No, no, no. Ask the answer the questions I asked, please. I only have five minutes. Who pays tariffs? Sorry. Well, who pays tariffs? Mr. Secretary, please.
▶ 0:32:32The question is very simply, who pays tariffs? Mr. Chairman, I'd like him to answer that question. Uh, well, he wants to answer other questions. Well, Congressman, if the Congressman, if the exporters they dislike tariffs so much, they Why wouldn't they? If I think what you're trying to get me to say, did you remember the question? I'm not sure you did. Who pays tariffs? That they It's a very complicated question. Reclaiming my time. People pay tariffs, right?
▶ 0:33:02I'm Reclaiming my time, Mr. Secretary. Reclaiming my time, Mr. Secretary. Reclaiming my time. You clearly aren't going to answer. I'm not going to waste my time having you go uh uh uh uh Mr. Secretary, reclaiming Mr. Chairman, I asked reclaiming my time. Tariffs, Mr. Mr. Chairman, and I asked to reclaim my time. Did I No, I said reclaiming my time because he's clearly not answering it.
▶ 0:33:30So, yeah. So, as a small business owner, and unfortunately, I like that time back since you it failed to recognize me for 30 seconds. So, I just recently from a one of my suppliers got the tariff search charge on things. And in addition to the tariff search charge, guess what else got raised? Americanmade walnut plaques. That has nothing to do with tariffs, but companies take advantage and do that. So right now we are getting screwed right and left because of the indiscriminate use of tariffs.
▶ 0:33:59That's the reality for Main Street. And you go off to Beverly Hills for private investor conferences and talk about crazy Ivan theories. Answer that. What is the crazy Ivan theory of tariffs that you mentioned at the the the summit? Uh well, first of all, sir, I I've had meetings with more than 50 small lenders. So the I I want to clarify that.
▶ 0:34:22I would also say that in game theory strategic uncertainty of which the you seem to like the name crazy Ivan well it's your words correct didn't you use crazy Ivan at the well you've used it five times and that's the question I am saying the strategic uncertainty is part of negotiations that should we say oh here's what we'll accept please take this okay I've got your answer thank you I'm going to reclaim my time again so for a small business we don't have that luxury right when
▶ 0:34:52the ports are empty in California uh and we can't get goods and people are stocking up for Christmas goods crazy Ivan is great for please don't take this offense really rich people like you but for people like me it's not right That's what makes small businesses fail. That's what makes people lose their jobs. That's what makes the stock market tank. So I'll ask one more time, who pays tariffs?
▶ 0:35:17Sir, the history would show that it is a complicated mix of who pays the tariffs over various times. So that's exactly the problem. If your answer, and you are a very educated person, you have a very impressive bio, cannot answer the question who pays tariffs because you won't answer that and you say it's a complicated issue. It's not complicated. Consumers pay Trump's tariff tax. That's the reality. And uh I'll yield back, Mr. Chairman, but I do think next time if I asked to yield back, I would appreciate being having my time yelled back.
▶ 0:35:46Chair now recognizes the gentle lady from Iowa, Miss Hinson. Thank you, Mr. Chairman. Um good morning, Mr. Secretary. Thank you so much for taking the time to come and answer our questions. Um I appreciate what the Trump administration is doing to try to level the playing field for American consumers, um and restore our economy to where it needs to be. So, I really appreciate the work that you were doing to make that happen, Mr. Secretary. And I certainly, as an appropriator, recognize the importance of making sure that every tax dollar is spent appropriately, and I appreciate your opening comments as such.
▶ 0:36:15So, with that, um, the GAO estimates the federal government loses between 233 and 521 billion annually to fraud. Those are um, alarming numbers. Hard-wasted, hard-earned tax dollars just wasted. Uh, President Trump has certainly acknowledged the absurdity of this level of waste, and he signed Executive Order 14249 to protect America's bank account against waste, fraud, and abuse.
▶ 0:36:40And I was proud to support this effort by introducing a piece of legislation to codify that, the Protecting American taxpayers from Wasteful Spending Act. One of the provisions of this EO is directed at your department um the department of treasury to establish pre-certification and pre-awward procedures across the federal government to prevent fraud and improper payments. So can you define for the committee today what an improper payment is and some examples of what you're seeing and why these procedures were not already in place before. Mr. secretary.
▶ 0:37:09Uh well, it it it's a bit mystifying why they weren't in place and u what we are seeing is that there was a very complacent upper level of management in many departments across the entire the across the entire government.
▶ 0:37:30what I can say at Treasury that of the 1.5 billion payments we p the we send out every year they're required to have something called a TAS the a Treasury account symbol. We discovered that more than onethird onethird of those payments did not have a TAS number.
▶ 0:37:52So as the appropriations committee, you should be shocked by that because how can a payment be tracked back to an appropriation only through the task number. So there was no accountability. So that is why the 450 organizations that sit above treasury where Treasury acts as the pay master are unable to pass an audit. So uh we have the crackdown on that. Every payment now requires a task number. Very simple.
▶ 0:38:20And I will tell you that the mid-level employees who I have had come into Treasury to talk to me about that feel liberated that they have, you know, they tell me, "I've been here 20 years. I've always wanted to do this.
▶ 0:38:34I've been here 14 years and they feel as though they now have agency and are making a difference towards saving the American taxpayer money." So, this is not only um a a complacency issue that you've fixed, but it's a morale issue for these employees who are helping to make the department much more efficient for They're very energized by their participation. Yeah, it's certainly unbelievable.
