Over $320 billion was refunded to taxpayers, an 18% increase from the last filing season with an average refund of nearly $3,300, more than an 11% increase on average. Many working-class Americans who owed money when filing in prior years instead received a refund this year because of the working families tax cuts. Treasury's initial guidance has also helped business provisions like full expensing for equipment and factories to drive domestic investment, productivity, and wages higher. Nearly 26 million small businesses now have increased confidence thanks to a permanent pro-growth 20% tax deduction that is estimated to create 1.2 million jobs annually and boost small business GDP by 70 to 75 billion dollars over the next decade. The permanent restoration of full expensing for US research and development will support domestic innovation and growth. Implementing the new provisions proceeded smoothly for tens of millions of Americans in the 2026 filing season. Regarding IRS modernization, Ranking Member Widen and I released the Taxpayer Assistance and Service Act, a bipartisan bill focused on modernizing the IRS, improving taxpayer experience, and strengthening taxpayer rights. I look forward to advancing this legislation and also establishing clear tax rules for digital assets. Mr. Secretary, we are very glad to have you with us today, and I turn to the ranking member for his opening statement.
Thank you very much. Mr. Chairman, there is lots to work on. This hearing is the first opportunity to examine the settlement of Trump's ridiculous IRS lawsuit. Trump sued his own administration for $10 billion over a tax return leak that happened on his watch. A judge was ready to toss the lawsuit, so Trump rushed a settlement for personal gain. The acting attorney general said the $1.8 billion insurrection slush fund is not moving forward, but the part that directly benefits Trump remains: Todd Blanch let Trump off the hook for potentially hundreds of millions in back taxes and canceled a long-running IRS dispute, and let the entire Trump family and organization off the hook for any past tax crimes. As of now, every American is subject to audit except the Trump family. Two former IRS commissioners confirm this is without precedent. Secretary Bessent owes an explanation, as Treasury was involved from beginning to end. This abuse of the IRS goes beyond anything I have seen. Last week, Secretary Bessent said the extra gasoline cost from the Iran war was less than $200 and dismissed concerns. And Trump said he doesn't think about Americans' financial situation. This administration is out of touch. There is also a cover-up of Epstein's financial records. Secretary Bessent is preventing access. The machinery of government works to benefit Donald Trump above all else.
Thank you, Senator Widen. Secretary Bessent, you may make your opening statement.
Could you pull the microphone a little bit closer? Sure.
Chairman Crapo, Ranking Member Widen, and members of the committee, thank you for convening today's hearing. I last appeared before this committee just before the Senate passed the working families tax cuts. This filing season, over 62 million tax returns claimed at least one of President Trump's new tax cuts: no tax on tips, no tax on overtime, deductibility of American car loan interest, and enhanced deduction for low- and middle-income seniors. The average refund increased by over 11%, with refunds up 18%. This legislation prevented the largest tax hike in history—over $5 trillion. Instead, we have better tax days. President Trump's pro-growth policies also include Trump accounts, which now have nearly 6 million accounts opened, with 1.4 million eligible for the thousand-dollar seed contribution. On trade, the goods trade deficit declined by approximately $370 billion, and the economy added 313,000 net private sector jobs and 13,000 manufacturing jobs in the past two months. Capital expenditures rose at an annual rate of over 17%. Our deregulatory efforts generated more savings last year than the entire prior Trump administration combined. Thank you for your partnership. And I want to add that Senator Widen has menacingly slandered the Treasury Department in an attempt to cover up his son's investment meeting with Jeffrey Epstein to ask for funding.
Let's be clear here. Nobody is interested in the ramblings of a capo in the most corrupt regime in American history. We want facts about this deal.
Well, thank you. I will ask my questions first today.
And we would like to hear what Adam Widen and Jeffrey Epstein talked about. Your son's largest investment position was Rick's Cabaret. So, did your son and Jeffrey Epstein talk about pole dancing as he begged him for money using your limited credibility?
I'm going to proceed with my questions. Mr. Secretary, regarding the settlement agreement between the president and the IRS over the leak of his tax returns: the Department of Justice announced it would abide by the district court's ruling on the anti-weaponization fund, and Acting Attorney General Todd Blanch said we are not moving forward with the fund. With respect to other parts, what can you share about Treasury and the IRS's role? Specifically, since IRS CEO Frank Bizano signed the settlement, what can you share about his role?
Thank you, Mr. Chairman. Treasury is following the direction of the Department of Justice. Acting Attorney General Todd Blanch testified that the government will not move forward with the fund, and we intend to comply. I have no additional details; this matter is subject to ongoing litigation. Treasury and IRS were represented by the Justice Department, so further questions should be addressed to DOJ and Acting Attorney General Todd Blanch.
