Hearing with Treasury Secretary Scott Bessent
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House Ways and Means U.S. House of Representatives
Follow its sittingsRichard Neal
Thank you, Mr. Chairman. Mr. Secretary, welcome, as always. The chairman made the point that this is the best committee in Congress. That's likely to be one of the few things we agree upon this morning, as all know. And you hold, as I pointed out in the past, one of the most important jobs in the world as a successor to Alexander Hamilton.
We hope that there'll be some explanations this morning about the failures of many of the economic promises that were made by the Trump administration. 70% of the American people disagree with the economic direction that the country is taking. Last time you visited with us, Americans were being socked with price hikes because of the tariffs where you and I met in front of the Supreme Court that day when the Supreme Court took and heard the oral arguments because of the big ugly bill. We fought on our side every step of the way, knowing and predicting what was to come. Higher costs, millions kicked off of healthcare, children going hungry, all in service to the wealthiest amongst us.
Despite this, a rosy picture was painted about the Trump economy and what it might deliver. It's safe to say that almost on every front, those predictions from the administration have been wrong. Workers and families are being forced to stretch their dollars further every day and the pain so clearly stems from many of these projects, including what was supposed to be a cessation of endless wars. We've watched the price hikes that are coming because of this tariff regime. And during testimony last year, you suggested that the Trump policies would lift the working and middle class and reinvigorate American manufacturing.
It was stated that take-home pay and wages would increase. You relied upon consumer confidence data to tout the strength of the economy. You pointed out that inflation was improving and that costs, including food, energy, and shelter, would be coming down. And now we have a chance to reflect upon what actually happened, including the slow walking of the tariff refunds that are due. Families are forced to shell out $1,700 more last year to cover many of the costs that were estimated to be rosy here not that long ago.
Between the tariffs, the Iran war, prices are rising faster than they have in years. Last month the inflation rate up ate up paychecks. Appreciated the chairman's position on pointing out that there has been a routine of 3% increases, but when you're paying more for everything else, that quickly goes away. The price of a tank of gasoline in many places has gone up by almost 50%. That's a staggering amount.
That growth came in at approximately one half of 1%, not even a full percentage point. That's not spin, those are facts. The administration continues to argue that down is up and to convince people that their pain should be subjugated to patriotic causes. Whether celebrating higher credit card delinquencies on households, they're spending more every day because of the economic policies of the administration. As if the $1,700 to cover the tariffs wasn't enough, estimates are now showing that the war in Iran has already cost households another $750.
And while an extra $200 in gas costs might not be a lot for some folks in the administration, it sure is for a lot of working families. I'm sure we're going to hear that there are many attempts to save the economy by touting the refunds. Those refunds were eaten up almost overnight because of increases in gasoline prices. Tax refunds fell short of the promises by 65% and have been completely wiped out, as I noted, by price hikes. The president's attention remains everywhere but what's most important.
As he said, he's not thinking about people's financial situations. He tends to be focused on more vanity projects, including a ballroom and an arch and painting the reflecting pool. We are now ready for a cage fight on the South Lawn and perhaps a $250 bill with his photograph on it. We look at what has happened recently with the slush fund that was created and our Republican colleagues continue to go wobbly on their defense, perhaps not understanding how this is playing with the American people. I know the administration has been busy trying this week to explain all of it, telling members of Congress that the slush fund is dead, apparently not consistent with what the president offered but 24 hours ago.
Let's be real. The $250 bill maybe might be needed because of the price hikes that are coming to the American people. Americans have made this very clear. 77% say the policies have increased the cost of living and more than half say it's worse than they can previously remember. Consumer sentiment is currently at a record low.
The savings rate for American is dropped to 2.6%, cut in half in just a year. When we look at this economy, we see failure upon failure. The policies that have been proposed have really not worked for average Americans. Families are getting crushed and we would suggest today that a new course of action needs to be taken. Republicans have made it clear that they don't want to put a stop to the chaos, but Democrats are unwavering in our fight for American families to lower costs and to end the harm that is being done.
Thank you, Mr. Chairman.
Jason Smith
Thank you, ranking member. Today's sole witness is United States Secretary of the Treasury, Scott Bessent. The committee has received your written testimony and it will be part of the formal hearing record. Secretary Bessent, you have five minutes to deliver your remarks and you may begin when you're ready.
Scott Bessent
Chairman Smith, Ranking Member Neal, and members of the committee, thank you for convening today's hearing. I'm grateful for this opportunity to discuss President Trump's 2027 budget, which builds on this administration's progress in unleashing a new era of economic expansion. I last appeared before this committee just a few weeks before the House passed the Working Families Tax Cut. So on the heels of the most successful filing season in IRS history, I'd be remiss if I did not begin by thanking the committee for helping to deliver this once-in-a-generation bill to the president's desk. This Tax Day, under President Trump, we celebrated how much more money hardworking Americans kept, not how much the government took.
Over 62 million tax returns claimed at least one of President Trump's signature new tax cuts: no tax on tips, no tax on overtime, deductibility of American car interest loans, and an enhanced deduction for low- and middle-income seniors.
All told, the average refund increased by over 11%, with total refunds increasing by 18%. But as important as what the legislation achieved, it is what it prevented. If opponents of the working families' tax cuts had had their way, our economy would have absorbed the largest, the largest tax hike in its history, over $5 trillion. 90% of American taxpayers would have seen their standard deduction slashed, while 40 million families would have seen their child tax credit halved. Instead, this committee held the line and the American people had a better tax day because of it.
Notably, President Trump's pro-growth policies don't stop at putting more money back in the pockets of working and middle-class families; they extend to placing the American dream within closer reach of their children. For context, nearly 40% of Americans have no exposure to US equities, no stakes in the companies they help to build. Trump accounts represent a profound reimagining of that arrangement. They will ensure that every American child can benefit from private ownership and compound growth, that every American child, in short, is born a shareholder. To date, nearly 6 million Trump accounts have been opened, with 1.4 million eligible for the $1,000 seed contribution from Treasury.
Of course, as these tax cuts deliver relief for working-class Americans, President Trump's economic agenda is bolstered by two other distinct but reinforcing levers: trade and deregulation. Let me briefly address both of these in turn. First, the President is undeterred in his determination to open markets for US goods and services while rebuilding US manufacturing capacity. Over the 12 months ending March 2026, the trade deficit for goods declined by $370 billion compared to the same timeframe ending March 2025. The economy has added 313,000 net new private sector jobs and 13,000 manufacturing jobs in the past two months.
Firm capital expenditures rose at an annual rate of over 17% in the final quarter, and companies are investing trillions to build and expand here at home. American industry is winning again to the benefit of American workers. A whole-of-government approach, meanwhile, is coupling our manufacturing revival with a great regulatory reset. Properly calibrated regulation is essential for economic growth, capital formation, employment, and higher wages. So at the outset of this administration, President Trump set the ambitious benchmark of slashing 10 existing regulations before issuing a new one.
In 2025, we shattered that goal with a ratio of 129 to 1, and as a result, the regulatory actions generated more savings last year than in those of the prior Trump administration combined. Separately, any one of these initiatives on trade, tax cuts, and deregulation would be substantial. Taken together, they are transformative. Before President Trump took office, our trading partners exploited America's markets, our regulatory state smothered businesses, and our tax code was poised to punish workers and job creators. Today, his policies are driving lower taxes, bigger paychecks, and broader prosperity.
So I thank this committee for its partnership in this critical work, and I look forward to building upon our strides through the President's budget for the year ahead. Thank you.
Jason Smith
Thank you. We will now proceed to the question and answer session. Mr. Secretary, yesterday in the Senate, you received a lot of questions from the Democrats over the anti-weaponization fund, which Acting Attorney General Todd Blanche said on the record is dead. You also told the Senate Finance Committee over and over and over and over a few more times again that you cannot discuss the settlement or the case due to ongoing litigation.
Can you please set the record straight right at the top of this hearing so members so members do not need to use their limited time asking you questions you cannot answer. What is the status of the fund, the settlement agreement, and what part did IRS CEO Mr. Bisignano play in both?
Scott Bessent
Thank you for this question, Mr. Chairman. I said yesterday that Einstein's definition of insanity is asking the same question over and over again and expecting a different answer. Let me be clear, as we've done throughout this matter, the Department of Treasury is following the direction of the Department of Justice. Acting Attorney General Todd Blanche testified on Tuesday that the government will not be moving forward with the fund. We intend to comply with that direction and Attorney General Blanche's direction.
I do not have any details into what that means at this time, but I will note that even the Acting Attorney General Blanche's statement Tuesday, this matter is still subject to ongoing litigation, so I'm unable to comment further on it. That means I'm also not able to discuss any part of the settlement agreement. As with all department litigation, the Department of the Treasury and the IRS are represented by the Justice Department, so any additional questions about the settlement or the fund should be directed to Acting Attorney General Todd Blanche. To your point about Mr. Bisignano, while I cannot speak on his behalf, I will note that the settlement agreement calls for the United States to issue an apology to the plaintiffs for, among other things, leaking their tax returns. Mr. Chairman, President Trump is a great American who has endured over 10 years of harassment and weaponization from all level of government.
No American should be targeted for political reasons.
Jason Smith
Thank you, Secretary, for starting out with that information. This tax filing season was the most historic because of the tax relief delivered to working-class families through the working families tax cuts. How much total tax relief did Americans get just this tax season?
Scott Bessent
The average refund increased by more than 11 percent, but that does not that does not reflect the dollar value. As the ranking member said likes to say, we overpromised and underdelivered. That is incorrect because so many people owed taxes last year that the dollar increase was actually much larger, going from negative to positive. As I travel the country, I have so many taxpayers who thank me because they had to pay last year and they got a refund this year.
Jason Smith
So how many taxpayers claimed at least one of President Trump's priorities of no tax on tips, no tax on overtime, no tax on social security, or the auto loan interest?
Jason Smith
And so what percent of tax filers who received a tax cut in filing season earned less than $100,000?
70 percent.
Jason Smith
So what percent of waiters and other tipped workers who received a tax cut thanks to the no tax on tips earned less than $100,000?
Jason Smith
That's that's helping people that need it the most. Funny, Democrats always claim always claim that the working families tax cuts were for billionaires. Mr. Secretary, I I'm sure you know a lot of billionaires.
Jason Smith
Do you know any billionaires that was able to use the no tax on tips deduction?
Jason Smith
Do you know of any billionaires that was able to use the no tax on overtime deduction?
No, sir.
Jason Smith
Absolutely not. But you'll hear all day today that this tax cut was for the billionaires. But the evidence proves differently, and so I greatly appreciate that. I'm sure we will hear about inflation in the economy today, too. And so at this point, during President Biden's term, what was the core inflation rate?
6.6.
2.8%.
Yes, sir.
Jason Smith
Wow. You wouldn't think that was the case based on the rhetoric coming from the other side, but that's what we're going to get. The working families' tax cuts renewed and revamped the opportunity zone programs to ensure that rural communities get their share of the benefits. The law provides incentives that will drive an estimated 100 billion in new investments into rural communities, helping small businesses and working families in underserved, often overlooked areas of the country. How is the Trump administration implementing this improved opportunity zone program to ensure rural communities that I represent are in fact benefiting in the way Congress intended, and how is Treasury utilizing the new transparency requirements within the program to reinforce this effort to target those underserved communities?
Scott Bessent
Mr. Chairman, as someone who grew up in a rural community, I'm very excited by the prospect of these opportunity zones being available there. I think it is new and important seeing the success, and I'm also excited by the permanence. And I would also point out that many members from the other side of the aisle have called Treasury concerned about losing opportunity zones in their districts or states in the case of senators, and I pointed out to them that they voted against them, but we will work with them on these opportunity zones. Congress wanted to reach all levels, and we are working on transparency requirements, which are critical because to make sure that the investment is reaching the rural communities, small businesses, and local projects.
Jason Smith
Thank you. On January 5th, 2026, through the hard work of both you and your staff, the Treasury Department secured a side-by-side agreement that largely exempts US-headquartered multinational enterprises from the OECD's income inclusion rule and undertaxed payments rule. This is a major, major win for US tax sovereignty. How confident are you that this agreement will be respected and fully, fully implemented by OECD members, particularly in the European Union?
Scott Bessent
I believe that we have the tools necessary that if our sovereignty is not respected to counteract any failures to enact this. And I believe this is important because with this, the money comes into the US Treasury rather than foreign treasuries, Mr. Chairman.
Jason Smith
What I would say, Secretary, you can count on us as working hand in glove as allies because Congress can also move legislation to make sure that they honor this, and we're willing to do that if they do not honor your commitment.
Scott Bessent
And Mr. Chairman, I will point out that my friend Senator Wyden complimented the side-by-side when he was back in Oregon recently.
Jason Smith
It's great to hear. What monitoring has Treasury put in place to ensure that US companies are not still subjected to the discriminatory treatment?
Speaker 10
We frequently meet with the companies and we have active engagement with the OECD on this matter.
Thank you. I now recognize the ranking member.
Richard Neal
Thank you, Mr. Chairman. A reminder that members of the committee, they get to decide how to allocate their five minutes as long as they're within the framework of the questions that they wish to ask. So, Mr. Secretary, were you or any employee of Treasury informed of the settlement that the Attorney General entered into with the plan of the fund?
Again, Congressman, there's ongoing litigation and as I said, I'm unable to answer.
Richard Neal
Fine. So I think we can agree upon this, there were 400,000 taxpayers that had their tax info leaked when Charles Littlejohn released that information. We all agree no citizen should have their taxpayer information leaked. That's a clear violation. But if we follow the logic of what has been proposed, then the suggestion would be that these 400,000 people would be never subject to any sort of IRS oversight?
Again, I'm unable to comment on that.
Richard Neal
Okay. So let me go back to part of the statistical data that's been gathered. With Barnstable, Massachusetts, which is a central hub on Cape Cod for commercial and transportation activity, they rely upon tourist dollars. Over the last year, there's been a 54% decrease in Canadian tourists. It's a big deal.
We're slow-walking the tariff-free funds. You and I were there as I reminded the audience today when the Supreme Court heard those arguments and the suggestion was that the tax refunds were going to proceed expeditiously. That is not happening. There have been arguments that somehow they've been slow-walked on purpose because they did cost 166 billion dollars which would come from revenue that previously had been allocated. In Las Vegas, those who fly into the Harry Reid airport, 4.9 million people flew in last year.
That's down by 12%. The positions that we have taken on the tariffs, the positions that we have taken on trade, have really been inconsistent with previous presidents and previous administrations. We understand how tariffs might be used to penalize an adversary, but the application of these tariffs are not working for the American family because of the price increases that are being experienced, particularly in the agricultural states where we can see where much of the political turmoil is now playing out. Ground beef is up by 20%, as I noted earlier, gasoline 51%, airfares have spiked by 20%, and everywhere that we turn, there's a price hike because of the economic policies that the president has embraced. Inflation has hit 3.8%.
We've watched how now perhaps we're going to change the independence of the Federal Reserve Board for the purpose of complying with some political suggestions. Let me suggest here that we think that the independence of the Federal Reserve Board, and in fact, the independence of the former chair of that board helped to guide us through a very rocky period of time. We watched how that service was denigrated time and again despite the fact that it was an honest patriotic effort that was made by that chairman to get us through again a very, very difficult period of time.
But if we don't like the outcome with the consumer price index we get rid of the forecaster. If we don't like the result of what the Federal Reserve Board has said then we threaten and intimidate the chairman of the Federal Reserve Board. The argument has been since your last visit that lowering costs was something that we all embraced but there's a fundamental acknowledgment and it is not happening. I cited a previous statistic that I think remains very compelling this morning. 77% of the American people disagree right now with the economic positions that are being embraced by the administration.
With that I yield back my time.
Vern Buchanan
Thank you for being here today Mr. Secretary. Passing the working family tax cuts was a major win for all Americans. In addition to the record tax refunds that millions of Americans have received I'm especially excited about the law as it pertains to small business. 100% bonus depreciation for business investment will boost the economic growth and manufacturing by encouraging small business to invest in America. Someone that's been in business for a lot of years I can tell you the reality is very much the case.
In addition the permanent 199A small business deduction will make it easier for small businesses to create jobs and reinvest in their corporations or operations. More than anything else I'm excited about the fact that we made a lot of this permanent it'll make a huge difference going forward and it has already. Working families' tax cuts are ensuring that American businesses can thrive and grow in the economy. I had the good fortune of being chairman of the Florida Chamber we had 130,000 businesses and these tax things I can tell you make a big difference and the guy who's Mark who's CEO made that reference to me many times. Mr. Secretary the small businesses in my district tell me 100% bonus depreciation is so important that that decision is key to their buying equipment and other things.
What's your thoughts on that or your experience on the bonus depreciation part?
Scott Bessent
Congressman I I believe that the bonus depreciation the full the full deductibility of the equipment is one of the greatest driving forces we are seeing in our manufacturing and in fact our main street revival. And I think equally important is the permanence. This the Republican Congress made this permanent so great certainty and the 20% pass-through rate is also made permanent is giving small business permanence.
Vern Buchanan
Can you touch on 199A? That's a big thing for a lot of people in the district it levels the playing field with corporations where they got cut 35 to 21 or whatever or 20 but this'll give that 20% will make a big difference but I wanted to get your thoughts and what you're seeing.
Scott Bessent
Yes sir it gives the average small business about $7,000 more per year and the small business deduction cuts taxes for 8 million small business owners by 4,600 and again what is important here is the certainty and the permanence. It allows the small businesses to hire to invest and plan for the future.
Speaker 13
And then let me just touch on in my district being in Florida we have a lot of obviously seniors one of I think the fifth most seniors in the country in terms of that and they're excited about this cut I think it's 200,000 seniors that I have in my district but the numbers are huge numbers across the country. Where is that at today and I think more importantly to me or one of the big things is to making sure we're talking to a lot of our seniors because most of them are taking advantage but my sense of it is not all of them are taking advantage.
Scott Bessent
What are we doing to communicate with the seniors that haven't taken advantage of the opportunity?
Congressman, I was just down at the Villages in Florida, the largest retirement community not in the United States, but in the world. And I cannot tell you the enthusiastic reception that the them being able to keep most of their Social Security has made. And these are not the well-to-do people, maybe at the Villages, but in general, that when we saw the senior deduction, 68% of the filers made less than $100,000 and 96% of the filers, 96% made less than 200,000.
Speaker 13
Yeah, all for many years I'd go to these hearings or different meetings that we'd be involved in, many times with senior organizations, and they all always complained or thought about when are we going to address, we've paid taxes once on Social Security, we've got to pay it again. So that's a big deal. But I just want to make sure we're doing everything we can to communicate with them so they can take advantage of it. Most have, but there's many that haven't. And but thanks for your leadership and all you've done for the country.
Scott Bessent
Good, thank you, sir. And we are, Treasury is working with Social Security Administration to make sure everyone is taking advantage of this.
With that I yield back.
Thank you. Mr. Doggett.
Lloyd Doggett
During your tenure as the Treasury Secretary, has the IRS recommended that any taxpayer be granted immunity from an audit for their taxes?
Speaker 21
Yes, sir, it isn't a question of being not able, it's being not want to. But my question is...
Yes, sir, as I said, there is litigation, so...
Speaker 22
Reserving my time, my question to you again is, definition of insanity, in the ordinary practice of the Treasury Department, has there ever been a recommendation that a taxpayer be granted immunity from an audit of their taxes?
Speaker 15
Same question. Has the IRS recommended that any taxpayer be granted immunity from an audit of their taxes?
Again, I'm unable to answer that.
Speaker 15
You can answer it, you refuse to answer. Can you tell the American people in the history of the Treasury Department, has there ever been a taxpayer who's been recommended to have immunity from an audit of their taxes?
Scott Bessent
Has there ever been a taxpayer who had his tax returns released, his family and every employee, every employee's?
Speaker 15
Thank you, so I'll take that as a no. Let me ask you, sir, since you say you're relying... Thank you, I reserve my maintaining my time. And since you refuse to answer, let me ask since you say you're following the advice of the Attorney General, the former criminal defense attorney for Mr. Trump. As you know, the Attorney General cannot compromise a tax dispute unless it's referred to him from the IRS for prosecution or defense.
Have you ever been involved in any way in a decision to refer a tax dispute to the Attorney General?
Speaker 15
You can comment. Your argument here that you can't comment in this case makes as much sense as President Trump saying that he cannot... I understand you want to talk over me, but you're not answering the question because you may have defined insanity by referring to Einstein, but your appearance here today and yesterday in the Senate defines deception. And that's what you're doing to the American people. Isn't it correct, sir, that the Financial Management Service within the Treasury Department must give approval before any payment can be made from the judgment fund?
Yes, sir, you give approval to it.
Speaker 15
No, sir, we administer them. You make a sign-off on them being... We administer them just like if you tell your bank to wire money. Your bank does not say do not pay you shouldn't pay your Visa bill. Did Brian Morrissey, who had been only confirmed by the Senate a few months earlier as Treasury General Counsel, do a good job for you?
Can you answer that just with a yes or no? Yes. Yes, he did. And as you know, he abruptly resigned rather than be associated with this seedy Trump slush fund deal and didn't sign off on anything. Can you pledge to the committee... I'm asking you a question, sir, if you'd listen to it.
