▶ 0:20:56Chair Crapo: This hearing will come to order. And before we begin our formal business, let me first extend a welcome to our new finance committee members. We have senator marshall on the republican side. Welcome, senator. And on the democrat side, we have senators lujan, sanders, smith, warnock, and welch.
▶ 0:21:23Chair Crapo: We welcome you all to the committee as well could you all bring great expertise to the committee come and we look forward to working with you. I'm also honored to lead this committee alongside ranking member wyden. Senator wyden and I have a proven track record of working together to improve the life of our constituents in the pacific northwest and on this committee, and we can and will do so again in this congress. I look forward to working with you, senator wyden.
▶ 0:21:50Chair Crapo: This committee's jurisdiction, tqax, trade come and health care policy, reflects some of the most challenging matters that congress can front. The congress will continue its long tradition of addressing these matters in a manner that reflects bipartisanship and delivers results to create opportunities for americans. Turning to today's hearing, let me extend a warm welcome to Mr.
▶ 0:22:18Chair Crapo: Scott bessent, president trump's nominee for the secretary of treasury, as well as his family. Congratulations, Mr. bessent, on your well-deserved nomination, and thank you for your willingness to serve, and for your extensive cooperation with this committee. It has already been a great pleasure to work with you. You've been transparent, candid, and insightful with me and with my colleagues.
▶ 0:22:44Chair Crapo: You spent countless hours, meaningfully answering our questions and according yourself with great courtesy, dignity, and professionalism. Throughout the committee's rigorous vetting process, and I think that our finance committee has the most vigorous process of any committee in congress, you have worked tirelessly to meet our long-standing, diligent standards.
▶ 0:23:08Chair Crapo: Is clear that you followed applicable law and provided thousands of pages of documentation that substantiate your positions, positions and supported by major law and accounting farms -- firms. Thank you for your transparency come and I look forward to working with you. Mr.
▶ 0:23:34Chair Crapo: Bessent has worked as the last three decades as one of the sharpest minds in the global finance industry, including as an entrepreneur who started his own asset management firm. He taught economic history at yale university, is a member on the council on foreign relations, has served on the board of universities and nonprofits, and engages in a variety of philanthropic endeavors. Mr.
▶ 0:24:00Chair Crapo: Bessent, based upon your background of experience and character, president trump made an excellent choice in nominating you to be his secretary of treasury. As you have described it, the position for which you are nominated is at the heart of the american economy. Which is interned at the heart of global economic growth. A treasury secretary heads the agency charged with supporting economic growth, representing U.S.
▶ 0:24:30Chair Crapo: Interests before foreign nations, and global financial markets and organizations, managing the federal treasury, and overseeing financial institutions, to name just a few of the responsibilities. Past successful treasury secretaries have understood business and financial markets as well as foreign policy and national security, budgets, and regulation.
▶ 0:24:54Chair Crapo: They have worked collaboratively they have worked collaboratively o prioritie -- collaboratively with congress to enact the present's priorities. The next treasury secretary will have to work with congress to preserve and build on the progrowth republican tax policies that have greatly benefited all americans as well as improve our global competitiveness through trade deals that create market access and combat china's unfair practices.
▶ 0:25:25Chair Crapo: I've seen the results of our most recent -- as seen in the results of our most recent elections, americans want a return to the robust economy we enjoyed during president trump's first term. If confirmed, I look forward to working closely with you to a achieve these and other essential aims. Mr. bessent, on behalf of my colleagues, I thank you for your willingness to serve and again congratulate you on your support and your nomination, which I intend to support.
▶ 0:25:55Chair Crapo: With that, I recognize ranking member wyden for his opening remarks.
▶ 0:25:57Sen. Wyden: Thank you very much, Mr. chairman, and I appreciate you introducing all the new members on both sides, and as always, your very kind comments about me. Very much appreciated. In a trump economy, the winner's circle is small, and it is dominated by the ultra-wealthy.
▶ 0:26:20Sen. Wyden: Working people in the middle class are on the outside looking in, and trump and his advisers are indifferent to the problems they face each day. I've had more than 1100 open to all town hall meetings in my state. I will have several more this weekend.
▶ 0:26:43Sen. Wyden: The second word I hear from oregonians in those meetings is almost always "bill," grocery bill, medical bill, electricity bill. Americans feel held down by the cost of living. They look at the growing fortunes at the top, and they weigh that against their sense that americans middle class just does not have the opportunity to really get ahead.
▶ 0:27:13Sen. Wyden: The american people voted for change, and more than anywhere else, they want change in the economy. I don't believe they're going to get it from Mr. bessent or donald trump. The centerpiece of the trump economic agenda is extending the 2017 tax law at a cost of more than $4 trillion. Ultra-wealthy individuals who rake in the millions each year would get tax breaks of hundreds of thousands of dollars.
▶ 0:27:46Sen. Wyden: Families who live paycheck-to-paycheck would be lucky if they could just get enough to cover the grocery bill for a week. How does donald trump and republicans plan to pay for the multitrillion dollar giveaway to the ultra-wealthy? For starters, they will be offering across-the-board tariffs, and let's be clear about what that is all about.
▶ 0:28:15Sen. Wyden: Trillions of dollars in new taxes paid for by working americans and small businesses. And to me, the ultimate distillation of the trump agenda is paying for tax breaks at the top by increasing child hunger, putting tens of millions off their health insurance, and laying off hundreds of thousands of manufacturing workers.
▶ 0:28:41Sen. Wyden: It feels to me like a class war on typical american families, and the nominee, if confirmed, is going to be right in the middle of it. Donald trump is going to be waging a class war instead of fixing what is broken about the tax code. Which is, there is a special set of rules that apply only to the ultra-wealthy.
▶ 0:29:07Sen. Wyden: Make no mistake about it, those ultra-wealth people get to pay what they want when they want to , and often little or nothing for years on end. Mr. bessent is a case in point. Taxes that fund medicare are automatic for vast majority of americans. It comes straight out of their paycheck. It's a civic duty that pays off, earned benefits down the road.
▶ 0:29:36Sen. Wyden: But like a number of wall street fund managers, Mr. bessent makes use of a tricky legal maneuver to opt out of paying into medicare. It's a tax loophole that hurts medicare but benefits him to the tune of hundreds of thousands of dollars each year. Now, the treasury department has gone to court to argue that taxpayers taking this position are violating tax law.
▶ 0:30:06Sen. Wyden: Make no mistake about that. That's not me making the judgment. That is the treasury department. They went to court to argue that taxpayers who take this position are violating the law. I believe it is a big conflict of interest if the nominee is confirmed. Either he and his lawyers take the position that treasury policy does not apply to the treasury secretary, or his left with a loophole that let wall street titans blow off their fair share of medicare taxes.
▶ 0:30:39Sen. Wyden: This is exactly the kind of abusive scheme that we as americans feeling disgusting with the tax code. They file their taxes with the big software companies as well. . It is absurd that americans get charged huge amounts of money to file their taxes every year.
▶ 0:30:59Sen. Wyden: That is why a number of us in this room worked hard to create the new direct file program with resources from the inflation reduction act and the biden administration. It's a free option that allows taxpayers to file the returns directly with the irs, no software middleman picking their pockets or harvesting their data.
▶ 0:31:22Sen. Wyden: It launched last year to rave reviews, and virtually no where in the western industrialized world do we have the kind of bureaucratic, costly system we have today. And we are trying to change it. 35 million americans across 25 states -- excuse me, 30 million americans across 25 states will be eligible to use direct file this year.
▶ 0:31:50Sen. Wyden: That is if it continues to survive. The software giants want direct file killed. With republicans on their side, maybe they are going to get their way. If they do come it will cost american taxpayers hundreds of millions of dollars this year alone. Trump and republicans are not stopping there when it comes to fighting with special interests over these typical consumer appeared to be inflation reduction act was the largest investment in clean energy in our history.
▶ 0:32:20Sen. Wyden: It was largely developed in this room, and it took years to try to find common ground around technological neutrality. The more you reduce carbon, the bigger your tax savings. It has created hundreds of thousands of jobs. Is a saving consumerist money on their energy bill. And along with record fossil fuel production, it has brought energy security to a level not seen in generations.
▶ 0:32:44Sen. Wyden: Our country is in a clean energy arms race with china and other powers, but unfortunately, these policies from donald trump and republicans may prevent us from winning that arms race with china. That's because the trump administration is talking about selling out to special interest and far right ideologues that want to nuke the provisions of the ira that help us promote clean energy.
▶ 0:33:12Sen. Wyden: They want to keep in place the oil and gas subsidies that have been around for more than a generation but eliminate the incentives that put us in the lead on clean energy. From what I've read, that's how the nominee sees it as well. That would be a recipe for higher energy costs, weaker energy security, and surrender to china when it comes to clean energy jobs and investments. In my view, that just defies common sense. I will close with this.
▶ 0:33:43Sen. Wyden: Many people, myself included, hoped that the president elect woods pick -- would pick a steady hand, a moderating force that would work with all sides and especially for all americans that gives a tax code for everybody in america the chance to get ahead, not just people at the top.
▶ 0:34:05Sen. Wyden: This is an important discussion today, and I wish I had read something that would indicate that this nominee would be the kind of treasury secretary I would approve. Thank you, senator crapo.
▶ 0:34:18Chair Crapo: Thank you very much, senator wyden. Today we are honored to have our good friend and colleague, now the new budget committee chairman, senator lindsey graham, to help introduce the nominee. Welcome, senator graham, from the state of the great state of south carolina. I want to thank you for joining us today, and I will turn it over to you to introduce Mr. bessent.
▶ 0:34:41Sen. Graham: Thank you, Mr. chairman. All 800 of us know each other pretty well. This is my first appearance in the finance committee, probably last. Y'all work on complicated staff them and I'm glad you like this test.
▶ 0:35:02Sen. Graham: It is kind of boring to me, but it is important, what you do, and I respect to the intellect it takes the people on the committee, the best minds we can find on the finance committee, and we need a secretary of treasury that knows what he's doing, has the trust of the president, and loves his country. Your ship came in with this guy. So scott bessent is from south carolina. He is academically gifted and real world tested.
▶ 0:35:34Sen. Graham: He went to yale. Nobody's perfect. [laughter] when he told me that, said, "hmm, I don't know about that." but anyway, he's really smart. Why am I here? Because trump won. I would not have been here if trump hadn't won. Trump won because more people voted for him, and he had to pick people to form his cabinet.
▶ 0:36:01Sen. Graham: And when he talked about secretary of treasury, I'm not the normal person you would go to ask about, because this is not so much my portfolio, but when he mentioned scott, I said oh my god, homerun. From my point of view. I mean, you talk about someone who is academically gifted, understands the world.
▶ 0:36:24Sen. Graham: Scott, like in a republican president -- any republican president would pick this guy did he really understands the president and what the president wants to do. I believe, colleagues, that every president deserves a cabinet that they know and trust.
▶ 0:36:49Sen. Graham: If I had to vote for people based on agreeing with them, I would not vote for anybody all picked. That's not the standard for me. I vote for people I disagree with, because I think they are qualified. So I would just ask the committee, just think, does he have the background, intelligence, and the character to serve president trump and our nation as secretary of treasury?
▶ 0:37:17Sen. Graham: I think by any reasonable test of qualifications, he excels, beyond the bare minimum, to the highest levels of excellence. But that is just my opinion. So my goal here today is to tell you a little bit about him. You've heard from the chairman about his success in the financial world, about his academic qualifications. He was born in south carolina. Why they call it little river?
▶ 0:37:50Sen. Graham: Because it is little and it is a river. [laughter] it's in ouray county -- horry county. How many of you heard of myrtle beach? Most of you. It's halfway between myrtle beach and conway. His first job was to set up beach chairs at north myrtle beach, and apparently he did well there, because north myrtle beach is thriving.
▶ 0:38:17Sen. Graham: He went to north myrtle beach high school, and he was voted most likely to succeed in 1980. And we have a high school classmate of his. What did they see in him? The same thing I see. Someone who really is talented and works hard and just is a good person, the kind of people that you think are going to succeed but you hope succeed.
▶ 0:38:50Sen. Graham: So he lives in charleston in a really nice place, going from little river to charleston is about a 2.5-hour drive, a real change. As I represent south carolina, I like them both very much. His has been john is right behind me. He has two kids, caroline and cole, who is absolutely beautiful.
▶ 0:39:20Sen. Graham: We are very proud of scott. I know him. The rich and powerful do not live in little river. This man has been successful at everything he's ever tried to do. He's worked really hard, and why did president trump pick him?
▶ 0:39:46Sen. Graham: Because he believes that president trump's economic agenda is good for this country and wants to help president trump be successful. Here's what scott said. I think it's the melding of economic policy of national security, economic policy and national security are now indispensable, and donald trump understands that. So I'm here to tell you, folks, I agree with that. If we don't have energy independence, we are less safe.
▶ 0:40:17Sen. Graham: If we don't get our debt in order, we are less safe. I'm known as a national security guy, but I do understand economic policy matters. If you want to clean up the environment, a carbon fee seems a good way to do it to punish china and india for bad practices. Call it a terrorist, -- tari ff, call it whatever you want to do. President trump won. I'm here today because he won.
▶ 0:40:46Sen. Graham: And here today because scott lives in south carolina. I'm here today to tell you that these qualifications as your test, this is the easiest test he will ever take. If your goal is to play like the election did not happen, then I guess you will vote no. When you lose elections, you get up and dust yourself off, you get ready for the next one.
▶ 0:41:13Sen. Graham: But I was honored when he asked me to introduce him, because I know this man, and america will be in good hands if he is our secretary of secretary. He deserves this job, he's qualified for this job, and president trump, thank you for picking him. On behalf of all of us in south carolina, we are extremely proud of you, and we wish you well. Thank you.
▶ 0:41:39Chair Crapo: Thank you, senator graham. We appreciate you giving this introduction, and you are now excused, as is our practice. Mr. bessent, before we turn it over to you for your opening statement, I have four questions that we ask all nominees who come before this committee. The first is, is there anything that you are aware of in your background that might present a conflict of interest with the duties of the office to which you have been nominated?
▶ 0:42:08Mr. Bessent: No, sir.
▶ 0:42:10Chair Crapo: Second, do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated?
▶ 0:42:23Mr. Bessent: No, sir.
▶ 0:42:25Chair Crapo: Third, do you agree without reservation to respond to any reasonable summons to appear and testify for any duly constituted committee of the congress if you are confirmed?
▶ 0:42:37Mr. Bessent: Yes, sir.
▶ 0:42:41Chair Crapo: And finally, do you commit to provide a prompt response in writing to any question asked to you by any senator on this committee?
▶ 0:42:47Mr. Bessent: Yes, sir.
▶ 0:42:48Chair Crapo: Thank you very much. Again, welcome to the committee, Mr. bessent, and you may make your opening statement.
▶ 0:42:55Mr. Bessent: Thank you. Chairman carico, ranking member white, members of the finance committee, it is an honor -- chairman crapo, ranking member wyden, members of the finance committee, it is an honor to be here. I want to thank all of you who took the time to meet with me over the past few weeks.
▶ 0:43:13Mr. Bessent: I want to thank my spouse, john freeman, who is here today, and my wonderful children , cole a nd caroline, who are sitting behind me for the ultimate civics lesson. I want to acknowledge three people who cannot be here today.
▶ 0:43:39Mr. Bessent: My 98-year-old mother-in-law, celine and freeman, a world war ii french bride, making for a three generation household. My sister, who does not like crowds, and my recently deceased sister, syn bessent, -- wyn bessent.
▶ 0:44:10Mr. Bessent: I want to thank donald trump for placing trust in me for such an important administration. While I have met with many of you, most americans watching at home will be unfamiliar with my background. I've been blessed with fulfilling a successful career, but my presence here today was far from predetermined. I was born and raised in the south carolina low country. My father fell into extreme financial difficulty when I was young.
▶ 0:44:37Mr. Bessent: When I was nine years old, I started working two summer jobs, and I have not stopped working since. I eventually made my way to yale. I accepted my first internship in finance because the job came with a pullout sofa in the office to sleep on, which allowed me to live in new york city rent free. I've been involved in financial markets ever since.
▶ 0:45:00Mr. Bessent: I've been fortunate enough to work with some of the world's greatest investors in a career that has taken me to almost 60 countries over 40 years. My life has been the "only in america" story that I am determined to preserve for future generations.