▶ 0:38:58Um when you think about that this was not in place and um certainly it's um we've got lots of examples from the the previous administration of some of those cat catastrophic failures. Um, who would you say is benefiting from those improper payments? And how could a government agency really justify standing idly by while those errors were seeping into our system and making our government less efficient?
▶ 0:39:19Uh, I I could can't speak to who was benefiting, but I can just speak to the attitude that has been shaken up that this is okay. This is not okay and this is taxpayer money and we are charged with protecting it. What other uh plans are in place to help implement that executive order? You've talked about the the Treasury account symbol. Are there other things in that executive order that you are executing on today?
▶ 0:39:45Uh well, again, the president, as you mentioned, has passed. We are trying to go more paperless with the checks with the very important checks that the citizens across the US receive whether it's social security veterans benefits tax refunds there is substantial number of those are stolen so president has issued an executive order to try to make that more electronic that will
▶ 0:40:16protect the integrity of those payments as well as cut down on cost. Have you been able to claw back any improper payments for the taxpayer, reclaim those dollars? Uh yes, we've we've called back tens of millions of dollars. Tens of millions. We'll look forward to continuing to work with you to improve those efficiencies and execute on that uh executive order. Appreciate the work you're doing at Treasury, Mr. Secretary. Thank you. I yield back. Thank you, Miss Henson. Chair now recognizes the lady from gentle lady from Washington, Mrs. Clusen Camp Perez. Thank you, chair.
▶ 0:40:45Uh and thank you, uh Secretary of Business for being here. Um, so I ran an auto repair shop before coming here and I know that people who are turning wrenches, uh, who are filing an earned income tax credit or tax return, they're, you know, they're they're about four times more likely to be audited.
▶ 0:41:05And I'm wondering if you could talk to me about what the plan is for ensuring that regardless of what uh, you know, income strata you're in, your probability of being audited is Well, the congresswoman, I think that was one of the problems with increasing the enforcement there. There was nothing to say that there would have been more enforcement at any distributional level.
▶ 0:41:31So that what you were saying is that the those receiving the earned income tax credit are more likely to be audited. That would have just meant more auditing. Uh there was also a proposal to uh track small payments $600 on Venmo and things like that the which has been pushed back also.
▶ 0:41:55But what is the forward program to ensure that there is an equitable not I'm not dis I'm not um I mean I have some quarrels with what you said but what is the pro the the plan the implementation plan to ensure moving forward we are getting towards a more equitable enforcement rate. Uh look, we we are re reviewing the the processes for who is audited at the IRS. There's been a great deal of politization of that. So we are trying to stop that.
▶ 0:42:23And we are also going to look at the distribution of who is audited and why they are audited. Um look forward to hearing more about how that is being implemented and how we can help you with that. Um, so I think you and I agree that the current trading system has failed working people, people who are turning wrenches, driving trucks, changing diapers.
▶ 0:42:44Um, could you could you expand on how the proposed tariffs would ensure that there is upward pressure on on wages? Uh well I I think that there there many parts to that but uh the the key to upward pressure on wages is more job opportunities and what we have seen since what the so-called China shock after China entered the WTO was a large decrease in
▶ 0:43:14manufacturing jobs and studies have shown that workers in manufacturing jobs have more potential for large scale wage increases than service workers do.
▶ 0:43:27So moving more workers from service work to manufacturing they should do that and the administration is also trying to bring down the costs for working Um I you know I agree right if you're if you are trying to uh earn a living as a barber you have to move to a city to earn a high wage. Um, but if you're in a rural community where there's a factory job, you can own land, you can own your home.
▶ 0:43:56And I think one of your points about financial literacy is ensuring that we do have economic self-determination. You can buy the pair of boots that will last 5 years and not be in this pace. But there's a lot of work to do here. Um, building real wealth. Uh, and not the nominal kind of I I'm not really here to be a defender of the stock market. Most of the people I know don't trade stocks in my community.
▶ 0:44:20Um, you know, it's a question of being able to own land, having that capital access to start your own business, um, and some, frankly, some of the antitrust work to ensure there's a level playing field for small businesses like mine. Um, I'm I'm hearing from constituents uh who uh have questions about their tax returns and are having trouble getting a real person on the line to speak to. Um, what what is what can we do?
▶ 0:44:45What is your plan for decreasing weight times for having somebody be able to actually talk to a human being when they call the IRS? Well, again, this goes back to my my three priorities, collection, privacy, and customer service. So, we are moving money into customer service the at the IRS.
▶ 0:45:03And it's almost imaginable that the uh the phone banks were had the same number of operators 24/7 365 days a year. So if one of your constituents called on Christmas Eve, they probably get through uh because there were so many idle phones. Uh if they called on April 14th, there was no surge to help them. So, you know, as President Trump has repeatedly said, this is a common sense administration.
▶ 0:45:32So, we're going to have common sense for the IRS, uh, playoff season is the for the first from January 15th to April 15th, game days, April 15th, and we're going to make sure that it's better than. Thank you. I yield back. Thank you very much. Chair now recognize recognizes a gentleman from Texas, Mr. Cloud, for his five minutes of questions. Thank you, Chairman, and thank you, Mr. secretary for being here.
