Committee will come to order. This mornings hearing will be the first on the president s fiscal year 2019 Budget Proposal. The Committee Welcomes secretary mnuchin who is hear to testify on the budget along with other members that may arise from questions. I think i speak for all members of the committee to say were interested in secretary mnu yn chins thoughts and insight on a number of items proposed in the budget. The budget envisions that governments receipts will average 17. 1 of gdp over the tenyear budget window, slightly below the long run average of 17. 4 over roughly the last four decades. It also has outlays averaging 20 of gdp over 10 years, which is also slightly below the long run average. The budget also includes some tax proposals, but they are not as sweeping as those weve seen in prior budgets, as you would expect following enactment of the new tax law at the end of next year last year. Thus far, im pleased by the success of the new tax law, which has already resulted in substantial benefits for American Workers and job creators. Since the beginning of the year, and keep in mind that were still in february, weve seen a stream of businesses come forward to announce plans to award bonuses, raise wages, or boost 401 k contributions for their employees. Other companies have announced plans to expand business and hire more workers here in the United States. According to some estimates, more than 340 companies have issued these types of statements impacting an estimated total of about 3. 5 million workers. I wont go through the whole list, but id like to highlight a few. For example, apple announced that it is going to hire 20,000 new employees and will issue 2,500 bonuses in the form of restricted stock units. Apple is also increasing its Financial Support for coding, education, science, technology, engineering, arts, and math. Wells fargo raised its base wage offered to employees from 13. 50 to 15 per hour plus they have promised 400 million in charitable donations. And best buy distributed 1,000 bonuses to its fulltime employees and 500 bonuses for parttime employees, reaching more than 100,000 workers in total. I remember during the floor debate on the tax reform bill, one of our fellow Committee Members and friends used a pretty great line. In evaluating the tax bill, she said, quote, the proof is in the paycheck, unquote. Thus far, i think its fair to say that she was correct. The tax law has been in effect for less than two months and about 3. 5 million workers in a variety of industries have already received bonuses, pay increases, enhanced retirement accounts, and other benefits as a direct result of our tax bill. Lets keep in mind that these announcements have been about direct decisions made by employers. They dont take into account the changes in the individual tax system which have cut taxes considerably for tens of millions of American Families. As the economy expands further, its safe to say that American Workers will continue to benefit as will the businesses that employ them, which is precisely what we intended to accomplish with the tax reform bill. Of course, no bill or law is perfect, and as implementation of the new tax law continues, it has become clear that one provision of the bill, section 199a, which provides a Tax Deduction for qualified business income, is having unintended effects in agricultural markets due to the treatment of qualified cooperative dividends. Though the aim of that provision in part was to preserve benefits previously available to agricultural cooperatives and their patrons for income attributable to Domestic Production activities, the current statutory language does not maintain the previous competitive balance between cooperatives, other agricultural businesses, and the farmers who sell their crops to them, which existed prior to enactment of the tax reform bill. Our colleagues here on the committee, in particular senators grassley, roberts, and thune, have taken a leading role in identifying a solution for this issue. Im committed to working with them and partnering with ways and means chairman brady as well as other Congressional Colleagues and stakeholders in affected communities to develop a solution to this issue that does not choose winners and losers and is fair to everyone involved. Whats once a suitable solution is arrived at, or identified, my goal is to work with my colleagues to advance legislation that can be sent to the president for his signature as soon as possible. Of course, with any as is the case with any major tax reform bill, none of the important provisions we have written will have their intended effects if they are not properly implemented. Thats why we will keep pressure on the administration to implement the law as congress intended. Im going to keep working to ensure that everyone recognizes the respects congresss role in this process and the fact that the best place to get an explanation of congresss intent is congress itself. Where things are potentially unclear in the law, congress should be the one to determine and explain what was intended, and if need be, such as with section 199a, provide a timely fix. I will continue to facilitate this type of constructive interaction between congress and the administration as things move forward, and i expect that secretary mnuchin will continue to ensure this important dialogue continues. With that, i look forward to hearing from our secretary mnuchin about his views on the president s budget and the ongoing fiscal challenges facing the nation. And were very happy and pleased to welcome you here before the committee. Senator wyden. Thank you very much. Mr. Chairman, today ought to start with the recap on taxes. Now, a little more than three months ago, treasury secretary mnuchin went on cable news and said that his tax models showed that the trump tax bill would spur 2. 5 trillion in growth. Enough to cover its 1. 5 trillion cost and leave a 1 trillion cherry on top. The secretary added, and i quote here, were happy to go through the numbers. We want full transparency to the American People. If youre looking for transparency, the American People finally got a little bit on monday when the budget showed how baseless that mnuchin talking point was from the getgo. Revenue, according to the budget projections, is about to plummet 300 billion short in 2018. 400 billion short in 2019. And it doesnt get any better. The fiscal bottom line is so out of whack, and the budget, so deep in fantasy land, theres a magical 813 billion in growth dropped in out of nowhere to make the overall picture look a bit less irresponsible. But the idea that the tax cuts would pay for themselves is far from the only misleading statement about the tax law. How about the idea that Corporate Tax cuts would get turned around immediately into workers pockets, not shareholders. 20 times more money has been spent on stock buybacks than on workers bonuses over the last few months. As of this morning, millions of workers have not seen their trump bump. Its been great for the slim, wealthy share of the population who dominate the stock market when stocks are doing well. But its a prescription for trouble when youre reaching into the pockets of the middle class to fund the buybacks that drive up the value of stock portfolios. The famed mnuchin rule, the promise that there would be no absolute tax cuts for the well off, has been shattered in a few trillion little pieces. The administration didnt follow through on the promise to close the carried interest loophole, and then, of course, there was the promise that the tax bill would not lead to cuts in social security, medicare, or medicaid. On monday, the worst fears of the American People were confirmed. The trump budget admits that the tax cuts dont pay for themselves, so it hits those key programs, programs like medicare and medicaid, with massive cuts. This morning, it is also important for the committee to discuss infrastructure. And here, we are talking about crumbling roads and bridges and rail in our transportation systems. The administrations infrastructure plan is fiction upon fiction upon fiction. First off, the idea that this is a 1. 5 trillion infrastructure plan is just plain nonsense. Even factoring in the new 200 billion infrastructure proposal, the trump budget is a net decrease in infrastructure spending. It cuts infrastructure programs like a bulldozer through asphalt. 122 billion cut out of the highway trust fund. 14 billion cut from the army corps of engineers. 5 billion cut from the tiger transportation grant program. 7. 