CEOInterviews.AIFull Committee Hearing with Treasury Secretary Scott Bessent

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Chairman Smith18:59

The committee will come to order. Welcome back, Secretary Bessent, to the best committee in all of Congress, the Ways and Means Committee. Since you last came before this committee, the average American has more money in their pocket from the working families tax cuts. This filing season, refunds were up more than 11% and tax refunds totaled nearly $325 billion. A family of four with two kids making $73,000 or less owed zero in federal income taxes. 62 million Americans claimed at least one of President Trump's new tax relief priorities such as no tax on tips, no tax on overtime, no tax on social security, and no tax on auto loan interest. Your department just revealed that the majority of Americans who benefited from these policies earn under $100,000. Nearly 6 million kids now have Trump accounts to save for their future. Nearly 40 million families claimed the child tax credit that was increased to $2,200 and permanently indexed for inflation so that the credit never loses value. Americans across the country are experiencing what tax relief means for them. At a hearing, a waiter from Arizona told us how he is using his tax savings from no tax on tips to start law school. A Texas steel worker said he can now afford to start a family from no tax on overtime. A couple in Texas adopted a second child with the help of the adoption tax credit. And in every community, working-class Americans have their own version of the story. Because President Trump and Republicans in Congress delivered real tax relief. However, every single Democrat voted against this tax relief, hiding behind the false claim that these tax cuts only help billionaires. But we all know the truth. There aren't any billionaires who work for tips. I don't know any billionaires that work for overtime. There aren't any billionaires who rely on social security. There aren't any billionaires that need an auto loan to afford a car. Republicans targeted tax relief to the Americans whose paychecks were stretched thin by Democrat inflation that needed help. The working families tax cuts provided bigger refunds and bigger paychecks and permanent pro-growth tax policy. And it will make it easier to build, to invest, produce, and hire in America. Our economy is in the middle of a historic construction boom that means new jobs and opportunities for working-class Americans. Factory activity grew every month this year and reached its highest level since May of 2022. Equipment investment rose 17% and investment in intellectual property rose 11% in the first quarter of this year. In the same period, economic growth was driven by two things, investment and exports. Republican policies are making investing in America a solid bet for companies after decades of America's manufacturing power declining. The president's tax and trade policies work hand and glove to fuel the economic investment that creates great paying jobs. Reciprocal trade agreements have secured $10 trillion in investment commitments in leading industries, opened new markets formally hostile to US exports, and made our trading relationships fairer for American workers, farmers, manufacturers, and producers. American producers exported just last year a record $3.4 trillion. And in the first three months of this year, US exports were over $300 billion each month. That's the highest in 250 years of our country's history. America is becoming less dependent on China. A goal long promised by Washington politicians with no actual progress until President Trump. Our trade deficit with China fell 32% last year to the lowest level since 2004. The Chinese recently agreed to purchase at least $17 billion annually in US agriculture products through 2028 alongside more Boeing airplanes. President Trump and Republicans in Congress repealed the de minimis privilege that mostly benefited Chinese companies shipping products undercutting American producers and manufacturers. Our economic security is a cornerstone of our national security and therefore must not be abused by bad actors. Yet, this committee's investigation into US-based nonprofits revealed many are funded or operate under the influence of foreign countries like China and they sow division and chaos in our communities that weakens America and strengthens foreign adversaries. Tax exempt status is a privilege, not a right. We have called on the IRS to investigate and if necessary revoke the tax exempt status of 11 different organizations who are the focus of our investigation. It is critical that the IRS take a close look at tax-exempt organizations with documented histories of activity that destabilizes society and supports terrorism. Looking ahead, our tax policies must continue to make our economy the most competitive for innovative sectors of the future, including digital assets and the over 60 million Americans who own cryptocurrency. America needs clear modern tax rules to ensure we remain the crypto capital of the world. Next week, we will be holding a legislative hearing on policies that offer solutions to pressing issues surrounding digital asset taxation. Mr. Secretary, I know you are a strong advocate for ensuring Main Street shares in the prosperity of our economy and I look forward to hearing how Treasury is implementing the working families tax cuts so that Americans who power our economy, workers, small businesses, farmers, manufacturers, and producers and innovators have a brighter future. I now recognize the gentleman from Massachusetts, the ranking member.

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Ranking Member Neal27:45

Thank you, Mr. Chairman. Mr. Secretary, welcome. As always, the chairman made the point that this is the best committee in Congress. That's likely to be one of the few things we agree upon this morning, as all know. And you hold, as I pointed out in the past, one of the most important jobs in the world as a successor to Alexander Hamilton. We hope that there'll be some explanations this morning about the failures of many of the economic promises that were made by the Trump administration. 70% of the American people disagree with the economic direction that the country has taken. Last time you visited with us, Americans were being socked with price hikes because of the tariffs where you and I met in front of the Supreme Court that day when the Supreme Court took and heard the oral arguments because of the big ugly bill. We fought on our side every step of the way, knowing and predicting what was to come: higher costs, millions kicked off of health care, children going hungry, all in service to the wealthiest amongst us. Despite this, a rosy picture was painted about the Trump economy and what it might deliver. It's safe to say that almost on every front, those predictions from the administration have been wrong. Workers and families are being forced to stretch their dollars further every day. And the pain so clearly stems from many of these projects, including what was supposed to be a cessation of endless wars. We've watched the price hikes that are coming because of this tariff regime. And during testimony last year, you suggested that the Trump policies would lift the working and middle class and reinvigorate American manufacturing. It was stated that take-home pay and wages would increase. You relied upon consumer confidence data to tout the strength of the economy. You pointed out that inflation was improving and that costs including food, energy, and shelter would be coming down. And now we have a chance to reflect upon what actually happened, including the slow walking of the tariff refunds that are due. Families are forced to shell out $1,700 more last year to cover many of the costs that were estimated to be rosy here not that long ago. Between the tariffs, the Iran war, prices are rising faster than they have in years. Last month, the inflation rate ate up paychecks. I appreciated the chairman's position on pointing out that there has been a routine of 3% increases, but when you're paying more for everything else, that quickly goes away. The price of a tank of gasoline in many places has gone up by almost 50%. That's a staggering amount. And despite the bullish assessment in January that economic growth would hit 5.4%, 4% in the fourth quarter, that growth came in at approximately one half a percent. Not even a full percentage point. That's not spin. Those are facts. The administration continues to argue that down is up and to convince people that their pain should be subjugated to patriotic causes. Whether celebrating higher credit card delinquencies on households, they're spending more every day because of the economic policies of the administration. As if the $1,700 to cover the tariffs wasn't enough, estimates are now showing that the war in Iran has already cost households another $750. And while an extra $200 in gas costs might not be a lot for some folks in the administration, it sure is for a lot of working families. I'm sure we're going to hear that there are many attempts to save the economy by touting the refunds. Those refunds were eaten up almost overnight because of increases in gasoline prices. Tax refunds fell short of the promises by 65% and have been completely wiped out, as I noted, by price hikes. The president's attention remains everywhere. But what's most important, as he said, he's not thinking about people's financial situations. He tends to be focused on more vanity projects, including a ballroom and an arch and painting the reflecting pool. We are now ready for a cage fight on the south lawn and perhaps a $250 bill with his photograph on it. We look at what has happened recently with a slush fund that was created and our Republican colleagues continue to go wobbly on their defense, perhaps not understanding how this is playing with the American people. I know the administration has been busy trying this week to explain all of it, telling members of Congress that the slush fund is dead. Apparently not consistent with what the president offered but 24 hours ago. Let's be real. The $250 bill maybe might be needed because of the price hikes that are coming to the American people. Americans have made this very clear. 77% say the policies have increased the cost of living and more than half say it's worse than they can previously remember. Consumer sentiment is currently at a record low. The savings rate for Americans has dropped to 2.6%, cut in half in just a year. When we look at this economy, we see failure upon failure. The policies that have been proposed have really not worked for average Americans. Families are getting crushed and we would suggest today that a new course of action needs to be taken. Republicans have made it clear that they don't want to put a stop to the chaos, but Democrats are unwavering in our fight for American families to lower cost and to end the harm that is being done. Thank you, Mr. Chairman.

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Chairman Smith33:36

Thank you, Ranking Member. Today's sole witness is United States Secretary of the Treasury, Scott Bessent. The committee has received your written testimony and it will be part of the formal hearing record. Secretary Bessent, you have five minutes to deliver your remarks and you may begin when you're ready.

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Scott Bessent33:52

Good. Chairman Smith, Ranking Member Neal, and members of the committee. Thank you for convening today's hearing. I'm grateful for this opportunity to discuss President Trump's 2027 budget, which builds on this administration's progress in unleashing a new era of economic expansion. I last appeared before this committee just a few weeks before the House passed the working families tax cuts. So, on the heels of the most successful filing season in IRS history, I'd be remiss if I did not begin by thanking the committee for helping to deliver this once in a generation bill to the president's desk. This tax day under President Trump, we celebrated how much more money hardworking Americans kept, not how much the government took. Over 62 million tax returns claimed at least one of President Trump's signature new tax cuts: no tax on tips, no tax on overtime, deductibility of American car loan interest, and an enhanced deduction for low and middle income seniors. All told, the average refund increased by over 11% with total refunds increasing by 18%. But as important as what the legislation achieves, it is what it prevented. If opponents of the working families tax cuts had had their way, our economy would have absorbed the largest tax hike in its history, over $5 trillion. 90% of American taxpayers would have seen their standard deduction slashed while 40 million families would have seen their child tax credit halved. Instead, this committee held the line and the American people had a better tax day because of it. Notably, President Trump's pro-growth policies don't stop at putting more money back in the pockets of working and middle-class families. They extend to placing the American dream within closer reach of their children. For context, nearly 40% of Americans have no exposure to US equities, no stakes in the companies they helped to build. Trump accounts represent a profound reimagining of that arrangement. They will ensure that every American child can benefit from private ownership and compound growth, that every American child, in short, is born a shareholder. To date, nearly six million Trump accounts have been opened with 1.4 million eligible for the $1,000 seed contribution from Treasury. Of course, as his tax cuts deliver relief for working-class Americans, President Trump's economic agenda is bolstered by two other distinct but reinforcing levers: trade and deregulation. Let me briefly address both of these in turn. First, the president is undeterred in his determination to open markets for US goods and services while rebuilding US manufacturing capacity. Over the 12 months ending March 2026, the trade deficit for goods declined by $370 billion compared to the same time frame ending March 2025. The economy has added 313,000 net new private sector jobs and 13,000 manufacturing jobs. In the past two months, firm capital expenditures rose at an annual rate of over 17% in the final quarter, and companies are investing trillions to build and expand here at home. American industry is winning again to the benefit of American workers. A whole of government approach, meanwhile, is coupling our manufacturing revival with a great regulatory reset. Properly calibrated regulation is essential for economic growth, capital formation, employment, and higher wages. So at the outset of this administration, President Trump set the ambitious benchmark of slashing 10 existing regulations before issuing a new one. In 2025, we shattered that goal with a ratio of 129 to 1. And as a result, the regulatory actions generated more savings last year than in those of the prior Trump administration combined. Separately, any one of these initiatives on trade, tax cuts, and deregulation would be substantial. Taken together, they are transformative. Before President Trump took office, our trading partners exploited America's markets, our regulatory state smothered businesses, and our tax code was poised to punish workers and job creators. Today, his policies are driving lower taxes, bigger paychecks, and broader prosperity. So, I thank this committee for its partnership in this critical work, and I look forward to building upon our strides through the president's budget for the year ahead. Thank you.

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Chairman Smith38:18

Thank you. We will now proceed to the question and answer session. Mr. Secretary, yesterday in the Senate, you received a lot of questions from the Democrats over the anti-weaponization fund, which Acting Attorney General Todd Blanch said on the record is dead. You also told the Senate Finance Committee over and over again that you cannot discuss the settlement or the case due to ongoing litigation. Can you please set the record straight right at the top of this hearing so members do not need to use their limited time asking you questions you cannot answer. What is the status of the fund, the settlement agreement, and what part did IRS CEO Mr. Bizinano play in both?

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Scott Bessent39:16

Good. Thank you for this question, Mr. Chairman. I said yesterday that Einstein's definition of insanity is asking the same question over and over again and expecting a different answer. Let me be clear, as we've done throughout this matter, the Department of Treasury is following the direction of the Department of Justice. Acting Attorney General Todd Blanch testified on Tuesday that the government will not be moving forward with the fund. We intend to comply with that direction and Attorney General Blanch's direction. I do not have any details into what that means at this time, but I will note that even the acting attorney general Blanch's statement Tuesday, this matter is still subject to ongoing litigation. So, I'm unable to comment further on it. That means I'm also not able to discuss any part of the settlement agreement. As with all department litigation, the Department of the Treasury and the IRS are represented by the Justice Department. So any additional questions about the settlement or the fund should be directed to Acting Attorney General Todd Blanch. To your point about Mr. Bizinano, while I cannot speak on his behalf, I will note that the settlement agreement calls for the United States to issue an apology to the plaintiffs for among other things leaking their tax returns. Mr. Chairman, President Trump is a great American who has endured over 10 years of harassment and weaponization from all levels of government. No American should be targeted for political reasons.

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Chairman Smith40:42

Thank you, Secretary, for starting out with that information. This tax filing season was the most historic because of the tax relief delivered to working-class families through the working families tax cuts. How much total tax relief did Americans get just this tax season?

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Scott Bessent41:01

Approximately $325 billion, Mr. Chairman.

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Chairman Smith41:04

And how much did the average individual tax refund increase?

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Scott Bessent41:11

The average refund increased by more than 11%. But that does not reflect the dollar value. As the ranking member likes to say we overpromised and underdelivered. That is incorrect because so many people owed taxes last year that the dollar increase was actually much larger going from negative to positive. As I travel the country, I have so many taxpayers who thank me because they had to pay last year and they got a refund this year.

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Chairman Smith41:40

So, how many taxpayers claimed at least one of President Trump's priorities of no tax on tips, no tax on overtime, no tax on social security, or the auto loan interest?

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Scott Bessent41:52

Approximately 62 million filers, about 44%, Mr. Chairman.

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Chairman Smith41:59

And so what percent of tax filers who received a tax cut in filing season earned less than $100,000?

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Scott Bessent42:07

Just over 70%, sir.

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Chairman Smith42:09

70%. So what percent of waiters and other tipped workers who received a tax cut thanks to the no tax on tips earned less than $100,000?

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Scott Bessent42:24

90%.

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Chairman Smith42:25

90%. That's helping people that need it the most. Funny, Democrats always claim that the working families tax cuts were for billionaires. Mr. Secretary, I'm sure you know a lot of billionaires. Do you know any billionaires that was able to use the no tax on tips deduction?

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Scott Bessent42:48

I have plenty of billionaires I give tips to, but not monetary tips, sir.

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Chairman Smith42:52

Do you know of any billionaires that was able to use the no tax on overtime deduction?

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Scott Bessent42:58

No, sir.

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Chairman Smith43:00

Absolutely not. But you'll hear all day today that this tax cut was for the billionaires. But the evidence proves differently. And so I greatly appreciate that. I'm sure we will hear about inflation in the economy today too. And so at this point, at this point during President Biden's term, what was the core inflation rate?

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Scott Bessent43:28

6.2% which led us to the worst inflation in 49 years, sir.

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Chairman Smith43:32

Absolutely. And was the highest under Biden? What was the highest?

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Scott Bessent43:38

6.6.

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Chairman Smith43:39

6.6.

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Scott Bessent43:41

September of 22.

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Chairman Smith43:42

And so what is core inflation this very second?

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Scott Bessent43:46

2.8%.

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Chairman Smith43:48

2.8%. But at this time during the Biden administration, it was 6.2.

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Scott Bessent43:54

Yes, sir.

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Chairman Smith43:55

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?

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Scott Bessent45:00

Mr. Chairman, as someone who grew up in a rural community, I'm very excited by the prospect of these opportunity zones being available there. I think it is new and important seeing the success and I'm also excited by the permanence. And I would also point out that many members from the other side of the aisle have called Treasury concerned about losing opportunity zones in their districts or states in the case of senators and I pointed out to them that they voted against them but we will work with them on these opportunity zones. Congress wanted to reach all levels and we are working on transparency requirements which are critical to make sure that the investment is reaching the rural communities, small businesses and local projects.

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Chairman Smith45:50

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 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?

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Scott Bessent46:28

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.

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Chairman Smith46:51

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.

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Scott Bessent47:07

And Mr. Chairman, I will point out that my friend Senator Wyden complimented the side-by-side when he was back in Oregon recently.

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Chairman Smith47:16

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?

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Scott Bessent47:26

We frequently meet with the companies and we have active engagement with the OECD on this matter.

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Chairman Smith47:35

Thank you. I now recognize the ranking member.

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Ranking Member Neal47:38

Thank you, Mr. Chairman. A reminder that members of the committee 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?

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Scott Bessent48:00

Again, Congressman, there's ongoing litigation and as I said, I'm unable to answer.

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Ranking Member Neal48:05

Fine. So, I think we could 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.

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Scott Bessent48:35

Again, I'm unable to comment on that.

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Ranking Member Neal48:39

Okay. So, let me go back to part of the statistical data that's been gathered with Barnstable, Massachusetts, which is a central hub on Cape Cod for commercial and transportation activity. They rely upon tourist dollars. 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 a 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 and it is not happening. I cited a previous statistic that I think remains very compelling this morning. 77% of the American people disagree right now with the economic positions that are being embraced by the administration. With that, I yield back my time.

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Chairman Smith51:49

Thank you, Mr. Buchanan.

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Representative Buchanan51:53

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 made a lot of this permanent. It'll make a huge difference going forward, and it has already. Working families tax cuts are ensuring that American businesses can thrive and grow in the economy. I had the good fortune of being chairman of the Florida Chamber. We had 130,000 businesses and these tax things I can tell you make a big difference. And the guy who's Mark who's CEO made that reference to me many times. Mr. Secretary, the small businesses in my district tell me 100% bonus depreciation is so important that that decision is key to their buying equipment and other things. What's your thoughts on that or your experience on the bonus depreciation part?

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Scott Bessent53:24

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. This Republican Congress made this permanent. So great certainty and the 20% pass through rate is also made permanent is giving small business permanence.

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Representative Buchanan54:00

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.

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Scott Bessent54:18

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.

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Representative Buchanan54:42

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. I 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?

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Scott Bessent55:18

Congressman, I was just down at the Villages in Florida, the large 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.

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Representative Buchanan55:56

Yeah. For many years I'd go to these hearings or different meetings that we'd be involved in many times with senior organizations and they all always complained or thought about when are we going to address we've paid taxes once on social security we 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. Thanks for your leadership and all you've done for the country.

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Scott Bessent56:24

Good, thank you sir. And our Treasury is working with Social Security Administration to make sure everyone is taking advantage of this.