▶ 0:45:58I think it was Albert Einstein who said that you can't solve problems with the same kind of thinking you used when you created them. And uh that's one of the things I certainly appreciate about you and the Trump administration and what you're bringing to the table. For a long time, we've seen the managed decline of America.
▶ 0:46:16And while many who run for positions that we hold will campaign on the need to do something, what we've seen is too often and even because some of the the politicking we've seen today uh for the sake of politics, we've not been able to do the the big hard things that we need to to to change course and get us out of the 36 uh trillion dollar debt pathway and growing pathway that we're on leading to that wall that
▶ 0:46:46you talked about. Uh the American people have watched this all play out, realizing that their nation's been in decline and seeing what they thought was kind of the promise that if we put the experts in charge, they would run the government, we would have a regulatory pattern that worked, the the wealth gap would close, America would be strong, and that has not happened. Uh what did the experts get wrong that you're correcting?
▶ 0:47:12Uh well sir, under President Trump's first administration, the wealth gap did close. That the the bottom 50% of households by net worth saw their net worth increase substantially more than the top 10%. And we are aiming to do that again. That under President Trump's first term, hourly workers wage gains were higher than supervisory workers.
▶ 0:47:40And look what what people got wrong was the the shock and there was this terrible policy of it was essentially compensate the losers. And I do not think that the American workers are losers. They were simply cast aside the as the necessary collateral damage in this unfettered free trade. And the free trade is not always fair trade.
▶ 0:48:07And we can see that from the large surpluses that these countries are accumulating on the other side. So we are aiming for fair trade to bring back high-paying precision manufacturing jobs to the US and we are doing that. Uh we're using tariffs but we were also using the substantial deregulation energy dominance.
▶ 0:48:31So, we want to continue to make the US an even more attractive location for manufacturing. It's uh interesting you talk about manufacturing. I think it was in 2008 the intelligence community put out a report. I I talk about it a lot because they they said the greatest transition of wealth, power, and influence is happening right now. Uh and this was some years ago. They said we expect it to continue. And it was going from the western countries to the eastern countries.
▶ 0:49:00And they said it was happening because we were sending manufacturing overseas and we were sending oil and gas revenues overseas. And yet they said it was like an unsolvable solution. Yet we have the Trump administration who's coming in and solving what seems to be not an easy solution but a very clear solution in bringing manufacturing back and bringing oil and gas back and appreciate it. I I wanted to ask you because there was a comment about the bond markets and certainly that's really uh is a concern.
▶ 0:49:26We need to make sure that they stay strong and that the dollar stays strong. Are are the bond markets more affected by the tariffs and the concern we see in them now? Are they more affected by the tariffs or or out of control debt and the fact that Congress can't seem to get our fiscal house in order? Well, you know, I I I will tell you that the large stock of government debt is why I'm sitting here now as opposed to back in in the private sector.
▶ 0:49:55I became so alarmed by what was going on under the previous administration, this deficit that we had uh highest ever that when we weren't at war or weren't in a recession and it's unsustainable and I thought it was deeply cynical and if we'd done it if we continued it then we would have gone into a malaise where we couldn't grow ourselves out we would have probably been forced into looking more like a eur European style economy.
▶ 0:50:25very high government spending, lack of innovation and lack of mobility and and that would matter for us uh here at home but certainly even for the world because we've kind of been the innovation engine of the world. Yep. Yes sir. And but what we've created in the US is this barbell economy and the Trump administration is attempting to remedy that.
▶ 0:50:46On one side we have financial services and the tech sector which are forwardlooking and the envy of the world. On the other side we are a natural resources economy led by energy which the previous administration the refu you know stop permitting for LG facilities. So but the arc in between is what we are missing are these manufacturing jobs and that's what we are trying to bring back. Thank you Mr. Secretary. Thank you.
▶ 0:51:16Uh, the chair now recognizes a gentleman from Maryland, Mr. Ivy, for five minutes of question. I uh appreciate you being here today, Secretary. Um, want to ask you a few questions about Doge and the role it's playing at Treasury.
▶ 0:51:38you um came into office, I guess you were sworn in on the 27th, was it? You were you were confirmed by the Senate on the 27th. Is that about right? Uh 28th. 28th. Okay. And then you started working at Treasury immediately after that. All right. And Doge began working there as well with respect to the payment systems.
▶ 0:52:04uh they uh two people two individuals from Doge who were actually Treasury employees were on site. Okay. And um I believe you were approached by the highest ranking career official at Treasury, David Lick. Is am I pronouncing his name correctly? I believe it's Lick. Lick. Okay. Um what was the nature of that conversation?
▶ 0:52:31I I assume this was about the Doge issue, but tell me briefly what uh that conversation was about. Uh well, that that conversation uh was the about a discussion of the payment system. And when I go back to what I didn't know, I think I walked in the office around 300 p.m. and I think he and I were having a conversation at 4:30 and the he uh I I got asked for the short version.
▶ 0:53:01Oh, no, no, no. But but you know, I I will tell you that when we were talking about the tasks that that it was people like this individual who were hitting send on the payments. So, you know, I've come to find out that that he's part of Okay, I apologize. I'll have to get that later from you. Feel free to send in substance of the discussion in a letter. But I I guess what I was going to ask was you just mentioned there were two people who were working with respect to Doge at the time. Yes, sir.
▶ 0:53:29And um Mark Elles was one of those. I'm not sure. Not sure you you're not familiar with that I I don't recall that name. I I interviewed Tom Krauss and personally recommended him to work at Treasury. Okay. Well, Mr. Alles um had worked at Mr.
