Transcripts For CSPAN3 Treasury Secretary Says Government To Stay Open Through Recess Without... 20170710

With us today, secretary of treasury mr. Ma mnuchin, thank you for joining us. Today we look forward discussing the departments budget request as well as some of the assumptions and policies included in the president s overall request for this upcoming here of 2018. The president s budget proposes cutting spending by 3. 6 trillion over the next ten years while making key investigatements to spur Economic Growth and job creation. And weve all heard what the critics have said and there might abe few critics in here today, but mr. Secretary i am not one of them. I believe the president s budget is honest and impressive. It includes major middle income and business tax cuts through tax reform allowing allowing individuals and constituents all across the country to keep more of their paycheck for themselves. It also has a patrol ondollars public and private plan for national infrastructure. It rescues families from a failing healthcare law. It builds upon our spending cuts and further reduces the size of many federal agencies, if not eliminating agencies altogether. The president rightly wants to have fewer bureaucrats around to regulate our lives and in doing that, it will free up funding for Border Security and for strengthening our military. So i look forward to continuing the discussion on the president s vision for balancing the budget here today. The department of treasurys mission is vast and it plays a vital role in helping to shape and implement the president s economic policies. This includes working to reform the tax code, monitoring risk and fostering growth in the Financial System, increasing access to credit for Small Businesses, and promoting Economic Prosperity for all americans. For this upcoming year, the department is requesting to spend 11. 2 billion which is nearly 400 million less than last year. Thats a cut over last year. Treasurys Largest Bureau is the Internal Revenue service ait accounting for nearly 94 of all of treasurys budget. And while the budget proposes cutting irss top line by 2 , it is also prioritized by requesting to support infrastructure and its i. T. Department and modernization and improving cybersecurity overall. Im interested in hearing from you today, mr. Secretary, on how funding for these priorities will improve the taxpayer experience. The request before us also includes 117 million for the office ever terrorism and Financial Intelligence. This is a 5 million reduction from last year as well. But this office does a lot and its not just oversees policy, but it also has a Critical Role of enforcing sanctions against rogue nations and nuclear prolive fer ratetors. Freezing accounts of terrorists, money launderers and drug lords and producing intelligence for treasury leadership and National Security officials. This office also has the dual purpose of safeguarding our Financial System against elicit use and protecting our systems from National Security threats. Im also interested to know about the challenges facing the treasury and dealing with so many looming threats ensuring that the department has adequate resources to help keep our country safe. The secretarys budget also includes 27 million for a newly created cybersecurity enhancement account. Now this account was established in our most recent government funding bill to strengthen the treasury cybersecurity posture and mitigate threats to the u. S. Financial infrastructure. Cybersecurity is one of the most urgent challenges fatsing tcing country. I hope to hear from you mr. Secretary honor how were going to use these resources to protect against and respond quickly to the Cyber Threats that we see. Before closing, i want to say that im grateful for the swift action that the administration has taken to jump start our economy. Over the last few months, the administration has issued executive orders to right size and streamline the federal government, reduce waste, and duplication and cut red tape. The positive effects are already being felt. Since january 20th, less than five months ago, business enthusiasm has risen at extraordinary rates. Our Gross Domestic Product as increased 1. 2 . Nearly 600,000 new jobs have been created, and unemployment is down another half a percent to 4. 3 , the lowest in a decade. Now thats exciting. What does all this mean . This means that more people are experiencing the dig knittive work and the fulfillment of providing for their families. So mr. Secretary, i look forward to learning more today about the trush ooir yourerys continued role in spurring ore Economic Growth and job creation and mr. Mnuchin, thank you again for taking the time to meet with us and be with us here today and we look forward to hearing your testimony in a few minutes. Right now id like to recognize a Ranking Member, mr. Quigley, for me opening remarks he may have. Thank you, mr. Chairman. Thank you mr. Secretary for being here today. The role the trerk uberry department plays in both domestic and Global Economy cannot be overstated. Not only do you and your department oversee the federal governments ability to collect trillions in revenue and finance government operations, but you are also charged with investigating and protecting our Financial System from the illicit and criminal activities of both foreign and domestic adversaries. Thats why i was so disappointed with this years treasury budget request which slashes fund big 372 million. For the irs this means a cust 260 million after factor in builtin costs such as statutory pay raises, inflation, the cut is in real terms closing to 630 million, thats on top of the nearly 1 billion thats been cut from the agency since 2010. In order to meet this will new draconian funding level, the is would need to reduce staffing by 6,000 adding to the more than 17,000 that the agency had already lost or the last seven years. This is simple lay formula for expanding the tax gap empowering tax cheats and confusing honest taxpayers. Yourself, mr. Secretary, had previously said that the irs is, quote, under resourced to perform its duties and that further cuts will, quote where are hamper ow ability to collect revenue. I was also deeply troubled by the elimination of the Community Development Financial Institutions fund which plays a vital role in spurring Economic Growth and revitalization in our most underserve and knee glektsed communities. In my hometown of chicago, cdfis are investing tens of million every year to provide lowincome families with affordable hows rg neighborhoods with Safe Community centers and Small Businesses with capital grow and high local workers. For the cost of less than 80 cents per american, this Program Helps cdfis across the country support the creation of tens of thousands of jobs financing for over 13,000 businesses, and more than 33,000 of Affordable Housing units. And thats just for last year. This is not only a hugely successful program, but its bipartisan. Which is evidence through the increased funding it received in this years omnibus. There are numerous other cuts to the department that are harmful as well, including questionable reductions to cybersecurity enhars meant at a time when hacking and Identity Theft are at an alltime high. Cuts to gro pro grams that safe grard our system from criminals and ebb force trade and economic sanctions and unwise reductions to various inspectors general offices. Particularly the premature 50 cut to the special Inspector General for tarp which is still charged with auditing the 38 billion in open tarp programs that will last until 2023. But i want to briefly touch been something that you bring up in your written testimony, and thats the issue of financial regulation. Last friday the president tweeted his support for the house passed bill to repeal dodd frank. It is surprising to see how easily some folks forget that less than a decade ago a financial crisis sparked the biggest global recession since the Great Depression and pushed our economy to the brink of collapse. Main street businesses families suffered even greater than loss greater losses than wall street as home values declined, Retirement Savings shrank and credit dried up. And how did we get there . A disastrous combination of irresponsible lend, over complex derivatives, highly leverage and under capitalized banks and inadequate oversight. No person wore argue that the status quo which all molt most crippled our economy was working before the crisis. We need to make our Financial Markets safer, more transparent and more accountable and thats exactly what dodd frank has done. We can all agree that rules need to be tweaked to make sure that small banks are not overly burdened with rules intended for those that pose a success Systemic Risk to our economy and dodd frank came up short orn reforming fannie mae and freddie mac. But gutting dodd frank and rolling back the clock isnt the answer. The answer lies in democrats and republicans working together in a bipartisan way toy continue to improve the sacht and soundness of our Financial System. I look forward to discussing these and other issues with you today. Thank you, mr. Chairman. Mr. Quigley. Id now like to remembering nieds chairman of the full committee. Thank you for the time. I also want to welcome secretary mnuchin to the committee and you fill some historic shoes. Good luck to you mr. Secretary. We look forward to your testimony and hearing your frank and candid views on many issues, some of which have already been brought up. Todays hearing spart of a process we follow to determine the best use of taxpayers dollars. After all the power of the purse lies in this build rg not elsewhere and its congresss obligation to make spending decisions on behalf of the American People. There is quite a lot of focus at home on the issue of the viability of the Internal Revenue service. I do share some of those concerns. We obviously want an agency thats responsible and helpful to our constituent and while im hopeful that congress will be able to reform our burdensome outdated tax towed doed make filing taxes a simpler process im still troubled by the problems that appear to playing that agency. Im eager to hear we are eager to hear how you plan to address some of these concerns. And like the chairman, i