Transcripts For CSPAN Treasury Secretary Testifies On Presidents 2021 Budget Request 20240713

Tour takes you to amarillo, texas. The treasury secretary Steven Mnuchin testified to congress. Theielded questions about 4. 8 trillion proposal and Economic Growth and the impact of the jobs act signed into law december, 2017. [camera shutters] sen. Grassley we are pleased to have treasury secretary mnuchin, here today testifying about the president s fiscal year 20202021 budget, the president s budget includes proposals to confront a number of important issues, i want to work with the president , the secretary, and others in congress, to address these and other pressing issues, within our committees jurisdiction. Drug pricing, and employer pension crisis are two such issues that must be dealt with, this Budget Proposal comes at a time when the economy is very strong, especially for working families. Better trade deals, less regulations, lower taxes from tax reform, we have translated into wage increases. Especially for lower wage earners. And historically tight labor market. Over six and seven tenths million jobs have been created since President Trump was elected, with 70 of the gains occurring since we passed the tax cut jobs act. Unemployment has fallen to a 50 year low, 23 consecutive months, with the Unemployment Rate with at or below 24 , the longest streak within five decades. Unemployment for hispanic and African American workers and have set an all time record. American middle class is growing, and families are benefiting, with a family of four earning 73,000, having their tax bill cut by 2000 after tax reforms. Statistics like these show the tax reform is a success. The Treasury Department were to the Treasury Departments work to implement the new tax law, has been an important part of that success. We appreciate the diligence, and of course the dedication, a treasury and irs, maintaining over the last 18 months to release extensive guidance necessary for hardworking americans, and a Business Community to file their tax returns. Despite treasurys steadfast efforts however, we have critics, and those critics have continued their assault, on the department for doing its job. Criticism that is unfounded. While the treasury plays an integral role when any major tax legislation is enacted, the heavy lifting occurs when that legislation is being implemented. Treasury is following the same process set out in the administrative procedures act, that has occurred after enactment of other acts of other tax legislation, for instance the Affordable Care act. Critics continuously use preliminary and incomplete data to distort the efforts of tax reform, to support a political narrative. Cboics focus on revised projections of Corporate Tax receipts is the latest installment. As i discussed in my statement yesterday to my fellow senators. Similar, we all recall the Misinformation Campaign in last years filing season, when critics tried to persuade the public that tax reform was a failure, because early tax refunds were down. Of course critics conveniently ignored that the size of the tax refund says nothing whatsoever about the Tax Liability of an individual. In the end, the criticism proved to be flat out wrong. Americans got tax relief and the average size and number of refunds ended up being closely in line with previous years. Im hopeful that we can avoid, similar scare tactics in this years filing season. Nothing the critics can say will refute the fact that every income group in every state sought tax cuts, under tax reform. And, this is particularly true, for low and middle income families. As we see statistics almost weekly about bluecollar workers, getting higher increase, on average than the percentage wage increase, on average than the management class. Instead, i hope that we can Work Together on policies that will benefit all americans, including some of the president s Budget Proposals. This committee has a solid foundation, of bipartisan accomplishments in recent months, including the secure act, the taxpayers first act, and the usmca trade deal. And after extensive negotiations, we came together, just before christmas, to extend a number of temporary bipartisan tax provisions. I wish more could have been done to resolve this once and for all, as we did in repealing three Affordable Care act taxes, but hopefully our efforts, in in december can lead us to success in future discussions on the expiring provisions that are coming up at the end of this year. I am also encouraged by the progress that has been made that the away cd, to reach a Multi Lateral global tax agreement on the economy. Senator wyden and i since a year ago, have remain united and bipartisan in our message that unilateral wages that discriminate against American Companies cannot be tolerated. And we continue to support Treasury Departments in these negotiations. As this year progresses now, we should build upon these past successes to make sure the treasury and our tax laws are working for the American People. Ive seen administration Budget Proposals from both republican and democratic president s alike, no matter which Party Controls the white house, members wont support everything that is in that budget. As a matter of fact, our former president , i guess it was president obama his last budget, was defeated on a 990 vote. As ive said before, in our system, the president proposes, and congress disposes. Even though todays hearing is part of an important process for looking at things that both people on both sides of the can agree on in the most fiscally responsible way. Ive had my say now, and its time for senator wyden. Thank you, and i appreciate this scheduling. At the trump Administration Budget is built on policies that pillage working families to pay for new windfalls for multinational corporations and the wealthy. This hurtful agenda has been on clear display over just the past few weeks. Events i will touch on, first, it recently came to light the Trump Administration, acting way to milk found a the 2017 tax law to create more than 100 100 billion worth of shiny new Corporate Tax loopholes. Colleagues understand these are not the same huge loopholes that i and others warned about back in 2017 on the bill was written. These are brandnew loopholes that are the product of tricky, Treasury Department regulatory maneuvering. Something in my view looks like it goes beyond the departments legal authority. The bottom line, it looks like corporate special interests are going to make off with brandnew loopholes worth 100 billion. Outlandish to the share they got from the original 2 trillion trump tax law. Stopor brown and i want to this fleecing of the american taxpayer. So today, senator brown and i are introducing legislation that will close these new loopholes and fix this new source of tax unfairness. When people say the tax code is rigged, and the Trump Administration has made it worse, what i have just described is a textbook case of what they are talking about. Now one additional point, not long after the news of these new tax loopholes broke the. Resident went to davos during an interview there, he was asked whether during a second term he would cut programs like medicare, medicaid, and Social Security. The president said, yes, he would. The president called that, and i quote here, actually the easiest of all things. So i have just given you a perfect snapshot of this administrations policies, robbing the working families to pay off special interests and those at the top. The president says shredding the safety net is a piece of cake. But lets make sure we know what hes talking about. Hes talking about medicaid, a program that pays for two at the three nursing home beds in america. That is taking place in a country where growing older is really expensive. And families, even those who scrimp and save and run out of money pay for longterm care. The president is talking about without millions of seniors would have no hope of having prescription drugs. The president is talking about Social Security which keeps American Workers from retiring into deprivation and desperation. The trump budget cuts, in those programs, amount to more than 1. 5 trillion. Probably goes over just fine with the ballroom crowd, at maralago, but ill tell you it is a terrifying prospect for the hundreds of millions of americans who every single month walk an economic tightrope, and count on medicaid and medicare and Social Security to be there as a lifeline for them in the tough days ahead. Add it up, pretty clear picture, the Trump Administration will tune out the needs of the middle class families, but gives the world any corporate lobbyist who comes calling at the Treasury Department. You see it in the secretary mnuchin stewardship, you see it in the budget, and as ive shown, you see it in the president s own words. Thank you, mr. Chairman. I appreciate you hearing holding this. Sen. Grassley before i introduce the secretary, it is my intention to have a 2 00 vote, we will change places in order to go vote. Secretary mnuchin is the 77th secretary of the treasury, prior to the current position secretary mnuchin was finance chairman, for the President Trumps organization, and served as a senior economic adviser, he. He has very extensive experience in all the financial markets, u. S. Government securities, mortgages, money markets,. , Municipal Bonds and he has , held various positions, and successful private enterprises, and has a longstanding commitment to philanthropy. He was born and raised new york city, turned bachelors degree, from yale university, and i suppose it is a lot of the things i could say about you but i want you to take the time now to make your statement. We are going to keep this meeting going during the vote. Thank you very much, chairman grassley, ranking. Ember wyden, im pleased to be with you to here today to discuss the president s budget, President Trumps Economic Freedom agenda is working. Tax cuts, Regulatory Reform, and better trade deals are proving the lives of hardworking americans. Unemployment remains historically low, with 3. 6 , it is at or near all time lows, for African Americans, hispanic americans, and veterans. The Unemployment Rate for women recently reached its lowest point in 70 years. Before President Trump came into office, experts were predicting that we would grow by 14,000 jobs per month, we averaged 175,000, wages for unsupervised workers, rose by 2. 3 in 2019, compared to 3 for all private sector employees. Which means that wages rose faster for workers than it did for their bosses. The improved employment environment means that more americans have returned to the job market, increasing Labor Participation. Last months Labor Participation rate reached 83. 1 in 11 year high. An 11 year high. American families are earning more each year, thanks to the tax cuts and jobs act, paying significantly lower taxes. They also have more Career Opportunities than ever before. Americas economic strength and is a bright spot in the world is other nations experience headwinds. In the year to come we are expecting even greater Economic Growth in the United States as we finalize trade deals with some of our most important trading partners. The phase one deal with china will result in critical enforceable protections for businesses and a tremendous boost for our farmers. The usmca will add to our success by setting some of the highest standards ever in a trade agreement. We are proud to have earned the support of a Broad Coalition of industries. We are pleased that it was passed by congress with strong bipartisan support. I particularly want to thank the members of this committee for their work on this important issue. In addition, President Trumps economic policies will result in Economic Growth, will reduce our National Death debt deficit over time. National debt and deficit over time. In order to secure critical funding to rebuild a military, Democrat Members of congress insisted on increasing other Government Spending, which resulted in overall spending of 8 . The administrations committed to working with members from both sides of the aisle to address spending going forward. The president s 2021 budget for the Treasury Department makes it clear that as we continue to prioritize Economic Growth as well as National Security. Of particular for this committee, we are requesting 12 million for the irs, this includes funding to implement the Taxpayer First act, and the third year of integrated Business System modernization. We continue to bring the irs into the 21st century by updating systems utilizing data, analytics and other Technology Advances to enhance the effectiveness of audit enforcement activity. We are requesting program integrity, and kept just meant to reduce the tax cap of the savings of over 64 billion over ten years. We also remain focused on improving Customer Service for taxpayers by reducing coal call and wait times, and enhancing Online Service capabilities. Im pleased to be here with you today, thank you very much i look forward to answer your questions. Sen. Grassley we will have a fiveminute round. S. Mr. Secretary, critics of tax reform have suggested that the treasury created loopholes for Big Companies and regulations as part of a secret gift or lobbying process. The idea that the process has occurred in secret is hard to understand given that the comment. In the administrative procedures act gives people opportunity for input. And i dont see how you cant do your job of implement a new law without listening to stakeholders. The preamble to the regulations make clear that treasury, meticulously analyzed, and addressed public comments, sometimes taxpayers were happy with the outcome. Sometimes they were not. I even heard some of these people in my state that werent happy about it. The Business Community certainly doesnt seem to think that they have received everything for which they have asked. Mr. Secretary, isnt it true that the treasurys decision about tax reform regulations, have been base squarely on Technical Analysis and legislative intent, and not by corporate . Yes, mr. Chin chairman, that is absolutely correct. Our job is to implement the legislation, not to make the legislation. On a regular basis we meet with lots of people to take input. We