▶ 0:53:53Mus SpaceX company um and the Wall Journal issued a story I think around February 7th that talked about statements that Mr. Alles had made um in the prior year. One was um you could not pay me to marry outside my ethnicity. Another was that he wanted to normalize Indian hate.
▶ 0:54:20A third was just for the record I was racist before it was cool. And another was I just want a eugenic immigration policy. Is that too much to ask? This man resigned uh shortly after that article was published. But you haven't you don't recall him being there? Congressman, I did not recall that individual's name, but that that individual was terminated. He was terminated. Okay. Um well, I appreciate that.
▶ 0:54:46Although it appears that he then later turned up that he was rehired, I guess, and that he's not by Treasury, sir. Okay. But he was continuing to do work for Doge, but in this instance, HHS and three other U departments, I have no idea. I didn't follow his career. Okay. Well, you you didn't catch J. D. Vance saying that he uh didn't think he should be terminated. Did you miss that, too? I I don't recall that. All right. Do you recall Mr.
▶ 0:55:16Trump saying that he uh should have a second chance? Uh I don't recall that. No. Okay. And uh do you you recall Mr. Musk saying he should be given a second chance as well? No, sir. All right. Well, I guess the main question too here is what exactly was the vetting practice that you had in place before you brought on these two people and gave them access to the payment system which is $6 trillion.
▶ 0:55:42Uh well sir, they they did not have access to the payment system or perhaps we have a different definition of access. Uh they they only had read they had read only abilities and it was for they were there for tech support tech support to look at the payment system the ERP system just like any private enterprise.
▶ 0:56:10Is this an individual that you would have brought on even in that capacity if you'd known that he'd made these statements prior to him becoming part of that team? uh, Congressman that I I think it's very difficult to monitor everyone's social media. That's not what I asked. If you knew that he had made these statements, would you have brought him on in the capacity that he had at the Department of Treasury? Uh, I I think the Office of Personal Management would have flagged that. You would you have brought him on?
▶ 0:56:38Uh, sir, again, they I'm not going to speculate. The chair now recognizes the gentleman from New York, Mr. Loa, for his five minutes. Thank you, Mr. Chairman. Good morning, uh, Mr. Secretary. Good to be with you this morning, sir. Uh, I'd like to use my time to talk about taxes and trade. Um, as head of Treasury, uh, you advised the president on taxes and trade, sir. On both, sir. Among many other things, of course. Yes. Um, and Mr. Mr.
▶ 0:57:08Secretary, in your estimation, how did President Trump's 2017 signature tax bill affect American job creation, employment, and wage growth? Uh, Mr. Vice Chair, it provided a substantial non-inflationary impetus to the economy, which resulted in real wage gains on a non-inflationary basis for the American people and a robust economy. I I would add I'm with you 100%. I'd add some data into there.
▶ 0:57:384.9 million jobs between the passage of the tax bill and the COVID pandemic. Employment rates dropped from the fours to the threes and we had a lot of wage growth, especially within the middle class. Um, and that sets me up for my next question. Congress now is considering extending uh those tax cuts which expire at the end of this calendar year. Would that be a good idea, Mr. Secretary? Uh, Congressman, what Congress is considering is making them permanent, which is a better idea. We're considering a lot on that tax bill.
▶ 0:58:07We're also considering salt, which I think is an awesome idea as well. Uh but nevertheless, on the greater bill, uh public polling uh suggests that you're right, and that eight of 10 Americans agree that extending uh those tax cuts are a good idea, recognizing that they help grow wages, they help lower employment, and help personal wealth. Uh but I want to use the remainder of my time to talk about trade policy. Mr. Secretary. Um, is it true that America's trade deficit is about $1.2 trillion approximately?
▶ 0:58:38Yes, sir. And with China, Mr. Secretary, about $300 billion. Uh, yes. And I I believe it may have increased slightly. Yeah. Um, and Mr. Secretary, what impact is China's exploitation of child labor and near slaveike labor? What impact does that have on the trade deficit?
▶ 0:58:58Uh well sir that it creates an unlevel you know aside from the values problem that Americans the do not believe in this behavior that it creates the unfair trading advantage and we can see that from the size of the deficit but more importantly from the size of the large surpluses they're accumulating. And Mr.
▶ 0:59:23Secretary, what impact does China's notorious theft of America's intellectual property have on our $300 billion trade deficit? Well, I I I think that that is a problem for not just the US but for every other country.
▶ 0:59:38And to the extent that they are able to leapfrog whether it's with technology whether it's with products then that creates a huge advantage that has given them it it's back to one of the uh cornerstones the of the problem of trade that if if you don't have to spend money on R&D then you can spend it on manufacturing cheap manufacturing and Mr.
▶ 1:00:05Secretary, are tariffs a tool to reduce America's trade deficit, specifically with China? Uh, yes, sir. And are they also a tool to protect American jobs, Mr. Secretary? 100%. And Mr. Secretary, you could probably tell by how far I sit in the day as I'm somewhat new to Congress. Uh, but yet hypocrisy still offends me. And there's a lot of double talk and hypocrisy in this town. And I'm going to read you a couple of quotes, Mr. Secretary.