share concern about the treasurys office of terrorism and Financial Intelligence which plays such a Critical Role in keeping our nation safe by safeguarding our Financial System against illicit use and combating rogue nations, tourists, facilitators, as well as money launders, drug king pins and other National Security threats. These efforts include disrupting isis finances and enforcing sanctions against bad actors like iran and north korea and theyre constantly trying to penetrate our system and do it damage. Given the current National Security challenges we face, we must ensure that the department continues to invest in these critical programs. Again, i welcome you to the committee and i thank the chairman for his time. Id now like to recognize mrs. Lowey member of the full committee today. Thank you, mr. Chairman. Id like to thank chairman graves and Ranking Member quigley for fold holding this hearing and as a former new yorker im sorry you had to leave us secretary mnuchin, welcome and thank you for being here today. Mr. Secretary, your fiscal year 2018 budget request does not prioritize the taxpayers Economic Development or the ability of your department to sum combat terrorists financing and other National Security threats. Instead, your budget would decrease the irs funding by 260 million, eliminate all discretionary Grant Programs in the communitydevelopment Financial Institutions fund, and this is shocking to me as a former new yorker, i just dont get it, it would reduce the office of terrorism and Financial Intelligence by 6 million. According to the taxpayer advocate, during the 2017 tax season, americans who called the irs for assistance were on hold for an average of 47 minutes. And nechb even then, only 40 of the calls were even answered. With these cuts, Taxpayer Services will become even worse. The ability of the irs to identify wrongdoing is also in jeopardy. Without Adequate Funding levels for irs enforcement, we will simply not have enough manpower to catch bad actors, making it very clear, if you want to cheat on your taxes, this budget is for you. The fy 18 request falls far short in the fight against fiching scams and identity left schemes which appear to be never ending. In addition to depleting the irs of resources to being responsive to taxpayers seeking clarity on the tax code. Cdfi awardees originated 3. 6 billion in loans and investments, financed 13,000 businesses, and 33,500 Affordable Housing units. In our home state of new york, there are 79 certified cdfis that have financed 950 businesses for a total of 163 million in loans in fy 16 alone. Cdfis expand Economic Opportunity for underserved communities by supporting the growth and capacity of a National Network of Community Development lenders. This programs elimination is incomprehensible to me. Its cuts like this, mr. Secretary, that make it clear this budget request is merely an idaho i diddyio logical document fulfilling Campaign Promises and not an attempt to improve the lives of taxpayers. That being said, mr. Secretary, i do look forward to a productive discussion this afternoon and to working with you to achieve the Treasury Departments goals while serving the best interests of the american taxpayer. Thank you for appearing before us. Mr. Secretary, we welcome you today and certainly welcome fiveminute statement from you and if you have a statement thats longer than that i think we already have here wed be happy to indlud in as part of the record. But i appreciate you joining and feeding our questions kmaentsd today. Thank you its a pleasure to be here with you. Chairman graves, Ranking Member quickly and members of the subcommittee, thank you for inviting me to meet today. I look forward with working with this subcommittee working on benefits for the American People. One of the president s promises to the american taxpayer he would make sure their money is spent wisely. A budget should not be an end into itself but a means of improving the lives of americans. More money does not necessarily translate into better policy, and so the president has challenged every agency and department to identify greater efficiencies and savings that can be realized both immediately and in the years to come. The administration is froud submit a budget that achieves this goal. This budget makes some difficult choices because of necessary constraints. We carefully evaluated the ool low occasion of resources to eecht departments functions and made prudential reductions where needed. But these choices in no way diminish our ability to operate the government effectively. The president has made it clear, National Security is the top priority. And in accordance, treasurys request prioritizes National Security and cybersecurity programs. Another top goal of treasury is creating sustained Economic Growth. With all treasury does, we have this mission in mind. This muchneeded growth will be achieved through a combination tax reform, Regulatory Reform and trade. This means working with congress to pass legislation that allows taxpayers to keep more of their hardearned paychecks. If we develop the right policies today, we will secure a prosperous future for our children and grandchildren. The difference between recent sluggish growth and a return to a 3 or higher gdp is trillions of dollars in the economy making a meaningful difference in the lives of all americans. This budget prioritizes the funding for treasurys wide array of economy ig and financial tools including sanctions. And our enemies have changed, so too have our weapons to combat them. We are honing the economic and financial tools and our arsenal to dits disrupt the Financial Resources and procurement capability of those who wish to do us harm. Thin concludes actions against destabilizing regimes, terrorist networks rarnd drug traffickers. Stopping the flow of funding to dangerous, nonstate actors, working with foreign partners to keep their Financial Systems secure, protecting our own Financial System, these key programs are critical to the continued safety and stability of the nation. Protecting treasury in the Financial System from Cyber Attacks is critical to our financial stability. Cyber attacks against our agency or the Financial System have the potential to impact markets, the economy, and National Security. The cybersecurity enhabs meant account makes investments an irnt prize wide cybersecurity cape thablts allow tresh rescuerry to better defend against Cyber Attacks and more efficiently respond and recover when they do occur. This account also makes investments in Critical Infrastructure protection allowing treasure troy work colab ratively with commercial sector to increase their operational resil yens. As i mentioned earlier, tax and Regulatory Reform are marquis items for Economic Growth and job creation. It has been over 30 years, too long since we have had comprehensive tax reform many this country. We are committed to changing that. Such reform means a simplified code that will provide simpler taxes and relief to middle americans while making our business competitive again. We have taken a comprehensive approach to regulatory relief meeting with hundreds of people across the financial industry, including community, regional, and large Financial Institutions, consumer advocacy groups, academics, think tanks, trade groups, and i surers. Weve heard about what works, what are does not work, and what can be done to level the playing field. Our reforms will spur Economic Growth by increasing access to credit, providing relief for Community Banks, and making regulations more efficient, effective, and appropriately applied. While ensuring that our Financial System is skpur and stable and does not put taxpayers at risk. We have an opportunity to do great things for the American People, and i look forward to working with members of this subcommittee on these important issues. Thank you very much and im happy to answer your questions. Thank you, mr. Secretary. Well have a few questions and i guess before we get into questions let me just remind the panel here that were going to stick to the fiveminute customary questions and reply time. And so i would just advise you if if mr. Secretary is not getting to the answer youre seeking, maybe respectfully redirect and know that around the 5minute time that will be the end of your time. So we can get through everybodys questions. Mr. Secretary, just real quickly and then im going to mr. Quigley. You stated the priorities and i appreciate the priorities just being forthright, National Defense and the taxpayer, those are the two that i really pulled out of what you said. Let me thank you for putting the taxpayers first, for for too long it seems like we have heard of putting government first and taxpayers secondary. And so its, to me, its encouraging to hear that the administration, including yourself, believe that the taxpayers are primary. Could you just sort of remind the committee here and maybe reflect back on the last four. 5, 5 months as to what has occurred in power economy . How many families have been impacted . The growth of the gdp, ha does all that mean and then where do you sthee going in the next six, eight, ten months . And then how does how does that fit into the vision that you and the administration have . Well, first of all, thank you. Its a great honor to be here and serve in this role. And ive had the opportunity to work with the president for over the last year on his economic policies and tax reform, so ive been thinking about this for a considerable period of time. We are very committed to achieving sustainable 3 gdp. Ive heard lots of people and many economists tell me why that cant be done. We dont believe that. We think it needs to be done. The difference between 2 and 3 gdp is over 2 trillion over the tenyear period and thats critical to our economy. If you look at the stock market, theres been trillions of dollars increase thats a sign of confidence in the Trump Administrations economic policies. Tax reform, regulatory relief, and trade are key components of that, mr. Chairman. Well, thank you. Early on when the budget came out i know theres been a lot of questions and theres been critics and cynics as i stated earlier. My First Response was that it was impressive and it was honest. One it was impressive because the