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Representative Buchanan56:32

With that, I yield back.

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Chairman Smith56:34

Thank you, Mr. Dog.

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Representative Dog56:36

During your tenure as a Treasury Secretary, has the IRS recommended that any taxpayer be granted immunity from an audit for their taxes?

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Scott Bessent56:44

Again, one portion of that is under litigation. So, I'm not able to.

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Representative Dog56:51

Yes, sir. It isn't a question of being not able, it's being not want to. But my question is as I said there is litigation. 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?

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Scott Bessent57:13

I'm sorry. What was that?

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Representative Dog57:15

Same question. Has the IRS recommended that any taxpayer be granted immunity from an audit of their taxes?

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Scott Bessent57:22

Again, I'm unable to answer that.

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Representative Dog57:23

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?

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Scott Bessent57:35

Has there ever been a taxpayer who had his tax returns released, his family and every employee? Let me ask you, sir, since you say you're relying to the president, thank you. I reserve my employees today.

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Representative Dog57:49

I'm 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?

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Scott Bessent58:13

Again, I cannot comment on that.

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Representative Dog58:16

You can't 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?

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Scott Bessent58:47

Sir, we administer the payments.

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Representative Dog58:50

Yes, sir. You give approval to it.

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Scott Bessent58:53

No, sir. We administer them.

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Representative Dog58:55

You make a sign off on them being.

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Scott Bessent58:58

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.

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Representative Dog59:05

Did Brian Morsy, who had been only confirmed by the Senate a few months earlier as Treasury General Counsel, do a good job for you?

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Scott Bessent59:16

Yes.

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Representative Dog59:19

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 at 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?

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Scott Bessent59:48

Sir, we follow the law.

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Representative Dog59:50

Okay. Well, will you follow the law and assure the committee that you won't retaliate against those courageous career employees?

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Scott Bessent59:57

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 bills 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.

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Representative Dog1:01:29

It doesn't prohibit how we got there with Mr. Littlejohn.

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Scott Bessent1:01:34

Yes, sir. It doesn't prohibit you indicating what you are doing to assure compliance with the law and with the practice long-standing practice of the Internal Revenue Service. So, I think we can assume from your deception today that nothing's being done and this president is being treated in a way that no other president, no other American citizen has ever been treated. I would agree with that. Incredibly corrupt deal.

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Representative Dog1:01:56

I would say he is being treated the way no other person has ever been treated.

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Representative Smith1:02:01

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 inter-agency 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 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.

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Scott Bessent1:06:00

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.

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Representative Smith1:06:41

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.

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Chairman Smith1:07:13

Thank you, Mr. Thompson.

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Representative Thompson1:07:14

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?

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Scott Bessent1:08:18

Sir, you can ask.

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Representative Thompson1:08:19

Yes or no.

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Scott Bessent1:08:20

You can ask a question. You can't tell me how to answer it.

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Representative Thompson1:08:24

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 it's rhetorical, so you don't even have to try and talk over me. Secretary, Mr. Secretary, what should I tell my constituents when they ask about these costs? Farmers who are being hit by high costs of fuel and fertilizers, who can't get their product to market because of the war in Iran. Tell them it's golden.

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Scott Bessent1:09:40

You should tell them that we've had 2.6% economic growth since President Trump took office despite the Democratic.

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Representative Thompson1:09:48

These farmers are pretty smart, Mr. Secretary. Well, the people in California, the one person. I'm 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 Blanch, the acting attorney general, and President Trump's former personal attorney, would require you to pay President Trump a billion dollars, no questions asked?

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Scott Bessent1:11:26

We will follow Justice Department.

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Representative Thompson1:11:28

Okay, you won't answer that either. Do you think this is something that the American people should know? How can you sit here and not provide any answers to the American people? Because it is astonishing to me that the president didn't know about this deal before it was signed. Of course, he knew about it. He directed it. So, why not cash out on his get out of jail free card. As I read it, he can absolutely file an amendment to his tax return and claim a giant tax refund. And you have to sit there and watch while he robs the Treasury and more important while he robs the American people blind. That's as unacceptable as you refusing to answer questions posed to you by the members of this committee. I yield back.

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Chairman Smith1:12:17

Mr. Kelly.

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Representative Kelly1:12:19

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 the Charles Dickens. Given that the Democratic House has a 17% approval rate, now I see why. This is the opening of a Charles Dickens novel, is it not? So, it was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness, it was the epic of belief, it was the epic of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope. It was the winter of despair. How well that describes what we're going through. I will remind my friends on the other side that we had double-digit inflation in the prior administration. The president inherited one of the worst situations he could possibly do. The cost of gasoline, by the way, in June of 2022 was the average was $5.16 a gallon. As of June 4th, it is 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 but fell on very, very hard times. But when we did the tax cuts and jobs act with the opportunity zones, this encouraged private investment, not taxpayer dollars, but private investment going into areas where the government would have wasted its money and does often times. 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 in 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 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 committing 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 like what's best for America?

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Scott Bessent1:15:29

Well, the representative, first of all, I have heard that Erie is a poster child in a great way for opportunity zone. So I look forward to coming and visit 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.

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Representative Kelly1:16:11

You know what and I appreciate that. So we'll get with you on that because I have two friends in the Senate right now that represent Pennsylvania. They are sometimes what have been described as polar opposites. They're not. So between Senator Fetterman and Senator McCormick, we have two people in the Senate now working together to do the best things that they can do for the state they represent and the nation that they work for. I think if we could twist things around and unfortunately elections get in the way of us doing things that are actually beneficial to the American people, we tend to work on a party spectrum rather than the people we represent. I as I said I represent three quarters of a million people. None of them are it's not all red, it's not all blue. And in fact what discourages me is too many of our people who live in the area no longer have faith and they don't even register to vote. But please we're going to invite you. We're going to invite Senator Fetterman, Senator McCormick. We will get people there to sit down with you. There is such a wealth of opportunity taking place right now. The figures don't lie. Sometimes the liars can figure, but figures don't lie. Thank you for doing what you're doing in your private life to walk away from that, to walk into this. When they first described it as a swamp, they 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.

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Scott Bessent1:17:26

Thank you, Mr. Larson.

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Representative Larson1:17:29

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?

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Scott Bessent1:18:26

Yes sir, it is.

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Representative Larson1:18:28

So those remarks core inflation reflects gasoline prices.

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Scott Bessent1:18:31

Core inflation reflects the underlying trend in inflation and whether that inflation has become endemic to the system as it did during President Biden.

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Representative Larson1:18:45

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?

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Scott Bessent1:18:59

Well, I'm not sure what the question is.

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Representative Larson1:19:10

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 as it caused?

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Scott Bessent1:19:26

Well again that is the regular inflation and gas prices have gone up which I believe will be temporary. The core inflation has dropped 0.5% since President Trump came to office.

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Representative Larson1:19:43

So gas prices have gone up but you believe they're temporary. 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?

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Scott Bessent1:20:08

We've taken the many.

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Representative Larson1:20:10

Are you in favor of eliminating the gas tax?

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Scott Bessent1:20:13

We have moved to.

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Representative Larson1:20:15

Are you in favor of eliminating the gas tax?

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Scott Bessent1:20:17

We would like to work.

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Representative Larson1:20:18

Are you able to answer that or is that not answer?

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Scott Bessent1:20:20

Well, if I'm not interrupted, I can congressman.

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Representative Larson1:20:22

Well, I'm waiting for your answer.

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Scott Bessent1:20:25

We have moved. We have asked Congress to move to eliminate the gas tax. That is done through statute.

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Representative Larson1:20:32

You have moved that. So, you're in favor of eliminating the gas tax?

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Scott Bessent1:20:36

We have asked for that.

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Representative Larson1:20:38

So we can join bipartisanly today because you're in favor to eliminate the gas tax.

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Scott Bessent1:20:43

Again, the White House has asked for it, sir.

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Representative Larson1:20:46

They have. Why isn't it before the committee for a vote?

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Scott Bessent1:20:51

I don't run the agenda.

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Representative Larson1:20:54

Well, it's good to hear that we're in favor of something that we can work on bipartisanly that will help relieve people who need it the most. Forgive me, but people in my district aren't doing cartwheels over this economy. They haven't seen the impact that you claim that they're all receiving. People hear a lot of rhetoric, etc., but that doesn't pay their grocery bills, that doesn't pay their heating costs, that doesn't put fuel in their tanks, that doesn't help them get through the day-to-day grind of their lives. And so coming here and filling us with platitude and telling us how grateful we should be to the Trump administration for everything that it's done.

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Scott Bessent1:21:46

Congressman, food at home is up 2.5% since President Trump took office.

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Representative Larson1:21:54

Are we at war?

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Scott Bessent1:21:56

Which is twice the price every year under the Biden administration.

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Representative Larson1:22:00

Are we at war currently?

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Scott Bessent1:22:05

The conflict has been halted. So we're not at war.

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Representative Larson1:22:13

Special military.

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Scott Bessent1:22:14

So our military is not involved. We're not at war.

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Representative Larson1:22:17

Again, if you would like for me to call the secretary of war, I can ask. I'm the secretary.

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Scott Bessent1:22:23

So as part of the administration and as part of this, we're not at war.

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Representative Larson1:22:28

How in God's name if we can't answer any questions at all and I don't know maybe there was a special orders where we're not allowed to 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 with for oil and gas that hasn't risen. Has it risen because of the war?

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Scott Bessent1:22:50

It did rise because of the conflict. Yes, sir.

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Representative Larson1:22:53

The conflict. So that's what we call it. Our people go into battle and lose their lives.

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Chairman Smith1:23:01

Mr. Larson, your time is expired.

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Representative Schweikert1:23:05

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 secretary or 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 at average more than 5% under the Biden-Warren economy. And I've got a list here that President Trump posted but no one wants to talk about it. Last year all we heard was eggs, eggs are down 90%. Avocados are down 19%.

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Scott Bessent1:24:03

Mr. Secretary, you will find.

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Representative Schweikert1:24:05

Which is probably avocados probably more popular on the other side of the aisle.

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Scott Bessent1:24:09

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.

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Representative Buchanan1:24:29

Going to have to understand it and find a better way to document it. We calculate about 17% of the US economy is now in the tax-exempt space. 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. 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 have been working on it. Is there a way to come up with a much more robust universal form so we can understand if these tax-exempt organizations are meeting their societal obligation, and if they're not, we can help them meet that? But we don't have enough information today.

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Scott Bessent1:25:28

It's a great question, Congressman. There are many tax-exempt organizations. A large part of the economy are hospitals and health care services, so we should look at whether they are meeting the needs and are in fact nonprofits. But your question about what is going on with these nonprofits: the IRS has issued guidance for Form 990. Nonprofits, just as banks must know your customer, we are telling the directors of these foundations and institutions you must know your grantee. So, know your grantee. If the money is being used for violent activities, you as a trustee or fiduciary are in trouble. If it is being used to take away people's civil rights, you are 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 understand both those that are using nonprofit tax-exempt status as funnels for bad acts, but also whether they are meeting their community obligations. One that you're probably not going to get as a question from anyone else: we have a fixation on debt management. We're responsible as policymakers for the debt, not the administration. We make the policy. What can we do as members of Congress, the Joint Economic Committee, and the Ways and Means Committee to help you convince the markets to buy a ten-year note? We have some visibility to see where we're going. I have some concerns that in the future, when the entire world is binging on debt, we might have some stressed auctions. What do we do as a country to actually not have that happen to us? 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 we must let our borrowers know—people who are buying Treasury bonds, whether US households, foreign central banks, or everyone else in between—that we are serious about getting our debt and deficit numbers under control.

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Representative Buchanan1:28:19

That is perfect, Mr. Secretary. And with that, I yield back, Mr. Chairman.

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Chairman Smith1:28:23

Mr. Davis.

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Representative Davis1:28:25

Thank you, Mr. Chairman. And thank you, Mr. Secretary. Secretary Bessent, as of April 18th, taxpayers received about 3.4 million delayed refund letters. Illinoisans received 110,000. Texans, Floridians, and New Yorkers each received over 200,000, and Californians received 400,000. Almost three months ago on March 9th, Representative 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. 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, can you tell me if before June 11th, you or your staff will meet with Representative Su and me to walk us through the evidence that taxpayers with delayed refunds received the funds owed to them?

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Scott Bessent1:30:51

I have not seen the letter; I will follow up on this. The delays you are talking about are for taxpayers who did not file electronically. We had about 98% of taxpayers file electronically, and they received their refunds within 21 days. It sounds to me that out of the approximately 134 million tax returns we received, the April number would have been the un... So, we are working through it, and much of that has to do with verification and lack of addresses. We look forward to working with you on that because we are committed to people getting their refunds.

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Representative Davis1:31:37

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? 3.4 million delayed notices getting their refunds expeditiously. 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.

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Chairman Smith1:32:19

Without objection.

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Representative Davis1:32:20

Thank you, Mr. Chairman.

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Chairman Smith1:32:21

And Congressman, what was that number last year?

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Representative Davis1:32:24

3.4 million.

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Chairman Smith1:32:26

No, no, no. I meant for the previous filing season and the year before that.

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Representative Davis1:32:33

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. Let me ask: is the Internal Revenue Service involved in that activity in any way?

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Scott Bessent1:32:55

Again, that's ongoing litigation. But from what I have read in the newspaper, that was the Justice Department and the FBI. The Internal Revenue Service is not suggesting to any other entities that they may lose their tax exemption if they contribute to the Southern Poverty Law Center. There is ongoing litigation, but that is driven by the Department of Justice and the FBI.

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Representative Davis1:33:29

Thank you, Mr. Chairman. I yield back.

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Chairman Smith1:33:31

Thank you, Mr. Davis.

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Representative Larson1:33:34

Thank you, Mr. Chairman. Mr. Secretary, welcome. Thank you for being here today. Thank you 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. I would describe it as a rural, suburban, and urban problem. Last year, in the Working Families Tax Cut bill, we included a number of provisions on affordable housing. One of those was my bill on the Affordable Housing Tax Credit. As you are well aware, one of the most significant barriers to economic success in our communities is housing. In the Working Families Tax Cut bill, we included the Affordable Housing Tax Credit, which includes a permanent 12% increase in the 9% allocation of LIHTC credits beginning this year. Independent analyses have estimated that this will lead to the development of more than 1.2 million more affordable homes nationwide over the next 10 years because of what we did. From your perspective and the Department of Treasury, what will the expansion of the Affordable Housing Tax Credit mean for working families struggling to afford housing?

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Scott Bessent1:34:45

The LIHTC provision specifically gives great predictability for investors and builders who want to go into the market. I think we have already seen a pickup in those areas with this program.

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Representative Larson1:35:03

Mr. Secretary, what about other mechanisms within the Department of Treasury or legislatively that we ought to be looking at to address this problem?

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Scott Bessent1:35:14

Well, there are two housing bills, one in front of the House and one in front of the Senate, that seem to be languishing.

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Representative Larson1:35:23

I want to switch topics. Besides serving on the Ways and Means Committee, I also serve on our Select Committee on China, which is a bipartisan committee focused on how we win the strategic competition against the CCP, and I serve on our Intelligence Committee. I want to focus on 45X, a provision in the tax code. Last year, in the Working Families Tax Cut bill, we included foreign entity of concern restrictions pertaining to curbing Chinese technology by manufacturers, mandating 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 CCP security officers embedded in their US facilities, undermining the objective of fully transferring operational knowledge of these technologies to US companies. Mr. Secretary, what is Treasury doing to address and prevent Chinese penetration and involvement in these companies receiving the 45X tax credit?

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Scott Bessent1:36:36

We are polling the companies. We are asking for verification that this is not happening. 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, we can go back and investigate those transactions.

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Representative Larson1:37:01

To your knowledge, have any of those investigations led to a fruitful prosecution or holding somebody accountable?

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Scott Bessent1:37:07

I can have my staff get back to you, but I can tell you it has been very robust. You would have seen that recently the FCC banned Chinese drones and routers, and the connected auto mandate ensures that electronic systems in American cars cannot be connected to Chinese entities.

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Representative Larson1:37:35

Thank you. I look forward to the follow-up with you and your team on this. This is obviously something we need to be heavily focused on. Lastly, in my remaining time, I want to focus on digital services taxes as they relate to Canada. We credit the administration for what you have been able to do on DSTs in Europe, but there are still some concerns with our Canadian friends. Can you comment on where we are at with that?

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Scott Bessent1:38:00

We are pushing back on these digital services taxes whether it's Europe, Turkey, Brazil, India, or Canada. We have the greatest technology and innovation ecosystem in the world, and they cannot take advantage of our companies and their treasuries. They are very interesting, ripe targets because they are profitable, well-run, and in demand, but we cannot have this. In every trade negotiation or discussion with the Canadians, we bring this up.

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Representative Larson1:38:42

Thank you, Mr. Secretary. I yield back.

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Chairman Smith1:38:44

Ms. Sanchez.

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Representative Sanchez1:38:47

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?

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Scott Bessent1:38:58

Yes, Congressman.

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Representative Sanchez1:38:59

Good. So do I. And do you believe that for those Americans who break our tax laws, they should be audited or held accountable?

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Scott Bessent1:39:08

Well, I think there are two things there. An audit is not a result of breaking the law.

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Representative Sanchez1:39:14

Yes or no? Simple question.

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Scott Bessent1:39:16

Well, no, it's not a simple question. Let me break it into two.

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Representative Sanchez1:39:18

If you're asking me a question, please answer. 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?

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Scott Bessent1:39:35

Yes.

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Representative Sanchez1:39:36

Do you think that people who break our tax laws should be held accountable?

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Scott Bessent1:39:40

Yes.

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Representative Sanchez1:39:41

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?

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Scott Bessent1:39:53

Again, I'm going to have to refer you to my previous statements.

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Representative Sanchez1:39:56

And what was your previous statement, sir?

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Scott Bessent1:39:59

I am unable to comment on any ongoing litigation.

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Representative Sanchez1:40:02

Can you name the ongoing case concerning President Trump's immunity from audit?

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Scott Bessent1:40:07

Sorry... There are three cases. Can you name them, please?

I will be happy to get back to you on those because, again, I am not a lawyer. We are represented by the DOJ.

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Representative Sanchez1:40:22

Great. You said you can't because there is ongoing litigation. You'll get me the name of the ongoing litigation because the only ongoing litigation 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 that litigation 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.

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Chairman Smith1:41:01

Without objection.

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Representative Sanchez1:41:02

Thank you. Now, Secretary, you said you're not an attorney. Is that correct?

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Scott Bessent1:41:06

Mercifully.

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Representative Sanchez1:41:08

Well, I am, and I'm actually proud to be an attorney and know the laws and know how to read a judicial ruling. Furthermore, 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?

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Scott Bessent1:41:35

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.