▶ 0:45:20Mr. Bessent: Today, I believe that president trump has a generational opportunity to unleash a new economic golden age that will create more jobs, wealth, and prosperity for all americans. My life's work in the private sector has given me a deep understanding of the economy and market, and while this experience could be economic policy, I have long adhered to the principle that you should know what you don't know and
▶ 0:45:51Mr. Bessent: Lean on those who do. Having never served in government, I intend, if confirmed, to be in close contact with each of you in your offices and seek your counsel. The treasury department plays a critical role in protecting american national security.
▶ 0:46:07Mr. Bessent: We must secure supply chains that are vulnerable to strategic competitors, and we must carefully deploy sanctions as part of a whole of government approach to address our national security requirements and critically they must ensure that the U.S. dollar remains the world's reserve currency.
▶ 0:46:31Mr. Bessent: Today, americans face significant challenges in an economy that is not that has not created enough opportunity for working men and women. We have an affordability crisis, a housing shortage, and for the first time in my lifetime, parents feel as though the american dream is slipping away from their children. The federal government has a significant spending program, driving deficits on the historically high 7% of gdp during the past four years.
▶ 0:46:59Mr. Bessent: We must work to get our fiscal house in order and adjust federal domestic discretionary spending that has grown by an astonishing 40% over the past four years. Productive investment that grows the economy must be prioritized over wasteful spending that drives inflation. As we begin 2025, americans are barreling toward an economic crisis at year end.
▶ 0:47:30Mr. Bessent: If congress fails to act, america will face the largest tax increase in history, a crushing $4 trillion tax hike. We must make permanent the 2017 tax cuts and jobs act and implement new progrowth policies to reduce the tax burden on american manufacturers, service workers, and seniors. I've already spoken with several members of this committee as well as leaders of the house about the best approach to achieving these important goals together.
▶ 0:48:01Mr. Bessent: As president trump has said, we will unleash the american economy by implementing progrowth, regulatory policies, reducing taxes, and unleashing energy production. Predictable progrowth tax policy and smart, updated regulations will continue to make america the most popular destination in the world for starting, growing, and taking public business.
▶ 0:48:30Mr. Bessent: And as we rebuild our economy and raise the foundations for the next generation of american competitiveness, we must use all the tools available to realign the economic system to better serve the interests of working americans. For too long, our nation has allowed unfair distortions in the international trading system.
▶ 0:48:51Mr. Bessent: President trump was the first president in modern times to recognize the need to change our trade policy and stand up for american trade workers. If confirmed, I look forward to working with president trump and members of this committee to do just that. Members of the committee, these are just some of many important goals that president trump has laid out for me and others on his economic team.
▶ 0:49:16Mr. Bessent: I firmly believe that if confirmed, and with your counsel and support, we can usher in a new, more balanced era of prosperity that will lift up all americans and rebuild communities and families across the country. I humbly thank you for your consideration, and I'm eager to take your questions.
▶ 0:49:33Chair Crapo: Thank you, Mr. bessent. Before I begin my questions, I want to reemphasize how appreciative I am that you've gone through the vetting in the senate. I appreciate the more than 3000 pages of material you provided as well as the countless hours you and your staff have offered to respond to respond to questions from this committee.
▶ 0:50:01Chair Crapo: Let me be clear, you followed all of the applicable law and met the committee's long-standing diligent standards. Your process match that which has applied to nominees and every previous nomination. My first question to you, I want to go to the tax cuts and jobs act, which senator wyden and I both mentioned already, and you have mentioned in your remarks.
▶ 0:50:28Chair Crapo: The attack on this statue come of this law, which is law, I want to remind everybody, it is the law now. It was passed in 2017, is that it was a tax cut for the wealthy. I appreciate you, Mr. bessent, noting it will be a $4 trillion plus tax increase if we do not extend this law.
▶ 0:50:48Chair Crapo: And a point I would remind all of our colleagues is that if that for trillion dollar plus tax increase happens, it is not going to be just something that impacts the wealthy, it is 2.6 trillion dollars of it. The majority of it falls on people who make less, $400,000 for a family with two taxpayers, under $400,000 per year.
▶ 0:51:19Chair Crapo: That's the number that president biden chose to say he wanted to protect. $2.6 trillion of the tax cut hits those making less than 400,000 dollars. Moreover, massive amounts of it hit a disease, small businesses across this country. This is not a tax cut for the wealthy we are talking about. It is a tax increase on all americans, the majority of whom are in the lower and middle income category.
▶ 0:51:47Chair Crapo: My question to you is, one of our fissionable -- pivotal tax is to protect. If we allow this $4 trillion to happen.
▶ 0:52:09Mr. Bessent: Senator crapo, thank you for this, and thank you for the meetings over the past few weeks. I've enjoyed working with your staff. And this is the single most important economic issue of the day. This is pass-fail.
▶ 0:52:29Mr. Bessent: If we do not fix these tax cuts, if we do not renew and extend, then we will be facing an economic calamity, and, as always with financial instability, that falls on the middle and working-class people. We will see a gigantic middle-class tax increase.
▶ 0:52:55Mr. Bessent: We will see the child tax credit, we will see the reduction, so it will be what we call an economic -- it has the potential for a sudden stop. And, as I said, traditionally with these sudden stops, it falls on working americans.
▶ 0:53:15Chair Crapo: Thank you. And I would just say to you, and you may be aware of this, but the tax foundation has indicated that if we do sustain these tax cuts and protect them from expiring and stop this tax increase, that the extension of this policy would increase the growth of the gdp in the united states by 1.1% over time.
▶ 0:53:43Chair Crapo: Similarly, and I don't know how they came up with the same number, but the national association of manufacturers indicates that if we don't extend this tax relief, that they will be a 1.1% reduction and growth of jobs and development in our economy.
▶ 0:54:06Chair Crapo: It seems to me that as we are talking about what to do for america, that protecting america from a 1% reduction versus a 1% growth in gdp is a critical objective. Could you just give a little bit of perspective? I know you just answer this question in another context, but could you just give a little bit more perspective on those kinds of dynamics?
▶ 0:54:32Chair Crapo: And I'm sorry, I'm going to try to keep the five minutes, and we only have about 15 seconds of mine. I want to make sure everybody else stays on time, so I will, too.
▶ 0:54:42Mr. Bessent: Senator, I will just say we saw the power of these tax cuts in 1819, -- 2018, 2019, going into 2020, before they were interrupted by covid, and the great success that was had.
▶ 0:54:56Chair Crapo: Thank you. Senator wyden.
▶ 0:54:59Sen. Wyden: Thank you very much. I have got four questions I'm going to ask, and if we both can keep it brief, I think we can get to all of them. It can frame for us with the day is all about. I want to start by talking about the future of direct buyouts. This is the program that helps our people who choose it to save hundreds of dollars when they file their tax returns. Last year, the irs launched it.
▶ 0:55:32Sen. Wyden: It was an enormous -- popular among tax lawyers, but many hate it. They want to shut it down. Filing starts january 27th, so it opens in 10 days, and many have been notified that they are going to be eligible to use direct file this year. I won't do this for every question, but I would really like a yes or no on this one.
▶ 0:56:01Sen. Wyden: Will you commit to keeping direct file up and running if you are confirmed?
▶ 0:56:08Mr. Bessent: I will commit that for this tax season, the direct file will be operative, and the american taxpayers who choose to use it will, and, if confirmed, I will consult and study the program and understand it better and make sure it works to serve the irs' customer service and
▶ 0:56:44Mr. Bessent: Privacy.
▶ 0:56:44Sen. Wyden: I appreciate that. It means taxpayers will save hundreds of dollars, and we will have a chance to see, once again, how popular it is with everyone except for the tax prep software crowd. Onto tariffs.
▶ 0:57:01Sen. Wyden: Donald trump, with no plan and no strategy, says he's going to put across the board tariffs, blanket tariffs on all imported goods, which means all workers and small businesses are going to get clobbered with additional taxes on practically everything they buy from other countries. My question is, who would pay these tariffs, americans or foreign countries?
▶ 0:57:26Mr. Bessent: So, senator wyden, just to understand, so I can frame the answer correctly, do you believe that these tariffs are a consumption tax increase?
▶ 0:57:42Sen. Wyden: I believe these tariffs, you can call it whatever you want in terms of trying to gussy it up, they are going to be paid for by our workers and small businesses. All through the campaign, we heard foreign countries are going to pay it. I think that is baloney. It's going to be paid for by workers and small businesses. Your response.
▶ 0:58:04Mr. Bessent: Senator, I would respectfully disagree, and the history of tariffs and tariff theory, optimal tariff theory does not support what you are saying. Traditionally, we see, if we were to use a number that has been thrown around in this graph of 10%, then traditionally, the currency appreciates by 4%, so the 10% is not passed through.
▶ 0:58:34Mr. Bessent: Then we have various elasticities, consumer preferences may change, and finally, foreign manufacturers, especially china, which is trying to export their way out of their current economic malaise, will continue cutting prices to maintain market share.
▶ 0:58:54Sen. Wyden: That is an academic view of it. But what I know is that the history of this is it clubbers people of modest means. They are the people who are going to get hit, and all through the campaign, there was a big show that it was going to be paid for by foreigners. Two other questions I want to get in. And I already made it clear, and you and I talked about this. I'm for a tax code that gives everybody the opportunity to get ahead.
▶ 0:59:26Sen. Wyden: When I talked about my friend bill bradley, he and I have been working on this for years. Do you believe the tax code should treat wages differently then it treats wealth?
▶ 0:59:38Mr. Bessent: Look, in any tax system that it manages and creates distortion, it is a change, senator, it is a decision that was made when a tax codes were written, so every tax code involves the trade-off and distortion in favor of other gains.
▶ 1:00:07Sen. Wyden: It sounds to me like you do believe it's trying to treat wealth more favorably. I could not disagree more. A dollar earned by hedge fund manager has more volatile you earned by a teacher or a factory worker, I just think it is a disconnect with the american people. One last question, and that is about the legislation that was written in this room that was the biggest transformation on clean energy in american history.
▶ 1:00:38Sen. Wyden: That is our package that basically says the tax code as it relates to energy is a broken down mess, and we basically said we are going to have a technology neutral system, the more you reduce carbon, the bigger the tax saving. Now there's a big effort in the trump administration to reverse it. I think that's going to be back for the economy, but it's going to be damn good for china, because we are in an arms race for clean energy with them. Are you going to be on the side of people who want to unravel this?
▶ 1:01:09Mr. Bessent: Senator wyden, just so we can frame this for everyone in the room, china will build 100 new coal plants this year. There's not a clean energy race. There is an energy race. China will build 10 nuclear plants this year. That is not solar. I'm in favor of more nuclear plants.
▶ 1:01:34Mr. Bessent: And I would note that the ira is wildly out of control in terms of spending on the upside.
▶ 1:01:43Sen. Wyden: Well, first of all, the clean energy package does protect nuclear, because members on both sides of the I want it to be that way, but if you are going to talk about fossils, the united states achieved a greater level of energy security that we had in a generation. Oil and gas production is at record highs. And is not just that, but it's about clean energy, and a very troubled by your position denying we are in an arms race with china on clean energy.
▶ 1:02:14Sen. Wyden: Thank you, chairman.
▶ 1:02:14Chair Crapo: We do need to move on. I told senator wyden he could have those four questions, but I expect everyone else to stick to time. Senator grassley.
▶ 1:02:27Sen. Grassley: Mr. bessent, congratulations. You and I talked about something in my office, and you will remember that tongue-in-cheek comment I made to you that you are going to be asked by the chairman, will you answer all of our letters, and everybody that comes to the hill says yes, they are going to come and I said, maybe you'd better say "maybe," because most people don't keep that promise.
▶ 1:02:54Sen. Grassley: So I just wanted to remind you if I remind you a letter, I would appreciate it if you'd answer. My democratic colleagues believe the only solution to our unsustainable debt and deficit is higher tax rates, and that ends up being on job creators and families alike, however, history proves that high tax
▶ 1:03:25Sen. Grassley: Rates failed to raise significant revenues. Taxpayers, workers, and investors are smarter than that, in other words, they are smarter than we in congress that things at one time a 93% marginal tax rate would bring in more revenue than a 70% tax rate or a 50% tax rate or a 30% tax rate or a 40% tax rate and so on.
▶ 1:03:53Sen. Grassley: But as you can see from this card, congress is not too smart, because the taxpayers decide how much money they are going to bring it to the federal treasury. Now, on the others of the ledger, federal spending is at levels we've never seen outside of war and recession and still growing.
▶ 1:04:14Sen. Grassley: So I'm making a statement to you, but if you would like to comment on whether or not we have a fiscal imbalance primarily or a spending problem rather than a revenue problem.
▶ 1:04:26Mr. Bessent: Senator grassley, I enjoyed visiting you and your office and will remind you that when we were talking about the american agriculture's and I made the first treasury secretary in the first time who may know what an exception is, 642 acres, and am involved in the farming business, yes, we do not have a revenue problem in
▶ 1:04:58Mr. Bessent: The united states of america, we have a spending problem. Historically, for the last 40 or 50 years, federal government revenue has averaged about 17 perfect sent --17% to 17.5% of gdp. Spending has been slightly over that, leading us to a 3.5% budget deficit, which is manageable, because we have roughly 3.8 percent nominal growth. 1.8% real growth, 2% inflation.
▶ 1:05:27Mr. Bessent: Today, as you stated, to be clear this is one thing that got me out from behind my desk in my quiet life, and this campaign was the thought that this is out of control appeared we are spending 24%, 25% of gdp come as you say, six point 8% deficit, we've never seen this before when it is not a recession or not a war.
▶ 1:05:57Mr. Bessent: And I am concerned, because several times, the treasury of the united states has been called upon to save the nation, whether it was the civil war, the great depression, world war ii, or the recent covid epidemic , treasury, along with full government and congress, has used is a borrowing capacity to save the union, to save the world, and to save the american people.
▶ 1:06:29Mr. Bessent: And what we currently have now, we would be hard-pressed to do the same.
▶ 1:06:34Sen. Grassley: My last question is when I asked a lot of people that come from treasury. While I oppose tax hikes on families and small businesses, I have long champion sensible policies geared toward shutting down tax loopholes and providing tools to irs to detect tax cheats.
▶ 1:06:57Sen. Grassley: A primary example is my legislation that I all third in 2006, the -- all 2006, the -- aauthored in 2006, the irs whistleblower law. It could do more if the irs would use it to its full potential.
▶ 1:07:21Sen. Grassley: I will rely on you if you are confirmed to him and I think you will be confirmed, that you will work to put its full use to its full potential.
▶ 1:07:30Mr. Bessent: Senator grassley, we are in complete alignment on this program.
▶ 1:07:36Chair Crapo: Thank you. Next will be senator cornyn.
▶ 1:07:40Sen. Cornyn: Thank you, Mr. chairman. Mr. bessent, welcome to washington, D.C. you are getting a taste of what it is like here, which is an out of body experience for most people who are not acquainted with it. I happen to represent a state that has the eighth largest economy in the world.
▶ 1:08:03Sen. Cornyn: We think we understand the formula for economic growth and prosperity, which are taxed are reasonable, a reasonable footprint, and opportunities for people to prosper come and by prospering, invest and create opportunities for other people to pursue their dreams. We think there's a lot washington can learn from that formula, and it sounds to me like you agree.
▶ 1:08:32Sen. Cornyn: One of the strange experiences I've had here is that so many of our colleagues, principally on the other cycle think that the money that you earn is not actually yours, it is the federal government's in you just get to keep a little bit of it. Conversely, I think the money people earn is theirs, and they have a responsibility to pay taxes, but as you point out, an over tax burden or large tax burden has a way of depressing the economy and reducing the standard of living.
▶ 1:09:03Sen. Cornyn: So, I'm grateful for your nomination, and I think you are exactly the type of individual that needs to serve in this important position, and I support your nomination wholeheartedly. Let me ask you come in the short time I have, one sort of obscure question and another one that we discussed in our office. As you know, the market to U.S. treasuries is the largest market in the world, at $28 trillion.
▶ 1:09:35Sen. Cornyn: It is critical to the financial stability of the united states. There's actually a proposal for an entity to clear futures at the london clearinghouse, which is overseen by the bank of england. Some would argue that the bank of england would have a control over a come heaven forbid, a default scenario in this critical market instead of the U.S. is this a concern to you?
▶ 1:10:03Mr. Bessent: Senator cornyn, I enjoyed visiting in your office, and I would know that while texas has more arrivals due to good economic policy, south carolina has more arrivals as a percent of the population. [laughter] also driven by our wonderful governor, henry mcmaster.
▶ 1:10:24Sen. Cornyn: I'm still going to vote for your nomination. [laughter] I think it's 1600 people a day in texas, but go ahead.
▶ 1:10:29Mr. Bessent: Everything is bigger in texas, sir. [laughter] you raised a very important question and one that I will investigate further. I was unaware of, until the past few days, of this exchange.