All right. Thank you. With regard to the working families tax cuts, affordability remains top of mind. Last summer, Republicans prevented the largest tax increase in history and delivered pro-growth tax relief. Can you talk about Treasury's work to implement this relief and which parts are most helpful for affordability?
Thank you, Senator. Since the working families tax cut passed on July 4th, I describe the benefits as a barbell. On one side, immediate expensing of capital goods and factories has led to more jobs. On the other side, President Trump's signature policies—no tax on tips, no tax on overtime, reduced taxes on Social Security, and deductibility of American-made car loans—have helped. 99% of filers claiming these deductions had incomes under $200,000, and 90% under $100,000. We saw record refunds, and many people who paid substantial amounts last year received large refunds this year. Importantly, small businesses now have certainty for planning.
Thank you. The Senate Finance Committee is engaged in productive bipartisan discussions on digital asset taxation. There is an increasing need for durable rules that provide certainty, support innovation, and keep the US competitive. Does Treasury support comprehensive digital asset taxation? What are the risks of continued inaction?
Since President Trump's executive order, Treasury has been working tirelessly on digital assets. Congress passed stablecoin legislation—the Clarity Act—which I encourage everyone to support. It brings US best practices onshore and cements the US as the innovation capital of the world in custody and beyond.
Thank you. My time is expired. Senator Widen.
Thank you, Mr. Chairman. Secretary, yesterday acting attorney general Todd Blanch said the slush fund is not moving forward, but there's no indication on the Trump audit immunity. Does the IRS audit immunity for Trump, his family, and his businesses still stand? I want a yes or no.
You can ask me a question. You can tell me how to answer it.
I have five minutes. I'll use them.
As I said, unable to comment on ongoing litigation.
Okay. This immunity deal is the biggest scam against taxpayers in American history. Who originated the May 19th addendum cancelling Trump's audits—Trump, DOJ, or Treasury?
As Albert Einstein said, doing the same thing expecting a different answer is the definition of insanity.
You've given no answers. Does the DOJ have authority to settle a tax dispute unilaterally?
The DOJ acts as attorney for Treasury and the IRS.
The tax code says DOJ can only settle if you first defer the dispute. In this case, unless you referred every one of Trump's tax returns to DOJ, the addendum is invalid. Career IRS attorneys wrote a 25-page memo recommending dismissal of Trump's lawsuit. Did you see that memo?
Again, there is continuing litigation and I cannot answer.
Will you provide the committee a copy of that memo?
Again, continuing litigation.
Mr. Chairman, I ask you to authorize a 6103 waiver and for the secretary to waive attorney-client privilege.
I will not ask him to waive privilege. We will get to the bottom of this in a bipartisan way. The Biden administration prosecuted Charles Littlejohn, who leaked Trump's tax returns. Three days before Trump filed his lawsuit, you canceled Booze Allen's contracts. Did you know in advance Trump would sue?
Will you send the committee records documenting this decision?
Again, ongoing litigation. Senator, how he got here was a violation of President Trump's 6103 rights. 400,000 tax returns were leaked by Littlejohn, and the Biden administration only prosecuted him on two counts, not three.
We need a 6103 waiver to investigate properly. This settlement is the most brazen abuse of power in history. Every American is subject to audit except Donald Trump and his family. You cleared the way by canceling contracts. I suspect people at the highest level of Treasury crafted this corrupt gift.
Senator Grassley. I want to commend the department for protecting the integrity of the conservation easement deduction by holding abusive syndicated easements accountable. These transactions relied on inflated appraisals to save $2 in taxes for every $1 spent. They perverted a charitable deduction. I encourage you and the IRS to stand by recent settlement offers.
Good. Thank you, Senator. In 1981, with growing deficits and inflation, Paul Volcker advised Congress to cut spending and pursue growth policies. The working families tax cut law followed that approach, reducing spending by over $1 trillion while making permanent provisions like full expensing for factories and R&D.
How important has the working family tax law been for economic growth, job creation, and wage growth?
It has been essential. For four quarters, the US economy has grown at 2.6%, despite the Democratic government shutdown and the Iran conflict. On the household side, almost 50% of returns included one of the president's signature policies. On the business side, immediate expensing and 100% R&D expensing provide certainty that allows businesses to plan, hire, and invest. This capital stock increases productivity and real standards of living.
Sir, this will be my last question. You've been a proponent of targeting annual deficits of 3% of GDP. Under Biden we had 6.2% and 6.3%; in 2025, under Trump, it was 5.8%. How does the president's budget and deregulatory agenda get us down to 3%?