administration was keeping it its promises to balance the budget. And they did that by being honest, tough decisions would have to be made in order to fulfill that. And i suspect that today some of the questions might come to that honest side, the honest choices that have to be made and i know that mr. Quigley would probably like to touch on that right about now. So mr. Quigley, id be happy to turn to you for any questions you may have. Thank you, m mr. Chairman. Debt ceiling, apparently the president has appointed you as the point person on raising the debt ceiling, is that correct, sir . That is correct. And you have said you want to get this done before august . I have. It is traditional for treasury secretaries to be the point person on this. As ive said repeatedly starting with the letter that i wrote to Congress Earlier in the year, i think its one thing to make decisions about how we spend money, but once weve spent the money we have to pay for if the u. S. Dollar is the reserve currency in the world and were the best credit in the world and we need to keep it that way. And i urge congress to act on this as soon as possible, and my preference, as ive stated, is before everybody leaves for august. Well, you said two things, and i want to you tell me why tell us why, if you would, please, each one is important. First, a clean debt ceiling being preferable and the fact that youd want it before august. Why do both of those matter and if you could elaborate. Sure. Let me first emphasize, and ive said this recently, if for whatever Reason Congress does not act before august, we do have backup plans that we can fund the government. So i want to make it clear that that is not the time frame that would create a serious problem. However, markets dont want us to wait. The sooner we do this, the better. There could be events in the world that make it more difficult for us to borrow, and i am very foek focuscused on do as soon as possible and look forward working with the house and senate on that. And why a clean debt ceiling . My preference would be that we address the debt ceiling as a debt ceiling increase and respond to budget decisions in a budget and through the appropriation process. I think you see in the project we have fema sized that it is important to balance the budget, but let me just say that the debt ceiling should not be a republican issue or a democrat issue, it should be an acknowledgement that we have spent the money and need to fund the government. Back to your first point, you talked about prefrg it to be in august but theoretically it can go later. Do you have an estimated date that treasury is projecting that the extraordinary measures will be exhausted or a range. Weve run lots of models and there are lots of different assumptions. I am comfortable saying that we can fund the government through the beginning of september. I would prefer not to give a range at that this time, but obviously if we dont fund the government, we dont raise this before hand, i will be providing updated numbers based upon how revenues come in. And if you could finely just elaborate a little by the on what happened if we dont raise the debt ceiling. I dont need to elaborate on that since cant imagine that that would ever be a scenario. But it would obviously create significant market disruption or our counterparts who rely upon us as the reserve currency and who own our debt would have issues. So i cant imagine that we would get to a point where we dont raise it. As you know, this has occurred many times with my predecessors, it has been raised in the past, and my suggestion, at some point going forward, is that Congress Considers changing the timing so that the debt ceiling matches the budget process so we dont have to deal with this in this format. Thank you. I yield back for now. Thank you. Mr. Yoder. Thank you, mr. Chairman. Mr. Secretary, welcome to the committee we appreciate your testimony. I was encouraged by the comments of the chairman as you discussed are the vision for 3 growth in the country. Weve had a number of secretaries testify before this committee, weve had a lot of debates about priorities. And i think we all want to see deficits reduced, we want to see Job Opportunities grow, we want to see the economy expand, we want the ability to invest in things in washington when there are needs such as our National Defense or medical research, priorities that we all share. But its hard do that when were running significant deficits were we have growth at 1. 7 . And so i thought, one, id just like to compliment, i think that approach, focusing on growth is really a rising tide that lifts all boats and we have siefrt split massachusetts dilemma in this committee and that country are we trying to grow the size of government or the size of the economy in the private sector and its hard do both at the same time and thats why the administrations been so strong on reducing the size of the government to take that strain off american taxpayers while growing the economy. You get to a point where you actualically balance the budget which is what the American People demand of both parties and washington, d. C. To did its job. So i certainly preeshlt the administration leading that way even if we dont all agree on the way to get there the. Instent clear and thats where the American People want us to go. Would you take a minute and describe how 3 growth would impact our constituents, some of the leading indicators that we might look for to know if were headed in that direction . What would you be looking for in the economy and what would the results be in terms of jobs and deficit reduction and all those whas does that mean for our country . Well, i think its absolutely critical. And let me just point out that when president obama submitted his original budget eight years ago i believe his assumption was over 4 growth and has not been achieved. Although the reported Unemployment Rate is extremely low from any historical basis, a significant component of that is because people who have left the workforce. And if you adjust that for the people who have left the workforce, the number is closer to 8. 5 or 9 . So we do believe theres significant room for people to come back into the workforce. I can tell you i had the benefit of traveling with the president during the campaign and going to all different parts of this country and meeting with workers in small and medium size businesses where many workers havent had significant increases in their wages in the last ten years. And thats something that were focused on. So many people and many economists have cited that over 70 of the burden of Corporate Taxes is actually borne by the workers. So were focused, think as you know we have one of the highest Corporate Tax rates in the world. We tax on worldwide income. We have this concept of deferral. Its not a surprise that our companies leave trillions of dollars offshore. Were focussed on bringing that money back to create jobs and spur investigate mentd and thats really what wed see in various different economic indicators. And you mentioned the threepronged approach which is Regulatory Reform, tax reform, and trade reform, essentially those three areas in being key ways in which we can grow our economy and create opportunities for americans. With you take about trade in particular as i travel my state i see a lot of parts of my community in kansas, which say heavy agriculture state that depend on open trade and free trade with our north American Trading partners, particularly mexico, of course, and canada. But and theyre concerned that some of the actions were taking might damage that trade relationship. And theres been debates about all sorts of policies that might change the relationship there. And would you talk about how important it is that we get the trade relationship right and maybe reassure some of my agriculture producers in kansas that theyre going to be able to continue to sell as much or more of their grain and meat across the border . Sure. Well where are thank you. And those are all very good points. Let me first say that secretary ross, myself, bob lighthizer, the u. S. Trade rep, gary cone at the nec were all working very closely together. And i think our counterpart and our allies are much more comfortable with understanding our position on trade. When i showed up at my first g20 i think there was concern about trade wars. Ive now met with many, many of our counterparts, i just got back from canada last week in meeting with the cabinet there. I mean, let me be very clear. President trump supports trade. He supports free and fair trade. But free and fair trade is reciprocal trade. And free trade is not i dont charge you a tariff and you charge me 25 . Thats not free trade. Thats not reciprocal trade. So we are working very hard, we want to be grow exports, we dont secretary ross and i are leading a comprehensive economic dialogue with the chinese. We had a very good discussion at mara lago. We had several discussions since then. I think you may have seen the announcement that weve opened up our markets to beef. Although beef isnt going to change the trait deficit alone, its a significant start and something thats very important to our farmers. So let me just say we are very focused on these issues. And we appreciate your comments on it. Thank you, mr. Secretary. Miss lowey. Thank you, mr. Chairman. Mr. Secretary, a fact sheet from the president s budgets discusses improper payments stating while the majority of government payments are proper, any waste or taxpayer money is unacceptable. I agree with that. The special Inspector General for tarp or sig tarp recently found that a contractor for a Nevada Agency spent 8. 