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Representative Sanchez1:41:44

Yes. But I just mentioned a Supreme Court case that doesn't bar you from testifying. It's pretty clear to me, though, that you're not interested in answering questions; you're interested in arguing. Let me ask you this: if President Biden amended a prior tax return and claimed that he was owed $1 billion, do you think that would or should be audited?

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Scott Bessent1:42:07

I'm not going to talk about any...

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Representative Sanchez1:42:12

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...

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Scott Bessent1:42:25

Do you have the ruling by the Justice Department?

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Representative Sanchez1:42:27

Do you have specific knowledge of an audit of President Trump?

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Scott Bessent1:42:30

Excuse me.

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Representative Sanchez1:42:31

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 answer some of them.

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Scott Bessent1:42:39

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 cousins, his great-great-grandchildren? Do you know the answer to that, Mr. Secretary?

Again, I imagine you have the Justice Department's phone number. I suggest you call them.

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Representative Sanchez1:43:02

I'm not the one that runs the Department of the Treasury or oversees this immunity.

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Scott Bessent1:43:10

I'm not either. We follow the instructions of our lawyers and we obey the law.

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Representative Sanchez1:43:16

I hope you're proud of your performance today, Mr. Secretary, because I think it is pretty safe to say that this is probably the most corrupt Treasury Department in our nation's history. While you dance around questions to protect Trump, Americans are suffering in Trump's spiraling economy. Inflation is 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.

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Chairman Smith1:43:59

Your time is expired, Ms. Sanchez.

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Representative Sanchez1:44:01

Thank you. My time is expired.

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Representative Schweikert1:44:03

Secretary, I would love for you to respond to the accusations at your department because I think you are due the opportunity for that.

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Scott Bessent1:44:13

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. Just because she cannot get the answer she wants... If she would like to give me facts, she seems long on hot air and short on facts. I will not stand for that.

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Chairman Smith1:44:47

Mr. ... is recognized to make a remark like that.

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Representative Schweikert1:44:52

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.

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Scott Bessent1:45:04

Congressman, on inflation, I am not going to take firefighting advice from an arsonist.

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Representative Schweikert1:45:10

Well, Mr. Secretary...

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Scott Bessent1:45:11

They torch the American people.

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Representative Schweikert1:45:13

Maybe we ought to ask the question: should the sons of presidents who have multiple felony convictions be held to the same standard as the American people in terms of crime and punishment? I wonder what the answer to that 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 are at an all-time high among my Democrat colleagues. Now we see why someone leaves California every two minutes. That hypocrisy and irony starts with questions about price increases. It was the failed economic policies, one self-inflicted failed economic policy after another, that created the worst inflation crisis in half a century. Unbridled spending—if you add the hikes in interest rates, it would be about $12 trillion in deficit spending. Waving 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. You know what? We pay a premium right now, and we will temporarily, to defend our country and 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 below $3 before the conflict. Under 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. But the premium that the Democrat policies imposed on the American people was for a mandate for electric vehicles. What did we get for that premium? Hundreds of billions of dollars—it was supposed to be $200 billion, but it was $800-plus billions in giveaways and corporate subsidies for green energy. That's what the American people got: higher energy prices, higher electric bills because of this radical climate agenda, the Green New Disaster. That was the trade-off from my Democrat colleagues. A little context to this conversation is helpful. The results, as you know, Mr. Secretary, were that the American people were losing $3,000 in wages every year. They had a 21% regressive tax hike. They were losing $1,500 a year. Are we in a golden age? Well, relative to the dark ages we were thrust into 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%. That's a percentage over what CBO said after we passed the big beautiful bill. On an annual average basis in the 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 year. Because we controlled discretionary spending and have saved almost half a trillion dollars. It's because Republicans actually cared about not frittering away tax dollars. We rooted out waste, fraud, and abuse to the tune of over a trillion dollars because we quadrupled revenue from restructuring world trade order and setting a level playing field for our farmers and manufacturers. Because of all 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.

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Scott Bessent1:49:48

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. If I were the Democrats on this side of the aisle, I would be terrified of 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 for no tax on tips, 29 million for overtime, 35 million for seniors.

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Representative Arrington1:50:15

Mr. Arrington, your time is expired. Unbelievable. Keep up the good work, Mr. Secretary.

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Chairman Smith1:50:23

Thank you, Ms. DeLauro.

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Representative DeLauro1:50:25

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 with no clue what 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 into the record.

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Chairman Smith1:51:52

Without objection.

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Representative DeLauro1:51:53

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. So my question for you is: do you take responsibility for that? And what specific measures, if any, have you taken afterwards to protect the affected individuals' data and rebuild confidence in your department's handling of sensitive information?

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Scott Bessent1:52:31

Would you care to look up what "inadvertent" means?

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Representative DeLauro1:52:36

But you're in charge. You are responsible for this. Do you take responsibility for that? Do you take responsibility?

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Scott Bessent1:52:44

I will take responsibility... to edit.

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Representative DeLauro1:52:53

What has happened to make sure that never happens again?

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Scott Bessent1:52:57

Just as we have at the IRS, we have tightened up all protocols on systems.

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Representative DeLauro1:53:05

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 that 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? And why don't you hold someone accountable?

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Scott Bessent1:53:45

Why are you bringing up USAID with me?

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Representative DeLauro1:53:49

Because it was a DOGE file that contained payment information.

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Scott Bessent1:53:54

USAID I do not oversee. I wear many hats in this administration, but not that one.

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Representative DeLauro1:53:59

And this is a file containing payment information. Are you not also in charge of the Treasury?

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Scott Bessent1:54:06

That has nothing to do with us.

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Representative DeLauro1:54:10

But payment information has nothing to do with it?

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Scott Bessent1:54:12

Again, it was not sourced at Treasury. Why are you bringing this up with me?

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Representative DeLauro1:54:17

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, 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 on all six recommendations? If you agree they are warranted, please let us know. If you disagree, please explain why.

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Scott Bessent1:55:05

Again, I don't have a copy of the recommendations in front of me. Your office did not share them in advance. We would be happy to get back to you. We would obviously agree with the ones where we have already agreed.

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Representative DeLauro1:55:16

So I hope you understand that these are findings from the GAO about ensuring information is protected. 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.

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Scott Bessent1:55:37

Well, 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?

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Representative DeLauro1:55:51

Americans' sensitive information has been leaked outside. Your time has expired.

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Scott Bessent1:55:57

We have tightened protocols. We have tightened access.

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Chairman Smith1:56:02

You have said nothing specific about what you have done. Mr. Bynum, your time has expired. Mr. Estes is recognized.

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Representative Estes1:56:06

Good to see you, Congresswoman.

Thank you, Mr. Chairman. Secretary Bessent, thank you for being here. 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 was much discussion about how Congress and the administration could work together to stop the taking of our tax authority by other nations and losing over $120 billion from the US Treasury over the next 10 years. I'm proud to say we are in a much better spot than we were a year ago, thanks to a lot of hard work by your Treasury folks and the effort we got done. 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 this agreement gives successful American companies a free ride, but that's simply not true. The reality is that 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 about how corporate tax revenue has changed since we passed TCJA in 2017 and thanks to our more competitive tax code?

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Scott Bessent1:57:29

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 of both equipment and structures—both factory structures and farm structures. You can think of that when you see that deduction taken, you are creating future tax revenues by building up the productive capacity of our country, and that increases productivity. On the other side, Pillar 2: getting this sorted out and making sure 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.

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Representative Estes1:58:31

Yeah, thank you for doing that. Can you give us an update on how some of the countries are implementing the side-by-side agreement and how we are moving forward on that?

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Scott Bessent1:58:42

We are finding a very good partnership, and we are implementing it via our partnership with the OECD and our constant interaction with them.

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Representative Estes1:58:54

Well, thank you. We will 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 work on digital services taxes as you mentioned earlier. A recent estimate 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. We need to continue that effort, and I appreciate your work in that regard. We in the United States, both in Congress and Treasury, are committed to protecting our tax base from foreign attempts to take it. While we welcome negotiation and engagement based on foundational principles of taxation, our resolve is absolute. We want to make sure we continue to provide every tool available, including ones we may have put on the shelf recently, to ensure our competitiveness on the world stage. This is true whether we're talking about Germany with their Section 49, or Italy or Mexico, which have been trying to weaponize tax audits or raid offices and homes and threaten criminal charges against US companies. I want to switch quickly to the domestic tax code. Everyday Americans, businesses, and individuals have tremendously benefited from our historic tax relief. 97% of taxpayers received a tax cut this past filing season thanks to no tax on tips, no tax on overtime, increased standard deduction, and enhanced senior deduction. These are America-first provisions that put more money in the pockets of hardworking Americans. I want to recognize some of the changes, as you've mentioned, in the Working Families Tax Cuts, including manufacturing, research and development, and capital expenditures that have been put in place for long-term growth. I only have a few seconds; I don't know if there are some comments you want to make about the economy and what you've seen over the last year.

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Scott Bessent2:01:01

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 that job growth is strong, except for April. We have seen real wage growth 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. 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.

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Representative Estes2:01:47

Well, great. Thank you for being here, Mr. Secretary. Mr. Chairman, I yield back.

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Chairman Smith2:01:50

Mr. Smucker.

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Representative Smucker2:01:53

Thank you, Secretary, for being here. I really appreciate your leadership. I think you just cited some figures about the economy that are really important. Real wages have been growing under this administration after the implementation of the bill we passed, very different from what we saw under the Biden administration when people were feeling the pain of rising prices because wages didn't keep up. So I'm grateful for 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 it affected their investment decisions when they have that permanence ahead of them. How they are doing is really important to every community they reside in. I'm very proud of what we've been able to accomplish. I do want to very quickly address another priority: direct primary care. Employers in my area use 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 puts together their guidance. I 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.

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Scott Bessent2:03:30

We are working on that. HSAs have been a very powerful tool, and we've seen the take-up—I think 37% to 40%. We will work on that and get that guidance out, sir.

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Representative Smucker2:03:46

I hope that we go with the initial intent, which was to make that deductible for employers as well. Thank you. I wanted to go back to the statement you made during the discussion with Representative Schweikert regarding the debt and the markets, which I thought was really good. I wanted you to expand on that if you would. You said, and I paraphrase, that to assure we have a regular and predictable issuance cadence, people who are buying Treasury bonds—whether US households or foreign central banks—have to be assured that we are serious about getting our debt and deficit numbers under control. I know you really care about this. I certainly do. I feel at times that the American people don't fully understand the impact of the debt on economic activity today and the threat going forward. So I would love for you to expand on that and talk about why it's important and what steps Congress could be taking to address the debt and deficit numbers.

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Scott Bessent2:04:57

Congressman, let's look at a little history. These are 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, for the American people, not only does it affect interest rates and our ability to issue debt, it also affects inflation. When you have roaring deficits, money goes into the economy. What the Biden administration did was inject a demand shock through giveaways, but then constrict supply with the regulatory state, and that's how you get inflation. This administration is doing the opposite. We had a fiscal contraction for calendar year 2025, and as I said, we are cutting regulations so we are increasing supply—whether it is energy or services. That is why core inflation is down more than half a percent since President Trump came in. One of the things we are 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 are 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 3% by the end of the administration. I wonder if you could talk about the importance of that goal in just a few seconds.

Yes, sir. I came out from behind my very comfortable desk and am here today because I am concerned about that trajectory. I do believe it is possible to get back to the historical level of 3% deficit-to-GDP. While that is not a balanced budget, if you have nominal growth above that level, you are paying down debt.

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Chairman Smith2:07:15

Thank you. Ms. Chu.

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Representative Chu2:07:17

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 the American saving rate has dropped by half since last year. 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?

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Scott Bessent2:08:43

Congresswoman, who was the president during World War I?

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Representative Chu2:08:50

Can you... Are you refusing to answer my question?

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Scott Bessent2:08:53

No, I'm asking. Who was the president during World War I?

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Representative Chu2:08:57

I don't know. But clearly, you are not answering my question.

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Scott Bessent2:09:00

World War I was... Well, let me tell you.

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Representative Chu2:09:02

So I'm clearly getting the idea that you do not want to answer whether you agree with President Trump that you do not care about Americans' financial situations.

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Scott Bessent2:09:10

President Trump does care about Americans' financial situations.

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Representative Chu2:09:12

Well, he actually said that he doesn't.

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Scott Bessent2:09:14

No, that is a truncated thing, like everything else. He is future-proofing because I can tell you that 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.

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Representative Chu2:09:34

Well then, let me ask you...

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Scott Bessent2:09:37

I promise you that President Woodrow Wilson... who was president during World War I... that the Germans did not attack us, and he got into it.

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Representative Chu2:09:49

You're not answering the question. So let me ask this: your prediction that Americans would face only 50 days of temporary elevated prices was wrong. Was that wrong, since we are at 100 days now?

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Scott Bessent2:10:07

How much have gasoline prices come down from the peak? 7%. Crude prices are down more than 20%. And gasoline prices follow crude prices.

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Representative Chu2:10:18

Those are inconvenient facts. Reclaiming my time. Gas prices are up 50% since the Trump war started and up nearly 30% from last year. Diesel and jet fuel prices have risen even faster because refining markets are strained. Utility costs have soared due to higher natural gas and fuel input costs. That means commutes, home heating, 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 Biden was president. Beef is up 15%. Tomatoes are up 40%. Bread and milk are up 8% and 5% compared to three months ago. It's those lower-income households that are hardest hit by Trump inflation. They are forced to cut back on spending. I know it's an inconvenient fact, but...

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Scott Bessent2:11:15

I know it would be hard for a billionaire like you to imagine how lower-income households are 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 food prices are up—food at home 2.5% since President Trump took office. I know that's an inconvenient fact for you. You are from California. Maybe you care about avocado prices; maybe you want them higher, but they are down 19%.

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Representative Chu2:11:47

All you have to do is go to the grocery store to see that beef is up, tomatoes are up 40%, bread and milk are up 8%.

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Scott Bessent2:11:58

You don't get to pick and choose. It is a basket, and the basket is up 2.5%. During the Biden era, it was up 5% a year.

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Representative Chu2:12:06

Well, you paint such a rosy picture.

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Scott Bessent2:12:09

But I think Americans are not experiencing this rosy picture. They are asking: are my wages keeping up with costs? Can I afford the things my family needs? I'm afraid the answer is no.

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Representative Chu2:12:19

Oh, I'm afraid you are incorrect because we had real wage increases every month since President Trump took office except for the month of April. I know the facts don't align with your narrative, but you are entitled to your opinion, not your own facts.

Your narrative is not lining up with what Americans are experiencing right now.

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Scott Bessent2:12:38

You are entitled to your opinion, not your own facts.

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Representative Chu2:12:40

I yield back.

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Representative Hern2:12:42

Mr. Secretary, it's good to see you. Thanks for being here.

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Scott Bessent2:12:45

Great to be here.

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Representative Hern2:12:46

I can see you're talking a lot about the facts. The facts are that during the four years of Joe Biden, we had a 25% increase in prices. No way did 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. Almost a year ago, Mr. Trump signed the Working Families Tax Cuts into law, preventing the largest tax increase in American history. I want to thank you, Mr. Secretary, for your hard work and partnership in getting that across the finish line. A huge part of the Working Families 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 proven to deliver 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 Families Tax Cuts, 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 Families 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 cost recovery for the enormous capital investments in 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 it, hear about it, and read about it. Those are the facts. Following the passage of the Working Families Tax Cuts, 52% of manufacturers surveyed said they intended to use the new provision to immediately expense the cost of constructing or expanding a manufacturing facility over the next four years. Mr. Secretary, last year I asked you about the importance of this provision, and you said that expensing for factories puts us on a level playing field with countries that heavily subsidize their industries. 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? Also, in your response, could you talk about what this does for your 3-3-3 plan and how that's part of the integration?

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Scott Bessent2:15:34

I think we should extend or make it permanent. I was able to go visit Winnebago in Minnesota, and they told me that because of the expensing, they were on the fence about whether to do a battery project for their RVs in Florida and build a factory. But because of the full expensing of equipment and full expensing of structures, they were doing it. I think we are seeing that again and again. Congressman, what is very important here, and I don't think people understand, is that we are creating productive capacity, and productive capacity generates future tax revenues. You get the immediate hit to taxes now, but then you create an accelerated stream of income with a much higher multiplier effect after that. I call it the slingshot effect. For one or two years, I think we are going to see this burst of factories and manufacturers that were encumbered under the Biden administration. Going forward, we are going to see a breakout in corporate income tax receipts.

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Representative Hern2:16:45

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 facility, but much more difficult to rebuild something and re-affirm that to move businesses back from abroad. So, I applaud you. We're going to build it, and they will come. One final question: I have significant concerns about third-party financing of litigation in the United States, particularly regarding the tax treatment of the profits derived from it. Currently, these financiers are claiming capital gains treatment, and it is highly questionable whether unadjudicated claims of harm constitute capital assets. This activity is distorting our judicial system and turning our court system into a casino. I would really love for your team at the IRS to work with me and look into the tax treatment of this practice. Many people across the nation are concerned about sovereign wealth funds and others gaming our system.

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Scott Bessent2:17:44

Congressman, I look forward to working with you on that, especially international foreign money coming in and gumming up the works, sponsoring these lawsuits in our system, and paying no taxes. I look forward to working with you on this.

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Representative Hern2:18:03

Thank you very much. I yield back.

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Chairman Smith2:18:05

Mrs. Miller.

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Representative Miller2:18:07

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 members of this committee. Common courtesy takes us a 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, farmers, and small businesses across the country, and it fulfilled President Trump's promise of tax relief and certainty. One of my priorities has been the Saving the Gig Economy Taxpayer Act, which repealed the Biden administration's harmful 1099-K reporting threshold of $600 and restored it to the proven standard of $20,000 and 200 transactions. Can you speak to how much of an effect this policy had on the tax filings of our hardworking Americans?

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Scott Bessent2:19:27

Well, I think that just speaks to the fact that the Democrats are not the party of Main Street. I don't know what they are the party of, but they brought this down. I thought it was one of the most reckless things done, creating this paperwork for small businesses. Many of them have service businesses. To do this and change the magnitude from $20,000 to $600 just shows a complete tin ear from an administration that probably had a record low number of business people involved. What they viewed as business experience... So, realigning that for Main Street and small businesses was essential. We have seen no effect at the IRS in terms of the revenues from that.

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Representative Miller2:20:18

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 and helped hourly workers keep more of what they earn. Have you seen that the no tax on overtime policy benefited our tax filers this past tax season?

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Scott Bessent2:20:57

I was with President Trump on April 15th in Las Vegas for a rally for tax day for his signature policies. He asked for a show of support from the crowd, and we were at the home of service and tips income. Actually, the no tax on overtime got a bigger ovation than the no tax on tips. It's the American way. 75% of filers make under $100,000; 90% make under $200,000. The average deduction was $3,100. 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 in California near the Reagan Library, and they love it. I was in a local Italian restaurant there, and the owner loves it because he was having staffing problems. Now, he has experienced staff, he's happy to pay the overtime, and the employees are happy to work the hours.