Can you pledge to the committee that you will assure that no retaliation occurs against the career IRS employees who wrote the 25-page memo asking the Department of Justice to halt action on this outrageous audit immunity deal? Sir, we follow the law. Okay, well will you follow the law and assure the committee that you won't retaliate against those courageous career employees? We always follow the law. What's involved here, sir, is the most corrupt deal in American history.
Truly incredible that a President of the United States could come in and sue the people of the United States for 10 billion dollars and then walk off with an immunity deal that no other American has ever had nor could they receive, and to get that immunity deal from his former criminal defense attorney who he has appointed as Acting Attorney General. This is the kind of corruption that would permit the Trump family, if the Wall Street Journal is correct, that Trump earned 5 billion dollars from his crypto bills last year, to be total... to pay them or not pay them as he feels it's smart to do. He made no complaint about the audits in his petition, and yet suddenly out of nowhere he is granted immunity in what some have said in a report would be a 100,000 dollar benefit, 100 million dollar benefit to him. You know that there is a responsibility of your department to do audits of the President every year. A report of this committee indicates that only one was begun during the first term.
What are you doing to assure that those annual audits occur this year, the first term, three years, nothing? Has anything been done this year to fulfill that responsibility? Again, sir, due to IRS rule... IRS rule 6103, which prohibits the discussion of taxpayer information... It doesn't... this is how we got there with Mr. Littlejohn. Yes, sir.
It doesn't prohibit you indicating what you are doing to assure complicity with the law and with the practice, long-standing practice of the Internal Revenue Service. So I think we can assume from your deception today that nothing's being done and this President is being treated in a way that no other President, no other American citizen has ever been treated in an incredibly corrupt deal. I would agree that he is being treated the way no other person has ever been treated.
Mr. Smith.
Speaker 24
Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here today. I think these conversations are certainly enlightening and maybe sometimes even entertaining to hear some of the items that are brought up, if it weren't so sad. But I appreciate many of my colleagues, whom I respect, speaking out against tariffs. Let me remind folks that after all the criticism of President Trump during his first term relating to tariffs, a few other things too, but in this case tariffs, unified Democratic control for two years resulted in no action on tariffs and quite honestly disengagement on trade altogether that I think brought disrespect to our country and I think damaging in many ways. But I'll move on here to talk more about tax and certainly the Treasury's recent interagency agreement with the Department of Education to address the ongoing cost to taxpayers associated with the Biden administration's student loan policies.
Last year I joined several colleagues in urging Treasury to rescind the waiver which prevented collection on defaulted student loans. So this agreement takes an important step toward restoring accountability and protecting taxpayers. I certainly appreciate your your partnership in the effort. You know the working families tax cut bill was very productive certainly teed up by the Tax Cuts and Jobs Act from the first Trump term. And it's interesting you know in the meantime we had a bipartisan bill where we had many of my colleagues both sides of the aisle vote for so many things from the Tax Cuts and Jobs Act and then when we even added more middle class advantages whether it's Trump accounts whether it's school choice whether it's the tax relief for overtime likewise for seniors I mean the list goes on but because there was no chance that President Biden would would sign that they they voted against it.
So when when there was a chance that President Biden would could have signed a bill now it didn't get through the Senate obviously but when when that were seemed to be the the situation they opposed it. So I I just get a little frustrated when we have we can have good discussions here in this room and legislate. I think it's important to note that there were so many inversions happening leading up to the Obama administration that even President Obama advocated for lowering the corporate tax rate. Now he he advocated a rate that didn't have enough support here. President Trump came in he advocated for a considerably lower rate and we legislated basically right in the middle.
And it proved very effective economically proved effective for growing revenues and growing the because the economy grows. So anyway I'm I'm excited about the Trump accounts because I think those are going to be consequential especially teaming up with the federal scholarship tax credit appreciate my colleague Blake Moore working with me to make permanent the the Trump accounts because I think they are going to be very much appreciated by a lot of folks a few years down the road especially but I think even in the near term as people start thinking more about their financial future. Now a lot's been said about various things and and certainly the president but I I know that there's been quite a bit of chatter from the other side of the aisle regarding the president's investments. I'm just wondering if you could set the record straight on this and explain how there have been mischaracterizations mischaracterizations during during the process and mischaracterizations of the law perhaps.
Scott Bessent
Yeah I I want to be very clear on this. The President Trump's investment holdings are maintained exclusively in fully discretionary accounts managed by independent third party institutions who have sole and exclusive authority over all investment decisions including asset allocation trading rebalancing and portfolio management. They receive no advance notice of trades cannot alter or override the manager's strategies or models and unlike Congress this was intentionally designed to maintain a clear separation between President Trump and the independent third party investment managers overseeing his accounts.
Speaker 24
Thank you Mr. Secretary and and let me just close by saying that the American people are wanting us to have good conversations thoughtful conversations reasonable conversations and and I think thoughtful and reasonable individuals know that what we did with our tax policy has been good. Thank you for your role in that and I I want us to work together for the for the betterment of of our economy moving forward just as the American people would expect us to do. Thank you I yield back.
Thank you, Mr. Thompson.
Speaker 25
Thank you, Mr. Chairman. Mr. Secretary, thank you for being with us today. You were here a year ago, you came before the committee and you closed your testimony by saying the President's bold leadership had laid the foundation for what you called a golden age economy. More recently, you said the economy could grow by at least 3.5% this year and that Americans would see a non-inflationary boom. Mr. Secretary, I've searched hard to find constituents in my district who believe that this economy is golden.
In fact, many of them are struggling more today than they were the last time you were in front of this committee. Personal savings are shrinking, disposable income is down, and families are paying more and more for basic necessities. So I'd like to ask you a couple of yes or no questions about this golden economy. Electricity bills are up 8.5%. Is that golden?
Speaker 28
Okay, let me put it this way, Mr. Secretary, because you're obviously not here to answer questions. It's my time, Mr. Secretary, it's my time. Health insurance costs are up 26%. That's not golden. Childcare costs are up 9%.
That's not golden. Gas prices are up nearly 50%. That's not golden. Grocery prices are still straining family budgets. That's not golden.
Mr. Secretary, working families don't feel like they're living through a golden age. And while HR 1 may have delivered modest tax cuts for some Americans, many families are seeing those savings wiped out by higher costs everywhere they shop. Is that what this administration considers a golden age? And it's rhetorical, so you don't even have to try and talk over me. Secretary, Mr. Secretary, what should I tell my constituents when they ask about these costs?
Farmers who are being hit by high costs of fuel and fertilizers, who can't get their product to market because of the war in Iran. Tell them it's golden?
Scott Bessent
You should tell them that we've had 2.6% economic growth since President Trump took office, despite the Democratic...
Speaker 26
Well, people in California, one person leaves California every two minutes.
Speaker 28
Reclaiming my time. These farmers are pretty smart, Mr. Secretary, and they're not going to fall for that line. I understand your unwillingness to testify and answer questions about details regarding the IRS settlement with the Trump administration due to ongoing litigation. But at the end of the day, your department, the Treasury Department, and specifically the IRS, is going to have to carry out its demands. And let me be very specific about what those demands are.
The settlement says the IRS is prevented from raising any and all claims against the President with respect to any tax return filed before May 19th, 2026. So Mr. Secretary, as the head of the Treasury Department, you will be in charge of carrying out the demands of this settlement.
So let me present a real true scenario for you. If on May 18th, President Trump files an amendment to his 2024 federal tax return and the amendment says, quote, I'm owed an extra 10 billion dollars. That's the amount that he sued the IRS that I forgot to claim on my tax return. Is it your opinion that the settlement agreement signed by Todd Blanche, the acting Attorney General and President Trump's former personal attorney, would require you to pay President Trump a billion dollars, no questions asked?
We will follow Justice Department's guidance.
Speaker 28
Okay, you won't answer that either. Do you think this is something that the American people should know? How can you sit here and not provide any answers to the American people? Because it is astonishing to me that the President didn't know about this deal before it was signed. Of course he knew about it.
He directed it. So why not cash out on his get out of jail free card? As I read it, he can absolutely file an amendment to his tax return and claim a giant tax refund. And you have to sit there and watch while he robs the Treasury and more important, while he robs the American people blind. That's as unacceptable as you refusing to answer questions posed to you by the members of this committee.
I yield back.
Mr. Kelly.
Speaker 29
Thank you, Mr. Chairman. Mr. Secretary, thanks for being here. As you know, the beatings will continue until morale improves. This is the beginning of a Charles Dickens novel, is it not? So, it was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epic of belief, it was the epic of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.
How well that describes what we're going through. I will remind my friends on the other side that we had double-digit inflation in the prior administration. The President inherited one of the worst situations he could possibly do. The cost of gasoline, by the way, in June of 2022 was the average was 5 dollars and 16 cents a gallon. As of June 4th, it's now 4 dollars and 51 cents a gallon.
So, facts are a funny thing. Use the ones that actually are true or bend them to anything you want. What I really want to talk to you about though is part of what we did when we first did Tax Cuts and Jobs Act was something called opportunity zones. And I'm going to invite you to come to Erie, Pennsylvania. Erie, Pennsylvania was at one time a thriving city, but fell on very, very hard times.
But when we did the Tax Cuts and Jobs Act with the opportunity zones, this encouraged private investment, not taxpayer dollars, but private investment going into areas where the government would have wasted its money and does oftentimes, but say to private investors, you know what, using the tax code, we're going to give you an opportunity to invest in something while other people would usually walk away from it. I got to tell you in Erie, in Erie, under the leadership of key stakeholders and local leaders such as the Erie Downtown Development Corporation and the Strategy of Erie Refocused Plan, the city committed itself to a goal of revitalizing its downtown waterfront while building on its industrial heritage. Using opportunity zones as a catalyst, Erie has leveraged more than 40 million dollars in private investment. This investment created 110 new residential units, revitalized more than 100,000 square feet of commercial space, restored 8 historic properties and brought a grocery store to a neighborhood previously designated as a food desert.
One of the things I I wanted to talk about because under this new plan, we decided, hey, you know what, we did some great jobs when it came to cities. Let's look at rural areas. So what I'm going to ask you to do, if you would please come to Erie, where you can see how these actually things worked in living color to real people in real time. How we're revitalizing a community. The job you've done is incredible, by the way.
The only thing I question, what keeps you getting up in the morning and coming into things like this when you know all that work that you do, all that time that you spend, all your staff works to make it better for the American people? The hell with this idea of it being a Republican idea or a Democrat idea. Why don't we just look like what's best for America?
Scott Bessent
Well, the Representative, first of all, I have heard that Erie is the poster child in a great way for opportunity zones. So I look forward to coming to visit and I look forward to visiting the rural areas in in your district. And also, as I said earlier, many, many representatives, senators from the other side of the aisle have called me to ask for guidance on opportunity zones. I pointed out that they voted against them, but that is why I come in, to help the American people. We can overcome partisan differences that they voted against them.
It is in statute now and we will make it work for all the American people.
Speaker 29
You know what, and I I would appreciate that. So we'll get with you on that. Because I have two friends in the Senate right now that represent Pennsylvania. They are sometimes what have been described as polar opposites. They're not.
So between Senator Fetterman and Senator McCormick, we have two people in the Senate now working together to do the best things that they can do for the state they represent and the nation that they work for. I think if we could twist things around and unfortunately elections get in the way of us doing things that are actually beneficial to the American people. We we tend to to work on a partly spec a party spectrum rather than the people we represent. I as I said, I represent three quarters of a million people. None of them are it's not all red, it's not all blue.
And in fact, what discourages me is too many of our people who live in the area no longer have faith and they don't even register to vote. But please, we're going to invite you, we're going to invite Senator Fetterman, Senator McCormick, we will get people there to sit down with you. There is such a wealth of opportunity taking place right now. The figures don't lie. Sometimes the liars can figure, but figures don't lie.
Thank you for doing what you're doing in your private life to walk away from that to walk into this. When they first described it as a swamp, they now had no idea how deep the swamp has become. Thank you for being here today and thank you for your dedication to the United States of America.
Thank you, Mr. Larson.
Speaker 30
Thank you, and thank you, Secretary, for joining us here today. It's always kind of unusual when you start a hearing and are instructed what you can say or can't say in an open and free democracy. But having said that, you mentioned in your testimony core inflation a couple of times. What's the difference between core inflation and inflation?
Scott Bessent
The many people believe or it is in general energy prices and food prices, which are much more fast moving. And I would say that energy prices will roll down when this Iran conflict ends.
Yes, sir.
Scott Bessent
Core inflation reflects the underlying trend in inflation and whether that inflation has become endemic to the system as it did during President Biden has the war in Iran had anything to do with core inflation?
Speaker 30
Does the war in Iran have anything to do with core inflation? Are you can't answer that or either or is this is that are we precluded from asking that?
Speaker 30
Does let me make it as simple as I can. Does the war in Iran are you with me? Does the war in Iran thus far sir cost have witnessed the rise in gas prices as it caused?
Scott Bessent
Well, again, that is the regular inflation and gas prices have gone up, which I believe will be temporary.
Scott Bessent
Core inflation has dropped 0.5% since President Trump came to office.
Speaker 30
Geez, you know, when I'm home in my district, I'm going to just tell those people, geez, you know what, you missed this whole thing. Don't you understand core inflation? You guys are better off. I mean, these gas prices, I don't know what you people are thinking out there. For God's sake, you know, they're just you should be doing cartwheels in the street over the price of gas.
So what is the administration's plan to lower gas prices?
We've taken the many.
We have moved to.
Speaker 30
Are you in favor of eliminating the gas tax? Are you able to answer that or is that not in?
Scott Bessent
Well, if I'm not interrupted I can, Congressman. We have moved, we have asked Congress to move to eliminate the gas tax. That is done through statute.
Speaker 30
You have moved that. So you're in favor of eliminating the gas tax. So we can join bipartisanly today because you're in favor to eliminate the gas tax.
Speaker 30
Well, it's good to hear that we're in favor of something that we can work on bipartisanly that will help relieve people who need it the most. Forgive me, but people in my district aren't doing cartwheels over this economy. They haven't seen the impact that you claim that they're all receiving. People hear a lot of rhetoric, etc., but that doesn't pay their grocery bills. That doesn't pay their heating costs.
That doesn't put fuel in their tanks. That doesn't help them get through the day-to-day grind of their lives. And so coming here and filling us with platitude and telling us how great we should be to the Trump administration for everything that it's done. Is this war responsible for any of this?
Scott Bessent
Congressman, food at home is up 2.5% since President Trump took office, which is twice the up twice that much every year under the Biden administration.
The conflict has been halted.
Speaker 30
The conflict has been halted. So we're not at war. So our military is not involved, we're not at war.
Scott Bessent
Again, if you would like for me to call the Secretary of War, I can ask. I'm the Secretary of.
Speaker 30
So as part of the administration and as part of this, we're not at war. How in God's name, if we can't answer any questions at all, and I don't know, maybe there's special orders where we're not allowed to these these questions and if not, we ought to make that clear. Are we at war or not? I'm asking as relation to the cost of going up for oil and gas. That hasn't risen, hasn't risen because of the war?
Speaker 35
The conflict. So that's what we call it. Our people go into battle and lose their lives in a conflict.
Speaker 38
Thank you, Mr. Chairman. And just Mr. Secretary, you were already heading there. As everyone here I'm sure knows, PCE, there's actually trimmed, there's which Kevin, new secretary, head of the Fed prefers. There's actually four or five ways you do balancing on the calculations. So if any of you want Joint Economic, actually we have a whole chart of how those calculations work if anyone would like.
Scott Bessent
Well, those are the facts and they're inconvenient. And food prices, food at home has risen 2.5% since President Trump came into, came into office. It averaged more than 5%, 5% under the Biden-Warren economy. And I've got a list here that President Trump posted, but no one wants to talk about it. Last year all we heard was eggs, eggs, eggs.
Eggs are down 90%. Avocados are down 19%.
Speaker 38
Mr. Secretary, you will find, which probably avocados probably more popular on the other side of the aisle. Mr. Secretary, you'll find we often choose whatever number works best for the social media posting we're going to do in an hour. So welcome to Congress. A conversation we've been having actually with some of your staff and some of the Ways and Means staff is something that often never comes up, but we're going to have to understand it and find a better way to document it. We calculate about 17% of the US economy now is in the tax-exempt space.
And within that space, those who receive the benefit of tax exemption, the basic concept is here's the community good you're doing for not having to pay taxes. Okay. There's something you're an expert on, the 990 form that documents to the IRS, to Treasury, to Congress, what is that community benefit. I know your team has been working on this. I know some of the IRS team we've been working on it.
Is there a way to come up with a much more robust, universal form so we can understand are these tax-exempt organizations meeting their societal obligation and if they're not, we can help them meet that? But we don't have enough information today.
Scott Bessent
It's a great question, Congressman. And there are many tax-exempt organizations, large part of the economy are hospitals and healthcare services. So we should look whether they are meeting the needs and are in fact nonprofits. But your question in terms of what is going on with these nonprofits, the IRS has issued guidance for form 990 that nonprofits, just as banks must KYC, know your customer, we are telling the directors of these foundations, of these institutions, you must know your grantee. So KYG.
If your grantee is, if the money is being used for violent activities, you as a trustee, as a fiduciary, are in trouble. If it is being used to take away people's civil rights, you're in trouble and the nonprofit status is in jeopardy.
Speaker 38
My team looks forward to continuing to work with Treasury on making that more robust so we actually understand both those that are using nonprofit tax-exempt as funnels to bad acts, but also are they meeting their community obligations. One that you're probably not going to get as a question from anyone else. We have a fixation of debt management.
You know, we're the responsible, as policymakers, we're responsible for the debt, not the administration. We do make the policy. What can we do as members of Congress, Joint Economic Committee, Ways and Means Committee, to help you convince the markets? You know, please buy a 10-year note. Please, um, we we have some vis- you know, the visibility to see where we're going.
Um, I do have some concerns of in the future where the entire world is binging on debt, that we have some stressed auctions. What do we do as a country to actually not have that happen to us?
Scott Bessent
Since President Trump came into office, the US Treasury market has been the best-performing developed market, but that that is not assured. It it is assured that we will have the Treasury will have a regular and predictable issuance cadence. But what we must let our the borrowers know, people who are buying Treasury bonds, whether it is US households, the foreign central banks and everyone else in between, that is that we are serious about the getting our debt and deficit numbers under control.
Speaker 38
That is perfect, Mr. Secretary, and with that I yield back, Mr. Chairman.
Mr. Davis.
Danny Davis
Thank you, Mr. Chairman, and thank you, Mr. Secretary. Secretary Bessent, as of April 18th, taxpayers received about 3.4 million delayed refund letters. Illinoisans received 110,000, Texans, Floridians, and New Yorkers each received over 200,000, and Californians received 400,000. Almost three months ago, on March 9th, Representative Sewell and I asked you for basic information to demonstrate that Americans are actually getting their delayed refunds. Last month, I requested a meeting with the appropriate staff at the IRS or Treasury for this information.
It was not until this morning that I received a response from Treasury. And although the letter contained some high-level information, it is insufficient to reassure me that Americans are receiving their refunds quickly. For example, the information in this morning's letter is substantially outdated. Today's letter cited 2.2 million CP 553E notices when a separate document you sent me a few weeks ago cited 3.4 million notices as of April 18th. Also, the information in today's letter fails to convey the current number of unique taxpayers whose refunds were delayed.
Nor does today's letter give a clear understanding of how quickly taxpayers are waiting on their delayed checks. So, Mr. Secretary, could you tell me when or before June 11th will you or your staff meet with Representative Sewell and me to walk us through the evidence that taxpayers with delayed refunds received the funds owed to them?
Scott Bessent
I have not seen the letter, that I will follow up on this, and the the delays that you are talking about are for taxpayers who did not file electronically. We had about 98% of taxpayers filed electronically, they received their refunds within 21 days.
It sounds to me that out of the 134, approximately 134 million tax returns that we received, that the April number would have been the amount and we are at 2.2, so we are working through it. And much of that has to do with verification, lack of addresses. So we look forward to working with you on that because we are committed to people getting their refunds quickly.
Danny Davis
Well, thank you, thank you very much. Well, let me, let me just continue. Mr. Chairman, could you assist me to make sure that the American people receive the information, 3.4 million delayed notices are getting their refunds expeditiously? And also I'd like to submit for the record a state-by-state breakout provided to me by the Internal Revenue Service where 3.4 million taxpayers live and whose refunds were delayed as of April 18th.
Thank you, Mr. Chairman.
3.4 million.
Scott Bessent
No, no, no, I meant for the previous filing season and the year before that.
Danny Davis
Well, I don't know the number for either one of those years, but let me move to my last question. I understand that the Southern Poverty Law Center has been indicted. And let me ask, is the Internal Revenue Service involved in that activity in any way?
Scott Bessent
Again, that's ongoing litigation, but that would have been done as I read in what I read in the newspaper, and that was the Justice Department and the FBI.
Danny Davis
And Internal Revenue is not urging or suggesting to any other entities that they may lose their tax exemption if they contribute to the Southern Poverty Law Center?