▶ 1:00:31And I'd like you to tell me if you think President Trump or somebody from the administration has said it or if you think Senator Schumer has said it on tariffs. Quote, "Tariffs are a necessary step towards addressing the unfair imbalance of China's trade relationship with the United States." Did Schumer say it or did Trump say it? I I would imagine the president Schumer said it, sir.
▶ 1:00:51Schumer was just a year ago in February of 2024 talking about tariffs being the answer to combat some of those issues in China, specifically ripping off our intellectual property and exploiting uh slave labor and child labor. Well, Congressman, I I would also note that the many many government officials, including presidents, were also in favor of a border wall until President Trump was. Good point. That leads me to my second question.
▶ 1:01:16Um, who said it, Schumer or Trump, that tariffs are vital to protect American workers, American ma American manufacturers, American innovation, and our national security? Who said it, Trump or Schumer? Uh, I I would imagine it was the ranking member. It was the the Senate minority leader, Chuck Schumer, said it. And like what you said, it was cool until Trump got in office and now he's opposed to it. Um, my time is about to expire, Mr.
▶ 1:01:41Secretary, I want to um commend you for fighting for uh American middle class workers. I do think that extending the tax bill with a couple of tweaks like salt is important. I do think that fighting for our middle class workers are important. I implore you to stay on the right path, sir. Good. Thank you, Congressman. Thank you for getting that salt plug in, Mr. Lo twice. The chair now recognizes a gentleman from Georgia, Mr. Bishop. Thank you very much, Mr. Chairman. U Thank you for being here, Secretary of Ascent.
▶ 1:02:10Uh I wanted to ask you some questions about uh the reports that the administration is cutting uh IRS workforce roughly in half uh with a goal of 50 50,000 including many of the frontline enforcement positions.
▶ 1:02:28Uh recent study concluded that this would result in a loss of $19 billion in foregone revenue just in 2026 and up to $350 billion over the next decade. Uh such substantial cuts in staffing could cause reductions in voluntary compliance as taxpayers will feel emboldened to cheat on their taxes.
▶ 1:02:51and an IRS official uh previously testified that a simple 1% decline in the compliance rate translates into 30 billion in lost revenue for the government. If the administration is truly concerned about reducing the federal deficit, as you indicate, why would it consider staffing reductions that reduce the IRS's capacity to collect much needed revenue that could be used to reduce the deficit or pay for critical services?
▶ 1:03:23Um a recent um Treasury Inspector General for Tax Administration's um report indicates that u the IRS compliance workforce would be drastically hit 31% uh with revenue officers of 18% uh they are paying the maximum u taxpayer compliance responsibilities that
▶ 1:03:54are needed for revenue for the government. Uh it appears that 31% of the reduction in force and I think uh since uh January uh the federal workforce has been reduced and IRS started out with 103,000 and now it's down to 91,600 which is an 11% reduction in the workforce.
▶ 1:04:18Uh that's 31% loss in revenue agents, 18% loss in revenue officers, 10% loss in contact representatives, and 10% loss in tax examiners. Uh it seems to be uh really really foolish uh to pursue that. Can you tell me why that makes sense? Briefly, sir.
▶ 1:04:46So I I think there there there two things here. There's the actual decrease that you just cited which is about 11 the 11% and then I'm if you could tell me where you're getting this number that where there's going to be a 40 or the IG's report sorry the IG's report that there's going to be a 40 or 50% decrease because you know sir I I I will tell you that was the goal the before I I took this job I didn't particularly like the term fake news.
▶ 1:05:15Now that I have it, I think it's probably not strong enough because on on March 22nd, the Washington Let me change let me change the subject. Let me let me move to another subject. Mr. Secretary, thank you. Uh if you want to elaborate, you can uh you can send us I'll be happy to have my office. Uh let me let me uh say that since uh this administration uh has come to the White House, the price of groceries has increased by 510% in only two months.
▶ 1:05:42According to a recent report uh by the groundwork collected, the price of meat, poultry, fish, and eggs has grown the fastest, up 2.9% since January of 2025. uh eggs at a record high 623 uh $623 a dozen up from 26% in January 25 alone. What is the administration doing to bring down the cost of food?
▶ 1:06:08What is the administration doing to ensure that the impact of the tariffs don't disproportionately fall on our nation's farmers? I've got a list of headlines uh from farmers all across the country uh that are complaining about the impact of the tariffs on on their capacity to sell their products. Um can you tell me what the uh administration is doing to bring down the cost of food? Well, a couple of things, Congressman. First of all, you may or may not know I am a farmer.
▶ 1:06:37Uh secondly that we inherited the a momentum food prices like monetary policy has long and variable lead times. Uh the price of eggs was up substantially during the Biden administration. It has been brought down 52% the in the past the few months and it just went up uh the last two months. I just told you.
▶ 1:07:03Uh no sir I I think that's not 100% January and finally uh we we are 6% we are bringing down energy cost and energy cost transportation is one of the single biggest factors in food pricing so diesel prices across the country have come down and that will result in lower food prices. Chair now recognizes a gentleman from North Carolina Mr. Edwards for any questions he may. Thank you Mr. Chair. Mr. Secretary, thanks for being with us this afternoon.
▶ 1:07:33Uh earlier this year, uh I co-sponsored a bill, the anti-CBDC surveillance state act that would prevent the Federal Reserve from issuing central bank digital currency. uh many of the folks that I represent are concerned about the security of such a currency and the uh privacy of their information were such a currency to be used.
