Transcripts For CSPAN SEN FINANCE - Mnuchin - Break To EndPT 20170120

My colleagues have asked for a second round and we are going to do that. I hope people will help us move this along. I will reserve any comments i have to make. Senator lets go back, if we mnuchin. Were cut for the while 2 percent that sure looks to me like what we agree is going to be called rule, absolute tax break for the wealthy. You agree with that . Again, we want, to work on and imis very specific asking you for a reason. I dont want to have to repeat it. For the topat cuts 2 while eliminating credit for those who are low and middle income. Doesnt that violate the mnuchin rule . Mr. Mnuchin we need to look at the overall tax plan and as i said, the primary objective is to deliver a middleincome taxcut and tax simplification on the high end. Senator you are already fudging on this commitment that you made to the American People, that he wouldnt give an absolute tax break to welltodo people. The reason i am asking this is because this is exactly what aca repeal was all about in the last congress. And every single republican up here voted for it. So i hope you will think this over, but this is exactly what troubles me. We have two tax systems in america. You were nudging our way, saying maybe you wouldnt give a break to welltodo i am asking about a specific situation. We will have to see. Let me turn to a second area that workingclass people care a lot about. It involves their purchasing power. There are a lot of questions about the 3540 5 border tax that the president elect is doing fair amount of tweaking g about. Tweetin can you tell the American People what products would be subject to this tax . I am not interested in interested in the complicated issues about the value of the dollar. That americans want to know what products would be subject . Workingclass people want to know, is gas going to be part of this . Give me your response. Any products that will be resent exempt . Mr. Mnuchin thank you, that is an important issue. Week, theat this president elect came out and suggested he had concerns about the house gop border adjusted tax. Part of it is the complexities around it and part of it is i am not talking about what the house is doing with border adjustment. I want to hear about the order tax the president has been talking about. Suggestedn he hasnt a border tax. What he suggested is that for Certain Companies that move jobs , that there may be repercussions to that. He has not suggested in any way an acrosstheboard 35 border tax. If anything, quite the contrary. As you said, he has concerned about the impact to gasoline and others. Products wouldt be off the table for purposes of what i call border tax, and you want to say is kind of something else. What products that workingclass people by will be exempt . He haschin what referred to as a border tax he has referred to a small number of companies that have moved their jobs or are moving putting products back into United States and taxing them. He has in no way contemplated a broad 35 border tax that couldnt that couldnt be further from anything he would possibly consider. Senator let me turn to another topic of tax policy. At leastying to gather a bit of information about how you would deal with some of these common tools that would be ifyour jurisdiction confirmed as treasury secretary. Inequality has grown substantially over the last 30 years. There has been bipartisan support in the past for the earned income tax credit. There are a number of proposals pending now in the congress. Do you have any thoughts on that . Mr. Mnuchin again, as i suggested to you when we met, i hope we can sit down and talk about taxes with democrats and republicans and see where we can agree on bipartisan solutions. I think as it relates to any specific component of this, i think we need to look at the overall tax reform that we are going to put through and where things fit in it. That i would welcome the opportunity to follow up with you and work on that. , and again, mnuchin i want to be respectful on this point. Because you have not been involved in these policy fields in the past and i respect that. Lots of leadership that a person can still provide. When i asked about medicare, you would be the managing trustee. You didnt really have thoughts on that. I just act ask you about the earned income tax credit. Mendous interest above among both parties. I gather you are not aware that the speaker has long been improvements that democrats are interested in. I will to you, i guess we will have the chance to go in some other questions i am very troubled that on these basic tools, that you would have if confirmed, you seem almost unscathed by the subject. So thank you, mr. Chairman. Mr. Mnuchin well, i am sorry that you are troubled by that. I hope i earned the respect that you arent troubled if i am confirmed. On the earned income tax credit, i dont want to comment on specific legislation on tax. I think the tax reform needs to be looked at as an overall policy, and i have laid out certain framework for what i believe the president elect believes in for tax reform without commenting on specifics. Senator i am over my time for this round. I hope, because i am interested with those discussions about tax reform, you are not talking about putting the in cap hased income tax credit has something you may throw in the trash can. If you do, you will have opposition from me and from the speaker of the house. Mr. Mnuchin i am not suggesting that. Im just saying i wasnt going into the specifics of every tax item. Thank you. Try toirman i want to cover three questions. The first is to return back to the discussion you were having with senator warner about fannie mae and Freddie Mac Gse reform, policy reform. Im sure you are aware that senator warren and i, and another number of senators on the Banking Committee have worked for it some time the banking legislation to deal with the circumstance. He currently have a situation in which fannie mae and freddie mac are in receivership. The federal government is basically running them, and the concern that i believe senator warner was referencing is a administratione not because we are afraid of anything, just because we are asking. We are trying to find out. Maycommit Administration Believe it is ok to keep them in receivership