I 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?
6.2%, which led us to the worst inflation in 49 years, sir.
Absolutely. And was the highest under Biden? What was the highest?
6.6. September of '22. And so what is core inflation this very second?
2.8%. But at this time during the Biden administration, it was 6.2.
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?
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. They're 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 to make sure that the investment is reaching the rural communities, small businesses, and local projects.
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 implemented by OECD members, particularly in the European Union?
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, what I would say, Secretary, you can count on us as working hand and 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.
And Mr. Chairman, I will point out that my friend Senator Wyden complimented the side-by-side when he was back in Oregon recently.
That's great to hear. What monitoring has Treasury put in place to ensure that US companies are not still subjected to the discriminatory treatment?
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.
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.
Fine. So, I think we can agree upon this. There were 400,000 taxpayers that had their tax information 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.
Okay. So let me go back to part of the statistical data that's been gathered, which Barnstable, Massachusetts, which is a central hub on Cape Cod for commercial and transportation activity. They rely upon tourist dollars. It's a big deal. Over the last year, there's been a 54% decrease in Canadian tourists. We're slow-walking the tariff refunds. 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, 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 chairman 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 cost was something that we all embraced, but there's a fundamental acknowledgement that 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.
Thank you, Mr. 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 in 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've 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 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?
Congressman, I believe that the bonus depreciation, 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. The Republican Congress made this permanent. So great certainty, and the 20% pass-through rate is also made permanent, is giving small business permanence.
And can you touch on 199A? That's a big thing for a lot of people in the district. It levels the playing field with the corporations where they got cut 35 to 21 or whatever or 20. But this will give that 20% will make a big difference. But I wanted to get your thoughts and what you're seeing.
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.
And then let me just touch on in my district being in Florida, we have a lot of obviously seniors, one of the 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 number is a huge number 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. 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 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. When we saw the senior deduction, 68% of the filers made less than $100,000, and 96% of the filers make less than $200,000.
For 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 what are we going to address. We've paid taxes once on social security, we 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. But thanks for your leadership and all you've done for the country.
Good. Thank you, sir. And Treasury is working with the Social Security Administration to make sure everyone is taking advantage of this.
With that, I yield back.
Thank you, Mr. Doggett. During your tenure as a Treasury Secretary, has the IRS recommended that any taxpayer be granted immunity from an audit for their taxes?
Again, one portion of that is under litigation. So, I'm not able to.
Yes, sir. It isn't a question of being not able, it's being not wanting to. But my question is, as I said, there is litigation. Reserving my time, my question to you again is, 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?
I'm sorry, what was that?
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.
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?
Has there ever been a taxpayer who had his tax returns released, his family and every employee's? Let me ask you, sir, since you say you're relying... Thank you. I reserve my time.
Maintaining my time, and since you refuse to answer, let me ask you, 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?
Again, I cannot comment on that.
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?
Sir, we administer the payments.
Yes, sir. You give approval to it.
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, it does not say do not pay, you shouldn't pay your Visa bill.
Did Brian Marcy, 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, he did. And as you know, he abruptly resigned rather than be associated with the 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?
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 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 from his crypto deals last year, to be totally to pay him or not pay him 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's granted immunity in what some have said in a report would be a $100 million 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 6103, which prohibits the discussion of taxpayer information...
It doesn't prohibit you indicating what you are doing to assure complicity with the law and with the 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. Incredibly corrupt deal.
I would agree he is being treated the way no other person has ever been treated.
Mr. Smith.
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 costs to taxpayers associated with the Biden administration 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 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 sign that, they voted against it. So when there was a chance that President Biden could have signed a bill, now it didn't get through the Senate obviously, but when that seemed to be the situation, they opposed it. So I just get a little frustrated when 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 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 economy because the economy grows. So, anyway, 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. I appreciate my colleague Blake Moore working with me to make permanent 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 certainly the president, but 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 during the process and mischaracterizations of the law perhaps.
Yeah, I want to be very clear on this. 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 advanced notice of trades, cannot alter or override the manager 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 account.
Thank you, Mr. Secretary. And let me just close by saying that the American people are wanting us to have good conversations, thoughtful conversations, reasonable conversations, 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 want us to work together for the betterment of our economy moving forward just as the American people would expect us to do. Thank you. I yield back.
Thank you, Mr. Thompson.
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, he 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 would like to ask you a couple of yes or no questions about this golden economy. Electricity bills are up 8.5%. Is that golden?
