Transcripts For CSPAN3 Treasury Secretary Mnuchin Testifes O

Members of the committee, i want to briefly comment on the horrific terrorist attack in manchester. Americans are bound to our british friends by a common language, culture, and many other things such as the common law. As a boy i remember the strength it brought to us americans to witness the courage of the british people as they stood strong in the battle of britain. We know the resolve of the british people will once again vanquish a common foe. I think i speak for all members of the committee when i say god save the queen. And god save great britain. We care a great deal for our friends overseas, and we wish them the best. Todays hearing has a dual focus. We will be will we discuss the president s budget for fiscal year 2018 as well as ongoing efforts to reform our nations tax code. We are pleased to be joined here today by treasury secretary Steven Mnuchin who will provide the administrations perspective on these important issues. We welcome you back to the committee, mr. Secretary. As this is your first Budget Hearing before this committee, let me warn you, these hearings tend to be pretty grueling but thats a necessary part not only of the budget process but also of the committees oversight function. But not to worry, i think youre up to the challenge. Let me begin by saying a few words about the president s budget. Obviously, were all still absorbing the finer details of this proposed budget. But at this point, i can say definitively i applaud the president for his focus on advancing pro growth policies to get our economy moving. I share the administrations concerns about our debt, which ballooned by nearly doubling under the Previous Administration. The president s budget and visions increased Economic Growth that eventually reaches 3 . As i understand it, that vision relies on implementation of a number of policies, including pro growth tax reform, cutting out unnecessary regulation, building infrastructure, and some other approaches as well. I think reforming healthcare is part of that, boosting Energy Production, reducing deficits. That would significantly improve the supply side of the economy, of course, this is not unheard of that the administration places its belief in the efficacy of its policy proposals. For example, in former president obamas fiscal year 2010 budget growth was assumed to get to as high as 4. 6 and was assumed to average 3. 8 over an extend eightyear period. And that was premised on policy prescriptions. May critics want to criticize the growth projections its more realistic than a number of Budget Proposals weve seen in the past. Particularly some that came from the Previous Administration. I shared the overall goal in the budget to reduce deficits without raising taxes, keeping in mind that our nations debt nearly doubled during the Previous Administration. We have a number of difficult choices ahead of us as we work to address inficiencies. That is reflected tht budget. I look forward to continuing to examine the various proposals and to hearing secretary mnuchins insights about the items in the budget that were going to discuss today. Id like to spend a few minutes discussing the other element of todays hearing, and thats tax reform. For six years now ive been beating the drum on tax reform. I sought to make the case for reform here in the committee, senate floor and Public Forums and events and private conversations. I havent been alone. Theres been a bipartisan recognition, one that i think is growing more by the day, that our current tax system doesnt work. And throughout this endeavor, ive stated numerous times that its going to be successful if were going to be successful well need to see engagement from the president. And before anyone writes that off as a political statement, let me make it clear i wasnt simply advocating for the election of a republican president. On the contrary, i implored president obama to engage with congress on tax reform but to no avail. The Current Administration put out a tax reform framework earlier this month, one i think can serve as an outline as this moves forward. Keeping in mind that as with any major undertaking will need to be realistic and commit to practicing the art of the doable. I expect that youll get a number of questions about the tax plan here today, secretary mnuchin. In addition i expect well hear a lot about the process about how tax reform will move through congress. On that point, weve already heard a few demands from my friends on the other side of the aisle stated as if they were preconditions for any serious engagement on tax reform. My hope these arent really preconditions. But still i want to address one of them briefly here today. One of the demands weve heard is the republicans abandoned the use of budget reconciliation for tax reform. This in my view is an odd demand. Most major tax bills that have moved through reconciliation have had bipartisan support. In fact, in the past, when republicans have controlled the house and senate along with the white house, all of our tax reconciliation bills have enjoyed some Senate Democrat support. If we can reach agreements on policy, there is absolutely no reason why democrats could not agree to support a tax reform package move through the reconciliation process. I cant image a scenario in which my democratic colleagues would be more amenable on tax reform policy if reconciliation is taken off the table. The other thing wed accomplish by foreclosing the use of reconciliation would be to insure that the minority would be able to more easily block any bill from passing. Which is a strange demand to make before beginning a good faith negotiation. In any event, whether this is truly a precondition or simply a rhetorical point on the part of my colleagues, let me be clear. My strong preference is that our tax Reform Efforts by bipartisan. I have reached out to my colleagues on both sides of the aisle and hope both parties can be at the table together. I think i have more than adequately demonstrated my willingness to work with my democratic colleagues. My intention is to continue to work with my democratic colleagues as long as theyre willing to engage. I think its safe to say he shares this desire and is similarly committed. And i think hes committed to working with our democratic colleagues on this effort. With that, let me once again thank the secretary for being here today. I look forward to a rigorous and thoughtful discussion of these and other issues. With that ill turn to my colleague and friend, senator widen for his opening remarks. Thank you, very much, mr. Chairman. Let me say, also, that on our side, we very much share your view with respect to these despicable acts in manchester. And a number of us serve also on the intelligence committee. Vice chairman warner and myself. We understand that your points are very well taken and we share them. Thank you. Mr. Chairman and colleagues what the American People demand of us is bipartisan cooperation on taxes, healthcare, and the many other issues that affect their daily lives. Yet what the new administration has offered is a one page tax cut proposal that is shorter than the typical drugstore receipt and a budget that looks like it was written by people who believe working families and seniors who are walking on an economic tightrope have life too easy. The one pager puts forward numbers that do not come close to adding up. The math behind this plan would make Bernie Madoff blush. Without realistic tax numbers to analyze, ill focus my remarks in two areas. First the administrations Economic Team says that the president s focus is on a middle class tax cut. If this trump plan was built for a middle class tax cut, then trump tower was built for middle class housing. On one side of the ledger, there is not a lot of detail on how the trump tax plan would help working families or the middle class. Just vague open ended promises. Contrast that with how it treats the very fortunate, very few. Eliminating the estate tax and opening a new mile wide loophole for the wealthy to exploit pass through status is a prescription for more inequality in america. Right here in this room, mr. Mnuchin and i agreed on the now legendary mnuchin rule of no absolute tax cuts for the rich. After what weve seen in the tax plan, and the budget, i guess we got to throw that in the waste bin alongside the trump plan not to cut medicare. Their health plan reduces makes it harder for us to keep the trust fund solvent. Theres the trillion dollars in medicaid cuts. And theres the 70 billion in cuts in Social Security disability. So the promise not to cut medicare, not to cut medicaid, and not to cut Social Security disability also has not rung true. Now, to the second point. The trump Economic Team is dusting off the old disproven idea that tax cuts completely pay for themselves. There is not a reputable economists out there that agree withes that. Governor brownback of kansas slashed rates for the wealthy and businesses, zeroing them out in some cases. He sold the plan by saying it would launch the states economy into the stratosphere. Instead its revenues have cratered. Kansas is struggling to keep schools open and basic services running. Go back further to the early 2000s and the bush tax cuts. Those tax cuts didnt pay for themselves either. And then look back to the late president reagan. He passed a big regressive tax cut in 1981. But in 1982 and 84 he had to raise revenue to make up for the deficits that were costs. The pay for itself argument behind this tax plan holds up as well as the flat Earth Society except people still try to defend it. I want to respond briefly to my friend, chairmans point with respect to the process going forward. Because i think he knows that i very much share his view that to pass lasting job creating tax reform, that is more than an economic sugar high, its got to be bipartisan. Its not a haphazard exercise, just throwing a bunch of bullet points together because you got an oped article written by campaign advisors. It takes a lot of careful consideration to write a bipartisan tax reform bill. And i know something about it because i wrote two of them. One with our former colleague senator coats and one with senator greg. The focus has to be on writing an economically responsibility proposal that will create good paying red white and blue jobs without heaping a burden on the middle class. Thats what wins support from both sides and will last. With respect to reconciliation, and i think this is not a debate about the desire of my friend, the chairman, orrin hatch, wanting to work in a bipartisan way. Because he and i have done that on a lot of occasions. This is not a question of the chairmans intent. But the fact is, as the chairman himself noted, reconciliation is inherently a partisan process. That is what its all about. Its a process that in effect puts a gun to the head of one side. So that is why there is such strong feeling on our side about not using reconciliation. And i want in making that comment to not diminish a, my affection for the chairman, and b, my desire to have a bipartisan bill. Because having written two of them, i would very much like in accord with some of these principles ive outlined. My colleagues have said that too. They dont think the tax system works. We understand that. But we have to insure that we have a bipartisan process and for that reason i just wanted to comment briefly on my friends remarks. Thank you, senator. Today, id like to extend a warm welcome to secretary Steven Mnuchin. Were really grateful to have you here. Secretary mnuchin was sworn in as the 77th secretary of the United States treasury on february 13th, 2017. Prior to his confirmation secretary mnuchin was the finance chairman for donald j. Trump for president. In addition to traveling with the president around the country in that role, secretary mnuchin also served as a senior Economic Advisor to the president in crafting the president s economic positions and economic speeches. Before those activities, though, secretary mnuchin served as founder, chairman, and chief executive officer of dune capital management. He founded one west bank group llc and served as its chairman and chief executive officer until its sale. Earlier in his career he worked at goldman seahawachs. He has extensive training in money markets and municipal bonds. He is committed to philanthropic activities and previously served as the member of the boards of the museum of contemporary art, los angeles. The Whitney Museum of art, the ucla Health Systems board. The New York Presbyterian Hospital board and the Los Angeles Police foundation. He was born and raised in new york city, and earned a bachelors degree from yale university. Secretary mnuchin, were grateful to have you here. Appreciate your willingness to serve your country. And please proceed with your opening statement. Thank you its a pleasure to be here. Chairman hatch, Ranking Member widen and members of the committee, its an honor to be here today. I am looking forward to working with members of congress in this committee on passing important legislation for the American People. My number one priority is creating sustainable Economic Growth for all americans. The best way to achieve this is through a combination of tax reform, regulatory relief, and protecting taxpayers. This also includes making some difficult decisions with respect to our budget. Were currently bearing the costs of excessive government commitments of previous years and this has forced us into making hard choices. But the remarkable thing about Economic Growth is it builds on itself. If we develop the right policies today, our children and gra grandchildren will reap the benefits benefits. If we return to the historicanch of 3 , our economy will grow by trillions of dollars. This will be meaningful to every man, woman and child in this country and future generations. Tax reform will play a major role in our campaign for growth. It has been more than 30 years since weve had comprehensive tax reform in this country. This administration is committed to changing that. We have over 100 people working at treasury on this issue. We are working diligently to bring tax relief to lower and middle income americans, as well as make American Business competitive again. All this comes as we simplify the tax code and make it easier for hard working americans to file their returns. Finally, i would like to speak about the importance of free and Fair International trade. Few doubt that free trade is a crucial component of Economic Growth. But trade deals that disadvantage American Workers and business can hardly be considered either free or fair. And in meeting with my international counterparts, i have stressed this dual importance. Just two weeks ago, i had productive meetings with the finance ministers of the g 7 and earlier i met with the members of the imf and world bank. They understood our concerns, and we have approached our International Dialogue with a renewed spirit of mutual understanding. In the president s joint session to congress, he spoke about the marvels this country is capable when its citizens are set free to pursue their visions. Fundamental to that freedom is removing imprudent regulation and uncompetitive taxes from blocking their way. This has been a significant few months of treasury. Weve been studying, developing, and implementing policies that will put this country on the path towards sustained Economic Growth. In the coming months, we will work with this committee and the congress and what well look back as an important time for this nations economy and history. Thank you and i look forward to answering your questions toed. Thank you so much. Were glad to have you here. And appreciate the way youve taken over and are doing your work. Mr. Secretary, an oped was written by then senator obama senior Economic Advisors, in the august 14th, 2008, edition of the the wall street journal. Ill put that in the record. In that oped, they stated that then senator obamas tax proposal would reduce revenues to 18. 