We do not have a collections problem; we have a spending problem and a growth problem. By constraining spending and growing the economy, we can pay down debt and get back to a 3% target by the end of President Trump's term.
Thank you. Senator Warner.
Secretary Bessent, yesterday the administration put Bill Pulte as acting director of national intelligence while he remains head of FHFA. Does Mr. Pulte even have a security clearance? Isn’t FHFA a full-time job? The idea of moonlighting as DNI seems insulting to the intelligence community. How would you describe his temperament?
I spoke with Director Pulte yesterday, congratulated him, and look forward to working with him on FHFA matters. Many teams squabble in the locker room and go out on the field.
He has a record of not respecting confidential information and weaponizing mortgage information. Giving him the keys to classified secrets is an embarrassment. On agentic AI, do we need a strong fiduciary regime? The president’s executive order is voluntary.
The president’s executive order strikes a good balance between innovation and safety. I’ve met with large language model labs and the largest banks; they are setting strong standards. The rest of industry can learn from them.
I believe a voluntary regime is insufficient and will put our banking and national security at risk. We also need to get CDFI money out. 32 senators have asked; it’s sitting there.
We have gotten out what was allocated. OMB did not apportion until April 8th, and we are getting the funding out.
Secretary, thank you for being here. Your team has been fantastic on housing issues. I want an update on the Bitcoin strategic reserve established by President Trump’s executive order. Economic security is national security.
Economic security is national security. I gave a speech at the Reagan Library on that. Under President Trump, we are moving forward quickly on digital assets. The strategic Bitcoin reserve is new ground; we are proceeding with all deliberate speed and best practices. I look forward to the Clarity Act passing this summer.
President Trump signed an executive order on IRA accounts for workers without employer-sponsored plans. Do you have a timeline for Trump accounts 2.0?
Trump accounts launch on July 4th, go live July 6th. After that, we will focus on IRA accounts.
Great. On opportunity zones, can you update us on streamlining the nomination process and best practices for governors?
Every Democrat voted against opportunity zones. This bill expanded rural opportunity zones. Treasury is engaging with state officials to provide transition guidance so investors can keep putting capital into communities that need it most.
Thank you. Senator Hassan.
Good morning, Secretary. The Treasury Inspector General said moving up business filing deadlines could prevent a billion dollars in fraud. Will you work on a bipartisan basis to advance this proposal to stop identity theft and fraud?
We look forward to working with both sides on that.
On the settlement, the acting attorney general said the slush fund is off the table, but the grant of tax immunity for the president and his family still stands. This sweetheart deal could cost at least a hundred million dollars. Secretary, President Trump said he does not think about Americans' financial situation. Do you think about their financial situation?
I do. And as the ranking member distorted my statement, I prefaced that these are challenging times and the average household has paid about $200 more in gasoline. We think about this every day.
Do you think your boss should think about it too? He said, 'I don't think about Americans' financial situation.' Are you telling him the truth about increased costs?
I have to disagree. Groceries are going down. Since President Trump took office, food at home is up 2.5%, half the annual rate under Biden.
When’s the last time you were in a grocery store? Granite Staters have paid $3,000 more since Trump took office, and the country lost 100,000 manufacturing jobs in 2025. Neither you nor the president acknowledge the pain. The administration claims lowering costs is top priority, but Trump requests a billion-dollar ballroom, spent $45 million on a military parade, proposes a $100 million arch, and now a $250 bill with his face. How does that lower costs?
Senator, you are incorrect. There is no cost to the American people for a new bill. The ballroom’s decorative part is privately funded. The parade goes on outside my office every day; it matters for national security.
Mr. Secretary, I don’t recall Democrats being exercised about $5 gas and 9% inflation in 2022. Pyromaniacs like fire. Since President Trump took office, food at home increased 2.5%, moving toward the Fed’s 2% target. We haven’t heard an apology for the massive fraud. GAO estimates $250 billion annual fraud; LexisNexis says about a trillion. What is your estimate?
At least $500 billion, sir.
Again, this is a range of somewhere between 3.3 and 13.3% of our budget.
A recent story I heard on the radio this morning of a fraudster in California, in one year from May 22nd to April 2023, made $270 million in claims. He was paid $178 million in fraud in California out of Medicaid. Do you have any idea how much of that $178 million was recovered?
Sir, what I can tell you is once the money goes out the door, it's very difficult to recover. The best way to prevent the fraud is to prevent it before it goes out the door. And Senator, I will tell you the other heartbreaking part of this is I did a roundtable in greater Minneapolis, and there were several owners of autism clinics there, valid clinics, who are having trouble getting funded and they are doing the right thing for these families and for those children.