and run as is, the status quo, or perhaps to simply recapitalize them or put them back out into the market without any housing reforms. I just wanted to ask you if you would i realize you cant comment on a specific plan yet, but if you would comment on the fact as to if you think we need reform in our Housing Finance policies that would go further than simply recapitalizing fannie and freddie were keeping them in the receivership. Mr. Mnuchin again, thank you for that. Unlike the Medicare Fund where i a knowledge i am not an expert, on fannie mae and freddie mac, i think i am in next. I have been around these for years, i understand very well. That is why it would be one of my priorities to work with you. As i have said, what i am focused on is we need housing reform and a solution. I start with the standpoint that the status quo is not acceptable , of just leaving them there. I think as you know and we have discussed, or a two extremes on this. It is something i look forward to sitting down and talking you with. We need housing reform and need to make sure that whatever the outcome is, on the two extremes, that one, we dont put the taxpayers at risk and two, we dont eliminate capital for the housing markets. I am very concerned that middleincome people and moderateincome people who need Mortgage Loans have access to the capital. Senator i agree with you on both objectives and i think that is exactly what we need to Work Together to identify. Well i amn good, optimistic we can Work Together and hopefully figure out bipartisan solution. Senator my second question is you have already answered it but i want to raise it again because it is so important we have seen the unfortunate circumstance, in my opinion, in the last few years of the irs actually targeting individuals because of what they believe and how they advocate in our society. You have already talked about this, but i would just encourage you to make a high priority that not only the irs, but all of the federal functions under your jurisdiction as secretary of treasury, which i am sure you will be confirmed to be, are ofpped from that kind targeting of american citizens who are conducting perfectly Legal Business and engaging in perfectly free and legal speech. Mr. Mnuchin you have my 100 assurance that i will do that. I think there is no place in not only the treasury, other agencies for us to be having people act that way. You. Or all right, thank my last question this round would be back to the tax issue. One of the big issues that i think we must grapple with and would like your ideas on it, is i am sure as you know, a huge majority of the business entities in the United States a tax or the individual income side of the code, rather than the corporate side of the code. As we reform, as we should, our corporate code and engage in individual tax code reforms, i am concerned that we dont end betweenignificant business agencies in the United States as to tax burdens and tax rates that they pay. Mr. Mnuchin sure, and i too think that is an important issue. Again, for Large Companies that are in past reform today. The reason Large Companies are in past reform are because they compare it to the corporate rate. For many Large Companies that are structured as such, they will opt to take the business tax. We will find a simple, nonbureaucratic you check the box, you leave the money in the company, you grow your company, you get the lower business tax, you distributed out, you pay dividends. I think that is something that is critical. We will make sure we work with congress to make sure that we close loopholes so that rich people dont use this as a way and onlower business tax the other end, we make sure that Small Businesses are protected, as well. Legitimate Small Businesses. Businesses the small dont pay and incrementally higher tax just because they choose not to engage in the corporate form . Mr. Mnuchin correct. It is something we look forward to working with you on the details and how we can make sure that is preserved. Senator all right, thank you very much. Thank you, mr. Chairman. Mr. Chairman senator nelson. Senator thank you, mr. Chairman. You no doubt are that one of the things as treasury secretary you will have to face is the multiemployer are direunds that straits in dire straits. These are ones that have become table and they are ones Pension Plans for people like Truck Drivers and carpenters and minors. Miners. And the secretary treasury has the ability to reduce the pension benefits if the plan is projected to run out of money. Therein there are two bad outcomes. One, it is running out of money and you are going to be faced with the problem of what to do about it. Who are living on the edge and a reduction in the pension is going to mean something that they have to go without. What do you think about this and how would you approach this heart wrenching issue . I appreciate your concern and we had the opportunity to talk about this or that i believe your office followed up and sent me information on this. It is something i look forward to working with you on. Let me first say that i think that people who have worked very of time and built up a pension deserve to get their pension. That is very important. On the other hand, we have to be careful that on the other extreme, we dont have a bailout of the entire pension industry and bankrupt the guarantee fund. But i commit to work with your office, i understand these issues, i understand the sensitivity of these issues and share your concerns that cutting Truck Drivers pensions and other is a significant outcome and we should go to Great Lengths to figure out other solutions before we do that. Nelson since folks like you and me have been blessed, we havent often had to walk in the , who of folks like that are living on the edge. Mr. Mnuchin i completely understand. Thator nelson and i asked in your position with awesome authority as treasury secretary, that you put yourself in those shoes. Another financial disaster is what is happening in puerto rico , not only because of what they in at fault about, but also the unequal way that they have been treated by the law quirks in the long that i dont understand how the even got that way. They are not treated the same on bankruptcy laws, they are not treated the same on medicare and medicaid laws, and they