▶ 1:10:52Mr. Bessent: What I can tell you is as a student, professor of economic history, it is important for the U.S., for U.S. treasury, for us to be able to resolve any stretch issued in the market in the U.S. we saw the lehman brothers bankruptcy that many of the problems emanated through from the u.k.
▶ 1:11:18Mr. Bessent: Subsidiary, so this is something that, thank you for bringing this to my attention, and my inclination is that the resolution authority must lie here in the U.S., but I will get back to you in writing with an answer on this if confirmed.
▶ 1:11:38Sen. Cornyn: Thank you. You appropriately mentions china as one of our biggest challenges, and while I believe in free and fair trade, we know that some countries, principally the prc, the chinese communist party, do not play by the rules. Over the years, by some estimates, U.S. investments in chinese companies totaled 2.3 trillion dollars in market value. That was at the end of 2020.
▶ 1:12:06Sen. Cornyn: That included $21 billion -- these are an companies investing in china -- 21 billion dollars in semiconductors, 54 billion dollars in military companies, and $221 billion in artificial intelligence. So it is pretty clear to me that U.S.
▶ 1:12:22Sen. Cornyn: Investments have fueled china's economic growth, which has allowed them not only an increased standard of living, which is great for the chinese people come about problematically, it has also allowed them to modernize their military and now threaten the peace in the indo pacific and beyond.
▶ 1:12:42Sen. Cornyn: As we've discussed, I've introduced a bill on transparency of american companies investing in china, and, of course, the entity that would receive the reports from american companies that do that -- and this is strictly a reporting requirement -- would be treasury. What is your view of an outbound transparency requirement?
▶ 1:13:13Mr. Bessent: Senator cornyn, I believe that, as we discussed in your office, this is a very important issue. We can come the chinese economy is the most unbalanced economy in the history of the world. The world using their surpluses to fund their military machine. In china. I want to try the mandarin pronunciation for the sake of everyone in the room. But there is a phrase that is two words.
▶ 1:13:41Mr. Bessent: Military industrial and military always comes first. So, we should understand that. We should have a very rigorous screening process. As you identified, for anything that could be used in ai, in quantum computing, in surveillance, in chips, that the U.S. has the lead and we must make sure we maintain it through smart policies like you and I have discussed.
▶ 1:14:14Sen. Bennet: Mr. bessent thank you for being here and chairman congratulations on your position. Mr. bessent, thank you for your willingness to serve. We are at the beginning of what will be a vigorous conversation about the country's fiscal health.
▶ 1:14:37Sen. Bennet: You are here with the same trump tax policy that has burdened the another $2 trillion of debt that their kids and grandkids will have to pay back. Despite the conversation we have hurt here here, clearly, the distribution was deeply unfair. 50% went to the top 5% of americans.
▶ 1:15:02Sen. Bennet: 75% of it, even the wall street journal won't support if you add the salt because it is outrageous will go to the wealthiest 5% of americans. The tax policy, for some reason in this room it makes sense to people. In america I do not think there has been a major in the history of the U.S.
▶ 1:15:25Sen. Bennet: Whose tax policy has been to go to the people of new york city, or atlantic city or even of mar-a-lago and say to them, I have an idea. I will borrow more money than we have ever borrowed in the history of our community and I will spend it. I would say, I'm worried about that. I do not want us to borrow a much -- a bunch of money without knowing what it is going for. Is it going for schools? No.
▶ 1:15:56Sen. Bennet: Will it compete with chinese in defense? No. Will it pay for parks? No. Will it help our mental health crisis? No. Will it secure our border? No. What will you do with the money? We will give it to the richest people in america, the richest people in our community and expect it to somehow trickle down to everybody else.
▶ 1:16:24Sen. Bennet: This has been the trump tax policy since the day he showed up. No mayor in america whatever with a straight face say that is what they should do and in fact no mayor in history has done that. To add insult to injury you sit here and Mr. mnuchin sat here and said it will all be paid for by economic growth. We know that is not true. We know that it costs $2 trillion.
▶ 1:16:51Sen. Bennet: While the benefit goes to the richest people in america the cost is borne by the children of working people all over the country. That is what will happen now. It is $4.6 trillion this time, not $2 trillion.
▶ 1:17:07Sen. Bennet: Then you come here and sneak into your opening statement we have a spending problem and what we have to focus on, as you said, is discretionary spending after your crocodile tears about how china is out competing us.
▶ 1:17:26Sen. Bennet: As you know, because you are a smart person, and you have spent a lot of time on wall street, just like your predecessor did, discretionary spending is about one third of our overall spending. 17% of what we spend is domestic. 17% roughly of what we spend is military spending. That is spending with respect to china.
▶ 1:17:51Sen. Bennet: There are so many things that I think you owe the american people after we have seen the catastrophe of the results from the tax cuts last time, the fact the benefits went to the wealthiest. Don't you at least owe the american people a refund for the $2 trillion they have already incurred because of the last round before you get to the $4.6 trillion?
▶ 1:18:14Sen. Bennet: Can't we think of a better idea in the halls here than cutting taxes for the wealthiest people and expecting it to all trickle down to everybody else when we have the profound needs you have talked about, when we are living in an economy where you had the american dream. We heard you say that. Where if and and fewer people can -- where fewer and fewer people can get ahead and this generation will be the first to leave less opportunity, not more, to our kids and grandkids.
▶ 1:18:46Sen. Bennet: We see massive income and wealth inequality. When trump was president, when biden was president. Can't we think of a better idea? And at a bare minimum, and this is tiny, don't we owe them an answer about what you are going to do to the 17% of discretionary spending or even the third before you come in here and say the most important thing we should do is cut taxes for the richest people in america?
▶ 1:19:14Mr. Bessent: Senator, thank you. I would respectfully disagree with much of your categorization in terms of the benefits accruing to the richest americans. Actually, they share -- the share of taxes paid by the upper percent of americans increased after t cja from 39% to 46%.
▶ 1:19:42Mr. Bessent: The top 56% of americans now pay 98% of taxes and working families had real wage increases in 2018 and 2019. And going into 2023 covid. -- going into 2020 three covid. Tax scores were re-scored by $1.5 trillion.
▶ 1:20:10Sen. Bennet: Make sure if you rely on the cbo score for this that you will be able to rely on it for the things you said it is no good.
▶ 1:20:17Mr. Bessent: Look, I am not in love with cbo scoring.
▶ 1:20:22Sen. Bennet: Now you are relying on it. It's not funny money. This is the american people's money. We can do math. Every mayor in america has to do math. We will insist you do the math too. We know george soros understands the math when you work today are. You understand full well what is going on. Just like steven mnuchin did. Just like donald trump does. We won't let it happen again to the american people. Thank you.
▶ 1:20:49Mr. Bessent: Thank you. I again remind my colleagues --chair crapo: we need to hold our time to five minutes. Senator cassidy.
▶ 1:20:59Sen. Cassidy: I will always pronounce your name like we are in south louisiana. Sometimes we get people here with a set of statements that have just been delivered, all due respect to my colleague and you actually get substantial answers and I thank you for that.
▶ 1:21:29Sen. Cassidy: Going back to tariffs which senator wyden spoke of I have been very concerned that countries like china manipulated by mental regulations. You point out they are building a hundred coal-fired plants over a period of time. Whatever we do want have an impact on global greenhouse gas emissions because china is putting up so many. I believe I have learned that is called an externality on economics. When we met, we discussed the foreign pollution fee.
▶ 1:21:52Sen. Cassidy: It would put a levy, a tariff on those carbon intensive products coming from countries like china. Roughly commensurate with their cost of not controlling it. Now, I would think that my democratic colleagues would like that, because it is clearly a way that they are manipulating the world economy to steal jobs from the united states and simultaneously increase global greenhouse gas emissions. Any comments on such a foreign pollution fee?
▶ 1:22:24Mr. Bessent: Senator cassidy, I greatly enjoyed our discussion and the extensive presentation you gave me when I visited with you. This is a very good question because -- and I believe that it is one for your democratic colleagues to understand. Whether they would be in favor of the equivalent of a carbon tariff. That senator graham is in favor of it and I think that this is a very interesting idea.
▶ 1:22:57Mr. Bessent: It could be part of an entire tariff program because I think president trump has not taken office yet, but, if confirmed, I look forward to working with him on various strategies. Some that could be, specifically aimed towards carbon as you say. Others that could be aimed towards unfair trade practices, unfair financing practices.
▶ 1:23:28Sen. Cassidy: If you will, there are externalities a tariff can draft and those externalities themselves hurt the pocketbook or job prospects of the average american. Let me move on. I applaud your goal to get our debt to gdp ratio down to 3%. But, you studiously say we cannot talk about things like social security.
▶ 1:23:55Sen. Cassidy: I think that is because routinely if we talk about social security we presume there will be a cut in benefits or a raise in taxes. You spoke when we met. I and others who have a bipartisan plan that would create a pension investment fund separate from the social security trust fund and, just like we do with our 401(k)s, invest it in the broader economy and use the proceeds from that to offset the upcoming 25% cut in social security benefits that
▶ 1:24:25Sen. Cassidy: Will occur if we don't address this problem. Just so folks get that, under current law when the social security program goes in in eight years per cbo there will be a 25% cut in benefits. Under the plan I and others have endorsed, it is a pension investment fund in which we would again invest in the broader economy. With all of the safeguards to keep the government from interfering. I mentioned that because it seemed like other advisors to the incoming president has spoken of creating an investment fund benefit. Mr. let a cat, Mr.
▶ 1:24:55Sen. Cassidy: Paulson did on the campaign trail. What are your thoughts about that? They spoke about it as sovereign wealth I see it as a fund to bail out social, all of the risk borne by the fund, none of the risk borne by the beneficiary. She would get her scheduled benefits. What are your thoughts?
▶ 1:25:17Mr. Bessent: Senator cassidy I want to emphasize president trump asset social security and medicare will not be touched.
▶ 1:25:28Sen. Cassidy: I am saying touching it positively. Not cutting benefits, not raising taxes, indeed, increase benefits and take the 25% cut off the table to make that clear.
▶ 1:25:37Mr. Bessent: I understand. Those would not be touched. One of the tragedies of this blowout in the budget deficit is we have to get our short-term house in order to start -- before we can start implementing the smart plans such as yours.
▶ 1:25:59Mr. Bessent: I do believe that there is discussion to leverage the asset side of the U.S. balance sheet, as we discussed in your office. In favor of a fund, whether it is a sovereign wealth fund, something, as you discussed, a supplemental fund. That is very much in the mix.
▶ 1:26:30Mr. Bessent: I look forward to getting back to you wanted. President trump has not taken office yet. If confirmed, this is something that I think could be very exciting. We always look at the debt in the united states. We have fantastic assets that could be earning leveraged or used for multiple revenue-generating opportunities. >> thank you. >> senator warner.
▶ 1:27:01Mr. Bessent: >> congratulations.
▶ 1:27:08Mr. Bessent -- Sen. Warner: Mr. bessent, good to see you. I enjoyed our meeting. I have specific questions to ask. I do not want to litigate this now but I do feel a someone working with senator crapo and others when we took on I still think the most comprehensive approach, we took arrows from each side. I am looking at any kind of progrowth policies possible.
▶ 1:27:33Mr. Bessent -- Sen. Warner: But, respectfully, I want to say, there is not an industrial nation -- a first world industrial nation in the world that gets anywhere close to meeting their revenue needs. I am not proposing america spend anywhere like that europeans at 17%-18% gdp. It has never happened historically and won't happen in a trump administration or future democrat administrations.
▶ 1:27:55Mr. Bessent -- Sen. Warner: We will have time to talk back and forth on this but I cannot let some of this go without at least offering something that there is not an economist around that would not. We have to bring down spend. But the revenue side alone, excluding that, we will never get to balance. On a more positive note, something I worked closely with the chairman on. And it is something I work with your predecessor on.
▶ 1:28:24Mr. Bessent -- Sen. Warner: I was very proud of that relationship. I found a lot of things to agree on. A relatively narrow part of the financial sector called csi -- cfis under the previous trip demonstration we put about $12 billion in for access to capital for underserved communities. Under senator crapo's leadership we built a bipartisan caucus. 12 democrats and 12 republicans.
▶ 1:28:53Mr. Bessent -- Sen. Warner: It is hard to get 24 bipartisan senators to agree on anything. There are things we can do to expand the area creating a secondary market. We have some bipartisan legislation they're trying to reward patient capital. A lot of these institutions now have tier one equity but they have to get patient capital. Senator crapo and I have worked with the current administration and we would want to work with euros on the healthy economic opportunity coalition.
▶ 1:29:17Mr. Bessent -- Sen. Warner: Can you say a word or two about how you view cfis and making sure underserved communities get access to capital so they can have their own american dream? How does that fit into your lexicon?
▶ 1:29:30Mr. Bessent: Senator warner I enjoyed talking to you about cdf is in your office. The early part of my career was as a financial services analyst. I have depth and breadth. I believe the breadth of the U.S. financial services industry is what makes the U.S.
▶ 1:29:56Mr. Bessent: Economy -- differentiates the U.S. economy from the rest of the world. I think that these cdfis in underserved communities are very
▶ 1:30:13Important Read Sen. Warner: I appreciate that. It is bipartisan and you understand markets well. If we can spark a secondary market in the stead, if we can leverage, and I am talking about private capital and I know that is what my colleagues liked a lot. We could leverage that exponentially. What are the things we discussed. We talked about this in my office. One0 of the things I wase happy to hear.
▶ 1:30:37Important Read Sen. Warner: I feel very strongly we cannot reward vladimir putin's aggressive, outrageous behavior in ukraine. I think the ukrainians have performed remarkably. Obviously, they have manpower. I see this from the intel site on a daily basis. One of the areas that I think we have not done as well command, candidly, the sanctions regime.
▶ 1:31:06Important Read Sen. Warner: I do not think it was as effective as it should have been. Frankly I think the biden administration waited too late to put additional sanctions on oil and tankers. The beat -- the ability for russia to retool. I hope that president trump can settle this. Hallelujah. The world will be better off. One of the things we discussed in my office was the potential to actually increase the sanctions regimes.
▶ 1:31:35Important Read Sen. Warner: Would you talk a moment about that again?
▶ 1:31:36Mr. Bessent: Yes senator warner I believe that the sanctions regime, especially -- well, first of all, I would say, in my adult life, the tragedy going on in ukraine is one of the greatest tragedies of my adult life. And, in doing that as soon as possible and the role of the treasury can play in that if confirmed, I would like to do.
▶ 1:32:11Mr. Bessent: I believe the sanctions were not fulsome enough. I believe we -- I believe that the previous administration was worried about raising U.S. energy prices during an election season.
▶ 1:32:33Mr. Bessent: And I am perplexed to see national security advisor sullivan on his way out the door raising the sanctions level on russian oil companies and indeed , the oil prices in the U.S. are up about 9% this month. So what was good for that administration is being foisted on us.
▶ 1:33:00Mr. Bessent: But having gone from, I think, low-level sanctions to mid-level, if any officials in the russian federation are watching this confirmation hearing, they should know that if I am confirmed kind of president trump requests, as part of his strategy to end ukraine war, that I will be 100% on board for taking sanctions up, especially on the russian oil majors to levels that would
▶ 1:33:31Mr. Bessent: Bring the russian federation to the table.
▶ 1:33:35Sen. Warner: Let me just get 30 seconds. Thank you for that because I think it is important that we don't take these tools out of the toolkit. We can litigate. What the past administration did and when they did it. But increasing pressure on putin to bring about a resolution, I very much appreciate your willingness and I hope you will be an advocate for keeping the sanctions on and actually advancing them even further.
▶ 1:34:00Thank You Chair Crapo: . Senator lankford.
▶ 1:34:04Sen. Lankford: Good to see you again. Thank you for your time in my office. I was interested in the statistic you shared earlier that after the tax cuts and jobs act of 2017 we have had several years to see what happens. I believe the statistic you gave is the top 15% of earners in america now pay 98% of the taxes. Did I hear that correctly? I have heard over and over again it is only the wealthy, only the big companies that get it.
▶ 1:34:32Sen. Lankford: I would encourage, frankly, every oklahoma company that is a small business to ask their cpa this year, when they are filing their taxes, what if the tax cuts and jobs ask expires next year? What would my taxes be next year? Have a small business owners ask that question of their cpa and I think they will be surprised based on the rhetoric aside, this is only about -- to sake this is only about big companies and wealthy people. It is them as well.