Right, so the fraud prevents the money going to the people who truly need it, that it's really intended for.
And that's my point. The Department of Justice publishes their list of indictments and prosecutions. About $4.7 billion is being prosecuted out of a total of somewhere between $250 billion and $1 trillion in fraud. So I know Dr. Oz suspended payments to 400 hospice centers in California. Los Angeles has a third of all hospice centers. They suspended payment to 400, and not one of them complained. Why wouldn't one of those 400 hospice centers not complain about losing their funding?
Again, Senator, we can speculate that it's fraudulent. And the key here, Senator, is transparency. We need to be able to see where this money is going. For everything that went on in Minneapolis and Minnesota, there was transparency. There was a list of the learning centers. You were able to see how much they received, the address, the people.
But Democrat government officials ignored that transparency. It was right there, they had access to it, they ignored it.
Well, they ignored that. But in many states like New York State, Illinois, they refuse any level of transparency. I believe that's true of the governor of Wisconsin as well, refusing to turn over records on some of the welfare benefits of Wisconsin.
This should be a bipartisan issue, sir.
So what can you do to prevent it? I mean, Dr. Oz obviously just suspended payments. I'd imagine you're somewhat limited there. I know Vice President Vance has got a fraud task force. We've got to get our arms around this and we're not going to get any help from the other side of the aisle. So it's going to have to be done through executive action. What can you actually do?
We are supporting Vice President Vance in this task force. There has been a new assistant attorney general appointed to do this, and this is an all-of-government effort by the Trump administration.
Well, we wish you luck. This is crucial. Thank you, Mr. Chairman.
Thanks very much, Secretary. Welcome. Have you identified any precedent in Treasury or IRS history for the agreement not to audit, investigate, or pursue any tax claims against the Trump family or businesses?
I can't identify any precedent where 400,000 tax returns including the people you just mentioned and all of their employees were leaked in a violation of the most sacred duties of the IRS.
The leak was by a contractor.
Can you tell me what contribution is being sought by Treasury or by the IRS for the harm done by the contractor? To a certain extent, your organization and the IRS are the victim of the contractor's malfeasance or negligence. What is being pursued by way of contribution by that contractor?
Well, the ranking member chastised me for cutting the contractor's contracts off, and we have removed their contracts, their ability to do business with Treasury and the IRS.
But there is no contribution into this particular case?
Again, Senator, you weren't here earlier, but I'm unable to discuss most of this because of ongoing litigation.
Yeah, I know you, like everybody, likes to say that.
We like to follow the law, Senator.
The law is that Congress has constitutional oversight functions that do not disappear simply because there is litigation, however convenient it may be by way of providing answers. So we have no precedent for it. No contribution is being sought from the contractor at fault. Was there any consideration to the government in return for the benefits of no audit, no investigation, no challenge or pursuit of refunds or other penalties?
Again, Senator, I'm unable to comment because of litigation. Treasury is represented by the Department of Justice in all matters. They act as our attorneys. So I would suggest that you direct your questions to Acting Attorney General Blanch.
Yeah, well, I've had a lot of times people who are before us invite me to ask my questions of somebody who's not before us, but you're the one who is before us. And I think you ought to know if there was any consideration offered or paid in return for that settlement. It's a very simple fact question. Was there or was there not consideration?
Again, there's ongoing litigation, and I suggest that you speak with the Treasury attorneys.
If this kind of behavior is okay with the chairman, I'll just pursue other questions. But you know, what goes around comes around in terms of dodging questions.
I believe it's very clear that witnesses of any kind cannot discuss ongoing litigation. They can certainly discuss a fact that they are aware of. The fact that there is some litigation out there doesn't mean that a witness can't say, 'Yeah, there was no consideration,' or 'Yes, there was consideration.' Was there a defense analysis memo? It's referenced in the judge's decision in Florida. Was there a defense analysis memo prepared by the IRS? And more specifically, did you see it?
Again, I'm not going to be able to comment on these matters.
Mr. Chairman, this just makes no sense at all. I've been a lawyer all my life. I have some idea of what is protected when you have ongoing litigation. Whether this individual has seen an official memo from within his own department is a very simple question to answer, and I think it's completely inappropriate to have this game of dodge be pursued without any consequences. Well, last of all, here's another question. Was there any analysis of what harm befell President Trump from having his taxes released when every president since Nixon released their taxes, and he had promised to? Did anybody analyze whether there was actually any harm at all to him in those circumstances?