7 gdp target. That was target they apparently thought was desirable. That target certainly exceeded the nations long run average for revenue to gdp. Which the nonpartisan cbo tells us has been 17 over the last 50 years. The Current Administrations budget has revenues averaging 18. 2 gdp over a ten year budget window, exactly what then senator obama was advocating. Secretary mnuchin, considering that taxes as a share of our economy are already heading high high higher and projected to rise above the historic average, and considering the president s budget projects an average of 18. 2 as a share of the economy. How do you respond to the critics who say the president s budget does not raise enough revenues. Thank you for pointing that out. I look forward to reading that oped that youre putting in the record. I believe that, as youve pointed out, we have a significant amount of revenues relative to gdp. And particularly with Economic Growth, we think that critical issue is that we have tax reform that simplifies personal taxes, provides a middle income tax cut and makes our business competitive again. Well, some of my friends on the other side have argued that congress should not pass tax reform for the budget reconciliation process. In fact, some have stated the administration and leaders in the house and senate should categorically take that option off the able before beginning any bipartisan talks on tax reform. Yet four years ago the Steven Mnuchin<\/a> who will provide the administrations perspective on these important issues. We welcome you back to the committee, mr. Secretary. As this is your first Budget Hearing<\/a> before this committee, let me warn you, these hearings tend to be pretty grueling but thats a necessary part not only of the budget process but also of the committees oversight function. But not to worry, i think youre up to the challenge. Let me begin by saying a few words about the president s budget. Obviously, were all still absorbing the finer details of this proposed budget. But at this point, i can say definitively i applaud the president for his focus on advancing pro growth policies to get our economy moving. I share the administrations concerns about our debt, which ballooned by nearly doubling under the Previous Administration<\/a>. The president s budget and visions increased Economic Growth<\/a> that eventually reaches 3 . As i understand it, that vision relies on implementation of a number of policies, including pro growth tax reform, cutting out unnecessary regulation, building infrastructure, and some other approaches as well. I think reforming healthcare is part of that, boosting Energy Production<\/a>, reducing deficits. That would significantly improve the supply side of the economy, of course, this is not unheard of that the administration places its belief in the efficacy of its policy proposals. For example, in former president obamas fiscal year 2010 budget growth was assumed to get to as high as 4. 6 and was assumed to average 3. 8 over an extend eightyear period. And that was premised on policy prescriptions. May critics want to criticize the growth projections its more realistic than a number of Budget Proposal<\/a>s weve seen in the past. Particularly some that came from the Previous Administration<\/a>. I shared the overall goal in the budget to reduce deficits without raising taxes, keeping in mind that our nations debt nearly doubled during the Previous Administration<\/a>. We have a number of difficult choices ahead of us as we work to address inficiencies. That is reflected tht budget. I look forward to continuing to examine the various proposals and to hearing secretary mnuchins insights about the items in the budget that were going to discuss today. Id like to spend a few minutes discussing the other element of todays hearing, and thats tax reform. For six years now ive been beating the drum on tax reform. I sought to make the case for reform here in the committee, senate floor and Public Forums<\/a> and events and private conversations. I havent been alone. Theres been a bipartisan recognition, one that i think is growing more by the day, that our current tax system doesnt work. And throughout this endeavor, ive stated numerous times that its going to be successful if were going to be successful well need to see engagement from the president. And before anyone writes that off as a political statement, let me make it clear i wasnt simply advocating for the election of a republican president. On the contrary, i implored president obama to engage with congress on tax reform but to no avail. The Current Administration<\/a> put out a tax reform framework earlier this month, one i think can serve as an outline as this moves forward. Keeping in mind that as with any major undertaking will need to be realistic and commit to practicing the art of the doable. I expect that youll get a number of questions about the tax plan here today, secretary mnuchin. In addition i expect well hear a lot about the process about how tax reform will move through congress. On that point, weve already heard a few demands from my friends on the other side of the aisle stated as if they were preconditions for any serious engagement on tax reform. My hope these arent really preconditions. But still i want to address one of them briefly here today. One of the demands weve heard is the republicans abandoned the use of budget reconciliation for tax reform. This in my view is an odd demand. Most major tax bills that have moved through reconciliation have had bipartisan support. In fact, in the past, when republicans have controlled the house and senate along with the white house, all of our tax reconciliation bills have enjoyed some Senate Democrat<\/a> support. If we can reach agreements on policy, there is absolutely no reason why democrats could not agree to support a tax reform package move through the reconciliation process. I cant image a scenario in which my democratic colleagues would be more amenable on tax reform policy if reconciliation is taken off the table. The other thing wed accomplish by foreclosing the use of reconciliation would be to insure that the minority would be able to more easily block any bill from passing. Which is a strange demand to make before beginning a good faith negotiation. In any event, whether this is truly a precondition or simply a rhetorical point on the part of my colleagues, let me be clear. My strong preference is that our tax Reform Efforts<\/a> by bipartisan. I have reached out to my colleagues on both sides of the aisle and hope both parties can be at the table together. I think i have more than adequately demonstrated my willingness to work with my democratic colleagues. My intention is to continue to work with my democratic colleagues as long as theyre willing to engage. I think its safe to say he shares this desire and is similarly committed. And i think hes committed to working with our democratic colleagues on this effort. With that, let me once again thank the secretary for being here today. I look forward to a rigorous and thoughtful discussion of these and other issues. With that ill turn to my colleague and friend, senator widen for his opening remarks. Thank you, very much, mr. Chairman. Let me say, also, that on our side, we very much share your view with respect to these despicable acts in manchester. And a number of us serve also on the intelligence committee. Vice chairman warner and myself. We understand that your points are very well taken and we share them. Thank you. Mr. Chairman and colleagues what the American People<\/a> demand of us is bipartisan cooperation on taxes, healthcare, and the many other issues that affect their daily lives. Yet what the new administration has offered is a one page tax cut proposal that is shorter than the typical drugstore receipt and a budget that looks like it was written by people who believe working families and seniors who are walking on an economic tightrope have life too easy. The one pager puts forward numbers that do not come close to adding up. The math behind this plan would make Bernie Madoff<\/a> blush. Without realistic tax numbers to analyze, ill focus my remarks in two areas. First the administrations Economic Team<\/a> says that the president s focus is on a middle class tax cut. If this trump plan was built for a middle class tax cut, then trump tower was built for middle class housing. On one side of the ledger, there is not a lot of detail on how the trump tax plan would help working families or the middle class. Just vague open ended promises. Contrast that with how it treats the very fortunate, very few. Eliminating the estate tax and opening a new mile wide loophole for the wealthy to exploit pass through status is a prescription for more inequality in america. Right here in this room, mr. Mnuchin and i agreed on the now legendary mnuchin rule of no absolute tax cuts for the rich. After what weve seen in the tax plan, and the budget, i guess we got to throw that in the waste bin alongside the trump plan not to cut medicare. Their health plan reduces makes it harder for us to keep the trust fund solvent. Theres the trillion dollars in medicaid cuts. And theres the 70 billion in cuts in Social Security<\/a> disability. So the promise not to cut medicare, not to cut medicaid, and not to cut Social Security<\/a> disability also has not rung true. Now, to the second point. The trump Economic Team<\/a> is dusting off the old disproven idea that tax cuts completely pay for themselves. There is not a reputable economists out there that agree withes that. Governor brownback of kansas slashed rates for the wealthy and businesses, zeroing them out in some cases. He sold the plan by saying it would launch the states economy into the stratosphere. Instead its revenues have cratered. Kansas is struggling to keep schools open and basic services running. Go back further to the early 2000s and the bush tax cuts. Those tax cuts didnt pay for themselves either. And then look back to the late president reagan. He passed a big regressive tax cut in 1981. But in 1982 and 84 he had to raise revenue to make up for the deficits that were costs. The pay for itself argument behind this tax plan holds up as well as the flat Earth Society<\/a> except people still try to defend it. I want to respond briefly to my friend, chairmans point with respect to the process going forward. Because i think he knows that i very much share his view that to pass lasting job creating tax reform, that is more than an economic sugar high, its got to be bipartisan. Its not a haphazard exercise, just throwing a bunch of bullet points together because you got an oped article written by campaign advisors. It takes a lot of careful consideration to write a bipartisan tax reform bill. And i know something about it because i wrote two of them. One with our former colleague senator coats and one with senator greg. The focus has to be on writing an economically responsibility proposal that will create good paying red white and blue jobs without heaping a burden on the middle class. Thats what wins support from both sides and will last. With respect to reconciliation, and i think this is not a debate about the desire of my friend, the chairman, orrin hatch, wanting to work in a bipartisan way. Because he and i have done that on a lot of occasions. This is not a question of the chairmans intent. But the fact is, as the chairman himself noted, reconciliation is inherently a partisan process. That is what its all about. Its a process that in effect puts a gun to the head of one side. So that is why there is such strong feeling on our side about not using reconciliation. And i want in making that comment to not diminish a, my affection for the chairman, and b, my desire to have a bipartisan bill. Because having written two of them, i would very much like in accord with some of these principles ive outlined. My colleagues have said that too. They dont think the tax system works. We understand that. But we have to insure that we have a bipartisan process and for that reason i just wanted to comment briefly on my friends remarks. Thank you, senator. Today, id like to extend a warm welcome to secretary Steven Mnuchin<\/a>. Were really grateful to have you here. Secretary mnuchin was sworn in as the 77th secretary of the United States<\/a> treasury on february 13th, 2017. Prior