▶ 1:34:59Sen. Lankford: The same of the child tax credit, the tax cuts and jobs act goes away get cut in half. The child tax credit, all the inversions happening under the obama administration where american companies were being bought up by foreign entities. Now that has switched. Now, american companies are buying foreign companies and the jobs are coming here. There has been a tremendous amount of benefit in that. One challenge we have had on this committee had been a conversation with janet yellen about the other two.
▶ 1:35:28Sen. Lankford: It started four years ago now, three years ago now when the conversation was about, we don't need congress to act on this. We feel like we can do it unilaterally. We can change american tax policy for all businesses in america. In the last year they shifted to say we have to come back to you at some point to get this. In the meantime a deal has been negotiated that it really helps european countries and hurts the united states on this. And they negotiated a deal that exempts china from being affected by this at all.
▶ 1:35:59Sen. Lankford: My question to you is, are you going to engage on this issue of pit or two? Number one, has this committee involved in writing taxes, which seems to be consistent with the constitution and what is your message to other countries if they try to implement pillar two on american businesses? >> Mr. bessent: thank you, senator.
▶ 1:36:23Sen. Lankford: As we discussed in your office I believe any especially european country, but any country that in the next few days before president trump takes office is intent on implementing pillar to will find the taxation of U.S. companies is a sovereign issue and the authority lies with this congress. I respect that.
▶ 1:36:48Sen. Lankford: I will work with you to undo what I think the -- has been the -- a terrible policy.
▶ 1:37:00Sen. Lankford: I would agree. Many members of the committee would agree. Not only did they go around congress and violate the constitution but deliberately hurt american companies and I think that is terrible policy. It was truly at america last policy. On the energy side you have talked a lot about energy production. I am from oklahoma and unashamedly we are all of the above and all of the below energy.
▶ 1:37:24Sen. Lankford: We have more wind, solar, and hydro production in my state than any other state on this dais than any other state with that on this dais with very few exceptions but we also use oil and gas and will produce all the energy our state needs to make sure we are stable on that. One business issue for small or large businesses is a stable bonus depreciation amount. It is not about the type of energy or business even.
▶ 1:37:51Sen. Lankford: It is if you are actually investing in your company, trying to grow your company, you would know the bonus depreciation. It will help with pipeline productions and with a pet shop, restaurant, a hair salon just as much as what your thoughts on bonus depreciation and a stable rate for that.
▶ 1:38:10Mr. Bessent: You are referring to the 100 percent immediate.
▶ 1:38:15Sen. Lankford: What has been in the past. But frankly a stable rate period. Right now we have a diminishing rate that is unpredictable.
▶ 1:38:21Mr. Bessent: I think increasing the after-tax return on capital for U.S. companies especially small business is one of the greatest forms of job creation we could see. To go back to your point on energy production, we have heard much here today saying we are at a record amount of energy production. We know that we are barely above where we were in 2020.
▶ 1:38:51Mr. Bessent: If we were to look at the department of energy projections for 2024 and 2025 we are well below the speed of the past four years we have seen U.S. production constrained as part of a -- and a part of a fulsome sanctions program would mean we need more energy production in the U.S. to make up for the loss of sentient russian oil to protect the U.S. consumer.
▶ 1:39:20Sen. Lankford: We will have to deal on the intangible drilling costs punishment put on oil and gas companies in my state and everywhere else driving up the cost for consumers. That is another issue this committee needs to take on.
▶ 1:39:33Sen. Hassan: Congratulations, Mr. chairman trade I look forward to working with you at all of our colleagues on the committee and thank you, Mr. bessent for being here. Congratulations on your nomination and willingness to serve and welcome to your husband and children as well. We are grateful for their willingness to share you with the country. I appreciate you meeting with me in this process edit sharing your priorities at treasury. If you are confirmed. I want to follow up on some of those topics today.
▶ 1:40:03Sen. Hassan: I want to associate myself with the comments of my colleagues senator bennet and senator warner. I certainly believe we need to cut taxes for working people and make sure the wealthiest pay their fair share. With regard to senator warner's comments on sanctions, you mentioned if vladimir putin is watching this hearing, he isn't the only one watching this hearing. China is watching this hearing.
▶ 1:40:29Sen. Hassan: We have talked about the importance of making sure we are not only competitive, but outperforming china for economic purposes as well as national security reasons. And as important as a resolution in ukraine is, history tells us appeasing tyrants at the expense of freedom fighters never works.
▶ 1:40:50Sen. Hassan: And it is critically important not only for the ukrainian people and for the freedom of all of us, but it is important because china and north korea are also watching what we do, watching this hearing and how we will go forward imposing sanctions. To turn to some of the topics we discussed when we met in my office. The research and development tax deduction was one of them. It is critical to helping us outcompete countries like china.
▶ 1:41:15Sen. Hassan: Currently, china provides a 200% super deduction for r&d, while american businesses can only immediately deduct 10% for r&d. I have worked with senator young on a bipartisan effort to restore the full and immediate r&d deduction. Do you support restoring the full and immediate r&d deduction? Will you work with me at my colleagues to get us across the finish line in congress?
▶ 1:41:38Mr. Bessent: Mr. bessent: senator, I enjoyed meeting in your office. I am not fully versed in this. But, my inclination is that this is something I would support. I will get back to you. If confirmed I will get back to you very quickly on it. We will make it a priority.
▶ 1:42:00Sen. Hassan: On do you agree it is an important tool for american companies to improve competitiveness?
▶ 1:42:05Mr. Bessent: Yes, senator. So both on thank you. One of my other top priorities is working on a bipartisan basis to over costs for families. Under president elect trump's policies do you believe prices for families will go up or down?
▶ 1:42:21Mr. Bessent: I believe inflation will be much closer to the federal reserve's target of 2% and I believe that what we have seen over the past few years is that the bottom two income quintiles have a very different basket of goods answer. There are two ways. We can either lower cost or get rid of wages -- get real wages up. I hope we can do both.
▶ 1:42:50Sen. Hassan: On you believ -- so you believe president trump's policies will further increase wages and lower inflation?
▶ 1:42:59Mr. Bessent: I believe they will increase real wages and lower inflation closer to the federal reserve's 2% target.
▶ 1:43:10Sen. Hassan: Are there proposals you expect will increase prices for families?
▶ 1:43:18Mr. Bessent: Nothing I can immediately think of.
▶ 1:43:21Sen. Hassan: If the president elect proposed a policy you believed would increase policies -- prices would you advise against it?
▶ 1:43:32Mr. Bessent: I would speak to president trump about it. It's his decision. I believe we think that if we look back, it is a complete composite return in terms of aggregate inflation numbers. I think it is very difficult.
▶ 1:43:55Sen. Hassan: If you believe a policy proposed by president trump would increase prices, would you advise him against doing it? Yes or no?
▶ 1:44:05Mr. Bessent: I can't answer that question because it's a hypothetical.
▶ 1:44:11Sen. Hassan: Let's move on. When we met prior to the hearing you told me president biden was responsible for increased prices over the past four years, something we can litigate, but I don't want to write here. By the same token, I assume you would agree that if prices increase in the next four years, president elect trump would be responsible?
▶ 1:44:28Mr. Bessent: I think there could be a variety of reasons. I think it could be -- we will see. The policies of the federal reserve. Spending policies. Congress sets the spending policies.
▶ 1:44:44Sen. Hassan: I will cut to the chase. At the end of the day, you are articulating a double standard that is disappointing to me. Thank you, Mr. chair.
▶ 1:44:52Chair Crapo: Thank you. Senator daines.
▶ 1:44:57Sen. Daines: Good to have you here this morning. I think what you are seeing in the committee is we do have a divide between very different philosophies about how to go forward and what is best for the american people in this economy and global competitiveness. I remember sitting in this chamber debating multiple trillions dollar massive spending bills, a two trillion dollar covert bill. The inflation reduction act.
▶ 1:45:25Sen. Daines: Massive multitrillion dollar bills that even democrat former secretaries of treasury said could be inflationary. And indeed, it was. Compare that outcome to what we are going to return back to. The policies of the prior trump administration.
▶ 1:45:45Sen. Daines: When you lower taxes for businesses, the american people, you create more economic activity, more wage growth, particularly for minorities as well. And you get back into winning with global competitiveness. We stopped the inversions. It went from multiple inversions to zero. I could not be prouder of what we did, boldly, back in the trump administration.
▶ 1:46:14Sen. Daines: That we have tried to fight against during this administration, massive spending bills that were inflationary and the american people suffered greatly. I am glad to have you as our next secretary of treasury to work with you to restore sanity.
▶ 1:46:38Sen. Daines: With the expiration coming of these tax rates, facing a $4.3 trillion tax increase if we don't act this year, as we begin drafting the bill, I applaud chairman crapo. He brought us together as ranking member last year, prior to getting the majority back anticipating we might have this moment.
▶ 1:47:03Sen. Daines: We started talking about, what are the key themes that we got in the details over several months of working groups for the next tax bill to renew and protect and preserve the tax rates? One of the keywords was permanency. I have expressed my support for the use of a current policy baseline.
▶ 1:47:26Sen. Daines: I expressed my support for permanency because we had uncertainty in congress with expiring tax code provisions. It is time to make it permanent to take one additional bird away from the american people wondering what will happen with congress, whether my tax rates will increase. Let's take that off the table for permanency.
▶ 1:47:53Sen. Daines: You said we need to grow out of our current economic situation and I cannot agree more. That is the philosophical divide we face here. The supply-side idea, reduced rates, unleashing capital into the free markets and letting those markets decide where the investment lies with respect to bureaucrats in washington and wasteful spending pre-and wasteful spending create how does permanency entertain -- and certainty of the tax code
▶ 1:48:23Sen. Daines: Affect our ability to grow out of these problems?
▶ 1:48:25Mr. Bessent: Senator daines I have enjoyed getting to know you over the past year with your work on the national republican senate committee on talking to you in your office. Also, discussing your history in the private sector, both with big and small companies. A question like that makes it clear to me you understand the incentives. That it is incentives that drive everything in tax policy.
▶ 1:48:53Mr. Bessent: I can tell you that since november 5, for small businesses, we have seen the biggest increase in optimism since they have been keeping the metrics. So, certainty, small business owners, many of whom are passed through corporations believe we will get the tax tcj across the line and I believe we could see a bigger increase in
▶ 1:49:24Mr. Bessent: Optimism in economics when we get something we can't define, we call it animal spirits. I believe we are seeing animal spirits. A nascent to move up. But permanency and forward guidance gives people certainty. We get capital and investment. We get hiring. We get real wages. Employers want to keep train and expanded their workforce.
▶ 1:49:53Mr. Bessent: Everyone wins with permanency and certainty. A kind of forward guidance for tax policy, I think, would be one of the things that could unleash the new golden age president trump has talked about.
▶ 1:50:08Sen. Daines: When you look at the private sector jobs in america, 140 million private sector jobs. 88 million of the jobs are from pass-through entities, about 63%. That tells me -- and that is the part that is expiring. I mean, the corporate rates are staying permanent.
▶ 1:50:29Sen. Daines: It is the pass-through rates, the 88 million jobs, 63% of private sector jobs, are taking a look at what will happen in washington over the next 6-8 months. It is important to make the rates permanent and prevent a tsunami of $4.3 trillion in tax increase that will come if we do not act.
▶ 1:50:48Chair Crapo: Senator cortez masto.
▶ 1:50:53Sen. Cortez Masto: Thank you for meeting with me at welcome to your family as well pit let me ask you this. I will talk about the acu premium tax credits. Over 80,000 of my constituents in nevada receive that premium tax credit to assist them in affording their health care coverage. And on average, these credits lowered americans health care costs by $530 per month. Congress provided an enhanced ptc in 2021. That policy expires this year.
▶ 1:51:25Sen. Cortez Masto: Without the enhanced ptc in place millions of americans will lose their health coverage. As the person most responsible for tax policy in the incoming administration, would you commit to opposing any attempt to remove or not renew the credits?
▶ 1:51:41Mr. Bessent: As we discussed in your office, and as has been a brief time since we met, I committed to you we would research this. I haven't had time to do it before the hearing. But if confirmed, I would get back to you. With all deliberate speed in investigating this.
▶ 1:52:06Sen. Cortez Masto: . I appreciate that. You would agree these tax credits, because of their current policy they extend current tax policy costs -- excuse me. That you agree that extending current tax policy actually costs money?
▶ 1:52:19Mr. Bessent: Again, I think I do not understand the nuance of that question. But I will get back to you on it.
▶ 1:52:29Sen. Cortez Masto: I appreciate that. You have been supportive of many of president trump's tariff plans. I have heard the conversation they are. I won't go into that. We have talked a little bit about it in my office. I will jump back into the credits imposed that some of my colleagues were against. They have benefited nevada. The 45 x manufacturing tax credit supports thousands of jobs in the reno area.
▶ 1:53:00Sen. Cortez Masto: And billions in investment across my state. It is also key to reducing dependence on china for the critical minerals we need for our military and it supports mining jobs in nevada. We are a mining state. We are mining critical minerals. Would you commit to opposing any effort to repeal or produce the 45 x tax credit that is not just a benefit in nevada, but a benefit in other states as well including alaska?
▶ 1:53:26Mr. Bessent: Again, senator, I am unfamiliar with that exact provision but I do believe it is important for us to mine, accumulate and move to domestic production for rare earth and other vital minerals. I will get back to you on that exact -- my thoughts on that exact program.
▶ 1:53:53Mr. Bessent: But, on an atmospheric meta basis I agree with the direction of travel.
▶ 1:53:59Mr. Bessent: Thank you. President trump stated he thinks the president should have influence over the decisions of the federal reserve. We discussed this in my office. I appreciate that opportunity. Does it continue to be your view that the federal reserve should be independent of the president?
▶ 1:54:23Mr. Bessent: Of course. I actually believe the notion that president trump believes he should have influence, there was , I believe, a highly inaccurate wall street journal article saying he believed something to the effect of who should be in the room. President trump is going to make his views known, as many senators did.
▶ 1:54:49Mr. Bessent: Three senators including two on this committee called for a jumbo rate cut in september. 50 basis points. Two senators on this committee.
▶ 1:55:01Sen. Cortez Masto: I'm not asking my senator collins. I am asking you. You don't deviate from our conversation? You think there should be independence?
▶ 1:55:09Mr. Bessent: On monetary policy decisions the fomc should be independent.
▶ 1:55:16Sen. Cortez Masto: Thank you I appreciate that. For the benefit of our colleagues what you were referring to earlier. In our meeting I asked you, if there were any regulations, treasury regulations that currently exist you disagree with. In response, in a continuing response now you say you will look into it and get back to me, is that right?
▶ 1:55:38Mr. Bessent: Look, I don't know if it is a regulation, but it's a policy. As we saw from the december aid cap behind the chinese entities into treasury I'm a very serious, that was through a work from home software app. One of the policies I supported, in the building, every day I am in washington and I support a return to the office. That is against the current treasury policy.
▶ 1:56:11Sen. Cortez Masto: I appreciate that. If there are others you oppose and could share with me get back to me. I would appreciate that.
▶ 1:56:20Mr. Bessent: Of course be it I'm happy to provide that in writing.
▶ 1:56:23Chair Crapo: Senator young.
▶ 1:56:25Sen. Young: Mr. bessent good to see you congratulations again on your nomination to this important position. Thank you for your willingness to serve our country. I will tell you what I am looking for in a treasury secretary. Somebody with a clear record of professional accomplishment. A distinguished academic record would be a bonus. You have those things. I'm looking for someone thoughtful.
▶ 1:56:56Sen. Young: What I care less about is the performative dimension of the job. I have to tell you. There is a lot of chatter in washington about that, but I do appreciate your thoughtful answers this morning. I will dive in and begin by asking you about a dimension of your role as treasury secretary.
▶ 1:57:19Sen. Young: You will inherit the role of chair on the committee on foreign investment in the united states that reviews foreign investment in american industries. Recently president biden blocked the nippon steel acquisition of U.S. steel steel on national security grounds.
▶ 1:57:42Sen. Young: Yet he and the administration provided no clear substantiated evidence in the unite -- I'd publicly at least to justify this decision. For my home state the broad action instilled a lot of anxiety particularly in gary, indiana area where there is nearly $1 billion in investments promised. If the nippon steel U.S.
▶ 1:58:06Sen. Young: Steel were to reappear before cfius do you commit today to an impartial review, an impartial review, particularly, when political pressure was initially permitted to overshadow an honest assessment of national security vulnerabilities?
▶ 1:58:28Mr. Bessent: Senator young, thank you for the question. I understand the imperative for jobs, for your constituents. In indiana. President trump has recently also spoken out against the deal. But --.