2 million in federal dollars on a mercedes benz, parties, casinos, cocktail bar, gifts for employees, expensive rent in a luxury building, identifying and putting an end to this type of waste is why it is so essential across the government. However, you probably saw this as the New York Times Editorial Board noted this morning, you proposed to cut the special i. D. s budget by 50 . How do you justify cutting the budget for oversight by i. G. Who is successfully identifying waste and bringing money back to the government . First of all, even though i moved to california, ill always feel like a new yorker. So thank you for everything youre doing. Let me just say and, again, as a general comment, we had to make very difficult decisions across the budget and prioritize. So there are many things that weve cut back that are very that could be valid. The two assumptions that we started with was we wanted to have a balanced budget. Two, the president believed that we needed to make a significant investment in our military which has been underfunded. So specifically on the sigtarp, i support the office of Inspector Generals. I think they have a very important function, not only across treasury, but across the government. The reason why we suggested they cut of that oig by that amount and not the other oigs, as we looked at, there was a time when the treasury had tens and tens of billions of dollars that in investments in t. A. R. P. The treasurys investments in t. A. R. P. Are down to a couple hundred Million Dollars. So the oigs responsibility is looking at the existing programs and not what was a vast program. And when we looked at the expense of that oig relative to the other oig, we felt that we were just, again, making difficult decisions of where we were going to cut back items and not making the comment on oigs. I think as you see both the irs oig and the regular oig within treasury, we had a much, much more modest. So this was specifically addressed. A significant shrinking of that oigs area. Mr. Secretary, i wont continue that debate because as a former new yorker, i can just imagine the reaction of many of your friends, neighbors, constituents. President trumps tax plan proposes to eliminate the state and local tax deduction. Eliminating this deduction is estimated to cost the average new yorker 6600 due to the high cost of living, the income of the middle class family in new york would enable wealth in other parts of the country. While many new yorkers are still trying to make ends meet. Adding insult to injury, new yorkers spend more taxpayer dollars, we used to call that moynihan principal, to the federal government than the state receives in return. Thats why, for the 3. 2 million residences who are able to deduct state and local taxes, the elimination of this deduction is unaccept age in any socalled reform package put before congress. I just have 55 seconds left. Maybe you can tell us how youre going to work to change that because you know its not going to be accepted. Now i have 46 seconds. If you think my friends in new york dont like that, i assure you my friends in california dont like that just as well. Again, as we propose tax reform, and i think its been 30 years since weve had tax reform, so we are committed. On the personal side, were committed to simplifying personal taxes. Reducing the number of brackets. Raising the standard deduction. So that 95 of americans can fill out their taxes on a large postcard as opposed to having lots and lots and lots of paper and hiring professionals. We are proposing to eliminate all deductions on the personal side other than charitable deductions and mortgage interest. While i appreciate the issue that this could have and i think were sensitive to the issue on new york, new jersey, california, and many other of the states, we want to balance that with we dont believe the federal government should be in the business of subsidizing states. So we are sensitive to that issue. Were sensitive to the Economic Contribution that new york and california and many of these other states make. And well continue to discuss this. Just in the last 31 seconds, as you well know, it is sticker shock for taxpayers who already paying more in taxes than their Community Gets in return. So i wish youd give it some serious thought. Thank you, mr. Chairman. I think its totally inappropriate to get rid of that deduction. Thank you. Thank you, miss lowey. Miss herrera beutler. Thank you, mr. Chairman. I wanted to also echo when i heard talk about the priorities, there are many areas were going to differ on budget priorities. But overall, talking about 3 growth is just what we in my area in southwest washington need. We need, like you said, job as you travel the country with the president on the campaign side you heard from people talking about wages and wage stagnation. That is a picture of some areas in my district. We need to change that and turn that around. So i think reg reform and tax relief are huge. An im also excited and encouraged to hear you talk about trade and your efforts with secretary ross. I think it needs to be a priority. Im from washington, were one of the most, if not the most, trade dependent state in the nation. I want to make sure, just like you said, fair and free trade continues to be a priority. I did want to mention a couple things that raised your attention. Credit unions, Community Banks, Small Community lenders, the folks that help those medium and smallsized businesses grow and thrive and invest in communities. As we traveled across my district in southwest washington, i hear from countless small guys, entrepreneurs, families about the importance of access to capital. Credit Union Community banks have been and i believe will be in the future continue to be the big part of making sure that this that these small mom and pop shops have access to capital. However, the total Financial Impact has increased dramatically on these guys. What are the administrations goals in easing the Regulatory Burden for Credit Unions and Community Banks . Im talking about the ones that really serve our communities. Thank you. That is a perfectly timed question for my advertisement. Im not able to promote anything in government. So this is an advertisement for the 6 00 today we will be publicly releasing the first of four reports that were doing from the president s executive order on what we call the Core Principles which not only looks at dodd frank but goes much further than dodd frank. The overarching theme on that is 50 of the assets of the Banking System are held by eight gsig bank and there are thousands of Community Banks, regional banks, and Credit Unions that have been overly burdened by regulatory issues. These banks are not what created the financial crisis. These banks know how to lend in the community. They know how to make loans. They know the people in the community. These banks are what fuel the engine of growth in this economy which is small and medium size businesses. So we have a 150page report. In the back of the report, there will be a long list of very specific items. A lot of them we will have, close to 70 or 80 , we believe our regulatory fixes. There are 20 or 30 where we require a regulatory issues. We support the choice act. We were primarily focused on what are the things that we can do to unlock burdensome regulations and overlapping regulations and work with the regulators . And thats something that in my role as chair, ive already begun working with them on. We appreciate the issue that you heard that is a big concern of ours. Its very encouraging to hear. I think especially going at it in a way that doesnt take an act of congress. Sometimes its a lot quicker. And to bring that immediate relief is going to unlock, hopefully unlock, that capital that gets us on that road to growth that were all anxious to see. On that note, i understand the president s executive order calling for freeze and new regulations did not technically apply to independent regulatory agencies but the fed is expected to endorse significant new capital requirements. Im sure you are well aware referred to as basul 4. Is this agreement that you were consulted on and support and is it something that you are planning to consider as part of your financial regulatory review . So let me just first comment that i do follow in the tradition of previous treasury secretaries that i meet up with the chair of the fed weekly. Janet yellen and i have had very productive conversations every week since ive been in office. And the majority of those conversations are on regulatory issues. She and i travel together to the g7, the g20, a meeting with foreign finance ministers and board governors. What youre referring to as basul four, i think people are referring to as basal 3 although i appreciate the confusion in three plus. But the answer is one of the subjects is making sure that our banks dont have competitive disadvantages with the international banks. Weve done a much better job building up capital. And in particular we dont think that Community Banks should be subject to these regulations. So thank you. Yes, thank you. With that i yield back. Thank you. Mr. Bishop. Thank you very much. Welcome, mr. Secretary. Im going to ask three questions and then you can answer them. The irs in april of 2016 released the latest estimate of the tax gap, the difference between what americans pay in tax ands what they actually owe. For the years 2008 to 2010, the annual gap averaged the huge 458 billion. The largest source of that tax gap, 125 billion or 27 stems from underreporting of business income on individual tax returns, socalled pass through income. The irs estimate thats the main types of pass through economy are High Percentage rates of misreporting, partnerships and S Corporations misreport income at 19 rate while sole proprietors misreport at a shocking rate of 63 . The administrations budget does nothing to address this compliance problem. Instead to advance a centerpiece, as a centerpiece of the tax cut plan, a special 15 discount rate for passthrough income that would like to make the problem worse. The proposal would create a powerful insentive for many wealthy individuals to reclassify as much of the income as possible and result in tax avoidance that cost the government more than 500 billion over the next decade. Are you and the administration serious about closing the tax gap or tax cut for pass through income makes the problem worse. My second question, the Trump Administration is very far behind in filling these positions as of last wednesday the administration, the president nominated onetenth of the position thats require senate confirmation. For treasury as of last week, the president has nominated ten of the 28 critical posts. Only one of which, which you is, has been confirmed. Almost six months since inauguration of the president the Treasury Department has no deputy secretary, no general counsel, no