▶ 1:08:00Can you give me the your perspective and maybe the administration's perspective on the place for digital currency? Uh sir, we believe that digital assets belong in the private sector and my personal view is that having a central bank digital currency is a sign of weakness not strength because uh really the reason if there is a reserve say a reserve manager or a foreign
▶ 1:08:30central bank holds US dollars then there is a wide variety of US assets they can invest in. uh you would create a central bank digital currency just for ease of use because there are no good choices for underlying assets. And so you're saying you would not be in favor of the Federal Reserve issuing such a currency? No, sir. Thank you.
▶ 1:08:53Can uh can can you tell us real quick at what point do you believe that our debt levels would no longer be sustainable? And then as the second part of that is what would that look like if our debt were were no longer sustainable. What would that look like to the American family? We talk a lot about debt up here. We put forth some elaborate graphs and charts and we hear all kind of economists using big long words.
▶ 1:09:24I need to uh be able to describe to the people back at home what that might look like in their lives were we no longer sustainable. Well, it would look like a sudden stop in the economy as the credit would disappear as markets would lose confidence. Uh and I'm committed to that not happening. And again it is a tipping point in debt sustainability is very difficult to to pinpoint.
▶ 1:09:53But what is not difficult to pinpoint is a trajectory and the trajectory the is unsustainable. When the when and if the markets were to rebel against uh is very difficult to know.
▶ 1:10:13Uh, I think just as I talked about the warning track for the X date, I think it's very important not to go on the warning track and we've got to get to the other side of this and start the reducing the debt and the debt numbers are are indeed scary, but the Secretary Yelen and I both agree that it is the debt to GDP that is the important number.
▶ 1:10:40So we are trying to both control the the absolute level of debt, pay it down, but also grow the GDP. And so I appreciate I applaud your approach towards the debt when give us an idea of where where is that tipping point? How close do you think that we might be to that?
▶ 1:11:05Again sir it it's I I think what the market having been in markets for 35 or 40 years what the market is more concerned about is a trajectory. Are you on a trajectory that is unsustainable or are you as we said during co bending the curve?
▶ 1:11:23So the the goal here is to both bend the curve but to grow the denominator the and use growth and spending constraint to solve this problem. And thank you for that. and as part of the president's cabinet and seeing more inside what's taking place than any of the rest of us, what role would you say that Doge is playing right now in prolonging that tipping point and reversing our uh our fiscal trend?
▶ 1:11:52Well, I I I think Doge or any other measure to constrain the spending the is admirable, important, and necessary. And if if we don't do that, you know, as I've said, um the and ranking member the mentioned it, we do not have a revenue problem. We have a spending problem and we have to bring this spending under control. Thank you. I've got just a few seconds.
▶ 1:12:21Can you tell us what keeps you up at night regarding cyber threats to our Treasury system? Uh well it's it's cyber threats across the entire financial system sir and that's why at treasury we are le leading the effort for more resilience within the entire financial system whether it's across the banking system the payment system and the the treasury system as you would have seen uh Treasury was hacked last year
▶ 1:12:52we've just discovered an OC hack that discovered last year. So, these hacks are real and Thank you, Mr. Chair. I'll yield. Thank you. The chair now recognizes the ranking member of the full committee, Mrs. Deloro, for any questions that she may have for five minutes. Thank you very much, Mr. Chairman. My apologies for for being late and apologies to you, Mr. Secretary, but lots of hearings happening here. So, I just a couple of points and I want to ask my my question.
▶ 1:13:21is just a a a followup on this on this IRS piece. Uh I think it's very interesting that uh well, first of all, I totally disagree with you, Mr. Secretary. We have a revenue problem, and that's where the IRS comes in. And we think about the debt. We think about the $2.3 trillion uh that was the debt uh uh really built up with the tax cuts uh to the uh wealthiest and the biggest corporations uh in 2017.
▶ 1:13:50We're now looking at an additional $4 and a half trillion dollars in tax cuts which are uh making their way to again the richest uh and to the biggest corporations. That is debt and that is something that u I don't know about yourself and others in the administration who refuse to see that kind of debt.
▶ 1:14:11And the o almost unbelievable piece of this is the IRS 2024 uh we invested in it uh able to recover more than 1.1 billion dollars from roughly 1,600 millionaires projected at the time that investments in high-end enforcement data and analytics that an additional 851 billion dollar would result in revenue over the next 10 years.
▶ 1:14:35The uh uh inspector general has said IRS lost 30% of auditors under Elon Musk's illegal purge. U people who are wanting to ensure that millionaires and billionaires are paying their taxes. Uh and the issue is here is that we're going to pay for those taxes by taking it out of the hide of Medicaid and of children of low-wage workers and of seniors.
▶ 1:14:58Um the the issue that I want to try to get to uh uh I'm going to make another another point is your comments on uh your recent comments that seem to call into question the vitality of the textile industry in the United States and national security. I applaud the administration for the steps they've taken on deminimus and closing down that loophole. I think it was very very important to do this. We need to go further. It needs to be applied to all countries not just to China.
▶ 1:15:26uh but unbelievable commentary uh on on the US textile industry provides good jobs across this country particularly in rural areas the supply chain directly employed 471,000 workers produced roughly 64 billion in product in 2024 let me get to my question with only two minutes to go here um uh this is the um dealing with standing up for a mechanism in the US to screen our investment ments in
▶ 1:15:56China to ensure capital, technology, and knowhow are not fueling the capabilities of the Chinese Communist Party. I've had a bipartisan bill to do that for years, help negotiate the bipartisan bill that nearly passed last year. Um, and I strongly support executive action to address the issue. In fact, we got appropriated funding for Treasury to implement the executive order on u uh outbound investment. Mr.