have a situationly tragic where they were given block that medicaid money is running out this year, while at the same time, one third of the islands residents are and we knowh zika that 15 of those infected with pregnant,hey are there is a 15 chance that they will have a deformed child. I would like very much for you to keep that in mind, as we have got to come up with a plan. Now, i know a lot of responsibility is on us in the congress. The chairman led an effort and we tried to get some things past passed in december. But the big things like medicaid are coming up in the future. Mr. Mnuchin senator, first of all, thank you for going through that. When i did have the opportunity to meet with secretary lou and talk about certain issues that you wanted to advise me on and that he thought i would have to deal with in the future, puerto rico was high on that list. I must say, i wasnt an expert on puerto rico before the last 30 days. I started studying the issue. I share your concerns. I am glad that the commission was established. I understand that the treasury has been staffing the commission. I have someone who i am party asked internally who is going to be working with me to start working on and get debriefed by the treasury staff on this. This is going to be something that we need to figure out a bipartisan solution. I am hoping it can be done in the context of the commission, but i look forward to working with you on. Senator nelson thank you, mr. Chairman. Mr. Clinton senator menendez. Menendez i have listened to your responses to my , defending more than 50,000 foreclosures on your watch. I understand that you ought a bad book of loans. Were not saying that you had to save every single homeowner, but by taking the backstop, you had the obligation to at least try. Do you believe you made every effort to prevent foreclosures . I do. I actually brought with me, if you want to make part of the record, the fdic asked the inspecter general, the oig, to come in and look at the loan modification program. And they independently reviewed that. That was verified by the oig. I dont know if their determination is that you made every effort. Well make that part of the record. One of your Vice President actually admitting to robo signing 750 documents a week without reading or reviewing them. How can that be considered making every effort . Can you honestly say your bank made every effort to keep families and seniors in their homes when they were robo signing one document every 23 minutes . Senator, yes, i can absolutely say that we made every effort. And again, our loan modification programs were audited by the treasury, the fdic, the occ. You can imagine, being a private equity person who bought a bank, we lived in a glass house and we were constantly viewed by the regulatedors. Now, the comments that youre making, there was an industry issue which had nothing to do with Loan Modifications which had to do around the processing of foreclosures. That was a procedure that was mak. Ed at indy at the beginning of our ownership, we unfortunately didnt change certain procedures, as ive said. It was solved. Im worried about what your direction that your bank you keep referring to the entities. The office of thrift distribution hit you with a Consent Order because you were putting home owners on a fast track to foreclosures. That was part of that 750 a month. You also had an independent government audit in 2009 and 2010 that alone identified more than 10,000 home owners who were owed . 5 million in damages. And among those home owners were 54 incidents over the course of just two years where the bank violated the rights of active duty military servicemen and women, those defending our country across the globe, under the Service Members civil relief act. If you did all of that, how is it that you feel you can honestly say here in sworn testimony that your company did everything . So first of all, senator, and i appreciate the issue and as i said before we highly regret the extent that we made even one error, whether especially to the servicemen. And yes we had all those loans reviewed, we paid 8 million. Many, many firms paid billions and billions of dollars. But we regret any issue there. What youre referring to with the independent foreclosure review, it was one and the same. So as ive referenced in my testimony we were one of 14 banks that signed a Consent Order. Basically the 14 largest servicers signed Consent Orders. It was lay later taken over, and we were the only bank that actually completed that independent foreclosure review and we are proud of that. And the fact that it was completed at the end of the day ultimately showed that your company took people out of their homes and created consequences for them they should not have had. So im not sure which one is to be proud of. Do you know a woman named Sylvia Oliver . I do not. I didnt think so. She is from new jersey. She is the sister of the immediate past speaker of the new jersey general assembly. She received a loan from indy mac in 2008 and after her employer cut her hours, she had problems paying her mortgage. She tried eight times for a loan modification, which i believe she would have qualified. Every time, your bank denied each and every one. Shes been fighting to save her home for seven years. She nearly lost her home yesterday. Thanks to her tenacity she has a 30day reprieve. But thats no guarantee she wont lose her home next week. So i look at her i would like to have the testimony of several individuals who face these realities be included in the record at this time. Without objection if they pertain to the record. They certainly pertain to the record. They pertain to having been foreclosed on and ultimately trying to seek Loan Modifications unsuccessfully. I think theyre more than eligible for the record. So let me just say, i see this as an example of privatizing profits with socializing losses. In the darkest days of the financial crisis it seems to me that you and your friends were looking for stores to raid and you found a gem in indy mac and with the government subsidizing the risk you engineered a licked on the backs of men and women. How does that create confidence in the secretary treasury nominee when you have to be looking out for every american . And it didnt seem that when you had the chance to do