undersecretary, no assistant secretaries that are confirmed. Assistant secretaries for economic policy, Financial Markets, financial stability, Financial Institutions has not been nominated. Is the administration having difficulty recruiting qualified individuals that want to serve and what impact do these vacancies have on the work of the department . And finally, you mentioned fair and free trade. I noted with great disappointment the president s indication that he intends to turn back the clock with regard to our relationships with cuba. How can we seriously want to expand trading free and fair trade when weve got a neighbor or 90 miles away that is receiving and is engaged in very serious commerce with china, canada, mexico but yet we want to turn our backs and particularly my state of georgia, we export over 78 billion in agriculture and, of course, there are other items besides agriculture that we who love to be able to export just 90 miles away. But seems the administration wants to go in the opposite direction there. First let me thank you for your variety of thoughtful questions. Let me make sure i jotted them down. So the first issue on the tax gap, i can assure you that i am very concerned about the tax gap. And i think the best way to address the tax gap. Which is way too complicated. Ive referred to it as not just a tax cut, it is tax reform. Simplifying it so that the irs can proper lly administer the code. Specifically in regard to passthrough, we believe in a business tax, not just a Corporate Tax. We want to make sure they have the benefit of a fair tax rate. Now, having said that, i, too, share your concern. About pass throughs. We have over 100 people working in the Tax Department on this. Making sure we set up rules so that passthroughs cant be used by the wealthy to dodge taxes and arent a means of somebody who should be paying 33 or 35 or 30 whatever. Paying 15 . So we will make sure it is wages and not otherwise. So thats the pass throughs. On filling positions i can assure you weve filled almost every single position. The fbi background checks are what have held up announcements and the last part id say we are researching we are spending some time discussing the cuba policy. Thats under review. Thank you. Mr. Young. Thank you, mr. Chairman. Nice to be with you, mr. Secretary. You talk about 3 growth. Id really like to see that. We all would, put america back to work. To get there you talk about, i quote you hear in your opening statement, this much needed growth will be achieved through a combination of tax reform, regulatory form and trade. Trade is a big concern of mine and a big concern of many of my colleagues and a big concern of people in my district. Were a very rural agricultural districts. Theyre waiting on pins and needles for markets of exporting sooner rather than later. And i know youre working with secretary commerce in our u. S. Trade representative. Can you tell me what specifically your role is, treasurys role is when it comes to trade . Well, let me just first say its a collaborative process between the three of us. As it relates to specifically, lets say china, in the case of china, secretary ross and i are working together on every aspect of the economic dialogue which includes both investment and trade. It includes Financial Services as well as it includes many of the other Technology Areas and many of the other exports areas. And ive known secretary ross for a long time and weve worked together for the last year. Can you convince me and others that you are pursuing trade agreements aggressively . Because, you know, many of my colleagues, and weve mentioned here already this afternoon about the need for trade. A letter went out from the house to over 15 members of congress on both sides of the aisle, asking the administration to be proactive sooner rather than later on trade. What are some of sidelines aside opening can you tell me what countries or where we are in pursuing by literal agreement right now if thats where the president s preference is . Sure, let me just say the priorities for the moment is first nafta, which i think you know is a very complicated fast track. If this is the fast track id hate to know what the slow track was. But i think weve had productive discussions with them. As i said ive just came back from canada, i was the first treasury secretary to go to canada in over ten years and i did that because of the importance of trade between us and them. As a matter of fact, if you look at our overall trade deficit, on goods and services, we actually have a slight surplus. We are very important to the canadian economy, and were specifically going to look for opportunities for us to increase trade with canada. Mexico as well. Naftas a very old agreement. Theres issues that we have as it relates to specifically the Auto Industry and others but were very focused on nafta, were very focused on china. Again, i think we agree to have a 100 day plan with china, weve agreed and china understands its in our interest and theyre interest to shrink the trade gap and that is by us growing exports. What about some of those countries that were in the Transpacific Partnership that are in the asiapacific rim who were waiting on america to come together with that tpp agreement . Those are markets, they need our goods, we want to export to them. They need our values as well, especially in the shadow of china and showing great strength over there. I think they show great republican for those who are strong. I think were missing opportunities here. I know china is very important, i know nafta is as well but there so many other countries out there they are awaiting to grow as well and we can use them as well to grow our economy. And to get to the 3 that we need, we can do tax reform and supplifacation here in congress. When it comes to trade and to get to 3 we really need to administration to be ready. Thank you and i yield my time. Thank you. I understand that thank you. Thank you mr. Young. Next, mr. Cartwright and mr. Stewart. Thank you, mr. Chairman. Thank you for being here today. I want to talk about taxes a bit and the socalled mnuchin rule which i gather you didnt name, is that correct . That is correct. Nevertheless, you were talking about the principles and having no absolute tax cut for the wealthiest. These are things you were saying back in november. You said specifically any benefit that high earners would see from cutting tax rates would be offset by eliminating deductions currently available. You were saying things to that effect, am i correct . Thats correct. All right. My question is if Congress Passes a tax plan that does not adhere to that socalled mnuchin rule will President Trump veto it . No, he will not veto it, okay. The president believes that tax reform is critical to the american worker, to the middle class. And the president is working closely with the house and the senate to get tax reform done, and this is a collaborative process and something that i hope we get democratic support from as well. We need tax reform, and the president will hopefully be in a position to sign a bill and turn it into law this year to have muchneeded tax reform in this country to spur the economy. Secretary, are you saying the only way this can be punched through congress is to give the absolute wealthiest, the highest earners a absolutely tax cut senate is that what youre saying . Thats not what im saying at all, and again i didnt name the rule. I said our objective which is true, and if you ask the members who represent new york and california and others, okay, and wed ultimately come out with the plan, show what the distribution is. That was our intent. Were taking away almost every deduction oa huge component of the deduction will be offset with less deductions for the rich. You mean youre going to try to adhere to the socalled mnuchin rule but if youre not able to its not a deal breaker for the white house . Again, the Administration First of all i want to be clear, i did not name it as a rule okay. Just a promise right . No i never made it a promise, i said it was an objective. Okay. And again, i think as you see our current proposal which lowers tax rate which is offset with a staggering deduction of deductions. When we come out with a distribution, i think youll see what it looks like. All right, i want to talk about the socalled financial choice act that you have expressed general support for am i correct in that . Thats correct. And i appreciate your comments by the way, about relieving the burden on local and Community Banks, i think thats a widely shared objective. Thank you. But i want to talk about some of the provisions in the choice act that passed the house last week. Im curious, do you support removing transparency from the executive pay, if the choice act becomes Law Companies will no longer be able to disclose the pay between their ceo and average institutions. They wont be required to disclose if companies are allowed to bet against their stock prices. Secretary mnuchin are those disclosures really that costly, do you support eliminating those Disclosure Requirements . Let me just first say i have Great Respect for the legislative process. Okay. And overall i do support the choice act and what its trying to do and now i look forward to working with the senate as to what will go forward. As it relates to executive pay i have always viewed that boards should be held accountable for executive pay. In this country, too many boards delegate that responsible to paid consultants which make no sense. Boards should be held accountable. One of the things youll see in our report and others, and when i speak to the regulators, board shouldnt be overburdened by clerical things but on risk and controlling management. Im sorry, its kind of a yes or no question secretary. Do you support those parts of Financial Care act that eliminate transparency in the instance that aye cited . Again, im focused on the overall bill and not the line item for evening. I for one think, okay as it relates to transparency through pox cities shareholders see what executives get paid. Whether theyre on a relative basis owner i dont have a strong opinion on that portion one way or another. I believe in proper disclosure of executive pay through the proxy system and i do support shareholders voting