Scott Bessent Grilled On Tariffs, Trump Tax Plan In House Appropriations Committee

yesterday

Treasury Secretary Scott Bessent testifies before the House Appropriations Subcommittee on Financial Services and General Government.

Transcript

00:00:00of the United States Department of Treasury. Members will have five legislative days within

00:00:04which to revise and extend their marks and insert extraneous material into the record.

00:00:09I would note we have a hard stop today at 1130. I now recognize myself for an opening statement.

00:00:15I would like to thank Secretary Bessent for being here today and for his leadership in his steady

00:00:19hand over the last several months. We are living in an increasingly complex world with no shortage

00:00:25of issues. Whether it be taxes or tariffs, right-sizing regulation, or creating a regulatory

00:00:30framework for digital assets, the Department of Treasury's role is fundamental to their resolution.

00:00:36If we think about it, this is why the Department of Treasury was created. The Department is central

00:00:40to maintaining a strong economy, creating jobs, and promoting economic growth both here and abroad.

00:00:46It was created to bolster our national security and to assure our economic stability, and it continues

00:00:51to thwart terrorists and criminals and protect the financial system from illicit activity

00:00:55every day. Fulfilling these responsibilities is no easy task. As the Department's fiscal year

00:01:002025 spending plan reveals, it takes significant resources. It starts with a strong workforce,

00:01:06the most updated technology, and the appropriate working conditions, including buildings that are

00:01:11sufficiently maintained. But this doesn't happen in a vacuum. This also takes cooperation, transparency,

00:01:17and accountability. As this committee looks to fund the Department's future operations,

00:01:21we need to understand the priorities and how the Department is deploying resources across its

00:01:26divisions and bureaus and why. There are definitely efficiencies to be identified, but changes need

00:01:33to be thoughtful and deliberate to ensure the Department's mission is still accomplished.

00:01:37We need to ensure our financial system, the economy, and leadership around the world is safe,

00:01:41secure, and thriving. Secretary Busset, there are and will be challenging times ahead, but I believe you

00:01:47are the right person at the right time to overcome those challenges. I look forward to working with

00:01:52you, and I now recognize the ranking member for his opening statement.

00:01:57Thank you very much, Mr. Chairman, and welcome, Mr. Secretary. This is our first substantive hearing

00:02:02dealing with the devastating actions that the Trump administration has taken in the first three

00:02:06months of 2025, actions planned and predicted by Project 2025. I look forward to having more such

00:02:14hearings with other agencies under our jurisdiction, especially the principles of DOGE, OMB, GSA, and OPM,

00:02:21which are having such profoundly negative impact on our country. What we've seen in the first

00:02:26hundred days of this administration is unprecedented, and so the polls tell us, disturbing to the American

00:02:33people. An irresponsible, incoherent terror policy has plunged the Americans and global economies into

00:02:39chaos. These past three months, the American economy shrank for the first time since the final days of

00:02:45the pandemic. The stock market fell more in the first 100 days of the Trump administration than in the

00:02:50first 100 days of any presidency in the past half century. Consumer confidence is at lowest since May of

00:02:572020, the height of COVID-19. That uncertainty has also rattled the bond market, with investors

00:03:04dangerously starting to doubt the full faith and credit of the United States. Most importantly,

00:03:09Americans are hurting. Families see their costs going up. Retirees watch their life savings losing

00:03:14value. Small business owners and farmers risk going under as they struggle to navigate ever-changing

00:03:20tariffs. Our economy is in chaos, and so I think is our government. Donald Trump, Russell Vogt,

00:03:27and Elon Musk are orchestrating an illegal purge of our federal employees. They clearly had a lot of

00:03:33ideas on how to remove these people and dismantle these programs as quickly as possible. Sadly,

00:03:40they had no clue, in my view, as to the devastating consequences of their actions on our country,

00:03:46our government, our allies, and the professionals we rely on to serve the American people.

00:03:51I am particularly concerned about the Internal Revenue Service, which has been severely understaffed

00:03:58and underfunded for decades. So far, the Trump administration has forced the IRS to cut as many

00:04:04as 11,443 employees, or over 11 percent of its staff. That includes 6,700 workers who were fired at the height of

00:04:13this most recent tax session. Now the administration is planning to reduce the IRS workforce, I understand,

00:04:20by another 40,000 jobs or 40 percent. That includes up to half of the IRS enforcement staff. Additionally,

00:04:30Trump's 2026 budget cuts funding for the IRS by 20 percent. These actions at IRS, in my view, and every other

00:04:39government office have bludgeoned morale, destroyed efficiency, and increased waste. Cutting back on

00:04:46IRS enforcement makes it easier for the wealthiest individuals and corporations to cheat on their taxes

00:04:52and get out of paying what they owe. That, of course, increases what others pay and explodes the deficit.

00:05:00As the President and Congressional Republicans undermine the ability to enforce our existing tax code,

00:05:06they are also pursuing net massive tax cuts for the wealthiest among us. Furthermore,

00:05:12Doge operatives are rifling through IRS databases that contain Americans' sensitive information,

00:05:19including their financial history, Social Security numbers, immigration status, and more. The story

00:05:26is the same across the federal government. Americans are reeling from this uncertainty in their economy

00:05:33and in their government. They need answers. More than that, they need an adult in the room.

00:05:41That is the role I hope the Treasury Department plays, and Mr. Secretary in particular yourself.

00:05:48The economy and markets do not lie. We all depend on the Treasury Secretary to communicate clearly

00:05:55and transparently to the President, the Congress, the American people, and indeed the world.

00:06:00I've mentioned tariffs and the IRS, but I'm also eager to hear, Mr. Secretary, from you about our

00:06:08economic approach to the Russian-Ukraine war, especially in light of last week's mineral deal and

00:06:14recent questions about our sanctions regime on Russia. Former Secretary Mnuchin, whom I believe you know,

00:06:21sir, and I disagreed on some things, but we still found ways to work in a bipartisan fashion to inspire

00:06:31competence in the economy. Mr. Secretary, I look forward to doing the same with you. Thank you, Mr. Chairman.

00:06:40Thank you, Mr. Hoyer. Today, we welcome the testimony of the Honorable Scott Bessent, Secretary of the United States Department of Treasury.

00:06:47Secretary, without objection, your written testimony will be entered into the record.

00:06:51That in mind, we ask you to please summarize your opening statement in five minutes.

00:06:57Good. Thank you, Mr. Chairman, Congressman Hoyer, Ranking Member, Chairman Joyce, Ranking Member Hoyer,

00:07:06and members of the subcommittee. I'm grateful to join you today. Treasury is eager to work with members of Congress

00:07:14to fund key priorities to strengthen our economy, and we look forward to coordinating with you on the

00:07:19President's budget as soon as it is released. Today, I wish to highlight the Department's efforts to boost

00:07:25U.S. economic growth, improve government efficiency, and target illicit actors that threaten our national

00:07:32security. The core components of the Trump economic agenda are trade, tax cuts, and deregulation. These are

00:07:40not standalone policies. They are interlocking parts of an engine designed to drive economic growth and

00:07:47domestic manufacturing. Tax cuts and cost savings from deregulation raise real incomes for families

00:07:53and businesses. Tariffs create an incentive for reshoring jobs and fair trade, and deregulation

00:08:00complements tariffs by making it easier to invest in energy and manufacturing projects. Already, this agenda is

00:08:07bearing fruit. In the first 100 days of the new administration, 464,000 new jobs were added to the

00:08:15economy. In April alone, over 177,000 American jobs were added, more than 40,000 more than economists

00:08:24predicted. All the while, unemployment remains low while real hourly wages continue to grow. As important as

00:08:33spurring job growth is wrangling inflation, and in this endeavor, the administration continues to make

00:08:40tangible progress. The CPI for energy goods declined in March, as did the price index for core goods,

00:08:48and the CPI for all items declined for the first time since the COVID pandemic. While the cost of goods is

00:08:55decreasing, so are energy prices. Complementary to our efforts to grow American prosperity,

00:09:01we are focused on improving efficiency across all levels of government, but especially the IRS.

00:09:08We just concluded a successful tax filing season, but the IRS still needs significant reforms to

00:09:14deliver efficient and cost-friendly results for the American people. In this endeavor, we have

00:09:20successfully cut $2 billion from the IRS IT budget without any operational disruptions. We achieved these

00:09:28cost savings by eliminating, renegotiating, and de-scoping wasteful IT and professional services

00:09:35contracts and addressing longstanding inefficiencies such as auto-renewed licenses unused for years.

00:09:43This intervention alone will save taxpayers hundreds of millions of dollars each year.