that and even the incentive by the backstop that the fdic gave you and over 400 million that that was your drive. So i need to be convinced thats going to be your drive now that you are the nominee for the treasury secretary thats supposed to represent all americans. Well, senator, i hope i have the opportunity to convince you going forward. And i apologize because i didnt recognize the name. But now that youve mentioned to me its been postponed. And i dont know any of the specifics but as a cureltsy cit did inform me that your office requested an extension and they did honor that and give an extension to revisit that. Im not involved any more but i would encourage you to make sure that you have again, if theres complaints there is a department within the bank that responds. Any complaints that came through any government or regulatory agencies were responded to very carefully. And reviewed by the occ. Again, i would just apologize to the extent there were any errors whatsoever that is something that i am very sorry for. But having said that, we took over a Mortgage Servicing business that was not part of what we were trying to build. It was a mess when we got there. We fixed it. We cleaned it up. And to the extent that we made errors or issues we compensated people for that as part of the agreement that we entered into the regulators which we think is the right thing to do. Senator carper. Thanks, mr. Chairman. I note you referenced your dad. How old is your father . 83. Youre blessed to have him with you. Thank you. He looks pretty good for 83, and im in a position to say that. That. [inaudible] im glad you said that. That is true. My parents are both deceased. A couple things they used to hoping y sister and me, it would sink in. Figure out the right thing to do not the easy thing. Just do it. They say treat other people the way we want to be treated. My dad was always big on doing things well. If it isnt perfect, make it better. He said it to my sister and me a lot, use common sense. Can you think of advice your dad or mom have given you that you could have used or should have used with respect to foreclosures that you are facing and what you did. Very briefly. Well, again, thank you. I agree with those many things that you were told. As i mexed, not only has my father had a big influence on me but my mother and my grandparents who have passed away and understanding the importance of hard work. Again, i can tell you one good thing, it applies to what guided you in this mortgage foreclosure. Issue. Treat people as you want to be treated. Be sympathetic, emplethetic and understand what theyre going through. The other thing, everything i do i know i can do better. I think youve acknowledged that as well. Absolutely. We can always do better. I want to go back to the issue of how to create a nurturing environment for job creation, job preservation with respect to growing exports, making sure we get our products to markets across the world. The president elect has i think several times talk about support for a duty on items imported from china, i think its 45 . And mexico. I think you may also consider executive order in imposing it, 5 tariff on all imports. I have a question with three parts. First, if the administration chooses to pursue such policies, how would you prevent those countries affected from imposing similar duties on american exports . Our , mexico is probably second largest. The top three were machinery, electrical machinery and autos. If mexico were to impose a 35 duty on american exports, what would be the impact on our manufactureing . Third what role would our government have on small or not Small Businesses harmed . Well, those are all good issues. Let me assure you from my conversations with the president elect on trade and i have discussed a lot of the trade issues with him. Ive also had the opportunity to work closely with will ber ross over the campaign who is also very involved in trade as well as Peter Navarro who will be in the white house. And trade i think as you know at least certain enforcement issues of trade cut across both the treasury, the commerce, and the ustr. So i would be working with the other people on a unified position on trade. Were the president elect ive never heard him talk about 30 or 45 tariffs across the board. I have heard him specifically say, well, if Certain Companies want to move their jobs, were going to specifically put a tariff on them. Now, i think thats something that needs to be looked at and i dont think that its a plan thats going into action. I share your issues where this is as much about growing exports as it is about growing imports and specifically with mexico i think most people acknowledge nafta was negotiated a long time ago that we should reopen this agreement. Actually, we did. And we did it in the context of tpp, as you know. I understand that. My hope is when you get settled in that you will go back when youre thinking about renegotiating, make sure we understand what has already been done. I would hope that the starting point is the work that youve done. And i am optimistic that we can renegotiate that deal thats both advantageous to us and advantageous to mexico. That its a winwin for both countries. When youre mentoring and giving advice to the president elect. Another word of advice from my parents probably works on the tariff, what goes around comes around. You might want to keep that in mind. Just to clarify the record. Im not mentoring him, hes mentoring me. But i do give him advice. I wouldnt clarify that as mentoring. Senator cardin. Thank you, mr. Chairman. I want to get to the tax issues for a moment. We had a chance to talk about that in the office. I think we all would acknowledge that our income tax rates, personal and corporation, on global competition, puts the United States at a disadvantage. Something we need to deal with. We also recognize that from a business tax point of view its not just the corporate rate, its also the individual rates, 90 plus pay the business rate. I want to talk about two standards that i hope will judge the review of tax reform so that we can have its simplified tax structure, one thats fair to the American People. One, i would hope that you would agree that we do not want tax reform to increase the size of the federal deficit. Im taking notes. Do