▶ 1:16:22Secretary, I understand that the administration is currently reviewing the executive order. There's a clear bipartisan consensus on the need for an outbound mechanism uh of that screening regime. Let me ask you, do you support the implementation of such a regime? Uh thank thank you, Congressman. This is ve very important issue. Uh the outbound security program is an important new tool in our effort to restrict the PRC from exploiting US investment.
▶ 1:16:52The program just began a few months ago and we are learning and we anticipate gaining important visibility into US persons investments involving PRC entity entities. Uh we appreciate the interest from Congress and while legislation is important and helpful. I would like some time the for our process to inform any legislation.
▶ 1:17:13We would like any legislation to be both flexible and Well, you know, in your confirmation hearing in January, you noted, and this is a quote, we should have a very rigorous screening process for US investments in key sectors that could go to China. And in March, you said, "We will make sure that our outbound investment doesn't get used against us.
▶ 1:17:37We are going to continue investigating this and where necessary to to block it." I I I heard your answer and quite frankly, it sounds a little bit wishy-washy. I I want to be clear about this. You have expressed support for outbound investment for months now. Has that changed in any way. What's the status of the administration's review of that order? What about the timeline on this because it's an important issue?
▶ 1:18:03And can you commit that your department will enforce this executive order to its fullest extent? Uh this this is I have not changed my position. As I said, we are looking at what is working, what isn't, and how that the best enforcement mechanisms and when a bill comes forward.
▶ 1:18:26Again, we want it to be wholesome and durable and a 2025 bill for all the nuance that goes with this. Well, just I'm I'm out of time, but please understand we have bipartisan support. It was almost it made it into the continuing resolution but for the influence of Mr. Musk and it is critically important for our competitive edge and I don't believe there's any reason for the administration to roll back.
▶ 1:18:55My hope is that we will move forward and keep the pressure on in order to be able to preserve our competitive advantage and not see to the Chinese. We're in complete agreement. Thank you. Thank you, Mr. Chairman. I would not want to interfere with that bipartisan moment. Okay. And it it's bipartisan legislation as you know. I appreciate that. Great piece of legislation. Uh and the chair will now recognize a gentleman from Nevada. Uh Mark Emmed for five minutes of question.
▶ 1:19:25Thank you, Mr. Chairman. Hi, Mr. Secretary. First of all, I want to I want to thank you for your availability uh during this uh this time since you've been confirmed and stuff like that. But I know nothing's been going on that affects the Treasury Department in any way and uh I appreciate having having access to you via phone over over an issue that wasn't reported. So, thank you very much.
▶ 1:19:48Um I I want to just ask you a couple of questions kind of relative to our conversation and that is I know that the president has said quit quit producing the penny. A lot of reasons. you know, arguably you lose two and a half plus cents for every penny you produce in in signage and you don't have to get up too early to do the math on that sort of thing.
▶ 1:20:10Um, but I think in the in in the timing of doing that, um, if we're going to eliminate the penny, which has to happen here, um, I I I would like to know who it is, who's kind of the point, the tip of the spear on your staff, uh, at Treasury.
▶ 1:20:27I already I already have the the mint information, but at Treasury um as far as those issues go and and I'll tell you why I want to know is I think there are some some issues regarding what it costs to produce a penny. I don't know if it's going to get you I don't think it'll get you down to a cent. So, it won't be that argument. But quite frankly, stacked up behind it is what it costs to produce a nickel and what it cost to produce a dime.
▶ 1:20:54I don't know about the quarter, but anyhow, um to make sure that we are at least giving your department and the bureau of the mint the most tools necessary to, if you will, untie their hands when they're looking for who they buy their blanks from and stuff like that that goes directly into what it costs to produce one.
▶ 1:21:13So, so my my first question is who's who's kind of in charge of that since I know you've got other things to do, but ultimately um so that we can start that dialogue with where do we go from here and if we're going to get rid of and I know there's been legislation uh introduced in the Senate to get rid of the penny altogether except for collectors. So, who's who's the point man or woman on your staff? Uh, Congressman, it would be my recently confirmed deputy Mike Fauler. Okay.
▶ 1:21:41And yeah, I would also say uh with the nickel and the dime, the the nickel costs more than a nickel to produce, but we are looking at material ch material changes in the materials uh that would reduce the cost uh to or below a nickel and then I believe the dime is profitable. and and and I guess that brings me to that there is legislation you might want to warn your your recently confirmed deputy.
▶ 1:22:09HR 1278 um bipartisan gives you guys the chance without coming to us every time to basically make changes in in the middle of that sort of stuff so that you can keep ahead of those sorts of things. So, if if you would, unless it's sitting here, whatever, it's like, hey, we're going to be calling you up. Um, the idea is to to solve the problem if it's solvable and and move on from there so you guys can do other things with your time. Uh, yes, sir.
▶ 1:22:38We we've been reviewing that. Good. Glad to hear that. U so, have you taken a look at the Senate bill that says no more pennies? And I guess other countries have rounded up to the nearest 5 cents and my research says well it wasn't the end of the world. So well sir we we are also encouraging rounding down. Okay that's good. Great answer. You know what I'm I'm going to reward good performance. I yield back Mr. Chairman.