to his confirmation secretary mnuchin was the finance chairman for donald j. Trump for president. In addition to traveling with the president around the country in that role, secretary mnuchin also served as a senior Economic Advisor<\/a> to the president in crafting the president s economic positions and economic speeches. Before those activities, though, secretary mnuchin served as founder, chairman, and chief executive officer of dune capital management. He founded one west bank group llc and served as its chairman and chief executive officer until its sale. Earlier in his career he worked at goldman seahawachs. He has extensive training in money markets and municipal bonds. He is committed to philanthropic activities and previously served as the member of the boards of the museum of contemporary art, los angeles. The Whitney Museum<\/a> of art, the ucla Health Systems<\/a> board. The New York Presbyterian Hospital<\/a> board and the Los Angeles Police<\/a> foundation. He was born and raised in new york city, and earned a bachelors degree from yale university. Secretary mnuchin, were grateful to have you here. Appreciate your willingness to serve your country. And please proceed with your opening statement. Thank you its a pleasure to be here. Chairman hatch, Ranking Member<\/a> widen and members of the committee, its an honor to be here today. I am looking forward to working with members of congress in this committee on passing important legislation for the American People<\/a>. My number one priority is creating sustainable Economic Growth<\/a> for all americans. The best way to achieve this is through a combination of tax reform, regulatory relief, and protecting taxpayers. This also includes making some difficult decisions with respect to our budget. Were currently bearing the costs of excessive government commitments of previous years and this has forced us into making hard choices. But the remarkable thing about Economic Growth<\/a> is it builds on itself. If we develop the right policies today, our children and gra grandchildren will reap the benefits benefits. If we return to the historicanch of 3 , our economy will grow by trillions of dollars. This will be meaningful to every man, woman and child in this country and future generations. Tax reform will play a major role in our campaign for growth. It has been more than 30 years since weve had comprehensive tax reform in this country. This administration is committed to changing that. We have over 100 people working at treasury on this issue. We are working diligently to bring tax relief to lower and middle income americans, as well as make American Business<\/a> competitive again. All this comes as we simplify the tax code and make it easier for hard working americans to file their returns. Finally, i would like to speak about the importance of free and Fair International<\/a> trade. Few doubt that free trade is a crucial component of Economic Growth<\/a>. But trade deals that disadvantage American Workers<\/a> and business can hardly be considered either free or fair. And in meeting with my international counterparts, i have stressed this dual importance. Just two weeks ago, i had productive meetings with the finance ministers of the g 7 and earlier i met with the members of the imf and world bank. They understood our concerns, and we have approached our International Dialogue<\/a> with a renewed spirit of mutual understanding. In the president s joint session to congress, he spoke about the marvels this country is capable when its citizens are set free to pursue their visions. Fundamental to that freedom is removing imprudent regulation and uncompetitive taxes from blocking their way. This has been a significant few months of treasury. Weve been studying, developing, and implementing policies that will put this country on the path towards sustained Economic Growth<\/a>. In the coming months, we will work with this committee and the congress and what well look back as an important time for this nations economy and history. Thank you and i look forward to answering your questions toed. Thank you so much. Were glad to have you here. And appreciate the way youve taken over and are doing your work. Mr. Secretary, an oped was written by then senator obama senior Economic Advisor<\/a>s, in the august 14th, 2008, edition of the the wall street journal. Ill put that in the record. In that oped, they stated that then senator obamas tax proposal would reduce revenues to 18. 7 gdp target. That was target they apparently thought was desirable. That target certainly exceeded the nations long run average for revenue to gdp. Which the nonpartisan cbo tells us has been 17 over the last 50 years. The Current Administration<\/a>s budget has revenues averaging 18. 2 gdp over a ten year budget window, exactly what then senator obama was advocating. Secretary mnuchin, considering that taxes as a share of our economy are already heading high high higher and projected to rise above the historic average, and considering the president s budget projects an average of 18. 2 as a share of the economy. How do you respond to the critics who say the president s budget does not raise enough revenues. Thank you for pointing that out. I look forward to reading that oped that youre putting in the record. I believe that, as youve pointed out, we have a significant amount of revenues relative to gdp. And particularly with Economic Growth<\/a>, we think that critical issue is that we have tax reform that simplifies personal taxes, provides a middle income tax cut and makes our business competitive again. Well, some of my friends on the other side have argued that congress should not pass tax reform for the budget reconciliation process. In fact, some have stated the administration and leaders in the house and senate should categorically take that option off the able before beginning any bipartisan talks on tax reform. Yet four years ago the Democratic Senate<\/a> had adopted a budget that included a reconciled tax increase of almost one trillion dollars. That tax increase instructions purpose was tax reform. Despite my objections to increasing taxes at that time i agreed to work on an intense bipartisan tax reform process. There were no preconditions or demands made that the democrats abandon their reconciled tax instruction. There are other relevant examples from recent history that played out the same way. I think its fairly safe to say that requiring that type of precondition, the categorical abandonment of reconciliation prior to negotiating is without any substantive precedent. What are your thoughts on that, mr. Secretary . Are there any process related demands you would like to make before youll be willing to worth with both sides up here on capitol hill on bipartisan tax legislation . Mr. Chairman, i have no process demands from my standpoint, i am hopeful that we can work with both republicans and democrats. I know weve had the opportunity to work with your staff. I know that my staff is going to be sitting down with senator widens staff and your staff later in the week. And we are hopeful that we can find common ground, particularly on the issue of making our business taxes competitive. We have a system that is highly uncompetitive. We need to put our workers back to work. Well, mr. Skairkt, the president s budget eventually reaches 3 . As i understand that that relies on an implementation of a number of policiies including tax reform, building infrastructure, reforming healthcare, boosting Energy Production<\/a> and reducing deficits that would significantly improve the supply side of the economy. Its not unheard of that an administration places belief in the efficacy of its policy proposals. For example, in former president obamas fiscal year 2010 budget, growth was assumed to get to as high as 4. 6 , it was assumed to average 3. 8 over an extended eight year period. And that was premised on the administrations belief in its policy prescriptions, particularly the impact of a socalled, quote stimulus, unquote. Could you spend a little bit of time explaining why the Administration Believe<\/a>s that its policy proposals including but not limited to tax reform can generate sustained higher Economic Growth<\/a>. Mr. Chairman, we firmly believe that a combination of tax reform regulatory relief and trade policies will return us to levels of 3 sustained Economic Growth<\/a> with gdp. And i believe our long term projection is actually 2. 9 in the budget. It takes several years to get to 3 . Ive heard lots of economists tell us why thats not going to be case but we are committed to have policies to get us back to what are appropriate growth rates in this country. Thank you, senator widen. Welcome. Thank you. Nothing shows tax unfairness more clearly than your proposal to let the fortunate few convert their ordinary income into business income without strings attached. Pay the lowest 15 tax rate and also avoid Social Security<\/a> and medicare payroll taxes. In my view, its a prescription for more inequality in america. Youre creating a massive new tax loophole. My reason for asking the question is especially because you cant enforce the tax laws on the books now. Your current Budget Proposal<\/a> asks for even deeper cuts to tax enforcement. How do you expect the American People<\/a> to believe you can prevent the fortunate few from exploiting this new loophole when you cant even stop the current tax cheats. Senator widen, thank you, thats a very good question. And first, let me assure you ive said this to the other day at the banking that we are absolutely committed to make sure that pass throughs, that small and medium sized businesses have the benefit of the business rate. That this is not just something for large corporations. Small and medium sized businesses are the engine of growth in this committee. But we will absolutely make sure that rich people cannot use this as a loophole where they should be paying 35 taxes on wages, and that they pay 15 instead. I assure you that will be in the code and well have very clear ways to enforce that. Mr. Secretary, respectfully, i dont think that cuts it. I mean, i dont doubt that you believe that you can absolutely make it happen, youre absolutely sure its only going to go for the little guy. The Small Business<\/a>. But the reality is the tax cheats thrive. They thrive in the absence of clear, tough enforcement principles. I didnt hear that now. What you said youre interested, youre absolutely going to assure it. But this proposal has been out there. And we have not gotten any specifics about how this actually going to be done, and if anything since we talked about it last, the problem is even more serious because the Budget Proposal<\/a>, again, cuts the enforcement budget. I think the sooner you get that to us, the better. Now youre budget assumes 3 growth. Which you claim adds 2 trillion to revenues. Thats kind of a dubious proposition to me. You told us last week that this Economic Growth<\/a> is what pays for tax reform. But the trump budget doesnt include tax reform. So unless you make this clear to us, arent you double counting the same 2 trillion to pay down deficits that you claim will pay for tax reform . This is kind of Bernie Madoff<\/a> math but tell me how it works. Were not intended to double counting. When the president s budget was done, we were not ready to have a full blown tax reform plan that we could model into the budget. So we havent put that in. We have put in the Economic Impact<\/a> as youve pointed out. There are other areas that are extremely conservative. But i assure you, when we present a tax plan, we will not be double counting the growth. So, again, were told that sometime down the road you wont double count. I would sure like to see as weve talked about more specifics. I dont see how your plan doesnt blow a multitrillion dollar hole in the deficit. And thats going to harm the ability to generate more high skill, high wage jobs in the innovation we want to see. Ill have more questions on the second round, mr. Chairman. Senator grassley. Secretary mnuchin mine is more of a rifle type question yz have. Not so general. Id like to bring your attention to a proposal ive introduced that is very much aligned with the president s America First<\/a> agenda. The america renewable fuel and job creation act is what its called would convert the current biodiesel blenders credit to a producers credit. The switch insures that the tax credit incentivizes Domestic Production<\/a> and taxpayers arent subsidizing imported fuel like were doing now. With bio fuel imports nearly doubling from 510 million gallons to almost one billion gallons in 2016. This change is critical to insure the credit is supporting the domestic industry rather than subsidizing foreign imports that often already receive favorable treatment from their home country. So its not really a question, but for you to understand that from argentina were getting all this bio fuel and the taxpayers of the United States<\/a> are subsidizing that import just like were attempting to incent physical Domestic Production<\/a>. We want to change it so we dont subsidize that import. Id like to hear you say you agree with me. Sounds like a good plan and look forward to working with you on the details of that. Okay. Question number two. I appreciate your and the president s dedication to pro growth tax reform. A key aspect of that is jump starting by reducing Corporate Tax<\/a> rates 35 to 15 . This makes sense given that the Corporate Tax<\/a> is the most harmful form of taxation. However the devils in the details. The camp tax reform proposals sought to lower the tax rate to 25 by slowing depreciation, however, as evidenced by the joint committee on taxations dynamic revenue estimate of the camp proposal depreciatable, if not all the positive growth effects of the lower rate. Question, the president s tax reform outline is silent on depreciati depreciation. Could you shed some light on where the Administration Stands<\/a> on depreciation . Would the administration favor slowing depreciation, accelerating depreciation or full expense it. Thank you, senator, thats a very good question. We fully support the need that capital goods and investment in capital is