6 billion cut from amtrak. And it just goes on. In my view, if you want big league infrastructure, a good place to start is not by making huge cuts to infrastructure programs that already work. The Second Fiction is that this plan is somehow going to be workable for the states. Just a few weeks ago, the Trump Administration kneecapped the ability of states to raise revenue to Fund Infrastructure projects with changes to the tax code. Now, the trump infrastructure plan burdens them with huge new costs they cant possibly afford. And that leads to the third fiction. That the trump infrastructure plan will not be a road map to more privatization and more tolls taking money out of the pockets of our families. If state and local governments cant cover the cost of the projects, theyre going to be looking for private dollars, and that can only mean one outcome, colleagues. Drive more than a few miles to work, get ready for more tolls. Rushing to school in the morning . Dont forget the cash for the toll booth. Heading to the Grocery Store or the mall to do some shopping . Better remember to budget tolls into your trip. The infrastructure proposal also brings back a whole host of old, misguided ideas. For example, in our part of the world, selling off the bonneville power administrations transmission system, which makes sense only if you believe peoples electricity bills in oregon arent high enough. The fact is the trump plan is a green light for infrastructure nationwide to be sold off. Wall Street Investors or, worse, to shadowy buyers from china or other foreign countries. I want to close with this last point mr. Chairman, on our side, we take a back seat to no one when it calls for Major Investments in our countrys infrastructure. In our view, you cant have big League Economic growth with Little League infrastructure. And i also believe strongly in responsible private financing and tackling the issue on a bipartisan basis. But getting infrastructure done right, rebuilding the spine of the infrastructure system that connects the nation requires more than hoping for private dollars. It requires robust funding at a federal level to tackle projects in the national interest. Thats not what the donald trump plan does, and its not even close. The bottom line is the trump infrastructure plan dumps huge costs to states and cities, sells off public assets like an auction at a country fair at a county fair, and raises transportation costs for hardworking families. And thats why its a disappointment to see it added to the list of broke trump promises. Were going to have a lot more to say on these issues this morning. Look forward to questions. Thank you, senator. With that enthusiastic set of comments, let me lets say today i would like to extend a warm welcome to secretary steven mnuchin. Were grateful to have you here. Thank you for taking the time to be here. Mr. Mnuchin was sworn in as the 72nd secretary of the treasury in 2017. Prior to his confirmation, secretary mnuchin was the finance adviser to donald trump for president. In addition to traveling in that role, secretary mnuchin served as senior economic adviser to the president and assisted in crafting the president s economic positions and economic speeches. Before those activities, though, secretary mnuchin also served as founder, chairman, and chief executive officer of dune capital management. He also founded one west bank group, llc, and served as its chairman and chief executive officering in its sale to cit group, inc. Earlier in his career, secretary mnuchin worked at the Goldman Sachs group, inc. , where he was a partner and served as chief information officer. He has extensive experience in Global Financial markets and oversaw trading in u. S. Government securities, mortgages, money markets, and municipal bonds. Secretary mnuchin is committed to philanthropic action fists and previously served as a member of the boards of the museum of contemporary art, los angeles, the Whitney Museum of art, the Hirschhorn Museum on the mall, the New York Hospital board, and Los Angeles Police foundation. He was born and raised in new york city and earned a bachelors degree from yale university. Secretary mnuchin, just please proceed with your Opening Statement here, and then well get into questions. Chairman hatch, Ranking Member wyden, and members of the committee, its a pleasure to be here today. Actually, its my oneyear anniversary on being confirmed. As treasury secretary, im focused on advancing the president s policies that will bring prosperity to the American People through Economic Growth. This is a core focus of it the president , and he is delivering. Last year the economy had two straight quarters of 3 or higher gdp growth, and the growth rate was higher than the average over the previous 20 years. The cornerstone of returning to more robust growth is deregulation and the tax cuts and jobs act. This law is already providing relief to middleincome families by putting money directly back into the pockets of hardworking American Families. Since the law was enacted, over 350 companies have announced bonuses, wage increases, higher 401 k matches, and new hiring benefiting more than four million employees. We are seeing the fastest wage growth since 2009 at 2. 9 . This is a meaningful difference in the lives of the millions of American Families. Our reforms are making American Companies competitive again which is having a demonstratable effect on economic success of the nation. The act lowered the statutory corporate rate from 35 , the highest in the industrial world, to 21 , below the industrial average. It also encourages companies to bring back profits that they have been having sitting overseas by eliminating the tax incentive for keeping that money offshore. Turning to the budget, the fiscal 2019 budget reforms last years tax reform legislation which reduces the burden on taxpayers and sets the country up for longterm growth. The policies of this budget will drive down spending and growing the economy, critical to putting the nation on a sound fiscal path long term and reducing the share of deficit by share of gdp. The past year has been an important step forward for our country. We will continue this progress by enacting policies that enable the American People to succeed, and i look forward to continuing to work with congress to make this happen. Thank you very much. Thank you, mr. Secretary. Lets go to five minutes for questions. Mr. Secretary, the Economic Growth assumptions in the budget show fourth quarteroverfourth quarter gdp growth or above at 3 for a number of years, eventually fading to 2. 8 . As i understand it, those assumptions follow from anticipated positive growth effects from policies put forward in the budget including tax reform, regulatory reform, health care reforms, boosting Domestic Energy production, and others. If i recall correctly, several budgets put forward by the Obama Administration similarly Incorporated Growth assumptions. Sometimes above 4. 0 , in anticipation of results it would obtain if the relative Budget Proposal were to be enacted. The relevant Budget Proposal, i should say. Secretary mnuchin, are you comfortable with the growth assumptions contained in the budget, and do you believe that the policies proposed by the administration will lead to strengthened growth in the economy . Yes, mr. Chairman, i am comfortable with them, and i do believe in them. Now the president s budget which incorporates effects on receipts of the recently enacted tax bill, has receipts as a share of gdp averaging 17. 1 over the tenyear budget window and receipts as a share of gdp generally increasing over the window ending at 17. 8 in 2028. By comparison, the longrun value of receipts as a share of gdp over the period 1977 through 2016 was 17. 4 . That is receipts relative to the size of the economy shown in the budget largely fall in line with the long run historical norm. I take that as an indication that the tax reform legislation in light of the tenyear expected revenue stream for the federal government of as much as 45. 5 trillion can hardly be thought of as a fiscal action that in any sense guts the federal tax take as a share of the economy. I wonder if you agree with my assessment there. I do agree, mr. Chairman. Okay. Mr. Secretary, id like to thank you and your staff for the hard work you put into ensuring that we deliver tax relief to middleclass americans throughout the country. And that will benefit workers and make american businesses more competitive and productive. Of course as we move forward, it will be important that the tax law is properly implemented and that implementation is consistent with congressional intent. I appreciate how your department has worked productively with members of congress and their staffs. Will you commit to continuing to work with congress to ensure that our intent in writing the tax law is realized as the law is implemented . Yes, i will. Weve already started those conversations on certain areas, as youve pointed out in your opening remarks, and we look forward to working with you. Okay. From what i understand, in coming months, the European Commission and oecd may advance suggestions about how to tax a socalled Digital Economy. Despite past conclusions by both bodies that it is impossible to distinguish the Digital Economy from the broader economy, it seems as though they are contemplating measures directed specifically at Digital Goods and services. Along with what some of us see as an aggressive posturing targeting companies. Mr. Secretary, will you commit to engaging forcefully in american efforts to ensure that nondiscriminatory policies are advanced in this area . Yes, i will, mr. Chairman. I had already begun discussions with my foreign counterparts on these issues and making sure that we fairly represent u. S. Companies from being unfairly targeted. Thank you. Mr. Secretary, this administration as well as the Prior Administration has engaged with the European Commission and Member States to express concerns about targeting by the European Commission of u. S. Firms through state aid investigations of the Tax Administration practices of eu Member States. Now that we have reformed our tax code to tax the historical deferred earnings of u. S. Multinationals, that are the subject of existing state aid cases as well as prospective earnings by ending deferral and taxing intentional income on a current basis, the u. S. Has addressed the socalled stateless income issue that was purportedly driving the state aid cases. However, it is not clear that the European Commission acknowledges this fact. The commission is continuing to pursue existing cases and is threatening to launch new investigations in an attempt to encroach on the u. S. Tax base under the guise of state aid. At the same time and somewhat ironically, some eu Member States have expressed their concerns with certain antibase erosion measures included in u. S. Tax reform and are threatening legal challenges. Now mr. Secretary, i understand