You can ask a question. You can't tell me how to answer it.
So, okay, let me put it this way, Mr. Secretary, because you're obviously not here to answer questions here. It's my time, Mr. Secretary. It's my time. Health insurance costs are up 26%. That's not golden. Child care 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 HR1 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 that's rhetorical, so you don't even have to try and talk over me. 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.
You should tell them that we've had 2.6% economic growth since President Trump took office despite the Democratic...
These farmers are pretty smart, Mr. Secretary. Well, the people in California, the one person... 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. 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...
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.
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 a 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 with the cost of gasoline. By the way, in June of 2022 the average was $5.16 a gallon. As of June 4th, it's now $4.51 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 that 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, under the leadership of key stakeholders and local leaders such as the Erie Downtown Development Corporation and the strategy of Erie Refocus 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 in private investment. This investment created 110 new residential units, revitalized more than 100,000 square feet of commercial space, restored eight historic properties and brought a grocery store to a neighborhood previously designated as a food desert. One of the things 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 things actually work 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 to 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, they help with this idea of it being a Republican idea, a Democrat idea. Why don't we just look at what's best for America?
Well, the representative, first of all, I have heard that Erie is a poster child in a great way for opportunity zones. So I look forward to coming and visiting, and I look forward to visiting the rural areas in your district. And also as I said earlier, 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.
You know what, and I would appreciate that. So we'll get with you because I have two friends in the Senate right now that represent Pennsylvania. They are sometimes would have been described as polar opposites. They're not. 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 now and unfortunately elections get in the way of us doing things that are actually beneficial to the American people. We tend to work on a party spectrum rather than the people we represent. 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 and 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 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.
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?
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.
So is gasoline considered part of core inflation?
So those remarks, core inflation reflects gasoline prices?
Core inflation reflects the underlying trend in inflation and whether that inflation has become endemic to the system as it did during President Biden.
Does the war in Iran have anything to do with core inflation? Sir, does the war in Iran have anything to do with core inflation? Or you can't answer that, or is that are we precluded from asking that?
Well, I'm not sure what the question is.
Does, let me make it as simple as I can. Does the war in Iran, are you with me? Has the war in Iran thus far caused, have witnessed the rise in gas prices, has it caused...
Well, again, that is the regular inflation, and gas prices have gone up, which I believe will be temporary. The core...
So gas prices have gone up, but you believe they're temporary.
Core inflation has dropped 5% since President Trump came to office.
Geez, you know, when I'm home in my district, I'm going to just tell those people, geez, you know what? You've 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?
Are you in favor of eliminating the gas tax?
Are you in favor of eliminating the gas tax?
Are you able to answer that or is that not answerable?
Well, if I'm not interrupted, I can, Congressman.
Well, I'm waiting for your answer.
We have asked Congress to move to eliminate the gas tax. That is done through statute.
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. Again, the White House has asked for it, sir. They have. Why isn't it before the committee for a vote? 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 platitudes and telling us how grateful we should be to the Trump administration for everything that it's done.
Well, Congressman, food at home is up 2.5% since President Trump took office.
Which is twice the price every year under the Biden administration.
The conflict has been halted.
The conflict has been halted. So we're not at war.
So our military is not involved. We're not at war.
Again, if you would like for me to call the Secretary of War, I can ask. I'm the Secretary.
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 was a special order where we're not allowed to ask these questions or 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 has risen. Has it risen because of the war?
It did rise because of the conflict. Yes, sir.
The conflict. So that's what we call it. Our people go into battle and lose their lives.
Mr. Larson, your time is expired.
Mr. Schweikert.
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 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. Those facts and they're inconvenient and food prices, food at home has risen 2.5% since President Trump came into office, it averaged more than 5% under the Biden war 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%. The...
Mr. Secretary, you will find...
Which is probably avocados probably more popular on the other side of the aisle.
Yeah, 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.
It's a great question, Congressman. And there are many tax-exempt organizations. A large part of the economy are hospitals and health care services. So we should look whether they are meeting the needs and are in fact nonprofits. 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, 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.
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 responsible as policy makers. 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. Where we have some visibility to see where we're going. I do have some concerns 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?
So since President Trump came into office, the US Treasury market has been the best performing developed market. But that is not assured. It is assured that the Treasury will have a regular and predictable issuance cadence. But what we must let our borrowers know, people who are buying Treasury bonds, whether it is US households, the foreign central banks, and everyone else in between, is that we are serious about getting our debt and deficit numbers under control.