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Representative Miller2:22:07

Very much so. Thank you so much. I yield back my time.

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Chairman Smith2:22:11

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 Ms. Sewell's questions. I now recognize the gentle lady for five minutes.

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Representative Sewell2:22:25

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 I represent in Alabama, is that you forecast 5.4% growth in GDP for the fourth quarter of 2025 and only delivered 0.5% growth. Wages have fallen behind rising inflation, and job growth has dramatically slowed since Trump took office. Mr. Secretary, I'm asking you rhetorically: why was your analysis so wrong? Could it be that Trump's illegal tariffs or the cost of the war of choice in Iran were the reasons? Whatever the reason, I want you to know that the people 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. The Iran war has cost American households over $100 billion. Grocery prices are rising faster than any time in the last four years, and gas is over $4 a gallon in Alabama, where last year it was only $3 a gallon. Mr. Secretary, this economy under this administration is failing the American people, and we can and must do better. Mr. Chairman, reclaiming my time, I'm not asking him a question; I'm stating facts.

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Scott Bessent2:25:35

You're not stating facts; you're stating opinion.

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Representative Sewell2:25:37

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 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, you ensure that the IRS is not improperly influenced by the president or this administration during the duration of that case. I trust you will make sure that happens. Lastly, Representative Davis and I sent several letters to the IRS. This past tax season was the first time the president signed an executive order that ceased paper refund checks from being issued. This decision has led to significant delays in refunds for those taxpayers. I understand in your response to Mr. Davis you said that 95% of those who receive 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 this administration will do all it can to make sure all Americans, irrespective of whether they are unbanked or have access to electronic payment, get their refunds. Mr. Davis asked a question you didn't answer, but I would like to answer it for you: we are asking that you and your office and the Treasury Department work with us to make sure our constituents get their refund checks.

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Scott Bessent2:27:34

I will commit to do that.

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Representative Sewell2:27:35

Thank you, sir. I yield back the balance of my time. And to be clear, that number 5.4% was the Atlanta Fed GDPNow, but I know that's inconvenient.

C

Chairman Smith2:27:48

Thank you, sir. As announced, the committee will stand in a five-minute brief recess.

Call the hearing back to order. I'd like to recognize Mr. Guest for five minutes.

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Representative Guest2:44:52

Thank you, Mr. Chairman. Thank you, Mr. Secretary, for appearing today. I 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 we've produced in this institution in a long, long time. I know you've been asked earlier by Congressman Buchanan about Section 199A, but I would like to go a little further with you on that. We made permanent in the one big beautiful bill a provision that gave a 20% deduction for those small businesses. When we were considering the policy, we had given a permanent rate for C-corps at 20-21%, but we were looking at parity for those small businesses. First, could you give your opinion on the effect of the permanency for those small businesses and pass-throughs? Then, could you give your opinion on a bill I have introduced, the Small Business Tax Cut Act, which would actually increase that deduction?

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Scott Bessent2:46:22

Deduction from 20% to 23%.

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Representative Buchanan2:46:28

Congressman.

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Scott Bessent2:46:31

We are clearly the party of Main Street, and nothing is more Main Street than putting small businesses on par with big business. What we are seeing is 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 they 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.

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Representative Buchanan2:47:24

Good. And would there be a benefit to small business to raising that deduction from 20% to 23%?

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Scott Bessent2:47:31

We're happy. Our tax policy is happy to engage with you and your staff on that, sir.

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Representative Buchanan2:47:35

Thank you very much. Mr. Secretary, as it relates to rates and yields, think about the bond market. I was looking at some quotes from the Clinton era, specifically James Carville. 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 give maybe some certainty or some clarity to those bond traders, those in the bond market, and the relative state of our economy.

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Scott Bessent2:48:48

The state of our economy is strong. We are having a short-term level increase in price levels. We will get to the other side of those, and I defy this side of the aisle to tell me what is wrong with our economy. We've had 2.6% GDP growth per quarter 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, it is my view, and we are going to push this, that the US will be hosting the G20 this year and we have the leadership. 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, Congressman, back to your initial question, it's all about certainty. So we have permanence. If you want to come, if you're an American or a foreigner, come to the US, build your business. You have tax certainty, you have energy certainty, you have regulatory certainty, and that all flows back into the Treasury. And what comes into the Treasury is stability. We had a fiscal contraction for 2025, and everything we are doing now is creating more productive capacity. It will be tax revenues down the road.

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Representative Buchanan2:50:16

Thank you, Mr. Secretary. I'll yield back.

C

Chairman Smith2:50:18

Thank you. Now, like to recognize Representative Stewie for 5 minutes.

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Representative Stewie2:50:22

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 family's 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?

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Scott Bessent2:51:07

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. The other thing I've encouraged people, one of the reasons for big refunds is you haven't changed your withholding. So if filers change their withholding, they get an automatic step up in their monthly take-home. You know, 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, I 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.

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Representative Stewie2:52:00

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 has 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 Petta 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?

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Scott Bessent2:53:17

So we are working on that with the constituents, and this is a real problem, especially as you described, for our seniors. More than one-third of our seniors have been victims of some kind of fraud, and what we don't need is some kind of 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.

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Representative Stewie2:53:54

For many working families, a tax refund isn't just a number on a return. It's money for rent, car repairs, groceries, medical bills, or paying down debt. At the same time, Treasury has to prevent improper payments and fraud. How is Treasury utilizing modernization efforts to get refunds out quickly while balancing the need to protect taxpayers and the Treasury from fraud?

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Scott Bessent2:54:14

Well, last year approximately 98% of taxpayers filed an electronic return, and we were able to, if everything was in good order, get that return sent electronically within 21 days. The other thing we are doing that is very important: we now have the means to say, 'We don't think your return is correct, and this will likely trigger an audit. Do you want to have another shot at this?' And that is very helpful in terms of the number of audit cases down the road and for taxpayers who, they or their preparer, may have made an honest mistake.

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Representative Stewie2:55:01

In the 20 seconds I have left, is there anything that you haven't had an opportunity to address from the lies from the Democrat side that you'd like to address in this time?

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Scott Bessent2:55:11

Again, we've got a temporary inflation spike. Groceries, as the Democrats or many people like to say, it's up 2.5% since the president came to office. We work on this every day. The underlying economy is very strong. The jobs numbers, they are good. Construction jobs are up. And what I want to say, Congressman, is these are private sector jobs. Private sector jobs. We could have started any government program and put a million more jobs on the board, but it is private sector jobs that enable Americans to have real wage increases, and every month except for April, Americans saw real wage increases.

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Representative Stewie2:55:55

That's a great point. Thanks for being here.

C

Chairman Smith2:55:57

Gentleman's time is expired. Recognize Miss Moore for five minutes.

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Representative Moore2:56:08

Thank you so much, Mr. Chairman, and thank you, Mr. Secretary, for appearing, and thank you for your patience and indulgence for this very long hearing. I just don't want to get into a big fight with you, sir, but I would have to agree with one of my colleagues that spoke earlier. These are some Dickensian times. For some people, these are the best of times. And we have heard you reiterate over and over again about how strong the economy is, how this inflation is very short term, how job growth to you looks promising. Good thing the jobs report comes out tomorrow instead of today.

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Scott Bessent2:56:58

I wish it had come out today because I don't have any prior knowledge, so I don't want to move.

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Representative Moore2:57:03

Okay. So, I guess when our colleagues like to attribute the president's confidence that he shouldn't worry about the financial stability or the financial ability of Americans, and your notion is just sort of a little blip, this inflation that people should not be taken seriously. I guess we would have to say that you agree with the president that our economy is strong and that we shouldn't worry about people's situations. Is that the conclusion I can reach?

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Scott Bessent2:57:40

No, my conclusion is that we understand that things are challenging now because of this conflict, and we will get to the other side of this, but the underlying economy is quite resilient.

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Representative Moore2:57:54

Okay. Well, good. Well, we've heard this before. And it's the worst of times because 76% of Americans are feeling the 40% increase in utility costs. You mentioned groceries. I guess it just depends on what kind of basket of food you choose. You better not choose something like beef. If you're getting ramen noodles, I guess that won't affect you as much. But these are the worst of times for a lot of people. Excuse me. And what we have found, and I'd like to place in the record an article I found without objection, which really indicates, and maybe it's no fault of this president, but in fact wages are growing at a much slower rate than inflation. And if we look at data going back to the beginning of this century, we'll see that inflation has really eaten up about all of the economic benefit people have. And people are experiencing that. When your utility bill goes up 40%. We've already paid, what is it, $48 billion? Just since this war, this blip, people have paid $43 billion more in gasoline costs. And people are feeling some pressure from that. I want to just change the subject, Mr. Secretary, and talk a little bit about the tax credit for the private school fund. This is a program where a taxpayer can get a 100% tax credit for providing monies to the school granting organizations. Can you tell me what other tax credit do we have where people don't have any skin in the game? They get a 100% tax credit for their participation. I just want to be reminded of it because I don't know.

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Scott Bessent3:00:12

Again, I don't know why you think there's no skin in the game because this can go to students in public schools for tutoring. It can go to handicapped students.

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Representative Moore3:00:19

Well, you know, I guess kids in public school don't pay tuition. So I don't know how...

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Scott Bessent3:00:26

If you wanted to hire a tutor for your child, you could do that.

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Representative Moore3:00:30

But I guess I'm talking about the taxpayer, sir. So I'm talking about me as a taxpayer. If I want to provide money to a school... Let me get to the point. What if I want to donate my money to a school that doesn't follow any of the civil rights protections? You know, I don't want to admit LGBTQ students. I don't want to admit black students. And I get a dollar-for-dollar tax credit for that. What other tax credit program do we have that's similar to that?

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Scott Bessent3:01:07

Almost nothing.

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Representative Moore3:01:10

Nothing. And...

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Scott Bessent3:01:12

And many of these are for religious schools, ma'am.

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Representative Moore3:01:15

Exactly. And so this is sort of an inequity we're building into the system. And my time is expired, but I just want the record to reflect that this is an inequity where we're allowing, we're circumventing the state's right. Expired.

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Scott Bessent3:01:33

Well, will you indulge me? I couldn't disagree more.

R

Representative Moore3:01:36

Yeah.

Okay. I have a unanimous consent request to put these materials in the record, Mr. Chairman.

C

Chairman Smith3:01:44

Without objection, I'd now like to recognize Mr. Fitzpatrick for five minutes. Thank you, Secretary Bessent, for being here today. We appreciate it.

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Representative Fitzpatrick3:01:51

Sir, since the beginning of Russia's war with Ukraine, many of us have worked to make it unmistakably clear that Russia's illegal campaign of aggression will not be normalized nor rewarded. And that is why several of us have continued to advocate for sanctions that will put economic pressure on Russia and ensure that any peace agreement is durable, is real, and is agreed to by the government of Ukraine. Last year, a large bipartisan group introduced something called the Peace Through Strength Against Russia Act, comprehensive legislation that mandates sanctions on Russian officials and entities supporting Russia's defense, energy, and transportation sectors. This bill would close loopholes fueling Russia's war economy, targeting Russia's energy leverage, and impose sanctions for war crimes including the kidnapping and wrongful deportation of Ukrainian children. It establishes a 500% tariff on all imports from Russia to the United States, as well as on products from any nation which continues to enable this war through the purchase of Russian-origin oil and natural gas. This committee and this Congress, I believe, have an obligation to provide the administration with the tools necessary to deliver lasting peace through strength. On May 18th, the Treasury announced a further 30-day extension of sanctions waivers permitting the purchase of Russian seaborne oil, citing the need to support energy-vulnerable countries affected by the supply chain disruptions in the Gulf oil markets. And while it was intended to address energy shortages, the waiver has the potential to enable continued Russian oil exports that generate revenue for the Kremlin, revenue that could be used to sustain Russia's ongoing war effort. So, Mr. Secretary, again, thank you for being here today. Just on that point, what safeguards are in place to prevent the Kremlin from using this extension to fund its war against Ukraine? Can you expand on the rationale for this waiver and the potential for there to be financial benefit to Russia in this war effort? And then lastly, is the Department of the Treasury prepared to implement meaningful sanctions against Russia such as those described in the legislation I just referenced?

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Scott Bessent3:04:27

You have to step back and think: are you willing to put a 500% tariff on China? Because all I've heard, especially from the other side but many on our side, is how tariffs are inflationary. I don't believe they are, but a 500% tariff is an embargo. So, I am the highest-ranking US official in this administration to have visited Ukraine. So, do not mistake my skepticism for this for a lack of support for Ukraine. And let's go back and look at the sanctions regime. The Biden administration was weak, weak, and weaker on Russia's sanctions. There were exemptions. If I were to score 0 to 10, the sanctions level was 3%. And then probably the worst national security adviser in history, Jake Sullivan, on his way out the door in January of 2025, raised what I would call the sanctions level from a three to a six. So the Trump administration could adhere to those sanctions. And we have. In October of 2025, President Trump asked me how he could really turn the heat up on the Russian Federation. And I said, 'You could do what no one else has done: sanction Lukoil and Rosneft.' And that has been done. So make no mistake, Congressman, that this administration has been tougher than any country in the world on the Russian Federation. And the Europeans, I believe they are on their 20th sanctions package now, which they're very proud of. But I believe that means their other 19 have failed.

R

Representative Fitzpatrick3:06:17

So just to follow up, Mr. Secretary, do you believe that the current sanctions structure is sufficient? Do you think any changes need to be made to that? And if you could address the issue of the waiver as well.

S

Scott Bessent3:06:34

Well, with the waiver, the waiver has done two things. It has kept overall global energy prices lower. And the other thing it has done: during World Bank-IMF week, many of the most vulnerable countries asked me to continue the waiver. It is not intended to... and we have... my guess is, or my strong inclination, is that if there are further waivers, they will be country-specific and not generalized. And the Russian Federation has seen very little incremental revenue because of the waivers. Their oil was always going to China, and now the oil can go to our allies.

C

Chairman Smith3:07:18

Gentleman's time is expired. I'd like to recognize Miss Tenny for five minutes.

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Representative Tenny3:07:23

Thank you so much, Secretary Bessent, for being here. And while we're on the energy topic, I do come from New York where we've banned natural gas drilling and we're talking about affordability. We still haven't hit the peak gasoline prices in my state that we had under the Biden administration. And we weren't dealing with a conflict in the Middle East. We didn't deal with the Democratic shutdown of our Department of Homeland Security last fall. We also didn't kill the Keystone pipeline, ban all new oil and gas leases, and restrict leasing on 13 million acres of land in Alaska. And the Biden administration was only able to bring prices down by releasing 50 million gallons in November of 2021, another 180 million gallons, a million per day in March of 2022, and that was the only reason our gas prices came down. So, as a New Yorker who's very sensitive about energy prices and really bad energy policy that's driving up the costs in our state... and you can look, I think if you looked at some of the stats you've put out, if you just took out New York and California, for example, the prices would probably be substantially lower on average, and your numbers would look even better. So I just want to say thank you for recognizing some of those things that I think my colleagues on the other side haven't seen. But I do want to give you...

S

Scott Bessent3:08:38

Congresswoman, I would say that no one likes paying higher electricity prices, but that is a state issue, and it is really a red state-blue state issue because blue states have not built new capacity and red states have. So it is a regulatory morass that we see unfortunately in great states like New York and what the people are subjected to.

R

Representative Tenny3:09:04

Absolutely. And it's a transmission issue and a pipeline issue and an access issue and a lack of common sense. But let's talk about the positive things because we want to talk about HR1 and your help in getting that across the finish line. Obviously, it was a monumental piece of legislation building on the 2017 tax cuts that I actually was in Congress for and voted for, and we are grateful to you and your department for making that happen. I also want to make sure and recognize you talked about some permanency today, and I want to make sure that we recognize one of the signature pieces of legislation that I co-authored with my colleague Representative Su, and it's the making the New Markets Tax Credit permanent as part of HR1. That was something we fought hard for, and it was very bipartisan. In my district alone in upstate New York, which is way up in the rural areas, New York 24 stretches from the St. Lawrence Seaway all the way to the Niagara River. The New Markets Credit has delivered over $38 million in total project financing, supported over 350 full-time jobs, and has brought real investment to communities in our region that Washington often forgets, and we appreciate you for that. And the permanency also really helps our rural communities, especially low-income neighborhoods, and oddly enough, very similar communities that Miss Su has in Alabama. So we want to thank you for that. And also want to just thank President Trump. The infrastructure has been significant. You talked about permanency and why that's going to be good for our communities. I do want to ask you a little bit if we could just get into when it comes to the implementation of New Markets. The Community Development Finance program and that fund. Can you just give us an update on that and where we are going to be with that in the future?

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Scott Bessent3:10:47

In terms of the CDFI?

R

Representative Tenny3:10:49

CDFI. Yeah. Where we are with CDFI and how that looks like we're moving full speed ahead on that.

S

Scott Bessent3:10:55

Yep. So, OMB apportioned the funding for fiscal year 2025, and we had to restore accountability. Over the last year, my team has reviewed rhetoric and priorities, and we are getting CDFIs back to their core business. It's not going to be financial engineering. It's not going to be wasting taxpayer dollars. And we think that they are important when used properly. One of the biggest financial frauds of last year was the CDFI.

R

Representative Tenny3:11:28

So, are we going to see... when are we going to see a timeline on that for our applicants? We know that. Is that coming out of Treasury?

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Scott Bessent3:11:36

I'll have my staff get back to yours tomorrow.

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Representative Tenny3:11:38

Okay, that'd be great. We appreciate it. Hope you run for president. Thank you.

C

Chairman Smith3:11:48

Thank you. And now recognize Mr. Bole for five minutes.

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Representative Bole3:11:50

Thank you. Mr. Secretary, a few days ago, the White House Director of the National Economic Council, Kevin Hassett, said, and I quote, 'People are spending more on gas, but they're also spending more on everything else, not just groceries, but restaurants and so on. I think that's a sign you see when people are optimistic about the future.' I was wondering if you agree with your White House colleague that people spending more on everything else is just a sign of great optimism.

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Scott Bessent3:12:26

I think high discretionary spending is probably what Director Hassett meant.

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Representative Bole3:12:32

You consider spending on groceries discretionary?

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Scott Bessent3:12:36

I again...

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Representative Bole3:12:37

Were gas discretionary?

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Scott Bessent3:12:39

I didn't say gas. Did he say gas? Yes, that's correct. I'll read the quote again. 'People are spending more on gas, but they're also spending more on everything else, not just groceries, restaurants, and so on. That's optimism.'

R

Representative Bole3:12:54

So, the everything else would be discretionary spending, Congressman.

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Scott Bessent3:12:58

It would be.