00:09:49We are also taking steps at the IRS to reduce administrative costs with a particular focus on paper

00:09:55processing, which has been a long-standing bipartisan goal. Last year, the IRS spent approximately $450

00:10:02million on paper processing, with nearly 6,500 full-time staff dedicated to the task. Through policy changes

00:10:10and automation, Treasury aims to reduce this expense to under $20 million by the end of President Trump's

00:10:17second term. In addition to making government more efficient, Treasury is committed to working alongside the

00:10:23White House to make America safe again. To that end, we have launched a maximum pressure campaign

00:10:30against violent cartels and terrorist networks. We have assessed tens of millions of dollars in civil

00:10:36penalties against organizations facilitating money laundering along the southern border, and by leveraging

00:10:43sanctions, we are choking off the financial lifelines of terrorists, criminals, and hackers from Mexico and

00:10:50Guatemala to China and Iran. In the first 100 days of the new administration, we have set the table for

00:10:57a robust economy that allows Main Street to grow. With Congress and the White House working hand-in-hand,

00:11:03we expect to see even more positive results over the next few months. Key to expanding economic

00:11:08opportunity for all Americans is making the Trump tax cuts permanent. We look forward to working closely with

00:11:15the members of this committee to pass this bill into law. Together, we can build a stronger,

00:11:21safer, and more prosperous America. Thank you. Thank you, Mr. Secretary. I now recognize myself for

00:11:29the first questions. Secretary, let's fast forward over here. Where do you see the U.S. with respect to

00:11:35tariffs and the overarching strategy? Do you anticipate all trade deals being bilateral, or could there be

00:11:41multi-country trade pacts of which groups of countries agree to a tariff schedule? Mr. Chairman,

00:11:51this will be path dependent on our trade partners. As I've said before, there are 18 very important trading

00:11:59relationships. We are currently negotiating with 17 of those trading partners. China, we have not engaged in

00:12:09negotiations with as of yet. So I expect that we can see a substantial reduction in the tariffs that we are

00:12:19being charged, as well as non-tariff barriers, currency manipulation, and the subsidies of both labor and

00:12:31capital investment. So that is proceeding very well. Many of our trading partners have

00:12:39approached us with very good offers, and we are in the process of renegotiating those. With the economy,

00:12:47you know, I would say that this is a three-legged stool, trade, tax, and deregulation. Trade was first.

00:12:55The House, according to Speaker Johnson, expects to move their portion of the bill over to the Senate

00:13:07on or about Memorial Day. So we're looking forward to that. And then deregulation necessarily takes

00:13:15longer to affect the economy, but I would expect in the third and fourth quarters, we would see

00:13:21substantial benefits from deregulation that by this time last year could be in full force.

00:13:29We've seen a few numbers discussed in terms of how many countries with whom you have started tariff

00:13:33negotiations. What is the actual number? What is the status of those negotiations? How many deals do

00:13:38you anticipate by the end of the year in the first quarter of 2026 or the second quarter? And what are

00:13:44the biggest challenges you see to negotiating tariffs and getting trade deals done?

00:13:51Again, sir, approximately 97 or 98 percent of our trade deficit is with 15 countries. 18 percent of the

00:14:00countries are our major trading partners, and I would be surprised that if we don't have more than 80

00:14:08or 90 percent of those wrapped up by the end of the year. And that may be much sooner. I would think

00:14:17that perhaps as early as this week, we will be announcing trade deals with some of our largest trading

00:14:25partners. They have come to us with very good offers. And, you know, what I will tell you is that in

00:14:33negotiating with some of them, they may not like the tariff wall that President Trump has put up, but they have

00:14:40them. So if tariffs are so bad, why do they like them? And then more insidious, we can see that from a

00:14:47practical matter and from academic research, are the non-tariff barriers. If you were to look prior to

00:14:55the escalation, I believe Chinese tariffs are only five percent. So clearly there's something else

00:15:01going on if they're accumulating these gigantic surpluses. The President released his skinny budget

00:15:07for the year, school year 2026 on Friday. Budget calls for approximately two and a half billion dollar

00:15:13cut to the IRS. As you know, Congress has been pulling back money from the IRS over the last several

00:15:18years, somewhere in the range of about 41.7 billion. Some may ask, what's left to cut from the IRS?

00:15:24What would you talk about your vision for the IRS and why streamlining operations will benefit

00:15:28taxpayers and not hurt them? Well, Mr. Chairman, the IRS is 30 years

00:15:36behind, 30 years behind on an IT modernization project where perhaps up to 50 billion dollars of

00:15:45taxpayer money has been wasted. We are right sizing that. So the substantial decrease in the IRS

00:15:54budget is largely in IT. We have had a large number of employees take the option for early retirement

00:16:06or for retirement. And again, let's look at the numbers. We are just taking the IRS back to where it was

00:16:15before the IRA bill substantially bloated the personnel and the infrastructure.

00:16:23Thank you. And now I recognize Ranking Member Hoyer for any questions he may have.

00:16:29Mr. Chairman, let me ask you a broader question, Mr. Secretary. The President has been talking about

00:16:38recession and the acceptance of a recession in the short term. Do you believe we're in a recession now?

00:16:49Congressman, I believe in data and there is nothing in the data that shows that we are

00:16:54in a recession. As a matter of fact, the jobs report has surprised to the upside.

00:16:59The job report, of course, less than the average for the Biden administration last in 2024.

00:17:12But the GDP

00:17:16went down this first quarter of the Trump administration.

00:17:20So I, having looked at a detailed analysis, would believe that the first quarter GDP would be

00:17:50revised upward. And, you know, I would also, with regards to your remark about where we were

00:17:56last year. Last year, we were spending 6.7 percent. We had a 6.7 percent fiscal deficit, the largest we've

00:18:06ever had during peacetime or non-recessionary times. So the easy thing to do would be to keep spending,

00:18:15to keep the economy running on an unsustainable path of government spending.

00:18:19Let me remark, because you mentioned this, I think, in our meeting. We had a spending problem,

00:18:33not a revenue problem. I want to talk about the revenue problem. Let me suggest to you my view is

00:18:38it's neither a revenue nor a spending problem. It's a pay-for problem. If we would pay for what we buy,

00:18:44whether it's defense or non-defense, we wouldn't increase the deficit. So I think looking at,

00:18:50I'm a big proponent of paying as you go. Unfortunately, we haven't pursued that on either

00:18:55side of the aisle, maybe for different objectives. Let me go to IRS.

00:19:00You probably know these figures, and these are somewhat old at this point in time. But what they

00:19:10reflect, as you will see, is a substantial decrease in the resources of the IRS, particularly in

00:19:18enforcement. As the blue representing an increase in filings, the orange representing the nominal,

00:19:31and the dotted line, the net actual value of the funding for IRS, particularly in enforcement.

00:19:45The budget proposes substantial cuts. Have you or anybody done an analysis of the ramifications

00:19:54of those cuts, both in the short term and in the long term, in terms of your ability to collect

00:19:59revenue? Let me paraphrase, not paraphrase, but give a, in your discussions, you said you were not going

00:20:09to sabotage, that we had in my office, sabotage collections. Are you confident in light of the fact

00:20:19that any IT, and I agree with you, we've wasted a lot of money on IT, that any IT will be accomplished

00:20:27within the next 36 to 48 months, and therefore justify a reduction in personnel?

00:20:37Congressman, let me work backwards there. So I am confident that we will make substantial progress

00:20:46progress in the IT and right-size the payments, the payment system, the collection system. As I've

00:20:55repeatedly said, my priorities are collections, privacy, and customer service. And, you know, again,

00:21:04the, the substantial increase in the enforcement group, there is nothing that shows historically

00:21:13that by bringing in unseasoned the collections agents that, that the results in more collections or

00:21:21high-end collections. It would be like sending in a junior high school student to try to do a college

00:21:28level class. That the, uh, becoming a high-end IRS collections agent, uh, is something that one grows

00:21:39into. So I believe through smarter IT, through this AI boom, that we can use that, uh, to, uh, enhance

00:21:51collections. And, you know, I, I would expect that collections would can continue to be very robust

00:21:58as they were this year. Chair now recognizes the gentleman from Arkansas, Mr. Womack for any questions.

00:22:03Thank you, Mr. Chairman. Um, and thank you, Mr. Secretary, for your service and for being here

00:22:09today, uh, in front of my colleagues. Uh, I'm going to ask a question that I'm sure you've never been

00:22:14asked before, but I'll give it a, a try here. When is X date? Congressman, we are, as I said earlier,

00:22:27we still take in a large amount of the paper returns. So every, every Friday I, I get a summary.

00:22:35And if you can believe it, as you know, uh, tax day was April 15th. We are still tallying that,

00:22:41uh, so that we don't have, we will share with Congress when we believe we are approximating that

00:22:52date. Uh, so that, that will be forthcoming. But I will tell you, uh, just as an outfielder

00:23:01running for a fly ball, uh, we are on the warning track. And when you're on the warning track,

00:23:09it means the wall is not far away. So it's not today, uh, may not be next week, but it is

00:23:18fast approaching. And, uh, and of course, uh, the United States government will never default.

00:23:26That we will raise the debt ceiling and treasury will not use the, uh, any gimmicks. Uh, we will make

00:23:35sure that the debt ceiling is raised. You, um, have already answered a couple of questions about

00:23:42the president's budget and, and I'm going to ask, uh, maybe a little differently.

00:23:48Um, the president's budget request for fiscal 26 looks very different from president Biden's

00:23:55budget just last year. And I have been a long time proponent of getting our fiscal house in order.

00:24:02And I applaud the president's attempt, uh, to get our fiscal house in order.

00:24:07Uh, during my tenure as chairman of the house budget committee, many years ago,

00:24:12I co-chaired the joint select committee on budget and appropriations process reform.