that treasury plans to engage with european officials regarding their concerns with u. S. Tax reform. Do you agree that treasury needs to ensure that u. S. Concerns with eu state aid cases are appropriately addressed . Yes, mr. Chairman. Were also in discussions on both those issues and look forward to working with you on that. Thank you. I have more questions, but ill send them in writing. Ive run out of my time. Well turn it to senator wyden. Thank you very much. Mr. Secretary, let me start with the question of the stock buyback. Since republicans jammed this massive Corporate Tax cut through congress, major corporations have spent over 120 billion on stock buybacks. This is a problem for the middle class. Members of this committee promised that middleclass paychecks would be bulging early in 2018. Instead, the ceos are funneling the tax windfall into buybacks that inflate the value of stocks held by affluent executives and wealthy shareholders. Meanwhile, recent public announcements by companies have found that the employee pay booth touted by the republicans add up to 5 billion, give or take. 5 billion. That means ceos have spent 20 times more on corporate buybacks than on boosting their employees compensation. Isnt it correct following this massive Corporate Tax cut that ceos have spent tens of billions of dollars more on corporate buybacks than on compensation boosts for their employees . Mr. Senator, i dont believe thats the fair comparison. Mr. Secretary, those are the facts. We got that information from public announcements, from companies, from sec filings. So tell me how those facts are wrong. Again, i was going to explain. Im not doubting your facts. What i said is i dont think its a fair comparison. The there are over four million americans that have received a onetime bonus, okay, as a result of this. We expect and as the cea has reported that wages will increase, and we expect that over the course of this year. That we will see close to several thousand dollars of wage increases. We would not have expected that all to occur in first month. So we were told on the floor of the senate last december that early this year we would see workers have bulging paychecks. You have just admitted that it hasnt happened yet. But you continue to believe that it might happen in the future. Now the administration claims its tax plan, as ive just indicated, would focus on working americans. Would focus g americans. If you care so much about delivering tax cuts to the middle class, why was it necessary to include in the tax bill a lower top rate for those with incomes over 500,000 or expanded state tax relief for those with the states worth more than 5. 5 million. Neither of those things, and you conceded last fall that the it disproportionately help his the affluent. Last year during the confirmation hearing you specifically had an interest as a loophole the tax bill would close. That didnt fool anybody and since then youve admitted carried interest was not addressed. So tell me why these policies, the top rate being lowered for those with incomes over 500,000, expanding tax relief for states, for people worth more than 5. 5 million, and not fixing the carried interest loophole which was pledged repeatedly. How in some way has that helped the middle class . Okay. Thank you. Im happy to explain that. Just as a followup to your previous comment, we do expect again, millions of americans have seen the effects of this already. We expect with the withholding changes in february people will see the tax cuts. Before we leave it, mr. Secretary, im not going to let the record be disported that way. As of now, ceos have spent 20 times more on corporate buybacks than on boosting employees compensation. Id be happy to share with you the information weve gotten from public reports and sec filings. Please proceed. Thank you. Im not debating your fact on that. So in regard to your specific comments let me see if i can address them. The original proposal had a full elimination of the estate tax. That was something that the president did scale that back. We thought that was important for people to be able to pass on businesses without unfair, double taxation. In regard to the carried interest, it was the president s desire to get rid of carried interest. We worked with congress and came up with a solution to increase the Holding Period to three years and again, that was something we do with congress and reduction of the top rate and that was intended to help many parts of the country which account for a big part of the gdp particularly, new york, new jersey, connecticut, california, illinois where we were eliminating the full deduction of state and local taxes and in essence, wanted to offset some of what was the tax increase in those states by a drop of the top rate. Im just going to close this round on your socalled compromise on carried interest, and let me just read you a headline in bloomberg this morning they say and i quote, new Hedge Fund Tax dodge triggers wild rush back into delaware. Thats what they think of your socalled carried interest loophole. They really outline in this article the glorious fix that you have described is going to be so helpful. We already have Hedge Fund Managers according to bloomberg showing up with ideas for an even bigger loophole for the fortunate few. Mr. Chairman, i would ask that this bloomberg article that shows what a farce the socalled carried interest fix is, and i would ask that be entered into the record. Mr. Chairman, if i can respond to the last comment and ive met with the irs and our office of tax policy this morning. As a result of that article. The irs and tax policy intends to send out within the next two weeks guidance that we do believe that taxpayers will not be able to get that loophole, and thats something that we believe we have the authority to do under the existing code that left a certain discretion to me as secretary and the irs. So mr. Chairman we will have that resolved. We have heard again and again how there will be fixes to these various problems and we continue to see that the passthrough loophole which we were told again and again would be fixed still is an ongoing problem. Weve got all kinds of Financial Experts talking about how it could be gamed and i would just say, colleagues, when we hear there is a serious problem outlined in a credible publication like i just cited and the secretary says hes going to fix it, sometimes it reminds me of the marquee at the old movie house where the socalled fixes are supposed to somehow show up and never get there. Thank you. Again, if you dont mind, i just want to clarify my comment. Its not a fix. We believe that the interpretation of the existing law that people are not allowed to do that and well be putting guidance out. Thats different than mr. Chairman, whereas you said there are certain issues in that we do need to work with congress to fix, but thank you. Thank you. Senator crepo . Senator hatch, i yield one minute of my time. Thank you for your opening remarks beyo remarks the unintended consequences of the tax law language of 199a and the necessity for correcting it and working with us. I know you know what the problem is and i know youve been working on it for a long time and its Pretty Simple that congress would not pass a law that would put some segments of our economy out of business and thats why it needs to be changed and i happen to sell and buy from a couple of quads produced in iowa, and i am not anticooperative, but the status quo should be all anybody ought to be expecting and it should have been taken care of back in january. Thank you. Thank you, senator. Senator crepo . Thank you. Secretary mnuchin, i only have two things and i will try to do them quickly and some allegations have been made and statements have been made this morning that the tax legislation that we passed will not achieve the revenue targets that we have discussed. I just want to clarify a couple of factors. First of all, isnt it correct that the Congressional Budget Office issued its analysis that if we do nothing we could expect about 2 growth for the next ten years under current law . That is correct. My understanding is that and thats a pretty anemic rate of growth in my opinion. Whats the historic average . Its closer to 3 . Thats what i thought. So what youre projecting is that since we did take action and passed some historic and very powerful tax reform that you expect through your analysis that you could achieve that or get close to that 3 rate of growth. That is correct. And this is the last bit of information that i understand and i want to confirm with you, that in order to make the tax bill revenue neutral wed have to get to 2. 3 or 2. 