That is perfect, Mr. Secretary. And with that, I yield back, Mr. Chairman.
Mr. 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 3 months ago on March 9th, Representative Su 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 contains 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 before June 11th, will you or your staff meet with Representative Su and me to walk us through the evidence that taxpayers with delayed refunds received the funds owed to them?
I have not seen the letter that I will follow up on this. And the delays that you were talking about are for taxpayers who did not file electronically. We had about 98% of taxpayers file electronically, they received their refunds within 21 days. It sounds to me that out of the approximately 134 million tax returns that we received, that the April number would have been the un...
Thank you. And we are at 2.2 too. 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...
Thank you very much.
Well, let me just continue. Mr. Chairman, could you assist me to make sure that the American people receive the information that 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.
Without objection.
Thank you, Mr. Chairman. And Congressman, what was that number last year?
3.4 million.
No, no, no. I meant for the previous filing season and the year before that.
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?
Again, that's ongoing litigation, but that would have been done as I read in what I know is what I've read in the newspaper, and that was the Justice Department and the FBI.
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.
Again, there's ongoing litigation, but that's driven by the Department of Justice and the FBI.
Thank you, Mr. Chairman. I give back.
Thank you, Mr. LaHood.
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 analysis 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?
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 with this program.
And Mr. Secretary, what do you see as we try to address this problem? Other mechanisms within Department of Treasury or legislatively that we ought to be looking at?
Well, there are two housing bills, one in front of the House and one in front of the Senate, and that seem to be languishing.
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?
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.
And to your knowledge, have any of those investigations led to a fruitful prosecution or holding somebody accountable?
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, electronic systems in American cars cannot be connected to Chinese entities.
Thank you. And I'll look forward to the follow-up with you and your team on this. This is something obviously we 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?
We are pushing, whether it's Europe, whether it's Turkey, whether it's Brazil, whether it's India, whether it is 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 for their treasuries. They are 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 in every trade negotiation or every trade discussion with the Canadians, we bring this up.
Thank you, Mr. Secretary. Yield back, Miss Sanchez.
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. Good. So do I. And do you believe that for those Americans who break our tax laws, they should be audited or held accountable?
Well, I think there are two things there. An audit is not a result of breaking the law.
Yes or no? Simple question.
Well, no, it's not a simple question. Let me break it into two. Do you think...
You're asking me? Please answer that. 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?
Okay. Do you think that people who break our laws should be held accountable, our tax laws?
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?
Again, I'm going to have to refer you to my previous statement.
And what was your previous statement, sir?
I am unable to comment on any of the ongoing litigation.
Okay. Can you name the ongoing case concerning President Trump's immunity from audit?
Can you name them? There are three cases.
Can you name them that are out there now and I will be happy to get back to you on those because again I am not a lawyer. We are represented by the DOJ.
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 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.
Thank you. Now, Secretary, you said you're not an attorney. Is that correct?
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?
Again, since you're a lawyer, you will understand that the US Treasury and the IRS are represented by the Justice Department and the acting attorney general.
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, do you think that that would be audited or should it be audited?
I'm not going to talk about any...
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...
Do you have specific knowledge of an audit of President Trump?
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?
Again, I imagine you have the Justice Department phone number. I suggest you call them.
I'm not the one that runs the Department of the Treasury or that oversees what is happening with this immunity that has...
I'm not the one either. We follow the instructions of our lawyers and we obey the law.
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 years. 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, Miss Sanchez.
Thank you. My time is expired. Secretary, I would love for you to respond to the accusations at your department because I think you were due the opportunity for that.
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.
Yeah, that's great.
Mr. is recognized. Grace 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.
Well, and Congressman, and two on inflation, I am not going to take firefighting advice from an arsonist.
And torch the American... 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. 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 a half a century. Unbridled spending. If you add the hikes in interest rates, it would be about $12 trillion in deficit spending. Waiving work requirements for able-bodied adults on welfare. Giving welfare and health care 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 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, we're trying to stave off another addition of 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. 800 plus billions of dollars in giveaways, corporate subsidies for green energy. That's what the American people got. They got higher energy prices, higher electric bills because of this radical climate agenda, the Green New Disaster. And that was the tradeoff from my Democrat colleagues. So, 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 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.
Oh, I don't, sir. Look, 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 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 is expired.