reached out to the committee and its staff, and again we go through a notice and Comment Period with the public. Sen. Grassley second point im pleased to see that the president s budget calls for making tax cuts and reforms benefiting individuals and Small Business permanent. This includes the doubling of the Child Tax Credit to 2000, nearly double standard deduction and lower overall , individual taxes. It also includes a 20 qualified Business Income Deduction which benefits small passthrough businesses. Mr. Secretary, and treasuries estimation, have these tax measures be an important factors in the high levels of Consumer Confidence and Small Business optimism reported since the enactment of the tax reform . And also would you expect making these tax provisions permit to have additional positive effects on consumer Small Businesses and the economy generally . Yes we would, mr. Chairman. Sen. Grassley . Thank you. Yesterday the house ways and means committee, argued that cbos adjustments in the Corporate Tax receipts is evidence that tax reform cost more than projected. Largely because treasury has provided an additional windfall to Corporate Taxpayers. However, as i mentioned in my statement yesterday, joint tax committee, and cbo have confirmed that one cannot infer from cbos projections are protections tax reform regulations are inconsistent with the statute. In fact, cbo clarified that other factors for the change in projections, namely the economy abroad, trade developments and the reduction in the bureau of economics and analysis of Corporate Tax revenue estimates between 2016 to 2018, which then of course intern informs cbos baseline. It strains credibility to blame tax reform for a change in the baseline, from years before tax reform was even inactive. Mr. Secretary, is it your understanding that cbos downward adjustment is a result of a number of factors, and that it is in fact too early to determine the precise impact of tax reform on tax receipts . And also does the administrations budget by cbo, project a steady increase in corporate receipts throughout the current budget window . Sec. Mnunchin mr. Chairman, let me say that our analysis is always been higher than cbo, as ive said previously, we believe that the tax cuts will pay for themselves over a tenyear period of time, that is how we score them, or two we are two years in, we have updated our projections for the next eight years, and we believe that. Again let me just comment, the spending is increasing as well, but the trillion and half dollars in tax cuts we believe will pay for themselves. Sen. Grassley senator wyden. Thank you very much, mr. Chairman. I want to start with what i think is a clear double standard in regards to responding to an oversight. I look at the record and it seems like democratic request get shoved to the back of a filing cabinet, and somehow republican requests get the red carpet treatment. So i want to give you specific examples, and give you a chance to respond. Treasury gets two requests from Congressional Committee chairs, one request is backed up by clear statutory language, in tax code section 6103, requiring the treasury secretary shall provide tax documents to the committee. The other request doesnt have the same legal basis, and certainly to me it looks political. The request from the democratic chair, with a firm legal basis, was met with nothing but legal footdragging. The request that came from the republican chairs got vip treatment. They got a response out the door in a flash. It looks to me that there is a double standard here. You are tipping the scales of congressional oversight. What am i missing, mr. Secretary . Two committee chairs, different treatment. Sec. Mnunchin we responded to you, and as i explained the house disclosure of tax returns , whichect to protections on the of ice of counsel, we have significant concerns. That is very different from what i believe is a request on a bipartisan basis, we have responded to thousands of requests to the committees from both republicans and democrats on an equal basis. As we said, treasury does not process den your stonewalling about stonewalling. Sec. Mnunchin thats really not fair at all. Sen. Wyden two committee chairs, one gets no response. Republican gets a quick response. Sec. Mnunchin thats just not fair mr. Wyden, we have responded. Sen. Wyden it is a fact. Sec. Mnunchin we responded to your requests another, we are following the law of 6103. Sen. Wyden i gave you a specific example that shows a standard a double standard. Sec. Mnunchin one has to do with sars thats under a different section which we have responded to your request and the democrats request on this committee equally with republicans. Sen. Wyden lets talk about Something Else where once again, it sure looks like there are sweetheart arrangements that do not meet the test of the public interest. Im talking about the state owned bank which has been accused of a billion dollar scheme to evade our sanctions, and it sure looks like erdogan and his soninlaw have been personally implicated in it, and since taking office you have had seven meetings, seven with senior turkish, one with erdogan one with his soninlaw, they were directly implicated in sanctions schemes. You met with them. Doesnt this send a horrible picture to pose in the oval office with sanction violators, . Is it just open season for sanction violators in your Treasury Department . Sec. Mnunchin mr. Wyden, i have met with hundreds of world leaders, and finance chairs, so meetings is nothing it is rare . Sen. Wyden what were the meetings about . Sec. Mnunchin i was just about to finish, those meetings were about many important strategic issues, as it relates to halt bank i cannot comment on the specific, because that is subject to inquiry, both the department as well as the department of justice. Sen. Wyden finally let me be clear, on these new loopholes, that were created, you made it out in some way that the minority was involved in. Our input was never sought in connection with this whole array of new loopholes. I know because i would have been fighting them every step of the way. Thank you, mr. Chairman. Sen. Grassley since you brought up the first issue, with him i would like to give my view of that. Not to defend the secretary, but just a state where i am coming from, because i am the instigator some of these requests. Whether it is the majority or minority, or senator wyden right now, youve publicly expressed, your frustration that treasury has responded to the committee, and produced request that the treasury has not done the same for the minority. And i think that that is wrong, and ive done a lot of oversight work, with senator wyden, and we have worked together on most of this stuff, and we are even working together on this particular issue. As the department itself wrote in the letter yesterday, ill put this letter in the record without objection, to senator wyden, the categories and types of documents that i have sought, from treasury have also been made available to senator wyden and his side of the aisle. My investigation with senator withon has nothing to do 6103. We are proceeding methodically with oversight, instead of running fast, skipping steps and failing to litigate privileged claims. At this point privileged claims dont even apply to our requests. So are you asking for a rebuttal to what i just said . Sen. Wyden yes, and i will be because im asking a question of the Treasury Department. What were talking about is two instances where treasury documents were requested by committee chairs. In one instance, the secretary has stonewalled the response. In the other he fast tracked the request. Thats what looks like a double me. Dard to period, full stop. Sen. Grassley ok senator , lankford. Mr. Secretary, thank you for being here. Thanks for the insight that you bring to this. Obviously we will go through the president s Budget Proposal, as every four puzzle comes to capitol hill gets reviewed and, then get set aside, i will go through it but there are a lot of good ideas. I appreciate the hard work that goes into it. I will be interested to see how history looks at this economy, 25, 30, 50 years from now. But we look back at the reagan economy, and the clinton economy, and see the growth thats happening, and watching some pretty Remarkable Growth in this economy since the tax cuts a. What you have overseen from the treasury right now, if im looking at this correct correctly, during the Previous Administration there were 3600 manufacturing job losses, during this administration, we have gained 12,300 gains in manufacturing alone. During that time period. So its dramatic turnaround. In the beginning of march of 2018, 21 consecutive months, that they are more job openings in america, then there are people looking for jobs in america. That is pretty remarkable. And for the last 16 consecutive months, we have had Hourly Earnings for folks who received 3 or higher every single month. That is a remarkable economy. And thats happening right now. So thank you for your work. Because you put a lot of work into this, to be able to go through the process. I want to ask about the process in this. Ive done a lot of work as well with many members of this in government shutdowns on trying to get away , from longterm and try to get , the solution on the debt ceiling, those are three things to hang out, there what were talking about budget issues, that also seems to be a part of the conversation on their, can you put an estimate on the cost on the financial cost of government shutdowns, on the cost for long term scars, and if there are alternate solutions with dealing with debt ceilings. . Sec. Mnunchin i dont have the specific cost of those, but i will tell you that they are quite costly particular to see crs have a very significant cost on the department of defense. Theres no question that that is a significant issue there. I would also just comment, i do you share your concerns about the debt ceiling. I think that we have done 80 of those last 50 years. I think everyone would agree, we cannot ever get to a point where we would default on the u. S. Government debt, and i would encourage congress to think about a process that we prove spending we simultaneously what is other peoples comments on debt ceiling and how they handle it. . Sec. Mnunchin most people dont have debt ceilings the way we do. This is a National Anomaly for us, we have five 80 of them in the last 50 or 60 years, as far as a debt ceiling increase, is it they are clearly not managing our spending, they have become us senator white house as well, a bare trump in the bedroomtrap in the there are no good results. , its an issue we have to resolve. Sec. Mnunchin i would just say, i would appreciate this as a bipartisan issue, and obviously spending is approved on a bipartisan basis, and it is important that we get to a process where we increase the debt ceiling at the same time. I want to ask two quick questions, there was a bit of an unknown at one point that ive asked you out about before, a business cannot have more than 5 of income on things like alcohol sales and things are listening in the code particularly. They can have up to 5 of their income and still be a recipient in the opportunity zones. There is not a definition for cannabis businesses. Are they in that 5 amount . There is a federal prohibition on cannabis sales . Sec. Mnunchin i will have to get back to you on the specifics. It would be great to no get clarity on this they will need clarification on that one we have spoken about it before its difficult to get a federal tax benefit for something in this gains federal law. But that is not clearly defined in the last regulations. Another one is their quest in there is a request in this budget to be a to transition secret service, dhs back over to treasury where used to before. Can you give some definition on that . Sec. Mnunchin thank you i , appreciate the opportunity to comment on that. Let me just first say, that this has support, on a bipartisan basis, from the current president , and the last several president s. I think you know the secret service has a long history which started at the Treasury Department to counter counterfeiting. We think that there is tremendous integration moving it back in working with all of our terrorists Financing Activities and working on our cyber issues and again this is something that has tremendous support within the secret service. I look forward to more details on that. Thank you, mr. Chairman, and thank you mr. Secretary. I do want to start by just talking about the view from michigan, because certainly the numbers you are talking about are not what we see. And just for clarity under the Previous Administration, we had about 80,000 manufacturing jobs, up until the last three quarters we had about 12, 000, under the current administration, but for the last three quarters we seem two quarters where we actually had lost manufacturing jobs, and the last quarter was flat. So the view from the ground is different than what youre seeing in certainly in michigan and in the midwest. We have not seen wages rising like youre talking about. We have a lot of folks working, jobs, three jobs, trying to hold things together, but that is not the same as having one good paying job, where you can actually take care of your family. Which is what i would hope would be all of our goals. So we do have, when we talk about the tax code as well, construction trades meeting with them this week, theyre not happy that the tax bill doesnt allow them to write off the cost of buying tools now, which are necessary for their job. And yet big corporations can write off what they need,. Theyre not very happy about the fact that they cant write off mileage anymore when they move from one job to the other, or if they move from california to michigan to get a job. That is no longer something that they can take themselves right write off. And when i tried to close loopholes that allow corporations to take jobs overseas, we couldnt get that in this tax package. So my view is a little bit different. But i want to focus on something where people did get hit, and have not yet recovered in the economy and that is pensions. Folks at work hard their whole lives, and trusted everybody, corporations, governments systems that said that maybe ill take a little bit less, and wages put money in a pension plan so i have it when i corona retire with my family, and when we saw what happened in the stock market, present talks oldtime the stock market, its soaring thats highly measures, things so its true top 10 , wealthiest folks doing very very well, but one of the ways that working people are dealing is whats been lost in the stock market, and in the crash, and that results in in reductions, in reductions. As a result of the financial crash, we know that there was over 1. 