▶ 1:58:52Sen. Young: The statute indicates you are charged with providing impartial reviews. That is all I am asking. Would you be following that law or not, sir?
▶ 1:59:02Mr. Bessent: Impartial review. It is currently in litigation. The review is closed. But if it reappears, cfius will conduct the same review it always does, yes, sir.
▶ 1:59:19Sen. Young: Ok. Thank you. We might have an opportunity to work together on that effort. Mr. bessent, your nomination comes at a time when tariffs are central to our economic debates particularly on issues like inflation, supply chain resilience, and job creation.
▶ 1:59:38Sen. Young: I believe in moderation, tariffs , for a time strengthen america's negotiating leverage with other nations and they can strengthen certain national security relevant industries. But, overuse of tariffs can inflate costs and promote trade retaliation.
▶ 2:00:03Sen. Young: As hoosier farmers have experienced firsthand over the years, they often bear the impact of these indiana producers and how do you envision the treasury department role in supporting them?
▶ 2:00:26Mr. Bessent: Thank you, senator young. As I mentioned before and may have mentioned in your office, our family is involved in the farming business and soybeans and corn. I am very sensitive to this. I am very up to date. American farmers have been very loyal. 90% of rural voters voted for president trump.
▶ 2:00:54Mr. Bessent: So, they should know their interests are his interests. When you asked what I would do specifically, I have said recently the biden administration kept on all of the trump tariffs but what they did not do in the agreement with china was in force the purchase provisions.
▶ 2:01:17Mr. Bessent: If confirmed next week, I would begin pushing for the purchase guarantees that were in the china agreement to be enforced and, perhaps, push the chinese for a catch-up provision over the past four years.
▶ 2:01:40Sen. Young: A quick follow-up. In terms of the application of tariffs a skilled negotiator might sometimes you'd -- use broad tariffs and in other situations a more sector specific approach would be effective. What criteria or benchmarks would you use to inform your decision to go with across the board measures or more surgical tariffs?
▶ 2:02:09Sen. Young: Do you think there should be built in caps or triggers to prevent unintended escalation?
▶ 2:02:16Mr. Bessent: Senator young, I have not been confirmed yet. President trump is not in office. But I would imagine that the american people should think about tariffs in three ways under the cash trump administration.
▶ 2:02:37Mr. Bessent: One is ending unfair trade practices through chinese tariffs, through steel. Two is may be more generalized tariff as a revenue raiser for the federal budget and three, president trump, has added a third use of tariffs, as you said, as a skilled negotiator to -- he believes we probably are
▶ 2:03:10Mr. Bessent: Over our skis a bit on sanctions and sanctions may be driving countries out of the use of the U.S. dollar. So, tariffs can be used for negotiations, whether it is for mexico and the fentanyl crisis. I think that you and the american people should think about those three broad categories.
▶ 2:03:31Sen. Young: Thank you.
▶ 2:03:32Chair Crapo: Next is senator sanders. Senator sanders, I do not believe you were here when I welcomed everybody to the committee this morning. But as a new member of the committee I personally welcome you and I look forward to working with you.
▶ 2:03:46Sen. Sanders: Thank you very much. It is a pleasure to be here. Mr. bessent thank you for being in the office the other day. Mr. bessent, the united states today is more income and wealth inequality that has ever existed in the history of our country. You've got three people on top. Mr. musk, Mr. bezos, and Mr. zuckerberg. They are now worth almost $1 trillion.
▶ 2:04:13Sen. Sanders: That's more than 50% of the bottom of our society, some 170 million people. Three people, more wealth than the bottom 170 million. We have more concentration of ownership today than we have ever had. We have more concentration of ownership in the media. A handful of billionaires like musk, bezos, rupert murdoch increasingly own the media and the information that the american people receive.
▶ 2:04:45Sen. Sanders: We have a corrupt campaign-finance system. A small number of billionaires in both political parties make huge contributions into the presidential and congressional campaigns.
▶ 2:04:59Sen. Sanders: When you have a small number of multi-billionaires who have enormous economic, media, and political power, would you agree with president biden who last night stated "an oligarchy is taking shape in america of extreme wealth, power, and influence that threatens our entire democracy, our basic rights, and freedoms." that is what president biden said last
▶ 2:05:30Sen. Sanders: Night. I agree with him. Do you?
▶ 2:05:31Mr. Bessent: Senator sanders, I enjoyed our visit.
▶ 2:05:37Sen. Sanders: Talk closer to the microphone.
▶ 2:05:38Mr. Bessent: I enjoyed our visit and I hope you got my follow-up materials. On the tariffs and china. The three billionaires who you listed they all made the money themselves. Mr. musk came to the country as an immigrant.
▶ 2:06:05Sen. Sanders: I understand that. I am asking, when you have a handful of people like musk, who will soon be part of the trump administration, and others, when you have three people owning more wealth than the bottom 50% of american society, when these people have enormous influence over the media, when they spend huge amounts of money, in both political parties, to elect candidates. Biden said last night we are moving towards an oligarchy. I'm asking you. Forget how they made their money.
▶ 2:06:35Sen. Sanders: Do you think that when so few people have so much wealth and so much economic and political power that that is an oligarchic form of society?
▶ 2:06:44Mr. Bessent: I would note that president biden gave the presidential medal of freedom to two people who I think would qualify for his oligarchs.
▶ 2:06:56Sen. Sanders: This is not a condemnation of anyone individual. I'm just asking. When so few people have so much wealth and power do you think that is an oligarchic form of society?
▶ 2:07:08Mr. Bessent: Senator, I think it depends on the ability to move up and down the income.
▶ 2:07:18Sen. Sanders: That is not really the answer even if you had the mobility. No matter who the individuals might be. All right. Another question. Right now in america, we have over 22 million workers who are making less than $15 per hour. And nearly 40 million people in our country are earning less than $70 an hour. Shameful -- $17 an hour.
▶ 2:07:46Sen. Sanders: Shamefully the federal minimum wage has not been raised since 2009 and remains an unbelievable $7.25 per hour. Will you work with those of us that want to raise the federal minimum wage to a living wage to take millions of americans out of poverty?
▶ 2:08:04Mr. Bessent: Senator, I believe the minimum wage is more of a statewide and regional issue.
▶ 2:08:11Sen. Sanders: You don't think we should change the federal minimum wage of seven dollars 25 cents per hour?
▶ 2:08:15Mr. Bessent: No sir.
▶ 2:08:19Sen. Sanders: Ok. Mr. bessent, millions of working-class americans are struggling to keep their heads above water and are paying outrageously high interest rates on their credit cards. Over 50% of the american people take out new credit cards and are being charged interest rates of over 24%. 24%. During his campaign, president-elect trump promised he was going to cap credit card interest rates at 10%.
▶ 2:08:46Sen. Sanders: I happen to think that is a very good idea and I will soon be introducing legislation to do just that. Will you, if you are confirmed, be supportive of what president-elect trump said and what I want to see happen, the cap of credit card interest rates at 10%?
▶ 2:09:06Mr. Bessent: Senator, I think we can both agree that many credit card companies have been bad actors. Throughout history. I will get back to you.
▶ 2:09:18Sen. Sanders: Very simple question. Trump said he wants to cap credit card interest rates at 10%. I agree with him. Will you be supportive of what trump and I would like to do?
▶ 2:09:27Mr. Bessent: When president trump takes office and if I am confirmed I will follow-up president trump wants to do.
▶ 2:09:34Sen. Sanders: Thank you.
▶ 2:09:35Chair Crapo: Next to senator smith.
▶ 2:09:38Sen. Smith: . Thank you very much Mr. chair and ranking member. Great to be a part of the committee. I appreciate it very much and I welcome Mr. bessent. It is nice to see you again. I want to follow up a bit on the conversation we had yesterday. I want to get into more detail. On some of the issues senator sanders is raising.
▶ 2:10:04Sen. Smith: I am focused on how we can lower cost for americans and how we can make the economy work better for regular people in the country. When we spoke yesterday, we talked generally about this. You said you think our biggest challenge is to get after the deficit. You have said your first priority is to extend the republican from tax cuts which would add a $4.6 trillion to the federal deficit.
▶ 2:10:27Sen. Smith: You have also said the trump republican tax cuts generated economic growth and those benefits are going to have trickle-down to everyone else. But what I see is these republican tax cuts have delivered massive consolidation of wealth at the top. Almost 50% of the benefits went to the top 5%.
▶ 2:10:48Sen. Smith: The top 1% got a tax cut that was 852 times bigger than the one that was received by the lowest earning working families in the country. No,w wealthy people have more money than they know what to do with grade you see elon musk buying twitter and now he has an office in the old executive office building and a seat on the platform when the president is inaugurated.
▶ 2:11:12Sen. Smith: The technology billionaires are launching rockets into space and building lavish doomsday bunkers, buying newspapers. That'll give them more power. I want to ask you, it seems to me this concentration is not good for our country and it is certainly not doing anything to lower prices for working families in minnesota or help them afford a home or childcare. In fact, it seems like it is doing the opposite of that. Can you comment on this?
▶ 2:11:41Mr. Bessent: Yes, senator smith. I believe that president trump, and if confirmed, myself, are committed to addressing this affordability crisis and part of the affordability crisis stems from the great inflation we have had since 2020. It was nascent in 2021. It occurred in 2022 and 2023.
▶ 2:12:12Mr. Bessent: We are still substantially above target. My hope is we will not see it accelerating again. Inflation is one of the great killers for working families. As we talked about in your office, the cpi or pce, the statistical numbers, those might be up about 20%-20 2% -- 20%-20 2% under the previous administration prayed getting inflation down, getting interest
▶ 2:12:43Mr. Bessent: Rates down, addressing the affordability crisis.
▶ 2:12:47Sen. Smith: As you know inflation is coming down and one thing I think we saw during the course of the last couple years was big consolidated corporations with so much market power jacking up their price way beyond the amount of money they would have had to have raised their prices in order to cover their costs. In my view, this level of corporate consolidation is actually hurting americans. It is hurting the price. It is costing people more.
▶ 2:13:17Sen. Smith: In fact, the republican trump tax bill, there is such a move to reinstate it or to extend it. That will contribute to the problem. Not make it better. Let me ask you, you have also said in order to get our fiscal house in order we need to cut spending, deregulate, and privatize. I want to look at what we are seeing with some privatizing in the private sector that is of great concern to me. Let's look at health care.
▶ 2:13:46Sen. Smith: We have seen a move by big corporate investors into health care, especially hospitals. Terrible stories we have heard about rural hospitals and clinics being shuttered, maternity wards shut down. That is caused in part by this private equity big corporation purchasing. Moving in, controlling, again, concentration in health care. None of this has lowered the cost for americans. In fact, the opposite. Costs have spikes.
▶ 2:14:15Sen. Smith: Do you see this kind of model of big corporate takeovers of health care actually helping lower costs for americans?
▶ 2:14:22Mr. Bessent: Senator smith, health care, I've often said, trying to understand health care costs and the drivers of that are on my to do list, to be able to sit in a room for a week and understand this, and I've never been able to do this.
▶ 2:14:40Mr. Bessent: But, you know, I will tell you that when we see things like health care, like higher education, both of which have substantially outperformed any inflation indexed, there is a problem there. .
▶ 2:15:03Mr. Bessent: I think what you are identify and could be one of the problems, but I think the overall level of health care costs we are seeing is driven by a multi fracture.
▶ 2:15:14Sen. Smith: It is a complicated issue. I know I'm out of time, Mr.'s chair. But what I see, and when chair sanders was chair of the health committee, he said corporations come in, the quality of care goes down, patient costs go up. There was a hospital in massachusetts that was bought up by one of these firms, and they stopped stalking common treatments for hemorrhage during pregnancy, and they've seen patients die.
▶ 2:15:43Sen. Smith: So I don't think this is a solution to our health care or other problems in our economy. Thank you, Mr. chair.
▶ 2:15:49Chair Crapo: Thank you. Senator johnson.
▶ 2:15:54Sen. Johnson: Thank you. I want to start by refuting one of the false narratives we hear ad nauseam, that the tax cuts and jobs act was the primary cause of our deficit. It's not true. I'm going to use the facts. This is not to confirm cbo numbers, it is to show you why we should take cbo objections with a grain of salt. After its passage, cbo projected 10 years, but I mean for seven years, we just experienced, total revenue of $27 trillion.
▶ 2:16:23Sen. Johnson: Actual revenue of $28.7 trillion. To do the math, that's $1.7 trillion more than what cbo estimated, which shows, the original is one point $5 trillion in lost revenue. We not only paid for tax cuts come in seven years, we generated 200 billion dollars more revenue, even with the covid recession.
▶ 2:16:49Sen. Johnson: We take cbo scores with a real grain of salt, but I hope this committee understands how what senator graham was talking about with the beginnings, and the tremendous american success story. I want to ask you a hypothetical. Do you understand american families. If an american family, let's say they normally spend $100,000, have a serious health crisis. And one year, they would have to spend $50,000 in medical bills, but that family member gets well, fortunately.
▶ 2:17:21Sen. Johnson: What would that family spend the next year? Just real quick.
▶ 2:17:26Mr. Bessent: Unless they have more income --
▶ 2:17:32Sen. Johnson: Five hundred thousand dollars.
▶ 2:17:34Mr. Bessent: They would spend the same amount and probably have debt associated with it.
▶ 2:17:40Sen. Johnson: And 2019 before the pandemic, we spent $4.4 trillion. In 2020, we spent six point $5 trillion, $6.6 trillion. When the pandemic ended, over the last five years, we've averaged $6.9 trillion. Now, Mr. bessent, is there any justification for keeping spending levels at this level?
▶ 2:18:05Mr. Bessent: Senator johnson, as I've said repeatedly, the united states does not have a revenue problem --
▶ 2:18:14Sen. Johnson: We have a spending problem. The question is, how do we reset spending levels to a reasonable, pre-pandemic level? I wrote a column and the "wall street journal" that laid out a few scenarios.
▶ 2:18:32Sen. Johnson: If you take the pre-pandemic years and increase all the spending by population inflation -- by the way, that is what families would do as well -- let your social security, medicare, and interest, and use president biden's 2025 budget, you spend what we plan on spending this year. If you take bill clinton's 1998 spending, I don't think he spent too little and 1998, we will have a baseline of 5.5 trillion dollars.
▶ 2:18:59Sen. Johnson: It took president obama's 2014 spending levels, it would be $6.2 trillion. The one I like the best, though, is if we use president trump's 2021 budget, estimates were spending in 2025, and use, again, inflate, just use those numbers, but slight in social security, medicare, as they are, you would be spending about $6 trillion. So wouldn't that be a reasonable level?
▶ 2:19:31Sen. Johnson: Five point $5 trillion and $6 trillion as a baseline spending to project our next 10 years.
▶ 2:19:37Mr. Bessent: Senator, I look forward to working with you on this. You've clearly done more work than I have. This looks like a very good starting point to me. To figure out how we've gotten into the spending we are at.
▶ 2:19:55Sen. Johnson: On the way, 1998, I used clinton's spending levels for this. I also want to refer to the current cbo score on extending tcja. They scored the whole thing as $1.5 trillion. If you just inflate that, you know, according to cpi, it would be $2 trillion. How do they justify a score of $4.3 trillion? It makes no sense. So I think we need to take those estimates with a huge grain of salt.
▶ 2:20:27Sen. Johnson: My final point, I heard the ranking member talk about inflation and the cost of living. Because we've incurred these massive deficits, in 1990 eight dollars, today, it's only rose $.51. $2014 today, it is only worth $.74. In 2019 dollars, it will be worth $.80.
▶ 2:20:50Sen. Johnson: That was caused by the massive deficits and then the devaluation of the dollar, and a lot of devaluation has occurred over the last four years, because we spent too much money. Not because we did not tax america enough, it's because we spent way too much money. Thank you, Mr. chairman.
▶ 2:21:06Chair Crapo: Thank you. Senator cantwell.
▶ 2:21:11Sen. Cantwell: Thank, Mr. chairman. Mr. bessent, congratulations on your nomination. I see your family sitting there in earnest on these economic issues. It is so interesting.
▶ 2:21:26Sen. Cantwell: A perspective you can see from this committee come arguing about what we think are the right economic policies for the country, and as the treasury nominee, with your background experience, we still are talking about the president's policies, and whether we think they are effective or not. Real gdp has increased, 3.1% in the third quarter of 2024. That is strong growth, right?
▶ 2:21:52Mr. Bessent: As an aggregate number, it is strong growth.
▶ 2:21:58Sen. Cantwell: Ok. The economy added jobs, the employment -- unemployment is the lowest it has been, which is led to better pay and working conditions. We want that, right?