R

Representative Bole3:13:00

Well, I'll tell you what. I can settle how the American people are feeling about this economy because I have the data on it right here from Fox News just the other week on the president and this administration's handling of the economy. 71% of the American people disapprove, including 40% of Republicans. On the president's handling of inflation, 72% disapprove. They disapprove in fact by a three-to-one margin over approval. So do you agree with the American people or are they just wrong?

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Scott Bessent3:13:39

Look, the American people were torched under the Biden administration.

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Representative Bole3:13:44

Oh my goodness. I wish I had a dollar for every time you or someone on the Republican side brought up Biden's name. If I did, I might have as much money as you have, Mr. Secretary.

S

Scott Bessent3:13:53

You would have lost 22% of your purchasing power because that's what happened.

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Representative Bole3:13:56

So the American people are wrong. The fact that by a 3:1 margin they disapprove of this president and your performance on the economy. They're wrong.

S

Scott Bessent3:14:04

The Democratic House's 17% approval rating.

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Representative Bole3:14:07

No, I understand why you don't want to answer the question. So, let me... Oh, I forgot to mention, reclaiming my time. I forgot to mention consumer sentiment is at an all-time low. So, the numbers on the approval rating of this president on the economy are the lowest since the Great Recession. But in terms of consumer sentiment, which actually does measure whether or not people are optimistic about their future, the lowest in the history of a poll that dates back to 1952.

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Scott Bessent3:14:34

Well, let's look at the underlying data. Two-thirds of those are Democrats. The Democrats... two-thirds of those polled. So Fox News, The Economist, all the polls are wrong. You're citing the University of Michigan...

R

Representative Bole3:14:47

There have been other surveys as well, but the Michigan...

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Scott Bessent3:14:50

People who listen to this kind of twaddle, they vote in the single digits, teens, whatever. Republicans vote much higher, and that's...

R

Representative Bole3:14:59

I don't even know what you're saying, Mr. Secretary.

S

Scott Bessent3:15:01

No, I don't think you know what you're saying. I know what I'm saying.

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Representative Bole3:15:03

I'm citing the facts. Those are the facts that you have a problem with, Mr. Secretary.

Well, let me just turn since I only have two minutes left. Let me just turn to this. I think it's an unquestioned fact that in the 2024 election, President Trump in my home state, the Commonwealth of Pennsylvania, and throughout the country, especially those seven big battleground states, he promised the American people, and I quote, 'I will lower costs on day one.' Well, Mr. Secretary, as it turns out, today is exactly day 500 of this administration, and costs aren't any lower. They are higher than ever before. Inflation is rising. Gas prices are surging. Consumer confidence again has collapsed. And health care costs are going up thanks to the bill that you helped pass over a year ago. Why won't you just admit that this has been a failed presidency? Because the first step to turning this around would be admitting the problem.

S

Scott Bessent3:16:03

The 2.6% GDP growth, exceptional job growth in the private sector... that's the average since President Trump came into office. Real wage increases every month except for April. So if...

R

Representative Bole3:16:16

Once again, inflation is eating away at the pocketbooks of the American view. I can tell you this. Reclaiming my time. In the 30 seconds I have left, when I was back home in Northeast Philly a couple days ago at a gas station, people were paying over $4.50 a gallon. They were feeling a lot of things, a lot of emotions. I guarantee you optimism wasn't one of them. With that, I yield back.

C

Chairman Smith3:16:42

Thank you very much.

S

Scott Bessent3:16:43

Thank you.

C

Chairman Smith3:16:45

Thank you. And I'll recognize Mr. Murphy for five minutes.

R

Representative Murphy3:16:47

You know, memory is a wonderful thing to study. How we...

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Scott Bessent3:16:51

I think George Orwell called it memory-holing.

R

Representative Murphy3:16:54

Yeah. So, it's really hilarious, I think actually sad and pathetic on the other hand, that people don't remember. I'm sorry that people get triggered when they talk about the former president. But 21% cumulative inflation during four years, which I think maybe you're smarter than I am in this regard, contributes a lot to what's going on. Now that said, I think it's actually pathetic that the other side of this dais places more concern about talking about gas prices. They didn't talk about gas prices during the last administration when they were higher actually than they are now. But they place more concern about that than the fact that their children and grandchildren might get irradiated by a nuclear weapon one day. And they were actually finally doing something about that.

S

Scott Bessent3:17:40

I couldn't agree more, Congressman. As someone with children who hopes to have grandchildren one day, President Trump is future-proofing the Iranian regime against having a nuclear weapon. And the short-term challenges that we are seeing now would be nothing compared to that.

R

Representative Murphy3:17:59

Yeah. And I totally commiserate with those, especially lower-income individuals where it's harder right now. Absolutely understand. But if we look back on one of the great historical lessons of Britain during the Battle of Britain and the things that they took on to save the fact that they didn't want to be destroyed by Nazi Germany, the same thing that we don't want to be destroyed by a radical Islamic regime which is in their constitution to do so. Then hardships sometimes are challenging. Well, I think the best analogy here is World War I, that Germany hadn't declared war on the US. We just knew that it was a menace, that it was a cancer that had to be stopped, and we have cut the head off the snake. Everyone should remember the number of Americans who have died at the hands of the Iranians since 1979. They are the world's leading sponsor of state terrorism. Whether it's the USS Cole through their proxies, whether it was the barracks in Beirut, and on and on. And yet we had a vote yesterday basically that was applauded. Not so much maybe it was anti-Trump because everything's anti-Trump these days, but it was more pro-Iranian in so many different regards. Nothing against the Iranian people, but the Islamic regime wants to kill Americans and has done so as you point out since 1979. Let me just pivot a little bit to a question here because I would love to have your thought about this. I hear time and time and time again from the other side that the rich are not paying their fair share. Can you tell me, was the Working Families Tax Cuts something just for the rich?

S

Scott Bessent3:19:34

Those are under TCJA. The highest income brackets paid 10% higher. And you know, I can see that for especially the president's signature policy, 99% of the filers on no tax on tips make less than $200,000. No tax on overtime: 90% of the filers, 75% make less than $100,000.

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Representative Murphy3:20:00

So, as we heard, the rich don't get tips. The rich don't need the senior deduction.

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Scott Bessent3:20:08

Yeah. So, I've just asked them repeatedly, tell me what that percentage is. What is the fair share? The fact that the top 1% donate one-third of all the donations in this country. Yeah, maybe they should do more. I don't have any issue with that, but that's a voluntary thing. And you've read the book Atlas Shrugged, right?

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Representative Murphy3:20:26

Yes, sir.

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Scott Bessent3:20:26

Don't you think we're seeing a lot of lessons from that today?

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Representative Murphy3:20:29

I think we're seeing more lessons from 1984.

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Scott Bessent3:20:33

Well, yes, indeed. Indeed. Let me pivot just a little bit to a challenging topic, and that's our debt and the fact that I think we've had pro-growth policies put forth in our tax bill which may not be readily apparent right now. Right. So I wonder if you could just give me what you think is going to happen, what our projections are going to be for debt to GDP in the next 5 to 10 years with all the investment that's going to be coming in.

As I said earlier, Congressman, we are creating highly productive assets that will be generating the high returns that will then go into the tax base. This manufacturing renaissance that we're seeing creates jobs in two ways. The companies will be paying more taxes. They've availed themselves, as we wanted them to, of the 100% full expensing on equipment for factories, for farm structures, and that will go into the tax base. I call it the slingshot effect. You pull it back and then it starts paying off.

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Representative Murphy3:21:37

Yeah. It's like a slinky. You know, if God forbid there was a Democrat that got into the next White House, they're going to come in and claim all the wonderful benefits that we're going to see at that point in time. Just kind of like the Biden administration talked about all the job creation after they destroyed all the jobs and then just restored them. So, thank you for the work that you do. You are doing the good Lord's work in a very, very challenging environment. You're deeply appreciated. Thank you. I'll yield back.

S

Scott Bessent3:22:02

Thank you, sir.

C

Chairman Smith3:22:03

Thank you, Miss Fishbach.

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Representative Fishbach3:22:04

Thank you, Mr. Chair, and Secretary. I want to say thank you for being here because it's always good to see you and I genuinely appreciate the information that you have and when we have the opportunity to have the discussion and be able to ask questions. But I really am sorry that the other side chooses not to acknowledge any of the good that's come out of this bill. And that's simply because this committee, the Republicans, Chairman Smith, and President Trump are the ones that did it. So they refuse to see any of the good. And I'm sorry about that because I think that they're missing a lot.

S

Scott Bessent3:22:42

Look, I'd be worried because all these tax returns that we got that had one of the president's signature policies, they all voted against them. They all voted for the biggest tax hike. They voted against increasing the child tax credit. They voted to cut it in half. And I feel like they did it simply because President Trump supported it.

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Representative Fishbach3:23:05

Absolutely. And I do feel sorry and I am sorry about the fact that they believe that being rude is the way to have any kind of discussion and that the only thing that they're seeking is social media clicks. And so I apologize for that because I respect not only your position but also the information you're able to provide. And I think it's important that we have civil discussions as opposed to this kind of yelling at people and not letting them speak. So I apologize for that. But I just wanted to ask a little bit. My district is very rural, very family-oriented, and so I wanted you to maybe talk a little bit about particularly those families that benefit from what we've done in the bill, the pro-family provisions, and maybe a little bit about that so that people can understand better what we really did for those families.

S

Scott Bessent3:24:02

Well, first of all, permanence is very important. We increased the child tax credit from $2,000 to $2,200. That is permanent. And we've done that. 40 million families have claimed this benefit. And with everything here, you know, as someone who has studied the history of economics, we would have had a cataclysmic event if we had a $5 trillion tax hike.

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Representative Fishbach3:24:38

Absolutely. Absolutely. And I think it's incredibly important, like I said, not only to all of the families, and I represent a rural area with lots of families, and so I think it's incredibly important that we do provide those kinds of tax breaks for those folks. And what would have happened had we not been able to do that is incredible.

S

Scott Bessent3:24:58

And I think we have a barbell here. The representative that we have on one side, it's the expensing of business equipment, can be farm equipment, structures. And then on the other side, the president's four signature policies.

R

Representative Fishbach3:25:15

And you anticipated some of where I was going to go with that, but I also did want to, with a little bit of time I've got left, talk a little bit about the small businesses because our communities depend so much on those small businesses. And I think that 199A has been discussed earlier, but I think if you have anything else to say on how critical these tax cuts are to those small businesses, because I will tell you, those small businesses are absolutely the backbone of my district. So if there's anything else you want to add on that.

S

Scott Bessent3:25:48

Well, Representative, the Wall Street Journal accused me of being a populist firebrand because I said it's time for Main Street to do well. I pointed out to them that's why it's called the Wall Street Journal, not the Main Street Journal. And this is a Main Street administration. I came from a small town, and Wall Street always does well. And with 199A, we make sure that Main Street small businesses, as I said earlier, many people put their life savings into these businesses, and they are the backbone of many of our communities. We've tried to make sure that they have proper lending. But importantly, when you're going to take on that kind of financial risk for yourself, your family, you want to have certainty. And I think we've given them great certainty, and I think permanence. I think permanence in these tax cuts. We will never have to call them tax cuts again because they are permanent.

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Representative Fishbach3:26:38

Well, and with my remaining couple of seconds, I know that you were invited to Pennsylvania, but I'd like to invite you to Minnesota anytime. And so that you would get outside of the metro area and into the rural areas where these permanent tax cuts have really had an effect. So I thank you for being here, and Mr. Chair, I yield back.

C

Chairman Smith3:27:01

Thank you. Mr. Secretary, there's no need to read that paper anyhow. I would just point that out. Mr. Byer.

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Representative Byer3:27:10

Thank you, Mr. Chairman, Ranking Member. Mr. Secretary, thank you for being here. And I have no intention of trying to find something for social media. I share your concern. I'd love to see faster economic growth in America. 3% would be amazing. It would help us begin to unwind the huge deficit that we have right now. What I am much more concerned about is not all the individual statistics. You know, my college statistics textbook was 'Lies, Damn Lies, and Statistics.' We can all pick out the ones that we like and the ones we don't like. I'm much more concerned on a more macro level that on at least five things, like you, I've studied economic history a great deal, that the administration is moving in ways that seem contrary to everything that I've learned about economic growth. Number one, of course, is the tariffs. Tariffs have rarely been a good thing, and we've seen study after study that shows that 96% of the tariff revenue so far has been paid for by American consumers and American businesses. Also has not led to a reshoring of manufacturing. Second is workforce. We know the two drivers of economic growth are workforce participation and productivity improvements. With the immigration enforcement, no one here objects to deporting criminals. But we've gone and we've imprisoned or deported hundreds of thousands of hardworking people paying American taxes with American families that have now, according to the businesses I talk to, the builders can't build, the farmers can't farm, our fast food places are all those workers that are necessary are gone. Number three, the war of choice. It hasn't accomplished regime change. It didn't bring democracy to Iran. They still have the missile capabilities which we are seeing every day, and they still have the nuclear stuff. And I see a Trump administration scrambling to recreate the Joint Comprehensive Plan of Action that he walked away from that actually had nuclear weapons 20 years away in Iran, and we'll be lucky if we can get back to that again. And then there's the disinvestment in research. 20% cuts to almost all university research. National Science Foundation down 55%. The science departments that know and EPA eliminated. Cuts to NIH and CDC. And what we're seeing is the young scientists in America fleeing to Germany and to France and to England, places that want them. This is back to where does our growth come from. And then I think maybe the most damning thing, half of the growth last year, which by the way according to the Federal Reserve is 2.1%, not 2.6, is 1.6% according to the Federal Reserve in the first quarter of this year. Those are not anything like the 2.8 that we had in 2024. But that half of the GDP growth last year of that 2.1% came from data centers alone. There are 831 data centers right now under construction. I live in an area that has half, two-thirds, three-quarters of the data centers in America. I am a big AI optimist, but I promise you so many of the people that I talk to are hating the data centers because of the impact on water, the sound, the particulate matter, the electricity costs, and ultimately the fears about what all that AI may do to their privacy and their concern. So, I want you to be successful because I'm an American and I love my country and I want to have 3% growth. I just worry that so many of those decisions that you have made, the president made, are moving us in the wrong direction. And with that, rather than getting into an argument with you, I know your responses. Let me move to something that I think has not been touched upon today.

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Scott Bessent3:30:54

Say in a courtroom, asked and answered.

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Representative Byer3:30:57

Oh yeah, maybe the president announced that he was appointed... you had plenty of chance today. They appointed a businessman and current head of the Federal Housing Finance Authority with zero background in intelligence gathering in national security to be the acting DNI. Of course, I speak for many of us. We think that Mr. Py is wildly unqualified for this job and also misused his limited authority as head of the Federal Housing Finance Association to manufacture bogus mortgage fraud cases against the president's enemies. But I know that you've had some interaction with him before. I think you said at the Finance Committee yesterday that you told him you were going to kick his rear end. But rather than going through an intensive search and vetting process, we look at you who had to go through all that, who had to be vetted, voted in by the US Senate. Doesn't it bother you as a Senate-confirmed, deeply vetted cabinet official that you're going to be asked to serve with a character like Bill Py?

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Scott Bessent3:31:55

I think the president has chosen a great cabinet. I think he continues to, and I think that it's a false assumption when you look at highly credentialized people. If I look, no one had more credentials than Jake Sullivan. And as I just said, I think he was the worst national security adviser of all time. Do you think the Afghan pullout was done in a good way? 13 people died at the Kabul airport. He wrote a piece in Foreign Affairs magazine that they had to be redone online. I've still got the hard copy where he said everything's fine in the Middle East, and then we got October 7th. So, I don't believe in credentials. I've actually made a lot of my money over the years betting against the status quo. And I think President Trump, you wouldn't have thought that a real estate developer could come down an escalator and become president twice. It had never been done before.

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Representative Byer3:32:48

I would point out that the Afghan withdrawal was done on Trump's timeline after it was negotiated at Camp David with Mike Pompeo.

C

Chairman Smith3:32:56

All right, Mr. Moore.

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Representative Moore3:32:59

Thank you, Chairman. This is a very important hearing, and particularly, Mr. Secretary, for being here. I want to commend the work that you and your staff have done over the last 11 months to implement the Working Families Tax Cuts. As a father of four and a representative from the youngest state in the country, I'm proud of the fact that we focus so much on supporting families and the next generation through an increased child tax credit, refundability of the adoption tax credit, and of course, the creation of Trump Accounts. Mr. Secretary, Treasury has indicated that over 5.5 million Trump Accounts have been opened. 5.5 million, with 86% of them linked to families making less than $200,000. Can you speak to what this investment in lower and middle-income Americans and children will do for their future?

S

Scott Bessent3:33:52

Congressman Moore, thank you for your leadership on this. I think that this is one of the most important benefits for young people maybe since the GI Bill. 38% of American households have no exposure to our great financial markets. They believe that they are on the outside looking in. I grew up in a rural place in South Carolina. I only knew that something bad had happened on Wall Street in 1929. And I have pushed and pushed for financial literacy. And I think this is going to do two things. We're creating a generation of shareholders. When the program goes live, and we're at 6 million as of this morning, when we go live July 4th is a Saturday, we'll go live on July 6th, that all those families will be able to look at the app and know that they have a share in our great economy, in our great markets. And we have created at Treasury learning modules, TrumpAccounts.gov. And I think this is going to be the ultimate learning experience. And on the back end of this, when the children turn 18, they can take it out, they can use it for a down payment on a home, they can use it for education, they can roll it into a retirement account that they take out when they're 65. So I think that this, as a supplement to our current programs, is going to prove one of the most durable legacies.

R

Representative Moore3:35:21

You make a point that not enough people had access to it, and I think you and I and many others understand that there was an opportunity to have access, and it only requires a little to make a huge impact in your own life, but getting started is insurmountable to a lot of people. They think, 'Oh, this isn't for us, this isn't for me.' And what this does is it makes it so it is literally in front of every single, an opportunity for every single child in America to be able to have it there and have it part of it. The other aspect of it that I think is due some of the most... what I think has been most incredible part that's come in the aftermath of passing it is I don't recall seeing really in my... maybe you got better examples, but over $6 billion given to one specific initiative of philanthropic dollars from the Dell family and so many others that are involved. Can you help put into perspective how significant and wide-ranging private and philanthropic investment is to Trump Accounts?