2 trillion just in ira and 401 k loss, not counting the pension system. And so my question relates to, what are you guys gonna do. What do you support in terms of what needs to be done for the pension benefit guaranty corporation. We know that we have 1 million and a half americans, that are going to lose the plans that they paid into their whole life,. They are totally risk for the next 20 years, and all we need is one big failure, like central states, and we will see the federal backstop go insolvent. So this is a very very big issue. We have a proposal put forward, passed by the house of representatives called the Butch Lewis Act that would give them time to recover. We are certainly willing to weigh in, our government to give loans to wall street, but yet the folks who lost their pensions are very afraid, and are still waiting for somebody to recognize what they lost. What are your ideas, what do you plan to do to protect Peoples Pensions . Sec. Mnunchin well, thank you. I agree with you the pension issue is a serious issue, i am well aware of the issues as you also know we administer certain functions associated with the multiemployers. I acknowledge there are some significant issues, i work i look forward to working with this committee, that consider legislation to address these issues, and we stand ready to provide assistance on a bipartisan basis. I guess my question would be does the president support the Butch Lewis Act that came over from the house of representatives that is before the senate . Sec. Mnunchin i cannot comment on that specifically, but the president is interested in looking at a bipartisan basis, these pension issues. I personally have met with some of the people from these pensions at various with various members of the committee. I just want you to know this, while we are all basically not acting, at this point other than we are able to come together, miners which was positive, but the reality is i have folks in michigan who now have gotten a 70 cut, 70 cut. In their pension. Thats pretty significant, pretty terrifying for people, so we need action. We need action. We know what it is, we know what needs to happen, we know the numbers, we need to act. And people are counting on us to do that. So im anxious to know what the president will do to act. Welcome, mr. Secretary, i want to start off by talking a little bit about Climate Change and energy policy, tax policy, and help us create some jobs, and address Climate Change. An appropriate way. I just got back from a trip with some friends to antarctica last month, and he said it was pretty warm, she was surprised. We were really surprised this past weekend when the temperature there hit 65 degrees at the south pole, antarctica. People say, was that a record . It sure was. California had wildfires, a place called paradise which went up in smoke. Australia had wildfires last month. Hardidwest, huge floods, to get the crops into the ground , seeds into the ground. The last five years with a hottest five years on record, this is the hottest january on record. Something is happening here, just what it is is not exactly clear. I think something is happening and it is clear, way too much carbon in the atmosphere. What are the ways we can address that . One of one of those ways is to the administration has proposed, our tax policy. Proposedistration has to illuminate some Clean Energy Tax incentives, and undermined goals that the president has said over and over again that he wants to achieve. But the president s Budget Proposal, prematurely eliminate Clean Energy Tax incentives, and what it would do, i did mention a couple of those tax incentives for electric vehicles, or fuels vehicles fueled by hydrogen, and a tax policy that incentivizes people to buy vehicles with less fuel. We have some incentive proposing tax, policies that actually lead to reducing carbon and our planet in regards to mobile sources, we are getting just the opposite why is that . Sec. Mnunchin let me just comment, because you addressed a lot of different issues. The president very much supports clean air and clean Water Administration proposed reducing epa funding by almost a third. Sec. Mnunchin i think you different credits including electric car credits and others. I would be happy to come and talk to you about the different policies. I do not know what you want me to comment on specifically on this. I will just be as direct as i can be. The source of the missions on our planet is mobile sources. There are ways to use tax policy to encourage people to drive vehicles including trucks there more energy inefficient, and instead of supporting tax policies that will do, that we get just the opposite. The other thing i would say that would be really helpful, the administration is talking about transportation i infrastructure. When i was governor, i would propose i was governor for eight years we had tax cuts seven of eight years. Balanced budget every year. I proposed transportation infrastructure for my little state, but i also propose ways to play for it, and we need the support of the administration as we go through this year, figuring out what to do, but not just to say this is a great want this would be great, but how we can pay for it is a conversation that we can have when we get together. Sec. Mnunchin i appreciate that, and the president is very much interested in infrastructure, particular roads highways rail and others, ive had several meeting with richie neil, to see if we can find ways on a bipartisan action. The president mentioned the barrasso bill which ive helped to, right at the state of the union address, the need for transportation, i held my wallet , its not just enough to do stuff, but we have to figure out how to pay for it. I agree, and i was encouraged. I think it passed 240. The last thing i want to ask, tax policies and pay for themselves, when you adopted the tax policy about two years ago, we said it was going to pay for itself. I think whether its the cbo or any number of entities, said it doesnt really pay for itself. That has not paid for itself and it will not pay for itself. Do you have a rebuttal for that. . The numbers around staggering. I think cbo said the estimated socalled tax cuts, i didnt additional 228 billion to the deficit for 2019 how do you respond to that . Sec. Mnunchin i stand by our comments, that the tax cuts will pay for themselves, this will be simple math. We measure this over ten years, we have eight years left, i look forward to writing the committee a letter in eight years to go through the exact numbers. First two years our numbers are projections, as part of the budget process we go through estimating the next eight years based upon our estimates of growth and various different issues, we do believe it will pay for itself. That is different than a deficit because we have increased Government Spending and we cant pay for it twice. Thank you. Sen. Grassley senator menendez. Sen. Menendez thank you, mr. Chairman. Mr. Secretary, we are facing a precarious moment in our public where truth is under assault. All in the name of politics, blind allegiance to a single fidelity valued over to the constitution. I would like to go over a few points today and correct the record so the American People have the truth before them. President trump claims to have inherited a, quote, disaster of. N economy from president obama he takes credit for what he calls, and i quote, an economic turnaround of historic proportions. Mr. Secretary, how long has the u. S. Economy been posting positive gdp growth . Sec. Mnunchin its the longest running economic scenario weve been in. Sen. Menendez absolutely true. Gdp was positive for the past 10 years, growing for the final seven years of president obamas presidency. Growing for the last 10 years, including the final seven years of the Obama Presidency. And we can both agree that President Trump has been in office for about three years, is that correct . Sec. Mnunchin that we can definitely agree on. Sen. Menendez the economy was already growing for seven years, before President Trump took office. Lets talk about jobs. President trump claimed he will be quote the greatest jobs president that god ever created. Closed quotes. He has repeatedly criticize d president obamas job record. Lets compare the last three years of the Obama Presidency to the first three years of the trump presidency. Can you guess who created more jobs . Sec. Mnunchin i dont have the numbers in front of us, but we have created substantially more jobs than the Obama Administration projected at the beginning of this administration by a multiple of three. Senator menendez . Lets talk about what actually happened. The economy gained 1. 5 million more jobs during the final three years of president obamas presidency than the first three years of the trump residency. Present obama have an 8. 1 million jobs during his final three years in office. That is more than the amount of jobs added during the first three years during the trump presidency. Which is roughly about 6. 6 million. The fact of the matter is, is that what we had is a growing economy, gdp was growing, strengthened dramatically over the last several years before this administration took over,. More jobs created in the final three years than when this administration took over. Years of thest two nbama Administration Media Household Income increased by yearsduring the first two of the Trump Administration, Household Income increased by less than a third of that. In fact, median Household Income only increased a mere 550 in 2018. Far short of the four to 9000 gains promised by these this administrator and. So let me recap, lets get to the truth. The trump economy created less jobs, and delivered under a third of the earnings to families than the final years of the Obama Presidency. All the while, nearly doubling the deficit to a trillion dollars. I think there is a truth, and the truth is a real disconnect between what the administration is saying, and how people are living. Bedrock middleclass goals of owning a home, sitting money for retirement or distant realities under this administrations economy. It is important to set the record straight. , doesy, let me ask you that itstment commit actions, policies, and investigations including sanctions will remain free from political pressure by the president . I look at the recent nominee who is supposed to be before the Banking Committee where i also serve, and her nomination has been pulled. I look at the issues on the question of how we are enforcing sanctions, can you tell this committee that the department will conduct its actions policy including sanctions free from political pressure by the president . Sec. Mnunchin i would be happy to answer that, and i will send you a followup. Sen. Menendez can you answer my question first . Sec. Mnunchin i have the numbers on disposable income, 4452 between december 2017 to 2019. In regards to your question i would say no. Sanctions are driven by Foreign Policy. Foreign policy is directed by the president. No, specifically i would say aretions as Foreign Policy by direction by the president and executed i am not talking policy considerations, i am talking political political sec. Mnunchin your differentiating political from policy. Big difference. Thank you, mr. Chairman. Mr. Secretary, nice to have you here i like to follow up one point with my colleagues talking about, we have the growth numbers, for fy 2019. And you say, that the tax 2017 the tax bill pays for itself, based upon the Economic Growth which we recognize, you have projected omd the Congressional Budget Office said 2. 4, quite a difference, when we now have the actuals 2. 