▶ 2:22:10Mr. Bessent: I'm in favor of better pay and working conditions, yes, senator.
▶ 2:22:14Sen. Cantwell: After tax increase by 400%. These are good economic news, and I personally think focusing on innovation and building supply chains is a good thing to do. So when you start talking about tariffs, that's when you get, you know, the pacific northwest attention.
▶ 2:22:36Sen. Cantwell: In fact, I would say a recent editorial by one of my newspapers was, you know, bracing for the trump tariffs, aviation in general. You can imagine we actually have a net surplus. I think we export about $2 billion worth of goods out of our stay versus importing $1 billion. This is a big part of it.
▶ 2:23:04Sen. Cantwell: So in the aviation sector, I think I sent you the article about the fact that we thank increasing on manufacturing innovation to continue to have markets and sell to those markets is a good economic strategy.
▶ 2:23:16Mr. Bessent: Senator cantwell, as I discussed in your office, and my hometown of charleston, south carolina, boeing is also the largest employer. I view aviation as very important.
▶ 2:23:34Sen. Cantwell: Great. Believe me, I would have the same conversation with joe biden, barack obama, or whoever. I want to focus on innovation, not the tariffs. I'm worried the terrorists are going to increase supply chain products. -- I'm worried the tariffs are going to increase supply chain products. They will increase prices on americans.
▶ 2:24:04Sen. Cantwell: Don't you think we are in an environment where exporting products and growing markets outside the united states is a big economic opportunity, and what are you going to do to build coalition to help us achieve opening up those markets as opposed to just the retaliatory environment which may raise costs on americans and not resolve these issues?
▶ 2:24:28Mr. Bessent: Senator cantwell, thank you for that. After our discussion in your office, I actually went back and looked at some older data. And 2000, in terms of the labor share of aggregate incomes in the U.S., 69% accrue to labor. Today, that number accrued to 60%. You can see a sharp drop after was called the china shop.
▶ 2:25:04Mr. Bessent: Open market is good, but the free trade must be balanced against fair trade. Clearly what has happened is the trait has not been fair. That has fallen on the american workers, and we cannot allow, as I think I mentioned to you, china is the most imbalanced, unbalanced economy in the history of the world.
▶ 2:25:38Mr. Bessent: They have -4% disinflation, and they are attempting to export their way out of that as opposed to doing the much internal rebalance. I'm with you on the need to open markets, but we cannot allow a player like this to flood our markets or to flood the world.
▶ 2:26:09Sen. Cantwell: I'm saying I believe in coalitions. We discussed the technology. I believe you thought that was a good idea. The notion, though, I mean, I get upset with my colleagues on the other of the aisle on the other time -- other side of the aisle all the time. Looking at these numbers that basically are talking about just a tariff and what it will do to the price of gasoline, given canada, is concerning.
▶ 2:26:32Sen. Cantwell: I want to know that the trump administration is going to focus as much on innovating our way to success as we are tariff on the tariffs, because I do think --as we are on the tariffs, because I do think we will see retaliatory tariffs. We see them in our state. It's hurt us in agriculture. You lose more farms. A lot of people are buying farmlands, goldman sachs, bill gates, but we are losing farmers in the middle of the trade war, and that is the concern I have. Thank you, Mr. chairman.
▶ 2:27:05Sen. Cantwell: By the way, thank you so much for mentioning housing. I so appreciate that that was in your statement. I look forward to working with you. I do think that is an area, that if the president will push forward, that is a way to lower cost. Thank you.
▶ 2:27:17Chair Crapo: Thank you. Senator lujan.
▶ 2:27:21Sen. Lujan: Thank you, Mr. chairman. Thank you, Mr. bessent. I appreciate the conversation we had in the office. I will touch on several topics. I will ask you some yes or no questions, and I thank you in advance for your brevity. Many observing today the immense responsibility that the secretary of treasury has in stemming the flow of fentanyl and other substances.
▶ 2:27:47Sen. Lujan: Yes or no, will you commit to continuing the biden administration's counter sentinel strikeforce, -- counter fentanyl strikeforce?
▶ 2:28:06Mr. Bessent: I appreciate the question. This is close to me. Families close to our family has lost children to the fentanyl crisis, so I will commit and kno w that it is my focus that president trump is laser focused on this issue.
▶ 2:28:29Sen. Lujan: Will you work to ensure there is more transparency against suspicious activity reports and network for congress?
▶ 2:28:40Mr. Bessent: I believe, as you and I discussed, there is a sleeve of treasury folks at tfi, treasury finance, that deals with this, and I believe that we have to have a 2025 approach to -- you and I talked about digital currencies and all branches of government, yes.
▶ 2:29:13Sen. Lujan: In your rule as treasury secretary, do you agree you will play an important role in advising president trump and congressional republicans on policy related to the economy, including investment in government programs?
▶ 2:29:28Mr. Bessent: Yes, senator.
▶ 2:29:30Sen. Lujan: I was pleased at our meeting that you stated, quote, "no cuts will be needed" to achieve your economic goals. I very much appreciate that conversation we had. Yes or no, will you recommend cutting medicaid?
▶ 2:29:53Mr. Bessent: I did not hear if you said medicaid or --
▶ 2:29:59Sen. Lujan: Yes or no, will you recommend cutting medicaid?
▶ 2:30:03Mr. Bessent: Medicaid? I will -- it is the business of congress to choose the budget, and I am in favor of empowering states, and I believe that for some states, there will be an increase, for some states, that will be a decrease.
▶ 2:30:28Sen. Lujan: So Mr. bessent, will you recommend cutting medicaid to president trump? And I will remind you that you acknowledged one of your responsibility as as secretary of the treasury will be to be providing this advice.
▶ 2:30:38Mr. Bessent: I will get back to you on this. When I have seen the details of the full budget proposal and, once president trump is in office and if confirmed.
▶ 2:30:53Sen. Lujan: Will be recommend customer broadband following the investments we have been seen across the country, making immense progress for connection of people across the country included in the bipoc included in the bi bipartisan infrastructure law?
▶ 2:31:11Mr. Bessent: Senator, I'm unfamiliar with the exact program. It's my understanding that much of the allocated funding has not been disbursed yet, so I will get back to you on that.
▶ 2:31:22Sen. Lujan: Well, Mr. bessent, a letter folks pockets of corona, including some of your former neighbors, or getting connectivity because of these programs. You may need to chat with them about the importance of what this program means. Before my time expires, it may surprise many here that there's only a couple of us in this body that are members of head start, and I imagine you may hear a little bit more that about my brother in headstart, Mr. warnock here.
▶ 2:31:54Sen. Lujan: We talk about education in america, yes or no, will you recommend cuts to headstart?
▶ 2:32:00Mr. Bessent: Again, senator, I will have to get back to you on this. I don't understand the intricacies of that program.
▶ 2:32:10Sen. Lujan: Of headstart? , senator, yes --
▶ 2:32:14Mr. Bessent: Yes. I don't understand the budget ramifications.
▶ 2:32:18Sen. Lujan: Do you know what headstart is?
▶ 2:32:23Mr. Bessent: I believe it is an earlier childhood education program.
▶ 2:32:25Sen. Lujan: You have to qualify to get into that program. The family that I was raised in, we qualified for that program. It opened doors. Heck, they got a couple of us to the united states senate. So I certainly hope we will be able to find some agreement in that program, and if somebody tries to eliminate that, early childhood education, we can count on you on behalf of new mexicans, south carolinians, and people of america say no, we will not do that.
▶ 2:32:55Sen. Lujan: Mr. chairman, we appreciate your time today.
▶ 2:32:56Chair Crapo: Thank you. Senator barrasso.
▶ 2:33:01Sen. Barrasso: Thank you very much, Mr. chairman. Thank you for being here. I enjoyed our discussion quite a bit, talking about the future of the country, the role of the treasury secretary and getting our economy back on track. This means higher prices, lower wages -- higher wages, lower prices, stronger economic growth for america. It means protecting people in states like wyoming from crushing, devastating tax hikes. Means getting spending under control.
▶ 2:33:30Sen. Barrasso: I'm encouraged by the meeting we had that I believe is a strong vision for america, getting tough on china, getting tough on our adversaries come and getting the federal government out of the way for so many of us. I would like to talk a bit about energy. And I've just been in another committee yesterday. The secretary of energy earlier today, the secretary of interior, lots of energy questions.
▶ 2:33:54Sen. Barrasso: So I'm glad we agree a key ingredient in reigniting the economy in the country is to unleash american energy in my home state of wyoming, superpower as a nation, and we are america's energy breadbasket in wyoming. Energy production is the heart of our wyoming economy and the nation's economy. It supports workers as well as schools, infrastructure, the money that comes from that, the tax revenue.
▶ 2:34:19Sen. Barrasso: Wyoming is the least populated state, but it is the third-largest net energy supplier, producing 12 times more energy than we consume. It's at the forefront of oil, natural gas, coal production, carbon capture technology, hydrogen production, many alternative sources of energy.
▶ 2:34:40Sen. Barrasso: Energy producers and wyoming faced a whole of government assault from the biden administration on american energy production, taxes, crippling regulations some of weaponized the tax code in ways that are just unthinkable to me come against conventional american energy production. Joe biden signed into law that made things worse. The good news is come up with you there, with president trump in the white house, things are about to change.
▶ 2:35:07Sen. Barrasso: You talked extensively about boosting american energy production. What role do you see yourself playing as treasury secretary in making sure we become american energy dominant in terms of energy security as well?
▶ 2:35:19Mr. Bessent: Senator barrasso, I very much enjoyed our meeting and wide-ranging discussion. My family and I had a fantastic vacation and wyoming this summer.
▶ 2:35:36Mr. Bessent: In terms of the potential trump administration, I'm sure you've heard it from secretary burgum, we refer to as energy dominant.
▶ 2:35:54Mr. Bessent: Energy dominance, one of the reasons that I believe we've not been able to apply the sanctions against the russian federation or unwilling was because the supply of energy was constrained in the U.S. so it's the same with the terraced regime in iran. So I would view that as we can raise U.S.
▶ 2:36:19Mr. Bessent: Production, we would squeeze down the bad actors, especially iran. In order of magnitude, I believe iran was down to 100 thousand barrels of oil exports, when president trump left office, I believe there are now exporting in excess of approximately 1.7 million, so through sanctions
▶ 2:36:49Mr. Bessent: Policy, I believe that we can, again, as I like to say, make iran poor again, not the iranian people, the iranian government. And then at the same time, have our domestic producers push that up with the highest energy standards of the world.
▶ 2:37:13Sen. Barrasso: We do it with the best in the land, and I agree. As you mention, with iran increasing sales to china, china is buying at a discount, so they are getting cheap energy. I ran is getting tanker loads of cash back essentially, using that money for terrorism. One last question, and my time remaining, and this has to do with the tax cuts and jobs act that we've had since 2017. If that were to expire, we are talking of a massive tax hike over $4 trillion.
▶ 2:37:45Sen. Barrasso: What would that kind of tax hike mean for small businesses, for job creators, as well as our global competitiveness, if all of a sudden we put a heavy, wet blanket of a $4 trillion tax increase on our nation?
▶ 2:37:56Mr. Bessent: Senator, I think it would be devastating, especially for small businesses. One of the things, as someone who came from a very small town, lived in new york, which is a very big town, and came back to a small town, I believe wall street has done great the past few years, and main street has suffered. I think it is main street's time.
▶ 2:38:21Mr. Bessent: Wall street can continue to do well or do not as well, it is time to have a main street, small business-led recovery, led by small banks, regional banks, as I call it, re-privatizing the economy. As I said earlier, since president trump's election, we seen the biggest jump in the small business confidence index.
▶ 2:38:50Sen. Barrasso: Thank you, Mr. chairman.
▶ 2:38:53Chair Crapo: Thank you. Senator tillis.
▶ 2:39:01Sen. Tillis: Thank you, Mr. bessent and your family. I leaned over to senator johnson when you were being attacked by one of my colleagues on the others' line of the aisle, said the guy looks like he's got a heart rate of 40. You are very composed, and thank you for staying on the facts and demonstrating all the knowledge you possess. When I was not here, someone put in a question your viability of a nominee because of your lack of public service, which I find interesting.
▶ 2:39:31Sen. Tillis: Sometimes I think we have too much public service in people's background here and not real-world world business experience. Can you give me an idea of why this nomination may represent your first entry into public service?
▶ 2:39:41Mr. Bessent: Yes, senator tillis, and, again, as an adjacent statement, as someone who is a homeowner in north carolina, I appreciated our conversation in your office. Love, I have been in public service, does not in the government.
▶ 2:40:01Mr. Bessent: When I lived in new york, I was a strong supporter of a charter school called harlem children's zone, which takes the young residents in a multi-bluff, keeps getting bigger, area of harlem and takes them from cradle through high school. But I have found that my service from anyone can write a check, or anyone with my means can write a check.
▶ 2:40:32Mr. Bessent: What has been fulfilling for me is mentoring these young people. I'm still in touch with them today. I'm also a trustee for rockefeller university in one of the great research universities in the world. I was on the executive committee. I chaired the investment committee. But sitting here today is especially meaningful for me, because this is my third try at public service.
▶ 2:40:59Mr. Bessent: In 1979, but I was 17 years old, I wanted to fight for my country. My father had just experienced extreme financial difficulties. I wanted to attend the U.S. naval academy. I was offered by a congressman of the sixth district of succulent appointment but was unable to take that appointment because of my sexual preference.
▶ 2:41:23Mr. Bessent: I managed to go to gail, work--- yale, worked several jobs to do that. I wanted to join the foreign service. I was told also not welcome. Sitting here today is my third attempt at public service, and I sit here knowing that president trump chose me because he believes and the best candidate, not because of my sexual preference, not because treasury secretaries with green eyes do better, and I think it is a
▶ 2:41:54Mr. Bessent: Tribute to president trump that he looks at people as people.
▶ 2:41:58Sen. Tillis: I agree, and I appreciate that answer. I'm going to go into a lightning round here. First off, this is the joint committee on taxation, distribution analysi of what happens to the various socioeconomic strata if we don't manage to pass the jobs and tax cut extension without objection.
▶ 2:42:19Chair Crapo: Without objection.
▶ 2:42:20Sen. Tillis: Senator johnson does big foam boards. I do hand outs. I'm handing this to all of my republican colleagues right now, staying asleep failed to extend the jobs and tax cuts act, we will own a fiscal crisis for people in middle america. 93 million people will be affected in terms of an added tax burden if we fail to pass an extension of tcja.
▶ 2:42:49Sen. Tillis: The last time I checked, there are not 93 million rich people in this country. There are people who struggle to like you did when you were a kid and like I did when I was a kid, who had to work themselves through college. And every time we had some well-intentioned program from government to make things better for me, it made it harder for me to dig myself out of the economic situation I was born into. So the facts are stubborn things.
▶ 2:43:16Sen. Tillis: This tells us what happens if we fail to pass the jobs and tax cuts. And it does not even get to the impact that I have. It turns out at the very table, jelly roll was here for a finance committee hearing. He lived in the same trailer park that I did 20 years later in south nashville, tennessee. And what I found interesting in my own family, we were right on the economic edge.
▶ 2:43:46Sen. Tillis: Every time government has some well-intentioned program to tax the rich, I went from a house to a trailer park, and every time government wanted to do what we wanted to do, we lived in a house. I'm an example, and I'm sure ben ray lujan and others that had the examples, you have to go back and look at historically when people like me and people like you have had real opportunity. I look forward to supporting your nomination come and Mr. chairman, I'm going to send some questions for the record.
▶ 2:44:15Sen. Tillis: But it is to reinforce the message that republicans have to deliver, and anyone who says that we should not is advocating for a $5 trillion tax increase that will hurt the people who are on the economic edge worse than anybody else. Thank you, Mr. chairman.
▶ 2:44:33Chair Crapo: Thank you. Senator warnock.
▶ 2:44:35Sen. Warnock: Thank you, chairman crapo. I'm grateful and honored to join this committee. I look forward to work with you and rick a member or white and to ensure our tax code supports working families, to protect social security, medicare, medicaid, and to promote trade policies that work for georgia businesses. Mr. bessent, good morning, and good to see you again.
▶ 2:45:01Sen. Warnock: I enjoyed our conversation earlier. I would like to follow-up on our discussion about your economic plan.
▶ 2:45:15Sen. Warnock: According to a new report from the tax policy center, the largest tax cuts from extending the trump tax bill would go to those with the highest income, especially those in the top 1%, making more than $1 million per year.
▶ 2:45:35Sen. Warnock: In fact, the top 1% of owners will take home roughly one- quarter of the benefits and the top 5% will get almost half of that. Do you believe that the wealthiest 1% of americans deserve or need an additional tax cut?