Scott Bessent
Again, there's ongoing litigation, but that's driven by the Department of Justice and the FBI.
Thank you, Mr. LaHood.
Speaker 45
Thank you, Mr. Chairman. Mr. Secretary, welcome, thank you for being here today, thanks for your service. I want to touch on affordable housing. I think collectively as we travel back to our districts, we continue to hear about the lack of affordable housing. And I would describe it as a rural, suburban, and urban problem.
And last year in the Working Families Tax Cut bill, we included a number of provisions on affordable housing. And one of those was my bill that was included in there on the affordable housing tax credit. And as you're well aware, one of the most significant barriers to economic success in our communities is housing. And so in the Working Families Tax Cut bill, we included the affordable housing tax credit, which includes a permanent 12% increase in the 9% allocation of LIHTC credits beginning this year. Independent analyses have estimated that this will lead to the development of more than 1.2 million more affordable homes nationwide over the next 10 years because of what we did.
From your perspective and the Department of Treasury, what will the expansion of the affordable housing tax credits mean for working families struggling to afford housing?
Scott Bessent
The LIHTC provision specifically gives great predictability for investors and builders who want to go into the market and I think we've already seen a pickup in those areas and with this program.
Speaker 45
And Mr. Secretary, what do you see for as we try to address this problem, other mechanisms within Department of Treasury or legislatively that we ought to be looking at?
Scott Bessent
Well, there are two housing bills, one in front of the House and one in front of the Senate, and they seem to be languishing.
Speaker 45
I want to switch topics. I also beyond being on the Ways and Means Committee, I serve on our Select Committee on China, which is a bipartisan committee focused on how do we win the strategic competition against the CCP, and I also serve on our Intelligence Committee. And I want to focus on 45X and that's a provision in the tax code. And so last year in the Working Families Tax Cut bill, we included the foreign entity of concerns restrictions that pertain to curbing Chinese technology by manufacturers and mandating in that bill that they operate fully independent companies here with no reliance on Chinese entities. Despite these clear requirements, recent media reports indicate that many manufacturers continue to depend on the active support of Chinese engineers overseen by the CCP, security officers embedded in their US facilities, undermining the objective of fully transferring operational knowledge of these technologies to US companies.
So Mr. Secretary, what is Treasury doing to address and prevent Chinese penetration and involvement in these companies receiving the 45X tax credit?
Scott Bessent
So we are polling the companies. We are asking for verification that this is not happening and whenever we receive a report, we investigate it just as with CFIUS. CFIUS is self-reported, but when we discover transactions that we believe should have been reported, then we can go back and investigate those transactions.
Speaker 45
And to your knowledge, have any of those investigations led to a fruitful prosecution or a holding somebody accountable?
Scott Bessent
I can get back to you. I can have my staff get back to you, but I can tell you it has been very robust and you would have seen that recently the FCC banned Chinese drones and routers and with the connected auto mandate that electronic systems in American cars cannot be connected to Chinese entities.
Speaker 45
Thank you. And I'll look forward to the follow-up with you and your team on this. This is something obviously we've got to be heavily focused on. Lastly, in my remaining time, I just want to focus on digital service taxes as it relates to Canada. And maybe obviously we have concerns, we credit the administration for what you've been able to do on DSTs in Europe, but there's still some concerns with our Canadian friends.
Can you comment on where we're at with that?
Scott Bessent
We are pushing whether it's Europe, whether it's Turkey, whether it's Brazil, whether it's India, whether it's Canada, we are pushing back on these digital service taxes. We have the greatest technology and innovation ecosystem in the world and they cannot take advantage of our companies and therefore their treasuries. It is a very interesting, they are very ripe targets because they are profitable, they are well-run, and they are in demand, but we cannot have this. And we in every trade negotiation or every trade discussion with the Canadians, we bring this up.
Ms. Sanchez.
Speaker 48
Thank you, Mr. Chairman. Secretary, nice to have you back before our committee. Mr. Secretary, do you believe that all Americans should follow our tax laws?
Yes, Congress.
Speaker 47
Yes, good. So do I. And do you believe that for those Americans who break our tax laws, there should be audited or held accountable?
Speaker 54
Well, I think there are two things there. An audited is not a result of breaking the law.
Yes or no, simple question.
Speaker 47
Please don't interrupt me. Please answer the... I came here for answers. If you came here to waste time, I'm going to try to make sure you don't do that. Do you believe that people who lie on their tax returns should be audited?
Speaker 53
Okay, do you think that people who break our laws should be held accountable, our tax laws?
Speaker 47
Okay, thank you, very simple. Not a hard question. I'm glad we agree. So why is it that you are allowing President Trump to have complete immunity from being audited?
Scott Bessent
Again, I'm going to have to refer you to my previous statement. And...
What was your previous statement, sir?
Speaker 47
Okay, can you name the ongoing case concerning President Trump's immunity from audit?
Sorry?
Can you name them?
Scott Bessent
There are three cases that are out there now, and I will be happy to get them back, get back to you on those because, again, I am not a lawyer. Representative, we are represented by the DOJ.
Speaker 47
Great, you said that you can't because there's ongoing litigation. You'll get me the name of the ongoing litigation because the only ongoing litigation that I know of is surrounding the 1.8 million dollar slush fund, which has already been suspended. The fact is that the judge's ruling in the litigation that references that slush fund only addresses the anti-weaponization fund. It doesn't even address Trump's immunity from audit. So I would like to ask unanimous consent to enter into the record the judge's order in the Floyd versus Department of Justice case.
Without objection.
Speaker 47
Thank you. Now, Secretary, you said you're not an attorney, is that correct?
Mercifully.
Speaker 47
Okay, well I am, and I'm actually proud to be an attorney and know the laws, and I know how to read a judicial ruling. Furthermore, I know that since 1962, the Supreme Court has held that ongoing litigation does not prevent someone from testifying in a congressional hearing. So once again, I'm going to ask, why are you allowing President Trump and his family to have complete immunity from being audited?
Scott Bessent
Again, since you are a lawyer, you will understand that the US Treasury and the IRS are represented by the Justice Department and the acting Attorney General.
Speaker 47
Yes, but I just mentioned a Supreme Court case that doesn't bar you from testifying. It's pretty clear to me, though, however, that you're not interested in answering questions. You're interested in arguing. Let me ask you this question. If President Biden amended a prior tax return and claimed that he was owed 1 billion dollars, do you think that that would be audited or should it be audited?
Speaker 47
Because you're not really here to answer questions. I don't understand why you wouldn't audit that, and I don't understand why you wouldn't do the same for President Trump. So the ruling, the ruling by the Justice Department...
Speaker 56
Do you have specific, do you have specific knowledge of an audit of President Trump?
Speaker 47
Excuse me. It's my time. You're not here to ask me questions. I'm here to ask you questions and hopefully you're here to try to answer some of them. I'm curious to know who counts as Trump's family for the purposes of this immunity.
Is it his children, his in-laws, his grandchildren, his second or third cousin, his great-great-grandchildren? Do you know the answer to that question, Mr. Secretary?
Scott Bessent
Again, I imagine you have the Justice Department phone number. I suggest you call them.
Speaker 47
I'm not the one that runs the Department of the Treasury or that oversees what is happening with this immunity that has been granted.
Speaker 61
We follow the instructions of our lawyers and we obey the law, Representative.
Speaker 47
And I hope that you're proud of your performance today, Mr. Secretary, because I think it's pretty safe to say that this is probably the most corrupt Treasury Department in our nation's history. And while you dance around questions to protect Trump, Americans are suffering in Trump's spiraling economy. Inflation is now rising faster than average hourly wages. Gas prices are at an all-time high with the war in Iran. The cost of groceries has risen 3.2% over the past year, and prices on most goods have gone up because of Trump's tariffs.
So I don't see how you could call that anything other than a failure of the most corrupt Treasury Department in history.
Your time is expired, Ms. Sanchez.
Jason Smith
Thank you. My time is expired, Secretary. I would love for you to respond to the accusations at your department because I think you are due the opportunity for that.
Scott Bessent
The Congresswoman is slanderous. She has nothing but unsubstantiated opinions, and I will not stand for that. There is nothing corrupt. We move at the highest levels, and just because she cannot get the answer she wants, if she would like to give me facts, she seems long on facts, short on facts, long on hot air, and I will not stand for that.
Jodey Arrington
It's a disgrace to make a remark like that. Apparently my colleagues had a sudden interest in the rule of law. I wonder if you asked her if she thought illegal immigrants should be detained and deported or caught and released, what the answer would be.
Scott Bessent
Well, and Congressman, too, on inflation, I am not going to take firefighting advice from an arsonist. They torched the American economy.
Jodey Arrington
Well, Mr. Secretary, maybe we ought to ask the question, should the sons of presidents who have multiple felony convictions, should they be held to the same standard of the American people in terms of crime and punishment? I wonder what the answer to that question would be. But let's not veer off. Apparently wages and take-home pay aren't the only thing up in this country. Irony and hypocrisy is at an all-time high among my Democrat colleagues.
Now we see why someone leaves California every two minutes. And that hypocrisy and irony starts with questions about price increases. It was the failed economic policies, one self-inflicted failed economic policy after the other, that created the worst inflation crisis in half a century. Unbridled spending, if you add the hikes in interest rates, it would be about $12 trillion in deficits. Waving work requirement for able-bodied adults on welfare, giving welfare and healthcare to illegal immigrants with the stroke of a pen by President Biden, layers of taxes on American competitiveness, layers of regulation on our small businesses.
And you know what? We pay a premium right now, and we will temporarily, to defend our country, our children's future, against a nuclear Iran, against a radical terrorist regime where we are under imminent threat. We will pay a premium at the pump. But gas prices were at a low, two-decade low in terms of disposable income.
We had gas prices before the conflict below $3. President Biden and four years of Democrat policies, gas prices went from 3.30 to $5. Now, we pay a premium for national security in times of conflict and when we have imminent threat and we're trying to stave off another addition, a nuclear power to the axis of evil. But the premium that the Democrat policies imposed on the American people was for what? A mandate for electric vehicles?
What did we get for that premium? We got hundreds of billions of dollars, it was supposed to be 200 billion, it was 800 plus billions of dollars in in giveaways, corporate subsidies for green energy. That's what the American people got. You know, they got higher energy prices, higher electric bills because of this radical climate agenda, the Green New Disaster, uh and that's that was the trade-off from my Democrat uh colleagues. So, uh a little context to this conversation I think is helpful.
The results, as you know, Mr. Secretary, were that the American people every year were losing $3,000 in wages. That they had a 21% regressive tax hike, 21%. They were losing $1,500 a year. I mean, are we in the golden age? Well, relative to the dark ages that we were thrust in by these failed policies, we are at the dawn of a golden age because wages are up, take-home pay is up, GDP you said is 2.6%.
Well, that's a percent over what CBO said after we passed the big beautiful bill and on a throughout a on an annual average basis in a budget window, that's $3 trillion to reducing the deficit, which may be why the deficit was reduced over 10% in the first six months of this fiscal year compared to last fiscal year because we actually controlled discretionary spending and have saved up to now almost a half a trillion dollars. It's because Republicans actually cared about not frittering away tax dollars and we rooted out waste, fraud, and abuse to a tune of over a trillion dollars because we had quadruple revenue from having restructured world trade order and set a level playing field for our farmers and manufacturers. Because of all of that plus the growth, we have had a reduction in the deficit to GDP for the first time in almost a decade. I'm out of time. I think you're doing a great job.
Keep it up, don't listen to the noise.
Scott Bessent
Oh, I don't, sir. Look, they they don't want to talk about how they voted to cut the child tax credit in half for 40 million people, voted for higher rates on low and middle-income families for a $5 million $5 trillion tax hike, and if I were the Democrats this side of the aisle, I would be terrified how many Americans applied for no tax on tips, no tax on overtime, reduced taxes on social security, and deductibility of auto loans. 7.5 million no tax on tips, 29 million overtime, seniors 35 million.
Mr. Arrington, your time has expired.
Thank you, Ms. DelBene.
Speaker 64
Thank you, Mr. Chairman. Thank you, Mr. Secretary, for being here. Um, last year, one of President Trump's first actions was to put his billionaire donor, Elon Musk, in charge of the so-called Department of Government Efficiency. By the end of Musk's short but destructive tenure, DOGE had nearly quadrupled its original budget, lost taxpayers hundreds of millions of dollars in estimated interest and fee revenue, and paid 200,000 federal employees roughly $22 billion to stop working.
DOGE was a massive failure. It turns out moving fast and breaking things and having no clue what the heck you're doing is not the most efficient way to govern. Unfortunately, DOGE's destruction wasn't limited to wasting taxpayer dollars and gutting the federal service. DOGE staffers also abused their position to gain access to taxpayers' sensitive private data. Mr. Secretary, on January 31, 2025, you personally granted DOGE access to one of the Treasury Department's payment systems at the Bureau of the Fiscal Service.
This database houses Americans' most sensitive data, including Social Security numbers and bank account information. Shortly after, my colleagues and I requested the GAO review DOGE's unprecedented access to this critical payment system. GAO completed that report last month, and I ask for unanimous consent to insert it in the record.
Without objection.
Speaker 64
Thank you. GAO's audit determined that a DOGE employee was inadvertently granted temporary access to create, modify, and delete data from the payment system. Mr. Secretary, you failed to impose basic safeguards that left millions of Americans' personal data vulnerable to unauthorized access and abuse. And so my question for you is, do you take responsibility for that? And if what specific measures, if any, have you taken afterwards to protect the affected individuals' data and rebuild confidence in your department's handling of sensitive information?
Speaker 64
Did you have you taken but you're in charge. Are you responsible for this? Do you take responsibility for that? Do you take responsibility?
Scott Bessent
Okay, and then what has been done to make sure that can never happen again?
Speaker 64
Congresswoman, it was read-only. They had no ability to edit.
What has happened to make sure that never happens again?
We have, just as we have at the IRS, we have tightened up all protocols on systems.
I guess that's not very specific, but the GAO also found that a DOGE staffer sent an unencrypted file containing USAID payment information and individuals' names to external DOGE personnel at the General Services Administration. Soon after, it was reported no disciplinary action was taken despite the employee's failure to protect federal and non-federal employees' sensitive personal data and comply with security requirements. So again, Mr. Secretary, when employees who violate IT security rules are not held accountable, what does that message send to agencies? And why don't you hold someone accountable?
Speaker 68
Because a DOGE staffer, GAO found that a DOGE had payment information, payment information.
Scott Bessent
USAID, I do not oversee. I wear many hats in this administration, not that one.
Speaker 64
And this is still this is a file containing payment information. Are you not in charge also of the Treasury?
Speaker 65
Again, it was not sourced at the Treasury. Why are you bringing this up with me?
Speaker 64
So GAO provided six recommendations to address identified weaknesses, including ensuring staff agree to comply with IT security rules and configuring systems to detect and prevent the transmission of unencrypted payment data. The report states that the Fiscal Service, again, the Fiscal Service, part of your agency, agreed that three of the recommendations or agreed with three of the recommendations and did not state whether it agreed or disagreed with the other three. So Mr. Secretary, can you confirm Treasury's position, this is part of your of your purview, Treasury's position on all six recommendations? And if you agree that they're warranted, please let us know, and if you disagree with the recommendations, please explain why.
Speaker 70
Again, I don't have a copy of the recommendations in front of me. Your office did not share them in advance. We'd be happy to get back to you. We would obviously agree with the ones where we've already agreed.
Speaker 64
So I hope that you understand that these are findings from the GAO about ensuring that information is protected. And again, we have seen access to taxpayer information leaks. What are you doing to address this? And are you taking responsibility? People don't have faith that access has been given against the law.
Scott Bessent
Well, again, President Trump and his family and employees of the Trump Organization, 400,000 people had their tax returns stolen at the IRS.
Speaker 64
You are in charge. What are you doing to prevent that Americans' people's sensitive information has been leaked outside and you have...
Ms. DelBene, your time has expired.
Good to see you, Congresswoman.
So frustrating.
Ron Estes
Thank you, Mr. Chairman, Secretary Bessent, I think welcome for Ways and Means and thank you for being here today. And Mr. Secretary, I want to go back to last year when you were here before the committee and a conversation turned to discussions around OECD Pillar Two. There was much discussion about how Congress and the administration could work together to stop the taking of our tax authority by other nations and losing over 120 billion dollars from the US Treasury over the next 10 years. I'm proud to say we're in a much better spot than we were a year ago, thanks to a lot of the hard work by your Treasury folks and the effort we got done there. Side-by-side agreement that you and your team negotiated is an important agreement that protects American tax base from foreign countries looking to use our economy as an ATM for their own budgets.
I know some members of this dais and their allies in the liberal press believe that this agreement gives successful American companies a free ride, but that's simply not true. The reality is President Trump and Republicans in Congress have done so much work on both the Working Families Tax Cuts and the Tax Cuts and Jobs Act to make the US tax code more competitive and cement the US as the best place to do business. Mr. Secretary, can you tell us a little bit about how corporate tax revenue has changed since we passed TCJA in 2017 and thanks to our more competitive tax code?
Scott Bessent
So it's a combination there, Congressman, we we are seeing a pickup in corporate revenue, but importantly, where we are seeing the deductions is for the full expensing both for equipment and structures, both factory structures and farm structures. So you can think of that when when you see that deduction taken, you are actually creating the future tax revenues by building up the productive capacity of our country and that increases productivity. So, you know, on that side, and on the other side, Pillar Two, the getting getting this sorted out and making sure that the tax revenue comes into the US Treasury was essential. The the US first instituted the global minimum tax and the Biden administration wanted to supplicate us to other countries in a, you know, internationalist tax regime that we were having none of.
Ron Estes
Yeah, thank you for doing that and can you give us a little update on how some of the countries are implementing the side-by-side agreement and how we're keeping them moving forward on that?
Scott Bessent
We're finding a very very good partnership and we are implementing it via our partnership with the OECD and our constant interaction with them.
Ron Estes
Well, thank you and we're going to continue our work to trust but verify that that process continues and other countries actually provide fair treatment for US businesses. I want to thank you for your comments and your work you're doing on the digital services taxes as well. As you mentioned earlier, I mean, a recent analysis I've seen is that American businesses pay nearly three billion dollars a year in foreign DSTs as of now and it would siphon off 117 billion dollars in tax revenue over the next 10 years. And we need to continue that effort and I appreciate your work in that regard. You know, we in the United States, both in Congress and Treasury, plan to commit to protect our tax base from foreign attempts to take it.
And while we welcome negotiation and engagement based on the foundational principles of taxation, you know, our resolve is absolute. We want to make sure that we continue to provide every tool available, including ones that we may have put on the shelf recently, to ensure our competitive on world stage. And this is true whether it's you're talking about Germany with their section 49 or whether you talk about Italy or Mexico that have been trying to weaponize tax audits or raiding offices and homes and threatening criminal charges against US companies. I want to switch quickly to domestic tax code. You know, everyday Americans, businesses, and individuals tremendously benefited from our historic tax relief.
You know, 97% of taxpayers received a tax cut this past filing season thanks to no tax on tips and no tax on overtime and increased standard deduction and enhanced senior deduction. And these American-first provisions that put more money in the pockets of hardworking Americans. I want to recognize some of the changes and as you've mentioned in the working family tax cuts had with manufacturing, whether it's research and development and capital expenditures that have been able to put in place for long-term growth. Have you, I only have a few seconds, I don't know if there's some comments you want to make about the economy and what you've seen over the last year?
Scott Bessent
Congressman, I would say the economy is very strong. We are experiencing a short-term elevation in prices due to the Iran conflict. That will come down. The what the other side doesn't want to talk about is job growth is strong. Except for April, we have seen real wage growth every month, every month since President Trump took office.
They don't want to talk about that. 2.6% economic growth despite the shutdown in the fourth quarter of last year and despite the Iran conflict. We will get on the other side of this and the we are creating jobs and importantly, Congressman, these are jobs for Americans, not the 5, 10, 20 million illegals that flooded across the border during the Biden administration.
Lloyd Smucker
Mr. Smucker.
Thank you, Secretary, for, you know, we're here. Thanks for being here. Very much appreciate your leadership and I think you just cited some figures about the economy that are really important. Real wages have been growing under this administration and after the implementation of the bill that we passed, very different from what we saw under the Biden administration when people were really feeling the pain of the rising prices because wages didn't keep up. So grateful for, as I said, your leadership.
One of my priorities in the big beautiful bill was the section 199 deduction, making that permanent. I've heard from businesses about how that's infected, affected their investment decisions when they have that permanency ahead of them. So and their how they're doing is really important to every community that they reside in. And so I'm very proud of what we've been able to accomplish. I do want to very quickly, another of my priorities was direct primary care.
I've employers in my area using direct primary care as a way to provide better access to healthcare. We wanted to ensure that contributions to HSAs by employees are tax deductible.
That was in the bill. We also wanted that to extend to employers, and I think there's some question about that as Treasury is putting together their guidance on that. So I just wanted to hear from you whether you agreed and whether you could assure us that Treasury's guidance will allow that to be deductible for businesses as well.