4 , is that correct . Its about 35 basis points of additional growth. We should see if your projections are correct about approaching 3 growth not only a revenue neutral tax bill, but one that does exactly what it was intended, generating surplus. I stand by my previous comments on this. Let me move on to another topic, another one that youve been approached today about in the hearing and that is what the impact of the Corporate Tax rate reductions is on workers and on salaries and so forth. During the deliberations i had the opportunity to ask the joint committee on taxation about what is the impact of Corporate Tax rate reductions and he indicated that his analysis and the analysis of the joint tax was that approximately a quarter of the benefit of Corporate Tax rate cuts go to workers in the form of wages and benefits and increased Job Opportunities as opposed to owners, and i want to get to owners here in a second, but is that roughly correct in your analysis . No. And our analysis, many economists believe that over 70 will go to workers. So the joint tax is more conservative than our analysis. Thats the conservative range that you just described this and some, almost everyone agrees it is 25 and many believe its up as high as 70 . With regard to the owners, its also, as i understand it understood, mr. Bartol indicated up to 75 of the Corporate Tax cut goes to corporate ownership, but that an increasing portion of that ownership is held by Pension Funds and defined Contribution Plans and other Retirement Funds and not to mention the Stock Ownership and members of the middle class now are increasing in their own investments. Again, what are your thoughts on that allocation that mr. Bartol discussed . I agree with that. Again, theres significant ownership and again, the capital, even if there are share buybacks, that capital is recycled back into the economy. It doesnt just sit in banks. It goes back to the economy. You anticipated my next point and i guess ill ask you to close with this in my last 30 seconds and the stock buybacks have been referenced as though they were a terrible thing and just benefited really rich people. What is the impact of the stock buyback . The stock buybacks or dividend, which are really the same, theyre just different ways of returning capital to shareholders when a company determines they dont have the use for that capital to make an appropriate return and they just deploy it to other business back in the economy. So it is a healthy thing, as well. Thank you. Just to reiterate one last point. There are many, many people, millions and millions and millions of people in america who are in the middle class as we describe it who own stock, whether its in their pension fund, their Retirement Plan or their own individual investments, is that not also correct . That is correct, and were doing whatever we can to encourage that number to go up. Thank you very much. Thank you, senator. Senator portman. Thank you, mr. Chairman, and secretary, thank you for being here again to talk about this tax reform legislation that has had incredibly beneficial impact and frankly exceeded expectation, i think its fair to say and we appreciate you working with us on it and so many of the aspects of this tax reform bill, as you know, have been bipartisan including the changes on the International Side that create enormous opportunities for growth. We have a system where jobs and investment were incentivized to go overseas which is crazy and makes no sense and we see announces of companies coming back to the United States for production. We see companies that are repatriating some of the two or three trillion dollars thats been parked overseas back to this country to invest and so i think this is something that we talked about a lot in a nonpartisan setting prior to the tax bill coming up and we have to remember that this tack code previously was in place made no sense for ohio workers and American Workers. There are two things we focused on. One was providing direct relief to American Families and thats through the tax relief including the middleclass families in ohio and the second was on the business side and on the individual side, as americans look at their paychecks and even this friday, many of them will see that theyre withholding this change so theyre not seeing as much money going to uncle sam and more money in their pockets. Can you tell us what percentage of American Workers are likely to see their withholding changed in a way that helps them, in other words, that less is coming out of their paycheck every couple of weeks or every month. We anticipate it will be 90 . 90 . I want to thank you and the irs for moving quickly with regard to withholiding tables and my sense is its already happening. I had a coffee and i heard from the constituents on it and i had calls and emails just in the last week. John in fairfield, ohio, received an additional 51 bucks in his paycheck and he was surprised because there was going to be no relief for him and there is. Carl from salineville is pleased to see 60 bucks. When he opened his first paycheck he was thrilled to see an additional 300 there. He said those 300 will be used for him to help cover the car payments for his two daughters. So its happening. When do you expect that all that 90 of American Workers will see that in their paychecks . Will that happen by the end of this month . Yes. We believe thats the case. And youve told the irs to send these tables out. Youve also told employers that they have to make these withholding changes within the next few weeks. Is that accurate . That is accurate, and we are very pleased with the work that the irs is doing on already implementing the act. Of course, the additional tax cuts going directly to the families because of the change on the business side and the International Side and i talked about the progrowth elements and investing it back to their plant and equipment and all of the economists i talked to say that productivity and economy is one of the reasons weve had this anemic growth. Weve had such low growth not just over the past several years and over the past decade and a half with no real increase in wages and were seeing that for the first time. More than 350 companies have now made decisions to invest in equipment, buildings and employees over 4 million americans are receiving tax reform bonuses to their benefits. Thats amazing and let me just ask you, had you expected to have that much good news about the effects of the tax bill this soon . No. We were pleasantly surprised by those announcements. Let me ask you about some of the smaller business elements here. Yes, walmart is paying people more and most of the states represented around this deus. Thats important and j. P. Morgan is adding 400 branches and adding 4,000 new jobs and theyre the third biggest employer in ohio. Apple is paying 38 billion to repatriate the earnings and 30 billion in Capital Expenditures right now in america, they say related to the tax bill. So a lot of great news from larger businesses, but how about the smaller businesses . What are you hearing from them . Ive been to four in ohio and all of whom are investing in their people and theyre investing in technology and modernization of their plants to make their workers more productive. What are you hearing from smalls are businesses . Were hearing the good news, as well from many Small Business owners that weve either listened to or visited. We are getting the same response about how they can invest back into their business and that theyre passing on wage increases. The National Federation of businesses says the Small Business optimism is at record levels right now and they lay that directly to the tax legislation. I do have some questions for the record for you on the production tax credit for the fine coal facilities and also something on the International Side and i want to make sure that the cf cnet earnings calculation is done properly and ill submit those for the record and i thank you for being here and congratulations for helping us put out a tax bill helping the people i represent. Thank you very much. Senator, your time is up and well turn to senator cardon. Thank you, mr. Chairman. Secretary mnuchin, it is always a pleasure to have you before the committee. I want to cover quickly an issue i mentioned to you before you walked in and that is your responsibility on implementing the sanctions law that was passed by the congress by 99 of the members, over 99 . This past week our intelligence committees held their annual briefing and it was, i believe, the unanimous view of the intelligence agencies that russia has not only continued its attacks on our country, but that they are even accelerating it and expected to be active in the 2018 elections. It was for that reason that we passed the sanction laws to make it clear to russia that well take action against them as they continue this type of conduct, mr. Putin continuing it. He clearly has, these sanctions are mandatory sanctions and there are various categories and we mentioned one, dealing with the intelience and Defense Sector that there is a significant transaction involving russia, mandatory transactions need to be imposed. I want to first start with a compliment. The global magnitsky law was implemented under the Trump Administration and it was done the rid way including the Treasury Departments assessments on the implementation, and its hard to understand how no sanctions have been imposed on this bill sent by congress and it sends a clear message that he can continue his activities without fear. Can you explain to us how you intend to implement this law passed by congress including the mandatory sanctions . Sure. Senator, thank you very much for that question because i do think it is a very important issue, and we very much support the legislation and we are fully committed to follow through on it. On the section that you mentioned which is on the intelligence and Defense Sector. That area has been delegated to the secretary of state and the state department so i cant comment on that, but what i will comment is on the other part of the law is the part that were responsible for which is the oligarchs and the government leaders, and as ive mentioned previously in my testimony we did deliver the report which was phase one. Part of it was classified and the unclassified part is basically a cut and paste from the forbes list which to me sends a signal to russia that we are not going to take public action against his corrupt regime in the use of oligarchs. Thats not the case, and i can assure you that again, i met this morning with my internal group and the intelligence people and we are actively working on russias sanctions coming out of the classified briefing, and i look forward to meeting with the Banking Committee on giving them a classified meeting. Ill