for boards who should be held accountable on executive pay. I yield back mr. Chairman. Mr. Stewart. Thank you sir. And mr. Secretary thank you and welcome. I have to say and its been said many times, bipartisan way as well. The president has assembled an extraordinary cabinet and i think you are one of those and i appreciate your willingness to serve. Let me hit on a couple things quickly and allow you to respond. I got to echo mr. Youngs comments if i could. I was in china a couple months ago, they announced theyd allow this. Which was a big deal. We were glad for that. Many of us though had mixed feelings about tpp. I hope you can recreate tpp. We can call it Trump Pacific Partnership if you want. But its just important that we continue to pursue these agreements, and i appreciate that you feel the same way, and i believe the president does as well. Its a difficult thing to do, we understand that, but its worth it i believe, as is tax reform, as youve said here, its difficult. Again, i support the Administration Goals and things youve said, the key to Economic Growth and really the key to bettering the lives of the American People is Economic Growth. And regulatory form, tax reform trade all of those are key to that but theres one other element too it and this is my question now. Im afraid you might not like my question but id appreciate your views on it. Over the last several months as they released a skinny budget and full budget, i think everybody sitting up here have dozens or hundreds of meetings with people who came under concern about the budget. Just generally by the nature of their concerns these are often democrats, theyre liberal leaning groups because theyre interested in government funding for their organizations whether its for the arts or picking agencies. I often say to those folks you got to go across aisle and talk to our democratic friends and convince them they got to work with us on mandatory spending. Until were willing to take on that challenge, all of these budget pressures are going to fall on these different agencies whether its nih, education, arts, all of them. I wonder if youd share with us your thoughts and the administrations view on being able to tackle that. Its an enormous problem, i know that. Its political difficult. But if we dont take that on, were not going to fix the debt challenge we have and the pressure could fall on these other agencies. Give us your sense on that, please, so maybe we can see work on that over the the next few years. First, let me comment on tpp, and there are many aspects of the agreement that do make sense. Its just the agreement overall doesnt make sense. And we fundamentally think we can get better deals negotiating bilateral deals. That doesnt mean in time it doesnt make sense to do a larger deal just to be clear, i agree with you. I think we can do better. Let me assure you again, our objective is more trade, okay. As i like to say i wen to my first g 20, it was 1918 against me over this trade issue. As i like to explain to people we are the most open market, the largest trading market, anybody could investigate here. Anybody who wants to have reciprocal trade on the same terms as us, were all for that, bring it on. As it relates to your mandatory spending, the president has made it clear that on Social Security thats not something hes addressing now, but if Congress Wants to review that, obviously thats within your prerogative. Okay. Of course we need a partner in the white house wholl work with us on those, we understand that might not be the priority right now, i actually support that that prioritizing is not one id disagree with. Strategically, long term, weve got to be willing to take that on. We would hope and encourage the administration, yourself included, to work with us, if not the first year, two years, in the second half of this first term to take on that challenge, so thank you, mr. Secretary. I yield back, mr. Chairman. Its important that we have some nba finallies here because theres been good clock management going on and were going to get to go a little bill longer if everybody wants to participate with additional questions. Mr. Secretary i have just a couple. Now that youve had a few meetings of fsoc, under your belt, give us an update on the direction of the council and where its going. In addition, youve been directed by the president back to april to review the processes and maybe you can update us on that review, and then speak to, i guess the processes, multiple processes, but if you could speak to your review and your thoughts on that designation as well. Okay. So let me just say, i have had several meetings of fsoc. In my mind, fsoc has two fundamentally very important functions. One is around the designation, and given the significance of that issue, the president signed an executive order so its not covered in our existing finding, and we look forward to doing the work on that and making the recommendation. The other function of fsoc is bringing the regulators together. And actually one of our recommendations to congress in the report that were putting out tonight is to give more power to fsoc and specifically the treasury secretary to work with and coordinator the regulators. So fsoc should not be a replacement for the regulators but, as an example, one of things we will recommend is, where there are overlapping issues, okay, cybersecurity is one which is clear to me. Cyber is one of my most important priorities. To the extent a bank is reviewed by the fed, the occ, the fdic and the Consumer Protection bureau, we think that one agency should be named as the lead agency and coordinate amongst all the rest of them. I do think that fsoc is an important area to get the regulators to make sure theyre working together to deal with overlap. And then, finally, this is something i take very seriously. We have a lot of resorted dedicated to it. Both within treasury and across the government. National security review is very very important and i can tell you that theres been many transactions already this year that we have indicated to the parties that we would not approve of them and would send them to the president and there have been voluntarily withdrawals. So the fact that you havent seen a lot of information coming out, doesnt mean theres not a lot of working been done there is. Its a considerable process and we respect that. Do you believe that process is flawed, have you discovered that in your review, the process particularly for nonbanks . Thats something that would be premature to comment on. Were doing a lot of work on it and i think as youre aware theres litigation around one situation in particular so i dont want to make any specific comments on that. Thats fair. Thank you. Then, also in the spirit of reducing spending and eliminating government waste, the president signed another executive order to reorder and streamline the executive Branch Agencies and require them to identify due politictive or inefficient processes. From your perch there in treasury hows that review going . Anything you can report back to us thats reflected in the Budget Proposal that weve already seen . Theres been a series of recommendations that weve made to the white house on this. I dont believe the savings are fully incorporated into the budge, i know theyre not in the case of our budget, so this is an area where we look forward to additional savings. We think theres things that can be consolidated where you have multiple departments doing things that can be brought together more efficiently. Given that some of those imfact a lot of different people across the government, i dont want to go into the spechks today but we look forward with working on congress on the recommendations what criteria might you use going through the process . My criteria is no different criteria than when i was in business. What can we do to produce Better Service at less expense and be more efficient. Its not just cost savings, its efficiency. Where can we save money and more Efficient Services . Whether thats on security, managing programs, were looking across the board. Then lastly on this i understand you cant go into some of the details at this point, but i suspect that youve discovered some overlap or some inefficiencies and ways to do things for less. What would be the time line that we can expect as a committee that we might see this review or report that will help us as we move forward . I hope its something that we can get to you this year. The sooner we get it to you, the sooner these changes can be incorporated and the better off we can all be. Great, thank you. Thank you. Just clarification. I believe when you were talking with Ranking Member miss lowey, you indicated theres only a couple hundred Million Dollars remaining in tarp investments. Ive been led to believe the treasurys still obligated to pay about 14 billion in the hamp program. Is that accurate, to your understanding . Sir, theres a difference in what i was saying that. The couple of 100 million i was referring to are the investment on the balance sheet. The hamp program has been fully committed. The hamp program is no longer an impact. The oig and others have been reviewing these hamp Loan Modifications now for i believe about seven or eight years. Were proud of the fact that loan modification starred under the fdic and we count converted to hamp so this is something i know about. Thank you. Changing topics. In your testimony, that the treasurys request nationalized security and prioritized the National Security and the departments wide range of financial tools toward that end. Were talking about sanctions. And in many respects youre sort of the watch dog on such things, making sure that theyre actually enforced. Im sure you believe that sanctions are an extraordinarily important diplomatic tool, say, going to war, make sure other countries comply with the rule of law and what other countries believe is appropriate. North korea, the iran deal, the sanctions on russia involving ukraine, but, again, there is a cut that the office of terrorism and Financial Intelligence by 6 million. And the nl Crimes Enforcement Network by 2 million. Particularly at a time when all of these countries are ramping up their efforts to circumvent sanctions by Money Laundering. First of all, let me just comment, and i