There was a crime. The president's rights under 6103 of the IRS code was violated, and equally as important, 400,000 taxpayers had that right violated, including every employee of the Trump administration, the housekeepers at DEA, the greenskeepers, the cashiers.
You're welcome to all of that, but it doesn't answer the question of whether the president actually suffered harm, and you're not answering that question either.
Welcome, Secretary Bessent. Let me ask you this on a separate subject. Federal law prohibits the image of a living person from appearing on US currency, and that includes the President of the United States. Isn't that correct?
That is correct, Senator.
Thank you. There's reporting that your US Treasurer, Brandon Beach, and his senior adviser, Mike Brown, have been repeatedly urging staff at the Bureau of Engraving and Printing to prepare prototypes of a $250 bill with President Donald Trump's face on it. And in fact, in August and September, Beach provided bureau staff with mockup designs for the note, including one that shows President Donald Trump's face in the center of the $250 bill between the signatures of the president and your signature. It is also reported that the artist who said he designed the mockup told the Post that he had spoken with Trump about it. Is it true that your staff is pursuing a mockup of this bill with President Trump's face on it?
That was in coordination with pending legislation in the Congress to change the requirement that a person must be deceased to be on the currency.
So you're acting before legislation has even passed to authorize it. Is that correct?
Just as we did with the Working Families Tax Cut, we were prepared in advance. At Treasury, we do things in advance. My predecessors seemed to scramble to do things at the last minute.
If the law does not pass, do you intend to still move forward without the authorization from Congress?
Of course not. We will follow the law.
Thank you. Let me ask you this question with respect to the agreement and the lawsuit settlement that a lot of my colleagues have been talking about shielding the president, his family, and corporations from any future audits. You are the acting IRS commissioner. Correct.
What is your position right now with the IRS?
So you have no position with the IRS whatsoever?
The IRS is a bureau that reports to Treasury. When there is no commissioner, those duties floated up to me.
All right. So there's no interaction that you have right now or responsibility over the IRS other than the commissioner's there? The commissioner has free reign and you don't have any authority to stop anything?
No. There is no commissioner, so I assume those duties.
So you're acting commissioner.
Okay, so for purposes of the public, let's get it straight so the public knows your involvement. There is no commissioner.
There's somebody that is acting. I had previously been the acting commissioner. Senator Warren, who likes to send me a lot of letters, was kind enough to send me a letter.
I'm just trying to figure out your role with the IRS for the purpose of the public and transparency. What is your role currently with the IRS in your authority?
I am performing the duties of the commissioner.
Oh, okay. Got it. So let me ask you this because you talked about not only Donald Trump and his family, but there were 400,000 taxpayers' information that was also leaked by Mr. Littlejohn, the contractor working for the IRS. Do you intend to give them the same immunity as President Trump and his family received?
Again, you were not here at the beginning. I had a statement that I read to Chairman Crapo that I am unable to provide any additional details due to litigation.
Well, that's not part of the litigation. The 400,000 taxpayers aren't part of the litigation. You have said there were 400,000 taxpayers' information that was also leaked. They're not part of that litigation. Do you intend to give them the same immunity that you gave Donald Trump and his family and corporations that were part of the litigation?
Senator, you may have missed the first part of this, but Treasury does not give any of that. We are represented by the Justice Department.
That's right. You're the acting commissioner. As acting commissioner, you had said earlier you had concerns about those 400,000 taxpayers whose documents were leaked by an independent contractor with the IRS. If you have concerns about those 400,000, do you intend as acting, or whatever role it is you have as the IRS commissioner, do you intend to give them the same type of treatment?
We will follow the instructions and the settlement.
That was not part of the settlement.
That was not part of the settlement. Clearly we will follow.
Let me just say that was not part of the settlement. It's been very clear you're dodging this and you're trying to use it as an excuse. It's just outrageous on behalf of the American public.
And I will follow the law as an excuse, Senator.
When you were going through your confirmation process, you stated that your goal was to get the federal budget deficit to 3% of GDP by the end of President Trump's term. However, in the administration's budget proposal for this year, it projects a deficit of over 5% of GDP by 2029. Do you no longer intend to achieve that 3% goal?
I do. I said something with a three in front of it, and we in fact had a fiscal contraction last year, so we are already in the five range.
You said something with a three in front of it. All right. I appreciate you being here.