00:24:17And many of our recommendations are included in Trump's request.

00:24:21It's no secret. We're heading toward big and needed change within the federal bureaucracy.

00:24:27That said, his budget request for the treasury is 11 and a half billion,

00:24:32uh, compared to FY 25 enacted at 14.2. Now that's a 19% decrease. You've already mentioned that we have

00:24:42savings achieved in, uh, contracts regarding, uh, IT services and this sort of thing. And we've saved

00:24:51the American public lot, but you've also said that IT remains one of our biggest challenges, particularly

00:24:57within the IRS. Uh, so how is it that you're going to operate with a smaller budget that still serves

00:25:04the needs of the American people? Uh, sir, part of that has been bringing people back to the office.

00:25:12So on March 10th, the, we reinstituted a work from your, your office program. And again,

00:25:21I think it's going to be efficiency. Uh, we, uh, have raised, we have asked for more money for

00:25:29many of the priorities, uh, the treasury, uh, foreign intelligence network and the office of foreign

00:25:37asset control, OFAC. So we will be keeping the American people safer. And again, uh, we think

00:25:44through efficiency gains, uh, the, the federal government historically does not have productivity

00:25:51increases. And as I've continually pointed out, uh, DOGE is the office of government efficiency,

00:25:58not the office of government extinction, the, or eradication. So, uh, I think that it is

00:26:06not a big leap to do much more with less. Are there two and a half billion dollars worth of

00:26:15efficiencies? Well, uh, again, uh, just two, uh, two of it is in the IT department. And if you were to

00:26:22look, uh, treasury processes about 1.5 billion payments per year, which is like a midsize U.S.

00:26:31regional bank. We have had many of these banks come in and talk to us about their payment programs.

00:26:38And their departments are one 10th the size and one 10th the budget. So allowing for the redundancies

00:26:46that we would need as a government agency, uh, then, you know, we think that we do need to be

00:26:51bigger and more fulsome, but there are substantial savings to be had. I want to ask one more quick

00:26:58question because I know we're not, we're probably not going to have a second round. You have been a

00:27:01proponent for better financial literacy in this country and, and your background is, uh, you know,

00:27:09is evidence of that. Quickly, um, can we do a better job in this country of educating young people

00:27:16on matters of financial literacy? Uh, any, any increase that we do would be a, a better job,

00:27:23but we just hosted financial literacy month, the, uh, at the treasury. Uh, I only had two months to get ready

00:27:31for it. I, I can tell you that every April we're going to do more and more, but the key to financial

00:27:38independence is financial literacy, making good choices and not, you know, I don't think it comes

00:27:44from more regulation. I think it comes from more financial education. Thank you very much.

00:27:48The chair now recognizes the gentleman from Wisconsin, Mr. Pocan, for five minutes.

00:27:52Thank you, Mr. Chairman. And thank you, Mr. Secretary, for being with us. Um,

00:27:56my main concern is I think what's, uh, what people are looking at the economy, you know,

00:28:01first the first hundred days, low stock market since Richard Nixon, not usually a measure people

00:28:06are shooting for, um, on tariffs, the fact that last year, uh, we had an effective rate about two

00:28:11and a half percent. I think the Yale budget lab, and I believe you went to Yale, uh, has said that

00:28:15effective rate is closer to 28%, the highest since 1901. I know that some of that's changed because the

00:28:21tariffs are on again, off again, some on again, some off again, uh, somewhat chaotic. I believe

00:28:27is your term is what crazy Ivan, uh, style. Um, I, I compare them to how a monkey throws dung. Uh,

00:28:34you're not exactly sure where they're going to land. Um, and that's the concern I have as a small

00:28:39business owner. And I know Ms. Lusenkamp Perez is as well. You know, I've got small businesses really

00:28:45worried. Um, you made a comment about, uh, while cargo volumes have dropped 60%, you see this as a

00:28:52temporary detox, but for a small business that's getting by day to day, uh, that's much bigger.

00:28:58You talked about main street. Um, we want to finally focus on main street, not wall street.

00:29:03Uh, I think you were at a global investor conference in Beverly Hills yesterday. That's

00:29:07the cocktail party where you mentioned the crazy Ivan theory. Um, and before that you were at a JP

00:29:13Morgan Chase, a world bank investor, private investor summit, all those things are not main

00:29:18street, right? Main street is, uh, an auto body repair, a specialty printer. So my concern is

00:29:24on the tariffs. Who pays tariffs, Mr. Secretary?

00:29:32No, no, no. Ask the answer. The questions I asked, please. I only have five minutes. Who pays tariffs?

00:29:37Sorry. Well, who pays tariffs? Sorry, Mr. Secretary, please. Excuse me.

00:29:40The question is very simply who pays tariffs, Mr. Chairman. I'd like him to answer that question.

00:29:45Uh, well. He wants to answer other questions. Well, Congressman, if the,

00:29:50Congressman, if the exporters, they, uh, dislike tariffs so much, they, uh, why wouldn't they,

00:30:00if I think what you're trying to get me to say. Did you remember the question? I'm not sure you did.

00:30:03Who pays tariffs? That they, uh, it's a very complicated question. Reclaiming my time.

00:30:09People pay tariffs, right? I'm reclaiming my time, Mr. Secretary. Reclaiming my time,

00:30:15Mr. Secretary. Reclaiming my time. You clearly aren't going to answer. I'm not going to waste my

00:30:20time having you go, uh, uh, uh, uh. Mr. Secretary, Mr. Chairman, I asked reclaiming my time.

00:30:27Mr. Chairman.

00:30:31And I asked to reclaim my time. Did I not?

00:30:33No, I said reclaiming my time because he's clearly not answering it. So.

00:30:41Yeah. So as a small business owner, and unfortunately I'd like that time back since you

00:30:45failed to recognize me for 30 seconds. So I just recently from a, one of my suppliers got the

00:30:51tariff surcharge on things. And in addition to the tariff surcharge, guess what else got raised?

00:30:55American made walnut plaques. That has nothing to do with tariffs, but companies take advantage and do

00:31:01that. So right now we are getting screwed right and left because of the indiscriminate use of

00:31:07tariffs. That's the reality for Main Street. And you go off to Beverly Hills for private investor

00:31:12conferences and talk about crazy Ivan theories. Answer that. What is the crazy Ivan theory of tariffs

00:31:19that you mentioned at the, the, the summit? Uh, well, first of all, sir, I, I've had meetings with

00:31:24more than 50 small lenders. So the, uh, I, I want to clarify that. I would also say that in game theory,

00:31:33strategic uncertainty of which the, uh, you seem to like the name crazy Ivan. Well, it's your words,

00:31:39correct? Didn't you use crazy Ivan at the, well, you've used it five times. And that's the question.

00:31:46I am saying the strategic uncertainty is part of negotiations that should we say, oh, here's what we'll

00:31:52accept. Please take this. Okay. I've got your answer. Thank you. I'm going to reclaim my time

00:31:56again. So for a small business, we don't have that luxury, right? When the ports are empty in

00:32:01California, uh, and we can't get goods and people are stocking up for Christmas goods. Crazy Ivan is

00:32:07great for, please don't take this offense, really rich people like you. But for people like me, it's not

00:32:13right. That's what makes small businesses fail. That's what makes people lose their jobs.

00:32:18That's what makes the stock market tank. So I'll ask one more time, who pays tariffs?

00:32:25Sir, the history would show that it is a complicated mix of who pays the tariffs over various times.

00:32:31So that's exactly the problem. If your answer, and you are a very educated person,

00:32:35you have a very impressive bio, cannot answer the question who pays tariffs because you won't answer

00:32:40that. And you say it's a complicated issue. It's not complicated. Consumers pay Trump's tariff tax.

00:32:47That's the reality. And, uh, I'll yield back, Mr. Chairman. But I do think next time,

00:32:51if I asked to yield back, I would appreciate being having my time yelled back.

00:32:55Chair now recognizes the gentle lady from Iowa, Ms. Henson.

00:32:58Thank you, Mr. Chairman. Um, good morning, Mr. Secretary. Thank you so much for taking the

00:33:02time to come and answer our questions. Um, I appreciate what the Trump administration

00:33:06is doing to try to level the playing field for American consumers, um, and restore our economy

00:33:11to where it needs to be. So I really appreciate the work that you were doing to make that happen,

00:33:14Mr. Secretary. And I certainly, as an appropriator, recognize the importance of making sure that

00:33:19every tax dollar is spent appropriately. And I appreciate your opening comments as such. So with

00:33:24that, um, the GAO estimates the federal government loses between 233 and 521 billion dollars annually to

00:33:32fraud. Those are, um, alarming numbers. Hard wasted, hard-earned tax dollars just wasted. Uh, President

00:33:38Trump has certainly acknowledged the absurdity of this level of waste. And he signed Executive Order

00:33:4314249 to protect America's bank account against waste fraud and abuse. And I was proud to support

00:33:50this effort by introducing a piece of legislation to codify that, the Protecting American Taxpayers

00:33:55from Wasteful Spending Act. One of the provisions of this EO is directed at your department, um, the

00:34:00Department of Treasury, to establish pre-certification and pre-award procedures across the federal government to

00:34:06prevent fraud and improper payments. So can you define for the committee today what an improper

00:34:11payment is and some examples, uh, of what you're seeing and why these procedures were not already

00:34:16in place before, Mr. Secretary? Uh, well, it's, it's, it's a bit mystifying why they weren't in place. And,

00:34:23uh, what we are seeing is that there was a very complacent upper level of management in many

00:34:32departments across the entire, the, uh, across the entire government. You know, what I can say

00:34:39at Treasury that of the 1.5 billion payments we, the, we, uh, send out every year, they're required

00:34:48to have something called a TAS, the, uh, a Treasury account symbol. We discovered that more than one

00:34:55third, one third of those payments did not have a TAS number. So as the Appropriations Committee,

00:35:02you should be shocked by that because how can a payment be tracked back to an appropriation?