appreciate the opportunity for us to meet earlier. I firmly believe in the sanction programs. Im probably spending 50 of my time on what we call terrorist financing and intelligence. These work. There is no question that the only reason iran came to the table was because the sanctions that we put on, in conjunction with our allies. So i can assure you this is something at the National Security council we talk about constantly. I work closely with secretary mattis and secretary tillerson. We believe in sanctions. Weve already put a significant number of new sanctions. Whether its north korea or irans Ballistic Missile programs. This administration will continue to use sanctions to the maximum allowable by law. The 117 million that we requested was intended to be flat to what was the continuing resolution. Now when the omnibus was approved we got a little more money. So it was somewhat unintentional that there was a small cut on that. Like other National Security parts of the government, it was intended to remain flat. Id also like to just say we were very pleased by the mou that was just signed with the gulf countries. Setting up a Financial Center that we will cochair in saudi arabia. Thats something that was done after the budget was submitted. So i will be working with director mulvaney on how we fund that because this is something weve done since the budget of funded. So you were anticipating Something Else in the omnibus . Excuse me . You were anticipating something we were pleased that we got a little bit more money for tfi. Again, let me just emphasize i mean, would you have funded were short on time. Would you have funded at the omnibus levels, if you had been made aware of the increase earlier . Again nows the time to speak. Let me just say im supportive of the difficult technicians but if you all want to put more money in tfi, i firmly believe in tfi and as i mentioned, im going to have to come back to you for more money on the terrorist financing center. Clearly, these people who are Money Laundering are doing it for terrorism efforts and to evade taxes at home and to avoid sanctions. So it has to be a priority for multiple reasons. It is a huge priority of ours. We look forward to working with you. And, as ive said, this is a very important National Security tool thats very effective in an important way not to put our military at risk. Thank you. Mr. Yoder. Mr. Bishop. Thank you, mr. Chairman. Mr. Secretary, id like to discuss an issue with you that my colleague and i raised with you in a letter sent to you on march 29th. As you know the chinese Financial Company has proposed to purchase moneygram, an American Company thats the second largest provider of money transfers in the world. Money gram is a Large Financial Institution with a volume of transactions similar in size to many large u. S. Banks. Youre likely aware that it is partially owned by the Chinese Government. The idea that a Company Owned at least in part by a Foreign Government is purchasing an american Financial Institution raises some concerns. Money gram is required by u. S. Law to collect and store sensitive personal information on all its customers. China has proven its ability and desire to hack information years ago. The idea of the Chinese Government having direct access to the personal data of millions of americans is very concerning. I appreciate that you value Cyber Security, in your testimony you highlight your budget request in Cyber Security and you stated quote, protecting treasury in the financial terror attack is critical to our financial stability, end quote. I believe that the money gram acquisition has significant Cyber Security implication. And im hoping today youll give us some of your thoughts on this situation. I recognize that youre not able to comment directly on an ongoing case, but in general, what concerns do you have about the potential for a Foreign Government to have a stake in a company that handled, directly handles, the private Financial Data of americans, how might this mitigate those concerns . Also, members of Americas Armed forces use money gram at a disproportionately high rate, dues to their frequent need to transfer money back home. Im concerned their Financial Information may be especially valuable to the Chinese Government and exposure of the nfc may be especially harmful to our security regarding troop movements and their locations in wire transfers, et cetera. Would they require any special scrutiny into this situation . First of all thank you for that. I am familiar with your letter and i am very familiar with the transaction. I do take my role as chair very seriously. Its an interagency responsibility as i previously mentioned, i think it is very important that we review transactions for National Security. Some people have suggested we expand very aspect. I look forward to working with congress on whether its joint venture or other aspects and how it may make sense to change the legislation. Given the confidential nature, i want to be clear im not prepared to make comments about this transaction. I want to assure you, the president and i take our National Security as highest priority, that is one of the reasons why he wants to increase the military budget substantially. Thats one of reasons why weve announced significant sanctions and will continue to announce sanctions. And to the extent that a transaction becomes before it that we believe is a threat for National Security, well attempt to mitigate it, if we cant if its not withdrawn, send it to the president. As ive suggested, just because you dont see things going to the president doesnt mean theres not a lot of activity. There is a lot of activity. Thank you, mr. Secretary and mr. Chairman. Mr. Bishop. And then miss herrera beutler. Thank you very much. Mr. Secretary, you indicated that one of the Top Priorities or the top two priorities was the taxpayer. I want to ask you about the irs use of private companies to collect taxes on a mission basis. As im concerned this program could result in incidents of being targeted and defrauded by criminals. Are both irs and the treasury general noted theres been a huge surge in the number of aggressive and threatening phone calls, criminals impersonating irs agents, but under the private tax checks program, private collection firms are now calling taxpayers directly and identifying themselves as contractors of the irs. Given that irs has historically referred to contact taxpayers by letters not by phone, often saying that if youre surprised to be hearing from us, then youre not hearing from us. Wont allowing private collection firms to call taxpayers who identify themselves as contractors of the irs simply confuse taxpayers. As a condition of receiving contracts to collect unpaid taxes on a Commission Basis, the irs has stipulated that all private collection Companies Must respect tax payer rights including among other things, abiding by the consumer texas provision and the collection taxes act. Despite these assurances, one of four Companies Currently under contract to collect taxes under a Commission Basis had its contract with the u. S. Department of education terminated in 2015 for providing in Accurate Information to student loan recipients. Given the facts that one of the country involved in the debt program already has a history of deceptive business practices, how can taxpayers be assured that these Companies Wont simply seek to exploit their situation for the companys financial gain . So let me first say obviously this is a decision that predated me. And in general, i am supportive of using outside firms on a contingency basis after all other means have been used. I was not familiar with the issues of one of the four had violations with the department of education, i will instruct any staff to look into it, that is concerning to me. Well make sure later in the year we have the irs report become to us in evaluation of this. I think its a balance between making sure the government collects money efficiently and appropriately with making sure we dont jeopardize tax payers. So i share your concerns. Thank you. Thank you. Thank you, here we go. Thank you. Im going to follow up on something that has already been talked about but i wanted to just underline it a little bit as youre moving forward just to to have a perspective about a program that i believe is not just bipartisan but crucial to areas where it is beyond rural, its borderline frontier in some of our regions. Community develop Financial Institutions fund. Funding for the cdfi fund has been eliminated, as we talked about. In one cdfi in my district has invested over 30 million in Small Businesses in rural Economic Development, which would not have been possible without the support of this fund. That funding helped create over 600 jobs, which may seem small, but in a county that it made up of 20,000 people, 600 jobs is a lifeline. I will point out as well, again i come back to the imagery you used earlier when you talked about traveling with the president into certain areas, the people you were reaching with the message you were reaching, this is that type of county. These are those people. Cdfis dont duplicate what banks do. They complement Financial Institutions by helping start up troubled businesses that would otherwise have trouble accessing traditional financing. I think eliminating this fund would eliminate a safeguard that kind of feels like a gap essentially. I guess as we move forward, i guess i would just ask that the administration consider this as as you know, weve got many more budgets to come. As youre prioritizing and reprioritizing recognizes the challenge of eliminating and reducing spending. I just want to put in a plug for this one. Sure. Let me just comment, and first of all, im very familiar with the cdfis and i do agree with you, they provide a significant benefit to many communities. This was just and i realize there has been bipartisan support for them as well, so i appreciate you raising it. Let me just comment, this was just a difficult decision in us trying to save money in different things. The two comments that id make is, one, this program started a long time ago when there wasnt private contributions. We still do have a program of bond guarantees to cdfis which help people. We still have a significant amount of money