take you up on that, and i understand that theres been some conversations in the administration, and this is the beginning of the process, but i just made the observation that you got off to a bad start with no sanctions being imposed. I want to cover the cdfi with the program that affects community and minority banks in the community and it also administered the new market tax credits, and i understand the budget continues the new market tax credits and the administration of the new market tax credits. My concern is that distressed communities, the stakeholders there, its difficult for them that their institutions will be maintained and yes, we want to build distressed community, but we also want to build institutions within distressed communities. How can we assure the institutions with the distressed communities that with the elimination of the cdfi that there will still be a focus by the Trump Administration on strengthening these communities . I can assure you that they will and we are in the process of awarding the current cdfi grants. I think that they have been helpful again and this is just a difficult decision in the context of the overall spending and having to make difficult decisions and we look forward to continuing to work on these issues. I appreciate that, and youre right. These grants went directly to institutions within distressed communities. Were losing our Community Banks and let alone minority banks that are particularly important for strengthening distressed areas. Ill take you up on your offer as to how you can find ways to strengthen the minority opportunities within the distressed communities including the new market tax credits. Thank you. I look forward to working with you on that. Thank you. I want to follow up on the sanctions stuff because i cant stress how important it is. It is a big deal when we get a vote of 5175. That is unprecedented in these times and that was the vote on the sanctions bill and director coates who was selected by the president and director pompeo both indicated that russia sees their meddling in our election as 2016 as successful and are confident they will be repeating their efforts in 2018. Has the president of the United States asked you to impose sanctions on russia . Again, first of all, i have a lot of confidence in director coates and pompeo and their work and that work has been incorporated in our report thats not my question. Has the president asked you to impose sanctions on russia. He didnt have to ask me ive never heard the president of the United States say a bad word about russia. Thats not the case. Well, i need to see quotes because ive never seen it. He always avoids. . Let him answer the question. I will, mr. President mr. Chairman, but hes not answering the question. I want to know if the president asked him. Again, what im happy to tell you is that i have told the president , i updated him on the report and i told him we would be doing sanctions against russia and he was pleased to hear that. Okay. Has he ever have you recommended to him that he publicly explain to the American People that he wants sanctions imposed on russia . I have not made that recommendation to him. Would you . I publicly i publicly said that, but i am happy to pass on your message to him. Do you think that the people of this country and frankly, the government of russia would be helpful if they heard from the president of the United States that he believes sanctions are appropriate when a country tries to break the backbone of democracies all over the world . Again, the president has delegated to me the responsibility for sanctions. I represent the administration and ive been very clear there will be sanctions on russia. I dont think i can be more clear on that and that work is under way as a result of the report. Well, the elections are coming. Theyre fast approaching and so far there have been zero consequences. Zero. And i think there were many sanctions that were issued last year and were happy to come and update you and we are happy to give you a classified update in the work in the report which we are very proud of what the intelligence committees have done. Well i if there have been any sanctions they certainly have not been heralded by this administration and they certainly have not been effective because it is very clear that russia, according to your Intelligence Community is actually engaged in doing the exact same thing again. The the release the memo it was very clear, and they were russian bots and not a peep from this administration or from you condemning that. Not one word and thats whats so hard. The vote was 5175. We all agree here. The chairman agrees. He voted for it. All of my republican colleagues with the exception, i think, of two voted for it and i want to make sure that you leave here without understanding that it is a real headscratcher. The silence from the oval office about the conduct of russia in attacking our democracy, and i hope that there is a new day and maybe tomorrow the president will step forward and say enough, russia. Were coming after you. This is warfare. You dont attack our democracy and not pay serious consequences. I want to also talk about the tax bill briefly. I am really worried about the carried interest leave being in there and i am worried about the new loopholes, and the l. A. Times headline, gop creates one of the largest loopholes in decades. That was the headline december 319st. Bloomberg just recently, heres the trump tax loophole your accountant can blow wide open and this is all about passthroughs, and the very complicated scenario that we have laid forth on passthroughs. Are you all prepared to lay out strict guidelines on these passthroughs because clearly, all of the accounting world. Its embarrassing how generous this tax bill was to families like mine and yours. Its embarrassing, and i see now and all these passthroughs and the vast majority of money goes to the 1 most wealthy in the country and the accountants are having a heyday with this loophole. How quickly can we expect written guidance on how we can make sure this is not a loophole that will allow the wealthy to avoid even more taxes Going Forward . I can assure you that both the Tax Department and treasury are over 100 people and the irs is fulltime focused on this and i assure you we will be putting out guidance and regulations to make sure that people cant abuse the passthroughs that the intent here was to create incentives so that businesses got those, but not for it to be abused and i can assure you were working on that and well be doing that shortly. Senator, your time is up, thank you. Senator white house. Mr. Mnuchin, i am new to this committee. Let me start with some very simple questions and the first is what your feeling is about the present level of income inequality in the United States . Again, my number one focus is Economic Growth, and i think if we have proper Economic Growth that that will shrink the income inequality. The ratio of ceo on average worker pay has gone to 2701 in the years and the top 1 take 24 of all income out of the economy every year according to the Federal Reserve and the top 25 Hedge Fund Managers made more in the last year we have information for and thats 2014 and then all 158,000 kindergarten teachers according to the washington post, do you think well grow our way out of that . Yes, i do. Okay. Do you think that the tax code should be progressive in the sense that it demands a higher contribution as a percentage of income from high income earners than from lower income earnings. Many things we did in the tax cuts act like eliminating the tax cut and progressive. Im glad we agree on that. The last report we had from the irs was from 2014. They looked at the top 400 taxpayers aggregated their income and their tax payments and calculated they paid 23 which was the lower tax rate which was the top 400 taxpayers and a lot of plumbers pay and a lot of teachers pay, and one thing that bothers me is that the irs has stopped reporting that information. You are in the position as secretary of the treasury to instruct the irs to start reporting that information again, and i think its i dont know what you think, but i think its important for americans to get a sense of how things are going in their demeanor democrat see to have a fair report of how much the highest income earners are actually paying in taxes. I dont know that thats something that we would want to know disclose. Im not going to put you on the spot right here, but i will ask you in a question for the record if you will tell the irs to go back to report the Tax Information for the taxpayers. I am happy to answer the question which i am not aware of the report, but i am happy to go back and speak to the irs and understand why they were comfortable in the past and why they are no longer doing it. Obviously, there is a sensitivity to any specific taxpayer information. So whether this is the sample i am happy to get back to you on that. I appreciate it. The other issue i want to talk to you about is as treasury secretary you oversee fin sam and one of the problems you are seeing loudly in the Judiciary Committee and senator grassley and i have Bipartisan Legislation on this is the United States is becoming the haven for International Criminals because our shell corporation, our Corporation Transparency controls are so bad and as the eu is cleaning up on this and as the uk is cleaning up on this, the United States is becoming the laggards with the result that terror organizations, drug cartels and human traffickers and other criminal enterprises can hide assets and launder money here in the United States. Your Deputy Assistant secretary at the office of Terror Financing and financial crimes told the Judiciary Committee that the lack of