00:35:08Only through the TAS number. So there was no accountability. So that is why the 450 organizations

00:35:15that sit above Treasury, where Treasury acts as the paymaster, are unable to pass an audit. So, uh, we have

00:35:23the crackdown on that. Every payment now requires a TAS number. Very simple. And I will tell you that the

00:35:30mid-level employees who I have had come into Treasury to talk to me about that feel liberated.

00:35:37That they have, you know, they tell me, I've been here 20 years. I've always wanted to do this. I've been

00:35:43here 14 years. And they feel as though they now have agency and are making a difference towards saving

00:35:50the American taxpayer money. So this is not only, um, uh, a complacency issue that you've fixed, but it's a morale

00:35:56issue for these employees who are helping to make the department much more efficient for taxpayers.

00:36:01Uh, they're very energized by their participation. Yeah. It's certainly unbelievable, um, when you think

00:36:07about that this was not in place. And, um, certainly it's, um, we've got lots of examples from the, the

00:36:12previous administration of some of those catastrophic failures. Um, who would you say is benefiting from those

00:36:18improper payments and how could a government agency really justify standing idly by while those errors

00:36:24were seeping into our system and making our government less efficient? Uh, I, I can't speak to

00:36:29who was benefiting, but I can just speak to the attitude that has been shaken up that this is okay.

00:36:37This is not okay. And this is taxpayer money and we are charged with protecting it. What other, uh,

00:36:45plans are in place to help, uh, implement that executive order? You've talked about the,

00:36:49the treasury account symbol. Are there other things in that executive order that you are executing on

00:36:53today? Uh, well, I, again, uh, the president, as you mentioned, has passed. We are trying to, uh, go more

00:37:00paperless with the checks, uh, with the very important checks that the, uh, citizens across the U.S. receive,

00:37:09whether it's social security, veterans benefits, tax refunds. There is substantial number of those

00:37:15are stolen. So president has issued an executive order to try to make that more electronic that will

00:37:24protect the integrity of those payments as well as cut down on costs. Have you been able to claw back

00:37:31any improper payments for the taxpayer? Reclaim those dollars? Uh, yes, we've, we've called back tens of

00:37:36millions of dollars. Tens of millions. We'll look forward to continuing to work with you to improve

00:37:40those efficiencies and execute on that, uh, executive order. Appreciate the work you're doing at

00:37:44Treasury, Mr. Secretary. Thank you. Thank you. Thank you, Ms. Hinson. Chair now recognizes the lady from,

00:37:49gentle lady from Washington, Mrs. Glusenkamp-Perez. Thank you, Chair. Uh, and thank you, uh, Secretary

00:37:56of Business for being here. Um, so I ran an auto repair shop before coming here, and I know that people who are

00:38:04turning wrenches, uh, who are filing an earned income tax credit or tax return, they're, you know,

00:38:10they're, they're about four times more likely to be audited. And I'm wondering if you could talk to me

00:38:15about what the plan is for ensuring that regardless of what, uh, you know, income strata you're in,

00:38:22your probability of being audited is equitable.

00:38:28Well, the Congresswoman, I think that was one of the problems with increasing the enforcement. There,

00:38:33there was nothing to say that there would have been more enforcement at any distributional level.

00:38:40So that what you were saying is that the, those receiving the earned income tax credit are more

00:38:47likely to be, uh, be audited. That would have just meant more auditing. Uh, there was also a proposal to

00:38:55track small payments, $600 on Venmo and things like that, the, uh, which has been pushed back also.

00:39:04But what is the forward program to ensure that there is an equitable, not, I'm not just, I'm not,

00:39:08um, I mean, I have some quant quarrels with what you said, but what is the pro, the, the plan,

00:39:13the implementation plan to ensure moving forward, we are getting towards a more equitable enforcement

00:39:18rate. Uh, we, we are reviewing the, the processes for who is audited at the IRS. There's been a great deal

00:39:27of politicization of that. So we are trying to stop that. And we are also going to look at the

00:39:33distribution of who is audited and why they are audited. Um, look forward to hearing more about how

00:39:40that is being implemented and how we can help you with that. Um, so I think you and I agree that

00:39:46the current trading system has failed working people, people who are turning wrenches, driving

00:39:50trucks, changing diapers. Um, could you, could you expand on how the proposed tariffs would ensure

00:39:58that there is upward pressure on, on wages?

00:40:03Uh, well, I, I think that there, there are many parts to that, but, uh, the, the key to upward

00:40:09pressure on wages is more job opportunities. And what we have seen since what the so-called China shock

00:40:17after China entered the WTO was a large decrease in manufacturing jobs. And studies have shown that

00:40:26workers in manufacturing jobs have more potential for large scale wage increases than service workers

00:40:34do. So moving more workers from service work to manufacturing, they should do that. And the

00:40:42administration is also trying to bring down the costs for working families. Um, I, you know, I agree,

00:40:51right? If you're, if you are trying to, uh, earn a living as a barber, you have to move to a

00:40:56city to earn a high wage. Um, but if you're in a rural community where there's a factory job,

00:41:02you can own land, you can own your home. And I think one of your points about financial literacy

00:41:07is ensuring that we do have economic self-determination. You can buy the pair of boots that

00:41:12will last five years and not be in this pace. But there's a lot of work to do here, um, building real

00:41:19wealth, uh, and not the nominal kind of, I, I'm not really here to be a defender of the stock market.

00:41:25Most of the people I know don't trade stocks in my community. Um, you know, it's a question

00:41:31of being able to own land, having that capital access to start your own business. Um, and some,

00:41:36frankly, some of the antitrust work to ensure there's a level playing field for small businesses

00:41:40like mine. Um, I'm, I'm hearing from constituents, uh, who, uh, have questions about their tax returns

00:41:48and are having trouble getting a real person on the line to speak to. Um, what, what is, what can we do?

00:41:53What is your plan for decreasing wait times for having somebody be able to actually talk to a

00:41:58human being when they call the IRS? Well, again, this goes back to my, my three priorities,

00:42:04collection, privacy, and customer service. So we are moving money into customer service

00:42:10at the IRS. And it's almost imaginable that the, uh, the phone banks were,

00:42:17had the same number of operators 24, seven, 365 days a year. So if one of your constituents called

00:42:26on Christmas Eve, they'd probably get through, uh, because there were so many idle phones. Uh,

00:42:32if they called on April 14th, there was no surge to help them. So, you know, as President Trump has

00:42:37repeatedly said, this is a common sense administration. So we're going to have common

00:42:41sense for the IRS, uh, playoff season is the, uh, for the first, from January 15th to April 15th,

00:42:52game days, April 15th. And we're going to make sure that it's better staff then.

00:42:56Thank you. I yield back. Thank you very much.

00:42:58Chair now recognizes the gentleman from Texas, Mr. Cloud, for his five minutes of questions.

00:43:03Thank you, Chairman. And thank you, Mr. Secretary, for being here. I think it was Albert Einstein

00:43:07who said that you can't solve problems with the same kind of thinking you used when you created

00:43:12them. And, uh, that's one of the things I certainly appreciate about you and the Trump

00:43:16administration and what you're bringing to the table. For a long time, we've seen the managed

00:43:23decline of America. And while many who run for positions that we hold will campaign on the need to

00:43:31do something, what we've seen is too often. And even because some of the, the politicking we've seen

00:43:37today, uh, for the sake of politics, we've not been able to do the, the big, hard things that we need

00:43:45to, to, to change course and get us out of the 36, uh, trillion dollar debt pathway and growing pathway

00:43:53that we're on leading to that wall that you talked about. Uh, the American people have watched this all

00:43:59play out realizing that their nation's been in decline and seeing what they thought was kind of

00:44:04the promise that if we put the experts in charge, they would run the government, we would have a

00:44:08regulatory pattern that worked, the, the wealth gap would close, America would be strong, and that has

00:44:15not happened. Uh, what did the experts get wrong that you're correcting? Uh, well, sir, uh, under President

00:44:23Trump's first administration, the wealth gap did close, that the, the bottom 50 percent of households

00:44:30by net worth saw their net worth increased substantially more than the top 10 percent. And we are aiming to

00:44:38do that again, that under President Trump's first term, hourly workers wage gains were higher than

00:44:47supervisory workers. And look, what, what people got wrong was the, the shock. And there was this

00:44:54terrible policy of, uh, it was essentially compensate the losers. And I do not think that the American

00:45:00workers are losers. They were simply cast aside the, as the, uh, necessary collateral damage in this

00:45:10unfettered free trade. And the free trade is not always fair trade. And we can see that from the large

00:45:18surpluses that these countries are accumulating on the other side. So we are aiming for fair trade to

00:45:26bring back high paying precision manufacturing jobs to the U.S. And we are doing that. Uh, we're using

00:45:34tariffs, but we were also using the substantial deregulation, energy dominance. So we want to

00:45:40continue to make the U.S. an even more attractive location for manufacturing.