S

Scott Bessent3:36:21

A lot of excellent points there, Congressman. First, there's this idea of food deserts, that people weren't able to get, are still aren't maybe able to get nutritious food because they're in a food desert. There have been financial service deserts, that people don't have the minimums to open some kind of a non-bank account where they can get access. So I think that this is curing that. This is a free, low-cost, no-cost entry if your child is born during President Trump's term at $1,000. But as you highlight, I think that this is a change in philanthropy. Foundations, great philanthropists like Michael and Susan Dell can donate directly to the children of America. No big foundation buildings, no annual gala, no speakers, straight to the children of America. And what Susan and Michael have done is that they are giving to... they have excluded the top 20% of zip codes in America. They're going to give to every eligible child in those zip codes. It will be $250 per account. That's $6.25 billion. And we have more and more philanthropists who are coming on board all over the country. We have major corporations that are doing it for their employees. People can adopt school districts. They can adopt zip codes. They could adopt states. I think we're going to see foundations and many state governments getting on board. So we have created the delivery device and the holding tank for this, and I think it's going to explode.

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Representative Moore3:38:02

It's galvanized so much more than I think people even expected. The group that's been involved with this, Invest America, from the start getting it to where we are, it's been an absolute honor to be able to work with your team on this and look forward to some of the best opportunities. Like I said, I have four young boys under 13 years old. I was at their age when I learned the concept of a checkbook. They're going to be able to learn the concept of compound interest and how just a little bit now is going to affect them later. And I yield back. Thank you.

C

Chairman Smith3:38:27

Miss Beth Van.

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Representative Beth Van3:38:30

Thank you very much, Mr. Chairman. Thank you, Secretary, for joining us today. I think it's safe to say that you have probably worked as hard as anyone over the last 18 months, and no one has done more for the American people than this administration and this Treasury Department. Mr. Secretary, when President Trump took office, what were the biggest economic challenges facing the administration?

S

Scott Bessent3:38:50

Well, we inherited a mess. We had the worst inflation in 49 years, and I think in many ways the worst for working people in our nation's history because someone was asking me about the inflation indices earlier. That's the average for working families. It is thought that many of their goods and services inflated as much as 35% with an 18% wage gain. So the loss in purchasing power was tremendous. We were running the biggest deficit to GDP that we'd ever run, 6.7% to 6.9%, when we were not at war, not in a recession, and we had to get that under control. And then, everything that was happening to our American workers, from the border being open, whether it was safety or jobs being taken.

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Representative Beth Van3:39:44

So, since January of last year, what would you say the largest economic indicators have been showing the greatest improvement?

S

Scott Bessent3:39:49

I would say that every month except this past April, we've seen real wage increases. We've seen on average 2.6% GDP growth for the past four quarters. And the underlying resilience of the economy. We pulled down the fiscal deficit to GDP. We got it down to about 5.5%. So we had a fiscal contraction and still grew. And Representative, everything we are doing, the jobs we're creating, they're in the private sector and they're for Americans.

R

Representative Beth Van3:40:25

I appreciate you saying that because the previous administration often pointed to job growth as evidence of economic success, but much of that growth, as you just mentioned, came from government hiring. So can you explain the difference between an economy that is driven by government job creation versus one in the private sector?

S

Scott Bessent3:40:41

Well, we see the productivity go up, but more importantly for the people who are getting those jobs, it's very difficult to create real wage increases. Traditionally, government jobs are indexed to the CPI. So you're just keeping up. With private sector, people can move up. And we are creating, with the Tax Cuts and Jobs Act, we're having a building boom in manufacturing structures. And if someone who is kind of economically illiterate said to me, 'Well, where are all these manufacturing jobs?' Well, manufacturing jobs take time. I was up in my hometown of Charleston, South Carolina. Boeing is expanding their facility there by 50% for the Dreamliner production facility. So first you get construction jobs, then you get a thousand high-paying jobs in the Boeing factory. And we're seeing that again and again.

R

Representative Beth Van3:41:41

Well, I think the goal of public policy shouldn't be to make government dependency more comfortable, but it should be to make economic independence more attainable. So, would you agree that the most effective way to improve a family's financial situation is not through government assistance, but through higher wages and better job opportunities?

S

Scott Bessent3:41:58

100%. And the opportunity to start your own business. And that's what we're seeing too, in terms of Main Street coming back. One of the things I spent my career in the financial sector, and 45% of our small and community banks have disappeared since the Great Financial Crisis. Senator Warren likes to say, 'Ooh, we might have a bank failure.' She killed 45% of the small banks.

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Representative Beth Van3:42:22

Yeah. I think the Trump administration is rightly focused on creating the conditions for private sector growth and for private sector hiring because every new private sector job represents an American who is less dependent on government and more empowered into their own future. And I think as Congress considers policies that encourage work and reduce dependency, I do believe that we have a responsibility to connect people with opportunity. So, I'm going to ask you, what are you doing on August 6th?

S

Scott Bessent3:42:47

I'm not even sure what I'm doing.

R

Representative Beth Van3:42:49

Let me tell you. For the fifth consecutive year, I am hosting what has become the nation's largest job fair. Last year, we had over 500 businesses that represented over 33,000 jobs. And we had about 35,000 people came last year to Globe Life Field, and we're going to do it again this year, August 6th. And we would love to have you there. I am formally inviting you right now to attend because if you want to know about economic policy, don't ask anybody in Washington. Ask the single mom who now has a job that pays the bills. Ask a vet who now finds a new career. Ask a worker who can get off government federal assistance because he's got a job that has given him a new opportunity. These are the real scorecards that I think we should be looking at.

S

Scott Bessent3:43:34

Well, I was just in Texas a few weeks ago. I'm going to be there next week. And that is the land of opportunity.

R

Representative Beth Van3:43:42

I appreciate you saying that. I think the clearest measure of a successful domestic policy is whether Americans believe opportunity exists. And I think on August 6th, over 35,000 people are going to walk into Globe Life Field looking for not government assistance, but looking for jobs, and over 500 businesses will be there because they need workers. And to me, that's the strongest real-world indicator that President Trump's economic agenda is working. And with that, I yield back.

C

Chairman Smith3:44:05

Thank you. Thank you, Mr. Evans.

R

Representative Evans3:44:09

Thank you, Mr. Chairman. Thank you for being here, Mr. Secretary. The Trump administration is failing at home and abroad. It is not smart investment for the future and certainly isn't delivering on the affordability agenda the American people deserve. The president's policy has left Americans paying more for food, gas, health care, and electricity. Electricity prices are especially important to me because it's related to the growing concern around the cost of data centers and future investment in energy. Meanwhile, the Trump administration has said he does not care about the financial situation of Americans. He has called gas prices 'peanuts.' While the GOP focuses on policies that make money for Trump and his allies, working families are paying the price. So, I say to you, Mr. Secretary, obviously there are concerns that we all have about what is occurring. Though I know you may have a different view, I want to share with you the view that I'm having and living with and hearing my constituents talk about. So as a result, I yield back the balance of my time and thank the chairman and the ranking member for this opportunity of this hearing. Again, I thank you.

C

Chairman Smith3:45:56

Thank you, Congressman.

S

Scott Bessent3:45:57

Exactly.

C

Chairman Smith3:45:58

Thank you, Mr. Finstra.

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Representative Finstra3:45:59

Thank you, Chairman and Ranking Member. Thank you for holding this hearing, Secretary Bessent. I truly enjoy always talking with you. I was a professor of business and economics, and when I got my doctorate, I actually did some work on what you've done in the past. So always very impressed. I want to just say we've done some historic things over the last year. Obviously, the big, beautiful bill, the Working Families Tax Cut, is just incredible. Can you talk a little bit about that bill? I'm going off script a little bit, so I hope I'm okay. But can you talk about international tax and what that is going to do to bring and onshore businesses and keep the US competitive around the world? We have so many multinationals and other companies that do jobs around the world. And I see a lot of this employment coming back and a lot of the workforce that we're going to have in the US is going to grow. Can you talk a little bit about that?

S

Scott Bessent3:47:06

So, a couple of things. And I enjoyed our trip out to Iowa. I remember being there when everyone says that the gasoline prices aren't going to come down. I remember the level when we went to the diner, and they will come down.

R

Representative Finstra3:47:23

You know what? And they're all happy, you know, compared to what everybody else is saying. All the farmers are happy, right?

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Scott Bessent3:47:31

So, corporations have a choice globally. And I think with this administration, I've often described that we have a three-legged stool: it is tax, trade, and regulatory certainty. And all of those have worked to push the businesses back into the US, to make them want to come here. And it's certainty. Come here, you have tax certainty, you have regulatory certainty, and you have energy certainty. The US is an energy superpower. And I am responsible for the US economic dialogue with China. And when I look at what does China envy the US over? It's our military. It is our economic system. And the strength of the US.

It is our innovation and it is our energy and we can't take those for granted and all of that centers around the tax policy and this immediate expensing. It's my belief that in China they spend about 4% of GDP subsidizing industry.

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Representative Buchanan3:48:37

So we aren't a command and control economy. What we tell people, I don't go through the S&P 500 and say you need a loading dock, you need a new assembly line. We just give companies 100% expensing and they can do what is best for them.

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Scott Bessent3:48:54

And it's capitalism. It works well and like you said, we're not giving anything like China is. It's just phenomenal. Immediate expensing is just a timing issue. I just want to talk about the ACRE Act. This was about borrowing costs for farmers, manufacturers, and agricultural businesses. Could you highlight how this will help strengthen America's agricultural economy? It's a tax on loans and we have lowered that. We want to continue to lower that. How could that incentivize growth in rural America?

Well, I think that deferral on the tax is very important because there is nothing with more fixed assets. Farming is an interesting business. My family has been in the farming business for 250 years. It's an interesting business because you have high fixed assets but you have uncertainty based on weather and production. So there is a lot of uncertainty, and this brings much more certainty in terms of cash flow to those farms.

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Representative Buchanan3:50:11

Yes, absolutely. One final thing based on farming. I call it the pill for tax. It's actually government sticking their hand in the grave and ringing a dead person's neck and saying you owe us 40% in death tax. I'm always appalled by this. When somebody passes away, all of a sudden we say, 'Oh, by the way, you owe us 40% tax if you pass that land on or that manufacturing or that small business on to the next generation.' So we did $15 million, thank you to President Trump and everyone else to get that done. Would you, what are your thoughts on trying to permanently get rid of the death tax? Do you tend to agree it's sort of a pill for tax?

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Scott Bessent3:50:49

Well, all that capital has already been taxed at least once, many times, twice. And to go back to farmland, in many countries, including the UK, farmland is not subject to death duties. That's right. Thank you so much. Always good to see you. Thank you. I yield back.

C

Chairman Smith3:51:17

Thank you. The chair recognizes the gentlewoman from New York, Miss Malliotakis.

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Representative Malliotakis3:51:23

Thank you very much, Secretary Bessent. Thank you very much. Welcome to our committee. It is great to have you here. First, I want to say thank you for your words in support of suspending the federal gas tax. I have legislation that would do that. It would suspend it for 90 days, give the president additional authority for 125 days. I'm introducing that with my colleague Max Miller on this committee as well, and we hope that we can get that through. Number two, I wanted to say that, you know, in pointing out some of what my colleagues on the other side have been saying about the working families tax cuts, the fact remains that this was a historic tax cut for working Americans, for middle class families, for senior citizens. They are the ones who voted to cut the standard deduction in half, to cut the child tax credit in half, to increase tax rates for Americans across the board. And they also voted against tax cuts for tipped workers, for those who work double shifts and overtime, for refunding taxes paid on Social Security to our senior citizens. So first, the SALT deduction and the senior citizens, I believe, in addition to the child tax credit, which we've seen tens of millions of families take advantage of across the country. I think the SALT and the senior deduction were most beneficial. I was very proud to have authored the bonus senior deduction. And I think essentially it has given back to the seniors that qualify the taxes that they paid on Social Security, and they're seeing that money returned to them, which is why it is the no tax on Social Security provision. Could you talk a little bit about SALT and senior deduction, how that benefited preferably New York but the entire country?

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Scott Bessent3:53:09

Well, I think in high tax jurisdictions, high income, high tax like yours, bringing back some level of the SALT deduction was appropriate. I think that no one negotiated harder. Well, maybe a couple people, but it was a group effort from some of the Northeast and California delegations. And I think we got to a very good spot on that SALT. If this tax bill had expired, the SALT deduction would have come back, but so would the AMT, which would have devastated the middle class, everyone in those states. So, and look, as I travel around, whether it is the Social Security deduction, when I look at these numbers, 99% of the filers claiming the no tax on tips have incomes under $200,000, 90% under $100,000. For the senior deductions, 94% under $200,000, 68% under $100,000. So these are people on fixed incomes and they need certainty.

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Representative Malliotakis3:54:17

Yeah. And the SALT deduction again was not for billionaires. It was targeted to families of incomes of less than $500,000. I think it was very well tapered.

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Scott Bessent3:54:25

It certainly was. And I know that it was tailored and tapered. And I can tell you that in my district, we have many people who have saved thousands of dollars because of that SALT deduction and seniors who have saved thousands of dollars because of the other deduction as well. And I just want to turn to some of these organizations that we've been talking about. Our committee has investigated these organizations that we're seeing a lot of foreign influence. We continue to see examples of foreign actors exploiting nonprofit organizations to interfere in our political process, to fuel anti-Semitism, in some cases even support or promote terrorism. We have also seen an increase in these organizations coordinating with and receiving support from individuals connected to the Chinese Communist Party. One of these organizations is Code Pink, which the Department of Treasury, your department, as well as Justice have launched an investigation into. The Code Pink founders and groups there, they've been meeting with Cuba's communist regime, the Iranian regime in the past, they've met with leadership of Hamas. I would like to have an update on your investigation and do you see the potential for some of these organizations to have their 501(c)(3) status stripped?

So, I'm going to have to say it to this side of the room now. I can't comment on ongoing investigations, but they are wholesome.

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Representative Malliotakis3:55:44

Okay. Well, we appreciate your efforts and I yield back my time and thank you for coming here and thank you for putting up with some of the nonsense that we're hearing.

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Chairman Smith3:55:53

Thank you. The chair now recognizes the gentleman from Carmel Valley, Mr. Panetta.

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Representative Panetta3:55:57

Thank you, Mr. Chair. I appreciate that. Secretary Bessent, thanks for being here. And I guess you go by Dr. Bessent based on that South Carolina degree that was conferred on you.

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Scott Bessent3:56:08

Only for the working press.

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Representative Panetta3:56:11

Understood. Look, as you heard, I come from Carmel Valley, the place I grew up, place my Italian immigrant grandfather settled. Thank God. We have a lot of beauty. We got a lot of bounty. But unfortunately, that means a lot of people want to live there. So housing affordability remains a major challenge in my district. And one of the reasons people aren't selling their homes is because they're going to take a huge hit on taxes, as I'm sure you're aware of, based on the fact that there is a capital gains exclusion. But that's from 1997, and it remains capped at $250,000 for individuals, $500,000 for couples, and it has not kept up with inflation. As a result, many people who have grown out of their home just aren't selling because they want to protect their nest egg. Now, I got a simple bipartisan bill that actually has 18 members of the Ways and Means Republicans on my bill. And in fact, except the chair at this point, but I'm trying to get him as well. That being said, the president has actually supported this idea as well. And so, not just because the president supported this type of legislation for doubling those numbers, making it $250 to $500 and $500 to $1 million and then tagging it to inflation. Would you support that type of solution when it comes to dealing with our affordability crisis, our affordable housing crisis?

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Scott Bessent3:57:32

I haven't seen studies that would show how many openings that would create, but I'd be happy to work with you on it. I remember it was a Clinton era program.

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Representative Panetta3:57:42

Yeah. Exactly. When the Clintons changed it previously, you were allowed a one-time deduction over some age, 60, 65. Or one time tax-free sale.

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Scott Bessent3:57:54

You could roll your appreciation up to that sale. So I think there are a lot of things that we can look at. I don't want it to seem, I'm older than you are and I'm constantly told that the boomers get too much. I don't want it to seem like something that's a giveaway to the boomers.

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Representative Panetta3:58:13

Completely understood and look forward to talking to you and continuing negotiations on this. But I appreciate your acceptance of being open to the concept. So I appreciate that and look forward to working with you. But look, I think as you know and as you've heard, it's not just housing that makes it tough when it comes to affordability. Over the last year, inflation has risen 3.8%. Energy has risen 17.9%. Gasoline prices have risen 28.4%. Food has risen by 3.2% and core inflation is still elevated at 2.8%. And look, I know you got some good numbers. I understand that. But the fact is that when you speak to people on the ground, including the polling that Mr. Bole referred to, prices are a major financial concern. Now, the costs have been exacerbated clearly by the Iran war, but also tariffs. Two areas I just want to hit on quickly. I realize you said the war is temporarily paused. I think you said that at the press conference you had last week. And you said that once it's resolved and there is a deal, gas prices will drop. Got it. But the president recently said that the Strait of Hormuz will be closed through Labor Day. Is that your definition of temporary? And are gas prices going to remain high through the summer?

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Scott Bessent3:59:24

Yeah, I didn't see that from the president. And every indication I have is that they should be open sooner.

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Representative Panetta3:59:30

Okay.

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Scott Bessent3:59:31

And we've already seen oil prices are down.

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Representative Panetta3:59:34

Understood, Mr. Secretary. And I don't like saying this, but I'm reclaiming my time. Tariffs are also affecting these prices and many people in small businesses in my district tell me that it's not just tariffs but the constant change in the tariff policy that we've seen over the last year. Just yesterday the administration announced another change in tariff policy and another tariff regime. 14 countries subject to 10%, 56 countries subject to 12.5% tariffs. Has Treasury done any sort of assessment on the impact of these frequent changes to the tariff policy and what they're having on small businesses? And is there an exclusion process planned to help these small businesses because of these types of changes in tariff policy?

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Scott Bessent4:00:13

Well, I would have to dispute that the cost increases were due to tariff policy because last year the inflation was in services and we don't tariff services.

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Representative Panetta4:00:26

Got it. Have you done any sort of assessment as to whether or not you can help small businesses get through these types of tariffs?

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Scott Bessent4:00:32

Well, I think we've already done a lot with small businesses in the working families tax cut.

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Representative Panetta4:00:36

All right. And what I'm getting, I'm going to reclaim my time just because you're not getting to the point. I'm reclaiming my time, Mr. Secretary. Thank you. But please know I think that should be done in regards to our small businesses. Now, also in regards to Mr. Patel, I was an intelligence officer. I served in Afghanistan and I served proudly and I dealt with the intelligence community. I know what you say about not having experience in the job, but please know that that's offensive to people in the intelligence community and worse, it's dangerous to our national security to have someone like that at that position. Thank you, Mr. Secretary, for being here. I yield back.

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Scott Bessent4:01:15

Thank you, Congressman.

C

Chairman Smith4:01:16

Thank you. The gentleman from the Buckeye State, Mr. Carey.