what fuels the growth of this economy. So no we do not support slowing depreciation. And were looking at various different alternatives as we build the tax plan. Okay. I am not going along the lines of the same question that senator widen asked about the 15 for Small Business<\/a>. Its a little more directed to how wide of a coverage that would be. Will the 15 rate on pass through business income be applicable whether were talking about single farmer sole proprietorship, a i said that wrong. I meant family farmer sole proprietorship, a small family partnership, a Subchapter S Corporation<\/a> or any other pass through entity . It will be, but as i said, we want to make sure that we put rules around this that can be easily managed by the irs with technology. So that wages are not abused in that system. And that Large Private Companies<\/a> cannot abuse this system and use it from getting around the personal tax system. And i appreciate that and thats what you should try to do. My question is more related, would there be any part of Small Business<\/a> that would be treated differently than another part no, theyll all have the benefit of that. While this will be my last question. While the tax reform approach slowed depreciatable liechable house Tax Blueprint<\/a> goes for full expensing. Part of the trade off for full expensing is that the house plan would generally eliminate interest as a deductible business expense. Do you view this as an acceptable tradeoff or do you support and do you support any limitation on the deductibleability of interest . Again, i think thats a very good question. And something we are looking at carefully. We are also reaching out to lots of different groups. I have heard some very strong concerns from small and medium sized businesses. That interest is an important part of what they need to be able to deduct. And our preference is to keep the deductibleability and thats one of the issues were looking at. Thank you. This is encouraging to hear the commentary about wanting to make things fair for Small Business<\/a>. Were you commentary not to become a part of the overall agreement at the end of the day of which youd get the Small Business<\/a> tax way down, i would like for you to look at a bill that senator collins and i filed, which makes sure Small Business<\/a>es dont have a higher tax rate than corporations. In other words, if you just changed the existing tax code, instead of them paying a rate much higher at an individual rate they would pay a rate no higher than the corporate rate. I hope youll take a look at that as backstop. But youre proposing something even further. Is that correct . That is. I hope we dont need your backstop but we look forward to working with you. All right. Well theres one bipartisan suggestion. Thank you. From senator collins and me. Now in the president s budget, there are large cuts to Childrens Health<\/a> insurance program, medical research at nih. Housing assistance for low income, especially with disabilities. And you eliminate subsidized student loans. You eliminate the cdbg program. And, of course, for example, the city of miami, uses that to service poor seniors on the meals on wheels. And theres not a full offset for tax reform. The overall tax reform. Im afraid whats going to happen is youre going to starve these programs of their resources. Without a full offset, how can we have confidence in the president s tax reform plan that it isnt just what looks like a veiled attempt to transfer wealth from the least privileged to the most privileged . Senator, first of all, we look forward to working with you as we develop more details of the tax plan. We were not ready to release more details. Were working on, obviously, theres lots of different issues for a base brodner that are critical to pay for the tax reforms. We look forward to working with you. On the president s overall budget, as you know, the president s priority in the budget reflects a large increase in military spending. The president believes we have underinvested in the military and National Security<\/a> is incredibly important. And across the board there were very difficult decisions on many good parts of and programs and i know that we look forward to work ing with congress on the budget as it moves forward. I appreciate your attitude. You know, i support a big increase in defense spending, too. But what are we to think when we see these programs, nih being savaged. Theres got to be balance in the budget. And thats what i want you to consider. Now, i would just point out florida is the state that has on its license tag the orange. The Citrus Industry<\/a> is under threat of extinction because of an imported bacteria from asia that gets into the trees sap and kills the tree in five years. We have the research, senator cornen has a lot of citrus as well. Theyre making progress, but what as we make this progress, we havent found the magic cure yet. What we have done is be able to hold off the effect of the killing of the tree for a couple of years. There are a lot of groves that are dead. What we need, if were going to have a Citrus Industry<\/a>, and the production of oranges is way down. Its less than half what it was seven years ago. Thats how dramatic a decline is. And what we need is the ability for the grower to go in there and plow the abandoned grove and replant. Since we now can extend the life of these trees until we find the magic cure. They need expensing. All in the first year, instead of the expenses over a number of years. Because of the tremendous threat to the industry. I wish you would put that in your calculations. Senator, i assure you that i love florida orange juice. And as we look at the tax codes, we will look at various Different Things<\/a> that promote Economic Growth<\/a> there and senator crapo. I want to know if you love idaho potatoes. I do, indeed. Almost as much as as oregon potatoes. I love them both equally. Nicely done. Well said. Now. Now. Secretary mnuchin first i want to thank you for being here. You have made yourself very available to this senate in many different contexts as we look through the proposals the administration is pursuing. And i appreciate that. I want to use the first part of my time, not so much to ask a question question but to set the record straight on several items that have come up during the times that you have been here. When you were here at this committee previously and then last week at the banking committee, you and the president were attacked by some who said that your efforts to repeal obamacare were a tax increase excuse me, a tax cut for the wealthy. I just want to set the record straight here about what the Obamacare Tax<\/a> policies are. When we debated the Affordable Care<\/a> act, the president obama made a pledge that there would be no tax increases in the bill on the middle class. I brought an amendment to simply achieve that objective in this committee and on the floor and each time we considered obamacare. And it was rejected by the other side each time. Even after the joint Tax Committee<\/a> clearly explained that the Affordable Care<\/a> act contains a number of tax increases on the middle class, and so i just want to, for you, because you may hear this again in some of your contact with the members of the other side, be hit with that argument. I just want to set the record straight. Its very clear that the Affordable Care<\/a> act has multiple taxes on the middle class and its repeal will, in fact, bring significant tax relief to the middle class. Now, im going to go on to talk with you about the budget projections. Youve already indicated here today that there have been criticisms of the growth rate that has been assumed in the budget by the administration, and that rate is well, could you tell us what the growth rate that is assumed in the budget. I believe its an average of 2. 9 . It gets up to 3 , but i believe over the tenyear period, its slightly lower. My the information i have in front of me is that president obamas first budget assumed a 4 tax excuse me, a 4 growth rate and in fact that his first four budget years assumed over at least 4 growth rate. Would you be aware of whether thats correct. I believe that is correct. And if you look at the tenyear proposal, the tenyear budget that president obama put forward, they assumed a 3. 2 growth rate for the entire decade, the previous decade that we have just been through. Whats the average rate for the decade that is in the budget . Did you just indicate thats 2. 9 . I believe its 2. 9 below what their projection was. So the trump proposals are significantly below the same types of projections that the Obama Administration<\/a> projected in presenting their budgets . That is correct. Lets talk about 3 growth rate. Is it unreasonable to expect that the United States<\/a> of america could grow at a rate of 3 . Senator, i know there are lots of economists who will give us reasons why structurally we cant grow at that rate, but we firmly believe that with the right policies, that the economy can get back to whats more normalized growth rates of 3 or higher and were committed to do that. And when you talk about normal growth rates, what is the average growth rate of the United States<\/a> for, say, the last 50 years . Its over 3 . And currently, we i think over the last eight or nine years, we have seen roughly well, under 2 . 1. 8 or 1. 9 , is that correct . That is correct. So it seems to me that those who are saying that we cant get above that threshold are saying that we need to be stuck in a, basically, plodding along economy that cant even get back to grow at its historic average. Would that be an accurate perception . That would be accurate. Well, i appreciate your unwillingness to accept that, and i wanted to work with you to develop progrowth policies for this country, whether its tax reform, health care reform, housing and finance reform, Regulatory Reform<\/a>, and i want to also thank you for the work youre doing at fsoc and the Treasury Department<\/a>. I look forward to your report coming out on regulatory improvements and statutory improvements that can be made to help reduce the drag on our economy that the federal government presents. And so, again, i just want to thank you for working for and fighting for these policies and assure you that ill aassist and work with you to try to achieve the growth rates that you hope to see america achieve. Thank you, senator. Senator brown. Thank you, mr. Chairman. Secretary mnuchin, welcome again. Your party has a history of, lets say, less than enthusiastic support for social insurance for medicare or for Social Security<\/a>, for unemployment insurance. Let me illustrate with a story. I was in youngstown one day and a woman stood up and said, im 63 years old, i hold two jobs, i dont have insurance, i just want to my goal is to live until im 65 until i have medicare. That was her goal, not to see her grandchildren, not to see the world, i mean, thats what this system has done to her. I hear your secretary of hhs, your cabinet colleague, talk about raising the eligibility age for medicare to 67, but let me go to tax reform. The day you came out, the day your administration came out with its very short, not very descriptive tax reform bill, the next day, front page of the wall street journal was the story about tax reform, but on page a17 on their on the op ed page was an article by martin feld stein who was by and large the god father, the real thinker behind the arthur lafr kind of tax cuts pay for themselves. Well, what he said is, ill just read the pullout. Gradually increasing the Social Security<\/a> eligibility age can offset revenue loss from trumps tax cuts. So, inspite of what the administration is saying, that youre going to grow out of these deficits from tax cuts, martin feldstein, the godfather of supply side economics has said, well, it really wont work that way and we should pay for it with Social Security<\/a> cuts, raising the eligibility age, and so i want to ask you a series of questions about that, that to clear up. Im worried about your paying for the youll pay for this tax cut because were not no economic theories really say well grow our economy to the point that will are remake all the revenue, make it all back but i want to ask, i want to clear this up because im worried about cuts to Social Security<\/a>, medicare, medicaid, its clear youre going to do it for medicaid, but heres my series of questions if you can answer yes or no. Can you give us your word that the administration will wlif up to the president s promise will not cut, alter or privatize Social Security<\/a> and medicare . I believe that is the president s intent, yes. Even though already in your plan, youre cutting 72 billion from disability insurance, which is, in fact, part of Social Security<\/a> . Yeah, let me just assure you that the president wants to be absolutely clear that anybody who is eligible for disability will get their disability payments. There are some assumed savings in there as a result of, perhaps, people who can get off of disability, but the president absolutely intends to make sure that people who have disability and are on that get their benefits. Well, i dont really believe the president when he also said he would not go after medicaid and you have two different big hits to medicaid, hca and the budget. But let me ask the next question. Would you commit to not raising the Social Security<\/a> retirement age in order to pay for these tax cuts. Yes. Okay. Thank you. You were very the administration has been very specific in what, in fact, you want to do on your budget cuts, but much less significant when it comes to tax reform. I mean, youve said youre going to go after Childrens Health<\/a> care, disability, infrastructure, medicaid, meals on wheels, food stamps, economic aid for appalachia, lake superior, a whole host of things you said youd cut but youre not at all specific on taxes yet and its a single page of bullet points and i will, in my last couple of minutes, ask some very specific questions, and i want to ask if certain provisions are under consideration in tax reform. Are you considering changing the earned income tax credit and the child tax credit. Its not a