you want me to answer them one at a time . The second is that tax reform should be at least as progressive as our current tax code. That is, middle class families should not be asked to pay more in regards to our tax code. And again, in both those issues and i share your concerns on the first one again we do believe in dine mix scoring. And with the appropriate growth. I think we want to make sure that tax reform doesnt increase the size of the deficit. And in regards to the second issue, as ive said in my discussions with the president elect, he is very interested in us providing a middle class tax cut. That is his priority. I would urge on the first part that recognize that we have to be disciplined as we deal with the federal budget, and i would hope we would have consistent rules in regards to both spending and tax cuts as to the dynamic nature of those types of activities its a lot easier for us to use the current rules because theyre objective and we have professionals that give us the ground rules. When we start using subject tivity it could be abused at the end of the day we could have much larger deficits. But your point is you do not want to add to the deficit of the country. That is correct. And you want to make sure that middle class families are not disadvantaged. So heres the challenge. We also believe we should be competitive globally because you want to grow our economy in regards to exports. Its difficult how to see how you can get that done within the context of using just Income Tax Revenues because the United States among the industrial nations of the world has a relatively low part of this economy tied up in government and yet we have marginal tax rates that are among the highest in the industrial world. The reason of course is that we dont use the consumption thasm that every other industrial nation uses. So without bringing in other sources of revenue were going to have a very difficult time to get those competitive tax rates. So i would just urge you to take a look at a progressive consumption tax. It is border adjusted, it does reward savings and makes our tax code not only competitive but gives us a competitive advantage over the industrial nations of the world. Well, again i appreciated meeting with you and talking about these issues and well follow up. Again, under the appropriate growth numbers, as ive said, with dynamic scoring, were not looking to grow the deficit. And obviously one of the concerns is the size of the debt and how its gone up. In regard to your other issue, one of the issues and this impacts trade policy is that we dont have a bad tax system. We have an income tax system and other countries do. And of course the rest of the world uses consumption taxes. We use income taxes. That are not border adjusted. That makes it difficult to grow exports. It also does not reward savings which is another area during the best of times americas savings ratios were not competitive with other countries. The other area that we talked about in my office that senator portman and i and others have worked on. That is to increase the opportunities for americans to say particularly in retirement, savings. I dont believe that would be a partisan issue. As we are working for major tax reform, i would urge you to work with us on Retirement Savings and other savings initiatives that we could make progress i think in a relatively short period of time. I look forward to working with you. Thank you. Thank you. I have to apologize to senator stab now. She should have been next. Thank you very much, mr. Chairman. I want to thank you very much for allowing us to have an opportunity to fully squ questions in multii believe rounds. I hope we only have two rounds. But thank you for allowing that. This really is a physical marathon i think of endurance in just the nomination hearings so we appreciate your hanging in there as well. Thank you. A couple of different things. First, following up with colleagues speaking about jobs going overseas. Obviously a very critical issue for michigan. We make things. We pride ourselves on making things and manufacturing one of the most significant parts of the economy. Ive been working for a number of years on a bill that we call bring jobs home act that would end the ability of a company to write off the costs of moving overseas. I dont know why, if a facility is closed, the workers and the taxpayers and the communities should pay for the move. And that certainly seems in line with our incoming president has said. Would you support stopping that . I look forward to working with you on that. I can tell you it sounds like something the president elect would like. So i look forward to working with you on that. Well, i think its important that we take step one, all of the loopholes that are there. The first one is we shouldnt pay for the move. So i appreciate and hope that thats something that will be embraced. A different subject. I know colleagues have talked which are ns critically important. People throughout their lives often giving up a pay raise to put money in to a pension. Whic critically important. Very serious whats happening o pensions around the country. And certainly whether it be a multiemployer pension or single employer pension deeply concerned about whats happening to people. We know that we heard that from the g. A. O. In 2013 that if there was a Multiemployer Pension Fund to become insolvent, a very large, troubled plan, then we could see an estimated benefit paid by the pbgc to be reduced less than 10 of the guaranteed level. So you would be talking about somebody who worked hard all their lives that would be getting 2,000 a month and ending up with 125. It seems to me thats a pretty basic promise that we need to keep. And rather than ask you to comment at this point im going on to the other piece of keeping our promises that i will ask you to respond to both. One is the pension and the other is Social Security. And as treasury secretary, you ill be a trustee, very important position. Im i think its important to know if youre demitted to upholding the new president s promise in may of 2015 that he would not support cults to Social Security. I absolutely support the president s promise. Thats why im here. Secondly, whats a cut . I mean, we have heard increases in the retirement age. Is that something that