3. Very close to omb. We dont have actuals running we do not have the actuals for any other years, but the difference between cbo and omb is pretty dramatic in the economic numbers. So what does cbo know that you dont know, and why were they able to project the growth for the first year that we had in 2019, when you are projecting over 3 throughout this time . Sec. Mnunchin there were significant number of things that impacted the growth this year, one was the global slowdown. Strike. The gm three was boeing. There were a significant number of issues that drag down gdp, in the range of the 50 to 70 basis point. At the end of the day, the projections are dependent upon gdp and economic numbers going forward. A big difference between the cbo projections, and our Economic Growth projections going forward. You can understand how we are concerned, about the tax bill, adding greatly to the deficit because Congressional Budget Office has been much more accurate than omb. I just want to point that out, and thats what we are concerned by these what we think unrealistic growth numbers. As you said, you will be able to come back and show us, we dont know for how many years, we should be able to come back and show us, and we will see whether in fact this holds true. I want to Say Something positive about your department, particularly the office of tax policy. At one of our hearings i said to , theuestion answered energyefficient commercial building deduction. For years i have heard from Small Business owners that they were required to make payments to state and local governments to receive an allocation letter to claim their deduction, that goes against the intent of our law. The letter sent back by treasury acknowledges that it is inconsistent with the policy goals, the owner of a public building to seek or solicit a payment for building for providing written allegations. I want to thank you because this letter will go a long way, and i hope it will provide the clarity we need. If it does not, i will be back in touch with you to make sure that the law is carried out. I want to knowledge that the budget does include funds for pleased to see that. Bipartisan effort in this committee. But you still have not appointed a National Taxpayer advocate. I say that because of the acting advocate roberts has said its a critical that a permanent National Taxpayer advocate be appointed as quickly as possible to ensure the irs protects taxpayer taxpayers. That is solely in your hands, the appointment of the Taxpayer Advocate. Can you give us any indication, when we might expect that. . I can. Uchin and let me first say, im glad we were able to clear up the other, issue and lets stay in touch, Taxpayer Advocate is a very important position, we have interviewed some very very qualified people, we have made a final decision at the recommendation of the commissioner, and i expect we will be announcing that the next few weeks. Sen. Cardin oh, good. Glad to hear that. That last thing i will bring up, im pleased the budget has the modernization and the technology thats important, i worry about the personnel rumors. We have seen a dramatic reduction in the last decade 20 reduction in the workforce, where youve had significant increase in tax returns, this budget again cuts the fulltime equivalence and irs, and i worry that you dont have the workforce you need and being able to retain the experience workers and irs, and professionals in order to carry out that responsibility, so i hope we can Work Together congress has been i think a little bit more generous in this area, we can Work Together this committee, has a responsibility to make sure the tax code is carried out effectively, we have the on staff we need, etc. , so i hope we can work because i think need help on that. Sec. Mnuchin we appreciate that. Thank you. Senator maggie hassan. Ssan thank, you mr. Chair. I want to thank you and the Ranking Member for holding this important hearing today, and thank you, secretary mnuchin, for testifying today about the Treasury Departments Budget Proposal. Mr. Secretary, when you testified to this Committee Last year about the treasurys budget, i spoke about the importance of robustly funding Treasury Department programs that combat terrorist funding streams and other forms of illicit financing. I am pleased to see that the 2021 treasury budget proposes increased funding for the office of terrorism and Financial Intelligence and for the financial crimes enforcement network. These offices play a vital role in combatting emerging National Security threats. For example, terrorists and other National Criminal organizations are increasingly using cryptocurrencies to finance their activities, do in due in a small part of the difficulty inherent in tracing these transactions and tying funds to specific actors. Treasuries proposed budget mr. Secretary, how will the treasuries proposed budget increases assist the department in monitoring suspicious Cryptocurrency Transactions and prosecuting terrorists and other criminal organizations financing illicit activities with cryptocurrency . Sec. Mnuchin first of all, thank you, and thank the committee for the generous report on funding increases in these areas over the last several years. Weve really built up a very dedicated career staff and specifically on cryptocurrencies we are spending a lot of time on , this, on an interagency basis and with the regulators, we are about to roll out some significant new requirements. We want to make sure that technology moves forward, but on the other, hand we want to make sure that cryptocurrencies are not used for the equivalent of old swiss secret and rebecca counts. Hassan well, thank you, and i look forward to continuing to work with you about that. Another question, under the Previous Administration, Treasury Department budgets contained proposals to improve the research and Development Tax credit for new and Small Businesses, as you know, the r d tax credit supports the efforts of startups to invest in the development of new, Innovative Products leading to job creation and economic policy. That is why it introduced Bipartisan Legislation along with another senator that would modernize and expand the r d tax credit for startups. Mr. Secretary, for this years budget, did the treasury consider including any proposals to improve the r d tax credit for Small Businesses, and what the treasury be willing to look at a bipartisan proposal to see how we can Work Together to support entrepreneurs. Sec. Mnuchin we would very much look forward to working with you on that, and my office will follow up to make sure we are on top of that. Sen. Hassan ok. That would be great. What we are really focused on is this companies that dont have a Tax Liability yet but are making these critical investments, so, last, question i am a strong supporter of Bipartisan Legislation championed by Ranking Member biden that would permanently extend tax cuts in New Hampshire and across the country. Last year, along with senators roberts, menendez, and daines, i was on a task force that recommended, on a bipartisan basis, passing permanent relief for craft brewers. It is vital that the bureau of alcohol and tobacco, tax and trade, as you know, which is within the treasury, clearing the backlog of approval request for new beverage formula and legal. I continue to hear from New Hampshire brewers that delays in approvals are slowing their business growth, despite the additional funds that congress has provided, and cutting down on the backlog. Mr. Secretary, can you explain to the committee what resources the secretaries treasury were would provide to address this backlog, and will you continue to work with congress on this issue . Sec. Mnuchin yes, yes and yes, and let me just say, if Congress Wants to do anything to simplify the label approvals, i would look forward to working with you on that as well, and i know there is tremendous bipartisan support for the craft brewers. Sen. Hassan and as i understand it, the budget proposes 5 5 million in funds to accelerate the processing formula and label applications, so it seems that there is recognition of the issue in your Budget Proposal, and i think what ive heard is a commitment to work with us. Sec. Mnuchin ive actually looked at this label issue and were trying to figure out how to streamline it. Sen. Hassan ok. Lets keep working on that together. Thank you very, much and thank you, mr. Chair. Senator cortez masto, im passing over senators, so if they come back, they will be with some of the people that are here. Masto thank, you mr. Chairman. Mr. Secretary, in the commons that you provided today you state that the federal government revenue increased by 4 from fiscal year 2018 to fiscal year 2019. Unfortunately, in order to secure a critical funding to rebuild the military, the democratic members of congress insisted on increasing other Government Spending, which resulted in spending growth of a percent from fiscal year 2018 to fiscal your 2019, so, i guess my question is, in order to address the democratic members of congress increase in Government Spending, is that the reason why in the current budget this Administration Seeks to cut 200 200 billion from s. N. A. P. For women and children, cut 170 billion from student loans, cut 90 billion dollars from seniors on Social Security, cut 76 billion from persons with disability, and cut 59 billion from farmers . Is that what this administration thinks is the way to balance this budget on the backs of individuals because they do not necessarily work for the military . Is that how i read this . Sec. Mnuchin i dont think that is the way you read it. The point that i was trying to make is that Government Spending increased faster than we would have, left to our own, i was involved in the bipartisan agreement to get that done and , and as it relates to Social Security, the president has been clear he does not want to cut Social Security, that on Social Security there is savings in the increase of growth forth fraud and other issues. But you do not disagree, this budget actually request to cut of 90 million for senior Social Security, correct . Sec. Mnuchin i believe its not a cut, its a reduction in the rate of increase, and its not too benefits of people on Social Security. So, a cut toasto student, loans Social Security, fore with disabilities farmers, and for women and children who seek assistance. If that is not a cut, then i would love to talk to you about what it is this administration values and how they see these groups unimportant individuals in our communities who are being effective. I would love to talk to you about that i disagree, and thats my concern is, this Administration Says one thing, but their actions are just the ,opposite and i think it is important for us to really talk the true facts and not what you come here and reading your statements about what the administration claims they are doing to the benefit of our communities, because when i go home to nevada, there are still people struggling, and i do want to talk to you about, when you put together this tax bill that you talked about an Economic Growth, particularly when it comes to the budget, i keep hearing you saying that youre talking about a budget that shows grows domestic product growth will climb to 3. 1 , that is your basis, is that correct . Youre basing it on the next eight years a 3 , 3. 1 growth . It ranges between 2. 8 and 3. 1. But let me just comment on Social Security. And looking at the mandatory programs of Social Security, starting at 1. 038 and it goes up every single year through 2030 to 1. 906, Social Security mandatory burns are going up consistently in our budget every single year. Sen. Cortez masto so what i hear from you today is that there is no request in your current budget to cut anything happen to do with Social Security. Rep. Nunes again the absolutehin , mandatory sen. Cortez masto dont read it to, me just tell me, there is no secret Social Security is what im hearing. Sec. Mnuchin i believe there is a cut in the rate of increase, not an absolute cut, but again i would be happy to follow up and go through this. Sen. Cortez masto lets talk, about it because of a Social Security, the resources in the individual of the time people working Social Security to help people in need, and youre impacting the people of need so lets talk about that now running out of time but let me ask you this, youre projecting a growth for the next few years and you have independent forecasters saying, it is only going to be 2 or 2. 2 , and you yourself has said you have concerns that growth might be impacted by the coronavirus, that 3 growth, then why arent you adjusting it downward, i guess, is my questions, to ensure that we come in eight years, and the tax bill hasnt been paid for, how do we pay for that . Curb inchin well, the the coronavirus is just a one time. When we did the projections. Sen. Cortez masto what does that, mean one time . Sec. Mnuchin it will just impact 2020, so the coronavirus is not going to impact growth over the next ten years, nor is the boeing issue going to impact it. It may have an impact on one year which again, we just has not updated the models because the whole budget process started at the end of last year. Sen. Cortez masto so, we hope the coronavirus does not have an impact beyond this year, is that what youre saying . Sec. Mnuchin i dont expect that the coronavirus will have an impact beyond this year. Sen. Cortez masto ok, thank you. Thank you. Mr. Secretary, thank you for being here today. Im now sitting in the chair of senator grassley. I see that. I see that. sen. Portman its a better seat, actually. Great testimony, today you pointed tax reform is working and it certainly is, so is regulatory relief. I think it is, and better trade agreements, and that combination is improving the lives of people represented it is good to see. When we started off this, effort President Trump in the Congress Said ok, were going to focus on tax reform because we believe that will result in more jobs, better wages and leveling the Playing Field for u. S. Companies trying to compete in the Global Economy and all of that happened, and dont take my word for it. The Congressional Budget Office, in 2018, the nonpartisan cbo says in their analysis of the effects of tax reform, these changes are expected to increase career savings, investment, and work, they also estimate of the bill would reduce the intended for customer invest overseas that 65 million per year, in other words, encouraging investment by states that we represent. To get its positive effect on the economy should result in an average gdp increase of 0. 