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Representative Carey4:01:19

I want to thank the chair. I want to thank the ranking member, but also, Mr. Secretary, it's great to see you again. Thank you for being with us. And again, I want to touch upon a lot of the facets with the working families tax cuts and how it has affected the average American. But first, I do want to say, I want to quite frankly just want to kind of highlight some of the successes within this piece of monumental legislation. You know, this landmark legislation was drafted with every American in mind. It didn't matter their race, their gender, their income level, their marital status. This affected all Americans. The overall share of taxes paid by the top 1%, at the end of the day, this is a fact, this isn't disputed, it went up. A family with two children saw their tax returns increase by an average of 11%. That's fact. For our small businesses, think about our small business, the backbone of the American economy. We permanently extended, Mr. Secretary, that's big. That's big for our seniors. And coming off of the Social Security fairness that we did in the previous administration, but for our firefighters and our postal workers and our police officers. But just what we did within the Social Security space, a $6,000 tax deduction, which is greater than the Social Security taxes the average senior household currently pays. For our manufacturers who built this country, we implemented 100% immediate expensing for equipment and machinery. That's what we did. Now, there's been a lot of talk about energy. There's been a lot of talk about fuel prices for our country. And I want to just highlight a couple numbers because we've heard a lot of numbers and energy happens to be something I do know a little bit about. But today the average gallon of gas is $4.24 per gallon. In the previous administration, same time average price was $5.16, without the sword of Damocles of a nuclear warhead in Iran. You have to understand history to understand how terrible that regime and the threat that that would have been for all Americans. But let's talk about the pro-family policies that this monumental piece of legislation did. It permanently extended a $2,200 tax credit and tied it to inflation. That's every working family that has kids, folks. Every working family. Extended the adoption tax credit. Expanded education savings accounts to include additional K through 12 additional expenses. Expanded the health savings accounts, great things. Improved employer provided child care tax credits and made permanent paid family leave and medical leave tax credit. Our children will reap the benefits of the Trump accounts in which 5 million children have already been enrolled. Now, this legislation didn't pick winners and losers. It didn't prioritize certain segments of the American population over others. And it's not a government handout to any particular economic sector. This is sound tax policy, focused on tax certainty for all American businesses, putting more money in the pockets of hardworking Americans, and putting our country on a trajectory for economic success. Now, Mr. Secretary, I know that you've had to listen to a lot of things today, and we do appreciate your service. We do appreciate you leaving the private sector to do something that in many ways is a very difficult position to be in. But Mr. Secretary, your time, your staff's commitment, and this commitment of the administration to make America a better place, we appreciate that. So with that, thank you again for being here today. And with that, Mr. Chairman, I yield back.

C

Chairman Smith4:05:58

Gentleman yields.

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Scott Bessent4:05:59

Congressman, thank you.

C

Chairman Smith4:06:00

Also from the Buckeye State, Mr. Miller is recognized.

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Representative Miller4:06:04

Thank you, Mr. Chairman. Mr. Secretary, it's great to see you again.

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Scott Bessent4:06:06

Good to see you.

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Representative Miller4:06:07

And to note, Chairman, just a better part of the Buckeye State. For the record, but thank you, Mr. Chairman, and thank you to Secretary Bessent for your testimony before this committee today. It is much appreciated. Since we last discussed digital assets in this room, the landscape has shifted from a conversation about the rise of these technologies to a question of how we successfully integrate them into our regulatory tax infrastructure. We've seen meaningful progress. The Senate Banking Committee has advanced the Clarity Act to build a market structure framework. Additionally, I along with my colleague to my left over here, Rep. Horsford, have introduced the Digital Asset Parity Act to finally provide the common sense tax certainty our businesses and investors truly require throughout our country. We are no longer debating whether digital assets are here to stay any longer, but rather how we define the rules of the road. And we believe that this is necessary now at this time in our history. I truly look forward to discussing how Treasury can collaborate with Congress to ensure these dual frameworks provide the economic stability and tax fairness the American people deserve. Mr. Secretary, the Parity Act was introduced to solve the phantom income and tax as cash hurdles that currently plague American businesses and everyday investors. We've seen that without tax parity, companies are hesitant to adopt these tools and individuals are burdened by the reporting requirements that feel more like friction tax than truly a fair system. So, I'll just get right to it. As the Treasury Department looks at the current tax code, how do you see the Parity Act, specifically its provisions for stablecoin payments and the elective deferral of staking and mining rewards, as a catalyst for keeping digital asset innovation within the United States rather than forcing it offshore?

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Scott Bessent4:07:55

So, Congressman, thank you for those questions. This administration and Treasury's goal is to onshore digital assets, both because of the innovation that we're seeing and US standards and practices. So we would like to work with both of you on this to perfect the right balance between how this should be done. But I do think, look, whenever we get to these new technologies, there is an adjustment period. We have to think about them in a different way. And I believe not only for the technology, for the payment rails, it's essential for us to be the leader to maintain dollar dominance, and we want to have the best standards in the US that we can export to the rest of the world. So we'd be happy to work with you on that.

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Representative Miller4:08:47

Thank you very much. We've been working extremely hard over the last, I'd say, 15 to 16 months to bring a framework. And truly what we're seeking here really is, you know, besides the name of the legislation, clarity and parity and just stability for the tax code for these individuals. And I very much thank you for your answer and you willing to work with both of us on committee and all of us. Our bill also...

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Scott Bessent4:09:07

Congressman, I would say let's get clarity done by the 4th of July and then we move on to the how.

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Representative Miller4:09:12

Mr. Secretary, I would love that. I just, if you could help me with some of those individuals up there.

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Scott Bessent4:09:17

I've been on the phone with them this week.

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Representative Miller4:09:19

All right. Well, if that thing gets moving, then yes, it makes our job much easier and I would prefer that way as well. But thank you and any more guided push would be awesome on our committee and very grateful. A critical piece of this legislation is the application of Section 1058-like treatment to digital asset lending. If the Treasury Department were to formally recognize digital asset lending as analogous to the securities lending covered under Section 1058, what is your assessment of the impact on the domestic market liquidity? And specifically, does Treasury agree that extending this established tax treatment of nonrecognition is one of the most efficient levers to move digital assets from a speculative asset class to a functional, transparent part of our institutional financial infrastructure?

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Scott Bessent4:10:03

Congressman, you obviously feel strongly about this. I have a motto in life: no data, no opinion. But I will get back to you with an opinion.

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Representative Miller4:10:12

I very much appreciate that. And this has been one of the tougher subject matters that we've discussed on the committee because I believe that this country for a long time has been stuck in the analog era and we are now in the digital age. And this framework altogether just provides guidelines and stability for the cryptocurrency network within our country. And I appreciate you saying you'll work with us, but I truly believe now is the right time for this with President Trump and the Federal Crypto Reserve and him wanting the United States to be the crypto capital. My concern is that if people like you and I and others right now who don't have a good understanding aren't the ones really steering this to its final destination, then we may never get there and it may get screwed up in a different way. But I truly appreciate you being here, working with Rep. Horsford, myself, and I yield back.

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Scott Bessent4:11:02

Good. Thank you.

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Chairman Smith4:11:03

Gentleman yields. The chair now recognizes the gentleman from Vegas, Mr. Horsford.

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Representative Horsford4:11:06

Thank you to the chairman and to the ranking member and I look forward to working with Congressman Miller and the other members of the committee on the Parity Act, which is a true bipartisan bill. Before I begin though, I want to thank Chairman Smith for his commitment to working with me also on the Full House Act. Prior to the Senate-passed bill, gaming patrons could deduct 100% of their gambling losses. They were taxed on what they actually earned, nothing more, nothing less. The Senate changed that. This provision was included without meaningful debate and creates a fundamentally unfair outcome for taxpayers who participate in legal gaming activities. Under the new provision, patrons can deduct only 90% of their losses. That means someone who breaks even or even loses money overall could still face a federal tax bill. So, Mr. Secretary, will you work with Chairman Smith and me to fix this issue and to protect gaming jobs and tourism-dependent economies like Nevada?

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Scott Bessent4:12:12

We'd be glad to, sir.

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Representative Horsford4:12:14

Thank you. Now, Mr. Secretary, you talked a lot about permanency throughout today's hearing. For the tip worker, for the warehouse worker, for the teacher, for the nurse, and for the small business owners in Nevada, they don't need a temporary tax gimmick. They need permanently lower cost and permanently higher take-home pay. Yet, when Republicans wrote their bill, they made a choice that the tax cuts for billionaires and large corporations would be made permanent while making the tax relief for working people temporary. To me and to the workers, that tells them exactly who they were thinking about when they wrote it. That's why I have introduced the TIPS Improvement Act as well as the Overtime for All Workers Act because I believe workers who earn tips or who work overtime should receive permanent tax relief, not temporary. If Republicans are serious about helping working families, they should join me in making tax relief for workers permanent, just like they did for billionaires. Now, Mr. Secretary, I want to discuss tariffs, which are hidden taxes that American consumers pay, including businesses. The Supreme Court ruled that this administration's broad tariff policy was unlawful, but American families already paid the price. Small businesses paid it through higher costs. Consumers paid it through hidden higher prices. And according to the Yale Budget Lab, the average household paid roughly $1,800 more because of these tariffs. So at a time when you talk about giving relief to workers, temporary relief, on the other hand, they are feeling the effect of higher prices. So, let me ask you directly. Do Americans deserve refunds for money collected through tariffs that the Supreme Court ruled illegal? Yes or no?

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Scott Bessent4:14:24

Congressman, the American people had the money. It was in the US Treasury and it didn't take away.

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Representative Horsford4:14:30

Do you agree that they deserve the money back that the Supreme Court ruled is illegal? Yes or no?

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Scott Bessent4:14:36

It's not a yes or no question because every Democratic attorney general applied...

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Representative Horsford4:14:40

The Supreme Court ruled that they were illegal. Mr. Secretary.

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Scott Bessent4:14:44

I know. And but they applied for them to go back to the companies, to the payers of record.

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Representative Horsford4:14:49

So do the companies deserve the money back?

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Scott Bessent4:14:51

That is an issue for the Customs and Border Patrol.

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Representative Horsford4:14:57

No, no, no, no, no. Mr. Secretary, while the Homeland Security Act of 2002 may have transferred a number of customs functions from Treasury to DHS, Treasury retains oversight over trade policy and the protection of revenue functions. Treasury can delegate those functions, but it cannot delegate that statutory authority. Just last week, the Justice Department appealed a court order that would have accelerated refunds to importers and to businesses. Mr. Chairman, I ask unanimous consent to submit for the record the May 29th article 'US to appeal judge's order for broad refund of Trump tariffs.'

C

Chairman Smith4:15:41

Without objection.

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Representative Horsford4:15:42

Thank you. Secretary Bessent, yes or no. Did you participate in discussions about appealing efforts to speed up tariff refunds?

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Scott Bessent4:15:47

No.

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Representative Horsford4:15:52

Treasury helps shape major fiscal policy. Returning roughly $165 billion to businesses and consumers is a major fiscal decision. So why wasn't the Treasury involved?

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Scott Bessent4:16:07

Again, we act as the payment agent. Your bank does not tell you which bills to pay. You tell your bank what?

R

Representative Horsford4:16:14

Well, from the public's perspective, taxpayers' perspective, the administration is fighting harder to keep their money than to return it. That's why I've introduced the RELIEF Act to give automatic refunds within 90 days to the people who paid the tariffs and that once the refunds are made, the benefit goes to the consumers that ultimately paid the price in higher cost. The RELIEF Act creates an automatic refund process, something that this administration has not been working to accomplish. And this would actually address the economic uncertainty that has been caused by these across-the-board tariffs. Not strategic, not in the best interest of American consumers. And it's time that we give the money back to the people who paid it. With that, I yield back.

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Scott Bessent4:17:01

And many foreign companies, and I think we're going to see that the payers of record, many of them are overseas entities. So I...

R

Representative Horsford4:17:12

Well, Mr. Secretary, families in America don't experience the economy through GDP reports or stock market indexes. They experience it through rent and groceries. They experience utility bills, tariffs, because they're paying.

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Scott Bessent4:17:27

That's exactly right. What does it have to do? It has to do with the average family not being able to meet their monthly budget obligations because this administration is so aloof to the reality the majority of Americans are facing.

R

Representative Bean4:17:45

Mr. Bean.

Thank you very much, Mr. Chairman. Good afternoon to you. Good afternoon, Ways and Means. Good afternoon, Mr. Secretary. Welcome back to Ways and Means. Four hours ago is when this hearing started, but a year ago we were in the middle of debate of the one big beautiful bill. You, Chairman Smith, this president were all architects. You made some big bold predictions. Pass this bill, Congress, and we will see a reverse of manufacturing jobs closing or fleeing the country. You made a big bold statement that you'll put more money in Americans' pockets than ever before should we pass this bill. We passed the bill and Mr. Secretary, everything you said is coming true. How about that? There's more money in Americans' pockets. The 4.5 million manufacturing jobs that we've lost since the year 2000 are coming back. And from me speaking across Northeast Florida, people are excited, business owners are excited and making that happen. A year ago also we were doing something else. We were debating fraud, waste, and abuse. You would think that would unite this committee. But you can see today we disagree on so many things. That's something that should unite us. I want to brag on something that you're doing and Treasury Department. You're a core pillar of President Trump's anti-fraud task force. Your subcommittees and your initiatives of the Office of Terrorism and Financial Intelligence, FinCEN, and the Office of Payment Integrity are leading the way of supplying that task force. Let's fight fraud once and for all. Something else you're doing. A year ago, we talked about it of how fast we pay. The United States pays our bills very fast, sometimes too quickly, because we pay people who shouldn't get paid. Scammers don't have to rob banks anymore. They can just bill the United States. We pay them and then this pay and chase, we figure it out. So you and I, you know this, you and I and your team have created a bill to codify what you're doing now, which is to verify, to use the data and statistics to make sure it's a legit bill, that it hasn't been paid by anybody else. So hats off to you. What else can we do, Mr. Secretary, to assist you? Maybe it's just get out of the way to assist you in fighting fraud.

S

Scott Bessent4:20:05

Congressman, you are exactly right that once money goes out the door, anything other than a partial recovery is unlikely. I was out in Minneapolis and saw what was going on there. And I think in terms of the US being a high trust society and maintaining the trust that American citizens have in each other and our visitors, it's important to prosecute, and of course prosecute, but the recoveries are going to be very strong.

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Representative Bean4:20:40

It's almost, they're bad guys. They hide and chase those. So your efforts, don't give up on our bill that's in Mr. Comer's committee. I'm still lobbying it. You weighing in would be a big deal. You're already doing it, but we want to codify it. It's the best practice of paying our bills. Scammers also are targeting older folks and Americans. They're these scam calls, spam and scam calls. I get eight to ten a day. Now, the FTC, it's already against the law. We put your number on the Do Not Call list. I want to plant a seed with you. The FTC is responsible for it. It's against the law. But what if they don't have the teeth or muscle that Treasury has? I want to plant the seed with you. What do you think about the idea of Treasury getting involved and chasing and kicking out these scammers that are calling us? What do you think, Mr. Secretary?

S

Scott Bessent4:21:30

We are, Congressman, FinCEN is actively involved and many of these come from overseas.

R

Representative Bean4:21:36

Right? And you've got the tools to go after them.

S

Scott Bessent4:21:39

So, we've worked very well with the FBI in Southeast Asia to break up these, I think they're called scammer cities. And a lot of it comes, a huge amount out of North Korea. And unfortunately, many of our seniors, I think one out of every three seniors has been the subject of a financial scam that averages about $300. There's a special place in the afterlife for anybody that rips off an older American or anybody old. I just hate that.

R

Representative Bean4:22:10

Mr. Secretary, we still have to solve healthcare. That's something that maybe we do agree on both sides of the aisle says we have to do better. What if Americans took charge of their own healthcare by having the money to do so? I've got a bill, HSAs for All, health savings account where people just like their retirement they can put money aside for health expenses to make that happen. Mr. Secretary, is that bill a good idea or a great idea? The Bean Bill of Health Savings Accounts for All.

S

Scott Bessent4:22:40

I think it's a great name and a great bill.

R

Representative Bean4:22:42

That's the right answer, Mr. Secretary. And look, when you give people agency, they can tailor it to their own needs. And what we are seeing with the employer credits where employers can give credits, we're seeing a big uptake in that.

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Scott Bessent4:22:59

Love it. Love it.

R

Representative Bean4:23:01

Mr. Secretary, you could be doing anything. Thank you for your service to your country. We appreciate you. All the best, Mr. Chairman. I yield back.

C

Chairman Smith4:23:08

Thank you, Mr. Bean.

R

Representative Moran4:23:10

Thank you, Mr. Chairman. Good afternoon, Secretary Bessent. Thanks for being here today. I know it's a long day. Thanks for your service to our country as well. You're doing a fabulous job, by the way. We appreciate your willingness to appear before the committee and provide updates on the important work being done at the US Treasury Department. I'd like to build on some of the successes my Republican colleagues have already highlighted by focusing on two direct results from the working families tax cuts, both substantially improving Americans' lives and financial futures. First, I want to discuss the opportunity zone program. You mentioned this in earlier testimony, specifically the new rural opportunity zone provisions. Last year, Ways and Means Republicans strengthened and modernized this program to ensure that investment reaches some of the most economically distressed communities in America. As someone who represents a large rural district in East Texas, I've seen firsthand the challenges that many communities face when it comes to attracting capital, creating jobs, and expanding economic opportunity. Too often, rural communities are overlooked despite their tremendous potential. Here's my question. As we move closer to the nomination process, can you walk us through what comes next after census tracts are nominated by the states?

S

Scott Bessent4:24:21

I can't do that, sir. I'm happy to have my team get back to yours. We are working with red state and blue state governors and we're encouraging them to get ahead of it. I had a call, I can't remember if it was yesterday or the day before, with the father of opportunity zones, my hometown senator, Senator Tim Scott, and we were talking about, you know, he's a city guy, I'm a country guy in South Carolina, and we were talking, I was telling him what a great move this is for the rural opportunity zones and how it's going to be transformational.

R

Representative Moran4:24:56

Yeah, I agree with you. That's what we see in these provisions as well, that it gives certainty and long-lasting opportunity for economic growth in areas in America where traditionally businesses or investors are looking and saying, 'You know, I'm not quite sure if I can make that investment there,' but this is the incentive that's needed. For question number two, involves the no taxes on overtime provision. I want to turn to this provision because I was proud to help champion this policy because it recognizes a simple principle: Americans who work harder and put in extra hours should be able to keep more of what they earn. We've now learned that more than 29 million filers have claimed that deduction this year, and notably 96% of those taxpayers earn less than $200,000 annually. Here's my question, Mr. Secretary. Do these results demonstrate that this law is delivering meaningful tax relief to working Americans, the men and women who are keeping our economy moving every day, and that the benefits are reaching middle class families rather than the wealthy as Democrats have falsely claimed?