focus of ours at the moment. Thats a no. Correct. Are you considering changing the deductiblebility of interest . Mortgage interest . Mortgage interest first. We are not considering that. Are you considering changing like kind exchanges. That is one of the many Different Things<\/a> that could be looked at but weve made no decision on it. Are you considering changing the new markets tax credit . At the current time, we are not. Are you considering changing the treatment of cash accounting. Again, i would just say we are in the process of developing the overall plan so we havent gone through all of these. Are you considering changing lifo, lastin, firstout accounting. Its not something were considering at the moment. Are you considering changing the treatment of Life Insurance<\/a> companies. Again, as ive said, were developing the overall plan. So were looking at many, many different ways of broadening the base. So, that specific one, i havent seen, but again, i just want to emphasize we are looking at things across the board. Are you considering changing the treatment of state and local bonds . Again, i have said our preference is strongly to keep the Interest Deductibility<\/a> of state and local bonds. Are you considering changing the low income tax housing credit considering the sharp the sharp, deep cuts to housing programs generally, are you considering changing the low Income Housing<\/a> tax credit. Again, at the moment, thats not something that ive seen. Okay. Thank you, mr. Chairman. Thank you. Senator casey. Mr. Secretary, thank you for being here. Couple questions on tax cuts or at least the proposal that we would anticipate. The Census Bureau<\/a> tells us that the average american salary is just about 52,000 a year. And i know that in both in previous testimony but also in our conversation last week with members of the finance committee, you were careful about what you could guarantee in the final outcome versus what youd be proposing or the administration would be proposing, so in light of that average american salary of 52,000, can you guarantee, in terms of your the administrations proposals, that millionaires and up will not receive a tax cut greater than that average american salary of 52,000 a year. Again, we are going through a process across the house, the senate, the administration, taking in lots of input. I have said that our intent is to have a middle income tax cut. I want to be careful and not guaranteeing anything since i am not the ultimate this is a but all i this is a process that goes through multiple different areas. Mr. Secretary, all im asking for is what is the what will be the proposal of the administration. I realize the house and senate could change things down the road. Im just asking, in your tax reform proposal, when it is finalized and presented, will that be the case that millionaires and up wont receive a greater tax cut than that 52,000. Our intent is that as opposed to the administration coming out with its own proposal, our intent is we are working with the house and senate that we will come up with a combined proposal that can pass the house and senate and be signed by the president and ive said before, when we come out with all the details, we will obviously have all the distribution, and people will be able to make whatever comments and whatever changes as it goes through the legislative process. Ill take that as a no, that theres not a guarantee. Im not personally guaranteeing anything at the moment. You ought to be able to guarantee what you can propose. Again, i can guarantee you our proposal has been and will be a middle income tax cut and that is our priority. I understand that. But thats not what were looking for here, so ill take that as a no. Also, weve got in pennsylvania almost 2 Million People<\/a> who earn less than 23,000 a year. So, if ask a similar question. For someone making 1 million a year or more, they would get or at 1 million, theyd be getting a tax cut of about 23,000 based upon what weve heard so far, so whats your answer to those pennsylvanians . Im sorry, those pennsylvanians who make 23,000 . Is that your question . Right. I believe with the standard deductions they wont be paying taxes. Well, but thats whats thats what some of them make in a year. What im asking you is, if the president s priority, as has been stated, quote, the president s priority has been not cutting taxes for the high end, then why would why would you include a tax cut for people at the high end of the income scale in terms of the proposal released in april . Because thats what weve read in that proposal. Again, that proposal, the idea was to eliminate almost all deductions with the exception of mortgage interest and charitable donations, which we are think are important and offset almost all those deductions with a reduction in taxes that is progrowth, will grow the economy and will create jobs and we look forward to working with you and others as we get through the details. Well, lets go through those deductions. Does the administration in the tax plan that will be presented plan to repeal the deduction for student Loan Interest<\/a> . Again, let me just state that we are looking at everything. So i dont have all the details and im not prepared to go through on a line item. You answered some questions before. Lets try it again. So youre not going to answer on student Loan Interest<\/a>. How about Higher Education<\/a> expenses . Again, i dont expect those, but let me be clear. We are going through base broadening so im just not prepared. Im more than happy to come back when we release a plan and go through on a line item basis with you and have it marked up so im more than happy to do that. And im also more than happy to seek input from you and your staff on what the priorities are so that if we can try to do this on a bipartisan basis, we have your input. That would be wonderful. Let me conclude with this. We have two letters that were waiting on answers from. These are from january. The first is a letter i sent you regarding based upon your statement in your testimony that you allege you sent a letter to hud on reverse mortgages so id ask you to find that letter and respond to it. Preferably by close of business tomorrow. And secondly, a letter that senator brown and i sent regarding foreclosure data from for one west bank, both nationally and state by state. So i would hope we could get an answer to both of those letters now that its the end of may. Let me be clear. I am no longer associated with cit, which purchased one west bank. I dont have access. Yes, i stand behind my comment that there was a letter to hud and if you would like, but i do not have access to that letter. Im sure hud has it. And you could request it from hud. Senator warner. Thank you, mr. Chairman. Mr. Secretary, its good to see you again. Nice to see you, senator. Let me do one that i dont expect you to respond but first of all, director malvaney has said the administrations policy is to make tax reform revenue neutral and that is the president s and the administrations proposal. I have repeatedly said that it would be paid for with Economic Growth<\/a> and base broadening. Well, im going to come back to that in a moment because that could mean also cooking the books. In your budget on page 13, one of the proposals that you bake into your assumptions is repeal of the estate tax, which would benefit folks like you and me. Im not sure anybody else on the panel. But then curiously enough, back on page 27 of the budget and again, you dont have it here, so i dont expect you to respond, you have a line item here that says estate and gift tax revenues are are still coming in. To me, that appears to be double counting and maybe we can get that cleared up. As you know, when we talked when i was in your confirmation hearings, you know, i applaud your effort to try to make our tax code more rational and try to lower corporate rates. I spent a couple years in this process and took some arrows from my own team in terms of entitlements and new revenues. I just got to tell you, sir, the nonpartisan crfb has estimated that your tax cuts and your outline would add about 5 trillion to the deficit over the coming decade. And with what youve answered to senator casey and senator brown, when you take charitable, home mortgage, retirement accounts, and some of these others off the table, you cant get 5 trillion in savings. As a matter of fact, you would have to take on at least im not going to go through the whole list, but the largest remaining tax expenditure, when you take the big ones off, you got to go where the money is. The deductibility of Employer Health<\/a> care plans. Is that on the table . Thats a thats north of 200 billion a year. That could get you some real revenues but that would dramatically disrupt the health care system. Let me first assure you that our plan is not going to add 5 trillion, and i dont understand why they would have scored it since they dont have the details. People like the Tax Foundation<\/a> and others have not scored it and i assure you, when we come out with all the details, there will be full transparency. This will be scored by joint tax as well as lots of outside groups as well as we will provide our own view of the scoring. We have over 100 people in the Tax Department<\/a> looking at lots of different scenarios, and were working hard on that. We have no intention of doing something that would add trillions of dollars to the debt. Well, especially since, you know, right now at 20 trillion, as Interest Rates<\/a> go up, for 100 basis points, again, we discussed this before, that adds just an Additional Debt<\/a> service. 140 billion a year in additional payments right off the top. So, you know, i would argue you balloon the debt and whatever benefit you get from the tax cut is going to be erased by the additional deficit payments. Senator warner, i assure you that we appreciate the significance of the debt having gone to 20 trillion. Both sides bear responsibility. All i would say, sir, is ive spent a couple years looking through these numbers pretty closely. I think based on reasonable, normal assumptions, would anything close to traditional scoring, even if you to a little bit of bump on dynamic scoring, you cant get to 5 trillion of tax expenditures without going after the largest ones like employerbased health care. I really fear that, you know, this becomes a lot harder than it looks, and i am worried if you around the 3 growth rate assumptions. Ill look more. Im worried as well about dynamic scoring that has to include the tax cut assumptions and yet youre then saying theyre not counted in the budget so there does seem to be, again, to be double counting. Im also very worried that were taking domestic Discretionary Spending<\/a> down to 3 of gdp. Thats the lowest its ever been. And you know, we were both business guys. You know, you invest in a business, if you have business invest in education, plant and equipment and staying ahead of the competition. A government does that by investing in education, infrastructure, and research and development and unfortunately, your budget slashes investments in education, infrastructure, and research and development. Thats not going to lead, i believe, to the kind of growth that you have in your underlying assumptions. Ive only got three seconds left. One of the things that you said that i applauded during your confirmation hearings was that you felt that the irs to do its job needed appropriate staff and resources, yet your budget cuts the irs. Do you want to address that . Sure. Let me first say i know you have tremendous business expertise and we hope we can work with you and your staff on suggestions for the business tax. I know you appreciate the system we have is just very complicated. The concept of worldwide income and deferral leaves trillions of dollars offshore, which makes no sense and we need to get that money back to build jobs so we very much hope that youll work forward with us on ideas to move forward on that. On the irs, as i did say, i have spent now a bunch of time with the irs, looking at things. I will tell you one of my biggest focus and i do have a technology background, is upgrading the technology at the irs. We are very, very focused that weve underinvested in technology, and i am pleased to report that within the budget, we will protect what are big increases in the technology in the irs and we will offset them in what we hope are savings in other areas, and obviously, we were looking to cut government spending, and im pleased that we protected the irs. There were other people who wanted to cut it more, and were very comfortable with the spending level and some savings and Big Technology<\/a> investments there. Senator isakson. Mr. Mnuchin, i want to associate myself with the comments mr. Crapo made about your willingness to come and testify and its been a breath of fresh air. She a Sherrod Brown<\/a> is the best one question, yes or no asker and one of his questions was about Social Security<\/a> and i want to follow it up, not by challenging mr. Brown but by making a point. We have a 20 trillion debt today, is that correct . Yes. Under most math, which is conservative, ten years from now its going to be 134 trillion. Principally because of the growth and the obligation of Social Security<\/a> and other measures that are benefit programs, is that not correct . I dont have the exact numbers but directionally, i understand what youre saying. My only point is this. None of us in here want to raise the cost of Social Security<\/a> to anyone. However, if you look at 1983, when reagan and tip oneil, a democrat, raised the eligibility age for Social Security<\/a> from 65 to 66, they raised i lost a year of Social Security<\/a> because i was 39 years old in 1983 and didnt turn 66 until 25 or 26 years later. But my point is, by recalibrating the formula in the out years, you can recover that debt over time and advertise it amortize it under the time value of money which is good for everybody so i just wanted to point out, none of us want to raise the cost to anyone or prevent people from being eligible. But recalibrating the formula at a time out in the future for those who will be beneficiaries