7 and a cbo projection, that in fact, just last, week last week, cbo said again in a new blog post, the tax bills effect on the economy have appeared consistent with our initial assessment. So, thats cbo, but the numbers are clear through out there, prior to tax reform, cbo said the economy would create an average of 107,000 jobs per month in 2018. We actually got an average of 193,000 jobs. They also said the 2019 it would be 27,000 jobs per month. So far, we are six times ahead of that average at 175,000 jobs so, you know, thats great. The thing that i like beth it is the wage growth. We have now seen for 18 straight months wage growth of over 3 , and as we know from the bureau of labor statistics information, this is primarily helping folks who are non supervisors, meaning, bluecollar workers, midincome, lowincome workers, and thats just awesome news, and we have not been able to see that kind of way towards his before the Great Recession so its working. One thing that you will talk about a lot is the international side, weve already heard you talk about some, people are bringing money home, they encourage companies, as you know, to leave their income overseas, not to pay back in taxes and International Provisions were designed and that, lockout thats exactly what is happened between january 2018 and september 2019, in the last data which we have, companies brought back over 1 trillion in overseas earnings, more than the previous six years combined. Which is why, by the, way on a bipartisan basement, we we have this change of lowering the radio into a territorial system, its actually working, and tax revenues are, up not down, which is one thing youve talked about a lot. Try to employ what was a complicated tax bill, i want to commend you for that. Its a difficult job, our whole new, International Tax system, again, one that was very bipartisan and its creation, although, at the end of the day, we did not get a bipartisan vote, that part of the legislation was always something that we believe was a good idea of both sides. In fact, senator schumer and i cochair the task force. I think youve been unfairly criticized by some have said by making the implementation changes that you are somehow not in keeping with the tax bill. I think its just the opposite. And i must say that today i heard people pointing to the cbo baseline as a reason to say the at, evidence of that, and i just think thats not how the regulatory relation process works, they dont report tax regulations, the same way it doesnt make the laws, taxation, scores tax legislation and so , and so your job is to implement the law in concurrence with congressional intent, and i think youve done your best to do that. Second, the joint committee on taxation is want to provide to cbo, to take into account some of the same assumptions about joint tax, but they also incorporate hundreds of thousands, so its also important at that cbo made both upwards of downwards revisions in terms of the overall forecasting, but critics only tell you about the downward revisions, which i think is interesting, so my sense is that the cbo revisions also come in large part, because companies are actually paying more in section 965 taxes, that is the repatriation taxes, in the first couple, years the may actually raise expected in as a result we could companies eight years to pay, and companies paid more quickly than that, so that is not a tax cut. Those are taxes that are already paid. On the guilty, which is meant to be a guardrail in this territorial system, i know that you have come up against some criticism on the way you handle. That this is exactly what we intended, which was that we would have the ability to bring profits home, create that incentive, and trillions of come back, as we talked about, but at the same time, under guilty, those companies who wanted to shift to lowtax jurisdictions would be penalized, and thats what youve done. The number we use for the minimum tax was 13. 215 and the number was very clear on that. So critics continue to argue that your efforts provided new tax cuts. I would say, not, adopt busily they would say that your new proposal clarifies the connection between the existing rules and providing exceptions for companies with foreign tax rates above a 0. 9 is a bad tax break, which is ridiculous. We have said anything above a 13. 125 would be cautious or very conservative, so, i wonder if you would give us your view on that . Do you believe youve taken a cautious and conservative approach on this, based on the congressional intent and taxpayer comments and treasuries Regulatory Authority . Sec. Mnuchin our job has been to implement that part of the tax code, consistent with the intent and as prescribed by the law, and thats what weve done. Sen. Portman again, i commend you for that. Im going to come back for a second round in a minute, give you a chance to talk about that and about what youve done implement the tax legislation. Senator warner. Warner thank you, mr. Chairman. Great job on opening statement. [laughter] sen. Warner mr. Secretary, it is great to see you. I want to ask you a couple of questions about, i think, some very good work the department has been doing around Beneficial Ownership and antimoney laundering. Last week, your Department Published the 2020 National Strategy for combatting terrorists and other illicit financing, and i know youve gotten a lot of criticism on the side of the aisle, but on this side, i want to commend you for putting out this strategy. I think it represent a critical undertaking. Particularly how little the u. S. Government really knows about illicit Financial Risks and what of the tools and some of the aspects we need to move forward. One of the key vulnerabilities identified in the report is the lack of a legally binding requirement to collect Beneficial Ownership at the time of company formation, a time that we think we provide the least burdensome approach. This failure to have this basic Beneficial Ownership information hinders Law Enforcement ability to fully investigate criminal actors, as the report points out, but it also drives up significantly the cost of Law Enforcement and the cost on both the public and private side. So the first question is, mr. Secretary, do you agree that one of our most urgent National Security and regulatory problems as the u. S. Government still has no idea who really controls shell companies, in many cases, being used to move billions of dollars across our economy . Sec. Mnuchin well, thank you, senator warner. I think this is a critical issue, and i also want to thank you, because i know you spent a lot of time with our department on this. And i would encourage the committee on a bipartisan basis to work on legislation. I think this is critical. Its critical not only here but as we push for other policies around the world, this is a glaring hole in our own system. Sen. Warner one of the things i also like you to comment on, when i see some of the risk on from my, well, sitting on the intelligence committee, we see regimes like china, iran, north korea, that, frankly, use u. S. Shell companies to hide some of their activities. I think weve seen it a lot in terms of activities around sentinel production. Fentanyl production. So far, legislation has great support for the committees that are trying to oppose sex trafficking, can you speak a little bit about the National Security implications and also some of the risks that the lack of information poses to the local communities . Sec. Mnuchin you pointed out very significant risks in the problem is that when someone opens up a bank account, the Beneficial Ownership is kept by the banks, but that information is not put into a centralized database. So we are looking at a specific entity, and we want to see who the Beneficial Owners are, we have no way of getting that information other than first tracking a bank account and then potentially pinging thousands and thousands of banks for that, so its a very inefficient program and allows them to hide their identity. Sen. Warner whereas, as you have indicated, i would like to point out, both chairman grassley and the Ranking Member have supported efforts to crack down on a shell companies, and you are kind enough to indicate you think we ought to be taking this up. You indicated on the Banking Committee, we have a broad and Bipartisan Coalition for , four democrats, four republicans, we named at the illicit cash act, which would dramatically update our am l regime and deals with this question around Beneficial Ownership. We think in a way that does not put undue burdens on businesses. As a matter of fact, one of the things that to other members of the finance committee who are ranking, and chairman of the Bank Committee, both members of this committee, and we are hoping they will move it towards a markup. I should be smart enough to take your earlier statement that you support this effort, but if you would like to make any final comments on this notion of moving this legislation through the Banking Committee, we have worked closely with the administration on that. I would love to hear. Sec. Mnuchin let me clarify. I very much support your efforts on that. I will take that, mr. Chairman, as a time to yield back my 28 seconds, but you might want to ask a question or something. Mr. Chair, thank you. Thank, you senator warner, for your responsible approach. Senator casey . Sen. Casey mr. Chairman thank you very much. Mr. Secretary, good to be with you. I wanted to focus on one topic, middleclass, and take you back to a meeting that you are at, but im sure you may not remember, because you had a lot of these. We had a meeting in october of 2017. It was a member of the finance committee, both parties, not everyone, but most of the committee, the president was there. The Administration Officials were there talking about the tax bill. At that time, the tax bill had not passed. It was in the drafting stages. I raised a question with the president about the focus of the tax bill with regard to the middle class, and he expressed a very positive aspiration to have the tax bill be a benefit to the middle class. As a matter of fact, i remember him returning to, you are trying to buy a first name, instead of secretary of the treasury but he said, im gonna make sure we focus in the middle class. We know what happened after that. The bill passed and we are told, these are just two examples apart of middle class, we are told by your committee on taxation any left of the 27 jean tax bill and take one segment of the middle class which in this case is 15 million households all making under 100,000, thats the category of people, that those 50 million households, all making under 100,000 a year, would see a tax increase or decrease, one way or the other, of less than 9 a month in 2019, and that is from the joint committee on taxation. Document in 10 19. Very little change, up or down, 9 a month. This is a way of looking at the middle of the middle of the Tax Policy Center formulated goes , going through the quintiles. The Tax Policy Center indicated that households earning between 48 and 86, thats a pretty good share of the middle class, millions of taxpayers, got an average tax cut of about 800 dollars. The top got a lot more, obviously not just 30, but the top 1 got a lot more percentage. I dont think many people dispute that. The question i have is, when you track with the president and your team, over the entire administration, is saying before the bill, after the bill about what the impact of the tax bill is on the middle class, and then subsequently, larry kudlow was quoted on november 1st of 2019 talking about, quote, tax cuts 2. 0 on cnbc, saying, you know, indicating that the intention was, i guess, to provide another tax cut. Can you tell me, where is that . Is there going to be a tax cut that is real, substantial, i hope, even transformative for the middle class, or are we still going to see a tax bill that is very limited, to 800 or whatever, whatever number a lot of the middle class get. Got . Well, i am happy to follow up and go through the numbers with you, but on my numbers the typical family earning 75,000, so, they saw the tax reduce more than 2000, or almost typically, by more than half, so i dont agree with your numbers that the tax cuts were not significant for the middle class. Sen. Casey im just saying that, i think what youre disagreeing with it is not me but the Tax Policy Center, so thats fine. Sec. Mnuchin well, im looking at the tax cuts and jobs act distribution chart. Id be happy to follow up with you and go through the specific numbers. Im looking at Tax Policy Center numbers. We could look at other numbers. So i dont know what youre specifically looking at. Sen. Casey [laughs] hope i would hope thats not your final answer. I would hope that the administration will be focused on giving a tax cut which really would really improve peoples lives, not either the 9 one way or the other per month for 50 Million People under the 100,000 box, so, thats one, and let me just finish with one reference to, i think, senator menendez was talking about jobs by way of comparison into administrations. I think the data shows that if you look at the first 36 months under President Trump, basically, february 2017 through january of this year, thats about 182,000 jobs per month. The last 36 months, the same time period, last 36 months, of president obamas administration, that number is 224,000 jobs per month in those 36 months, so 42,000 more jobs under obama, adding up to more than 1 million and a half more jobs, so i dont think theres anything wrong with the president trying to commend the work of his administrations about job growth, but i think we ought to be clear that if hes going to constantly compare himself to president obama, he ought to at least acknowledge that the last 36 months under president obama were stronger than his first 36 months. Maybe months 37 will be better but i think thats what the , record shows. Sec. Mnuchin actually, the economy was not stronger. With regards to jobs, when you start with the higher Unemployment Rate, its easier to create absolute more jobs. Sen. Casey you get did not walk into an unemployed 10 , either which president obama did. When you look at four and a half to three and a half, obviously, as you get down the low unemployment range is harder and harder to create jobs 45 qs is a program i amipation. Interested in. Thiseography is suited for and we would benefit from decreased global house gas emissions. We keep hearing guidance will be withinnd thinks weeks, but weeks pass. What is the current timetable of releasing this guidance . Can we be sure it will be released soon . Sec. Mnuchin i know if there have been delays on this. I did review this as recently as yesterday. Comingill be guidance out in the next few weeks. There are other regulations that were supposed to come out i told him they needed to have come out in march. Sounds great. You are your familiar with this. Claimeds improperly millions in taxpayer credits and the irs does not have the process to prevent these claims. Size sincedoubled in the year they were first reported. It is the top 1 buying electric vehicles and the guy buying a pickup truck paying the tax credit. What has the treasury done to be able to identify were to eliminate this problem . Sec. Mnuchin i agree with you on the first part. Particularly people buying those expensive teslas, they dont need that tax credit. We have a situation where Certain Companies have tax credits and others dont. We are working on the audit issue and what we do to fix that. If it seems a simple solution would be a cross relationship, but do you need any authority from congress to do this . Sec. Mnuchin we will always take more money from congress, but now, we dont need any authority. Unfortunately, an unfortunate situation. About the rise of commerce and counterfeit that are a risk to both health and safety. These sellerst, of counterfeit goods are less likely to pay taxes. Could you tell me about any taking the treasury is to address the tax gap that counterfeits create . Let me comment two things. The counterfeit issue is not directly a treasury issue, but we do share the concerns. One of the questions that needs to be considered is the people selling these counterfeit goods on marketplaces. Beard these Companies Better responsibility . Ultimately, this relates to the tax gap. Tax cap. We are very focused on what we can do on the tax cap overall. Can you comment on the impact counterfeits could have on the u. S. Economy . Sec. Mnuchin it has a big impact. It is lost revenues collected asserting companies and Small Businesses. It is ripping off consumers. I appreciate your answers. Welcome, mr. Secretary. I want to spend a few moments and talk about the historically strong state of our economy. Watching what has happened under President Trump, with the spublicans leadership commitment to tax reform, the economy is booming. I am struck by the job creation numbers. 