00:45:48It's, uh, interesting you talk about manufacturing. I think it was in 2008, the intelligence community

00:45:53put out a report. I, I talk about it a lot because they, they said the greatest transition of wealth,

00:45:57power, and influence is happening right now. Uh, and this was some years ago. They said we expect it to

00:46:03continue and it was going from the Western countries to the Eastern countries. And they said it was

00:46:09happening because we were sending manufacturing overseas and we were sending oil and gas revenues

00:46:13overseas. And yet they said it was like an unsolvable solution. Yet we have the Trump administration

00:46:18who's coming in and solving what seems to be not an easy solution, but a very clear solution in bringing

00:46:25manufacturing back and bringing oil and gas back and, uh, appreciate it. I, I wanted to ask you because

00:46:30there was a comment about the bond markets and certainly that's really, uh, is a concern. We

00:46:35need to make sure that they stay strong and that the dollar stays strong. Are, are the bond markets

00:46:40more affected by the, the tariffs and the concern we see in them now? Are they more affected by the

00:46:44tariffs or, or out of control debt and the fact that Congress can't seem to get our fiscal house in order?

00:46:50Uh, well, you know, I, I, I will tell you that the large stock of government debt is why I'm sitting here now

00:47:00as, uh, as opposed to back in, in the private sector. I became so alarmed by what was going on

00:47:06under the previous administration, this deficit that we had, uh, highest ever that when we weren't

00:47:13at war or weren't in a recession and it's unsustainable. And I thought it was deeply cynical.

00:47:19And if we'd done it, if we continued it, then we would have gone into a malaise where we couldn't

00:47:25grow ourselves out. We would have probably been forced into looking more like a European style

00:47:32economy, very high government spending, lack of innovation and lack of mobility.

00:47:36And, and that would matter for us, uh, here at home, but certainly even for the world because we've

00:47:42kind of been the innovation engine of the world. Uh, yeah, yes, sir. And, but what we've created in

00:47:48the U S is this barbell economy and the Trump administration is attempting to remedy that. On one

00:47:55side, we have financial services and the tech sector, which are forward looking and the envy of the world.

00:48:04On the other side, we are a natural resources economy led by energy, which the previous administration,

00:48:10they refute, you know, stop permitting for LNG facilities. Uh, so, but the arc in between is what we

00:48:17are missing are these manufacturing jobs. And that's what we are trying to bring back.

00:48:22Thank you, Mr. Secretary. Thank you. Uh, the chair now recognizes the gentleman from

00:48:27Maryland, Mr. Ivy for five minutes of question.

00:48:36I, uh, appreciate you being here today, Mr. Secretary. Um, I want to ask you a few questions

00:48:43about Doge and the role it's playing at Treasury. You, um, came into office, I guess you were sworn

00:48:53in on the 27th, was it? You were, you were confirmed by the Senate on the 27th? Is that about right?

00:48:59Uh, 28th. 28th? Okay. And then you started working at Treasury immediately after that?

00:49:06All right. And Doge began working there as well with respect to the payment systems?

00:49:10Uh, they, uh, two people, two individuals from Doge who are actually Treasury employees were on site.

00:49:21Okay. And, um, I believe you were approached by the highest ranking career official at Treasury,

00:49:31David LeBrick. Am I pronouncing his name correctly? I believe it's LeBrick. LeBrick. Okay. Um,

00:49:38what was the nature of that conversation? I, I assume this was about the Doge issue,

00:49:42but tell me briefly what, uh, that conversation was about. Uh, well, that, that conversation,

00:49:47uh, was the, uh, about a discussion of the payment system. And when I go back to what I didn't know,

00:49:56I think I walked in the office around 3 p.m., and I think he and I were having a conversation at 4.30,

00:50:03and the, uh, he, uh, I, I got asked for the short version. Oh, no, no, no. Okay. But, you know,

00:50:11I, I will tell you that when we were talking about the tasks, the, that it was people like this

00:50:18individual who were hitting send on the payments. So, you know, I've come to find out.

00:50:23Okay. Okay. I apologize. I'll have to get that later from you. Yep. Feel free to send in

00:50:29substance of the discussion in a letter. But I, I guess what I was going to ask was,

00:50:33you just mentioned there were two people who were working with respect to Doge at the time.

00:50:37Yes, sir. And, um, Mark Elez was one of those?

00:50:43I'm not sure. Not sure? You, you're not familiar with that name?

00:50:48Uh, I, I, I don't recall that name. I re, I interviewed Tom Krause and personally recommended

00:50:54him to work at Treasury. Okay. Well, Mr. Elez, um, had worked at Mr. Musk's SpaceX company.

00:51:03Um, and the Wall Street Journal issued a story, I think around February 7th that talked about

00:51:14statements that Mr. Elez had made, um, in the prior year. One was, um, you could not pay me to

00:51:21marry outside my ethnicity. Another was that he wanted to normalize Indian hate. A third was just

00:51:30for the record. I was racist before it was cool. And another was, I just want a eugenic

00:51:36immigration policy. Is that too much to ask? This man resigned, uh, shortly after that article was

00:51:43published, but you haven't, you don't recall him being there? Congressman, I did not recall that

00:51:48individual's name, but that, that individual was terminated. He was terminated. Okay. Um,

00:51:53well, I appreciate that. Although it appears that he then later turned up

00:51:59that he was rehired, I guess, and that he's not my treasury, sir. Okay. But he was continuing to do

00:52:05work for Doge, but in this instance, HHS and three other, um, apartments. I have no idea. I didn't

00:52:15follow his career. Okay. Well, you, you didn't catch JD Vance saying that he, uh, didn't think he

00:52:20should be terminated. Did you miss that too? I don't recall that. All right. Do you recall Mr.

00:52:25Trump saying that he, uh, should have a second chance? Uh, I don't recall that. No. Okay. And,

00:52:31uh, do you, you recall Mr. Musk saying he should be given a second chance as well? No, sir. All right.

00:52:37Well, I guess the main question too here is what exactly was the vetting practice that you had in

00:52:43place before you brought on these two people and gave them access to the payment system, which is

00:52:49six trillion dollars. Uh, well, sir, they, they did not have access to the payment system, or perhaps we

00:52:55have a different definition of access. Uh, they, they only had read, they had read-only abilities, and it

00:53:05was for, they were there for tech support, tech support to look at the payment system, the ERP system, just like any

00:53:16private enterprise. Is this an individual that you would have brought on even in that capacity if

00:53:22you'd known that he'd made these statements prior to him becoming part of that team? Uh, congressman,

00:53:27that I, I think it's very difficult to monitor everyone's social media. That's not what I asked.

00:53:33If you knew that he had made these statements, would you have brought him on in the capacity that

00:53:38he had at the Department of Treasury? Uh, I, I think the Office of Personal Management would have

00:53:42flagged that. You would, would you have brought him on? Uh, sir, I, again, the, uh, I, I'm not going to

00:53:49speculate. The chair now recognizes the gentleman from New York, Mr. Lolota, for his five minutes.

00:53:58Thank you, Mr. Chairman. Good morning. Trade, sir?

00:54:00Uh, on both, sir. Among many other things. Yes. Yes. Um, and Mr. Secretary, in your estimation,

00:54:08how did President Trump's 2017 signature tax bill affect American job creation, employment,

00:54:14and wage growth? Uh, Mr. Vice Chair, it provided a substantial non-inflationary impetus to the economy,

00:54:24which resulted in real wage gains on a non-inflationary basis for the American

00:54:30people and a robust economy. Uh, I, I would add, I would, I'm with you 100%. I'd add some data into

00:54:36there. 4.9 million jobs between the passage of the tax bill and the COVID pandemic. Employment rates

00:54:43dropped, uh, from the fours to the threes, and we had a lot of wage growth, especially within the

00:54:48middle class. Um, and that sets me off for my next question. Congress now is considering extending,

00:54:53uh, those tax cuts, which expire at the end of this calendar year. Would that be a good idea,

00:54:57Mr. Secretary? Congressman, what Congress is considering is making them permanent,

00:55:02which is a better idea. We're considering a lot on the tax bill. We're also considering salt,

00:55:07which I think is an awesome idea as well. Uh, but nevertheless, on the greater bill, uh, public

00:55:12polling, uh, suggests that you're right and that eight of 10 Americans agree that extending, uh, those

00:55:18tax cuts are a good idea, recognizing that they help grow wages, they help lower employment,

00:55:25and help personal wealth. Uh, but I want to use the remainder of my time to talk about trade policy,

00:55:29Mr. Secretary. Um, is it true that America's trade deficit is about $1.2 trillion? Approximately,

00:55:37yes, sir. And with China, Mr. Secretary, about $300 billion? Uh, yes. And I, I believe it may have

00:55:45increased slightly. Yeah. Um, and Mr. Secretary, what impact is China's exploitation of child labor and

00:55:52near slave-like labor? Uh, what impact does that have on the trade deficit?