Scott Bessent
We are working on that, and that has been, HSAs have been a very powerful tool, and we've seen the take-up. I think 37, 40-something percent. So we will work on that and get that guidance out, sir.
Lloyd Smucker
Yeah, I hope that we go with that initial intent, which was to make that deductible for employers as well. Thank you for that. I wanted to, you had, I have to pull this up, a statement you made in regards or during the discussion with Schweikert in regards to the debt and the markets that I thought was really good, and I wanted you to expand on that if you would. You said, and I may be paraphrase just a little bit, but to assure that we have a regular and predictable issuance and cadence, people who are buying Treasury bonds, whether it's US households or foreign central banks, they have to be assured that we're serious about getting our debt and deficit numbers under control. I know you really care about this.
I certainly do. I feel at times like the American people don't fully understand the impact of the debt on economic activity today, but the threat going forward. So I'd love for you to expand on that a little, talk about why that's important and what steps, what are the steps that we could be taking in Congress to address the debt and the deficit numbers.
Scott Bessent
Well, Congressman, let's look at a little bit of history, and this is MIT's numbers, not my numbers. MIT believes that almost 50% of the inflation we saw during the Biden era was due to the size of the deficit. So first of all, for the American people, not only does it affect the interest rates, our ability to issue debt, it also affects inflation. When you have these roaring deficits, money goes into the economy, and what the Biden administration did was they injected, you had a demand shock through giveaways, but then you constricted supply with the regulatory state, and that's how you get inflation. And this administration's doing the opposite.
We had a fiscal contraction for calendar year 2025, and as I said earlier, we are cutting regulation, so we are increasing supply, whether it is energy, for services. So that is why core inflation is down more than half a percent since President Trump came in.
Lloyd Smucker
One of the things we're talking about in the Budget Committee with Chairman Arrington is a resolution that would set a goal for Congress to get to a 3% deficit to GDP within the next decade. This has bipartisan support. We're hoping to see that support grow. You've talked about this. You've set a goal of wanting to be at a deficit percentage of GDP starting with three by the end of the administration.
I wonder if you could talk about the importance of that goal as well in just a few seconds I have remaining.
Scott Bessent
Yes, sir. I came out from behind my very comfortable desk and am here today because I was concerned about that trajectory, and I do believe it is possible to get back to the historical level, 3% deficit to GDP, and while that is not a balanced budget, if you have nominal growth above that level, you are paying down debt.
Thank you. Ms. Chu.
Judy Chu
Secretary Bessent, since President Trump launched his illegal war in Iran, you've repeatedly assured Americans that higher prices would be temporary. In March, you said Americans should expect only 50 days of temporary elevated prices. Secretary Bessent, it's been almost 100 days and inflation is at a three-year high with no indication of going down. In May, you said help is on the way when it comes to skyrocketing gas prices. A month later, Americans are still searching for the relief you promised as they pay more than double at the pump than what they paid before the war started.
Later that month, you described rising inflation as a very limited spike. In reality, for the first time in three years, inflation is outpacing Americans' wages and Americans' saving rate has dropped by half since last year. And just yesterday before the Senate Finance Committee, you again characterized inflation as a short-term blip. Recently, President Trump proudly claimed that he doesn't think about Americans' financial situation when it comes to the war with Iran. So I want to ask you, Secretary Bessent, do you agree with President Trump that you also do not care about Americans' financial situations?
Can you, are you refusing to answer my question?
I don't know, but clearly you are not answering my question.
Speaker 87
So you don't know who the president during World War I was. Well, let me tell you.
Speaker 88
So I'm clearly getting the idea that you do not want to answer whether you agree with President Trump that you do not care about Americans' financial situation.
Well, he actually said that he doesn't.
Scott Bessent
The, no, that is a truncated thing like everything is, that he is future-proofing because I can tell you, Americans' financial situations would be the devastated if Iran got a nuclear weapon and there was a permanent, permanent shutdown of the flow of energy out of the Middle East.
Speaker 82
Well, then let me ask you, was your prediction, I'm taking my time back, was your prediction...
Speaker 85
And I promise you, and I promise you that President Woodrow Wilson, who was president during World War I, that the Germans did not attack us. That he got into that, it was a, it was a war of choice. And I guarantee you, President Woodrow Wilson thought the same thing.
Speaker 81
But you're not answering the question, so let me ask this. Was your prediction that Americans would face only 50 days of temporary elevated prices wrong? You said that Americans would face only 50 days of temporary elevated prices. Was that wrong since actually of course we're at 100 days now?
Scott Bessent
The, how much have gasoline prices come down from the peak? 7%, crude prices are down more than 20 and gasoline prices follow crude prices.
Well, then reclaiming my time.
Those are inconvenient facts.
Speaker 81
Reclaiming my time, gas prices are up by 50% since Trump war started and up nearly 30% from last year. Diesel and jet fuel prices have risen even faster because refining markets are strained. Utility costs have soared due to higher natural gas and fuel input costs, and that means commutes, home heating and electricity, airline tickets and delivery fees are all more expensive. And how about grocery prices? They jumped more in April than they did in nearly four years since when Biden was president.
Beef is up by 15%, tomatoes are up by 40%, bread and milk are up 8% and 5% compared to three months ago. And it's those lower income households that are hardest hit by Trumpflation. They're forced to cut back on spending and I know it's an inconvenient fact, but I know that it'd be hard for a billionaire like you to imagine how these lower income households would be hit by inflation. And in fact, Trump said he couldn't care less about higher car prices for Americans. Do you agree with that statement?
Scott Bessent
I believe the food prices are up 2.5% since President Trump took office. I know that's an inconvenient fact for you. You're from California, maybe you care about avocado prices, maybe you want them higher, but they're down 19%.
Speaker 81
Well, all you have to do is to go to the grocery store to see that beef is up by 15%, tomatoes are up by 40% and bread and milk are up by 8%.
Speaker 89
It is a basket and the basket is up 2.5%. During the Biden era, it was up 5% a year.
Speaker 81
Well, you paint such a rosy picture, but I think Americans are not experiencing this rosy picture that you paint. They are asking, are my wages keeping up with costs, can I afford the things that my family needs and I'm afraid the answer is no.
Scott Bessent
Oh, I'm afraid you're incorrect because we had real wage increases every month since President Trump took office except for the month of April. So I know the facts don't align with your narrative, but please, you're entitled to your opinion, not your own facts.
Mr. Secretary, it's good to see you. Thanks for being here.
Great to be here.
Speaker 90
And I can see you're talking a lot about the facts. The facts are during the four years of Joe Biden, we had 25% increase in prices, no way did the wages keep up during that time. The highest gas prices we've seen in the last decade were under Joe Biden, but my colleagues have gotten amnesia. But almost a year ago, Mr. Trump signed the Working Family Tax Cuts into law and preventing the largest tax increase in American history. And I want to thank you, Mr. Secretary, for your hard work and for your partnership in getting that across the finish line.
A huge part of the Working Family Tax Cuts was making permanent many provisions of the 2017 TCJA, including eliminating the lockout effect encouraging companies to bring intellectual property and profits back to the United States, lower rates for all Americans, the pass-through small business deduction and immediate expensing provisions, all of which have been proven to drive tremendous growth and job creation. Prior to last year, the lack of permanency in these policies hindered economic growth and job creation, but thanks to the Working Family Tax Cut, businesses now have the certainty they need to plan, grow, invest and create jobs here in America. I now want to shift focus to the expensing of factories, which is a new pro-growth tax policy in the Working Family Tax Cuts. After the passage of TCJA, bonus depreciation allowed businesses to deduct the full cost of equipment and machinery immediately, but the factory building that housed the machinery had to be depreciated over a much longer 39-year schedule. This created a major gap in US tax policy.
Manufacturers could quickly recover the cost of machines, but the cost recovery for the enormous capital investments in the physical factories lagged far behind. Last year's tax law extended accelerated expensing treatment to the structures of new domestic production facilities, allowing manufacturers to quickly recover the cost of the building and in turn make it significantly more attractive for companies to invest in expanding US manufacturing capacity.
And in fact, they have. We see that, we hear about it, we read about it. Those are the facts. Following the passage of the Working Family Tax Cuts, 52% of manufacturers surveyed said they intended to use the new provision to immediately expense the cost of the construction or expanding a manufacturing facility over the next four years. Mr. Secretary, my first question is, last year I asked you about the importance of this provision and you said that expensing for factories in a way puts us on a level playing field with countries that heavily subsidize their industries.
And as you know, this provision expires at the end of 2029. Do you believe this provision should be made permanent or extended to continue incentivizing the expansion of US manufacturing capacity and job creation? And also, in your response, could you also talk about what this does for your 3-3-3 plan and how that's part of the integration of that?
Scott Bessent
I think we should extend or make it permanent. I was able to go and visit Winnebago in Minnesota and they told me that because of the expensing, they were on the fence on whether to do a battery project for their RVs in Florida to build a factory. But because of the full expensing of equipment, full expensing of structures, they were doing it. And I think we are seeing that again and again. But Congressman, what is very important here, and I don't think people really understand, we are creating productive capacity here.
And productive capacity is what generates future tax revenues. So we, you get the immediate hit to taxes now, but then you create an accelerated stream of income that is much higher, a multiplier effect after that. I call it the slingshot effect. So for one or two years, I think we're going to see this burst of factories and manufacturers that were encumbered under the Biden administration. And I think going forward, we are going to see a breakout in corporate income tax receipts.
Speaker 90
Mr. Secretary, I think what you're describing shows the ignorance of the critics of this policy because it's very easy to shut down a building or a facility, but much more difficult to rebuild something and restaff it to move businesses back from abroad. So I applaud you. We're going to build it and they are going to come. And then one final question. I have significant concerns on third-party financing of litigation in the United States, particularly regarding the tax treatment of these profits derived from it.
And currently these financiers are claiming capital gains treatment and it is, at best, highly questionable that unadjudicated claims of harm constitute capital assets. This activity is distorting our judicial system and turning our court system into a casino. And I'd really love for your team at the IRS to work with me and look into how we have this tax treatment of this practice. There are many people across the nation are concerned about sovereign wealth funds and others that are gaming our system.
Scott Bessent
Congressman, I look forward to working with you on that, especially international foreign money that is coming in and gumming up the works and sponsoring these lawsuits in our system.
And paying no taxes.
And paying no taxes. So I look forward to working with you on this.
Thank you very much. I yield back.
Mrs. Miller.
Speaker 91
Thank you, Mr. Chairman. Secretary Bessent, thank you for being here today. I've found it a little disturbing the animosity and lack of decorum from some of the members of this committee. Common courtesy takes us a long, long way. I'm a lifelong small businesswoman and I want to emphasize the importance of working with business-minded leaders rather than career politicians who may not fully understand the real harm that bad policy inflicts on everyday Americans, especially back home in my state of West Virginia.
The Working Families Tax Cuts provided much relief to our families, our farmers, and our small businesses across the country, and it fulfilled President Trump's promise of tax relief and certainty. One of my priorities has been Saving the Gig Economy Taxpayer Act, which repealed the Biden administration's harmful 1099-K reporting threshold of $600, and it restored it back to the proven standard of $20,000 and 200 transactions. Can you speak to how much of an effect that this policy had on the tax filings of our hardworking Americans?
Scott Bessent
That, well, I, I think that just speaks to the Democrats are not the party of Main Street. They're the, I don't know what they're the party of, but they're bringing this down. I, I thought that it was one of the most reckless things that had been done, that you were going to create this paperwork for small businesses, many of them, they're service businesses, and, you know, to do this, and the magnitude from 20,000 to 6,000, it just shows a complete tin ear for an administration that probably had a record low business people involved with the administration and what, you know, they viewed the, as business experience. So, uh, I, I think realigning that for Main Street and small businesses was essential, and we, we have seen no, no effect at the IRS in terms of the revenues from that.
Speaker 91
That's right. If anything, it's better. In your testimony, you mentioned President Trump's signature new tax cuts, and specifically the no tax on overtime provision, which rewarded hourly workers by allowing them to deduct up to $12,500 or $25,000 for married couples. This pro-growth policy has helped expand domestic manufacturing in our country and helped hourly workers keep more of what they earn. Have you seen that the no tax on overtime policy benefit our tax filers this past tax season?
Scott Bessent
Uh, that, Representative, I was with President Trump on April 15th in Las Vegas for a rally, uh, for Tax Day for his signature policies, and he asked for a show of support from the crowd. And, you know, we were at the home of the service and the tipped income. And actually, the no tax on overtime got a bigger ovation than the no tax on tips. And it's the American way. We had the, 75% of the filers make under $100,000, 90% make under $200,000, and the average deduction that was $3,100.
And it's the American way. If you want to work harder, you get to keep more the, of your take-home pay. I was with a group of small business owners out in California near the Reagan Library, and they, they love it. You know, I, I was in a local Italian restaurant there, the owner loves it because he was having staffing problems. So now, you know, he has experienced staff, he's happy to pay the overtime, and the employees are happy to work the hours.
Terri Sewell
Thank you. Before I recognize the gentlelady from Alabama, I want to inform members that at the request of our witness, I intend to call a brief recess, um, following Ms. Sewell's questions, and I now recognize the gentlelady, um, for five minutes.
Thank you, Mr. Chairman. Mr. Secretary, you promised the American people that the big, beautiful bill would lead to big economic boom for the American people. In a statement you made on July 3rd, 2025, after the passage of the so-called one big beautiful bill, you said that the legislation would unleash growth in the American economy.
Republicans pledged that it would stimulate economic growth and lead to an additional $2.4 trillion in government revenue. However, the most recent GDP data shows that the economy barely grew in the last quarter of 2025 at a rate of only .5% and continues to fall below expectations in the first quarter of 2026. Time and time again, you told the American people not to believe their own eyes or what's in their bank accounts. While families have been hit with higher costs from Trump's illegal tariffs and his costly war on a war of choice in Iran, this administration continues to insist that the economy is thriving. The reality, sir, especially for the folks that I represent in Alabama, is that you forecast a 5.4% growth in GDP for the fourth quarter 2025 and only delivered a .5% growth.
The reality is that wages have fallen behind rising inflation and that job growth dramatically slowed down since Trump took office. Mr. Secretary, I'm asking you, I'm asking you rhetorically the following questions. I ask you why was your analysis so wrong? And I'm asking you rhetorically since you've shown yourself not to be able to answer questions on this side. So let me try to answer it.
Could it be that Trump's illegal tariff or the cost of the war of choice in Iran were the reasons why your analysis was off? Whatever the reason, I want you to know that the people that I represent in Alabama are hurting under this economy. Prices in Alabama have fallen by 3.6% over last year. Energy prices are up 18% and exports of Alabama products and services have dropped by $3 billion since President Trump took office. In addition, the Iran war has cost American households over $100 billion.
Grocery prices are rising faster than any time in the last four years and gas is over $4 a gallon in Alabama, where last year it was only $3 a gallon. Mr. Secretary, your economy, this economy under this administration is failing the American people and we can and must do better. My second question, or my second topic I'd like to discuss is what's going on.
And I would point out the 5.4% was the Atlanta Fed.
Speaker 93
Sir, I haven't asked you one single question. Mr. Chairman, I ask to reclaim my time. I'm not asking him a question, I'm stating facts.
Terri Sewell
Mr. Secretary, black and brown Americans feel like they are under attack by this administration. President Trump has ordered state legislators across the country to redraw maps to dilute black political representation. Moreover, Trump has weaponized the DOJ to go after groups like the Southern Poverty Law Center because of the work that they've done to expose white supremacy groups that are often supporters of President Trump. I am asking you, sir, that if the IRS plays a role in these cases, I ask that you ensure that the IRS is not improperly influenced by the President or this administration during the duration of that case and I trust that you will make sure that that does happen. Lastly, Representative Davis and I sent several letters to the IRS and I think that Representative Davis during his questioning of you asked you about it.
This past, this most recent tax season was the first time that the President signed an executive order in September of last year that ceased paper refund checks from being issued. This decision to upend paper checks has led to a significant delay in refunds for those taxpayers.
And I understand in your response to Mr. Davis, you said that 95% of those that receive their refunds get them electronically. Well, I represent the 5% that do not have access to electronic repayment. Those folks need paper checks and they need their refunds now. I trust that this administration will do all that it can to make sure that all Americans, irrespective of whether they're unbanked or have access to electronic payment, that they get their refund. And Mr. Davis asked a question that you didn't answer, but I'd like to answer it for you.
We're asking that you and your office, the Treasury Department, work with us to make sure that our constituents get their refund.
I will commit to do that.
Thank you, sir. I yield back the balance of my time.
Scott Bessent
That was the first I've seen, and to be clear, that number 5.4% was Atlanta Fed GDPNow, but I know that's inconvenient. So.
Thank you, sir.
Speaker 95
Thanks. Thanks. As announced, the committee will stand in a five-minute brief recess.
Speaker 97
Call the hearing back to order and I'd like to recognize Mr. Kustoff for five minutes.
David Kustoff
Thank you, Mr. Chairman. Thank you, Mr. Secretary, for appearing today. I do want to thank you for your service and for your leadership in the Working Families Tax Cuts, the one big beautiful bill, which I think is one of the most significant pieces of legislation that we've produced in this institution in a long, long time. If I could, and I know that you've been asked earlier by Congressman Buchanan about Section 199A, but I would like, if I could, to go a little bit further with you on that. Obviously, we made permanent in the one big beautiful bill, or the Working Families Tax Cuts Act, a provision that gave a 20% deduction for those small businesses.
When we looked and were considering the policy, of course, we had given a permanent deduction, or permanent deduction or rate for those C-corps at 20%, 21% rate, but we were looking at parity as it relates to those small businesses. First, if I can, if I can ask you to give, in your opinion, the effect of the permanency for those small businesses and for the pass-throughs.
And then secondly, if I could ask your opinion about a bill that I've introduced, the Small Business Tax Cut Act, which would actually increase that deduction from 20% to 23%.
Scott Bessent
Congressman, we are clearly the party of Main Street, and nothing is more Main Street than putting small businesses on par with big business. And what we are seeing is the great certainty for many people in small businesses, many of them mortgaged their houses for these businesses. So it is the certainty that enables them to invest, to hire people, to plan for their future, and I think we are going to see that. The other thing that we are doing at Treasury is trying to unleash our small banks, because small and community banks are the lenders to these companies. So we believe that for many years, regulation was not tailored and the small banks, it was too big to fail, small banks became too small to succeed.
So I think the combination of the certainty and the Main Street lending, we're really going to see the flourishing.
David Kustoff
Good. And would there be a benefit to small business to raising that deduction from 20% to 23%?
Speaker 98
We're happy, our office of tax policy is happy to engage with you and your staff on that, sir.
David Kustoff
Thank you very much. Mr. Secretary, as it relates to rates and yields, I think about the bond market. And I was looking at some some quotes from the Clinton era, specifically James Carville, if I could, if I can quote him. This is him talking about the bond market. He said, I used to think that if there was reincarnation, I wanted to come back as the president or the pope or a 400 baseball hitter.
But now I'd like to come back as the bond market, you can intimidate everybody. And then a second quote from President Clinton to your predecessor, Secretary Rubin. He said, you mean to tell me that the success of the economic program and my reelection hinges on the Federal Reserve and a bunch of blank bond traders? Let me ask you if I can to give maybe some certainty or some clarity to those bond traders, those in the bond market and the relative state of our economy.
Scott Bessent
The state of our economy is strong. We are having a short-term level increase in price levels. We will get to the other side of those. And I defy this side of the aisle to tell me what is wrong with our economy. We've had 2.6% GDP growth per quarter since President average since President Trump came in, that's despite the Democratic shutdown in the fourth quarter and this this conflict that we're going through.
So I'm very optimistic on the other side. And it is my view, and we are going to push this, that the US will be hosting the G20 this year and we have the leadership that the biggest threat to financial stability is a lack of growth. And I believe that we can grow well in excess of 3% given the deregulation and great tax policy. So, and Congressman, back to your initial question, it's all about certainty. So we have permanence.
If you want to come, if you're an American or a foreigner, come to the US, build your business, you have tax certainty, you have energy certainty, you have regulatory certainty, and that all flows back into the Treasury. And what comes into the Treasury is stability. We had a fiscal contraction for 2025, and everything we are doing now is creating more productive capacity that will be tax revenues down the road.
Thank you, Mr. Secretary. I'll yield back.
Thank you. Now I'd like to recognize Representative Steube for five minutes.
Greg Steube
Thank you, Mr. Chairman. Mr. Secretary, thank you for being here. Families in Florida are still focused on affordability. Groceries, housing, cars, childcare, and day-to-day bills. Treasury's new analysis shows the working families' tax cuts are delivering relief through policies like no tax on tips, no tax on overtime, the enhanced senior deduction, which is huge in my district, and the expanded child tax credit, and no tax on car loan interest for American-made vehicles.
Beyond the top-line numbers, what tangible steps is Treasury taking to make sure these policies translate into more take-home pay, lower tax bills, and real breathing room for working families, seniors, and small businesses?