Secretary Bessent, great to have you here today. You and I have discussed shipbuilding in the past and the importance of shipbuilding. I've seen you recently offer your thoughts about the importance of this issue and the importance of rebuilding our shipbuilding enterprise here in the United States. The president has also spoken quite forcefully about the threats associated with having a shipbuilding enterprise that is weak and unable to produce enough ships for the needs of our nation. In fact, his executive order on restoring America's maritime dominance and his subsequent maritime action plan highlighted with some specificity the challenges and the opportunities that we face. So I'm grateful for his leadership, grateful for yours. We know China has invested heavily in this industry. They of course have a centrally planned economy and they've overinvested in their capacity. I've been briefed that China can actually build over a thousand oceangoing vessels in a year. The United States built one last year, one oceangoing commercial vessel. For those who are skeptical of industrial policy, and I think that's a healthy skepticism, there's a reason we don't have a centrally planned economy. But from time to time, you need to deviate from the catechism. Adam Smith himself, the father of free market economics, identified shipbuilding as the one industry that a maritime nation cannot be allowed to have offshore. So you and several other members of the cabinet, Mr. Secretary, have highlighted this need to restore our maritime industrial base. But we know we can't do it without giving the president of the United States additional authorities and resources he needs. That is why Congress in a bipartisan way needs to pass the Ships for America Act and pass it now. Mr. Secretary, how are you thinking about these issues and do I have your commitment to work with Congress to start building ships in America again?
Senator, as you know, President Trump signed an executive order to restore US maritime capacity. I gave a speech at the Reagan Library on Friday where I talked about the critical industries that we needed to reshore, and top of mind there was the shipbuilding industry. And as important as the industry is, the reservoir of knowledge that we have should we get into a great power conflict.
That's exactly it. We haven't, because of cheerful scenario planning, thought through how we're going to repair all our Navy vessels and, if necessary, build new Navy vessels in a time of long war scenario. A long war is a war that might exceed just a couple of months. So it's an acute issue. I agree with you, Mr. Secretary.
Senator, we look forward to working with you to connect industrial capacity, logistics, resilience, and we want to work with you and your team toward this end.
That's highly encouraging. I'll take you up on that, sir. I'm going to pivot very quickly to China's advantage as it relates to critical minerals, not just as it relates to the supply, but they've come up with a way to manipulate our markets. They shape prices, they restrict exports, they absorb losses, they create all this uncertainty that keeps private capital from financing US or allied critical minerals projects. And I've come up with a solution to help address this. We call it the Secure Minerals Act. Mr. Secretary, it's designed to create a strategic resilience reserve. This would be a government corporation and it would employ tools like loans, acquisitions, non-recourse lending, advanced market commitments, contracts for differences, and partner country co-investment. The goal is of course not to compete with or replace private capital, it's to create enough price stability and demand certainty to build domestic and trusted partner capacity. We want people investing in processing and digging new mines and all the rest. So Mr. Secretary, as the administration considers tariffs on processed critical minerals and derivative products, my question is: should those tariffs be paired with a financing mechanism like the strategic resilience reserve to make the capacity we need commercially viable?
Sir, through EXIM Bank we are working on Project Vault to do much of what you are talking about, and it is critical to have critical minerals. And as you said, the predatory pricing that China has done for 25-30 years, just like in shipbuilding, critical minerals is one of the key industries that we're focused on.
My hope would be that I can work with you to give more legal certainty to that very important Project Vault you're working on, so that after the Trump administration leaves, which will be in a couple of years, there can be a legacy of enduring law and operations so that we've addressed this challenge related to our critical minerals vulnerability. Might I work with you on that effort?
We look forward to working with you, Senator. It is a priority for this administration and for Treasury and indeed for myself.
Thank you, Mr. Secretary.
Mr. Chairman, thank you. Secretary Bessent, it's good to have you here this morning.
Good to see you, Senator.
Grateful for all you are doing. A steady hand of wisdom there in the West Wing as you are working and solving some of the difficult challenges we face as a nation. So thanks for your service and appreciate you being here today. And I want to start by emphasizing how pleased I was when I saw the IRS's settlement offer for taxpayers involved with conservation easement tax disputes. For years I've been sounding the alarm here on Capitol Hill on the abusive syndicated conservation easements falsely claiming a charitable donation solely to turn a profit. And I'm an avid outdoorsman, a guy from Montana. Protecting our farmers and ranchers and championing conservation is one of my biggest priorities as I represent the state of Montana here the past 13 years. I know this is a shared priority for you and this administration, which is why I commend you for your help in implementing and enforcing this settlement. So it's a thank you.
I also want to thank you for your hard work as we worked together over much of the last year on the Working Family Tax Cuts Act that was passed and signed into law. We're seeing some great results in Montana. In fact, Montana received an average nearly $3,600 tax cut on their tax return this year, and about 105,000 Montana small businesses will benefit from permanent tax relief through that 20% pass-through deduction. And we know the pass-through side of the equation actually supports more jobs than the corporate side. So we did something here that's going to be helpful to create more jobs and importantly job growth and income growth here for so many American people.