00:55:57Well, sir, that it creates an unlevel, you know, aside from the values problem that Americans

00:56:05did, do not believe in this behavior, that it creates the, uh, an unfair trading advantage. And we

00:56:15can see that from the size of the deficit, but more importantly, from the size of the large surpluses

00:56:20they're accumulating. And Mr. Secretary, what impact does China's notorious theft of America's

00:56:27intellectual property have on our $300 billion trade deficit? Well, I, I, I think that that is a problem

00:56:34for not just the U.S., but for every other country. And to the extent that they are able to leapfrog,

00:56:41whether it's with technology, whether it's with products, then that creates a huge advantage

00:56:47that has given them, you know, it, it's back to one of the, uh, cornerstones, the, of the problem

00:56:54of trade, that if, if you don't have to spend money on R and D, then you can spend it on manufacturing,

00:57:02cheap manufacturing. And, Mr. Secretary, are tariffs a tool to reduce

00:57:07America's trade deficit, specifically with China? Uh, yes, sir. And are they also a tool to protect

00:57:13American jobs, Mr. Secretary? A hundred percent. And Mr. Secretary, you could probably tell by how

00:57:19far I sit in the dais. I'm somewhat new to Congress, uh, but yet hypocrisy still, uh, offends me. And

00:57:26there's a lot of double talk and hypocrisy in this town. I'm going to read you a couple of quotes,

00:57:30Mr. Secretary. I'd like you to tell me if you think President Trump or somebody from the

00:57:33administration has said it, or if you think Senator Schumer has said it on tariffs. Quote,

00:57:38tariffs are a necessary step towards addressing the unfair imbalance of China's trade relationship

00:57:44with the United States. Did Schumer say it, or did Trump say it? Uh, I would imagine the president.

00:57:49Schumer said it, sir. Schumer was just a year ago in February, 2024, talking about

00:57:55tariffs being the answer to combat some of those issues in China, specifically ripping off our

00:58:00intellectual property and exploiting, uh, slave labor and child labor. Well, Congressman, I would also

00:58:05note that the, uh, many, many government officials, including presidents were also in favor of a

00:58:10border wall until President Trump was. Good point. That leads me to my second question. Um,

00:58:16who said it, Schumer or Trump, that tariffs are vital to protect American workers, American,

00:58:22American manufacturers, American innovation, and our national security. Who said it? Trump or Schumer?

00:58:27Uh, I would imagine it was the ranking member. It was the, uh, the Senate minority,

00:58:32Chuck Schumer said it. And like what you said, it was cool until Trump got in office and now he's

00:58:37opposed to it. Um, my time is about to expire, Mr. Secretary, but I want to, um, commend you for

00:58:43fighting for, uh, American middle-class workers. I do think that extending the tax bill with a couple

00:58:48of tweaks like salt is important. I do think that fighting for our middle-class workers are important.

00:58:54I implore you to stay on the right path, sir. Good. Thank you, Congressman.

00:58:56Thank you for getting that salt plug in, Mr. Lolota, twice. The chair now recognizes the

00:59:02gentleman from Georgia, Mr. Bishop. Thank you very much, Mr. Chairman. Uh, thank you for being

00:59:08here, Secretary Bissette. Uh, I wanted to ask you some questions about, uh, the reports that the

00:59:15administration is cutting, uh, IRS workforce roughly in half, uh, with a goal of 50,000, including

00:59:24men of the frontline enforcement positions. Uh, a recent study concluded that this would result in

00:59:30a loss of $19 billion in foregone revenue just in 2026 and up to $350 billion over the next decade.

00:59:40Uh, such substantial cuts in staffing could cause reductions in voluntary compliance as taxpayers

00:59:48will feel emboldened to cheat on their taxes and an IRS official, uh, previously testified that a simple

00:59:55one percent decline in the compliance rate translates into $30 billion in lost revenue for the government.

01:00:03If the administration is truly concerned about reducing the federal deficit, as you indicate,

01:00:10why would it consider staffing reductions that reduce the IRS's capacity to collect much needed revenue

01:00:16that could be used to reduce the deficit or pay for critical services? Um,

01:00:24a recent, um, Treasury Inspector General for Tax Administration's, um, report indicates that, um,

01:00:35the IRS compliance workforce would be drastically hit 31 percent, uh, with revenue officers,

01:00:44or 18 percent, uh, they are paying the maximum, uh, taxpayer compliance responsibilities that are needed for

01:00:54revenue for the government. Uh, it appears that 31 percent of the reduction in force, and I think, uh, since, uh,

01:01:04January, uh, the federal workforce has been reduced, and IRS started out with 103,000, and now it's down to 91,600,

01:01:14which is an 11 percent reduction in the workforce. Uh, that's 31 percent loss in revenue agents,

01:01:2218 percent loss in revenue officers, 10 percent loss in contact representatives, and 10 percent loss in tax

01:01:30examiners. Uh, it seems to be, uh, really, really foolish, uh, to pursue that. Can you tell me

01:01:39why that makes sense? Briefly? Sir, so I, I think there, there, there are two things here. There's the

01:01:49actual decrease that you just cited, which is about 11, the 11 percent, and then I, I'm, if you could

01:01:57tell me where you're getting this number that where there's going to be a 40 or 50. The IG's report.

01:02:02Sorry? The IG's report. There's going to be a 40 or 50 percent decrease, because, you know,

01:02:06sir, I, I, I will tell you. That was the goal. The, uh, but before I, I took this job, I didn't

01:02:12particularly like the term fake news. Now that I have it, I think it's probably not strong enough.

01:02:16Okay. Because on, on March 22nd, the Washington Post. Let me change this, let me change the subject.

01:02:21Let me, let me move to another subject, Mr. Secretary. Thank you. Uh, if you want to elaborate, you can, uh,

01:02:26you can, I'll, I'll be happy to have my office. Uh, let me, let me, uh, say that since, uh, this

01:02:32administration, uh, has come to the White House, the price of groceries has increased by 5, 10 percent

01:02:39in only two months. According to a recent report, uh, by the Groundwork Collector, the price of meat,

01:02:46poultry, fish, and eggs has grown the fastest, up 2.9 percent since January of 2025. Uh, eggs that are

01:02:53record high of 623, uh, $6.23 a dozen, up from 26 percent in January 25 alone. What is the

01:03:04administration doing to bring down the cost of food? What is the administration doing to ensure

01:03:09that the impact of the tariffs don't disproportionately fall on our nation's farmers? I've got a list of

01:03:16headlines, uh, from farmers all across the country, uh, that are complaining about the impact of the

01:03:22tariffs on, on their capacity to sell their products. Um, can you tell me what the, uh,

01:03:30administration is doing to bring down the cost of food? Uh, a couple of things, Congressman. First

01:03:34of all, you may or may not know I am a farmer. Uh, secondly, that we inherited the, uh, a momentum.

01:03:42Food prices like monetary policy has long and variable lead times. Uh, the price of eggs

01:03:49was up substantially during the Biden administration. It has been brought down 52 percent in the past

01:03:57few months. And it just went up, uh, the last two months. Uh, I just told you. Uh, no, sir. I,

01:04:04I think that's not hundred percent. It's January. And finally, uh, we, we are six percent. We are

01:04:10bringing down energy cost and energy cost. Transportation is one of the single biggest

01:04:16factors in food pricing. So diesel prices across the country have come down and that will result

01:04:23in lower food prices. Chair now recognizes the gentleman from North Carolina, Mr. Edwards,

01:04:28for any questions he may have. Thank you, Mr. Chair. Mr. Secretary,

01:04:30thanks for being with us this afternoon. Uh, earlier this year, uh, I co-sponsored a bill,

01:04:37the Anti-CBDC Surveillance State Act, that would prevent the Federal Reserve from issuing central

01:04:45bank digital currency. Uh, many of the folks that I represent are concerned about the security of such

01:04:53a currency and the, uh, privacy of their information were such a currency to be used. Can you give me the,

01:05:01your perspective and maybe the administration's perspective on the place for digital currency?

01:05:07Uh, sir, we believe that digital assets belong in, in the private sector. And my personal view

01:05:16is that having a central bank digital currency is a sign of weakness, not strength. Because, uh, really,

01:05:24the reason if there is a reserve, say a reserve manager, uh, or a foreign central bank holds U.S. dollars,

01:05:31then there is a wide variety of U.S. assets they can invest in. Uh, you would create a central bank

01:05:38digital currency just for ease of use because there are no good choices for underlying assets.

01:05:44And so you're saying you would not be in favor of the Federal Reserve issuing such a currency?

01:05:50No, sir. All right. Thank you. Can, uh, can, uh, can, can you tell us real quick,

01:05:56at what point do you believe that our debt levels would no longer be sustainable?

01:06:03And then as the second part of that is what would that look like if our debt were no longer

01:06:09sustainable? What would that look like to the American family? We talk a lot about debt up here.