Scott Bessent
Representative, what we did was we had about 98% last year of online filers, and we made sure that they got their refunds within 21 days. So the other thing I've encouraged people, one of the reasons for big refunds is you haven't changed your withholding. So if filers change their withholding, they get an automatic step-up in their monthly take-home, and we are constantly refining all of these programs at Treasury, and we're trying to educate people because I've been in restaurants and when I talk to the server and said, "How is no tax on tips going for you?" they said, "We didn't know about it." So I think a lot of it is education, and I would expect that the take-up this coming year will be even bigger.
Greg Steube
So I represent one of the most elderly districts in the nation. I have the most Social Security recipients of any district in the country. So what should seniors on fixed income feel from this law over the next year? The rebate that we did is just, I've had people at events come up to me and say how impactful that that's been to their bottom dollar.
Scott Bessent
Well, as you may have heard me say earlier, a few weeks ago I was at The Villages with the President, and obviously a very warm welcome. The average deduction was $7,500. 68% of the filers make less than $100,000. 94% make less than $200,000. And this is very important for people on a fixed budget.
Greg Steube
Representative Panetta and I introduced the Taxpayer Protection and Preparer Proficiency Act to crack down on fraudulent and incompetent tax preparers, including ghost preparers who prepare returns for a fee but refuse to sign the return or include a valid PTIN. For a taxpayer who did everything they thought was right, it can be devastating to later find out that their preparer inflated deductions, claimed credits that they did not qualify for, or disappeared after the filing. From Treasury's perspective, how serious and pervasive is the ghost preparer problem, and what additional tools would help Treasury and the IRS hold bad actors accountable while protecting honest taxpayers?
Scott Bessent
So we are working on that with the constituents, and this is a real problem. It's that, especially as you described for our seniors, more than one-third of our seniors have been victim of some kind of a fraud, and what we don't need is some kind of a tax fraud here. So we are, we have pushed out to the preparers to make sure that everyone understands what should be done, and we are happy to work with your office on that, especially for seniors who are subject to fraud.
Greg Steube
For many working families, a tax refund isn't just a number on a return. It's money for rent, car repairs, groceries, medical bills, or paying down debt. At the same time, Treasury has to prevent improper payments and fraud. How is the Treasury utilizing modernization efforts to get refunds out quickly while balancing the need to protect taxpayers and the Treasury from fraud?
Scott Bessent
Last year approximately 98% of taxpayers filed an electronic return, and we were able to, if everything was in good order, we were able to get that return sent electronically within 21 days.
The other thing we are doing that is very important, we now have the means to say, we don't think your return is correct and this will likely trigger an audit. Do you want to have another shot at this? And that is very helpful in terms of, you know, down the road in terms of the number of audit cases and for taxpayers who they or their preparer may have made an honest mistake.
Greg Steube
In the 20 seconds I have left, is there anything that you haven't had an opportunity to address from the lies from the Democrats' side that you'd like to address in this time?
Scott Bessent
Again, we've got a temporary inflation spike. Groceries, as the Democrats or many people like to say, is up 2.5% since the President came to office. We work on this every day. The underlying economy is very strong. The jobs numbers are good.
Construction jobs are up. And what I want to say, Congressman, is these are private sector jobs. Private sector jobs. We could have started any government program and, you know, put a million more jobs on the board, but it's private sector jobs that enables Americans to have real wage increases. And every month except for April, Americans saw real wage increases.
Speaker 100
That's a great point. Thanks for being here and thanks for all your good work.
Speaker 101
The gentleman's time has expired. Recognize Ms. Moore for five minutes.
Gwen Moore
Thank you so much, Mr. Chairman, and thank you, Mr. Secretary, for appearing and thank you for your patience and indulgence for this very long hearing. I just don't want to get into a big fight with you, sir, but I would have to agree with one of my colleagues who spoke earlier. This is, these are some Dickensian times and for some people that these are, these are the best of times. And we have heard you reiterate over again about how strong the economy is, how this inflation is very short-term, how job growth to you looks promising. Good thing the jobs report comes out tomorrow instead of today.
Scott Bessent
I wish it had come out today because I don't have any prior knowledge, so I don't want to move the market.
Gwen Moore
Okay, so I guess, you know, when our colleagues like to attribute the President's confidence that he shouldn't worry about the financial stability or the financial ability of Americans and your notion is just sort of a little blip, this inflation, that people should not be taken seriously, I guess we would have to say that you agree with the President that our economy is strong and that we just shouldn't worry about people's situations. Is that the conclusion I can reach?
Scott Bessent
No, my conclusion is that we understand that things are challenging now because of this conflict and we will get to the other side of this, but the underlying economy is quite resilient.
Gwen Moore
Okay, well good, well we've heard this before. And it's the worst of times because I mean 76% of Americans are perceiving, are feeling the 40% increase in utility costs. You mentioned groceries and I guess that's, it just depends on what kind of basket of food you choose. You better not choose something like beef or something if you're getting some of the ramen noodles or something, I guess that won't affect you as much.
But these are the worst of times for a lot of people, excuse me. And what we have found, and I'd like to place in the record, article I found without objection, which really indicates, and maybe it's no fault of this president, but in fact, wages are growing at a much slower rate than inflation. And if we look at data going back to even, you know, the beginning of this century, we'll see that, um, that inflation is really eaten up about all of the economic benefit people have, and people are experiencing that. When your utility bill goes up 40%. Um, we've already paid, what is it, 48, just since this war, this blip, people have paid $43 billion more in gasoline costs.
Um, and, um, uh, and people are, are feeling some pressure from that. I want to just change the subject, Mr. Secretary, and talk a little about the, um, tax credit, uh, for the, uh, the private school fund. Uh, and this is a bill where, um, this is a program where a taxpayer can get a 100% tax credit for providing moneys to the, what do you call these organizations, the school granting organizations. Um, can you, what other tax credit do we have where people don't have any skin in the game, they get a, a 100% tax credit for their participation? I just want to be reminded of it because I don't know.
Speaker 105
Uh, again, I, I don't know why you think there's no skin in the game because this can go to students in public schools for tutoring, it can go to handicapped students.
Speaker 108
Well, it, you know, I guess kids in public school don't pay tuition, and so I, I don't know how.
Speaker 103
But if you, if you wanted to hire a tutor for your child, that you could do that.
Gwen Moore
But I guess I'm talking about the taxpayer, sir. So I'm talking about me as a taxpayer, if I want to provide money to a school, and say it's a school, let me get to the point. What if I want to donate my money to a school that doesn't follow any of the civil rights protections, you know, I don't want to admit LGBTQ students, I don't want to admit black students, or, um, what, what would, and I'm going to get a dollar-for-dollar tax credit for that. What other tax credit program do we have that's similar to that?
Nothing.
And many of these are for religious schools, ma'am.
Gwen Moore
Exactly. And so this is sort of an inequity we're building into the system. And my time is expired, but I just want the record to reflect that this is an inequity, um, where we're giving, we're allowing, we're, we're circumventing the states' right.
Gentlewoman's time has expired.
Well, will you indulge me?
I, I couldn't disagree more.
Gwen Moore
Yeah. Okay, I have a unanimous consent request, um, to put these materials in the record, Mr. Chairman.
Speaker 104
Without objection, and now I'd like to recognize Mr. Fitzpatrick for five minutes.
Brian Fitzpatrick
Thank you, Secretary Bessent, for being here today, we appreciate it. Um, sir, since the beginning of Russia's war with Ukraine, many of us have worked to make it unmistakably clear that Russia's illegal campaign of aggression will not be normalized nor rewarded. And that is why several of us have continued to advocate for sanctions that will put economic pressure on Russia and ensure that any peace agreement is durable, is real, and is agreed to by the government of Ukraine. Last year, a large bipartisan group introduced something called the Peace Through Strength Against Russia Act, comprehensive legislation that mandates sanctions on Russian officials and entities supporting Russia's defense, energy, and transportation sectors.
This bill would close loopholes fueling Russia's war economy, targeting Russia's energy leverage and impose sanctions for war crimes, including the kidnapping and wrongful deportation of Ukrainian children. It establishes a 500% tariff on all imports from Russia to the United States, as well as on products from any nation which continues to enable this war through the purchase of Russian-origin oil and natural gas. This committee and this Congress, I believe, have an obligation to provide the administration with the tools necessary to deliver lasting peace through strength. On May 18th, the Treasury announced a further 30-day extension of sanctions waivers permitting the purchase of Russian seaborne oil, citing the need to support energy-vulnerable countries affected by the supply chain disruptions in the Gulf oil markets. And while it was intended to address energy shortages, the waiver has the potential to enable continued Russian oil exports that generate revenue for the Kremlin, revenue that could be used to sustain Russia's ongoing war effort.
So, Mr. Secretary, again, thank you for being here today. Just on that point, what safeguards are in place to prevent the Kremlin from using this extension to fund its war against Ukraine? Can you expand on the rationale for this waiver and potential for there to be financial benefit to Russia in this war effort? And then lastly, is the Department of the Treasury prepared to implement meaningful sanctions against Russia, such as those described in the legislation I just referenced?
Scott Bessent
You have to step back and think, are you willing to put a 500% tariff on China? Because all I've heard, especially from the other side, but many on our side, were how tariffs were inflationary. I don't believe they are, but a 500% tariff is an embargo. So, I am the highest-ranking US official in this administration to have visited Ukraine, so do not mistake my skepticism for this for a lack of support for the Ukraine. And let's go back and look at the sanctions regime.
The Biden administration was weak, weak, and weaker on Russia's sanctions. There were exemptions. If I were to score zero to ten, the sanctions level was 3%. And then probably the worst national security advisor in history, Jake Sullivan, on his way out the door in January of 2025, raised what I would call the sanctions level from a three to a six, so the Trump administration could adhere to those sanctions, and we have. In October of 2025, President Trump asked me how could he really turn the heat up on Russian Federation, and I said, you could do what no one else has done, Don, sanction Lukoil and Rosneft, and that has been done.
So make no mistake, Congressman, that this administration has been tougher than any country in the world on the Russian Federation. And the Europeans, I believe that they are on their 20th sanctions package now, which they're very proud of. But I believe that means the other 19 have failed.
Brian Fitzpatrick
So just to follow up, Mr. Secretary, do you believe that the, and this is an open-ended question, it's why we're having this conversation, do you believe that the current sanctions structure is sufficient? Do you think any changes need to be made to that, and if you could address the issue of the waiver as well?
Scott Bessent
Well, with the waiver, the waiver's done two things.
It has kept overall global energy prices lower. And the other thing it has done, during World Bank, IMF week, many of the most vulnerable countries asked me to continue the waiver. I had not intended to, and we have. My guess is, or my strong inclination is, that if there are further waivers, that they will be country-specific and not generalized. And the Russian Federation has seen very little incremental revenue because of the waivers.
Their oil was always going to China, and now the oil can go to our allies.
Claudia Tenney
Gentleman's time has expired. I'd like to recognize Ms. Tenney for five minutes.
Over here. Thank you so much, Secretary Bessent, for being here. And on the, while we're on the energy topic, I do come from New York, where we've banned natural gas drilling, and we're talking about affordability. We still haven't hit the peak gasoline prices in my state that we had under the Biden administration. And we weren't dealing with a conflict in the Middle East.
We didn't deal with the democratic shutdown of our Department of Homeland Security last fall. We also didn't kill the Keystone pipeline, ban all new oil and gas leases, and also restrict leasing on 13 million acres of land in Alaska. And the Biden administration was only able to bring prices down by releasing 50 million gallons in November of 2021, another 180 million gallons, a million per day, in March of 2022. And that was the only reason our gas prices came down. So as a New Yorker who's very sensitive about energy prices and really bad energy policy that's driving up the costs in our state, and you can look, I think if you looked at some of the stats you've put out, if you just took out New York and California, for example, the prices would probably be substantially lower on average, and actually your numbers would look even better.
So I just want to say thank you for recognizing some of those things that I think my colleagues on the other side haven't seen. But I do want to give you—
Scott Bessent
And Congresswoman, I would say that no one likes paying higher electricity prices, but that is a state issue. And it is a really a red state, blue state issue, because blue states have not built new capacity and red states have. So it is a regulatory morass that we see, unfortunately, in great states like New York, and what the people are subjected to.
Claudia Tenney
Absolutely. And it's a transmission issue, and a pipeline issue, and an access issue, and a lack of common sense. But let's talk about the positive things, because we want to talk about the HR 1 and your help in getting that across the finish line. Obviously, it was a monumental piece of legislation, building on 2017 tax cuts that I actually was in Congress for and voted for. And we are grateful to you and your department for making that happen.
I also want to make sure and recognize you talked about permanency today, and I want to make sure that we recognize one of the signature pieces of legislation that I co-authored, actually, with my colleague, Representative Sewell. And it's the making the New Markets Tax Credit permanent as part of HR 1. And that was something we fought hard for, and it was very bipartisan. In my district alone, in upstate New York, which is way up in the rural areas, New York 24 stretches from the St. Lawrence Seaway all the way to the Niagara River, the New Markets Credit has delivered over 38 million in total project financing, supported by over 350 full-time jobs, and has brought real investment to communities in our region that Washington often forgets. And we appreciate you for that.
And the permanency also, it really helps our rural communities, especially low-income neighborhoods and oddly enough, very similar communities that Ms. Sewell has in Alabama. So we want to thank you for that. And also I want to just thank President Trump, the infrastructure's been significant. You talked about permanency and why that's going to be good for our communities. I do want to ask you a little bit and if we could just get into when it comes to the implementation of New Markets, the Community Development Finance program and that fund.
Can you just give us an update on that and where we are going to be with that in the future?
In terms of the CDI?
Claudia Tenney
CDI, yeah, where we are with CDFI and how and that looks like we're moving full speed ahead on that.
Scott Bessent
Yep. So the OMB apportioned the funding for fiscal year 2025 and we had to restore accountability. Over the last year, my team has reviewed rhetoric, priorities, and we are getting CDFIs back to their core business. It's not going to be financial engineering, it's not going to be wasting taxpayer dollars. And we think that they are important when used properly.
Like one of the biggest financial frauds of last year, Tricolor, was a CDFI.
Claudia Tenney
So are we going to see, when are we going to see a timeline on that for our applicants? We know that, do we have a, is that coming out of Treasury?
I'll have my staff get back to yours tomorrow.
Speaker 113
Okay, that'd be great. We appreciate it, hope you run for president. Thank you.
Thank you. I now recognize Mr. Boyle for five minutes.
Brendan Boyle
Thank you. Mr. Secretary, a few days ago, the White House Director of National Economic Council, Kevin Hassett, said, and I quote, "People are spending more on gas, but they're also spending more on everything else, not just groceries, but restaurants and so on." "I think that's a sign you see when people are optimistic about the future." I was wondering if you agree with your White House colleague that people spending more on everything else is just a sign of great optimism.
Scott Bessent
I think high discretionary spending is likely what Director Hassett meant and...
I again...
Speaker 117
Yes, that's correct. I'll read the quote again. "People are spending more on gas, but they're also spending more on everything else, not just groceries, restaurants and so on." That's optimism.
Scott Bessent
So the everything else would be discretionary spending, Congressman.
Speaker 119
Well, I'll tell you what, I have, we can settle, excuse me, reclaiming my time. I can settle how the American people are feeling about this economy because I have the data on it right here from Fox News just the other week. On the president and this administration's handling of the economy, 71% of the American people disapprove, including 40% of Republicans. On the president's handling of inflation, 72% disapprove. They disapprove in fact by a three-to-one margin over approval.
So do you agree with the American people or are they just wrong?
Look, the American people were torched under the Biden administration.
Speaker 115
Oh my god, I wish I had a dollar for every time you or someone on the Republican side brought up Biden's name. If I did, I might have as much money as you have, Mr. Secretary.
Speaker 110
Well, you would have lost 22% of your purchasing power because that's what happened.
Speaker 118
So the American people are wrong. The fact that by a three-to-one margin they disapprove of this president and your performance on the economy, they're wrong.
Scott Bessent
The Democratic House has a 17% approval rating, are they right or wrong?
Speaker 114
No, I understand why you don't want to answer the question. So let me, oh, I forgot to mention, reclaiming my time, I forgot to mention consumer sentiment is at an all-time low. So the numbers on the approval rating of this president on the economy are the lowest since the Great Recession. But in terms of consumer sentiment, which actually does measure whether or not people are optimistic about their future, the lowest in the history of a poll that dates back to 1952.
Speaker 129
Well, let's look at the underlying data. Two-thirds of those are Democrats. The Democrats vote in the...
Speaker 121
No, two-thirds, excuse me, two-thirds of those polled, so Fox News, the Economist, all the polls are wrong?
Scott Bessent
Democrats who listen to this kind of twaddle, they vote in the single digits, teens, whatever. Republicans, they vote much higher, and that's how you get that economy number.
Speaker 130
No, I don't think you know what you're saying. I know what I'm saying.
Speaker 119
I'm citing the facts. Those are the facts that you have a problem with, Mr. Secretary. Well, let me just turn, since I only have two minutes left, let me just turn to this. I think it's unquestioned fact that in the 2024 election, President Trump, in my home state, the Commonwealth of Pennsylvania, and throughout the country, especially those seven big battleground states, he promised the American people, and I quote, "I will lower costs on day one." Well, Mr. Secretary, as it turns out, today is exactly day 500 of this administration, and costs aren't any lower.
They're higher than ever before. Inflation is rising. Gas prices are surging. Consumer confidence, again, has collapsed, and healthcare costs are going up thanks to the bill that you helped pass over a year ago. Why won't you just admit that this has been a failed presidency, because the first step to turning this around would be admitting the problem?
Speaker 126
The 2.6% GDP growth, exceptional job growth in the private, that's the average since President Trump came into office, real wage increases every month except for April. So if you...
Speaker 119
Once again, inflation is eating away at the pocketbooks of the American people. I can tell you this, in the 30 seconds, reclaiming my time, in the 30 seconds I have left, when I was back home in Northeast Philly a couple days ago and at a gas station, people were paying over 4.50 a gallon. They were feeling a lot of things, a lot of emotions. I guarantee you, optimism wasn't one of them. With that, I yield back.
Thank you very much.
Thank you.
Speaker 125
Yeah, so it's really, it's hilarious, I think, actually sad and pathetic on another hand, that people don't remember, you know, I'm sorry that people get triggered when they talk about the former president. But 21% cumulative inflation during four years, which I think, maybe you're smarter than I am in this regard, contributes a lot to what's going on. Now, that said, I think it's actually pathetic that this, the other side of this dais places more concern about talking about gas prices. They didn't talk about gas prices during the last administration when they were higher actually than they were now, but they place more concern about that than the fact that their children and grandchildren might get irradiated by a nuclear weapon one day. And we're actually finally doing something about that.
Scott Bessent
I couldn't agree more, Congress, as someone with children who hopes to have grandchildren one day, President Trump is future-proofing this Iranian regime against having a nuclear weapon. And the short-term challenges that we are seeing now, they would be nothing compared to that.
Speaker 125
Yeah, and you know, I totally commiserate with those, especially lower-income individuals where it's harder right now. Absolutely, understand. But if we look back on one of the great historical lessons of Britain during the Battle of Britain and the things that they took on to save the fact that they didn't want to be destroyed by Nazi Germany, the same thing that we don't want to be destroyed by a radical Islamic regime, which is in their constitution to do so, then hardships sometimes are challenging.
Scott Bessent
I think the best analogy here is World War I, that Germany hadn't declared war on the US. We just knew that it was a menace, that it was a that it was a cancer that had to be stopped. And we have cut the head off the snake. Everyone should remember the number of Americans who have died at the hands of the Iranians since 1979. They are the world's leading sponsor of state terrorism, whether it's the USS Cole through their proxies, whether it was the the barracks in Beirut and on and on.
Speaker 125
Yeah, we had a vote yesterday basically that was applauded, not so much maybe it was anti-Trump because everything's anti-Trump these days, but it was more pro-Iranian in so many different regards. Nothing against the Iranian people, but the Islamic regime wants to kill Americans and has done so, as you point out, since 1979. Let me let me just pivot just a little bit question here, because I would love to have your thought about this. I hear time and time and time again from the other side that the that the rich are not paying their fair share. Can you tell me, did the working families' tax cuts, was it something just for the rich?
Scott Bessent
No sir, under TCJA, that the the highest income brackets paid 10% higher. And I can see that for especially for the president's signature policy, 99% of the filers on no tax on tips make less than $200% make less than $200,000. No tax on overtime, 96% of the filers, 75% make the less than 100. And we heard the the rich don't get tips, the rich the don't need the senior deduction.
Speaker 125
Yeah, so I've just asked them repeatedly, repeatedly, tell me what that percentage is. What is the fair share? The fact that the top 1% donate one-third of all the donations in this country. Yeah, maybe they should do more. I don't have any issue with that, but that's a voluntary thing.
And you've read the book Atlas Shrugged, right?
Yes sir.
I think we're seeing more lessons from 1984.
Speaker 125
Well, yes indeed, indeed. Let me let me pivot just a little bit to a to a challenging topic, and and that's our debt. And the fact that I think we've had pro-growth policies put forth in our tax bill, which may not be readily apparent right now, right? So I wonder if you could just give me a what you think is going to what our projections are going to be debt to GDP, what's going to happen in the next five to 10 years with all the investment that's going to be coming in.