S

Scott Bessent4:26:00

Congressman, I told someone asked me earlier, 'Why do you do this job?' And the highlight is going out and meeting with our hardworking Americans, being out with the people. Whether I'm in Texas at a barbecue place outside of Dallas, which I enjoyed, I was in an Italian restaurant in Simi Valley near the Reagan Museum this weekend, and all I hear from both the employees and the employers is what a home run this has been. And you know, I told the story earlier, tax day April 15th, I was with the president in Las Vegas. He had a big rally and he asked for, you know, the room, he went through each one of the provisions, and we're in the tip capital of the world in Las Vegas, but it was the no tax on overtime that got the roar of approval over no tax on tips.

R

Representative Moran4:26:54

Yeah, I'm finding the same thing as I go through my district. That's the number one provision that people are citing to me.

S

Scott Bessent4:27:00

It's the American way. If you want to work harder, you should get to keep more of your money. And you know, I think one of the congressmen said, 'Well, we've got to let these workers, we've got to have...' What if Americans want to work more and keep more of their money? That's right. I think that's a concept we need to continue to propagate and find policies that support letting hardworking Americans keep more of their money. We forget sometimes in DC, and we shouldn't forget this, that it's their money. It's not ours. And I know you know that. I think you're doing, as I mentioned earlier, a great job. We really appreciate, I want to mention your successful negotiation of the side-by-side agreement that's helping to place the United States in a much stronger and more competitive position in the global tax landscape, digging us out of the Biden tax surrender effectively and really putting us back on the footing we need to get on. So, thank you for that work. I know you got a great team behind you as well. Keep up the hard work and let us know what we can do. Thank you. I yield back.

Good. Thank you, Congressman.

C

Chairman Smith4:28:00

Mr. Schneider.

R

Representative Schneider4:28:02

Thank you. And Mr. Secretary, thank you for your patience staying here. I actually want to give you a chance to correct the record on something you said. You earlier commented somewhat off-handedly that the conflict with Iran had ended. Do you truly believe that we are no longer in conflict with Iran and that they are no longer a threat to Israel or allies in the Gulf? That their nuclear program has been destroyed? That they no longer have a ballistic missile program and drone program threatening its neighbors in the region? And that they will no longer sponsor terrorism in the region around the world?

S

Scott Bessent4:28:31

So, are you saying you're in agreement with the president's decision to...

R

Representative Schneider4:28:37

You said the conflict was over. I'm asking, do you believe the conflict's over and everything is on pause?

S

Scott Bessent4:28:42

So everything's good with Iran now.

R

Representative Schneider4:28:45

No, don't be absurd. Don't be clever. As the president said yesterday, unless an American life is lost, he does not believe that he will have to restart the kinetic action.

S

Scott Bessent4:28:55

Okay.

R

Representative Schneider4:28:58

So you're, I'm reclaiming my time and I'm just trying to help you clear the record. I'm reclaiming my time. Mr. Secretary, can you promise, because this is your jurisdiction, that you and the Trump administration are not considering lifting sanctions on Iran as a concession towards opening the Straits of Hormuz?

S

Scott Bessent4:29:14

We've made it clear that the blockade of the Strait of Hormuz is the only thing that will be lifted to reopen the straits.

R

Representative Schneider4:29:24

So no sanctions relief whatsoever.

S

Scott Bessent4:29:26

I'm not part of the negotiating team, but I am told by the negotiating team and I strongly believe that the blockade will be lifted.

R

Representative Schneider4:29:36

Okay. And I'm going to just reclaim because there's a lot of things I want to cover. My hope is you'll keep Congress informed of any such considerations if they do come up. Also, in your opening remarks, Mr. Secretary, you said Americans have more money in their pockets. That's not what I'm hearing from my constituents. Are you saying the overall cost of living is lower today than it was 16 months ago when you came into office? Because what I'm hearing from my constituents is that the cost of groceries are up. For example, beef, coffee, tomatoes are at record or near record highs. The cost of housing is up. And for too many, the American dream of buying a home is out of reach. I'll let you answer. Healthcare premiums continue to rise and millions of Americans have either already lost or expect to lose their health insurance altogether because of HR1, the bill you so joyously celebrate. Energy costs, gas for our cars, electricity for our homes are all rising through the roof. And family care, child care, and elder care is prohibitively costly. Are you saying that cost of living is lower today than it was a year ago?

S

Scott Bessent4:30:31

No, I am saying that we are much closer to the Fed's target rate of 2% on core inflation than we were when President Trump came into office. We are at 2.8%. And you can list off the most expensive groceries that have had the biggest price increases.

R

Representative Schneider4:30:46

I think you're just out of touch with what American families are facing. As my colleague noted, I'm reclaiming my time. Tariffs are attacks on American families. This is my time, Mr. Secretary. This is my time. I will speak and then...

S

Scott Bessent4:30:59

5%.

R

Representative Schneider4:31:00

Higher grocery prices are taxes on American families. Higher gas and electricity prices are...

S

Scott Bessent4:31:05

Democrats should know. No wonder so many people are leaving Illinois. Why don't you come see me in South Carolina?

R

Representative Schneider4:31:10

They're not leaving. They're coming to... Just a question.

S

Scott Bessent4:31:13

You're saying Illinois doesn't have net outbound migration.

R

Representative Schneider4:31:16

All right. Let me take it to a different topic. And I know you don't want to address it, but my constituents are outraged and want me to talk to you about the absurd, illegal self-dealing settlement between President Trump and his family with the Justice Department and the IRS over which you have jurisdiction. The administration apparently believes that there should be two systems of justice, two sets of laws. One for the president, his family, and his rich friends like you, and one for the rest of us. Nothing demonstrates this more than the so-called settlement with its slush fund for insurrectionists and tax immunity for the president and his family. Mr. Secretary, simple question. Do you believe that there should be only one legal system in this country and that no one, even the president, should be above the law?

S

Scott Bessent4:31:54

I believe that no one is above the law, but you all have put the president beneath the law and you have weaponized the system against him. Whether it is the leak of his taxpayer records...

R

Representative Schneider4:32:03

His taxes should never be leaked. No taxpayer's information should be leaked. I agree with you on that. But no, let me ask you a separate question. Would you like to apologize to the president right now on behalf of the...

S

Scott Bessent4:32:14

I have nothing to apologize to this president for. His taxes should not have been leaked, but it was leaked by a contractor and you keep trying to dissemble here and avoid the questions. You believe that all Americans should pay the taxes they owe and not a penny more.

R

Representative Schneider4:32:29

100%.

S

Scott Bessent4:32:30

Yes or no?

R

Representative Schneider4:32:32

All right. So do you think it applies to the president of the United States irrespective of whether the president is a Democrat or Republican?

S

Scott Bessent4:32:37

Yes.

R

Representative Schneider4:32:37

Okay. So, we agree on this and we should have a tax system that is fair and it should be applied fairly to all people. But I can tell you that my constituents are outraged by the agreement the president made with himself and his own justice department that excluded him from ever having an audit over his taxes.

S

Scott Bessent4:32:56

No one should be targeted. No one should be targeted by the administration. Whoever is in the White House, their taxes should be paid and they should be confident that that information will be kept confidential with the IRS and not used to target them, their families, or their business.

R

Representative Schneider4:33:15

Couldn't agree more. Couldn't agree more.

C

Chairman Smith4:33:18

Mr. Yakym.

R

Representative Yakym4:33:20

Thank you, Mr. Chairman, for holding this hearing today and Secretary Bessent, it is great to see you again. Thanks for being here.

S

Scott Bessent4:33:25

Good to see you, Congressman.

R

Representative Yakym4:33:26

There's been a lot of talk about the cost of groceries lately here in this committee room. A lot of numbers thrown around, but I think it's worth putting eyes on the Democrats' inflation. I had my staff whip up this chart behind me, and it shows that CPI numbers from what economists call 'food at home,' but most Americans just simply call it groceries. These are the cumulative inflation numbers for the first 16 months of a presidential term, of every presidential term since 1993. Mr. Secretary, the title most likely gives it away, but I'd like you to just play a little game with me here. Can you guess which one of these lines represents the Biden administration?

S

Scott Bessent4:34:03

Oh, probably the one that's red for torturing the American people.

R

Representative Yakym4:34:07

That would be correct. Well done, Mr. Secretary. It is the red one. 16 months into the Biden administration, or as we now call it, Biden, grocery prices were up almost 12%. That far outpaced anything that any American had seen in recent history. And you can clearly see from the chart that that red line is as detached as the Democrats' rhetoric is from reality today on this particular topic. So thank you for playing along here today. Switching gears, let's talk about tax priorities.

S

Scott Bessent4:34:37

And Congressman, I would note that the inconvenient truth for this side of the room, food at home since President Trump came into office is up 2.5%. That is half of what it averaged over the four years of the Biden administration.

R

Representative Yakym4:34:56

That's right. And that stands in stark contrast to the 12% that you saw on the chart here a few moments ago. So, thank you for pointing that out. A 2019 New York Times story said that most taxpayers got a tax cut under the first Trump tax cuts, but most Americans didn't believe it because, quote, 'a sustained and misleading effort by liberal opponents of the law to brand it as a middle class tax increase.' Here we are a few years later and Republicans cut taxes again for working families and working Americans. But yet again, my Democrat colleagues are rolling out the same tired playbook of bad faith attacks and misinformation. The working families tax cuts cut taxes for working families. It's just that simple. I can't tell you, Mr. Secretary, how many people have come up to me, whether it's at church or in the grocery store or just anywhere around the community, and they've said, 'Hey, thank you. Because my tax refund that I got was much bigger than what I expected.' It's that working families tax cuts is just simply putting real money back in the pockets of working families.

S

Scott Bessent4:35:58

And Congressman, I can tell you when the 2017 tax bill was passed, I was one of the people who now fled New York, but I lived in Manhattan. My taxes went up. So for many upper-end people in high tax states, taxes actually went up. That's right. And let's talk about some of the actual numbers and move beyond what some of the Democrats' rhetoric has been today. Mr. Secretary, you recently said that 90% of filers claiming no tax on tips made less than $100,000, they had an average deduction of $7,000. 75% of filers claiming no tax on overtime made less than $100,000 with an average deduction of $3,100. And 68% of seniors claiming the enhanced deduction had incomes under $100,000 with an average deduction of $7,500. Does that sound directionally correct and roughly right to you?

That sounds pretty precise, Congressman.

R

Representative Yakym4:36:58

And, Mr. Secretary, are you aware of any millionaires or billionaires that claim no tax on tips or no tax on overtime or the enhanced senior deduction?

S

Scott Bessent4:37:07

No, sir.

R

Representative Yakym4:37:09

No billionaires claiming any of this stuff. Again, these are the ultimate working family signature tax cuts put through by this side of the room and President Trump.

S

Scott Bessent4:37:25

That's right.

R

Representative Yakym4:37:26

Well, thank you for clearing that up. Let's now consider what happened when Democrats had the pen and when they were able to craft their own tax law. A 2024 analysis of households claiming the green giveaways in Democrats' Inflation Reduction Act found that only 47% made less than $100,000. In fact, over a quarter of the households who took those deductions made over $200,000. And households making over a million dollars got nearly $100 million taxpayer dollars worth of Democrats' green giveaways. Even Mother Jones had to admit that when it comes to Democrats' green giveaways, quote, 'Working class Americans are missing out.' But if you think about it, it kind of makes sense, doesn't it? Mr. Secretary, do you think that a family making less than $100,000 cares more about no tax on tips or putting solar panels on their roof?

S

Scott Bessent4:38:14

I think they care about no tax on tips or the subsidy for a high-priced EV.

R

Representative Yakym4:38:20

And do you think that they would care more about no tax on overtime or solar panels on the roof?

S

Scott Bessent4:38:25

Everyone I've spoken to loves no tax on overtime, sir.

R

Representative Yakym4:38:30

So while Democrats gave millions to millionaires and while the Republican working families tax cuts simply cut taxes for working families. Is that correct?

S

Scott Bessent4:38:37

100%.

R

Representative Yakym4:38:38

Thank you, Mr. Secretary. And Mr. Chairman, I yield back.

C

Chairman Smith4:38:41

Thank you, Mr.

R

Representative Larson4:38:46

Thank you, Mr. Chairman, and thank you, Mr. Secretary, for sticking it out for over four hours here today. We appreciate your time, and we appreciate your service to the nation.

S

Scott Bessent4:38:54

Good to see you, sir.

R

Representative Larson4:38:56

So, earlier today, Mr. Kelly from Pennsylvania was quoting from Charles Dickens. He said it was the best of times, it was the worst of times. Would you happen to know what the name of that book was that that came from?

S

Scott Bessent4:39:07

A Tale of Two Cities.

R

Representative Larson4:39:08

A Tale of Two Cities, which is very appropriate for what we I think see happening at this hearing here today.

S

Scott Bessent4:39:14

We might say Manhattan and Dallas.

R

Representative Larson4:39:16

I wouldn't say that, but okay. So, let's think about it. You said earlier today, and I'm sure you stick by this, the economy is very strong.

S

Scott Bessent4:39:26

It is.

R

Representative Larson4:39:27

Okay. So, you say it's very strong, but we've heard consistently throughout the course of this day and in reports regularly that over 70% of Americans think the economy is bad and getting worse. Are you familiar with that polling?

S

Scott Bessent4:39:41

I am.

R

Representative Larson4:39:42

So, that would seem to be a tale of two cities. You saying the economy is very strong and the people of the United States of America saying the economy is bad and getting worse. Now, the Biden administration, which we've heard a lot from you guys today, I think made a similar mistake to what your administration is making because the stock market was booming under the Biden administration. There was job creation under the Biden administration. Unemployment was low under the Biden administration and the stock market is booming under this administration. That's true. And unemployment remains relatively low and there is some but much reduced job creation. But you're making a mistake, I think, to not listen to what the American people are saying, which is that they're very unhappy with the economy because of the way it's affecting them. So, have you heard the expression the K economy or the K recovery?

S

Scott Bessent4:40:35

Yes, sir. But I think we're probably moving to a C economy where the top...

R

Representative Larson4:40:41

Okay. But I want to talk about the K economy for a second. We can get to C a little bit later. Is that okay? Okay. So the K economy has one group of people going up and another group of people going down. It's the K economy. So in the K economy, the top group sees a booming stock market. But as you mentioned earlier, one of the reasons you wanted to do the what you call Trump accounts is because 93% of the stock holdings in America are held by the top 10%. But the lower income Americans, 50% of Americans have only 1% of the stock holdings. So while the stock market may be booming for much of the people in the United States of America, they have booming gas prices and booming grocery prices. In the K economy, we have your friends and some of friends of the people here that talk about buying second homes. But in the other part of the K economy that's going downwards, people can't afford to buy a home. Young people especially are foreclosed from being able to buy a home in this K economy. In the K economy, you have a group of people that are their friends are talking about the great vacations they're going on. They're going to these exotic places. They're doing these interesting things. In the other part of the K economy, people have a hard time paying their bills. So, there's these two tales of two cities that's taking place in the K economy here in the United States of America right now. Now, Mr. Secretary, you attended the president's inauguration. Were you?

S

Scott Bessent4:42:07

I did.

R

Representative Larson4:42:08

Yes. And at his inauguration, he said, 'We're going to rapidly reduce prices.' That was one of the quotes the president made during his inauguration. He made many quotes like that during his campaign as well. Do you think that the prices in the United States of America have been rapidly reduced?

S

Scott Bessent4:42:25

I think before the Iran conflict began, the rate of change for inflation both headline and core had come down substantially.

R

Representative Larson4:42:35

Well, people don't think that prices have been rapidly reduced. So, you do admit though that the war has caused prices to go up for gasoline, for example.

S

Scott Bessent4:42:42

100%.

R

Representative Larson4:42:43

And you also agree well they didn't go up 100%. They only went up 50%.

S

Scott Bessent4:42:46

No, no, no. I...

R

Representative Larson4:42:47

You agree with me 100%. Okay, that's better.

S

Scott Bessent4:42:49

I'm glad to see somebody on this side is funny.

R

Representative Larson4:42:51

Okay. So the second thing is that the tariffs, do you think tariffs have caused prices to go up?

S

Scott Bessent4:42:58

Negligibly.

R

Representative Larson4:43:00

You don't think prices have gone up significantly because of... You just reduced tariffs the other day on farm equipment because you wanted to reduce prices on farm equipment because you thought it caused the prices to go up.

S

Scott Bessent4:43:11

Again, overall the levels, what we saw last year was goods inflation was down.

R

Representative Larson4:43:16

Well, I would argue that tariffs have caused prices to go up and there's a lot of economists and groups such as the Yale Budget Lab, which you used to teach at Yale, didn't you?

S

Scott Bessent4:43:25

The Yale Budget Lab is a bunch of Biden era second stringers.

R

Representative Larson4:43:29

Okay. Well, you taught at Yale. I understand. You taught three classes: the 20th century financial booms and busts, hedge funds, and a seminar on the financial panic of 2000 to 2009. So, I don't know why you're not knocking Yale. You used to teach at Yale. You went to Yale. Didn't you go to Yale?

S

Scott Bessent4:43:42

That's why I get to knock Yale.

R

Representative Larson4:43:44

Okay. So tariffs have caused prices to go up. The war has caused prices to go up. Do you think the deficits that were created by the big beautiful bill are causing interest rates to stay artificially high?

S

Scott Bessent4:43:53

No. But what I can tell you is that let's cite MIT. MIT said that 50%, actually let's be precise, 44% of the 21.5% inflation we saw during the Biden years came from the Biden deficit.

R

Representative Larson4:44:07

No, but I'm asking you, do you think the deficits that were created by the big beautiful bill are causing interest rates to stay artificially high? Yes or no? That's simple. I'm out of time. Come on.

S

Scott Bessent4:44:17

No, Congressman, we had a fiscal contraction last year. So, the deficit went down.

R

Representative Larson4:44:23

So, I you should...

Okay. I'm just going to argue, Mr. Secretary, I'm just going to argue that prices are up, gas prices are up, grocery prices are up, energy prices are up, health care prices are up, interest rates are high, all specifically related to the policies of this administration. Mr. Secretary, thank you again for your service. I really appreciate it.

S

Scott Bessent4:44:44

Good to see you, Congressman. I want to invite you to South Carolina to see all your former constituents.

C

Chairman Smith4:44:49

Mr. Secretary, being a cattle farmer, I would say that the reason why the beef prices are high is the result of a very reduced herd. We don't have as many cattle today as what we had decades ago. I know everyone keeps talking about beef prices around here, but it's a simple fact that we've had droughts and people had to sell their herd to be slaughtered and they no longer have the reproduction status quo and that is why the beef prices are high regardless of what anyone wants to say. With that, Mr. Secretary, thank you for being here with us today. Thank you for the over four hours. Please be advised that members have two weeks to submit written questions to be answered later in writing. Those questions and your answers will be made part of the formal hearing record. With that, the committee stands adjourned.

Full Committee Hearing with Treasury Secretary Scott Bessent

About Scott Bessent