information and this prevalence of american shell corporations is what you call a vulnerability and former treasury special agent testifying and ill quote him here, requiring the real owner of the u. S. Company to be named during the corporation process will cut down in dramatic fashion the ability of criminals to finance their crimes. I would like to ask you to work with us with senator grassley and myself in trying to improve in corporation, transparency in the United States. I think that when Ronald Reagan we were on a city on a hill echoing john winthrop, he said that for a reason and i dont think we look much like a city on a hill when we become the haven for crooked gains of criminals and kleptocrats. We need to have a way of tracking ben feshl ownership. I am working with the department and we look forward to working with congress and we do need to solve this issue and its something that i look forward to working with you on. For the record, mr. Chairman, i know my time has expired and the problem here is that even with a warrant. Even with a subpoena. You cant get this information because it has been so well hidden. The traditional tools of Law Enforcement fail against the problem of the shell corporations. I thank you, mr. Mnuchin. Senator isaacson, i think you are next. Secretary mnuchin, i like you and most everybody has been somewhat amazed with the jobs act, and i thought it would do a lot of good things and appears to have done, but it does bear out the old saying driving economic decisions. The policy of this administration and the policy that we passed is showing a reinvestment in america, our american corporations and also with their people to reinvest, and we look forward to that in the future because it is going to grow. I live in atlanta near cocacola which was a soft drink, which funds hospitals and research and advancement and those are monies by the private sector and of the upper 1 that have made our city better. Home depot started in atlanta, georgia. Two Hardware Store guys had an idea about selling hardware and the chain revolutionized that business and arthur blank any bernie did so. So there are a lot of actors out there that would be less than admirable and there are people in the top 1 and it would not have been possible in the country, and i wanted to say that first and foremost. I also want to take the liberty to take your time to talk about something that is not in your responsibility and its part of the budget. Its a part of our countrys infrastructure and it needs to be addressed and thats the port of savannah. Its the most profitable port on the east coast, and its a port where 19 years ago we authorized its expansion to 47 feet and have over the course of time reauthorized it and three years ago approved it and my state put 295 million in the budget at the request of the United States government and it promised it would follow up with the corps of engineers. So the 21st century as it goes through the panama canal can go through the most profitable export port through the port of savannah. The current budget falls short and it recommends that project. That is enough to give us time to address what weve taken out and not enough to continue to expand the court and i will talk to encourage the administration to have the project that has been for 19 years authorized by this project and mostly state money and its time for the feds to deliver on that part of that reinvestment and i will do everything we can to fight because if we dont were going to lose jobs and were going to lose opportunity. That port generates 300,000 jobs in the United States and billions in income to the companies and the individuals of the United States and we have to seek to refinish its expansion or else well pass by in the country as the ships going through the panama canal and that business will go somewhere else and we dont want that to happen. We dont have to respond to that except that well keep the port of savannah in mind. I will keep it in mind. Its good for, in, and good for the guy that collects taxes. Thank you, senator. Secretary mnuchin and a couple of comments or requests and then a question. First, ill add, the tax cut and jobs act and working on louisiana, the louisiana, and the Iberia Bank Lafayette and the bank in new orleans and home depot, walmart, best buy and were giving better bonuses and better wages and Better Benefits on the longterm Capital Investment and exxon mobil is a major presence in louisiana and announced 35 billion in capex investment that will increase competition for workers driving up their wages. That is the way to reduce income inequality. The tax cut and jobs act bill has been good in our state and thank you for your role in it and i am proud to participate. The request, if you will, the one of the provisions in the tax bill was to provide fair treatment for taxpayers in a loss position upon deemed repatriation under section 965 and free repatriation losses and a potential question has arisen in regard to losses in 2017. So i just ask that your department will work with us and we have an amendment to address that, but we want to make sure that we can address that. We look forward to working with you. Thank you. Let me now go to something that the white house raised, the financial crimes enforcement network, you have a Strategic Plan through 2022 to analyze the system and the Analytical Capabilities to better collect and act upon Financial Data and intelligence. In my office were looking at how the drug cartels transfer 110 billion per year from the United States down into mexico. Best we can tell the treasurys getting 7 billion of it and we know its going through boat cash and going through tradebased moneyed laundering and going through people driving cars that have 10,000 on them and theyre coming in the over not boat, but were not sure cooperation has been very good. Its been difficult to find out, but it seems like we have one department doing that and another this, but the departments are not doing it in concert. Clearly, this is important, and its a way to get at the cartels. Frankly, i would like to use that money to pay for the wall. It would s it wouldnt be the mexican government. It would be the cartels. Any comments on the effectiveness of our different departments working together . From my experience, senator, i think the departments are working well together, but on this specific we look forward to following up with you. It is a very important issue and we want to do everything we can to get the money from the cartels. It seems, though, just prima facie, if you will, that you have 100 billion moving south and treasurys only getting 7 billion of it. That seems to be a big gap. So we would like to continue to work with you on this because 7 billion is just, you know, which you might lose in the back of your couch if you are worth 110 billion per year and we understand that if the mission uses data to provided by the financial intugs and this may be what sheldon was referring about. Do they have a process in verifying information in the suspicion transaction reports. They do and they use those sars to follow up with the institution, but one of the problems as has been pointed out is the issue of beneficial ownership. We have a flaw in our process about how to track ben feshl ownership and whether they did it at the say the level or the federal government level. Can you do that by regulation . To address the issue of lack of clarity regarding beneficial ownership. It is unclear and depends on what the solution is and which way we go, but this is something that we do want to work with congress and make sure were enacting it the right way. I am almost out of time. I yield back. Senator . Thank you, mr. Chairman. Secretary, welcome. Glad youre in front of the committee. I have short comments and one Pretty Simple question. As you know, you and i have talked about this, the Banking Committee, there is a quiet crisis and retired workers are at risk of losing the plans that they spent an entire career getting into and many in this town dont understand what happens at the bargaining table where workers will give up wages today in order to have Retirement Security in the future. 60,000 ohioans and 1. 5 workers could see drastic cuts to the pensions that theyve earned and theyve been promised and it doesnt just affect retirees and its current workers and Small Businesses and this week i met with a group of businesses from ohio about a dozen of them that have done the right things for their workers and theyve enrolled them in central states. Theyre scared to death about their liability and what happens to their workers. Whats the things that these businesses got, those businesses face bankruptcy if they plan to fail and they know the benefit corporation if we dont act. These familyowned businesses that have been passed on for three and sometimes four generations are at risk, any thats not how their story should end. Its not partisan on this committee alone. Senator portmans been interested, senator roberts, senator nelson, senator scott, senator casey next to me, senator thune, senator mccaskel down the table and the chair and the Ranking Member all have cared about this issue and it affects lots most of these states it affects thousands of workers. Ive introduced a bill, as you know, my democratic colleagues to address it. We need all sides to bring their ideas to the table and thats yet joint select committee on tension reform is now law and why its so important and the committee will force congress to finally treat the tension crisis with the urgency the American Workers deserve. My question is this. The committee needs the administrations help and there will be four republicans and four democrats from each house. The Administration Needs it needs the administrations help to be careful and i know we dont see eye to eye, and your ultimate goal, we sometimes disagree on thij things and this is an area where we can agree something must be done and ill link to the congress and your select committee to what the Treasury Administration will provide Technical Support and expertise needed for the committee to succeed . Yes, i will. Its an important issue and we look forward to working with you and we are pleased to provide technical help and any policy work you need from us. Thank you, mr. Secretary. Thank you, mr. Chairman. Thank you very much. Good to be with you. Thank you. I want to start with a matter that arose and i think part of the story was missed and the coverage missed in the debate and that was regard to the Child Tax Credit. There is a lot of publicity and attention paid to the debate about the tax credit and im afraid that the real story was missed because according to one source that would be the center of budget and policy priorities. The increase and the new part of it, the increase in the Child Tax Credit in the bill when you compare to current law. Heres what it resulted in. A single mother with two children working fulltime at minimum wage, her Child Tax Credit year over year would be 75 bucks total. 