Scott Bessent
As as I said earlier, Congressman, that we are creating highly productive assets that will be generating the high returns that will then go into the tax base. This manufacturing renaissance that we're seeing creates jobs in two ways. The companies will be paying more taxes. They availed themselves as we wanted them to of the 100% full expensing on equipment for equipment for factory structures, and that will go into the tax base. I call it the slingshot effect.
You pull it back and then it starts paying off.
Speaker 125
Right, it's like a Slinky. You know, if God forbid there was a Democrat that got into the next White House, they're going to come in and claim all the wonderful benefits that we're going to see at that point in time, just kind of like the Biden administration talked about all the job creation after they destroyed all the jobs and then just restored them. So thank you for the work that you do. You are doing the the good Lord's work in a very, very challenging environment. You're deeply appreciated.
Thank you, I yield back.
Thank you, sir.
Michelle Fischbach
Thank you, Mr. Chair. And Secretary, I want to say thank you for being here, because it's always good to see you and I genuinely appreciate the information that you have and the and when we have the opportunity to have the discussion and be able to ask questions. But I really am sorry that the other side chooses not to acknowledge any of the good that's come out of this bill. And that's simply because this committee, the Republicans, Chairman Smith and President Trump are the ones that did it.
So they refuse to see any of the good and I'm sorry about that because I think that they're missing a lot.
Scott Bessent
Look, I'd be worried because all these tax returns that we got that had one of the President's signature policies, they all voted against them. They all voted for the biggest tax hike. They all voted against increasing the child tax credit. They voted to cut it in half.
Michelle Fischbach
And I feel like they did it simply because President Trump supported it. And I do feel sorry and I am sorry about the fact that they believe that being rude is the way to have any kind of discussion and that the only thing that they're seeking is social media clicks. And so I apologize for that because I not only your position but also the information you're able to provide and I think it's important that we have civil discussions as opposed to this kind of yelling at people and not letting them speak. So I apologize for that. But I just wanted to ask a little bit, my district is very rural, very family-oriented.
And so I wanted you to maybe talk a little bit about particularly those families that benefit from what we've done in the bill, you know, the pro-family provisions and maybe a little bit about that so that people can understand better what we really did for those families.
Scott Bessent
Well, first of all, permanence is very important. We increased the child tax credit from 2,000 to 2,200. That is permanent and we've done and that's per child. 40 million families have claimed this benefit. And with everything here, as someone that's studied the history of economics, we would have had a cataclysmic event if we'd had a 5 trillion dollar tax hike.
Michelle Fischbach
Absolutely. Absolutely. And I think it's incredibly important, like I said, to all of the families and I, like I said, represent a rural area with lots of families and so I think it's incredibly important that we do provide those kinds of tax breaks for those folks and what would have happened had we not been able to do that is an incredible scenario.
Scott Bessent
And I think we have a barbell here, Representative, that we have on one side it's the expensing of business equipment, can be farm equipment, we have ag structures, and then on the other side the President's four signature policies.
Michelle Fischbach
And you anticipated I think some of where I was going to go with the ag, but I also did want to, with the little bit of time I've got left, is talk a little bit about the small businesses because our communities depend so much on those small business and I think that 199A has been discussed earlier, but I think that if you have anything else to say on how just critical these tax cuts are to those small businesses. Because I will tell you those small businesses are absolutely the backbone of my district. And so if there's anything else you want to add on that.
Scott Bessent
Well, Representative, the Wall Street Journal accused me of being a populist firebrand because I said it's time for Main Street to do well, which I pointed out to them that's why it's called the Wall Street Journal, not the Main Street Journal. And this is a Main Street administration. I came from a small town and Wall Street always does well and everything with 199A makes sure that Main Street small businesses, as I said earlier, many people put their life savings into these businesses and they are the backbone of many of our communities.
We've tried to make sure that they have proper lending, but importantly, when you're going to take on that kind of financial risk for yourself, your family, you want to have certainty. And I think we've given them great certainty and I think permanence. I think permanence in these tax cuts, we will never have to call them tax cuts again because they are permanent.
Michelle Fischbach
Well, and and with my remaining couple of seconds, I know that you were invited to Pennsylvania, but I'd like to invite you to Minnesota anytime and and so that you would get outside of the metro area and into into the rural areas where these tax permanent these tax cut permanent tax cuts have really really had an effect. So I thank you for being here and Mr. Chair, I yield back.
Speaker 133
Thank you. Mr. Secretary, there's no need to read that paper anyhow. I would just point that out. Mr. Beyer.
Donald Beyer
Thank you, Mr. Chairman, Ranking Member. Mr. Secretary, thank you for being here and I have no intention of trying to find something for social media. I share your concern, I'd love to see fast economic growth in America. 3% would be amazing. It would help us begin to unwind the huge deficit that we have right now.
What I am much more concerned about is not all the individual statistics, you know, the my college statistics textbook was lies, damn lies, and statistics. We can all pick out the ones that we like and the ones that we don't like. I'm much more concerned about on a more macro level that on at least five things, like you I've studied economic history a great deal, that the administration is moving in ways that seem contrary to everything that I've learned about economic growth. Number one, of course, is the tariffs. Tariffs have rarely been a good and we've seen study after study that has shown that 96% of the tariff revenue so far has been paid for by American consumers and American businesses.
It also has not led to a reshoring of manufacturing. Second is workforce. We know the two drivers of economic growth are workforce participation and technology productivity improvements. With the immigration enforcement, no one here objects to deporting criminals. But we've gone and we've imprisoned or deported hundreds of thousands of hard-working people paying American taxes with American families that have now, according to the businesses I talk to, the builders can't build, the farmers can't farm, our fast food places are all done, all those workers that necessary are gone.
Number three, the war of choice. You know, it hasn't caused a regime change. It didn't bring democracy to Iran. They still have the missile capabilities which we are seeing every day and they still have the nuclear stuff. I see a Trump administration scrambling to recreate the Joint Comprehensive Plan of Action that he walked away from that actually had nuclear weapons 20 years away in Iran and we'll be lucky if we can get back to that again.
And then there's the disinvestment in research. You know, 20% cuts to almost all university research, National Science Foundation down 55%, the science departments at NOAA and EPA eliminated. It cuts to NIH and CDC. And what we're seeing is the young scientists in America fleeing to Germany and to France and to England, places that they want them. You know, this is back to where does our growth come from?
And then I think maybe the most damning thing, half of the growth last year, which by the way according to the Federal Reserve is 2.1%, not 2.6%, it was 1.6% according to the Federal Reserve in the first quarter of this year. Those are not anything like the 2.8 that we had in 2024. But that half of the GDP growth last year of that 2.1% came from data centers alone. Okay, there are 831 data centers right now under construction. You know, I live in an area that has half, two-thirds, three-quarters of the data centers in America.
So, I want you to be successful because I'm an American and I love my country and I want to have 3% growth. I just worry that some of those decisions that you have made, the President made, are moving us in the wrong direction. And with that, rather than getting into an argument about you, I know your responses, let me move to something that I think has not been touched upon today.
Donald Beyer
Oh, maybe. The President announced that he was appointing, you had plenty of chance today, that he appointed a businessman and current head of the Federal Housing Financing Authority with zero background in intelligence gathering and national security to be the acting DNI. Of course, I speak for many of us, we think that Mr. Polte is wildly unqualified for this job and also misused his limited authority as head of the Federal Housing Finance Association to manufacture bogus mortgage fraud cases against the President's enemies. But I know that you've had some interaction with him before. I think you said at the Finance Committee yesterday that you told him you're going to kick his rear end.
But rather than going through an intensive search and vetting process, we look at you, who had to go through all that, who had to be vetted, voted in by the US Senate. Doesn't it bother you as a Senate-confirmed, deeply vetted cabinet official that you're going to be asked to serve with a character like Bill Polte?
Scott Bessent
I think the President has chosen a great cabinet. I think he continues to, and I think that it's a false assumption when you look at highly credentialized people. If I look, no one had more credentials than Jake Sullivan, and as I just said, I think he was the worst national security advisor of all time. Do you think the Afghan pullout was done in a good way? 13 people, it was tragic, 13 people died at the Kabul airport.
He wrote a piece in Foreign Affairs magazine that had to be redone online, I've still got the hard copy, where he said everything's fine in the Middle East, and then we got October 7th. So I don't believe in credentials. I've actually made a lot of my money over the years betting against the status quo, and I think President Trump, you wouldn't have thought that a real estate developer could come down an escalator and become President twice. It'd never been done before.
Donald Beyer
I would point out that the Afghan withdrawal was done on Trump's timeline after it was negotiated at Camp David with Mike Pompeo.
Blake Moore
Thank you, Chairman. This is a very important hearing and particularly, Mr. Secretary, for being here. I want to commend the work that you and your staff have done over the last 11 months to implement the working families tax cuts. As a father of four and a representative from the youngest state in the country, I'm proud of the fact that we focus so much on supporting families and the next generation through an increased child tax credit, refundability of the adoption tax credit, and of course the creation of Trump accounts. Mr. Secretary, Treasury has indicated that over 5.5 million Trump accounts have been opened.
5.5 million, with 86% of them linked to families making less than $200,000. Can you speak to what this investment in lower and middle-income Americans and children will do for their future?
Scott Bessent
Good Congressman Moore, thank you for your leadership on this. I think that this is one of the most important benefits for young people, maybe since the GI Bill. 38% of American households have no exposure to our great financial markets.
They believe that they are on the outside looking in. I grew up in a rural place in South Carolina. I only knew that something bad had happened on Wall Street in 1929. And I've pushed and pushed for financial literacy. And I think this is going to do two things.
We're creating a generation of shareholders that when the program goes live, and we're at six million as of this morning, when we go live July 4th is a Saturday, we'll go live on July 6th. That all those families will be able to look at the app and know that they have a share in our great economy, in our great markets. And we've created a Treasury, we've created learning modules, trumpaccounts.gov. And I think this is going to be the ultimate learning experience. And on the back end of this, that when the children turn 18, they can take it out.
They can use it for a down payment on a home. They can use it for education. They can roll it into a retirement account that they take out when they're 65. So I think that this as a supplement to our current programs is going to prove one of the most durable legacies.
Blake Moore
You make a point that not enough people had access to it. And I think you and I and many others understand that there was an opportunity to have access and it only requires a little to make a huge impact in your own life. But getting started is insurmountable to a lot of people. They think, oh, this isn't for us, this isn't for me. And what this does is it makes it so it is literally in front of every single and opportunity for every single child in America to be able to have it there and have it part of it.
The other aspect of it that I think is due some of the most incredible part that's come in the aftermath of passing it is I don't recall seeing really in my, maybe you've got better examples, but over six billion dollars given to one specific initiative of philanthropic dollars from the Dell family and so many others that are involved. Can you help put this into perspective, how significant and wide-ranging private and philanthropic investment is into Trump Accounts?
Scott Bessent
So a lot of excellent points there, Congressman. First, there's this idea of food deserts, that people weren't able to get or still aren't maybe able to get nutritious food because they're in a food desert. There've been financial service deserts, that people don't have the minimums to open some kind of a non-bank account where they can get access. So I think that this is curing that. This is a free, low-cost, no-cost entry.
If your child's born during President Trump's term, you get a thousand dollars. But as you highlight, I think that this is a change in philanthropy. Foundations, great philanthropists like Michael and Susan Dell can donate directly to the children of America. No big foundation buildings, no annual gala, no speakers, straight to the children of America. And what Susan and Michael have done, that they are giving to, they have excluded the top 20 percent of zip codes in America.
They are going to give to every eligible child in those zip codes. It will be 250 dollars per account. That's what that 6.25 billion, and we have more and more philanthropists who are coming on board all over the country. We have major corporations that are doing it for their employees. People can adopt school districts, they can adopt zip codes, they can adopt states.
I think we're going to see foundations and many state governments are getting aboard. So we have created the delivery device and the holding tank for this and I think it's going to explode.
Blake Moore
It's galvanized so much more than I think people even expected at the group that's been involved with this, Invest America, from the start, getting it to where we are. It's been an absolute honor to be able to work with your team on this and look forward to some of the best opportunities.
Like I said, I have four young boys under 13 years old. I was at their age when I learned the concept of a checkbook. They're going to be able to learn the concept of compound interest and how just a little bit now is going to affect them later. And I yield back, thank you.
Ms. Van Duyne.
Beth Van Duyne
Thank you very much, Mr. Chairman. And thank you, Secretary, for joining us today. I think it's safe to say that you have probably worked as hard as anyone over the last 18 months, and no one has done more for the American people than this administration and this Treasury Department. Mr. Secretary, when President Trump took office, what were the biggest economic challenges facing the administration?
Scott Bessent
Well, we inherited a mess. We'd had the worst inflation in 49 years, and I think in many ways the worst for working people in our nation's history because someone was asking me about the inflation indices earlier, that that's the average for working families, that it is thought that many of their goods and services inflated as much as 35% with an 18% wage gain. So the loss in purchasing power was tremendous. We were running the biggest deficit to GDP that we'd ever run, 6.7, 6.9% when we were not at war, not in recession, and we had to get that under control. And then everything that was happening to our American workers from the border being open and whether it was safety or jobs being taken.
Speaker 141
So since January of last year, what would you say that the largest economic indicators have been showing the greatest improvement?
Scott Bessent
I would say that every month except this past April, we've seen real wage increases. We've seen on average 2.6% GDP growth for the past four quarters. And the underlying resilience of the economy, we pulled down the fiscal deficit to GDP. We got it down to about 5.5%, so we had a fiscal contraction and still grew. And Representative, everything that we, all the jobs we're creating, they're in the private sector and they're for Americans.
Beth Van Duyne
I appreciate you saying that because the previous administration often pointed to job growth as evidence of economic success, but much of that growth, as you just mentioned, came from the government hiring. So can you explain the difference between an economy that is driven by government job creation versus that in the private sector?
Scott Bessent
Well, we see the productivity go up, but more importantly for the people who are getting those jobs, that very difficult to create real wage increases. Traditionally, government jobs are indexed to the CPI, so you're just keeping up. That with private sector, people can move up. And we are creating with the Tax Cuts and Jobs Act, we're having a building boom in manufacturing structures. And someone, the kind of financially, economically illiterate said to me, well, where are all these manufacturing jobs?
Well, manufacturing jobs take time. I was up in my hometown of Charleston, South Carolina. Boeing is expanding their facility there by 50% as the Dreamliner production facility. So first you get construction jobs, then you get a thousand high-paying jobs in the Boeing factory, and we're seeing that again and again.
Beth Van Duyne
Well, I think the public, the goal of public policy shouldn't be to make government dependency more comfortable, right, but it should be to make economic independence more attainable. And so would you agree that the most effective way to improve a family's financial situation is not through government assistance, but through higher wages and better job opportunities?
Scott Bessent
And the opportunity to start your own business, and that's what we're seeing too, that in terms of Main Street coming back. 100%. One of the things, I spent my career in the financial sector, and 45% of our small and community banks disappeared since the great financial crisis. Senator Warren likes to say, oh, we might have a bank failure. She killed 45% of the small banks.
Beth Van Duyne
Yeah. I think, you know, the Trump administration is rightly focused on creating the conditions for private sector growth and for private sector hiring because every new private sector job represents an American who is less dependent on government and more empowered into their own future. And I think as Congress considers policies that encourage work and reduce dependency, I do believe that we have a responsibility to connect people with opportunity. So I'm going to ask you, what are you doing on August 6th?
I'm not even sure what I'm doing.
Beth Van Duyne
Let me tell you. For the fifth consecutive year, I am hosting what has become the nation's largest job fair. Last year we had over 500 businesses that represented over 33,000 jobs and we had about 35,000 people came last year to Globe Life Field and we're going to do it again this year, August 6th. And we would love to have you there. I am formally inviting you right now to attend.
Because if you want to know about economic policy, don't ask anybody in Washington. Ask the single mom who now has a job that pays the bills. Ask a vet who now finds a new career. Ask a worker who can get off economic government federal assistance because he's got a job that has given him a new opportunity. These are the real scorecards that I think that we should be looking at.
Scott Bessent
Well, I was just in Texas a few weeks ago, I'm going to be there next week, and that is the land of opportunity.
Beth Van Duyne
I appreciate you saying that. I think the clearest measure of a successful domestic policy is whether Americans believe opportunity exists. And I think on August 6th, over 35,000 people are going to walk into Globe Life Field looking for not for government assistance, but looking for jobs and over 500 businesses will be there because they need workers. And to me, that's the strongest real-world indicator that President Trump's economic agenda is working. And with that, I yield back.
Thank you.
Thank you, Mr. Evans.
Randy Feenstra
Thank you, Mr. Chairman. Thank you for being here, Mr. Secretary. The Trump-Biden administration is failing at home and abroad. It is not smart investment for the future and certainly isn't delivering on the affordability agenda American people deserve. The president's policy has left Americans paying more in food and gas and healthcare and electricity.
The electricity price is especially important to me because it's related to the growing concern around the cost of data centers and future investment in energy. Meanwhile, the Trump administration has said he does not care about the financial situation of Americans. He has called the gas price peanuts while the GOP focuses on policies that make money for Trump and his allies, working families are paying the price. So I say to you, Mr. Secretary, obviously there's concerns that we all have about what is occurring. Though I know you may have a different view, I want to share with you the view that I'm having and living with and hearing my constituents talk about.
So as a result, I yield back the balance of my time and thank the chairman and the ranking member for this opportunity of this hearing. Again, I thank you.
Thank you, Mr. Feenstra.
Randy Feenstra
Thank you, Chairman and Ranking Member. Thank you for holding this hearing, Secretary Bessent. I truly enjoy always talking with you. I was a professor of business and economics and I've, when I got my doctorate, I actually did some some work on what you've done in the past. So I've always very impressed.
I want to just say, we've done some historic things over the last year. Obviously the big beautiful bill, the Working Families Tax Cuts Act is just incredible. Can you talk a little bit about that bill? I'm going off script a little bit, so I hope I'm okay. But can you talk about international tax and what that is going to do to bring and onshore businesses and keep keep the US?
Speaker 144
Can you talk a little bit about that bill and I'm going off script a little bit so I hope I I am okay. But can you talk about international tax and what that is going to do to bring on shore businesses and keep keep the US competitive around the world. We have so many multinationals and other other companies that do jobs around the world and I see a lot of this employment coming back and a lot of the workforce that that we're going to have in the US is going to grow. Can you talk a little bit about that?
Scott Bessent
So couple couple of things and I enjoyed our trip out to Iowa. I remember being there when everyone says like that the gasoline prices aren't going to come down. I remember the level when we went to the the diner and they will come down.
Speaker 144
And you know what and they're all happy. You know compared to whatever else is saying all the farmers are happy.
Scott Bessent
So corporations have a choice globally. And I think with this administration I've often described that we have a three-legged stool and it is tax trade excuse me tax trade and regulatory certainty. And all of those have worked to push the businesses back into the US to make them want to come here. And it's certainty. Come here you have tax certainty you have regulatory certainty and you have energy certainty.
US is an energy superpower. And I am responsible for the the US economic dialogue with China and when I look at like what does China envy the US over? It's our military. It is our economic system and the strength of the dollar. It is our innovation and it is our energy.
And we can't take those for granted and all of that centers around the tax policy and this immediate expensing it's my belief that in China they spend about four percentage of GDP subsidizing industry. So we aren't command and control economy. What we tell people I don't go through the S&P 500 and say you need a loading dock you you need a new assembly line. We just give companies 100% expensing and they can do what is best for them.
Speaker 144
And it's capitalism. I mean it it works well and like you said we're not giving anything like China is. I mean it's just phenomenal. It's just immediate expensing and that's just a timing issue. I just want to talk about I was really involved in the ACRE Act.
This was borrowing farmers that borrow costs for manufacturers and agricultural businesses and stuff like this. Could you highlight how this will help strengthen America's agricultural economy if you know a little bit about it or not what it is it's the the tax on the loans and we have lowered that we want to continue to lower that and can you just tell how that could incentivize growth in rural America?
Scott Bessent
Well I I think that that deferral on the tax is very important because that there is nothing with more fixed assets. Farming's an interesting business. My family's been in the farming business for 250 years that it's an interesting business because you have high fixed the income assets or high fixed assets but you have uncertainty based on weather production. So you know very there is a lot of uncertainty and this brings much more certainty in terms of cash flow to those farms.
Yes, absolutely.
Speaker 144
Then one final thing based on farming and stuff like that. I call it the pilfer tax. It's actually government sticking their hand in the grave and wringing some a dead person's neck and saying you owe us 40% in death tax. I'm always appalled by this when somebody passes away and all of a sudden we say oh and by the way you owe us 40% tax if you pass that land on or that manufacturing or that small business on to the next generation. So we did 15 million thanks to President Trump and everyone else to get that done.
Would you what what is your thoughts on trying to permanently get rid of the death tax? I mean do you tend to agree it's sort of a pilfer tax?
Scott Bessent
Well it's all that capital has already been taxed at least once many times twice. And to go back to farmland in many I've studied tax policy around the world in many countries including the UK farmland is not subject to death duties.