you would support . Again, ive heard the president s promise and i would sit down and discuss it with him. And im happy to work with you on the specifics. But i havent discussed the specifics with him but i know from a high level how he feels. And just going back to the pension fund issue, it is i acknowledge its a very significant issue. And something i look forward to working with you and your office on. This is very real for people and just as the financial crisis created a serious situation for people in homes and for financial institutions. We all know Pension Funds were involved in that as well. Show didnt make it to somehow didnt make it to the top in terms of being made whole. I think thats an unfulfilled promise and obligation that our country still needs to keep. On Social Security, though, there are a lot of ways whats a cut . A lot of different ways to look at this. And whether its raising retirement age, change cpi, progressive price indexing, privatization, cuts in the amounts of benefits all of these things would reduce a retirees or workers lifetime benefits as they become a retiree. And all of them are extremely significant. Just out of curiosity, do you know the average Social Security benefit per month . I do not. I apologize. 1,228. 12. Not a lot to live on. And for about a third of the seniors in the country, thats 90 or more of their income. So thank you so much. Its a very significant issue and i appreciate that. And if im confirmed i look forward to working with the president elect on this important issue. Thank you. Thank you, senator. Senator brown. Ive been pleased thank you. Sorry i had to hurry through lunch so ive been sitting in he backroom. Ive been pleased the president elect is committed to helping manufacturers. He wants to buy american, hire american. Im sending him a letter today this letter that i would hold up to let him know that i will be introducing legislation to buy american in all public works projects. Whether its a water and sewer system or bridge or steel and iron or cloth for an American Flag in akron, ohio, over the post office that taxpayers pay for our companies and workers should build it. I want to talk to you about china. Ive never met a Goldman Sachs banker who wanted to get tough on china. Based on your background and financial dealings, im concerned about just what ive seen in the past with bankers and what i would say is soft on china. Let me lay out a couple things. When you were cochair there during 20142015, the Company Received investment from chinese investors in the companys fixes and partnered with government of the peoples republic of china to promote and distribute chinese films. China readily admits it wants to become more powerful by increasing its cultural influence in this country and expanding its financial stake in the film industry. Youre a board member of a company that partnered their influence in hollywood. Were you helping china expand its global power . Let me first comment. Try to answer very short. First, i left Goldman Sachs 15 years ago. Just going back to trade. I think of myself as a region al banker not Goldman Sachs. As it relates from my experience of rell tivity, the chinese never invested in rell tivity and i dont recall them ever having invested in relativety films. They did have a small venture in china that was not particularly successful. For what its worth. Now in regard to my view on china i 100 support the president s view. And that we need to look at china overall from a trade standpoint and an economic standpoint and a securities standpoint. I look forward to working with him on that. Thats not what you said is not from the reports we get. We will follow up by mail. We will follow up with a letter to you. Happy to. Let me shift to china. Chinas as you know, china has great capacity in production of steel. Their distortion of the global steel market puts American Workers out of jobs. You and the president elect talked about that, in places like youngstown, ohio. Would you commit to make public a comprehensive plan to deal with the global Steel Industry . I dont want to make that commitment but im happy to work with your office on this issue. Within the first month . Or that you will put a substantive comprehensive plan to address global overcapacity . I will make the commitment to sit down with your office and work on this issue. And then figure out the timeframe and whether question should be making it public. But i understand the issue. The president elect is concerned about these issues and will work with you on this. Thank you. I want to follow up on you said you left goldman 15 years ago. Correct . I did. 2002. Youre aware that during part of the time you were at goldman, you were one of the two firms i am not saying you worked on this personally but im saying that goldman is one of the two firms that managed the portfolio of the Central States Teamsters Pension fund and while goldman was the a manager the plan lost 40 of its value more than double the average losses tor a defined pension plan. Due to loss in those, in part due to Goldman Sacks i would is mismanagement, the fund in distress and risk of becoming insolve. Theres a certain irony that if youre confirmed youll be a member of the board and responsible in many ways for protecting the pensions of more than 400,000 working families. You i assumed dont know butch and rita. Constituents of mine. And senator portmans. He worked as a trucker for 40 years. He was a teamster. He led thefight against the pension cuts. He passed away on new years eve due to a stroke which doctors have said due to the stress over pension cuts. They lived in southwest ohio. She will lose almost her entire pension. So i know you said you arent for finding a way for making these pensions whole but understand this congress bailed out wall street banks including goldman and i hope that you will change your mind on helping make these pensions whole. And i appreciate the significantance of pension issue and i assure you i had nothing to do with that issue. But i also but that doesnt make rita lewis any better. I completely understand that, senator. I appreciate that. I just know theres an ideological antitip thy from more conservative members to help wall street banks but not help workers. Thats o gone a little far. I dont know anybody that