6. 7 million jobs. President trump was elected. 4. 6 million of those jobs have been created since we passed tax reform. A national Unemployment Rate is near a 50 year low. Thee is a reason i left private sector to come into public service, to see results like this. Wages are growing across the board, but importantly, we are seeing this bluecollar. Low income americans are experiencing the largest wage gains, and average wage growth for workers now outpaces the wage growth for managers. Americans are getting back to work. This is good for montana. Its good for the country. Mister secretary, my question for you is, as you look at the tax policies that we move forward with, as we have seen now an outcome that was predictable, we saw this when president kennedy threw his leadership cut taxes, we saw under president reagan through his leadership in cutting taxes and growing the economy and seeing wage growth and more jobs created, which tax policies do you see as being some of the most important in keeping our economy growing . Sec. Mnuchin i think there is no question the change in the corporate side to a territorial system Encouraging Companies to bring their cash back here and build jobs here is being very important. I think there is no question that the deduction for Small Businesses has been critical and i think theres no question the tax cuts for the middle class and put a lot of money back in peoples pockets that they could save or spend. So, you brought up the tax, we call it the mainstream tax relief. The main street businesses side. In montana, 90 of our businesses are actually on the smaller side. Survey,g to a recent Small Business owners say their business benefited from the 2017 tax law, 69 . More than seven in ten say they reinvested over one quarter of the savings that resulted from the tax law back into their businesses. And i can tell you thats why myself along with senator roberts, senator thune, senator blackburn, introduced the main street tax certainty act which would make that 20 deduction with tax cuts and jobs act permanent. I think it is critical that we work towards this on behalf of our Small Businesses. My question for you, mister secretary, is how it is making this 20 deduction permanent, as the president s budget proposes, help to increase business certainty and provide confidence for job creators to invest and grow their businesses . 01 37 27 well, asmnuchin youve commented, those Small Businesses are the backbone of a large part of the economy, not just in your state but in other states and providing that tax relief gives those businesses more money to put back into their businesses to hire additional people and go out and make Capital Investment. I want to shift gears for a you,t, and i agree with and talk about the trade situation. Ive been struck by the success we have all seen in the last 120 days. Remarkable. I was there in the white house with the president when he signed historic japan deal in october. In fact, i had a montana cowboy hat in the room with me, followed up then by the phase one china deal followed then by the canada and mexico trade agreements. The trade with these four countries, over two trillion dollars countries as we know, United States, you get them, all one, two, three, four. I applaud the focus. We have made great progress on trade and i want to congratulate you and the team to that end. I look forward to continue to work with you in this administration to hold china accountable not these existing commitments and we get these phase two negotiations are completed as well as what youre doing here now with the uk, with the eu, india, and critical markets. Lets see how many more we can get done here within the year. Thank you, secretary. Thank, you mister chairman. And welcome, mister secretary. I got word last night that jesse lieu with whom we are going to do a hearing in banking for nomination, she was explicitly and suddenly withdrawn from her nomination by the president last night. When did you in the learn the president was withdrawing the undersecretary of your department . Sec. Mnuchin i believe it was two days ago. Two days ago. Can you tell me why her nomination was withdrawn . Sec. Mnuchin i think you know nominations are at the president s direction and we dont comment when nominations, as a matter of policy, when nominations are withdrawn, which happened for a variety of Different Reasons at different times, why that is done. So, you dont have any opinion or knowledge of why she was withdrawn . Again, what ive said is that as a matter of policy. Okay, i want to give your second chance, mister secretary. Prior to position, you may know, maybe you dont, i dont know. She was u. S. Attorney for the district of columbia. She was involved in the cases of three of mr. Trumps convicted political operatives, mr. Gates, mr. Stone, mr. Flynn, absent any plausible explanation for his withdrawal of this nomination , even though you know you claim, i hope you know more last no you are under oath, you claim have known him for two days and it appears this is another stop on the president s personal retribution tour, an attempt to ensure she did not come to the Banking Committee tomorrow to answer under the questions about this prosecutorial decisions with prosecutors scaling back sentencing recommendations on mr. Flynn with senior doj officials suddenly intervening yesterday to reverse and make more lenient the second syncing sentencing record of career prosecutors, one of them actually resigned, it tells us a lot. I mean, this personal retribution, this retribution tour for the white house, personal retribution tour the president has engaged and started with the prayer breakfast, of all places, and then the east room, and then as attacks on colonel vindman mocking his accent, the senator and i worked a lot with Ukrainian Community and im proud that so many ukrainians have called america home, leaving the soviet regime and he was serving his country. The president mocks him. The unannounced, the surprised, unexplained withdrawal of jesse lieu, and i hope we would get an explanation that is counter to the one that everyone assumes, and that is that the president , and she is part of the president s personal retribution tour. So im hopeful that later you will help us and tell us the real reason. Mister chairman, i wanted to shift to another question senator wyden has been a leader on. I appreciate your response to the letter i sent you last month about the International Tax regulations. Since i wrote, you the since i wrote you, the po provided c corporate revenue projections that over the next ten years theyre projecting 110 billion dollars less in revenue than previously thought. The report says hed be a reduced its projection, but the amount of income under certain provisions fled National Business activities, these changes, which lower court receipts reflect the implementation of the law. I am most interested in the regulations impacting u. S. Tax obligations of multinational tax corporations under foreign income. Before treasury issued these regulations, did treasury do any analysis of how much revenue would be lost . Sec. Mnuchin treasury doesnt do analysis as part of regulations, but what treasury does do is when we update the budget and there are specific regulations or technical changes, we do take that into account. So, did you estimate how much . Did you have any estimate about how much revenue would be lost by those regulations . Again, what i would say is that now having reanalyzed those relative to the overall receipts we dont think there are significant materials changes. Is pretty significant and 100 billion when you look at. Sec. Mnuchin i dont think there are hundreds of billions, just to be clear. I didnt say hundreds, i said 110. You know, this when the president put out his budget monday, after your tax cuts about what you brag and i was forget to mention that this had never happened during periods of Economic Growth when the budget expose the way it, does something you told your administration does not seem to care about, you then, the president goes, announces, it takes it back, and then goes in his budget and makes huge cuts in medicare, Social Security, medicaid, and all kinds of things that matter to working class families while the rich in this country get richer, and that seems to be the way this administration seems to want to go. Thank you. Senator cantwell. Mr. Treasury, secretary, weve had a chance before to talk about the problem that we have in the United States of america with the lack of Affordable Housing and particularly, i wanted to ask you about the low Income Housing tax credit, the tax credit has two different credits, 9 , which is mainly used for new construction of Affordable Housing and 4 which is used for new construction, closely with workforce and rural housing, rehabilitation of existing Affordable Housing. 4 because 53 of all for about the Affordable Housing built in the United States. The tax credit writ large, like 90 of the Affordable Housing that is built is built with tax credit which means if we dont expand the capacity for the credit, we are not going to get more supply, and we certainly have a supply problem. Now, now the 4 credit is challenged because it is not only 4 because it is a variable rate, right now it is trading at 3. 2 , so, one of the things that my colleagues, senator young and i have been working on my colleague, senator young and i have been working on, is making that 4 a floor, if you will, on the tax credit, it fix right. This would help, us immediately, provide more Affordable Housing in the marketplace by just the value of that credit being more determinant to those making these investments getting the tax credit so, could you give me some feedback on that, as the treasury looks at this issue, and whether or not you would support the 4 fix . Sec. Mnuchin we would definitely be happy to work with you on that but unfortunately, senator brown just left, i just wanted to make the comment, we do care about Affordable Housing and im hoping its a different committee, but we can work on housing, financial reform, because Affordable Housing is a big component of that but we would definitely be willing to work with you on the issue you just brought up. The 4 . The easiest thing to do right now, we would certainly appreciate the treasury looking at a larger investment beyond just fixing the 4 , we think the supply size of the equation who clearly shows we are not getting the job done across america for lots of Different Reasons, just lots of different changes in demographics. And i think the thing that is clear is that the population that doesnt have Affordable Housing is costing us a lot of money. Probably 20 more percent more to deal with the same population in emergency situations, hospitals, shelters, you know, incarcerations, so, getting this solution would be a big boost to, and i, mean economies across United States because the Rural Communities are facing just as much of a challenge as the urban centers. Like, if you could, give us feedback on that as well. I think i will stop right there. Thank, you mister chairman. Im sure its unusual for today, but, yes i am. [laughter] ok. Senator toomey came back so im going back up to the top of the list. Senator toomey, go ahead. Thank you very much, mister chairman, mister secretary, welcome and thank, you let me to thank you. Let me say at the top i want to say i really appreciate the way you have consistently engaged in a dialog with senators and i guess inform the judgment of folks at treasury in the implementation of our tax reform, i appreciate it ongoing dialog. I think its very constructive. Related to that point, one thing i thought was most constructive and progrowth about our tax reform was moving to enabling business to fully expense Capital Expenditure in the year in which it occurs rather than having these various appreciation schedules depending on the type of the asset. As you understand very well, for peculiar reasons we have these expense in expense provisions phaseout over time in the next several years. I have introduced, actually, i will be introducing tomorrow, a bill that will make those expensing provisions permanent and provide business with the assurance that they will be able to fully expensed the Capital Investment that they make. My view is that that enhanced, this effectively lowers the after tax cost of capital, doing that means more gets invested, that means workers are more productive and end up getting higher wages. So, just quickly, i think i know the answer, but are you generally of the view thats encouraging that expensing is good for the economy . Sec. Mnuchin yes, i agree. And adjacent to that is the issue is something we nobody which relates to the qualified improvement provision so this relates to the Technical Area and the drafting of the tax reform by which improvements, for business, instead of being able to fully expense them when they occur, because of the drafting error, they have to be depreciated over very, very long periods of time and that raises the cost for anyone making leasehold improvements and as you know, as you know very well, retailers especially, restaurant eurs to a very large degree have