Unbelievable. Keep up the good work, Mr. Secretary.
Thank you, Miss DelBene.
Thank you, Mr. Chairman. Thank you, Mr. Secretary, for being here. 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 31st, 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.
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 individual's data and rebuild confidence in your department's handling of sensitive information?
Again, would you care to look up what does inadvertent mean?
Have you taken... but you're in charge? Are you responsible for this? Do you take responsibility for that? Do you take responsibility?
I will take responsibility 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 agents and why don't you hold someone?
Why are you bringing up USAID with me?
Because a DOGE found that a DOGE payment information...
USAID I do not oversee. I wear many hats in this administration, not one.
And this is still... this is a file containing payment information. Are you not in charge also of the Treasury?
That has USAID, that has nothing to do with us.
But payment information has nothing to do with it?
Again, it was not sourced at the Treasury. Why are you bringing this up with me?
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 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 purview, that Treasury's position on all six recommendations. And if you agree that they are warranted, please let us know. And if you disagree with the recommendations, please explain why.
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.
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. 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.
Well again, President Trump and his family and employees of the Trump Organization, 400,000 people had their tax returns stolen at the IRS.
You are in charge. What are you doing to prevent that? Americans' sensitive information has been leaked outside. Your time has expired.
We have tightened the protocols. We have tightened access.
And you have said nothing specific of what you've done to...
Mr. Babin. Your time is expired. Mr. Estes is recognized.
Good to see you, Congresswoman.
So frustrating.
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 the conversation turned to discussions around OECD Pillar 2. There's much discussion about how Congress and administration could work together to stop the taking of our tax authority by other nations and losing over $120 billion 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. The side-by-side agreement that you and your team negotiated is an important agreement that protects the 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?
So it's a combination there, Congressman. 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 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 Pillar 2, getting this sorted out and making sure that the tax revenue comes into the US Treasury was essential. The US first instituted the global minimum tax and the Biden administration wanted to supplicate us to other countries and an internationalist tax regime that we were having none of.
Yeah, thank you for doing that. 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 to move forward on that?
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.
Yeah. 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. You mentioned earlier. I mean, a recent analysis I've seen is that American businesses pay nearly $3 billion a year in foreign DSTs as of now. And it would siphon off $17 billion in tax revenue over the next 10 years. And we need to continue that effort and I appreciate your work in that regards. 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, 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 we're competitive on the world stage. And this is true whether 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 are American first provisions that have put more money in the pockets of hardworking Americans. I want to recognize that some of the changes and as you've mentioned in the working family tax cuts had with manufacturing where there's research and development and capital expenditures that have been able to put in place for long-term growth. 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.
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. 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 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.
Oh great, thank you for being here, Mr. Chairman. I yield back.
Mr. Smucker.
Thank you, Secretary. Yeah, 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 199A deduction, making that permanent. I've heard from businesses about how that's affected their investment decisions when they have that permanency ahead of them. So, and 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 of employers in my area using direct primary care as a way to provide better access to health care. 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.
We are working on that and HSAs have been a very powerful tool and we've seen that the take-up, 30, I think 37, 40-something percent. So we will work on that and get that guidance out, sir.
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 to pull this up, the 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 maybe 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.
Congress, 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 deficits. 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 a demand shock through giveaways, but then you constricted supply with the regulatory state and that's how you get inflation. And this administration is 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 or services. So that is why core inflation is down more than half a percent since President Trump came in. 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.
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 of 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, Mr. Secretary.
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 American 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?
Congresswoman, who was the president during World War I?
Are you refusing to answer my question?
No, I'm asking. Who was the president during World War I?
I don't know. But clearly, you are not answering my question.
World War I was... Well, let me tell you.
So, I'm clearly getting the idea that you do not want to... whether you agree with President Trump that you do not care about Americans' financial situations.
President Trump does care about Americans' financial situations.
Well, he actually said that he doesn't.
No, that is a truncated thing like everything is. He is future-proofing because I can tell you Americans' financial situations would be devastated if Iran got a nuclear weapon and there was a permanent shutdown of the flow of energy out of the Middle East.
Well then let me ask you...
And I promise you that President...
I'm taking my time back. I will...
President Woodrow Wilson, who was president during World War I, the Germans did not attack us, he got into that...
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. 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.