01:06:16We put forth some elaborate graphs and charts and we hear all kind of economists using big long words.

01:06:23I need to, uh, be able to describe to the people back at home what that might look like in their lives

01:06:31where we no longer sustainable. Well, it would look like a sudden stop in the economy as the credit would

01:06:37disappear, as markets would lose confidence. Uh, and I'm committed to that not happening. And again, it is

01:06:46a, a tipping point in debt sustainability is very difficult to pinpoint, but what is not difficult

01:06:54to pinpoint is a trajectory. And the trajectory is unsustainable when the, when and if the markets were to,

01:07:05uh, rebel, uh, against, uh, is very difficult to know. Uh,

01:07:12uh, I think just as I talked about the warning track for the X date, I think it's very important

01:07:19not to go on the warning track and we've got to get to the other side of this and start the reducing

01:07:25the debt. And the debt numbers are, are indeed scary, but the Secretary Yellen and I both agree that

01:07:35it is the debt to GDP that is the important number. So we are trying to both control the,

01:07:44the absolute level of debt, pay it down, but also grow the GDP.

01:07:48And so I appreciate, I applaud your approach towards the debt. Would give us an idea of

01:07:58where, where is that tipping point? How close do you think that we might be to that?

01:08:04Again, sir, it's, I think what the market, having been in markets for 35 or 40 years,

01:08:11what the market is more concerned about is a trajectory. Are you on a trajectory that is

01:08:17unsustainable or are you, as we said during COVID, bending the curve? So the, the, the goal here

01:08:24is to both bend the curve, but to grow the denominator, the, and, uh, use growth and spending

01:08:32constraint to solve this problem. And, uh, thank you for that. And, uh, as part of the president's

01:08:39cabinet and seeing more inside what's taking place than any of the rest of us, what role would you say

01:08:44that DOGE is playing right now in prolonging that tipping point and reversing our, uh, our fiscal trend?

01:08:52Well, I, I, I think DOGE or any other measure to constrain the spending, the, uh, is admirable,

01:08:59important, and necessary. And if, if we don't do that, you know, as I've said, uh, the, and, uh, ranking member,

01:09:08uh, they have mentioned it, uh, we do not have a revenue problem. We have a spending problem,

01:09:15and we have to bring this spending under control. Thank you. I've got just a few seconds. Can you

01:09:21tell us what keeps you up at night regarding cyber threats to our treasury system? Uh, well, it's,

01:09:27it's cyber threats across the entire financial system, sir. And that's why, uh, at treasury,

01:09:34we are leading the effort for more resilience within the entire financial system, whether it's

01:09:41across the banking system, the payment system, and the, the treasury system. As you would have seen,

01:09:47uh, treasury was hacked last year. We've just discovered an OCC hack that discovered last year.

01:09:55So these hacks are real, uh, and dangerous. Thank you, Mr. Chair. Are you? Thank you. The chair now

01:10:03recognizes the ranking member of the full committee, Mrs. DeLauro, for any questions that she may have

01:10:08for five minutes. Thank you very much, Mr. Chairman. My apologies for, for being late, and apologies to you,

01:10:13Mr. Secretary, but lots of hearings happening. So I, I just, a couple of points, and I want to ask my,

01:10:20my question. It's just a, a, a follow-up on this, on this IRS piece. Uh, I think it's very interesting

01:10:27that, uh, well, first of all, I totally disagree with you, Mr. Secretary. We have a revenue problem,

01:10:32and that's where the IRS comes in. And we think about the debt. We think about the 2.3 trillion dollars,

01:10:38uh, that was the debt, uh, uh, really built up with the tax cuts, uh, to the, uh, wealthiest and the biggest

01:10:46corporations, uh, uh, in 2017. We're now looking at an additional four and a half trillion dollars

01:10:53in tax cuts, which are, uh, uh, uh, making their way to, again, the richest, uh, and to the biggest

01:11:00corporations. That is debt. And that is something that, uh, I don't know about yourself and others

01:11:07in the administration who refuse to see that kind of debt. And the almost unbelievable piece of this

01:11:13is the IRS 2024. Uh, we invested in it, uh, uh, able to recover more than 1.1 billion dollars from

01:11:21roughly 1,600 millionaires projected at the time that investments in high-end enforcement data and

01:11:27analytics that an additional $851 billion would result in revenue over the next 10 years. Uh, uh, uh,

01:11:35the, uh, uh, Inspector General has said IRS lost 30 percent of auditors under Elon Musk's illegal purge.

01:11:42Uh, people who are wanting to ensure that millionaires and billionaires are paying their taxes.

01:11:48Uh, and the issue is here is that we're going to pay for those taxes by taking it out of the height

01:11:53of Medicaid and of children, of low-wage workers, and of seniors. Um, the, the issue that I want to try

01:12:00to get to, uh, I'm going to make another, another point is your comments on, uh, your recent comments

01:12:06that seem to call into question the vitality of the textile industry in the United States and national

01:12:12security. I applaud the administration for the steps they've taken on de minimis and closing down

01:12:17that loophole. I think it was very, very important to do this. We need to go further. It needs to be

01:12:22applied to all countries, not just to China. Uh, but unbelievable commentary, uh, on, on the U.S.

01:12:30textile industry provides good jobs across this country, particularly in rural areas. The supply

01:12:35chain directly employed 471,000 workers produced roughly $64 billion in product in 2024. Let me get

01:12:43to my question with only two minutes to go here. Um, uh, this is the, um, dealing with a standing up

01:12:51for a mechanism in the U.S. to screen our investments in China to ensure capital technology and know-how are

01:12:58not fueling the capabilities of the Chinese Communist Party. I've had a bipartisan bill to do that for years,

01:13:04help negotiate the bipartisan bill that nearly passed last year. Um, and I strongly support

01:13:10executive action to address the issue. In fact, we got appropriated funding from Treasury to implement

01:13:17the executive order on, uh, outbound investment. Mr. Secretary, I understand that the administration

01:13:24is currently reviewing the executive order. There's a clear bipartisan consensus on the need for an

01:13:30outbound mechanism, uh, of that screening regime. Let me ask you, do you support the implementation of

01:13:36such a regime? Uh, thank you. Thank you, Congresswoman. This is very, very important issue. Uh, the outbound

01:13:45security program is an important new tool in our effort to restrict the PRC from exploiting U.S.

01:13:50investment. The program just began a few months ago and we are learning and we anticipate gaining

01:13:56important visibility into U.S. persons investments involving PRC entities. Uh, we appreciate the

01:14:03interest from Congress and while legislation is important and helpful, I would like some time

01:14:08the, uh, for our process to inform any legislation. We would like any legislation to be both flexible and

01:14:15durable. Well, uh, you know, in your confirmation hearing in January, you noted, and this is a quote,

01:14:22we should have a very rigorous screening process for U.S. investments in key sectors that could go to

01:14:29China. And in March, you said, we will make sure that our outbound investment doesn't get used against

01:14:36us. We are going to continue investigating this and where necessary to, to block it. I, I heard your

01:14:43answer and quite frankly, it sounds a little bit wishy-washy. I, I want to be clear about this. You have

01:14:49expressed support for outbound investment for months now. Has that changed in any way? What's the status

01:14:56of the administration's review of that order? What about the timeline on this? Because it's an important

01:15:02issue. And can you commit that your department will enforce this executive order to its fullest extent?

01:15:07Uh, this, this is, I have not changed my position. As I said, we are looking at what is working,

01:15:15what isn't and how the, the best enforcement mechanisms. And when a bill comes forward again,

01:15:25we want it to be fulsome and durable and a 2025 bill for all the nuance that goes with this.

01:15:33Well, I just, I, I, I'm out of time, but please understand we have bipartisan support.

01:15:41It was almost made it into the continuing resolution, but for the influence of Mr. Musk.

01:15:48And it is critically important for our competitive edge. And I don't believe there's any reason for

01:15:52the administration to roll back. My hope is that we will move forward and keep the pressure on in

01:15:58order to be able to preserve our competitive advantage and not see to the Chinese. We're in

01:16:04complete agreement. Thank you. Thank you, Mr. Chairman. I would not want to interfere with

01:16:08that bipartisan moment. Okay. And it, it's bipartisan legislation, as you know.

01:16:13I appreciate that. Great piece of legislation.

01:16:15Uh, and the chair will now recognize a gentleman from Nevada, uh, Mark Amaday for five minutes of

01:16:22question. Thank you, Mr. Chairman. Hi, Mr. Secretary. First of all, I want to, I want to thank you for

01:16:29your availability, uh, during this, uh, this, uh, time since you've been confirmed and stuff like that.

01:16:35I know nothing's been going on that affects the treasury department in any way. And, uh, I appreciate

01:16:41having, having access to you via phone over, over an issue that wasn't important. So thank you very

01:16:47much. Um, I, I want to just ask you a couple of questions kind of relative to our conversation. And that

01:16:55is, I know that the president has said quits, quit producing the penny. A lot of reasons, you know,

01:17:00arguably you lose two and a half plus cents for every penny you produce in, in signage.