regular needs to make substantial leasehold improvements and that category of investment has really and unsurprisingly actually had a negative impact, while the rest capex has grown, so, i know youve been supportive of this and i just want you to ask you to continue to work with us to get this fixed into the tax code as soon as we can. Sec. Mnuchin i think both democrats and republicans acknowledge that that was a drafting mistake, that it was not intended to be a policy change but we unfortunately cannot fix that through our regulations. I have constantly brought this up on both sides of the aisle, that this should not be a democrat or republican issue. There is a segment of the economy that was unfairly hurt by this mistake and this is our number one request to getting a congressional fix for. I completely agree and i appreciate your support on this, and then finally, i wonder if you could just, and i apologize if you have already covered this, but if you have not, i would love to get an update on where we are with the oecd and the talks about tax policy and specifically im very concerned about the Digital Services tax that some European Countries are intending to impose, as a practical matter, on American Companies. I want to commend you for your work in helping to reach what looks to be like kind of a truce for now, the french have agreed not to impose these taxes on us. We have agreed not to impose tariffs on their products. Im hoping that that gives us a moment to negotiate an agreement but i also think its best if its done with respect to the entire oecd, rather than a strictly bilateral basis, anything you can share with us on the status of those discussions . Sec. Mnuchin i think, as you know, these International Tax issues are probably the most complex issues there are but the president has been clear that we think that the Digital Service tax is an unfair attack on u. S. Companies and discriminates. Hes been personally involved in this in discussions with president macron and others, as a result of his involvement we have reached what i would call a truce with france where they will not be collecting this this year but we continue the oecd, the good news is that the uk also will not be collecting at this year and i think all these countries have agreed if we have an oecd solution, they will replace the gst with the oecd solution and we are actively working on that in that is a priority for us this year. Sec. Mnuchin thank you. Senator white house. Let me add to the bipartisan chorus of urging you to get 45 q done. It has taken two years which i think is inexcusable. Somebody has done a rather poor job of quarterbacking that within your organization but im glad you say it will be done in a few weeks. Please. Can you hear us . Sec. Mnuchin it will. There is no excuse why it is taken as long as it has and i assure you what will be done. Thank you. So, on another issue where we in Corporation Transparency in the problem of the Shell Corporations that the devil so Many American interests. At the moment, we probably have two republican votes for the judiciary version of the inCorporation Transparency bill and i dont know that we have any of the Banking Committee, so, your people in your Administration Needs to make a bigger effort, politically, to emphasize the National Security and Economic Security prerogatives behind your support of the inCorporation Transparency legislation, so at the moment it is jammed up. I think it is jammed up because there are a lot of slippery interests that make a lot of money after this rather creepy Shell Corporation and international crookedness kleptocracy economy and they are working through lobby groups to try to jam this up. I hope you agree with me that they are not to succeed but i want you to know that they are going to succeed unless this administration makes it quite clear that this is a bill the president really wants to pass, that this is important to our national and financial security, so i offer you that heads up and hope you act on it. I have been in contact with the Banking Committee about a set of economic warnings that are out there, and i will give you a copy of the letter i wrote and i want to give you a part of it. It is based on december letter that i wrote, based on a Coastal Property values crash that come from another source but in particular freddie mac, a credible source, and of a carbon asset bubbles crash led primarily by the bank of england have been at some time. There are now over 30 sovereign Central Banks echoing those warnings. So between the sending of the letters, the bank of International Settlements came out with a very significant warning, that these physical and transition risks associated with Climate Change would affect the stability of the financial sector, that they could be irremediable by ordinary methods. The impacts could be so great as to, here is their language make quantifying financial damages impossible. I put them again, the effects would be catastrophic and irreversible, that these climate related risks will remain unhedgeable. As long as systemwide action is not taken, and it emphasizes that this is a systemic financial risk, the terms systemic financial risk means of something a fairly significant, do they not . Sec. Mnuchin they do. And it is a severe warning, is it not . Sec. Mnuchin yes. The warning of systemic financial risk, as it is or not a severe warning of systemic financial risk . Sec. Mnuchin im not following what the question is, so i understand obviously what Systemic Risk is. And its serious. Sec. Mnuchin Systemic Risk is , by definition, serious. Thank you. Then we went on in that same time period to the black rock letter in which ceo larry think larry think wrote Climate Change has become a defining factor in long term prospects that we are on the edge of a fundamental reshaping of finance compelling investors to reassess options, that in the near future and sooner the most anticipated there will be a significant reallocation of capital. That is another pretty ominous phrase, is it not . Sec. Mnuchin thats his opinion. I dont take it as an ominous phrase, but yes. It would be interesting, also, mackenzie recently pointed out that Climate Change could make Long Duration borrowing unavailable, impact insurance costs and availability, reduced terminal values and trigger capital reallocation asset repricing. The World Economic forum put out its global risks report in the same month, listing the top five most likely risks facing the world over the next ten years, and all five were climate related risks. The last, sorry mister chairman, last, the Stanford Graduate School of Business Report in january noted again that the Financial Risks from Climate Change are systemic, singular in nature, that the Global Economic losses from Climate Change could reach 23 trillion dollars, three or four times the scale of the 2008 financial crisis. My question to you is have you ever heard so many and such severe warnings from so many such respected sources about a looming risk of economic crash, ever . Sec. Mnuchin let me just say, anytime somebody agrees on Financial Risks, they turn out not to be the case and when people do not see them it is the worst thing you can expect. There was a lot of discussion on this issue when i was at davos. I will say it is something that both, on an international basis and at the fsock, we will continue to talk about and monitor. I think one of the Big Questions is how does Technology Change over the next 20 years and what is the cost of carbon recapture . There is a lot of very extremely interesting potential technologies that will reduce the cost of carbon recapture quite dramatically. Before i call on the senator, i want to say, since i am a partner with senator white house on Beneficial Ownership, i want to thank you, and i hope you can talk loudly about it because we senator sasse . Thank, you chairman, thank you, secretary, for being here. Lets talk about china a little. Powell at then Bank Committee this morning, and when he was asked a series of questions about the coronavirus he said that it was, and im not quoting here, but paraphrasing, he said it was too early to tell if the Public Health event would materially change chinas economic relationship with the rest of the world so, i think i have two questions about that for you. The first, is do you agree that its too early to tell what the impact of coronavirus are going to be, but more significantly, what kind of data would the Treasury Department be looking for to see the earliest signs of whether or not china may be undergoing some sort of change relationship with the rest of the world, obviously it is going to overlap with a bunch of trade questions. Sec. Mnuchin let me just say, chair powell and i have spoken about this recently and i think we both share similar views. So, anytime you are modeling something like, this you have to start with what the impact is of the virus and the way it is spreading. I think on the one hand there are certain aspects of it that are much more concerning with sars, on the other hand, i think china started with this much earlier so i think that the scientific data, we will have another two to four weeks where the data will have been much better ability to extrapolate this. Theres no questions having a Significant Impact in china. To what extent the virus spreads, the rate it spreads is something were obviously monitoring very carefully and to have economic impacts, i think we need another three to four weeks updated to be able to extrapolate in a more specific way. I appreciate your point that they have tackled this earlier than sars, but we should just have a shared understanding in this room and in the broader u. S. Context that this disease, nineish weeks old, we have, it got no attention for over five weeks in the Chinese Communist party because they have this myth that chairman she can preside over china, i think in their language at the most wasnt Party Conference president xi can control china from east to west, from north to south, across all centers of the economy. He is functionally, all knowing, well who believe that kind of bs than obviously you would need to hide the emergence of a Global Pandemic because 1. 4 billion chinese, many members to come his party noisy consolidates more more power at the top, this myth that he is able to centrally planned everything that happens in a civilization means that if you have something horrible, a Natural Disaster like a disease, the communist party essentially becomes a great incubator to spread that disease by lying to your people about the confidence of the leadership so you may have addressed it faster than sars, they still addressed it way too late and there are people both in china and beyond dying because of the malfeasance and maladministration of the communist party. Could you distinguish a little bit between what you see as the victories of phase one on the china deal, that are real, and what you hope could be the most endnd most front realizable goals of the face to agreement and how you see that time, limit police . Sec. Mnuchin i think the phase one agreement is quite significant, thats the first time there has been serious commitments. It is everything from forced technology issue, patent protection, agricultural structural issues, Financial Services if shoes, currency provisions, and a real enforcement provision. So i think they are quite significant. Obviously our biggest focus is , implementing phase one. That to a certain extent is slow down given the virus, as expected. And i think phase two, the good news is that ambassador lighthizer and i have the entire phase two chapters dealt with and we have said we may have ruled them out in phase two. When you say you have this chapter stealth, with have you looked at phase two a, or whatever the piece that is the earliest, one of the earliest and worstcase in the timeline you envision . Sec. Mnuchin we have not really determined that. I, mean the president has been very clear. Want to the exit on phase one. Wants us to make sure as we move to phase two we get what we need to get and it does not want to set arbitrary timelines. So i think as you know the president kept significant tariffs to create incentives for them to do phase two and those will be reduced until we do that. Thanks. You mentioned that there have been real commitments about theft and forced Technology Transfer in phase one. I want to start by saying ive got some lot of skepticism about whether the Chinese Government will keep their commitments, but i applaud the president for having been one of the first people to push on the fact that china has been a bad actor, and we needed to shine aboard a spotlight on them. So i applaud the president for having done that, but its also the case that they made pledges many times in the past about ip and technology they have not kept their word on. Have you seen, personally, any evidence of things like chinese ownership for past wrongdoing . So, the equifax indictments that were announced by the department of justice and the attorney general this week, really great stuff, that more than one third of american, the great news that theyre being indicted, the event is itself horrific, but in the 2017 hack of equifax that led to the personally identifiable Financial Information of more than one third of americans being stolen, great that the attorney general and the Justice Department are focused on that, but in any of your dealings with them as you have these conversations i were these conversations about getting honest and getting real about ip, intellectual property more broadly in the future, do they ever own any of their past wrongdoings . Sec. Mnuchin let me just comment, obviously, the equifax thing is obviously quite concerning those along concerning Law Enforcement issue so we have not had specific discussions with them around equifax. I will say that as it relates to specific technology things, i think there is a legitimate interest internally in china by a large group of areas that they want to put these protections in place because they realize that their economy cant move forward without them. Now, as you said theres been commitments made in the past, the difference here is this agreement has real enforcement