left on new market tax credits, which also help significantly, and another thing, for me to advertise the report thats coming out tonight i did not arrange this. Yes, exactly, and we didnt have any discussion on this. Im calling for a tax force to reintroduce a Community Reinvestment act. And i think that banks spend billions and billions of dollars to fulfill their obligation which i support. I think in too many cases this money is not properly going to the community. I want to make sure we meet with the community advocates, with nonprofit groups, with community leaders, cdfis and others to make sure that the billions and billions of dollars banks are spending, which is far larger than what we we support on cdfi, thats going to help communities and isnt just a check the box to satisfy regulators or shareholder. Thank you, i appreciate that. I yield back. Thank you. And i think what we hear from the secretary multiple times today is that he respect the process and recognizes the concerns and interest of the committee. If we can balance those interest with others he has the greatest respect for that. Mr. Cartwright and then mr. Young. Secretary mnuchin i want to return to the hamp program, that stands for home affordable modification program, right . It does. That was part of the tarp, the relief program, right . Yes. The idea was to help homeowners who were upside down with their mortgages and figure out a way to help them keep their homes, right . Thats correct. In addition to creating that, it created the sigtarp which was the watchdog over the hamp program, right . Thats correct. And the general has been successful as an office, they have charged 96 bankers with crimes and has convicted 36 of them, would i be correct in that . It sounds right. Holding the bankers accountable for the bailout money basically that they got through the hamp program to help people stay in their homes, the current shape tarp, special Inspector General is the honorable Kristi Goldsmith romero, am i correct in that . Yes. She took unusual measures to make Public Comment about this budget. This is a budget that cut sigtarps money in half, correct . Is i dont think theres anything unusual. They have the right to do that and i would have quite frankly surprised if we got the budget and the head of sigtarp didnt Say Something otherwise. My question is, is sigtarps budget cut in this budget . It is. And again let me just highlight well, i only have three seconds left, and i want to repeat what her comment was. Her comment was basically that even though this is an office that has come up with 40 times return on investment, sigtarp, holding bankers feet to the fire that they comply with the terms of tarp and the hamp program, even though its been an enormously successful office, the office of watchdog sigtarp, this is a budget that cuts their money in half, and according to sigtarp, romero, she says this Budget Proposal substantially inhibits sigtarp from performing the duties of office, including audits and criminal investigations, and it said, it place is critical federal governments interest at risk, and substantially inhibits the oig in carrying out its duties and responsibilities. Thats what Christy Goldsmith romero said. And with respect to that, i have a couple questions. Number one, have you met with her after she made that Public Statement . I have not, but id be happy too if she wanted to meet with me. Wouldnt it make sense for you . I mean, thats a fairly damning statement about your budget decision on her agency, isnt it . Again, let me comment and say let me say i respect the committees views on different things. Sigtarp was spending more money, the entire oig, for treasury. And, again, the hamp program, which im widely familiar with, the modifications i think were quite successful. I believe the bank would have done the loan modification anyway without the billions of dollars of taxpayer money that was spent. These hamp have been reviewed every year. Were not suggesting, okay, this is merely an efficiency, and i have reviewed this with the oig of the treasury to get their opinion. But, again, if you respectfully disagree you can all decide to change the funding. Im interested in your view, i mean, arent you concerned that the watchdog is saying i cant do my job, my job that has put 36 bankers in jail that is abusing the program. Doesnt that bother you shes saying she cant do her job under your budget . Again, i have the utmost respect for the oigs and whats been done. People who have reviewed this came back and made the recommendation that there were efficiencies. And ive never met a regulator or oig when you cut their budget in half doesnt object to it. Again, ive had other people, not myself, independently review and make this recommendation. Well, mr. Secretary, will you make this commitment, meet with her and go over it . Id be more than happy to. Ill address my staff and let me just assure you, any time any oig ive met with the oig from the irs, ive met with the oig from treasury, any time any oig calls my office, i pick up the phone. Yield back, mr. Chairman. Thank you. Mr. Young. Im looking forward to your 150 page report at 6 00 p. M. Thank you. Im going to print it out and read it. Im glad youre doing something about the rules and regulations that have been put down on our smaller Community Banks, Credit Unions. Relief is needed out there. When we talk about rural america, the strength of the borrowing and lending in that area is with our Community Banks so and i hear a lot from Community Banks about reporting requirements as well. That were not included in the original Home Mortgage disclosure act. But some requirements that have come out because of rulemakings and rules and regulations. I hope that your may address some of those issues as well, that maybe not necessarily were included within the doddfrank but you mentioned the Community Reinvestment act. Maybe theres some other pieces of legislation as well that have within out the been out there, laws that youre addressing. It specifically raises the limit on qualified Residential Mortgages for Community Banks. I think as you appreciate, particularly Community Banks and areas that are rural with farming and agricultural, which is a seasonal business, they know how to make these loans. They understand how to underwrite these individuals and they dont need regulators to tell them they cant make these loans. I appreciate your comment there about these people know their community the best. Theres a rural accountability there. They know each other, respect each other, want to build a Better Community with one another. You say in your statement here, this budget prioritizes funding for treasurys wide array of economic and financial tools, including sanctions. As part of the recently passed fiscal year 2017 omnibus appropriations bill, the Treasury Department is directed to review all sanction designation removals related to iran during the past two years and determine whether these entities have engaged in any prohibited activities since the removal of sanctions. Treasury is then requested to either sanction entities engaged in prohibited activity or explain why not. Im not asking you to tell me what youre going to determine, but i just hope that you are on track and taking this seriously and that you have you are committed to making sure that this review is done in an appropriate manner and relay to us so we can be helpful if we need to be. Absolutely. Thank you, sir. Thank you for being with us today. Thank you, before chairman. Secretary mnuchin, thank you for your time today. As you can see, this is a very thoughtful committee, adept at the issues and enjoy the topics and i appreciate your thoroughness today. My takeaway, for our committee and for everyone else, is that you have an unwavering commitment that i have a great appreciation for to the taxpayer. And thats from what i heard today by balancing the budget, a fair and flat and Family Friendly tax code, building a vibrant economy, but all of that wrapped up and defended by a Strong Military that respects the men and women who have and do and will don our uniforms. Mr. Secretary, thank you for your commitment. Thank you. And with that, there are no other questions. We stand adjourned. The Senate Returns at 3 00 eastern time. They will take up the nomination of neomi rao. With a confirmation vote set for 5 30. The house returns for legislative business tomorrow. The main bill on their agenda is the 2018 defense authorization, setting Defense Department programs and policy for the next year. The legislation is expected on the floor by thursday and a vote as early as friday. Live coverage of the house on cspan and the senate on cspan 2. Tonight on the communicators what theyre doing there is 5g trials. And it was giga bite fast wireless. Thats something i never thought i would see in my lifetime. Thats Home Broadband fast, thats fiber to your house fast. And its really, really exciting. Meredith atwellbaker on what the 5g network will look like to consumers. She also talks about the building out of broadband in rural areas. She is interviewed by politicos technology reporter, Margaret Harding mcgill. Whats the economic case for 5g. If it costs that much, how do carriers make a return on that . Its going to mean 500 billion to our economy and 3 million jobs, so one out of every hundred persons will have a 5g job. But again, its only if we get it right, and that really does mean weve got to move on spectrum, weve got to get a pipeline of low, medium and high band, and weve got to get this infrastructure right because as we roll forward, we need to build 300,000 small cell sites in the next few years. And what a small cell looks like is maybe a pizza box. Its small and its going to be attached to everything, because these are going to be much more dense networks. Theyre going to be on traffic lights and streetlights, the sides of buildings, and so what we really need and this is really porn, we need an infrastructure that rethinks how we site. Watch it tonight at 8 00 eastern on cspan 2. Next, a hearing on the International Gang ms13. Members of the Senate Judiciary Committee Heard from federal Law Enforcement about the gangs activity and tactics for recruiting unoccupied immigrant children. The hearing ran just under two hours