Speaker 149
That's right. That's right. Thank you so much. Always good to see you. Thank you.
I yield back oh Mr. Chair.
Speaker 145
Thank you. The chair recognizes the gentlewoman from New York Ms. Malliotakis.
Nicole Malliotakis
Thank you very much Secretary Bessent thank you very much. Welcome to our committee. It is great to have you here. First I want to say thank you for your words in support of suspending the federal gas tax. I have legislation that would do that.
It would suspend it for 90 days give the president additional authority for 125 days. I'm introducing that with my colleague Max Miller on this committee as well and we hope that we can get that through. Number two I wanted to say that you know in pointing out some of what my colleagues on the other side have been saying about the working families tax cuts the fact remains that this was a historic tax cut for working Americans for middle class families for senior citizens. They are the ones who voted to cut the standard deduction in half to cut the child tax credit in half to increase tax rates for Americans across the board. And they also voted against tax cuts for tipped workers for those who work double shifts and overtime for refunding taxes paid on social security to our senior citizens.
And so first you know the SALT deduction and the senior citizens I believe in addition to the child tax credit which we've seen tens of millions of families take advantage of across the country I think the SALT and the senior deduction were most beneficial. I was very proud to have authored the bonus senior deduction. I think essentially it has given back the seniors that qualify the taxes that they paid on social security and they're seeing that money return to them which is why it is no tax on social security provision. Could you talk a little bit about SALT and senior deduction how that benefited preferably New York but the entire country?
Scott Bessent
Well I think in high tax jurisdictions you know high income high tax like yours bringing back some level of the SALT deduction that was appropriate. I think that no one negotiated harder well maybe a couple people but it was a group effort from some of the Northeast and California delegations and I think we got to a very good spot on that SALT that if this tax bill had expired the SALT deduction would have come back but so would the AMT which would have devastated which would have devastated everyone in those states. So and look as I travel around that whether it is the social security deduction when I look at these numbers 99% of the filers claiming the no tax on tips incomes under $200,000 90% under 100. For the senior deductions 94% under 200 68% under 100. So these are people on fixed incomes and they need certainty.
Nicole Malliotakis
Yeah, and the SALT deduction, again, was not for billionaires. It was targeted to families of incomes of less than $500,000.
I think it was very well tapered.
Nicole Malliotakis
It certainly was, and I know that... Extremely tailored and tapered. And I could tell you that in my district, we have many people who have saved thousands of dollars because of that SALT deduction and seniors who have saved thousands of dollars because of the other deduction as well. And I just want to turn to some of these organizations that we've been talking about. Our committee has investigated these organizations that have... we're seeing a lot of foreign influence.
We continue to see examples of foreign actors exploiting nonprofit organizations to interfere in our political process, to fuel antisemitism, in some cases even support or promote terrorism. We have also seen an increase in these organizations coordinating with and receiving support from individuals connected to the Chinese Communist Party. One of these organizations is Code Pink, which Department of Treasury, your department, as well as Justice, have launched an investigation into. I mean, the Code Pink founders and groups there, they've been meeting with Cuba's communist regime, the Iranian regime, in the past they've met with leadership of Hamas. I would like to have an update on your investigation and do you see the potential for some of these organizations to have their 501(c)(3) status stripped?
Speaker 155
So I'm going to have to sit to this side of the room now. I can't comment on ongoing investigations, but they are fulsome.
Speaker 154
Okay, well, we appreciate your efforts and I yield back my time. And thank you for coming here and thank you for putting up with some of the nonsense that we're hearing.
Speaker 150
And the chair now recognizes the gentleman from Carmel Valley, Mr. Panetta.
Jimmy Panetta
Thank you, Mr. Chair, I appreciate that. Secretary Bessent, thanks for being here and I guess you go by Dr. Bessent based on that South Carolina degree that was conferred on you.
Speaker 152
Understood. Look, as you heard, I come from, I hail from Carmel Valley, the place I grew up, place my Italian immigrant grandfather settled, thank God. We have a lot of beauty, we got a lot of bounty, but unfortunately that means a lot of people want to live there. So housing affordability does remain a major challenge in my district. And one of the reasons people aren't selling their homes is because they're going to take a huge hit on taxes, as I'm sure you're aware of, based on the fact that there is a capital gains exclusion, but that's from 1997 and it remains capped at the fact that it's only 250,000 for individuals, 500,000 for couples, and it has not kept up with inflation.
As a result, many people who have grown out of their home just aren't selling because they want to protect their nest egg. Now, I got a simple bipartisan bill that actually has 18 members of the Ways and Means Republicans on my bill. And in fact, except the chair at this point, but I'm trying to get him as well. That being said, the president has actually supported this idea as well. And so not just because the president's supported this type of legislation for doubling those numbers, making it 250 to 500 and 500 to 1 million and then tagging it to inflation, would you support that type of solution when it comes to dealing with our affordability crisis, when it comes to affordable housing crisis?
Scott Bessent
I haven't seen studies that would show that how many openings that would create, but I'd be happy to work with you on it. I remember it's a Clinton-era program and I remember when the Clintons changed it. Previously, you would were allowed a one-time deduction over some age, 60, 65, or one-time tax-free sale. You could roll your appreciation up to that sale. So I think there are a lot of things that we can look at.
I don't want it to seem, I'm older than you are, and I'm constantly told the boomers get too much. I don't want it to seem like something that it's a giveaway to the boomers.
Speaker 153
So I appreciate that and look forward to working with you. But look, I think as you know, and as you've heard, it's not just housing that makes it tough when it comes to affordability. Over the last year, inflation has rose 3.8%, energy has rose 17.9%, gasoline prices have rose 28.4%, food has rose by 3.2%, and core inflation is still elevated at 2.8%. And look, I know you got some good numbers, I understand that, but the fact is that when you speak to people on the ground, including the polling that Mr. Boyle referred to, prices are a major financial concern. Now, the costs have been exacerbated clearly by the Iran war, but also tariffs.
Completely understood and look forward to talking to you and continuing negotiations on this, but I appreciate your acceptance of being open to the concept.
Two areas I just want to hit on quickly. I realize you said the war is temporarily paused, I think you said that or you said that at the press conference you had last week. And you said that once it's resolved and there is a deal, gas prices will drop. Got it. But the President recently said that the Strait of Hormuz will be closed through Labor Day.
Is that your definition of temporary and are gas prices going to remain high through the summer?
Scott Bessent
Yeah, I didn't see that from the President and every indication I have is that they should be open sooner. And we've already seen oil prices are down 120%.
Speaker 153
Understood, Mr. Secretary, and I don't like saying this, but reclaiming my time. Tariffs are also affecting these prices. And many people in small business in my district tell me that it's not just tariffs, but the constant change in the tariff policy that we've seen over the last year. Just yesterday, the administration announced another change in tariff policy and another tariff regime. 14 countries subject to 10%, 56 countries subject to 12.5% tariffs.
Has Treasury done any sort of assessment on the impact of these frequent changes to the tariff policy and what they're having on small businesses? And is there an exclusion process planned to help these small businesses because of these types of changes in tariff policy?
Scott Bessent
Well, I would have to dispute that the cost increases were due to tariff policy because last year the inflation was in services and we don't tariff services.
Speaker 153
Got it, but have you done any sort of assessment as to whether or not you can help small businesses get through these types of tariffs?
Speaker 157
Well, I think we've already done a lot with small businesses in the Working Families Tax Cut.
Speaker 153
Alright, so you haven't, that's fine. What I'm getting, I'm going to reclaim my time just because you're not getting to the point. In terms of the refund, this is a significant issue. But please know I think that should be done in regards to our small businesses. Now also in regards to Mr. Polti.
I'm an intelligence, I was an intelligence officer. I served in Afghanistan and I served proudly and I dealt with the intelligence community. I know what you say about not having experience in the job, but please know that that's offensive to people in the intelligence community and worse, it's dangerous to our national security to have someone like that at that position. Thank you, Mr. Secretary, for being here. I yield back.
Speaker 156
Thank you, Congressman. Thank you, the gentleman from Buckeye State, Mr. Carey.
Mike Carey
Well, I want to thank the Chair, I want to thank the ranking member, but also Mr. Secretary, it's great to see you again. Thank you for being with us. And again, I want to touch upon a lot of the facets with the Working Families Tax Cuts and how it has affected the average American. But first off, I do want to say, I quite frankly just want to kind of highlight some of the successes within the piece of this monumental piece of legislation. You know, this landmark legislation was drafted with every, with every American in mind.
It didn't matter their race, their gender, their income level, their marital status, this affected all Americans. The overall share of taxes paid by the top 1%, at the end of the day, this is a fact, this isn't disputed, it went up.
A family with two children saw their tax returns increase by an average 11%. That's fact. For our small businesses, think about our small business, the backbone of the American economy. We permanently extended the 20% tax deduction for small businesses. Mr. Secretary, that's big.
That's big. For our seniors, and coming off of the social security fairness that we did in the prior administration, but for our firefighters and our postal workers and our police officers, but just what we did within the social security space, a $6,000 tax deduction, which is greater than the social security taxes the average senior household currently pays. For our manufacturers who built this country, we implemented 100% immediate expensing for equipment and machinery. That's what we did. Now, there's been a lot of talk about energy.
There's been a lot of talk about fuel prices for our country. And I want to just highlight a couple numbers because we've heard a lot of numbers and energy happens to be something I do know a little bit about. But today the average gallon of gas is 4.24 per gallon. Into the previous administration, same time, the average price was $5.16 with without the sword of Damocles of a nuclear warhead in Iran. You have to understand history to understand how terrible that regime and the threat that that would have been for all Americans.
But let's talk about the pro-family policies that this monumental piece of legislation did. It permanently extended $2,200 tax credit and tied it to inflation. That's every working family that has kids, folks, every working family. Extended the adoption tax credit. Expanded education savings accounts to include additional K through 12 additional expenses.
Expanded the health savings accounts. Great things. Improved employer-provided child care tax credits and made permanent paid family leave and medical leave tax credit. Our children will recap the benefits of the Trump accounts in which 5 million, 5 million children have already been enrolled. Now this legislation didn't pick winners and losers.
It didn't prioritize certain segments of the American population over the others, and it's not a government handout to any particular economic sector. This is sound tax policy focused on providing tax certainty for all American businesses, putting more money in the pockets of hardworking Americans and putting our country on a trajectory for economic success. And Mr. Secretary, I know that you've had to listen to a lot of things today, and we do appreciate your service. We do appreciate you leaving the private sector to do something that in many ways is a very difficult position to be in. But Mr. Secretary, your time, your staff's commitment, and this commitment of the administration to make America a better place, we appreciate that.
So with that, thank you again for being here today, and with that, Mr. Chairman, I yield back.
Speaker 159
Gentleman yields. Congressman, thank you. Also from the Buckeye State, Mr. Miller is recognized.
Max Miller
Thank you, Mr. Chairman. Mr. Secretary, it's great to see you again. And to note, Chairman, just a better part of the Buckeye State for the record. But thank you, Mr. Chairman.
Thank you, Secretary Bessent, for your testimony before this committee today. It is much appreciated. Since we last discussed digital assets in this room, the landscape has shifted from a conversation about the rise of these technologies to a question of how we successfully integrate them into our regulatory tax infrastructure. We've seen meaningful progress. The Senate Banking Committee has advanced the Clarity Act to build a market structure framework.
Additionally, I, along with my colleague to my left over here, Rep. Horsford, have introduced the Digital Asset Parity Act to finally provide the common sense tax certainty our businesses and investors truly require throughout our country. We are no longer debating whether digital assets are here to stay any longer, but rather how we define the rules of the road, and we believe that this is necessary now at this time in our history. I truly look forward to discussing how Treasury can collaborate with Congress to ensure these dual frameworks provide the economic stability and tax fairness the American people deserve. Mr. Secretary, the Parity Act was introduced to solve the phantom income and tax-as-cash hurdles that currently plague American businesses and everyday investors. We've seen that without tax parity, companies are hesitant to adopt these tools, and individuals are burdened by the reporting requirements that feel more like friction tax than truly a fair system.
So I'll just get right to it. As the Treasury Department looks at the current tax code, how do you see the Parity Act, specifically its provisions for stablecoin payments and the elective deferral of staking and mining rewards, as a catalyst for keeping digital asset innovation within the United States rather than forcing it offshore?
Scott Bessent
So, Congressman, thank you for those questions. This administration and Treasury's goal is to onshore digital assets, both because of the innovation that we're seeing and US standards and practices. So we would like to work with both of you on this to perfect the right balance between how this should be done. But I do think, look, whenever we get to these new technologies, there is an adjustment period. We have to think about them in a different way.
And I believe not only for the technology, for the payment rails, it's essential for us to be the leader to maintain dollar dominance. And we want to have the best standards in the US that we can export to the rest of the world. So we'd be happy to work with you on that.
Max Miller
Thank you very much. We've been working extremely hard over the last, I'd say, 15 to 16 months to bring a framework, and truly what we're seeking here, really is, besides the name of the legislation, clarity and parity and just stability for the tax code for these individuals. And I very much thank you for your answer and you willing to work with both of us on committee and all of us. Our bill also—
Scott Bessent
I would say, let's get clarity done by the 4th of July, and then we move on to how to tax it.
Max Miller
Mr. Secretary, I would love that. I just, if you could help me with some of those individuals up there.
I've been on the phone with them this week.
Max Miller
All right, well, if that thing gets moving, then yes, it makes our job much easier, and I would prefer that way as well. But thank you, and any more guided push would be awesome on our committee and very grateful. A critical piece of this legislation is the application of Section 1058-like treatment to digital asset lending. If the Treasury Department were to formally recognize digital asset lending as analogous to the securities lending covered under Section 1058, what is your assessment of the impact on the domestic market liquidity? And specifically, does Treasury agree that extending this established tax treatment of non-recognition is one of the most efficient levers to move digital assets from a speculative asset class to a functional, transparent part of our institutional financial infrastructure?
Scott Bessent
Congressman, you obviously feel strongly about this. I have a motto in life: no data, no opinion. But I will get back to you with an opinion.
Max Miller
I very much appreciate that. This has been one of the tougher subject matters that we've discussed on the committee because I believe that this country for a long time has been stuck in the analog era and we are now in the digital age. And, you know, this framework all together just provides guidelines and stability for the cryptocurrency network within our country. And I appreciate, you know, you saying you'll work with us, but I truly believe now is the right time for this with President Trump and the federal crypto reserve and him wanting, you know, the United States to be the crypto capital. My concern is is that if people like you and I and others right now, you know, who don't have a good understanding aren't the ones really steering this, you know, to its, you know, final destination, then we may never get there and it may get screwed up in a different way.
But I truly appreciate you being here, working with Rep Horsford and myself, and I yield back.
Gentleman yields. The chair now recognizes the gentleman from Vegas, Mr. Horsford.
Steven Horsford
Thank you to the chairman and to the ranking member, and I look forward to working with Congressman Miller and the other members of the committee on the Parity Act, which is a true bipartisan bill. Before I begin, though, I want to thank Chairman Smith for his commitment to working with me also on the Full House Act. They were taxed on what they actually earned, nothing more, nothing less. The Senate changed that. Prior to the Senate-passed bill, gaming patrons could deduct 100% of their gambling losses.
This provision was included without meaningful debate and creates a fundamentally unfair outcome for taxpayers who participate in legal gaming activities. Under the new provision, patrons can deduct only 90% of their losses. That means someone who breaks even or even loses money overall could still face a federal tax bill. So, Mr. Secretary, will you work with Chairman Smith and me to fix this issue and to protect gaming jobs and tourism-dependent economies like Nevada?
Speaker 165
Thank you. Now you, Mr. Secretary, you talked a lot about permanency throughout today's hearing. For the tip worker, for the warehouse worker, for the teacher, for the nurse, and for the small business owners in Nevada, they don't need a temporary tax gimmick. They need permanently lower cost and permanently higher take-home pay. Yet when Republicans wrote their bill, they made a choice that the tax cuts for billionaires and large corporations would be made permanent while making the tax relief for working people temporary.
To me and to the workers, that tells them exactly who they were thinking about when they wrote it. That's why I have introduced the Tips Improvement Act as well as the Overtime for All Workers Act because I believe workers who earn tips or who work overtime should receive permanent tax relief, not temporary. If Republicans are serious about helping working families, they should join me in making tax relief for workers permanent, just like they did for billionaires. Now, Mr. Secretary, I want to discuss tariffs, which are hidden taxes that American consumers pay, including businesses. The Supreme Court ruled that this administration's broad tariff policy was unlawful.
But American families already paid the price. Small businesses paid it through higher costs, consumers paid it through hidden higher prices, and according to the Yale Budget Lab, the average household paid roughly $1,800 more because of these tariffs. So at a time when you talk about giving relief to workers, temporary relief, on the other hand, they are feeling the effect of higher prices.
So let me ask you directly, do Americans deserve refunds for money collected through tariffs that the Supreme Court ruled illegal, yes or no?
Speaker 166
Congressman, the American people had the money. It was in the US Treasury and it wasn't taken away.
Speaker 168
Do you agree that they deserve the money back that the Supreme Court ruled is illegal, yes or no?
Speaker 167
It's not a yes or no question because every Democratic Attorney General applied for them to go back to the companies, to the payers of record.
Speaker 170
So do the companies deserve the money back? So do they deserve their money back?
Speaker 165
No, no, no, no, no, Mr. Secretary. While the Homeland Security Act of 2002 may have transferred a number of custom functions from Treasury to DHS, Treasury retains oversight over trade policy and the protection of revenue functions. Treasury can delegate those functions, but it cannot delegate that statutory authority. Just last week, the Justice Department appealed a court order that would have accelerated refunds to importers and to businesses. Mr. Chairman, I ask unanimous consent to submit for the record the May 29th article, US to appeal judge's order for broad refund of Trump tariff.
Without objection.
Speaker 165
Thank you. Secretary Bessent, yes or no, did you participate in discussions about appealing efforts to speed up tariff refunds?
Speaker 165
Treasury helps shape major fiscal policy. Returning roughly $165 billion to businesses and consumers is a major fiscal decision. So why wasn't the Treasury involved?
Speaker 171
Again, we act as the payment agent. Your bank does not tell you which bills to pay. You tell your bank.
Speaker 165
Well, from the public's perspective, taxpayers' perspective, the administration is fighting harder to keep their money than to return it. That's why I've introduced the Relief Act to give automatic refunds within 90 days to the people who paid the tariffs. And that once the refunds are made, that the benefit goes to the consumers that ultimately paid the price in higher cost. The Relief Act creates an automatic refund process, something that this administration has not been working to accomplish, and this would actually address the economic uncertainty that has been caused by these across-the-board tariffs. Not strategic, not in the best interest of American consumers, and it's time that we give the money back to the people who paid it.
With that, I yield back.
Scott Bessent
And many foreign companies. And I think we're going to see that the payers of record, many of them are overseas entities.
Speaker 165
Well, Mr. Secretary, families in America don't experience the economy through GDP reports or stock market indexes. They experience it through rent and groceries. They experience it through utility bills.
What does that have to do with tariffs?
Speaker 165
Because they're paying, that's exactly right, what does it have to do? It has to do with the average family not being able to meet their monthly budget obligations because this administration is so aloof to the reality that the majority of Americans are facing.
Mr. Horsford, time has expired. Mr. Bean.
Aaron Bean
Thank you very much, Mr. Chairman. Good afternoon to you, good afternoon Ways and Means, good afternoon Mr. Secretary, welcome back to Ways and Means. Four hours ago is when this hearing started. But a year ago, we were in the middle of debate of the one big beautiful bill you, Chairman Smith, this president were all architects. You made some big bold predictions, pass this bill Congress and we will see a reverse of manufacturing jobs closing or fleeing the country.
You made a big, bold statement that you'll put more money in Americans' pockets than ever before should we pass this bill. We passed the bill, and Mr. Secretary, everything you said is coming true. How about that? There's more money in Americans' pockets. The 4.5 million manufacturing jobs that we've lost since the year 2000 are coming back.
And for me, speaking across Northeast Florida, people are excited, business owners are excited and making that happen. A year ago also, we were doing something else. We were debating fraud, waste, and abuse. You would think that would unite this committee, but you can see today we disagree on so many things. That's something that should unite us.
I want to brag on something that you're doing in Treasury Department. You're a core pillar of President Trump's anti-fraud task force. Your subcommittees and your initiatives of the Office of Terrorism and Financial Intelligence, FinCEN, and the Office of Payment Integrity are leading the way of supplying that task force. Let's fight fraud once and for all. Something else you're doing, a year ago we talked about it, of how fast we pay.
The United States pays our bills very fast, sometimes too quickly, because we pay people who shouldn't get paid. Scammers don't have to rob banks anymore, they can just bill the United States, we'll pay them, and then this pay-and-chase we figure it out. So you and I, do you know this, you and I and your team have created a bill to codify what you're doing now, which is to verify, to use the data and statistics to making sure it's a legit bill that hasn't been paid by anybody else. So hats off to you. What else can we do, Mr. Secretary, to assist you, maybe it's just get out of the way, to assist you in fighting fraud?