75 bucks, but a married couple with two children earning 400,000, that family would benefit from the Child Tax Credit 4,000 in the year. About 333 per months. So 75 for the single mom of an increase. An increase of 4,000 for the family with the income over 400,000. So i think the and this is an eerie responsibility to publicize a provision in the tax bill, but i wanted to ask you about that. How do you feel about whats your view of that policy and when you consider not just your job as secretary and the administrations job with helping families, what do you think the purpose of that tax credit is . Again, i think the purpose of the tax credit was to get relief to middleincome families and im not familiar with the specific example and you outlined 14,500 and i am familiar with the median numbers and i assume your number is correct, but obviously this impacts different taxpayers differently, but the intent was for the median family that did deliver significant middleclass relief. I would argue we had an opportunity to have a transform tiff job tax credit and it didnt happen, but let me move on. The other issue i wanted to raise is wages. There were a lot of assertions made that a cut in the corporate rate would lead to a wage increase. In fact, Bloomberg Intelligence estimates are that corporations will devote 875 billion to buying back stock. So far this year corporations have authorized 20 times more on stock buybacks than theyve spent on increasing wages. Last may you told the committee that, quote, over 70 of the cost of Corporate Taxes are actually borne by the worker, end quote. If companies arent keeping to that and instead are keeping a majority of the value to tax cut and executives through dividends and buybacks, do you think we should have a mechanism in place to make sure that employees and the wage earners see the gains from the tax cut . I commented on this earlier, the similar question and again, we do stand behind what we do believe and are there many economists that support this that are under 70 on the low end and its probably 30 . So we do stand behind that. We think were going see wage increases and as i comment earlier, thats capital thats recycled back into the economy, it doesnt sit in banks. I would have preferred that we gave it directly to the workers. That would have been my preference. My argument didnt prevail. Mr. Secretary, i know we have less than a minute left, but i wanted to ask you a question about russias sanctions. We, as you know, passed the countering americas at versaries where congress provides the administration to hold accountable countries like iran, russia and north korea for their actions and are there currently Budget Constraints that prevented from fully exercising the authorities granted under this legislation and if not, are there other constraints . There are not Budget Constraints and i commented on this earlier, i apologize, you missed it and we are actively working on those sanctions. You should expect them in the near future. Phase one was creating the report. I am happy to come talk to you in a classified setting about the report, but i assure you those sanctions are coming and were actively working on that as we speak. Thank you, mr. Secretary. Thank you, senator menendez. Thank you, mr. Secretary for being here. Last week at the when you testified before the Banking Committee, i asked you about the irs fundamentally flawed advisory two days before christmas which prevented thous thousands without paying. You responded it was to prevent taxpayers from, and i quote, abusing the system. I have to say im offended. Offended by that accusation. Lets be clear. The people of new jersey work hard they pay far more than our fair of taxes and we are not just a blue state. Were a blue chip state that drives innovation and were not abusing the system. I would argue the system is abusing us and let me ask you another way, prior to the passage of the trump corporate bill, tax bill, was there any prohibition against deducting prepaid state income taxes or local property taxes in the year that they were paid . First, let me comment and i didnt mean to offend yoi, so i apologize if thats the case. The guidance that the irs put out is completely consistent with what has been thats not what i asked you. I asked you was there any provision prior to the passage of the trump Corporate Tax bill against deducting prestate income taxes . Yes, was there. The irs interpretation did not change as a result of the bill, and i would just say, in certain cases again, its very factspecific. In certain cases, again, if it has been assessed people could pay their taxes this year in certain cases. Let me ask you this, if thats the case that they were both prohibited based on your answer, and why would section 11042 specifically prohibit the deduction of prepaid state income taxes . Why would the bill prohibit this allowed . Thats illogical. On the real estate side there was no change to current law and again, the irs felt it was important to put out guidance to give taxpayers information. Is there anything in the trump Corporate Tax bill that prohibited the deduction of prepaid property taxes in the bill . Im sorry. We are talking about prepaid property taxes. Im asking you, in the law can you point to me the section in the law that specifically prohibits the deduction . Not in the bill, but in the irs actual code yes, and ill brung bring a team from the irs. Prior law doesnt prohibit property taxes. And the prepaid property taxes. And they passed and theyre prohibited about state income taxes and it seems to me that clearly we should be allowed to permit the deduction of property taxes when they are paid. I just heard you in an answer a little while ago talk about the estate tax to avoid double taxation with places like new jersey and other parts of the country that get hit with that tax bill that doesnt allow them the full deductability that has arent existed for a long time. Let me ask you another question. The administration has bragged about trickledown bonuses that only 2 of American Workers are receiving after the trump Corporate Tax bill. Do corporations get to deduct these bonuses from their 2017 taxes even if they dont pay the bonuses in 2017 . Again, thats a factspecific question i am not prepared to answer. Let me inform you that corporations can deduct the full amount of the bonuses in 2017 regardless whether or not they made the payment and this is important because by deducting in 2017, corporations can, to use your words, game the system and claim an even larger deduction in 2017 without spending a dime, but in contrast, a middleclass family that actually paid their property taxes in 2017 wont be able to deduct them in the year that they paid which to me is blatant hypocrisy and it would be shocking if it did not so neatly fit into the pattern that puts corporations and wall street above the people that live on main street. So i urge you to make this again because if its good enough for corporations to make a deduction in a year in which they didnt pay it, then taxpayers should be able to make a deduction in the year in which they did pay it and i urge you to relook at this issue because its just a question of fairness and justice and its not if its good enough for corporations its good enough for middle class families. I want to clarify one thing. In certain circumstances, the prepayment would be eligible and in certain circumstances, the prepayment wouldnt be eligible. So i want to clarify that. The guidance was with a strict interpretation of current law. Thank you for holding this hearing. Mr. Mnuchin, its nice to see you again. Thank you for your service. This year were working on a farm bill and chairman robertson and Ranking Member stabineau are writing the next farm bill. I notice your budget cut is 260 billion on top of a 15 cut in Discretionary Spending for usda and i am all for finding savings and the ag committee, you may not know this, was the only committee that actually got bipartisan savings in the last budget process, the last farm bill was projected to save 23 billion. The only committee that did its work the cbo tells us that that bipartisan work on behalf and fueled by the farmers and ranchers is now saving 100 billion. Many farmers and ranchers are facing persistent drought ask fighting hard to keep their operations moving and i would like you to tell those farmers and ranchers about the proposed cuts when those guys already unlike anybody else already did their work last