▶ 2:45:57Mr. Bessent: Senator warnock, I greatly enjoyed visiting with you. I think probably a better way to look at it is on a percentage basis, and when I think about the distributional aspects of the tax cuts and jobs act that most of the benefits accrue for the working and middle people as opposed to the upper end.
▶ 2:46:22Mr. Bessent: In absolute dollars, as you just read, that is correct, but I think it is important to look at it in percentage terms.
▶ 2:46:29Sen. Warnock: So you believe that the tax-cut that provided one-quarter of the benefits to the top 1% and top 5% getting almost one half actually benefited those at the bottom more than a benefit of those at the top?
▶ 2:46:46Mr. Bessent: I believe that in 2018, 2019, that the households in the bottom 50% of income earners, the wealth increase of those households was three times higher than the wealth increase for the top 10% of americans.
▶ 2:47:07Sen. Warnock: So we should continue to move in that direction and give more tax cuts to those of the highest? You talked about high deficits as a national defense problem, and I agree with that. I think we need to be fiscally responsible. We need to work to bring the national debt under control. In 2013, congress extended the bush tax cuts for everyone except those making more than $400,000 a year.
▶ 2:47:37Sen. Warnock: This bipartisan decision save the treasury 600 billion dollars, helping to narrow the deficit. Do you agree that ending the tax cuts for those making more than 400 thousand dollars would help close the deficit and reduce our national debt?
▶ 2:47:47Mr. Bessent: Senator warnock, I do not. I believe that you would capture and an ornament amount of -- in an inordinate amount of people --
▶ 2:48:04Sen. Warnock: You would not cut it off at $400,000. What about $1 million?
▶ 2:48:09Mr. Bessent: Again, I think these are small business owners, and I believe that we come as I said before, wall street has done great. It is time for mainstreet to do well, and small businesses need to drive what I call the re- privatization away from government spending.
▶ 2:48:31Sen. Warnock: I agree that it is main street's time. What about those making more than $10 million? Would we reduce the deficit by extending those tax cuts to folks making about 10 million dollars?
▶ 2:48:50Mr. Bessent: Again, I think it is imported that we put in incentives for them to invest, so going back to the 100% depreciation for equipment that I think --
▶ 2:49:06Sen. Warnock: I don't need to keep interrupting, but I am the pastor come and we are known to be loquacious with speech, but I'm running out of time here. What about one what about o $1 billion?
▶ 2:49:21Mr. Bessent: Again, I think these are the job creators.
▶ 2:49:25Sen. Warnock: So there is no income level for which you would consider raising taxes?
▶ 2:49:31Mr. Bessent: There's no income level that I don't think we should continue the tcja.
▶ 2:49:38Sen. Warnock: All right. I think our country is facing structural deficits, however, I think to continue to reduce taxes for the wealthy and letting them award taxes based on what they already owe is not going to get us out of that problem. But I look forward to continuing that discussion. Thank you very much.
▶ 2:50:01Mr. Bessent: Thank you, senator.
▶ 2:50:03Chair Crapo: Thank you very much. Before we go on to senator blackburn, I want to say there are a lot of facts that have been thrown around, and I want to repeat when I said in my opening statement, and that is of the $4.3 trillion to 6.3 trillion dollars tax increase that could happen, this is actual dollars, $2.6 trillion of that goes to families and individuals who make less than $400,000.
▶ 2:50:34Chair Crapo: That is simply the distribution of the tax increase. Senator blackburn.
▶ 2:50:40Sen. Blackburn: Thank you, Mr. chairman. Thank you for bringing that clarification, because if we do not extend the tax cuts and jobs act, it is that $4 trillion tax hike that people are going to see come and I appreciate your comment about a main street small business recovery.
▶ 2:50:59Sen. Blackburn: That is something that is so vitally important, and as the chairman knows, we have had much discussion over the last few years with the biden administration over how they determined that $400,000 number. If it is the gross, if it is the adjusted gross, they came up with the term of total positive income, which is everything you make.
▶ 2:51:26Sen. Blackburn: And we know that the biden administration approach on this would be a killer for main street businesses. We know that 199a is vital to them, and they need to see that in the trump tax cuts and in that permanent, so that we can have that main street, small business recovery and revival.
▶ 2:51:52Sen. Blackburn: I appreciate that, and I appreciate that president trump has nominated you for treasury secretary. Because you are sensitive to that.
▶ 2:52:15Sen. Blackburn: You are sensitive to main street individuals, and looking at these provisions that are going to be in front of you, so we appreciate that you would come back a third time with john and caroline and cole. By the way, they are behaving so beautifully. Whatever they want, they get. [laughter] senate orders, we will be right there to support that.
▶ 2:52:51Sen. Blackburn: I want to talk about the push that the biden administration, they give an executive order for treasury to research development of the cbdc in the united states. And, of course, this causes a lot of us heartburn, because we look at what the tcp did with the digital yuan, in connection with the olympics.
▶ 2:53:17Sen. Blackburn: So upon confirmation, how would you approach this discussion of cbdc, and are you for them or against them? Could you end the biden administration project to create a U.S.-based cbdc?
▶ 2:53:33Mr. Bessent: Senator blackburn, thank you for your remarks. I may have a little trouble disciplining the two behind me, as I'm sure that I will hear that a U.S. senator has vouched for their behavior. [laughter] but on cbdc, I see no reason for the U.S. to have a central bank digital currency.
▶ 2:54:05Mr. Bessent: In my mind, a central bank digital currency is for a country who has no other investment alternative, so if we think about a reserve manager, a high surplus country, whether it is saudi arabia, singapore, who ends up with, call the chinese currency, whatever you want, the yuan, if you own that currency, you have to have something to invest in.
▶ 2:54:35Mr. Bessent: There's very little to invest in if you want to hold the cup -- the currency.
▶ 2:54:40Sen. Blackburn: So your view of that would be a negative view.
▶ 2:54:44Mr. Bessent: Many of these countries view it as a necessity. Whereas if you hold U.S. dollars, you can hold a variety of very secure U.S. --
▶ 2:54:53Sen. Blackburn: Exactly. I appreciate that. I appreciate your comments earlier to senator barrasso about the negotiation. This is something we would be well served to extract ourselves from this. Currently, the luminary data that we have is 40%,, right at 40% of the total tax burden is on us, and china, of course, has found a way to exempt themselves from this.
▶ 2:55:28Sen. Blackburn: So that is in need of a revisit. I look forward to you doing that and standing with our countries. Advanced persistent threat, a pt, which is china, they were able to override security systems and remotely access workstations where they had access to classified documents, and of course this is the
▶ 2:56:02Sen. Blackburn: Chinese communist party's work again. We found this out after finding out from the treasury inspector general that 2800 irs employees still had tiktok on the government devices. If confirmed and when confirmed, will you take steps to improve treasury security system?
▶ 2:56:27Mr. Bessent: Senator blackburn, one of the earlier questions was, what policies of the current treasury secretary do you disagree with? And, as you noted, the december 8 tax and treasury was via a work from home system, so I come as treasury secretary, if confirmed, planned to be in the office every day that I'm in washington, D.C., and I expect
▶ 2:56:57Mr. Bessent: All the employees to do that, too.
▶ 2:56:58Sen. Blackburn: Thank you.
▶ 2:57:00Mr. Bessent: And I think it is a matter of national security for everyone to be at 1500 pennsylvania avenue.
▶ 2:57:05Sen. Blackburn: Thank you. That is well received. Thank you, Mr. chairman.
▶ 2:57:10Chair Crapo: Senator welch.
▶ 2:57:13Sen. Welch: Thank you, Mr. chair. I look forward to working with you and our colleagues. Mr. bessent, welcome to you and welcome to your family. As we discussed, the situation for a lot of vermonters who are working incredibly hard is very tough. Vermont actually has one of the widest if not the widest gap between what people can earn and what their expenses are.
▶ 2:58:01Sen. Welch: For the past 40 years, working americans have actually had a pay cut, not a pay increase. And my hope is that whatever tax policy we have is going to start with a commitment to making life better for the main street folks that we mentioned, and I'm glad we did. There's going to be a live negotiation on how to pay for the tax cuts.
▶ 2:58:25Sen. Welch: One of the things that will be on the block is something that's very important for vermonters, and that is the affordable tax care credit that we have now. In vermont, and health care is incredibly expensive for everybody, but if we have, just as an example, an electrician in bennington, vermont who is making $67,000 a year, with the tax credits that are set to expire, that family would have a
▶ 2:58:57Sen. Welch: $700 a month increase in their health care bill. That's going to hammer them. That's like $9,000. So my question to you, in putting together this tax proposal, that you are going to have to be making recommendations about how to pay for it, will we continue to provide this help to vermonters, like this electrician, so he does not get hammered on health care premiums, going well beyond what he can afford?
▶ 2:59:28Mr. Bessent: Senator, as we discussed in your office, and I have not had time to do my homework on this. I think I told you that my family friends, business colleagues, I often get sick of hearing my phrase, "no data, no opinion," so I will get up to speed.
▶ 2:59:55Sen. Welch: I appreciate that, but there are a couple of things that make a difference for working americans in south carolina and in vermont, is the child tax credit. When we had that come a reduced poverty for children by 50%. That is really elemental for hard-working families. In premium support, where health care is a brutal expense, for employers, too, by the way. So my hope is in the design, we are going to start by making sure we do know harm to working vermonters and working south carolinians, ok?
▶ 3:00:25Sen. Welch: Second. On the tariffs, I'm in support of the china tariffs. That is defending us against unfair trade practices by china. I'm concerned about the impacts of tariffs on canada and what that does to us in vermont.
▶ 3:00:43Sen. Welch: Our major business partner, export partner is canada, and from what we have seen, it would raise the cost to businesses, probably cost jobs and cost to consumers. So what reassurance can we get from the trump administration that there's going to be a do no harm policy to american consumers in vermont versus small businesses with the tariff policy?
▶ 3:01:11Mr. Bessent: Senator, it is very difficult for me to isolate vermont especially, but in terms of working americans, I believe that president trump understands that it's working america, he has a very unique coalition.
▶ 3:01:30Sen. Welch: He does, and I hope the policy will reflect that. So I appreciate the opportunity to work with you on that.
▶ 3:01:36Mr. Bessent: I look forward to working with you. I think he understands that it is the affordability crisis.
▶ 3:01:45Sen. Welch: Yeah. It is. We were talking about credit card rates for consumers. Credit card fees for our small businesses are the highest in the whole world! The highest in the whole world. Why can't we bring them down and pay what you are up pays? Small businesses, it is like the second or third highest expense for them. Those costs on our small businesses, including the capture businesses, I would like to get them down and get your help in doing that.
▶ 3:02:16Mr. Bessent: I look forward to working with you on this issue, if confirmed.
▶ 3:02:24Sen. Welch: Thank you very much.
▶ 3:02:25Mr. Bessent: Thank you.
▶ 3:02:27Chair Crapo: Thank you. Senator marshall?
▶ 3:02:33Sen. Marshall: Thank you, chairman crapo, I look forward to joining you. We share the same goal appeared we want americans to be prosperous, we want them to live their american dream. We disagree on how to get there often times, but we have the same goal, that we want americans to be prosperous. Mr. bessent, welcome and congratulations on your nomination as well. I think it could be said that rural america in many ways is president trump's base.
▶ 3:03:01Sen. Marshall: Of the 77 million people that voted for president trump, a lot of them came from rural america. In fact, I think I could argue that 90% of rural americans voted for president trump, and no one has suffered more in these last four years then rural america has. My question is, what can we do to help main street health small businesses, and help-- street, help small businesses, and help rural america?
▶ 3:03:31Sen. Marshall: Everyone knows you are a financial wizard on wall street. You are from a small town. I think you understand agriculture, from our conversations, and even some background in community banks. How important our community banks to those small towns, and what is your commitment to rural america?
▶ 3:03:50Mr. Bessent: Well, senator marshall, I think I, again, may be one of the few treasury secretary nominees in recent periods who occasionally listens to form radio on xm on the weekends, and I can tell you that after the silicon valley debacle, that form radio was intensely focused on the potential wealth of small and
▶ 3:04:21Mr. Bessent: Can be. They are important pillars for the communities. I think examining, in terms of what is the regulation, what is the supervision, are they being unduly burdened? And they are not able to help their communities, what are the supervisors, what is the supervisory edict there?
▶ 3:04:48Mr. Bessent: And, again, as I said earlier, too, I think china has not made good on their ad purchases for four years. And, if confirmed, next week, I would start pushing for them to resume the purchase is, and then I would conference with president trump on whether he should.
▶ 3:05:18Sen. Marshall: Thank you. I want to stay on rural america and talk about tax credits for a second. 45 visa tax credits, I'm not sure if you are familiar with it or not, but it would really help rural america in the standpoint that it would help take some of our feedstocks, whether it is soybeans or corn, and turn it into renewable diesel. I think it will lead to cleaner air for all of us. It is important to rural america. What we cannot do is let china benefit from it.
▶ 3:05:49Sen. Marshall: Any tax credit we have should not impact foreign entities, and a few background thoughts on the 45 b tax credit from you.
▶ 3:05:59Mr. Bessent: As we discussed in your office, and you gave me a very good overall of doubt -- overview of the chinese back into this program, that is obviously unacceptable. I look forward to working with you on the 45b.
▶ 3:06:14Sen. Marshall: Great. I want to finish up probably here on the trump tax cuts and how important it is to make them permanent. I don't understand what $4.6 trillion is, but I can tell you that families back in kansas were able to put about $1000 a month in their pocket after the the trump tax cuts took effect.
▶ 3:06:39Sen. Marshall: If we lost of these trump tax cuts, than I would assume that the same families would be federal government another $1000. So this issue to me is vitally important to rural america, to the tune of $1000 a month. So I guess my question for you is, beyond making the current trump tax cuts permanent, what else would be on the menu that would help the economy as far as other tax cuts?
▶ 3:07:03Mr. Bessent: Well, I think president trump has talked about, and it is not specifically a rule issue, but it is something that affects the lower two quintiles of the income and distribution more, and perhaps making auto loans tax deductible again, because that would go a long way toward
▶ 3:07:34Mr. Bessent: Subverting the affordability crisis.
▶ 3:07:35Sen. Marshall: We can come back and talk about secord tax one more time, -- feed corn tax one more time. Mr. chairman?
▶ 3:07:47Chair Crapo: I appreciate our colleagues mentioning 45b, the clean fuel production tax credit. That is part of the clean energy tax credit that we got into law. I look forward to working -- I look forward to working with you on it.
▶ 3:08:03Chair Crapo: Thank you. Mr. bessent, so you understand how we are going here. I know it has been a long time, and thank you for your patience. We have senator warren next, followed by senator scott, then senator whitehouse, and then said no sai senator wyden would like to ask one more question. He gets the only extra question, then he and I would probably make a few brief remarks and wrap up, and we will be finished at that point. Senator warren.
▶ 3:08:34Sen. Moran: Thank you, Mr. chairman. Thank you, Mr. bessent --
▶ 3:08:40Senator Warren: Thank you, Mr. chairman. Thank you, Mr. bessent, welcome, and welcome to your family. Donald trump and elizabeth warren are singing from the same hymnal. Mr. bessent, let's make it a trio, do you agree with president-elect trump that the debt limit should be repealed?
▶ 3:09:00Mr. Bessent: Senator warren, first of all, I enjoyed our visit in your office and appreciate the fact that when I walked in, you said let's talk about what we have in common, which was cape cod, the red sox, and addressing the affordable daily crisis -- the affordability crisis and the housing shortage.
▶ 3:09:25Mr. Bessent: The debt limit is a very nuanced convention. What I would like to do is get back to you and president trump, I would like to do a survey of market participants with this amount of debt. It is very fragile equilibrium.
▶ 3:09:48Sen. Warren: Mr. bessent, forgive me for just a minute here. I'm not asking whether or not we are increasing debt. A very different question, and that is whether or not we should have a statute in place with the debt limit. That them if we don't increase the debt limit, would cause us to default.
▶ 3:10:24Sen. Warren: Have you seen the congressional budget office projections of what would happen if the united states government defaulted on its debt? That is, if we hit the debt limit and just kept on going without raising it or eliminating it?
▶ 3:10:36Mr. Bessent: The united states is not going to default on its debt, if I'm confirmed, but, you know, I will tell you that for people who don't understand the debt limit, it might be like taking out your hand a break in your car. That you can still hit the brakes, but it is one last feature.
▶ 3:10:59Sen. Warren: But I thought you said you'd never use it. You talked about the hand brake, but in fact it is not connected to a braking system. It is never used, right?