Senator, I have very clear recollection of you in the cabinet room expressing to myself, White House staff, and the President the need for permanence. So I think that will be one of your great lasting achievements once you retire.
Well, Secretary Bessent, thank you. I know we both knew that permanence was an important part of the equation to remove the uncertainty that's oftentimes found in the tax code with expiring tax provisions. And there's enough uncertainty on Capitol Hill sadly that happens because of whether it's overreach and regulations or uncertain taxes. But to take that off the table I think was one of the great achievements that we faced. But thank you for your kind words. I do think that we're going to see the benefits of this bill for many years to come. On Capitol Hill, anytime we pass something that's 800 pages plus in length, usually the more you dig into something, the worse it gets. Oftentimes with big pork barrel spending bills. In this case, the more you dig into that Working Family Tax Cut bill, the better it gets.
Sir, the statistics are unbelievable. We saw at the IRS that 61 million filers filed for at least one of the signature policies. And we are seeing an industrial renaissance because of the immediate expensing for equipment, factories, and farm structures.
Well, it's music to our ears. It's what we predicted would happen. You put that kind of incentive structure in place. And I also believe as we think about our China strategy, having that 100% expensing in the R&D investment to incentivize innovation will be another lasting legacy from what we accomplished together over the course of last year. I'd like just to ask you an open-ended question around how passing that largest tax cut, or set another way, preventing the largest tax increase in American history, and making it permanent, is that making the American taxpayer better off?
Sir, I believe that, as you said, giving great certainty whether it's to households, small business, or large business, that provides for them to create capital stock, capital spending, and increase productivity. And increased productivity is what leads to higher standards of living across the country.
Last question I have is on digital assets. Digital assets have moved from the margins now more to the mainstream. It's been clear that our tax code hasn't kept up. We bear that responsibility now to put a tax structure in place. I'm taking the lead here in the Finance Committee. That's why we've been developing a framework that could give us clearer rules for digital asset taxation. Following the passage of the GENIUS Act, digital assets are becoming more integrated in our financial system and I believe are going to play a growing role in our economy and the potential to keep driving investment in the United States. The numbers speak for themselves. The total crypto market cap reached $4 trillion for the first time in history. Stablecoin transaction volume was $33 trillion, a 72% increase from 2024. The number of crypto mobile wallet users reached an all-time high, up 20% from last year. I do believe it's important that we provide some clarity as it relates to tax, and that's our responsibility here that I'm working on at the moment.
The time of the gentleman is expired.
Could I finish one final question if I could? Secretary Bessent, as the administration continues its work in digital assets, will you commit to working with Congress on implementing digital asset taxation legislation?
I will commit to that. And tax certainty, as we've seen with every other industry, is the key to innovation.
Great. Secretary, thank you.
Time of the gentleman's expired. The chairman's return. Senator Smith.
Thank you, Mr. Chair and Ranking Member, and welcome to the committee, Secretary Bessent. So, though I've not been in the room, we have this thing called closed circuit television in the Congress. So I've been able to watch the hearing in my office. Many of my colleagues have tried to get at this so-called anti-weaponization fund that was created in a settlement with the president after he sued his own IRS for $10 billion that includes this provision that bars the IRS from auditing or taking any enforcement action on any of the president's tax returns or those of his family. And I understand you've repeated many times that you cannot respond to this because of ongoing litigation. I want to just associate myself with the points that Senator Whitehouse made, which is that I don't quite understand how we're able to do our oversight responsibilities if we can't ask any questions when anything is even in the vicinity of ongoing litigation. So let me see if I can ask a question that I don't think has anything to do with the ongoing litigation. My first question is this: Secretary Bessent, did Brian Moresy, your former general counsel, ever raise concerns over the establishment of the anti-weaponization fund before he left his position, before he resigned?
Again, that's attorney-client privilege, Senator.
That would have been a privileged conversation.
Well, let me ask this. Does Treasury agree with the Justice Department in thinking that the court decision blocking payments out of the slush fund was incorrectly decided?
Again, we do not have agency in this. We defer to the Department of Justice, the acting attorneys, and they represent us. So you should refer any of those questions to Acting Attorney General Blanch.
Okay, I'm going to come back to that. But do you at least commit to following any and all court decisions regarding the establishment or the administration of this slush fund? Do you see those court decisions as legitimate that you would follow?
You follow the law. So that would mean that you would follow a court decision. You wouldn't have your own opinion about what the law is. You would follow the decision of the court. Am I understanding you correctly?
We will always follow the law.
You'll follow the decision of the court.