in the future can go a long way toward beginning to lower the obligation were going to have a decade from now. I wanted to make that point. Second, budgeting budgeting document is a messaging instrument. One, we were disappointed that there was no inclusion by the in the core of engineer for any funding for the savannah fort. State of georgia has put its own money into that with the United States<\/a> federal government. We are in the process of deepening it now and all of a sudden theres no additional money in it for this years budget. Without that additional money in there, it puts out a higher cost in future years. Id appreciate your working with me to look at that and see if theres a way we can reprioritize capital apportionment for this year to see to it the port of savannah gets additional funding. Thats a parochial issue and a selfish one. Be more than happy to follow up with you and your staff. Secondly, also parochial issue for myself and senator scott is section 45 of the tax code, production tax credits for nuclear. Is that not correct . Thats correct. The Southern Company<\/a> is building a nuclear two Nuclear Reactors<\/a> in georgia, also in South Carolina<\/a>. They are the only two Nuclear Reactors<\/a> in the United States<\/a> under construction now. Because of the problem with finances at westinghouse and a bankruptcy, those plants the ability of those plants to be finished is not as soon as we thought it would be. The production tax credit section 44 ends at 2020, is that not right . Were asking you to take a look at an extension of that eligibility from 2020 out a few years. It doesnt cost you any more money. But the federal involvement gives us the ability to borrow and leverage in such a way that you have cheap, Affordable Energy<\/a> and can finish those plants. Otherwise, lose the money thats been put into them and lose the opportunity to do so, so i dont expect an answer. Happy to look at it with you. I would appreciate it and time is of the essence. Id love to talk to you about it. And lastly for low and moderate income people, i have worked on the Free File Program<\/a> for a long time. Are you familiar with free file . I am. I think its very important we continue that. I think it ends in 2020 or some out year. I would appreciate your taking the time when you get a chance to look at that and see if we cant make that a Permanent Program<\/a> for the american taxpayer where they get free assistance in filing their income taxes. Its a good program. Irs should always be forward and the secretary of treasury should be forward as well. Weve looked at that and we agree with you and look forward to working with you on that. Again, thank you very much for the job youre doing, mr. Secretary. Okay, senator scott, and then senator bennet and then were going to close this down. The leader democrat leader will have a couple of questions. Thank you very much. Youll have to excuse me. I have to leave. But i think youll be treated fairly and i expect you to be treated fairly. Mr. Chairman, with your indulgence, if we havent had any finance members either on the democratic side or the republican side who havent had their five minutes, i assume it would be acceptable to let them ask questions. Thats right. Okay. Senator scott. Thank you, mr. Chairman. Ranking member. Mr. Secretary, good to see you so often in these chambers, god bless you. Couple questions. I do want to associate myself with senator isaksons comments about the importance of the Nuclear Production<\/a> tax credits. What it comes down to is a commitment the country made to encourage states to look at ways to get back in the Nuclear Energy<\/a> business. South carolina and georgia both said yes. It seems like the federal government is not honoring its commitment to those projects and thats what it boils down to and there seems to be a suggestion that the administration, through treasury and the irs, may be able to provide a bridge from 2020 to 2022 or a couple of years longer. And that process. But if i were an average person, and i am, sitting back at home, taking a look at the conversation that were currently having around tax reform, it would be difficult to discern where that average person finds benefit in the conversation around tax reform because weve done such a poor job of having a conversation that seems to go back home. The only real comment that was glossed over that i thought was really important was when you answered senator bob from pennsylvania, when you answered his question, senator casey asked you a question about the impact of your tax reform package on that person earning about 23,000 a year and your answer was, that person would essentially pay no taxes. There was a moment of silence there. I think its really important to note that as we have a discussion about tax reform, what were the direction were heading in is that the person who is the lowest end of the economic ladder really would have no Tax Liability<\/a> in your tax reform package. Is that correct . That is correct. By increasing the standard deductions, a huge chunk of people who cant afford to pay taxes wont. And 95 of americans, we think, will be able to file their taxes on a simple large postcard without having to itemize. Simplification. Yes. Second part of the conversation that i think that the average person at home would really enjoy understanding and appreciating because it takes a little time for us to get there in this committee, folks at home are a lot smarter than we give them credit for being, but we simply dont talk to them. We talk about them. So, when we have a conversation about the Corporate Tax<\/a> rate, both republicans and democrats, both conservative and liberal economists all come to the same conclusion, that the Corporate Tax<\/a> rate is born, essentially, by three groups of individuals. One group would be the employees who experience lower wages. So if were looking for a way to have a conversation with Middle America<\/a> about getting a raise at work, the Corporate Tax<\/a> rate is one of the fastest ways for us to get to that higher income for the folks that we care about if we were to lower that rate, we could assume that some of the benefits, some of the savings would go to employees. The second group that would benefit from a lower Corporate Tax<\/a> rate would be the consumers who are buying those products because embedded in the actual price of it is the tax for it. And then the third group are those folks who are in a position to make further investments so as to create more Economic Activity<\/a> or those folks who are shareholders in companies, those three groups of individuals are the folks who actually bear the burden of Corporate Tax<\/a>es. Is that about right . It is. And multiple economic studies have shown that over 70 of the cost of Corporate Tax<\/a>es are actually borne by the worker. So, a major part of reforming the Corporate Tax<\/a> system is in an effort to increase wages and opportunities for workers. My final point, as it relates to the folks that i care most about, folks back in South Carolina<\/a> and around the country who are like my mother was a hardworking single mom who was struggled to make her ends meet, worked 16 hours a day and needed more opportunities, and one of the things that we see in this conversation about reform is that if we lower the Corporate Tax<\/a> rate, we allow for rep repatriation and we include in that the pass through entities and we create some kind of mechanism to make sure theres not a perverse incentive to move the income that to pass through entity from income to profit, which was the question of our Ranking Member<\/a>, we can figure that out and create a way of having a mechanism to stop that. And then with Regulatory Reform<\/a>, we should have a robust Economic Activity<\/a> that leads to Economic Growth<\/a>, perhaps the 2. 9 over ten years and the final part that would help those folks back at home would be some emphasis on the workforce reinvestment that the economy, the Technology Economy<\/a> will displace a lot of workers but if we have that in our sights, that through the Economic Activity<\/a>, we could actually design a Workforce Readiness<\/a> program that would marry the workers who are looking for work with the jobs where they lie, if we have that kind of synergy in our focus and in our activities, is that basically accurate . That is, and we do believe that job training is an important part of Economic Growth<\/a> and making sure workers are prepared. My final question will be a question for the record. I appreciate you answering later. A question about the facta. Are you familiar with that . Those regulations, the reporting regulations being imposed on those property and Casualty Companies<\/a> that have international exposure, doing international work, theyre not trying to escape taxation. It appears that facta is an onerous burden on those companies. I would love to hear your response to how your administration or this administration mr. Secretary would be in a position to follow i want to finish this real quick here, if you dont mind. In a position to follow up and see if theres something that we can do now. My staff has made me aware of this issue and we will follow up with you. Thank you. Very good. Thank you, senator scott. My colleagues have been very patient. Senator mckas kel is next. I think senator bennet has been here. Arent you great. Ive been trying to make three hearings at one time. I think hes been here a long time. Claire mccaskill is my favorite senator. She was my favorite senator before she did that but the graciousness, i cant tell you how much i appreciate that. Thank you. Thank you, claire. Mr. Mnuchin, thank you so much for your service. Were all grateful that youve taken the job that you have. Are you aware that we collect in revenue roughly 18 of our Gross Domestic Product<\/a> . Yes. Chairman hatch made that comment at the beginning. And are you also aware that we spend a little over 21 of our Gross Domestic Product<\/a> . Yes. And so what youve presented is a budget that and im saying this so the Tea Party Folks<\/a> in america can hear it. That youre presenting a budget that cuts more taxes, so were now going to be lower than the 18 , particularly with the Economic Growth<\/a> that youve talked about, lower than 18 , and at the same time, a budget that actually spends more money. Were cutting taxes and were spending more money. Is that not correct . Again, the budget doesnt model in our tax changes because we didnt have them ready. Are you not cutting taxes in your budget . We are cutting taxes. Thank you. So, the distinction or the difference between the 18 that were collecting revenue of gdp and the more than 21 that were spending in this government in gdp, all the promises have been made to the tea party and balance the budget and all the rest, are broken in this budget because were going to collect less in taxes and were going to spend more money, isnt that correct . I dont think thats correct over the tenyear period. Over the tenyear period of time, one way you deal with that is by cutting domestic spending, not military, not defense, but domestic spending by 40 . Thats the proposal that youve made. Isnt that correct . The president s priority is to grow the military. We understand the president wants to grow the military. And to offset that with less domestic spending. He said he wont touch medicare. By the way, tea party people, listen to this, for every medicare dollar you pay in, 3 are taken out. So, were going to continue to have a deficit in medicare, were going to have a deficit in the government. Were going to spend more in military spending. Were going to tax rich people less, and were going to cut domestic Discretionary Spending<\/a> by 40 . Thats the plan. Thats our plan. While the front page of the New York Times<\/a> has tunnels that chinas building through seven Different Countries<\/a> in asia, our plan is that were going to cut our domestic Discretionary Spending<\/a> by 40 . Thats your plan. Right . Thats what the president told people in ohio and wisconsin and pennsylvania, that hes going to cut that domestic Discretionary Spending<\/a> by 40 so he can finance tax cuts for the wealthiest americans. Thats not the case at all. As ive said before, the tax reform and its not just tax cuts, it will be tax reform, will pay for itself and when we have the details, were more than happy to go im i would love to go through the mr. Mnuchin, secretary were not prepared today to go through the details on that. Let me ask you a question about that because you said you werent prepared to talk about details and youre not and we know youve put out a tax proposal. And i accept the fact that things will be modified and changed in the congress and i appreciate that. But will you say today that the Trump Administration<\/a> will not accept the tax reform bill that cuts taxes on average for high income taxpayers . Again nope, nope. Go ahead. What ive said is, our priority is about a middle income tax cut and to lower the top tax rate and offset it with a reduction of will you tell the American People<\/a> today that your administration, because at the end of the day, you get to sign a bill or veto a bill, your administration will not accept a tax reform bill from the congress that cuts taxes on average for high income taxpayers . Again, i had some of these questions earlier, and ill repeat that. You didnt answer them earlier. Im asking you to answer them now. What ive said is we are working very closely with the house and the senate on an overall tax reform package. Were taking in lots of input. And when we have the details, we are happy to go through them with you. Our objective is to create Economic Growth<\/a> to make business taxes let me ask it this way. And to create a middle income tax will the president veto a bill, a tax reform bill, that cuts taxes on average for high income taxpayers that violates the mnuchin rule . Again, the president will look at the overall package thats been i just hope, mr. Chairman, i hope the people that voted for this person are listening to these answers. The last question i would ask and i know im out of time because senator mccaskill was so kind. I just want to ask one question about medicaid. So two questions, i guess. The Health Care Bill<\/a> that you have endorsed and the president has endorsed its not a Health Care Bill<\/a> in my view but the bill thats passed the house cuts medicare by roughly 850 billion. This budget seems to propose another 600 billion in medicaid cuts . I mean, are we up to 1. 