01:17:06And you don't have to get up too early to do the math on that sort of thing. Um, but I think in the,

01:17:12in, in the timing of doing that, um, if we're going to eliminate the penny, which has to happen here,

01:17:18um, I, I would like to know who it is, who's kind of the point, the tip of the spear

01:17:24on your staff, uh, at treasury. I already, I already have the, the mint information, but at treasury,

01:17:32um, as far as those issues go, and I'll, and I'll tell you why I want to know is,

01:17:37I think there are some, some issues regarding what it costs to produce a penny. I don't know

01:17:42if it's going to get you, I don't think it'll get you down to a cent, so it won't be that argument.

01:17:46But quite frankly, stacked up behind it is what it costs to produce a nickel and what it costs to

01:17:52produce a dime. I don't know about the quarter, but anyhow, um, to make sure that we are at least

01:17:59giving your department and the Bureau of the Mint the most tools necessary to, if you will, untie

01:18:05their hands when they're looking for who they buy their blanks from and stuff like that that goes

01:18:10directly into what it costs to produce one. So, so my, my first question is who's, who's kind of

01:18:16in charge of that since I know you've got other things to do, but ultimately, um, so that we can

01:18:22start that dialogue with where do we go from here and if we're going to get rid of, and I know there's

01:18:27been legislation, uh, introduced in the Senate to get rid of the penny altogether except for collectors.

01:18:32So, who's, who's the point man or woman on your staff?

01:18:35Uh, Congressman, it would be my recently confirmed deputy, Mike Faulkner.

01:18:40Okay.

01:18:40And yeah, I would also say, uh, with the nickel and the dime, uh, the, the nickel costs more than

01:18:46a nickel to produce, but we are looking at, uh, material chain, material changes in the materials,

01:18:54uh, that would reduce the cost, uh, to or below a nickel. And then I believe the dime is profitable.

01:19:01And, and, and I guess that brings me to the, there is legislation you might want to warn your,

01:19:06your recently confirmed, uh, deputy. H.R. 1278, um, bipartisan gives you guys the chance without

01:19:14coming to us every time to basically make changes in, in the metal of that sort of stuff so that you

01:19:19can keep ahead of those sorts of things. So, if, if you would, unless it's sitting here, whatever,

01:19:26it's like, hey, we're going to be calling you up. Um, the idea is to, to solve the problem if it's

01:19:31solvable and, and move on from there so you guys can do other things with your time. Uh, yes, sir.

01:19:38We've, we've been reviewing that. Good. Glad to hear that. Um, uh, so have you taken a look at

01:19:47the Senate bill that says no more pennies? And I guess other countries have rounded up to the nearest

01:19:51five cents and my research says, well, it wasn't the end of the world. So, uh, well, sir, we, we are

01:19:57also encouraging rounding down. Okay. That's good. Great answer. You know what? I'm, I'm going to

01:20:03reward good performance. I yield back, Mr. Chairman. Certainly appreciate that, Mr. Amaday. Um, we were,

01:20:11I understand you had the hard stop at 1130. Uh, I'd like to honor that. I want to be fair to my fellow

01:20:18committee members though. In doing so, um, uh, not all of us will be eligible for a second round,

01:20:24but it's certainly, uh, my ranking member, Mr. Hoyer would request that he have a chance to ask you,

01:20:30uh, another question before the stop. Of course. Mr. Secretary, first, first of all, let me say that, uh,

01:20:41I believe the, uh, Congress is being taken for granted in the policies being pursued.

01:20:48I think frankly, some illegal things are being done. I'm not by you. I'm just talking about the

01:20:52administration in terms of federal employees. I represent 77,000 federal employees who came here to

01:20:58work for the government and that's why they're here. Um, I've worked very well with Republicans

01:21:10throughout my career, which is now in its 45th year. Uh, I want to do that some more because I think

01:21:19that's the best sense of the country.

01:21:25I believe you're one of those who has a shot at keeping us on a somewhat even keel.

01:21:32I mean, that is a compliment, but obviously is also a concern.

01:21:44When you say, and I want to reiterate this, that we have a spending problem,

01:21:50and I retort to, you know, what we have is a paying for problem.

01:21:54If I make a million dollars, I can spend 999,000 less taxes. But if I make 500,000, I spend a million

01:22:05dollars. That is a paying problem because I don't pay for it and I accumulate debt. That's how debt

01:22:11goes. Now, I was here in the Reagan administration some period of time ago.

01:22:15Uh, we were told that the tax cuts that were passed in 1981 were going to pay for themselves.

01:22:24They did not.

01:22:27Perhaps will surprise you. Maybe you know this figure.

01:22:30The largest increase in the national debt was under Ronald Reagan, the only president who had a

01:22:36triple digit, 189% increase in the national debt during the course of his term.

01:22:42It might also surprise you that Clinton is the only one who was 30% or lower since Ronald Reagan.

01:22:56Clinton is the only one who balanced the budget.

01:23:01Now, one of the reasons we did so is because we had bipartisan objectives.

01:23:05The Republicans wanted to cut taxes, which is their mantra. And we wanted to invest, as we call it,

01:23:16as opposed to spending, in children's education, in people's health care, in safety, et cetera, et cetera.

01:23:23If we continue this logic that we have a spending problem

01:23:34and discount taxes as spending, when we did the tax increase under George,

01:23:42excuse me, in 2017, you may recall, the Republicans gave themselves a $1.5 trillion headroom.

01:23:52The reason it was limited to that is because the senator from Tennessee wouldn't go higher than that.

01:23:59So in other words, a $1.5 trillion unpaid for headroom to give a tax cut.

01:24:05That is spending because you're cutting prices while increasing costs.

01:24:16That's what costs you deficits.

01:24:18Some of my Republican friends, I'm a strong supporter of national defense.

01:24:26But I do not delude myself that raising $150 billion in national defense expenses don't cost taxes.

01:24:34We don't have $150 billion to either cut taxes with or to spend money with.

01:24:40So we borrow.

01:24:45And when my friend talks about hypocrisy,

01:24:53we all know if you spend more than you get, you go into debt.

01:24:58And that's what we do as a country on both sides of the aisle.

01:25:03And we need people like yourself to be honest with those with whom you work

01:25:11and honest with the Congress of the United States in terms of the ramifications of the actions.

01:25:17I know you are a strong supporter of permanent increase.

01:25:21You're not a strong supporter of paying for it.

01:25:23And you can cut all of non-defense discretionary spending and you won't get there.

01:25:32And this game that Mr. Musk has played, he had no sense of the ramifications of the actions he's taken.

01:25:40He knew how to do it.

01:25:41He was prepared.

01:25:43As one article in the Atlantic Journal said, the blitzkrieg, which our speaker calls flooding the zone,

01:25:50been pretty effective at that, just trying to watch where the ball is and see if you can respond.

01:25:56Mr. Secretary, I have a lot of questions.

01:25:58I'm going to send them to you, ask them to you, and I would like to take some time with you on that.

01:26:04I have great respect for your background and your abilities.

01:26:08And I am really praying that you will bring a voice of reason and rationality to our deliberations.

01:26:16My time is over, and I appreciate the chairman's forbearance.

01:26:21But this is serious business.

01:26:24Very serious business.

01:26:26And I agree with you.

01:26:28A $37 trillion debt is not sustainable.

01:26:33And we all have to do it, but we have to do it together.

01:26:37That's the only way it will get done.

01:26:41Thank you, Mr. Chairman.

01:26:42You have a response, Mr. Secretary.

01:26:43Congressman, thank you for that.

01:26:45And I would note that while President Reagan substantially increased the defense budget,

01:26:53the Clinton administration was able to capitalize on the peace dividend.

01:26:59But as you said, the defense budget dropped dramatically post the fall of the Iron Curtain,

01:27:06which contributed to the fiscal soundness.

01:27:09And through, as you said, through bipartisanship, working with Speaker Gingrich, they worked together.

01:27:20So I would hope that we could do that again.

01:27:22Which, by the way, cost Gingrich's job.

01:27:25The right wing of his party was incensed that he did that.

01:27:29And what it did was had a rational policy because both sides participated.

01:27:35So, well, and the senator from Tennessee is actually my neighbor.

01:27:41So I see him quite often.

01:27:44And look, there are ramifications here.

01:27:47And you're not talking about any current senators from Tennessee.

01:27:51He's left.

01:27:52No, I know.

01:27:52Okay.

01:27:53Senator Corker.

01:27:54I want to make sure we had the right Tennesseans.

01:27:55Senator Corker.

01:27:56Yes.

01:27:57Yes.

01:27:57He's my neighbor.

01:27:58Uh-huh.

01:27:59So, and I look forward to inviting a bipartisan solution.

01:28:07Thank you, sir.

01:28:08And with that, our time is concluded.

01:28:09I'd like to thank you, Secretary Besson, for being here today.

01:28:12There may be some members, as the ranking member Hoyer has indicated, who will have questions.

01:28:17They're going to submit those questions for the record.

01:28:19I would ask any of the police to submit those questions to the subcommittee staff within the

01:28:23next seven days.

01:28:24I would ask that you try to respond to them within the next 15 business days after receipt.

01:28:30And with that, the subcommittee.

Scott Bessent Grilled On Tariffs, Trump Tax Plan In House Appropriations Committee

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