time. How are these proposed cuts going to help them . Again, im not the expert on the farm area, and its an important part of the economy and i look forward to working with you on these issues. Well, can you e lap rate how theyll affect the farmers and ranchers particularly with these Commodity Prices . There were difficult decisions made in the budget and as it relates to farmers, this is something that would have some impact and look forward to following up. I know from at least my perspective and i hope speaking for both republicans and democrats on the ag committee, and when we see farmers and ranchers especially in this commodity environment getting whacked and by the way, i dont think you guys have made hard choices, giving 37 million to 572,000 taxpayers that make more than a Million Dollars a year by borrowing that money is not a bad choice and youre having to back fill already a month later, mr. Secretary. Do you know what it was when bill clinton left the presidency. I do because of the Economic Growth during that period of time we saw revenues increase significantly and since that period of time the deficits have increased significantly. What was the deficit when bill clinton left the white house . We were actually during that period of time paying down. We had a surplus, didnt we . It was a 5 trillion surplus during that decade, isnt that correct . I do know we were paying. Thats what it was and we were Holding Hearings about what to do with the surplus. Do you know what the deficit was when president obama became president . I have the numbers with me. It was 1. 2 trillion and it became 1. 5 trillion and i saw jack liu who was here, your predecessor and secretary geithner beaten to death by members of this committee over the recession over the deficit during the worst recession since the great depression. I have statement after statement after statement of republican colleagues who were unwilling to lift a finger when we had a 10 unemployment rate, beating those guys to death as they sat here and now we passed 1. 5 trillion tax cut, borrowed all of that money from money from our kids. Last week, the president signed that spending bill like weve never seen before. So the estimates now are that even in an economy where were seeing tremendous growth, were going to have a trilliondollar deficit next year and as much as 2 trillion over ten years. How can you look yourself in the mirror . Well, again, let me just first say i share your concerns over the deficit, and thats why i think its important on a bipartisan basis we work on this. We put together a budget that shrinks the deficit. Well but the president is concerned that the debt went from 10 to 20 trillion and were on track and that is when we had a recession, mr. Secretary. That is when we had a recession. We will have a recession. We may have an Armed Conflict of some kind, and the idea that were now spending the money instead of trying to figure out how to work in a bipartisan way to do the work. And, mr. Secretary, the assumptions that underlie your budget save 675 billion by repealing the Affordable Care act, the majority leader has already told us were not doing that. They attempted to repeal it over and over and over again. The majority leader says were not doing that. Thats 675 billion. You say 1. 5 trillion by slashing nondefense Discretionary Spending to a level we have not seen since president hoover was the president. Senator, your time is expired. I look forward to trying to create a ratherional process. Thank you, mr. Chairman. Senator wyden has a couple of and is and then were going to wrap this up. I think senator mccaskill may have a couple. You do . I dont. Senator wyden will be the last one. I want to talk about infrastructure for a moment. Mr. Secretary, state and local governments now are responsible for more than 3 4 of all Government Investment in infrastructure. Despite that, the core of the trump infrastructure plan is for the states and the localities to pony up even more money. In fact, Administration Officials were actually quoted over the weekend talking about the need for local governments to increase property taxes and sales taxes. This, of course, comes as senator menendez eloquently noted after the tax bill causes a dramatic curtailment to the state and local deduction. Aside from raising taxes on many middle class families by subjecting them to double taxation, cutting back the deduction makes it more difficult for local governments to raise new revenues. So ive got a yes or no question, and i think its pretty direct, does the Trump Administration actually support local governments raising taxes two months after passing a law that ensures that those taxes are no longer deductible from their federal taxes . This is a yes or no answer, mr. Secretary, because of what your Administration Officials said last weekend. So youre either agreeing with him or not agreeing with him, so have it. Well, again, i realize you want a yes or no answer, but not every single state is the same, okay . Some states have very high taxes, like california and new york, so i surely would not encourage california and new york to raise their taxes, i would encourage them to lower their taxes. So it seems to me you are definitely agreeing with the officials who were quoted last weekend that certainly in substantial parts of the country your answer on infrastructure is the need for local governments to increase property taxes and sales taxes. Ill keep the record open so you can amplify on that, but you basically said, hey, what the Administration Officials said last weekend was our view with the possible exception of some states that we know have been very concerned. Let me finish with one last question. As you know, ive repeatedly asked the Treasury Department to turn over to the committee its records on russian Financial Transactions in the country. And across the board, the department has refused, has refused to turn over to me as the ranking democrat these records, many of which arent even classified. So now, according to news reports, the fbi is investigating whether a russian official with close ties to Vladimir Putin and the National Rifle association used russianbacked Shell Companies to funnel money to u. S. Tax exempt entities that spent millions of dollars backing the trump campaign. So, as you and i have talked about, i consider this oversight function absolutely key to the committees work. So earlier in the month i wrote letters to both you and the nra, seeking more information about these alleged transactions. Transactions that could involve Shell Companies, Money Laundering and the like. Now, i just got a commitment from the nra to respond to my request. They said they will get us these documents. So id like to renew my request to you today. Will you respond as the nra has to my request for documents and do it promptly . Senator, i am aware of your request. As you know, we have lots of resources that are cooperating with three bipartisan committees as well as the special prosecutor. These are the same resources that we used for sanctions and national security, and as weve talked about, are focused on russia sanctions. Weve also been following through on Previous Administration information that we needed to follow up. So we look forward to working with you and the chairman. Again, we have the request. Okay. Mr. Chairman, just very briefly, and ill be very brief. Mr. Secretary, you have not responded to one single request. Not one. And now when i asked about something where the nra, to their credit, said they were going to get back promptly, you said well see what happens. That is a textbook case of essentially telling the committee with lead jurisdiction over your agency that when it comes to oversight and when it comes to reasonable requests youre saying not interested. I think that is very detrimental to public interests and i hope you change your mind. Thank you, mr. Chairman. Senator, i dont think that was the interpretation of my comment. Not one request has been honored. Nor did i interpret it that way as well. Look, this has been a particularly contentious day, as far as im concerned, and youre in a tough position. There is no question about it. Youre doing some very, very important work for this country, and i personally appreciate it. I want to thank you for being here today. I want to thank all of my colleagues for their questions and for their participation in todays hearings. Now, for any of my colleagues who have any written questions, i ask that you submit them by wednesday, february 21st, and with that, this hearing is adjourned. [ indistinct chatter ] sunday night on q a, michael fibey on his book crashback. First of all, there is a public shaming, and chinas lost a lot of face. Its hard for westerners to get an idea of what that means to the asian culture, especially someone that that is as big and proud as wealthy ads china. They lost a lot of face with that and they came away with the never again mentality. So they after that set off on this mindset, we will build up our navy and Missile Defense forces so in a way we never lose states like this again. Sunday night at 8 00 p. M. Eastern on cspans q a. Coming up tonight on cspan3, a confirmation hearing for nominees of the federal trade commission. Then, Governor Scott walker delivers the wisconsin state of the state address. After that, a look at the future of the army and military readiness. Later, a forum on u. S. Trade policy and agriculture industry. Next, a confirmation hearing for federal trade commission nominees. The senate customers, science and Transportation Committee heard from the four nominees on issues including antitrust laws, Prescription Drug pricing, Credit Rating agencies and the influence of Big Tech Companies like google and f