Scott Bessent
Congressman, you are exactly right. Once money goes out the door, that anything other than a partial recovery is unlikely. I was out in Minneapolis and saw what was going on there. And I think in terms of the US is a high-trust society, and in terms of maintaining the trust that American citizens have in each other and in our visitors, it's important to prosecute. And of course, the prosecute, but the recoveries are going to be very difficult.
Aaron Bean
It's almost impossible. They're bad guys. They hide and chase. So your efforts, don't give up on our bill that's in Mr. Comer's committee. I'm still lobbying it.
You weighing in would be a big deal. You're already doing it, but we want to codify it. It's the best practice of paying our bills. Scammers also are targeting older folks in Americans. They're these scam calls, spam and scam calls.
I get eight to ten a day. Now the FTC, it's already against the law. We put your number on the do-not-call list. I want to plant a seed with you. The FTC is responsible for it.
It's against the law. But what if they don't have the teeth or muscle that Treasury has? I want to plant the seed with you. What do you think about the idea of Treasury getting involved and chasing and kicking out these scammers that are calling us? What do you think, Mr. Secretary?
Scott Bessent
We are, Congressman. FinCEN is actively involved, and many of these come from overseas.
Scott Bessent
So we've worked very well with the FBI in Southeast Asia to break up these, I think they're called scammer cities. And, you know, a lot of it comes out of, huge amount out of North Korea. And unfortunately, many of our seniors, I think one out of every three seniors has been the subject of a financial scam that averages about $300.
Aaron Bean
There's a special place in the afterlife for anybody that rips off an older American or anybody old. I just hate that. Mr. Secretary, we still have to solve healthcare.
That's something that maybe we do agree on both sides of the aisle is we have to do better. What if Americans took charge of their own healthcare by having the money to do so? I've got a bill, HSAs for all, health savings accounts where people, just like their retirement, they can put money aside for health expenses to make that happen. Mr. Secretary, is that bill, is that a good idea or a great idea, the Bean bill of health savings accounts for all?
I think it's a great name and a great bill.
That's the right answer, Mr. Secretary.
Scott Bessent
And look, when you give people agency, they can tailor it to their own needs. And what we are seeing with the employer credits, where employers can give credits, we're seeing a big uptick in that.
Aaron Bean
Love it, love it. Mr. Secretary, you could be doing anything. Thank you for your service to your country. We appreciate you. All the best.
Mr. Chairman, I yield back.
Thank you, Mr. Moran.
Nathaniel Moran
Thank you, Mr. Chairman. Good afternoon, Secretary Bessent. Thanks for being here today. I know it's a long day. Thanks for your service to our country as well.
You're doing a fabulous job, by the way. We appreciate your willingness to appear before the committee and provide updates on the important work being done at the US Treasury Department. I'd like to build on some of the successes my Republican colleagues have already highlighted by focusing on two direct results from the working families' tax cuts, both substantially improving Americans' lives and financial futures. First, I want to discuss the opportunity zone program. You mentioned this in earlier testimony, specifically the new rural opportunity zone provisions.
Last year, Ways and Means Republicans strengthened and modernized this program to ensure that investment reaches some of the most economically distressed communities in America. As someone who represents a large rural district in East Texas, I've seen firsthand the challenges that many communities face when it comes to attracting capital, creating jobs, and expanding economic opportunity. Too often, rural communities are overlooked despite their tremendous potential. Here's my question. As we move closer to the nomination process, can you walk us through what comes next after census tracts are nominated by the states?
Scott Bessent
I can do that, sir. I'm happy to have the team get back to yours. We are working with red state and blue state governors, and we're encouraging them to get ahead of it. I had a call, I can't remember if it was yesterday or the day before, with the father of opportunity zones, my hometown senator, Senator Tim Scott. And we were talking about, you know, he's a city guy, I'm a country guy in South Carolina, and we were talking, I was telling him what a great move this is for the rural opportunity zones and how it's going to be transformational.
Speaker 175
Yeah, I agree with you. That's what we see in these provisions as well, that it gives certainty and long-lasting opportunity for economic growth in areas in America where traditionally businesses or investors are looking and saying, you know, I'm not quite sure if I can make that investment there, but this is the incentive that's needed for that. Question number two involves the no taxes on overtime provision. I want to turn to this provision because I was proud to help champion this policy because it recognizes a simple principle. Americans who work harder and put in extra hours should be able to keep more of what they earn.
We've now learned that more than 29 million filers have claimed the deduction this year. And notably, 96% of those taxpayers earn less than 200,000 annually. Here's my question, Mr. Secretary. Do these results demonstrate that this law is delivering meaningful tax relief to working Americans, the men and women who are keeping our economy moving every day, and that the benefits are reaching middle-class families rather than the wealthy, as Democrats have falsely claimed?
Scott Bessent
Congressman, I tell you, someone asked me earlier, why do you do this job? And the highlight is going out and meeting with our hardworking Americans, being out with the people. And whether I'm in Texas at a barbecue place outside of Dallas, which I enjoyed, I was in an Italian restaurant in Simi Valley near the Reagan Museum this weekend. And all I hear from both the employees and the employers is what a home run this has been.
And I tell you, I told the story earlier, tax day, April 15th, I was with the president in Las Vegas. He had a big rally and he asked for the room to, he went through each one of the provisions and we're in the tip capital of the world in Las Vegas, but it was the no tax on overtime that got the roar of approval over no tax on tips.
Yeah, I'm finding the same thing as I go through my district, that's the number one provision that people are citing to me. It's the American way, if you want to work harder, you should get to keep more of your money. And I think one of the congressmen said, well, you know, we've got to let in these workers, we've got to have, what if Americans want to work more and keep more of their money?
Speaker 175
That's right. You know, I think that's a concept we need to continue to propagate and find policies that support letting hardworking Americans keep more of their money. We forget sometimes in DC, and we shouldn't forget this, that it's their money, it's not ours. And I know you know that, I think you're doing, as I mentioned earlier, a great job. We really appreciate and want to mention your successful negotiation of the side-by-side agreement that's helping to place United States in a much stronger and more competitive position in the global tax landscape, digging us out of the Biden tax surrender effectively and really putting us back on the footing we need to get on.
So thank you for that work. I know you've got a great team behind you as well. Keep up the hard work and let us know what we can do. Thank you, I yield back.
Bradley Schneider
Thank you, and Mr. Secretary, thank you for your patience staying here. I actually want to give you a chance to correct the record on something you said. You earlier commented somewhat offhandedly that the conflict with Iran had ended. Do you truly believe that we are no longer in conflict with Iran and that they are no longer a threat to Israel or allies in the Gulf, that their nuclear program has been destroyed, that they no longer have a ballistic missile program and drone program threatening its neighbors in the region, and that they will no longer sponsor terrorism in the region and around the world?
Speaker 178
Sir, you're saying you're in agreement with the president's decision to the...
Speaker 182
You said the conflict was over. I'm asking, do you believe the conflict's over and everything's copacetic?
The conflict is on pause.
So everything's good with Iran now?
No, don't be absurd.
Well, I'm asking you to clarify.
Speaker 157
Don't be absurd, that the as the president said yesterday, unless an American life is lost, he does not believe that he will have to restart the kinetic asset.
Speaker 180
Okay, so you're, I'm reclaiming my time and I'm just trying to help you clear the record. I'm reclaiming my time, Mr. Secretary. Can you promise, because this is your jurisdiction, that you and the Trump administration are not considering lifting sanctions on Iran as a concession towards opening the Straits of Hormuz?
Speaker 157
We've made it clear that the Straits of Hormuz, the blockade is the only thing that will be lifted to reopen the straits.
So no sanctions relief whatsoever?
Speaker 157
I am not part of the negotiating team, but I am told by the negotiating team and I strongly believe that it will be the blockade will be lifted.
Speaker 181
Okay, and I'm going to just reclaim because there's a lot of things I want to cover. My hope is you'll keep Congress informed of any such considerations if they do come up. Also in your opening remarks, Mr. Secretary, you said Americans have more money in their pockets. That's not what I'm hearing from my constituents. Are you saying the overall cost of living is lower today than it was 16 months ago when you came into office?
Because what I'm hearing from my constituents is that the cost of groceries are up, for example, beef, coffee, tomatoes are at record or near-record highs. The cost of housing is up, and for too many the American dream of buying a home is out of reach. I'll let you answer. Healthcare premiums continue to rise and millions of Americans have either already lost or expect to lose their health insurance altogether because of HR1, the bill you so joyously celebrate. Energy costs, gas for our cars, electricity for our homes are all rising through the roof.
And family care, childcare, and eldercare is prohibitively costly. Are you saying that cost of living is lower today than it was a year ago?
Speaker 157
No, I am saying that we are much closer to the Fed's target rate of 2% on core inflation than when President Trump came into office. We are at 2.8% and you can list off the most expensive groceries or the that have had the biggest price increases.
Speaker 180
I think you're just out of touch with what American families are facing. And as my colleague noted, I'm reclaiming my time. Tariffs are a tax on American families. This is my time, Mr. Secretary. This is my time.
Speaker 192
Higher grocery prices are taxes on American families. Higher gas and electricity prices.
Speaker 190
Well, you Democrats should know, no wonder so many people are leaving Illinois. Why don't you come see me in South Carolina?
Speaker 191
They're not leaving, they're coming to Illinois. Just a quick question, Mr. Secretary.
Speaker 181
All right, let me take you to a different topic, and I know you don't want to address it, but my constituents are outraged and want me to talk to you about the absurd illegal self-dealing settlement between President Trump and his family with the Justice Department and the IRS over which you have jurisdiction. The administration apparently believes that there should be two systems of justice, two sets of laws, one for the president, his family, and his rich friends like you, and one for the rest of us. Nothing demonstrates this more than the so-called settlement with its slush fund for insurrectionists and tax immunity for the president and his family. Mr. Secretary, simple question. Do you believe that there should be only one legal system in this country and that no one, even the president, should be above the law?
Speaker 157
I believe that no one is above the law, but you all have put the president beneath the law and you have weaponized the system against him, whether it is the leak of his taxpayer records, whether it is...
Speaker 186
His taxes should never be leaked. No taxpayer's information should be leaked. I agree with you on that. But no, let me ask you a separate question.
Speaker 157
Would you like to apologize to the president right now on behalf of the...
Speaker 181
I have nothing to apologize to this president for. His taxes should not have been leaked, but it was leaked by a contractor and you keep trying to dissemble here and avoid the questions. Do you believe that all Americans should pay the taxes they owe and not a penny more?
Yes or no? All right. So do you think it applies to the President of the United States irrespective of whether the president is a Democrat or Republican?
100%.
Speaker 181
Okay, so we agree on this, and we should have a tax system that is fair and it should be applied fairly to all people. But I can tell you that my constituents are outraged by the agreement the president made with himself and his own Justice Department that excluded him from ever having an audit over his taxes. No one should be targeted.
Speaker 181
No one should be targeted by the administration, whoever's in the White House. Their taxes should be paid and they should be confident that that information will be kept confidential with the IRS and not used to target them, their families, or their business. I yield back.
Mr. Yakum.
Rudy Yakym
Thank you, Mr. Chairman, for holding this hearing today, and Secretary Bessent, it is great to see you again. Thanks for being here.
Good to see you, Congressman.
Speaker 187
There's been a lot of talk about the cost of groceries lately here in this committee room. A lot of numbers thrown around, but I think it's worth putting eyes on the Democrats' inflation. I had my staff whip up this chart behind me, and it shows the CPI numbers for what economists call, quote, food at home, but most Americans just simply call it groceries. These are the cumulative inflation numbers for the first 16 months of a presidential term, of every presidential term since 1993. Mr. Secretary, the title most likely gives it away, but I'd like you to just play a little game with me here.
Can you guess which one of these lines represents the Biden administration?
Speaker 187
That would be correct. Well done, Mr. Secretary.
It is the red one. Sixteen months into the Biden administration, or as we now call it, Bidenomics, grocery prices were up almost 12%. That far outpaced anything that any American had seen in recent history. And you can clearly see from the chart that that red line is as detached as the Democrats' rhetoric is from reality today on this particular topic. So, thank you for playing along here today.
Switching gears, let's talk about tax priorities.
Scott Bessent
And Congressman, I would note that the inconvenient truth for this side of the room, food at home since President Trump came into office is up 2.5%. That is half, half of what it averaged over the four years of the Biden administration.
Speaker 187
That's right. And that stands in stark contrast of the 12% that you saw on the chart here a few moments ago. So thank you for pointing that out. A 2019 New York Times story said that most taxpayers got a tax cut under the first Trump tax cuts. But most Americans didn't believe it because, quote, a sustained and misleading effort by liberal opponents of the law to brand it as a middle-class tax increase.
Here we are a few years later, and Republicans cut taxes again for working families and working Americans. But yet again, my Democrat colleagues are rolling out the same tired playbook of bad-faith attacks and misinformation. The working families' tax cuts cut taxes for working families. It's just that simple. I can't tell you, Mr. Secretary, how many people have come up to me, whether it's at church or in the grocery store or just anywhere around the community, and they've said, hey, thank you, because my tax refund that I got was much bigger than what I expected.
And that working families' tax cuts is just simply putting real money back in the pockets of working families.
Scott Bessent
And Congressman, I can tell you, when the 2017 tax bill was passed, I lived, I was one of the people who now fled New York, but I lived in Manhattan, my taxes went up. So for many upper-end people in high-tax states, taxes actually went up.
Speaker 187
That's right. And let's talk about some of the actual numbers and move beyond what some of the Democrats' rhetoric has been today. Mr. Secretary, you recently said that a 90% of filers claiming no tax on tips who made less than $100,000, they had an average deduction of $7,000. 75% of filers claiming no tax on overtime made less than $100,000 with an average deduction of $3,100. And 68% of seniors claiming the enhanced deduction had incomes under $100,000 with an average deduction of $7,500.
Does that sound directionally correct and roughly right to you?
That sounds pretty precise, Congressman.
Speaker 187
And Mr. Secretary, are you aware of any millionaires or billionaires that claim no tax on tips or no tax on overtime or the enhanced senior deduction?
No, sir.
No billionaires claiming any of this stuff.
Speaker 195
Again, this is the ultimate working family, these are the ultimate working family signature tax cuts put through by this side of the room and President Trump.
Speaker 187
That's right. Well, thank you for clearing that up. Let's now consider what happened when Democrats had the pen and when they were able to craft their own tax law. A 2024 analysis of households claiming the green giveaways in Democrats' Inflation Reduction Act found that only 47% made less than $100,000. In fact, over a quarter of the households who took those deductions made over $200,000, and households making over a million dollars got nearly $100 million taxpayer dollars worth of Democrats' green giveaways.
Even Mother Jones had to admit that when it comes to Democrats' green giveaways, quote, working-class Americans are missing out. But if you think about it, it kind of makes sense, doesn't it? Mr. Secretary, do you think that a family making less than $100,000 cares more about no tax on tips or putting solar panels on their roof?
Speaker 187
And do you think that they would care more about no tax on overtime or solar panels on the roof?
Speaker 187
So while Democrats gave millions to millionaires and while the Republican working families tax cuts simply cut taxes for working families. Is that correct?
100%.
Thank you, Mr. Suozzi.
Thomas Suozzi
Thank you, Mr. Chairman, and thank you, Mr. Secretary, for sticking it out for over four hours here today. We appreciate your time and we appreciate your service to the nation.
Good to see you, sir.
Thomas Suozzi
So earlier today, Mr. Kelly from Pennsylvania was quoting from Charles Dickens. He said it was the best of times, it was the worst of times. Would you happen to know what the name of that book was that that came from?
Tale of Two Cities.
Thomas Suozzi
A Tale of Two Cities, which is very appropriate for what we I think is see happening at this hearing here today.
We might say Manhattan and Dallas.
Thomas Suozzi
I wouldn't say that, but okay. I would. So let's think about it. You said earlier today, and I'm sure you stick by this, the economy is very strong.
It is.
Thomas Suozzi
Okay, so you say it's very strong, but we've heard consistently throughout the course of this day and in reports regularly that over 70% of Americans think the economy is bad and getting worse. Are you familiar with that polling?
I am.
Thomas Suozzi
So that would seem to be a tale of two cities. You saying the economy's very strong and the people of the United States of America saying the economy's bad and getting worse. Now, the Biden administration, which we've heard a lot from you guys today, I think made a similar mistake to what your administration is making. Because the stock market was booming under the Biden administration. There was job creation under the Biden administration.
Unemployment was low under the Biden administration. And the stock market is booming under this administration, that's true. And unemployment remains relatively low and there is some, but much reduced, job creation. But you're making a mistake, I think, to not listen to what the American people are saying, which is that they're very unhappy with the economy because of the way it's affecting them. So have you heard of the expression the K economy or the K recovery?
Scott Bessent
Yes, sir, but I think we were probably moving to a C economy where the top.
Thomas Suozzi
Okay, but I want to talk about the K economy for a second. We can get the C a little bit later. Is that okay? Okay. So the K economy has one group of people going up and another group of people going down.
It's a K economy. So in the K economy, the top group sees a booming stock market. But as you mentioned earlier, one of the reasons you wanted to do the what you call Trump accounts is because 93% of the stock holdings in America are held by the top 10%. But the lower income Americans, 50% of Americans, have only 1% of the stock holdings. So while the stock market may be booming for much of the people in the United States of America, they have booming gas prices and booming grocery prices.
In the K economy, we have your friends and some of friends of the people here that talk about buying second homes. But in the other part of the K economy that's going downwards, people can't afford to buy a home. Young people especially are foreclosed from being able to buy a home in this K economy. In the K economy, you have a group of people that are their friends are talking about the great vacations they're going on. They're going to these exotic places, they're doing these interesting things.
In the other part of the K economy, people have a hard time paying their bills. So there's these two tale of two cities that's taking place in the K economy here in the United States of America right now. Now, Mr. Secretary, you attended the president's inauguration, were you?
I did.
Thomas Suozzi
Yes. And at his inauguration, he said, we're going to rapidly reduce prices. That was one of the quotes the president made during his inauguration.
He made many quotes like that during his administration, his campaign as well. Do you think that the prices in the United States of America have been rapidly reduced?
Scott Bessent
I think before the Iran conflict began that the rate of change for inflation, both headline and core, had come down substantially.
Thomas Suozzi
Well, people don't think that prices have been rapidly reduced. So you do admit, though, that the war has caused prices to go up for gasoline, for example?
A hundred percent.
Speaker 197
And you also agree, well, they didn't go up a hundred percent, they only went up fifty percent. But you agree with me a hundred percent. Okay, that's better. I'm glad to see somebody on this side is funny. Okay.
So the second thing is that the tariffs. Do you think tariffs have caused prices to go up?
Negligibly.
Thomas Suozzi
You don't think prices have gone up significantly because of, you just reduced tariffs the other day on farm equipment because you wanted to reduce prices on farm equipment because you thought it caused the prices to go up.
Speaker 157
Again, overall, the levels, what we saw last year was goods inflation was down.
Thomas Suozzi
Well, I would argue that tariffs have caused prices to go up and there's a lot of economists and groups such as the Yale Budget Lab, which you used to teach at Yale, didn't you used to teach at Yale?
Thomas Suozzi
Okay, well, you taught at Yale, I understand. You taught three classes: the 20th Century Financial Booms and Busts, Hedge Funds, and a seminar on Financial Panic of 2000 to 2009. So I don't know why you're knocking Yale. You used to teach at Yale. You went to Yale, didn't you go to Yale?
Thomas Suozzi
Okay, so tariffs have caused prices to go up, the war has caused prices to go up. Do you think the deficits that were created by the big beautiful bill are causing interest rates to stay artificially high?
Speaker 157
No, but what I can tell you is that let's cite MIT. MIT said that 50 percent, actually let's be precise like they are, 44 percent of the 21.5 percent inflation we saw during the Biden years came from the Biden deficit.
Thomas Suozzi
No, but I'm asking you. Do you think the deficits that were created by the big beautiful bill are causing interest rates to stay artificially high? Yes or no? That's simple. I'm out of time.
Come on.
Scott Bessent
No, Congressman, we had a fiscal contraction last year. So the deficit went down. So you should explore this after.
Thomas Suozzi
Okay, I'm just going to argue, Mr. Secretary, I'm just going to argue, Mr. Secretary, that prices are up, gas prices are up, grocery prices are up, energy prices are up, healthcare prices are up, interest rates are high, all specifically related to the policies of this administration. Mr. Secretary, thank you again for your service. I really appreciate it.
Speaker 199
Good to see you, Congressman. I want to invite you to South Carolina to see all your former constituents.
Jason Smith
Mr. Secretary, being a cattle farmer, I would say that the reason why the beef prices are high is the result of a very reduced herd. We don't have as many cattle today as what we had decades ago. I know everyone keeps talking about beef prices around here, but it's the simple fact that we've had droughts and people had to sell their herd to be slaughtered and they no longer have the reproduction status quo and that is why the beef prices are high regardless of what anyone wants to say. With that, Mr. Secretary, thank you for being here with us today. Thank you for the over four hours.
Please be advised that members have two weeks to submit written questions to be answered later in writing. Those questions and your answers will be made part of the formal hearing record. With that, the committee stands adjourned.
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