wants to do that. I dont know anybody ok mr. Chairman ill finish my comments. One more point i wanted to make. Last year, i worked with some manufacturers concerned that a metals warehouse owned by your former employer was driving up aluminum cost. He fed proposed rules. Weve done some hearings. Will you make it a priority to help the fed finish its banking rules and to use Treasury Authority to address this . Absolutely. Thank you. I understand treasury has joint Rulemaking Authority and march nt banking so they have a role, you have a role. And i hope that you exercise it. Thank you. Senator. Thank you. Hanks for your patience. I want to talk i dont question the president elects desire to repeal and replace obamacare. He said it, and i dont doubt it. At i do question is what his positions are on all the taxes. And as you know there were a dozen or more taxes in obamacare, trillion dollars. New taxes on middle class america. Can you clarify the president elects position on the tax that is went along with it . Do we want to keep them . Does he want to repeal them . Give me your best thoughts. First of all, again, i want to apologize that we didnt get back to you on that information. I assure you ive read my staff the riot act that this will be our top priority when. Thank you. In regards to obamacare, i havent been as involved in the specifics of the repeal and replace or replace. As it relates to the taxes my understanding is to get rid of the surcharge on that. Obviously theres a number of controversial taxes in there. The medical device tax, cadillac tax being another. I want to hone in on the cadillac taxes. Its a 45 excise tax on what they deem to be considered cadillac taxes. Most people it doesnt come anywhere close to Highend Health care programs. This would affect 1. 3 million nevadaens, 120 million americans. Were talking seniors, unions, public employees. Go down the list, that are going to get hit by this 40 excise tax. Give me your feelings on this. I agree with you. Im not as close to the whole obamacare discussions right now but i will definitely follow up with you on that. It was post poppede two ars to postponed two to 2020. And were working hard. With a i just want is a commitment to work with you on this as we go forward on this. Hopefully we can repeal what i consider to be a very onerous tax. It sounds like what youre saying makes absolute sense and you have my commitment to work with you on that. Thank you. I want to talk a little more about housing. 17 of the houses in nevada are currently still under water. 17 . I want to talk about the mortgage debt tax real quick. The i. R. S. Deems it a gift today that if you bought your house for 250,000 today its worth 200, they deem that 50,000 as a gift and want to tax you on that. Now, senator stab now, ikesen, and menendez we have worked closely on this and it expired as of january 1st. We have reintroduced that egislation to try to eliminate this burden on the taxpayer. I would like to get your understanding of this, your feelings on it, where your support would be on this particular piece of legislation. You have my commitment to work with you if its not bad enough that the person lost their home but then weve got to send them a tax bill, i agree with you on that. I appreciate your support. Thats all i have. Senator warner. Thank you, mr. Chairman. I just want the record to reflect i would differ with my colleague the senator from nevada in terms of characterization of most of the funding that went in for obamacare went to the Capital Gains surcharge for folks like you and me and the higher income surchadge for folks like you and me. I know this has not been your focus yet but in any world in y form dine nick scoring scheme, the ability to say were going to as the president elect has said maintain the prohibition against preexisting conditions, keep kids on their parents policies until theyre 26, make sure theres insurance for everybody, and pay for it all, will be a curious act. Let me come to my questions though. I appreciate very much your earlier comments to me and senator crapo about gse reform. But i want to clear up one thing. As youre aware, there have been a number of hedge funds that at the absolute demise of those fannie and freddie in the public markets, they went in and bought them cheap. Thats what hedge funds do. They have then launched a Remarkable Campaign both public and private of lobbying that is in certain ways in terms of character assassination of certain senators in some ways that is almost unprecedent. The president elect and you invested in one of those funds. The president elect has dive vested himself, i imagine you will as well. But in light of your Firm Commitment earlier not to go with some kind of recap and release scheme that would greatly enhance those hedge funds profits i believe and then leave the taxpayers potentially holding the bag if another housing crisis took place, i thought you probably want to comment and reaffirm that you will be looking out for the taxpayers and not the folks you invested in the past. Ive divested my interest in that fund as we will already. As well already. My job is to look out for the guest interests on the taxpayers. Balancing the need for housing reform and making sure that we maintain housing liquidity with making sure that the taxpayers are not on the hook for that. And whatever the league issues are associated with again as it relates to the entities i have tremendous expertise on the entities. As it relates to the legal case of various holders, i havent studied that as well. I would encourage those of us been part of the reform realize that legal proceeding will continue. U one of the things you were complimentry on my business background. Obviously you have great deal of success in business as well. One of the thing that is Business People oftentimes bring to the political process is a willingness to look at things fresh. You as a business person realizes theres two sides. Theres revenue and spending. Many people come to the political process and get hired into this process by taking absolute pledges on things like revenues as we discussed in my i will f you look and share with you the data. 34 industrial nations in the world, watch the surprise many america ranks 31 out of 34 nations in terms of total revenue as part of