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 the