4 trillion in medicaid cuts . I dont have the numbers in front of me. Then, those are the numbers as i understand them. Thats a cut to medicaid of over 25 . In my state, 50 of the people are children. So i hear people, politicians talk about, go to work. They need to go to work. Children are the children supposed to go to work . Are the people in Nursing Homes<\/a> supposed to go to work . Are the people that are already working at a wage that wont allow them to have private insurance supposed to go to work . Wheres the quarter of medicaid, whos going to cover these people. As much as i share senator bennets concerns, this has to be the last response. I apologize. Did you want to respond, mr. Secretary . Theres a we are slowing the rate of medicaid and i can assure you that children will be taken care of. Its not our intent that they wont have coverage. The order is senator thune and senator mccaskill. Whats the growth rate been under the past eight years under the Obama Administration<\/a>. Its been between 1. 5 and 2 . Whats the historic average. Over 3 . So is it fair to say that the policies, the economic policies of the Previous Administration<\/a> havent been conducive or created conditions that are favorable to Economic Growth<\/a>, at least what we would consider to be normal Economic Growth<\/a>. Yes, i believe that to be the case. So is it also fair to say, then, that part of reason for that would be the heavy tax and heavy regulation that have been part of those economic policies . Yes, i agree with you. So, it seems to me, at least, that as we talk about where we want to go for the country, we clearly want to get that growth rate back up to a more normalized rate, hopefully north of 3 . Thats our number one priority. So if in order to do that, you know, clearly the tax increases, the heavy regulations of Previous Administration<\/a> have not worked, it seems to me that simplifying our tax code, reforming our tax code in a way that makes us more competitive in the global marketplace would certainly be a desirable outcome and result and something that we ought to be able to work on up here on a bipartisan basis and i would hope my colleagues on the other side would join with us and hopefully with you and your team as we design a tax reform plan that hopefully will get us back up to that 3 growth and one of the reasons i ask that is because the best way to solve the longterm fiscal problems the country has is faster Economic Growth<\/a>. We get back up to north of 3 growth, i assume well see a significant increase in government revenues, would that be the case. Yes, its over 2 trillion difference. See, and so to me, growth is should be the goal. And i appreciate the fact that although i disagree with aspects of the president s budget, there is an emphasis there on growth and on what tax reform can do to generate a higher rate of growth in the economy. I introduced a bill last week that is geared toward small and mediumsized businesses who we believe are an engine for Economic Growth<\/a> and job creation in this country that focuses on faster cost recovery. The proposal that you set forward talks about lowering rates which is i think the other lever that we can use to get greater growth in the economy. Could you tell me how you see faster cost recovery, immediate expensing actually playing into the administrations tax reform ideas as well. Thank you, senator. Thats a very good comment. So first of all, we absolutely agree with you that small and mediumsized businesses are the engine of growth in this economy. And we need to unleash that growth. We are very focused on making sure that we have the appropriate policies on expensing capital goods to encourage people to invest and as i stated earlier, were looking at a variety of ways to increase depreciation. Okay. I think thats a ought to be part of any tax plan that we come up with here. Mr. Secretary, under the president s april 21 executive order, you are in the process of identifying regulations within the Treasury Department<\/a> that impose undue financial burden and complexity. I believe there are a number of final regulations that were promulgated by the last administration that should be on that list. Whats unclear, however, is how you plan on handling regulations that were proposed but not finalized, ones like the estate tax valuation discount regulations that the Obama Administration<\/a> proposed in august of 2016. These regulations, if finalized, would make it more difficult for owners of family farms and businesses to pass them on to future generations and significantly increase the estate tax burden on family businesses. Mr. Secretary, as part of your review of regulations, will you include a proposed regulations and withdraw those that were not finalized . That would give taxpayers, i think, confidence that these proposals will not move forward without at least being reproposed. I can assure you, we are looking at those and in particular, i am familiar with the Family Discount<\/a> issue that we are reviewing. Okay. Final question. I was pleased to see that the administrations tax reform framework seeks to preserve the incentive for Charitable Giving<\/a>. Stakeholders have raised concerns, however, that increasing the standard deduction could create disincentives for Charitable Giving<\/a>. Could you talk a little bit about whether or not youve looked at that potential interaction and if there are other steps that we could take to encourage Charitable Giving<\/a> so the generosity of americans can continue to be put to work in our communities and to help those who are most in need. We do support the need and encouragement for Charitable Giving<\/a> and thats why we wanted to leave that deduction in the tax code and were happy to follow up with you and talk to you about ideas for people who use the standard deduction. Thank you. Thank you, mr. Chairman. Thank you, mr. Secretary. Senator mccaskill. Thank you. Secretary mnuchin, while i know you have repeatedly said that there is not specifics in the budget, the budget document is full of specifics, including a specific claim that it balances the budget. That is a very specific claim. So, i only think its fair that we can continue to drill down on some of the a kind way of putting it is anomalies that are in this budget document, just from a financial perspective. Your budget assumes 3 growth, which i am not going to argue with you here but i think most economists in the country are vociferously arguing about the notion that 3 growth is going to happen. And you say that contributes 2 trillion in dynamic revenue that goes to deficit reduction based on the tables in the budget. But then were told that that 2 trillion pays for the tax cuts. And i see nothing in the budget where the 5 trillion of revenue were going to lose from the tax cuts are calculated in. So, either youre double counting and someone is not paying attention to how you do accounting, or you just made a mistake. And i need the know which one it is. Senator, i appreciate you bringing up that question and i responded to a similar question earlier. So, first of all, the intent was not to do double counting. As i have stated earlier, were not far enough along in tax reform to have modeled in the impact of that. There are other areas of the budget that we think are conservative in our calculation of revenues, but i can assure you, when we have tax reform, there will be full transparency of it and there is no intent to double count or anything else along those lines. So it was a mistake . No, it wasnt a mistake at all. Well, you cant have you cant have that tax reform is paid for by growth and then count that growth as against the deficit. Either its paying for the lack of revenue were getting from the tax reform or its going against the deficit. You cant do both. Thats beyond fuzzy math. Thats double counting. Again, just to be clear, when the budget came out, okay, we overlaid the administrations plans for growth, which are incorporated and that is whats shown in there, okay . We do not have tax changes, so we did not model in tax changes. Theres full transparency is the growth coming from the tax changes . One of the things is is the growth coming from the tax changes . One of them but theres also plenty of other economic policies. How did you come up with trade policies or whether its our Regulatory Reform<\/a> policies. Theres plenty of other things that will also impact the growth. It just defies understanding what youre going to project what the growth is going to be based on a tax cut but you cannot put anything in the budget about what the lack of revenue is going to be because of a tax cut. That doesnt even make sense. I mean, how can you how can you say youre going to have 3 growth and youre going to have all this growth and revenue because of the tax cuts if you never put in the budget what the tax cuts cost. Even a ballpark. Not even you didnt even say, well, maybe its going to cost 3 trillion. You didnt do any of that in the budget so how can this document even be taken seriously. Of course it can be taken seriously and im sorry you feel that way. It was completely transparent. Nobodys trying to hide anything. Okay. Well, i think that you cant say that the growth of 2 trillion is going to pay for tax cuts and say its going to reduce the deficit at the same time. That just doesnt make sense. Especially when we youre not even counting what the tax cut is. Let me go to something we talked about in your confirmation hearing and that is the stability of the pension funds. You graciously, and i was impressed and frankly, it indicated to me that you were willing to listen to folks that have reallife problems that nobodys helping with, you graciously agreed to meet with some of the missouri Truck Drivers<\/a> in your confirmation hearing to hear their plight, these people who have driven trucks 35, 40 years are now being told theyre going to have a mere fraction of the pension that they were promised and their families were going to rely on. I want to let you know that they are going to be in washington in a few weeks. I want to save you a trip to missouri if i can, if we could figure out a time when theyre here to have a small group of them, we dont want to overwhelm you, we can ask for one or two representatives to come in and meet with you. I would ask you today if you would be willing to try to make time in your schedule. I would. I think we were reaching out to your office about trying to bring people in from multiple states but if you have people in, we will definitely well try to coordinate with you and maybe we can get multiple states in because i think the problem is the same no matter where they drove a truck. Basically, their promises made to them are going to be broken. And im much more familiar with this issue than i was at my confirmation. Weve spent a lot of time looking at this. Part of it is a function of treasury where we oversee certain rules, but we appreciate the issue and we look forward to working with you on it. Thank you so much, mr. Secretary. Thank you, mr. Chairman. Senator heller. Mr. Chairman, thank you. And to you, mr. Secretary, thank you for being here today. Thanks for taking time to answer our questions. I want to talk about the border adjustment tax here for just a minute. As youre well aware, the House Republican<\/a> tax reform blueprint includes a 20 b. A. T. Tax. Its estimated that it would net around 1 trillion of revenue. Youve cast the b. A. T. As unessential to tax reform. And that its not workable in its current form. Do you still feel the same way . I do. I testified at the house yesterday. I had several questions on that. Weve been working closely with the house on this, and weve expressed concerns and suggested that they should go back and rework it. You also mentioned that there are plenty of other ways to raise that revenue. Can you shine some light on what you mean by these other ways . I do. I think this is all about base broadening, and we are working hard to look at lots of different alternatives as to how to fill that gap. Can you give us an example . Were looking at everything, senator, as you know. Nothing is off the table as far as were concerned. All right. Let me ask you some questions dealing with debt. I saw a report recently said that the total u. S. Consumer debt is approaching 13 trillion. When you talk of student debt, credit card debt, auto debt, were looking at 13 trillion. Do you think that will have any impact on your ability to grow the economy when we see such staggering debt out there . Were concerned about that, and were particularly concerned about the burden on students of student debt. Have you guys looked at this and decided how much more debt can grow . We have not, but we have people who are looking at that. Okay. Well, would we anticipate that there would be answers soon on that . Be more than happy to follow up with you. Id appreciate that. I want to go change subjects here for just a minute and talk about investment tax credits and see if i can get your feel for alternative energy. Since ive been here in congress and over the last couple of years, ive tried to look for some parity between, say, solar tax credits, geothermal tax credits, wind tax credits, and im sure youre very familiar with these. During the p. A. T. H. Act of 2015, some of these tax credits were left out. The protection tax credits, specifically im talking about commercial geothermal, and im an all of the above energy guy, and these alternative energies like solar, geothermal and wind have huge potential in the state of nevada as far as job creation and an industry that could do quite well. I want to know if youre aware of the issue of parity between these industries and if you have any concerns or problems with trying to find some equal treatment between the different industries. Im only broadly aware of the issue, by id be more than happy