▶ 1:23:08Certainly appreciate that Mr. Amday. Um we I understand you have the hard stop at 11:30. Uh I like to honor that. I I want to be fair to my fellow committee members though in doing so um not all of us will be eligible for a second round but certainly uh I my ranking member Mr. Hoyer would request that he have a chance to ask you uh another question before the stop Mr.
▶ 1:23:35Okay, first first of all, let me say uh I believe the uh Congress is being taken for granted in the policies being pursued. I think frankly some illegal things are being done. I'm not by you. I'm just talking about the administration in terms of federal employees. I represent 77,000 federal employees who came here to work for the government and that's why they're here.
▶ 1:24:05Um, I've worked very well with Republicans throughout my career, which is now in its 45th year. Uh, I want to do that some more because I think that's the best interest of the country.
▶ 1:24:25I believe you're one of those who has a shot at keeping us on a somewhat even I mean that as a compliment but obviously as also a concern when you say and I want to reiterate this that we have a spending problem and I retort to you know no what we have is a paying for
▶ 1:24:56problem if I make a million dollars I can spend 999,000 less taxes but if If I make 500,000, I spend a million dollars. That is a paying problem because I don't pay for it and I accumulate debt. That's our debt. Now, I was here in the Reagan administration some period of time ago. Uh we were told that the tax cuts that were passed in 1981 were going to pay for themselves. They did not.
▶ 1:25:27It perhaps will surprise you, maybe you know this figure. The largest increase in the national debt was under Ronald Reagan, the only president who had a tripledigit 189% increase in the national debt during the course of his term. It might also surprise you uh that uh uh Clinton uh is the only one who was 30% lower since Ronald Reagan.
▶ 1:25:57Clinton is the only one who balanced the budget. Now, one of the reasons we did so is because we had bipartisan Uh the Republicans wanted to cut taxes which is their mantra and we wanted to invest as we call it as opposed to spending in children's education and people's health care in in safety etc etc.
▶ 1:26:25If we continue logic that we have a spending problem and discount taxes as spending when we did the tax increase under George uh excuse me in in 2017 you may recall the Republicans gave themselves a $1.5 trillion headroom.
▶ 1:26:53The reason it was limited that is because the senator from uh Tennessee wouldn't go higher than that. So in other words, a $1.5 trillion unpaid for headroom to give a cut. That is spending because uh you're cutting prices while increasing costs. That's what causes def deficits.
▶ 1:27:21some my Republican friends, I'm a strong supporter of national defense, but I do not delude myself that raising $150 billion in national defense expenses don't cost taxes. We don't have billion to either cut taxes with or to spend money with, so we borrow.
▶ 1:27:46And when my friend talks about uh, we all know if you spend more than you get, you go into debt. And that's what we do as a country on both sides of the aisle.
▶ 1:28:04And we need people like yourself to be honest with those with whom you work and honest with the Congress of the United States in terms of the ramifications of the actions. I know you are a strong supporter of permanent increase. You're not a strong supporter of paying for it.
▶ 1:28:26And you can cut all of non-defense discretionary spending and you won't get And this game that uh Mr. Musk has played, he had no sense of the ramifications of the actions he's taken. He knew how to do it. He was prepared. As one article in the Atlantic Journal said, the Blitzkrieg, which our speaker calls flooding the zone, been pretty effective at that.
▶ 1:28:53Just trying to watch where the ball is and see if you can respond. But Mr. Secretary, I have a lot of questions. I'm going to send them to you, ask them to you, and would like to take some time with you on that. Um, I have great respect for your background and your abilities, and I am really praying that you will bring a voice of reason and rationality to our deliberations.
▶ 1:29:18My time is over, and I appreciate the chairman's uh forbearance, but this is serious business. Very serious business. And I agree with you. A $ 37 trillion uh debt is not sustainable and we all have to do it, but we have to do it together. That's the only way it will get done. Thank you, Mr. Chairman. Thank you. You have a response, Mr. Secretary. Congressman, thank you for that.
▶ 1:29:46And I I would note that that while President Reagan substantially increased the defense budget, the Clinton administration was able to capitalize on the peace dividend.
▶ 1:30:00And but as you said, the defense budget dropped dramatically the post the fall the of the iron curtain which contributed to the fiscal soundness and through as you said bipartisanship working the with Speaker Gingrich they worked together. So I would hope that we could do that again which by the way cost Gingrich's job.
▶ 1:30:25the right wing of his party was insensed that he did that and what it did was had a rational policy because both sides participated. So uh well and uh the senator from Tennessee is actually my neighbor. So I I see him quite often and look there there are ramifications here and you're not talking about any current senators from Tennessee. He's left. No, I know. Okay.
▶ 1:30:54make sure we had the right Tennesseeian. Senator Corker. Yes. Yes. Is my neighbor. Uhhuh. So, um, and I I look forward to the inviting a bipartisan Thank you, sir. With that, our time has concluded. I'd like to thank you, Secretary Pesson, for being here today. There may be some members, as uh, ranking member Hoyer has indicated, who have questions. They're going to submit those questions for the record. I would ask any of please submit those questions to the subcommittee staff within the next seven days.
▶ 1:31:25Uh I would ask that you try to respond to them within the next 15 business days after receipt. Thank you. And with that the subcommittee stands adjourned. Thank you.