▶ 3:11:13Mr. Bessent: I've never pulled the handbrake going 60 miles an hour on my car. The serious cost of the debt limit breach, moody's said a debt limit breach would cost the U.S. economy $12 trillion and cause 6 million people their job.
▶ 3:11:38Mr. Bessent: I think this is the reason that president-elect trump said eliminating the debt limit is "the smartest thing congress can do," and I would like for congress to do the smartest thing, and that is eliminate the debt limit, so we don't have this problem.
▶ 3:11:54Mr. Bessent: Senator warren, I will tell you that once president trump takes office, and if I'm confirmed, if he wants to eliminate the debt limit, I will work with him and you on that.
▶ 3:12:04Sen. Blackburn: Great. Great, because I agree. The debt limit should be repealed. I know that's not what congressional republicans plan to do. Last month, they committed to raising the debt limit by another 1.5 trillion dollars. So why do republicans want to raise the debt ceiling?
▶ 3:12:27Sen. Blackburn: Because the plan is to shovel new tax cuts to billionaires, and that would increase the debt by more than one trillion dollars, just in the next four-year period. During hisfirst term', president trumps's only major legislative achievement was his 2017 tax cuts, that mostly got sucked up by millionaires, billionaires, and giant corporations.
▶ 3:12:52Sen. Blackburn: Now, most of these cuts were good for only eight years, so that republicans, who were designing them, could claim that the cost was "only" $2 trillion, eight years of cuts that added $2 trillion to the debt. Now we are talking about republicans and president-elect trump want to give the same rich people and giant corporations more years of tax cuts.
▶ 3:13:20Sen. Blackburn: And I just want to be clear that we understand each other here, but I think it was reverend or senator warnock who asked you about, is there any billionaire rich and who you would not support a tax cut for going forward?
▶ 3:13:38Mr. Bessent: I think it is unwise to single out any individual --
▶ 3:13:45Sen. Warren: Rich people?
▶ 3:13:47Mr. Bessent: Any individual.
▶ 3:13:49Sen. Warren: Ok. Is there a group of billionaires? Take a dollar figure come and there can be more than one.
▶ 3:13:56Mr. Bessent: I could give you a glib answer, but I won't. Again, that is not where the money is. At one point, when president obama was debating mitt romney, the moderator said, but sir, I would make collections go down, and he said, yeah. But it is about fairness. Senator warren, I'm about collections.
▶ 3:14:25Sen. Warren: I understand, but I like to think that fairness is about billionaires paying their fair share, too. Thank you, Mr. chairman.
▶ 3:14:34Chair Crapo: Thank you. Senator scott.
▶ 3:14:39Sen. Scott: Thank you, Mr. chairman. Mr. bessent, thank you for your willingness to serve the country. We need people who can sacrifice for a greater cause. Generations of americans you likely will never meet but will be better off because we do the right thing. One of the things I think about as the right thing, I know you grew up in a working class household and poverty is having stability in our financial system. One of the places we need the greatest amount of stability is and our banks.
▶ 3:15:10Sen. Scott: Think about silicon valley bank and other banks that have failed. As the chairman of the banking committee, I care deeply about the strength and stability of our banking system. From your vantage point, can you provide your assessment of the soundness and safety of the banking industry and what steps you believe are necessary to ensure long-term stability?
▶ 3:15:30Mr. Bessent: Senator scott, good to see you, good to have two south carolinians in the room. I think the strength of the U.S. economy, our financial markets is the depth and breadth of our financial system. I believe we have likely seen the top five banks become too big a share of banking assets.
▶ 3:15:57Mr. Bessent: We have seen because of undue regulation, the shadow banking system get larger and larger and to the detriment of community banks, small banks, and small regional banks so I think we have to take a look at both regulatory and supervisory conditions in those.
▶ 3:16:24Mr. Bessent: I think the banking system is well-capitalized, perhaps over capitalized. This comes from someone, my background is as a financial institution's analysts. I've also taught the history of financial crises so I am very attuned to the idea that financial stability is important. The pendulum tends to swing, go into overshoot.
▶ 3:16:55Mr. Bessent: From 1999 until 2008, that wasn't overshoot. Since then, the regulation, our banking system has been constrained. If we are going to have the kind of generalized main street prosperity that I would like to see over the next few years, it will be driven by communities, small banks, small regionals.
▶ 3:17:13Sen. Scott: If I had more time, another five or six minutes, that would be great. Don't think I'm getting it. We still have more time on basel 3, because your answer reflect that there is more capital on the sidelines which means less capital to loan for mortgages or starting small businesses. Where I will go is toward opportunity zones. I wrote the legislation and opportunity zones, bipartisan, only supported by republicans.
▶ 3:17:44Sen. Scott: The results of the opportunity zone has been astounding. My friends who are democrat mayors support it, celebrate it, my friends who are republican governors support it and celebrate it. The fact is that 84 billion dollars committed and invested in opportunity zones have led to real help coming into some distressed communities. It has only had less than a 5% gentrification rate which is really important.
▶ 3:18:16Sen. Scott: Before the housing question, so many folks, mayors around the country said for the first time because of opportunity zones they are seeing affordable housing in their downtown areas. We know that they have been effective without gentrification. I hope the administration will spend some time encouraging and supporting the next iteration of opportunity zones. Your thoughts?
▶ 3:18:42Mr. Bessent: Senator scott, I think they've been a resounding success. I recently read data that in terms of affordable housing, the opportunity zones have created more affordable housing within the zones than any other of the government federal government programs since opportunity zones were created. I think that it is a fantastic way to address the housing crisis.
▶ 3:19:11Mr. Bessent: I think the inner city redevelopment, we could think about opportunity zones more in rural areas. I look forward to expanding and continuing the discussion.
▶ 3:19:22Sen. Scott: My last thoughts will be a comment, not a question. As a result of the tcja, we saw the richest americans' tax burden as a percent of revenues come in go up, and we saw the poorest americans as a percent of revenue coming into the government go down.
▶ 3:19:46Sen. Scott: The easiest way to say that is to recognize that a single mother, like the one who raised me in 2017, made on average $40,000 a year. Her tax burden, tax percent went down by 71%. That is a result of good policy being good politics, and I hope that we keep our eyes on the ball of helping the average american have more of their money in their pockets.
▶ 3:20:12Chair Crapo: Thank you, senator scott. Senator whitehouse.
▶ 3:20:18Sen. Whitehouse: Thank you, Mr. chairman. Mr. bessent, thank you for the meeting we had in our office. I understand colleagues have already raise the urgency of more sanctions on russia's shadow fleet particularly as it is sabotaging our allies infrastructure in the baltic. And urge that it is unfair for chinese manufacturers to be able to under U.S. manufacturers by virtue of lower environmental standards. I just want to give two thumbs up to both of those notions.
▶ 3:20:50Sen. Whitehouse: As we talked about in my office, I think the most immediate danger of a major economic collapse is going to come through the insurance industry. We are seeing signs of it in florida already, the fire is in l.a. Are making it worse out in california, but it is a current nationwide. As we discussed, where you cannot get insurance, you cannot get mortgages.
▶ 3:21:19Sen. Whitehouse: Where you cannot get mortgages, you cannot sell property at value. And according to the chief economist of freddie mac, that turned into a 2008 style massive economic recession. I would like to ask first that you get somebody on your team to take a look at this report which I would asked to put into the record from the senate budget committee.
▶ 3:21:42Chair Crapo: Without objection, so ordered.
▶ 3:21:45Sen. Whitehouse: On the non-renewables and unavailability problem county by county across the country. If somebody him on your team looks at it and can give you a summary, I would be grateful. I would actually ask you personally to read this "economist" magazine article.
▶ 3:22:06Mr. Bessent: Senator, you gave it to me in your office and I did read it. I will point out to my children behind me, doing your homework is important.
▶ 3:22:16Sen. Whitehouse: It is important, and thank you for doing that. I think you are the first person in the nomination hearings that have done the reading that was proposed. I just think that all of us need to be alert to this problem. I think it actually started, ernest hemingway famously said bankruptcies happen gradually and then suddenly.
▶ 3:22:44Sen. Whitehouse: I think we are in gradually a climate change-driven crisis that will cascade out into the whole economy. I gave my environment public works colleagues a book in this thick, gave your team a similar book of all the many high level, serious, peer reviewed studies showing these economic risks. I just don't think that we are ready for it. I think it's important that we be ready for it. I don't want anyone to say that they were not warned about it.
▶ 3:23:15Sen. Whitehouse: So there is my warning. Last question to you, and I will be treading into an area that I don't know a thing because I just heard about it this morning. I have been the ranking member in the epw. What I did read this morning is that the manner in which you have structured your partnership has enabled you to avoid the payment of nearly $1 million in medicare taxes, and that the irs
▶ 3:23:47Sen. Whitehouse: Has taken the position that the manner in which you structured your partnership to avoid those medicare taxes does not actually support avoiding medicare taxes. It is probably more complicated of an issue than you and I are going to get through in the next one minute, 13 seconds, so we will follow up with a question for the record.
▶ 3:24:12Sen. Whitehouse: But I just think that when we are dealing with these massive issues of income inequality and threats to medicare and all of the concerns that I think actually helped propel president trump to the presidency, it would be extremely awkward if the secretary of the treasury were taking advantage of a supposedly avoidance mechanism that the irs which you oversee has determined actually doesn't produce that result.
▶ 3:24:43Sen. Whitehouse: Somehow, those things need to come into alignment. I suppose the easiest thing would be to go back and pay the medicare taxes. But again, this is way more complicated than you and I can dispose of in the next half minute. But I do think it is really important to send a message as an incoming treasury that everything you do with respect to your personal taxes aligns with irs guidance.
▶ 3:25:07Mr. Bessent: Thank you for the question. We are up on all of our taxes. This matter is not by us, but in continuing litigation.
▶ 3:25:27Mr. Bessent: If confirmed, I would agree to shutter my firm and I have also informed the ranking member and the chairman that I will provision the amount that is lower than the amount stated in the press release that went out last night, and I will hold that until the case makes its way through the courts.
▶ 3:25:53Sen. Whitehouse: That seems like an attentive response to the problem. I am glad that you respected this as actually a problem that needs to be attended to, so thank you.
▶ 3:26:04Chair Crapo: Senator wyden has asked if he could have one last question. You get the last one.
▶ 3:26:10Sen. Wyden: Thank you, Mr. chairman. I gather after this, I suppose that you and I will have some closers. I will be short on that, as well. Mr. bessent, I want to ask about the double standard with respect to tax enforcement in america.
▶ 3:26:31Sen. Wyden: The working person, a firefighter, nurse, somebody who works for a wage, pays taxes with every single paycheck and the government gets that information. And to a great extent, the ultra-wealthy can have a very different system. They can bring in this whole battery of accountants, lawyers and the like and say, you know, make sure that I don't have a lot of income this year.
▶ 3:27:02Sen. Wyden: Then they don't have the same reporting system. What I have always felt is that, ensuring that the government, irs can do tax enforcement to prevent wealthy tax cheating is absolutely crucial to limiting this double standard with respect to enforcement.
▶ 3:27:27Sen. Wyden: We have all this information from people working for a wage, you are trying to figure out what is going on with lots of wealthy people, because to me, the scam is and what is legal. I want it understood. I'm talking about people using their accountants and lawyers as a battery of people. My question to you is, do you believe it makes sense for the congress to give the irs the resources to collect taxes from people who may be cheating?
▶ 3:27:59Sen. Wyden: And we don't even know because it is so hard to run down all this information. Do you believe it's important for the congress to fund the irs for that kind of enforcement?
▶ 3:28:08Mr. Bessent: Senator wyden, I believe that collections are very important. I believe that the irs and, again, I have not been confirmed, I've had no meetings. This is all external. I believe that a large amount of it can be solved by data processing. We are on the verge of an ai revolution.
▶ 3:28:35Mr. Bessent: I would hope that the ai revolution, much as it has in medical technology, it is pattern recognition, and my understanding now is that the agency runs on 12 different systems, on cobalt, the programming language when I went to yale in 1980.
▶ 3:29:02Mr. Bessent: So I am 100% in favor of that, updating those systems.
▶ 3:29:06Sen. Whitehouse: You talked --
▶ 3:29:09Sen. Wyden: You talked to me in my office and I appreciated the comments. It is still resources. It will be computers perhaps, not people, but I showed up in the united states senate when only one person, pat leahy, knew how to use the computer. We have seen these dramatic developments. I think you are right, ai will shape the debate, but it still leaves the question, we are going to need resources.
▶ 3:29:41Sen. Wyden: Again, what you have seen because we don't have the resources because of the wealthy tax cheats, people use their earned income tax credit or something, they are the ones that get the audits and the like. I want to see in this position somebody to make a commitment to make sure we have the resources to go after the wealthy tax cheats that have this unique kind of system.
▶ 3:30:04Sen. Wyden: I would acknowledge your point that certainly it will be a challenge for the years ahead with respect to ai and other technologies but we are still going to need resources. Do you support that?
▶ 3:30:14Mr. Bessent: If confirmed, I will come back to you with a plan for upping collections.
▶ 3:30:21Sen. Wyden: On wealthy tax cheats.
▶ 3:30:25Mr. Bessent: You seem to believe that the wealthy cheat more. I think across the entire income . You are saying that the wealthy cachet cache.
▶ 3:30:42Mr. Bessent: If there is some large mother load there, then to figure out how to crack that, whether through ai or some other means, that I will commit to coming back to you.
▶ 3:30:57Sen. Wyden: Let me tell you why it is so important. Former irs commissioner reddick, alongside president trump last ira commissioner testified here that the irs needed additional multi-year funding because it was "outgunned" when it came to auditing wealthy individuals and large corporations.
▶ 3:31:20Sen. Wyden: The view that I have stated today is not just one that I offer but a former trump appointee said specifically that the agency was outgunned with respect to resources. You have indicated that you will continue the discussion. It's an important one.
▶ 3:31:36Chair Crapo: Thank you. Why don't you go ahead with any closing remarks that you would like to make right now.
▶ 3:31:41Sen. Wyden: I will spare everybody and especially the nominee a filibuster. It's been a long morning. Mr. bessent, we started off with your confirming that you will protect taxpayers ability to file their taxes for free directly with the irs.
▶ 3:31:59Sen. Wyden: I think that is constructive because I think when it works for a second straight year, we are going to begin to join the rest of the western industrialized world and making sure that our people have a chance to have a system that works for them, that empowers them if they choose it. With respect to some other issues, I'm concerned about a number of other matters. We may need to have some additional conversations about it.
▶ 3:32:27Sen. Wyden: What concerned me was your response to my question about wealth rather than work with respect to being favored in the tax code. I think today that is a reality. It is just plain fact. The people I represent know it, because they pay taxes with all of their paychecks, they are paying a higher rate than people who, as I have indicated today, have good lawyers and good accountants.
▶ 3:32:59Sen. Wyden: I continue to be very troubled by that. Some of the past reforms have tried to minimize those differences between tax rates for wealthy people and tax rates for workers. I remain concerned about that. With respect to some of the other issues, I leave you with the proposition that I haven't really heard you touch on, and it is the proposition that bill bradley and I have believed in through these many years.
▶ 3:33:29Sen. Wyden: We want a tax code that gives everybody in america a chance to get ahead. With differences like the one I asked about, the differences between the rates of the wealthy and for workers, there is a long way to go to get it solved. Look forward to continuing conversations with you. Thank you, Mr. chairman.
▶ 3:33:47Chair Crapo: Thank you, senator wyden. Mr. bessent, we are toward the very end. I will be brief myself. I want to end where we started out. I think it is clear that you have acted in you're dealing with the vetting of this committee in a very, very straightforward, courteous, and honorable way.
▶ 3:34:14Chair Crapo: When it comes to your qualifications to be the next secretary of the treasury, there is no room for debate. You have shown that today. Your background, your training, everything is tailor-made for this role. And your character and demeanor are self-evident. You have satisfied our due diligence process.
▶ 3:34:33Chair Crapo: In prior congresses, I'm joined with many of my republican colleagues in voting for well-qualified treasury secretary candidates put forward by a democratic president, even though I didn't agree with all the position that they advocated. Your candidacy ought to enjoy similar support and I'm going to encourage my colleagues on both sides of the aisle to join with me in advancing your nomination.
▶ 3:34:58Chair Crapo: I appreciate your taking the time that you have taken to work with us over the past few weeks to get this process to this point. And with that, I would like to remind my colleagues that the deadline for submitting any questions for the record is 5:00 p.m. Today. With that, anything else? This hearing stands adjourned.
▶ 3:35:33Chair Crapo: [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]