That's not what I'm saying. You know, Mr. Secretary, you've said that Acting Attorney General Blanch is representing Treasury and the IRS here. Would you have any... I'm wondering, Mr. Chair, if maybe the committee should call Acting Attorney General Blanch to appear before our committee if Secretary Bessent is unwilling to answer any questions about the IRS, which as my colleague Senator Cortez Masto established, Secretary Bessent is overseeing. I don't expect a response to that, Mr. Chair, but I ask a question just reasonably. How are we going to find answers to these questions if we can't get them from the secretary?
As the secretary has said many times, exactly the attorney-client privilege and the relationship they have with the Justice Department prevents him from answering.
So, Senator, you asked if I would follow the law on a court ruling. I am following the law here-
What I noted, Secretary Bessent, is you wouldn't say that you would follow the court and their interpretation of the law. You said you would follow the law, which is different as we know with this administration. But I have just a few minutes, a minute and a half left. I want to get actually to the farm economy. This is something that you and I have discussed many times starting when you first came into my office. You called yourself a soybean farmer. Though I think that Montana farmers would differentiate between wealthy land owners who rent their land versus people who actually do the farming. But I can tell you that in Minnesota, Mr. Secretary, a lot of farmers are really feeling the pain. According to the Farm Bureau, farm bankruptcies were up almost 50% this last year. Minnesota has the most farm bankruptcies in the country in the first quarter of 2026. And the Farm Bureau tells us that six out of 10 farmers are reporting declining financial situations. So it's rough out there. Fertilizer prices are up, diesel prices are up. Could you just explain to me and to farmers in Minnesota how those increased prices driven by the war in Iran are worth the pain that they are feeling right now?
Senator, do you believe that Iran can have a nuclear weapon?
Mr. Secretary, this is my time to ask you the questions. How do you respond to Minnesota farmers who cannot afford the fertilizer they need?
Well, I think if you were to look in the dictionary, the definition of a farmer is someone who owns a farm and farms the land. And so as a former farmer, I will tell you that maybe you know that 75% of the fertilizer had already been purchased this year.
That is not what my farmers in Minnesota are telling me, sir. They are telling me that they cannot afford their fertilizer and they know the reason why.
There is no doubt that farmers have been struggling. But much of that... there was a record crop last year, Senator. And what do record crops lead to?
So I'm sure I will take that back. I will take that back to my producers in Minnesota that they have somebody in this Department of Treasury, a former farmer, who is feeling their pain. Thank you.
Mr. Chairman, thank you. Mr. Secretary, thank you. You know, a year later after passing the Working Families Tax Cut Act, I have to tell you, it's been remarkable how fast Treasury has moved on implementation in a lot of the areas. We worked a lot together on things like full expensing and making that permanent and trying to get that established long-term. That makes an enormous difference for our farmers and ranchers that are trying to buy equipment right now to be able to do that expensing. Commodity prices are down, fertilizer prices are up. But I would tell you, fertilizer prices started spiking under the Biden administration, not in the past two weeks here and certainly not in the past two months. Gasoline prices now are what they were during the Biden administration in a spike, and there wasn't a war in Iran, and under the Biden administration we had 9% inflation during that time period. So there's been tremendous amount of growth in the economy here, which I appreciate your partnership on. We've also worked a lot on the charitable donation side of things, and I appreciate the substantiation requirement information that Treasury and IRS has put out that helps a lot of folks that are donating now to nonprofits. And the work that we've done together... there is still work to do on the donor advised funds. There were some Biden administration regulations that came out that were directly targeted at the donor advised funds that have caused real problems. Those are folks that are directly helping nonprofits and charities all over the country, but they're feeling some real pain from some additional changes in regulations. So I know this administration's been very aggressive at reviewing regulations and looking at it. I would only ask you to review as well the Biden administration regulations on donor advised funds, because that's directly taking money away from people that need it the most and folks that want to be able to help.
Senator, I will be happy to instruct our Office of Tax Policy to work with you and your staff on this. I know it's an important issue for you.
It is. Thank you. Look forward to that cooperation together to be able to look at it to be able to make sure the regulations work for every American. I want to talk a little bit about what you've done so far on the sanctions on drug smuggling and specifically targeting all these cartels that are in Mexico and in Central and South America and trying to go after that. You've seen some progress. Some new techniques have been done to target individuals and entities to try to limit the amount of smuggling. I want to just get an update from you. Dollars have been allocated. You've asked for additional dollars directly related to terrorism and drug smuggling cartels. This is a budget hearing. What's happened so far? Have those budget dollars previously been used? What are you asking for additional dollars for in that?