Reclaiming my time. Gas prices are up by 50% since Trump's 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 3 months ago. And it's those lower-income households that are hardest hit by Trump inflation. They're forced to cut back on spending. I know it's an inconvenient... excuse me, it's my 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. In fact, Trump said he couldn't care less about higher car prices for Americans. Do you agree with that statement?
I believe that 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%.
Well, all you have to do is to go to the grocery store to see that beef is up... tomatoes are up by 40%. Bread and milk are up by 8%.
You don't get to pick and choose. It is a basket. The basket is up 2.5%. During the Biden era, it was up 5% a year.
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.
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.
Your narrative is not lining up with what Americans are experiencing right now.
You're entitled to your opinion, not your own facts.
I yield back.
Mr. Hern. Mr. Secretary, it's good to see you. Thanks for being here.
And I can see you're talking a lot about the facts. The facts are is 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. So, but almost a year ago, President 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 of 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 then 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?
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 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.
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 reaffirm 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. Currently, these financiers are claiming capital gains treatment, and it's 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 who are concerned about sovereign wealth funds and others that are gaming our system.
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. So, I look forward to working with you on this. Thank you very much.
Mrs. Miller.
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 1099K reporting threshold of $600 and 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?
Well, 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 have been bringing this down. I thought that it was one of the most reckless things that have been done, that you were going to create this paperwork for small businesses. Many of them, they have service businesses, and to do this and the magnitude from 20,000 to 600, it just shows a complete disdain for an administration that probably had a record low of business people involved with the administration and what they viewed as business experience. So I think realigning that for Main Street and small businesses was essential, and we have seen no effect at the IRS in terms of the revenues from that.
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?
Representative, I was with President Trump on April 15th in Las Vegas for a rally for tax day for his signature policies, and he asked for a show of support from the crowd. And we were at the home of the service and the tip 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 75% of the filers make under $100,000. 90% make under $200,000. And the average deduction was $3,100. And it's the American way. If you want to work harder, you get to keep more of your take-home pay. I was with a group of small business owners out in California near the Reagan Library, and they love it. I was in a local Italian restaurant there. The owner loves it because he was having staffing problems. So now, he has experienced staff. He's happy to pay the overtime and the employees are happy to work the hours.
Very much so. Thank you so much. I yield back my time.
Thank you. Before I recognize the gentle lady from Alabama, I want to inform members that at the request of our witness, I intend to call a brief recess following Miss Sewell's questions. And I now recognize the gentle lady for 5 minutes.
Thank you, Mr. Chairman. Mr. Secretary, you promised the American people that the big beautiful bill would lead to a 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 0.5% 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 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 0.5% 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 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 dollars. 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. I haven't asked one single question. I will point out Mr. Chairman reclaim my time. I'm not asking him a question. I'm stating facts.
You're not stating facts. You're stating opinion.
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 are unbanked or have access to electronic payment, that they get their refunds. 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, that the Treasury Department work with us to make sure that our constituents get their refund checks.
I will commit to do that.
Thank you, sir. I yield back the balance of my time.
This is the first I've seen. And to be clear, that number 5.4% was the Atlanta Fed GDP Nowcast, but I know that's inconvenient. So, thank you, sir.
Thanks. As announced, the committee will stand in a five-minute brief recess.
Call the hearing back to order. I'd like to recognize Mr. Gustafson for five minutes.
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 of 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 rate for those C corps at 21% rate, but we were looking at parity as it relates to those small businesses. First, 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%.
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 mortgage their homes for these businesses. So it is the certainty that enables them to invest, to hire people, to plan for the future, and I think we are going to see that. The other thing that we are doing at Treasury is we are 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.
Good. And would there be a benefit to small business to raising that deduction from 20% to 23%?
We're happy, our Office of Tax Policy is happy to engage with you and your staff on that, sir.
Thank you very much. Mr. Secretary, as it relates to rates and yields, think about the bond market. And I was looking at some quotes from the Clinton era, specifically James Carville, if I could 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.
The state of our economy is strong. We are having a short-term, the 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 on average since President Trump came in and that's despite the Democratic shutdown in the fourth quarter and 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 at 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 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. There 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.
Thank you, Mr. Chairman. Mr. Secretary, thank you for being here. Families in Florida are still focused on affordability, groceries, housing, cars, child care, 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 topline 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?
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 that 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 talked to the server, said how is no tax on tips going for you, and 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.
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's been to their bottom dollar.
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. This is very important for people on a fixed budget.
Representative Peltola 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?
So, we are working on that with the constituents and this is a real problem 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 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.