provisions built into it. I am at the kids table and i recognize you see me is the most Junior Member basically behind your shoulder here, i dont want to upset the chairman. You were not so junior. You get the same 5 minutes everybody else gets. Thats good way pointing out to me that the clock is ticking, six and a half minutes, a followup with you separately about some other ip issues. Thank you, mr. Chairman. Thank, mr. Secretary. Since tax return, reform, our economy has absolutely been roaring. Its really been encouraging. Along with Regulatory Reform and imitation of usmca forthcoming, the longest period of economic expansion in American History and i know folks back home in my state are really enjoying the fruits of our prosperity. Since tax reform, real disposable personal income from the state of indiana has risen around 6,000. Moreover, average Hourly Earnings grew at a rate of 3 or higher for 16 consecutive months with the largest wage gains concentrated in the bottom quarter of the wage scale. That is something i will continue to tout and i commend you and your department for your hard work to help affect this change. Secretary, mr. There are skeptics still despite these high numbers in this tax cuts and jobs act who are trying to draw attention away from our outstanding economic results and push concerns of stagnant wages. And i just want to give you an opportunity to sort of respond to this narrative that we hear out there and elaborate on how changes in investment behavior matter for ordinary americans, like those i just described. Sec. Mnuchin thank you. I think theres no question that we think that the tax cuts are having a real impact on the economy, and a real impact on wages, as you pointed out. That the average american as seen real economic gains. That about says it. Well thank you, and as you continue to implement the tax cuts and jobs act. I stand ready, this committee stands ready to help you and also our taxpayers to navigate the new changes, to make sure haveesses and individuals the necessary guidance. So id like to turn to a different topic, but a very important one. Its the emergence of cryptocurrency and the challenges it creates for the United States government in various ways. So the increasing interconnectedness of our world Financial Institutions is addressed in the president s budget. In fact, he proposes to move the secret servicebacked treasury to create a new efficiencies and recently, the irs has increased enforcements and released Additional Guidance related to crypto. Proponents of crypto believe it can benefit the everyday consumer by lowering transaction costs for Online Purchases and increasing protection from Identity Theft and breaking down various financial barriers. How does your department, mr. Secretary, plan to respond to this rapidly evolving technology of cryptocurrency and other Digital Assets . Sec. Mnuchin well, thank you, and as you commented we are very supportive of bringing the secret service back up to the treasury, where it started, and the efficiencies of how to get together. Were spending a lot of time on the issue of cryptocurrencies and Digital Payment systems. Its a crucial area, and theres a lot of Different Things that get grouped together in this one area. So let me be brief. Pure cryptocurrencies like bitcoin and there are others, we want to make sure that these are not used as the equivalent of secret bank accounts. So we are rolling out new regulations to be very clear on greater transparency, so that Law Enforcement can see where the money is going and this is not used for money laundering. There is another component of the market which people refer to thinkble coins where we technology can be used to reduce Payment Processing quite considerably, particularly for smaller dollar payments across the border. And then there is a third component that people are looking at, which is central bank potentially issued currency. That is something that chair powell and i do not think the u. S. Needs to consider now, but could consider down the road. You preempted, my followup question there, as a release to central bankers, there is a concern that they could use these Virtual Currencies to operate outside of the Current International financial system, right . Ok. Well, as the department stands ready to begin working on that, i look forward to engaging with you on that issue. So, thank you so much. I yield back my five seconds. Secretary, heres where we are. The chairman had to be out of the room for a couple of minutes. So senator thune is going to ask his questions. I have one additional area i want to explore with you, and we quickly appreciate your patience and we will recognize senator thune and i think the chairman will be back. Thank, you, and secretary mnuchin, thank you for being here today. As already pointed out in two years since tax reform has passed we have seen and continue to see the benefits of that. Last weeks jobs number was great, and the two and 25,000 jobs created, and probably most important of all is just the annual hourly wage growth that weve seen has been north of 3 again and for 18 months now in a row, and unemployment to 4 or under for 23 weeks in a row, so these are not blips on the radar. They mark progress on the trajectory of the economy and in an era where lackluster growth is no longer the new normal so we believe the policies that are working will continue to make life better for American Workers and i hope our friends across , the aisle will put partisanship aside and join us in creating more opportunities for American Workers. Before i get to my question, i want to mention thank you for your effort to thread the needle on the 199 a regulations to ensure that the deal we have with stakeholders clearly reflected in those regulations. So thank you for your attention to that. The president fiscal 21, 20 budget seeks to improve worker classification, an issue important is give economy and as you know i introduced legislation that would help develop clarity surrounding the tax treatment of this new generation of workers and the administrations proposal about the benefits of this legislation. Act addresses the class of workers, independent contractors versus employees, and creates a worker safe harbor based on objective tests. It also provides voluntary withholding of independent contractors. Secretary, do you agree that one way you can address the tax gap is by updating our tax reporting laws to ensure the irs has the information it needs to enforce our tax laws while also respecting the traditional distinction between employees and independent contractors . A followup to that. How important is in your mind that congress modernize the tax code to reflect the evolving nature of our economy and evolving nature of how goods and services are increasingly provided . Sec. Mnuchin we look forward to working with you. We think it is an significant issue. Ok. We hope so. We would like to see this change made and get enacted. In the postwayfarer world there remains the potential for discriminatory and duplicate of taxes on Digital Goods and services, such as online music and Cloud Computing services and while my home state of south dakota was careful of the way it crafted sales tax laws, the potential for multiple and discriminatory taxes levied on these types of goods and services could threaten the growth and innovation of this sector of the economy, something that i have worked with the Ranking Member widen on in the past and we have detergents and Services Tax Fairness act, a bill which would provide some rules of the road for taxing goods and services and sales, which establishes a framework across multiple tax jurisdictions. Mr. Secretary, do you agree that more certainty on these another interstate commerce issues is needed after the wayfarer decision . Sec. Mnuchin we look forward to working with you on that as well. Well, we are going to give you that opportunity. Were going to have a hearing on that real soon in the congress committee. We appreciate the work that you did last year to implement changes to treasury guidance for high deductible plans used with hsas. The inclusion of chronic disease management as Preventive Care is an important step in helping patients with conditions like diabetes or asthma better manage their health, and i look forward to continuing to work with you on that. We had one other issue that is related to that. I have a bill called the fifth act, and it would allow it to say dollars to be used towards expenses related to physical activity, and i think that is something on the preventive side we can do that would help when it comes to reducing health care costs, and i would simply ask you in response, would you commit to working with me on my staff on ways you can address that issue through legislation or through further administrative fixes . Sec. Mnuchin we will. Thank you. Great. That was easy. Got all my questions answered. Chairman i yield back. , thank you senator thune. ,one additional area, mr. Secretary. Senator menendez and i both asked you about whether the Treasury Department was being tough enough on sanction violators. Senator menendez asked if sanctions decisions would be free from Political Considerations and you simply said no. Now President Trump has one of his trump towers in istanbul and senior hawk Bank Officials have offices there. In a letter that your office sent to me in november, and im going to put that into the record now, you said that when president erdogan asked trump to go easy on turkey, President Trump referred erdogans request to you. Is, didestion to you President Trump ask you to intervene and assist with turkeys sanctions violations . Sec. Mnuchin so i want to just clarify one thing on the first part. When the question was asked about political, i was using the word political and policy interchangeably. As it relates to, and i want to be careful how i respond because this is subject to ongoing Law Enforcement with the department of justice. The reason why the president referred to me and the doj was ande were ongoing issues, the portion fell under my responsibility. That is the reason why it was referred to me. So my question is, did President Trump ask you to intervene and assist turkey with their sanctions violations . Sec. Mnuchin he did not ask me to intervene. What he asked me to do was, again, he knew that i was responsible for seeing the old provision of it. And again i cant go into the , specifics of the investigation. Again, this was a sanctions violation, as you are aware of, as it relates to the bank and it would not be a regular first talk to government officials, specifically where there are areas under my responsibility. You told me there were seven meetings. Now, i know enough, having served on the committee, treasury secretary a pretty busy guy. Seven meetings . What happened at these meetings . Want to say i just that my calendar is public so it is no surprise. I assume the seven number is correct. Thats what you told me. Sec. Mnuchin but again, i meet with finance ministers, with world leaders, with the president on a constant basis. So many of these discussions have nothing to do with sanctions issues or the bank issues whatsoever. We were having trade discussions with turkey. We were having discussions around Foreign Policy issues. We also have another Foreign Policy decisions. At almost every g20 weve been at we have met with turkey on a regular basis on a bilateral basis. Well leave it at that for now. Thank you mister secretary for your testimony today, on the president s fiscal year 2021 budget. We are going to ask members on both sides of the aisle, i think submit anynows to written questions to the record by close of business on and with that, the hearing is wednesday, february 26. Adjourned. Sec. Mnuchin thank you, very much. Cspans washington journal live every day with news and policy issues that impact you. We will discuss efforts to improve the equal rights amendment with the equal Rights Coalition copresident and ceo. We will talk about the Trump Administration approach to Border Control with the National Border patrol president. Watch cspans washington journal at 7 00 eastern this morning. Watch next week for museum week. We will explore mount vernon, the National Museum of the smithsonian, the National Museum, and the smithsonian National Museum of africanamerican culture. Live friday on the cspan Army Secretary Ryan Mccarthy will speak at 1 00 p. M. On cspan. Cspan2 at 9 00 a. M. The 16th meeting examining Sexual Assault in the military. On cspan3 at nine 30 the Trump Administrations immigration policies. At 12 30 pm of forum on the history of black america. Hosted by the woodson center. Follow campaign 20 to nevada this weekend. 11 00 p. M. Ht at eastern democratic president ial joe biden, pete buttigieg, amy klobuchar, stier, sanders, and warren speak before clark county democrats. 5 00 p. M. Eastern joe biden, pete buttigieg, senator amy klobuchar, and tom steyer speak at a forum on infrastructure. Watch ondemand at cspan. Org and listen on the go on the cspan radio app. Are live fromd we the savannah book festival saturday at 9 00 eastern. Our coverage includes editor of the american scholar on the life of 19thcentury showman pb barnum. And an environmental lawyer on his 20year legal battle against dupont. And the recounting of the journey of 18 black men admitted into harvard in 1859. At 2 00 Edward Larson on the partnership between George Washington and benjamin franklin. At three 15, identity and race and her experiences growing up in puerto rico. And Michelle Sullivan on leadership and philanthropy. The savanna book festival, live starting saturday at 9 00 a. M. Eastern. Watch our live coverage of the tucson festival of books next month. Congress approve the equal rights amendment to the constitution in 19 72. The e. R. A. Would guarantee equal rights for all american citizens regardless of gender and end distinctions in divorce, property, and other matters. On thursday the house passed an amendment to remove the line for the ratification. The measure now goes to the senate. This is long overdue legislation to ensure the equal rights amendment can become the 20 eighth amendment to the United States constitution. This year we will celebrate the 100th anniversof