to follow up with you and your staff on it. Okay. Ill be happy to get some sentence some questions to you. I want to talk also about a state and local tax deductions. Obviously, state of nevada is one that has no personal income tax and were able to write off sales tax with the blueprint in discussions that weve had, weve everythings on the table, including the removal of those deductions. It would cost the average person in the state of nevada about 1,000 more in taxes if those deductions were removed. I guess i need a commitment from you that as we go through this process, we can make sure that it is equitable and that individuals in the state of nevada will in fact benefit from the proposal you have with or without these deductions. Wed be more than happy to work with you and you dont have state taxes so i can assure you the people who have state taxes really call me on this one but i hope you can appreciate were trying to get the federal government out of the business of subsidizing states. I want to talk to you about one more issue and thats mortgage debt relief. Weve talked about mortgages in the state of nevada in the past and the declining home prices, rising foreclosure rates, frankly, have forced many families to sell their homes in nevada for less than what they paid for and in some cases less than the outstanding debt. Ive worked with several members on this committee to try to find some relief for those individuals that have to that are being asked to pay for taxes for income that theyve never received. Im hoping that you would help address this. Absolutely. I realize the serious issue of that and we will follow up with you. I appreciate that. Ill get a list of questions to you. Thank you. Get those followups in there. Thank you again for being here. Senator menendez. Thank you, mr. Chairman. Let me ask you, do you believe its a good idea to cut medicaid to provide tax cuts for the wealthy . Again, we have no intention of cutting medicaid. Im asking you as an idea. As an idea, do you believe that it is a good idea to cut medicaid to pay for tax cuts for the wealthy . Thats not the intent of cutting medicaid. So is your answer yes, no . No, i my comment is whether or not its your intent, do you believe were talking about, you know, the administration also sets policy views, so your deferral is amazing, but the Administration Sets<\/a> policy views. Does the Administration Believe<\/a> that it is a good idea to cut medicaid to pay tax cuts for the wealthy . Are you referring to the what are you referring to in the tax cuts for the wealthy . Well, certainly, lets take the mnuchin rule. So are you referring to the taxes as part of obamacare because we heard earlier, many of those taxes hit the middle income im referring to what the houses republican Health Care Bill<\/a> does because it cuts nearly 1 trillion from medicaid and it rips away health care from the most vulnerable in our society, and it hands the money over to the most privileged in our country. I dont share your view that it hands the money over to the most privileged. But you share the view that it cuts nearly 1 trillion from medicaid . Again, it scales back the growth of medicaid. It cuts scales back. It cuts nearly 1 trillion. You call that scaling back . I guess on wall street 1 trillion is nothing. No, 1 trillion is in the lives of real people, its something. I appreciate your comments. The 1 trillion is obviously a lot of money. I realize that im happy to talk about the tax aspect of well, let me ask you this. But the other areas are out of my domain on health care. Let me ask you this. Will the president adhere to his own budget and only sign a tax reform bill that doesnt increase the debt . Yes or no. Again, i think the the president will look at when there is an overall tax reform bill that can pass the house and the senate, the president who has always said hes willing to negotiate so he might sign one that increases the debt, thats a possibility . What id say is that the president always has said that hes willing to negotiate on these issues and hell make a decision and i will make a recommendation when we have an overall bill. But the question is the president is very theres no policy standards here. You want us to judge in the absence of any executive policy standards. Its all very nebulous. I understand negotiation. But at the end of the day, there has to be some standards. Let me ask you this. Will the president commit himself to your own mnuchin rule and not sign a tax reform bill that cuts taxes on the top 1 . The president is very concerned about the debt and wants to have plans to pay down the debt and the president is very focused down the debt and the president is focused there is a middle income tax cut as part of this. If you sign a bill that actually permits debt to take place, that is concern isnt that great. Will the president sign a tax reform bill that doesnt cut taxes for all families earning under 100,000 . It is not his intent to do that. He wants a middle income tax cut. Does that mean no, he will not . I cant speak for the president on what he you advise him. Would you advise him not to. Yes, i would advise him that and we will make sure there are tax cuts in this process for the middle class. Will the president sign a bill that gives more tax cuts as a percentage of income to the top 1 and the middle class . Again, i am not going to go through a bunch of hypothetical scenarios of what the president will do and what the president wont do. Im happy to explain what the president s objectives are and we are moving through a process. Maybe these will have greater clarity. Will the president sign a tax reform bill that will creates a new is your tax for millionaires to show up medicaid, i should say . I dont believe thats in the current plan. So that would be a no . I said its not. Will the president sign a tax reform bill that will increases the estate tax . I do not believe thats in the current plan. So that would be a no nen. Will the president sign a bill that doesnt cut taxes on large corporations. The president wants to make sure we have a competitive Business System<\/a> and for many Large Companies<\/a> they pay substantially less than the 35 . So our. So the answer to that is no. And broaden the ba is. The answer is no. Youve answered pretty clear definitively, couldnt answer yes or no on anything else, on those things, it paints a clear picture of what his priorities will be. Hell sign a bill that explodes the debt, leaves middle class families in the cold, breaks the mnuchin rule by cutting taxes for the top 1 but wont sign a bill unless it includes a giveaway to large multinational corporations. Senator, in all due respect thats not what i said and thats you didnt say that specifically but your line of question and answers give me that. Let me say the final thing. I downtown get, this sounds like enron type accounting. The budget, the trump budget is virtually no details on tax reform. Yet it assumes their nonexisting plan will create 2 trillion in revenue, uses an imagine ril rev knew to plug a hole in the deficit. Besides the problem of counting chickens before they hatch, they think imaginary dollars will be used to offset tax cuts. How did the administration estimate the mark crow economic effects of tax reform without knowing any of the specifics of tax reform including whether and how revenue deductions will be offset. Im sorry you werent here earlier. I answered similar questions already and that we didnt have the details to put in the impact of taxes. We have complete transparency. You dont have details today . Were going to have to wrap this up. Finalize. You dont have any details and so if you dont have any details what it will look like, i dont know how you do such mark crow economic forecasting. Mr. Mnuchin, we have one other area we have to explore before we wrap up. The Treasury Department<\/a> makes payments directly to Health Insurers<\/a> to help cover deductibles and copayments for roughly 7 million americans. These are folks are modest incomes. They have private health plans. They bought on the Insurance Exchange<\/a> and this is for help with deductibles and copayments. These are called cost sharing reduction payments. Csrs. The president s been making the payments since he took office but recently it has been reported that he is threatening to stop. We have gotten enormous amount of letters and emails and tweets from citizens and insurers and governors and experts that this really dangerous rhetoric about these payments is causing a lot of uncertainty in the markets, and this is raising premiums for hardworking americans. Ive got all these comments from governors and insurance executives. Im just going to put those in the record by unanimous consent. Now, we know that you and the president have stated your strong belief in the free market. But the lack of clarity here is just causing turmoil. Its almost like gasoline is being poured on the fires of uncertainty in the Health Care Marketplace<\/a> and the private sector just cant continue to operate with this level of uncertainty. The insurers have to submit their proposed rates for 2018, and they cite the fact that these cost sharing reduction payments remain unresolved as a main reason for premium increases. So theres been all of this discussion about this. But my staff discovered in the president s own budget that theres an assumption that they are going to be paid out in 2018. So after all of this hullabaloo, i was pretty surprised at this. So my question is, mr. Secretary, is the president going to follow his own Budget Proposal<\/a> . This is in the budget document. We were kind of amazed its in there. Is he going to follow his own budget document, his own proposal and continue funding these cost sharing payments next year . Thank you, senator wyden. I havent had any direct discussions with the president on this but im more than happy to follow up with director mull veiny and him on this issue. Well, im asking you, this is in your budget, mr. Secretary. Im not asking you if you went to medical school. Im not asking you about health care policy. Im trying to find out about whether the president s budget and its in your treasury appendix section, whether you as treasury secretary agree that these payments ought to continue as they have been made for the last several years. Again, i respect your question and im going to follow up and get back with you on that. Well, if im an insurer who is setting rates right now, should i believe that the reported threats about these payments in the administration are accurate or should i believe the proposal that is in pur treasury budget in which should i believe right now . Were happy to provide clarity for you and to the free market on that. I will just tell you, mr. Secretary, having started this, i dont know, maybe 2 1 2 hours ago, we have really gotten virtually no clarity on the Big Questions<\/a> starting from this propos proposal that so dramatically favors the very wealthy with respect to pooling. My colleagues questions, i mean, this is really a critical issue, and its critical right now because the 90day period where this is going to continue to be debated means that everybodys going to be up in the air while the Insurance Companies<\/a> are trying to make decisions. And as somebody who believes in the free market, i would hope that you back the proposal in your own budget. It would be one thing if it was coming from somewhere else. But its in your own budget. And im just baffled why you wont support your own budget. Let me just leave you with where i think we are. We now have on offer a onepage proposal, and i gather that there is one section that may have been an added. I havent had a chance to look at it in detail, but i gather its something involving retirement. At the rate were going, were going to have like a full proposal, you know, somewhere like 2075 or Something Like<\/a> that. Weve really got to get moving. I mean, the American People<\/a> as i said, the first sentence out of my mouth, the American People<\/a> demand that weep work in a bipartisan way on the issues that are important to them and particularly matters Like Health Care<\/a> and taxes. These are key bread and butter issues for anybody who is a nurse, anybody who is a cop, working class people, people who aspire to be middle class. So we have got to get more specifics. Ive told you both publicly and privately, i wrote two fullfledged tax reform bills, not kind of papers with a few principles on it. Theyre actually bills. They provide a real middle class tax cut, and republicans went on it. So it can be done. And its got to be real as opposed to much of what my colleagues have said. So i gather that some emails are going around about meetings coming up that are going to be bipartisan were sent this morning. I just want to make it clear that to get this done, we have to take the onepage that is shorter than the drugstore receipts that my staff was seeing last night and turn it into something that could actually produce a bipartisan bill. I know from lis nick to listeni colleagues on this side of the aisle they agree the Current System<\/a> is a mess. It is a dysfunctional mess. We need changes to create more good paying red, white, and blue jobs. I made it clear their morning that i would work very closely with my good friend chairman hatch because he believes we also ought to work in a bipartisan way. With that, mr. Secretary, well adjourn and we to continue this discussion very soon. Thank you. If you missed any of this hearing with treasury secretary steve mnuchin, youll be able to find it at cspan. Org. Just type Senate Finance<\/a> in the search bar. On our website are the all 62 pages of the president s 2018 Budget Proposal<\/a>. Today is election day in","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia600605.us.archive.org\/7\/items\/CSPAN3_20170525_140500_Treasury_Secretary_Mnuchin_Testifes_on_FY_2018_Budget_and_Tax_Reform\/CSPAN3_20170525_140500_Treasury_Secretary_Mnuchin_Testifes_on_FY_2018_Budget_and_Tax_Reform.thumbs\/CSPAN3_20170525_140500_Treasury_Secretary_Mnuchin_Testifes_on_FY_2018_Budget_and_Tax_Reform_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240628T12:35:10+00:00"}