g. D. P. It affects our tax rates compared to anyone else. My hope would be that you would not in your moving forward in this position take one of those absolutist pledges that in an effort to try to drive down our 19 trillion dollar deficit going much higher, with some of these tax reform plans being put forward, that youre not going to arbitrarily take one whole half of the Balance Sheet off from being considered the whole question around revenues. My only pledge is im working for the American People. And i will be open minded at looking at different things. The good news is not only do i have have hopefully a new view but we have a president who is willing to look at im going to hold you to that because the absolutist approach leads to to where we are where were spending the lowest level in modern American History on education, infrastructure, and r d. Thats not a Good Business plan. Two other questions. Earlier comments and i was a little surprised at your response having gone through the fdic process with a relatively midsized institution. Im sure youre aware, lehman uch smaller than most of the sfy institutions took five years in the bankruptcy proceeding. And in title 2 of doddfrank, a bipartisan component of the bill that actually had 80 senators support, there was an acknowledgment that while we need to prepare for pruptsy proceedings and those are the lickedation plans that these institutions have to prepare that if that proceeding doesnt take couldnt take place or if bankruptcy wouldnt work you had as a fallback provision title 2. It would concern me greatly if you agreed with some of the other comments that that title 2 reserve that most of the large institutions actually believe strengthen the system, you would be in favor of repealing. Well, again, its a complicated issue. Absolutely. So thats why im concerned. Again, im not suggesting that we remove title 2 tomorrow without having the appropriate bankruptcy solution. And again, it depends on whats in bankruptcy. So it depends about whether were talking about a Holding Company that just has a bunch of subdebt and equity. Or if were talking about the banks. So again, weve had a process to resolve banks. Again, i think that we need to look at the Holding Company issues. I would simply point out the National Bankruptcy conference which is composed of judges, lawyers believes Orderly Liquidation Authority should be continue to be available even if the Bankruptcy Code is amended. Thank you. I want to gently take issue with my colleague senator burr. It is clear that the Foreign Investment, the committee, does have the responsibility of looking at Foreign Investment and whether it impacts National Security. And clearly, as secretary of the treasury, you will have a role on that. I think it would be hard to argue that debt owed to foreign eenttizz by the commander in chief and the president of the United States, that it could not have any impact on National Security. I recall that when a Foreign Company was looking at buying starwood, for example, it was going to go for a decision. I want to point out for the record that if you decide somebody wants to come in and buy one of president trumps properties and if you decide its going to risk National Security by the location or who the foreign entity is, the ultimate decision is whose . Well, again, let me just assure you im going to take my role as chair very seriously. I know. As whose decision is it . As it relites to these different views on the president s business, again i would consult with the internal counsel at treasury and the ethics area in treasury and determine. And by the way the general counsel at the white house. And well figure out the right solution. Do you know whose decision it it is ultimately under the law . Yes. Whose is it . Mine. No, its not. It is the president of the United States. You make a decision and then it goes to the president and the president gets to decide. I understand but i think the same guy who is going to hire his ethics i need to make the decision for it to go to the president. I just wanted to point out for the record that ultimately it is hi call. It is not your call. But you have a chance to make a recommendation to him. I think we can all acknowledge that were in a little bit of a unique situation that we havent had a president like this that owns these types of businesses. No in fact and someone who is willing, again, to come in to government and serve the country as president. And i assure you, we will come back and talk about the issues. I know theres different views here. Well work with the chairman as too the purview of the committee and appropriate lawyers on this. Thats terrific. And it is different. And if we think in history that we got the annullments clause because a Foreign Government gave a juled snuff box to the president of the United States that almost seems kind of deminmuss in light of how complicated the International Aspect of the holdings that the president is going to stay with through his presidency. So i do think youre inviting a lot more questions down this line. And while were on the subject besides being a former prosecuter im also a former auditter. So when i heard the president elects pledge, my ears perked up because as you well know you benefit from income to your business even if its not profitable. Correct . How do you benefit of income if its not profitable . Well, lets say youre the trump hotel by the white house and youre losing 1 million a year and a Foreign Government comes in and buys a suite of rooms for a year which brings your Balance Sheet much closer to a loss of 200,000 a year. Havent you benefited from that income of 800,000 a year . Im following your reasoning. Ok. First of all, i think he has to in order to make good on a pledge to do this, he has to pledge to give all of his income from foreign interests, unless theres going to be an auditter. Who is going to decide if and when mr. Trumps businesses that he has not guested from are profitable from foreign involvement . Who is going to make that call . Is that going to be his family . Is that going to be his ethics officer . Are there going to be any is there anybody who works for you that is going to take a look at how he is determining whether or not he is profiting off foreign involvement in his wide variety of interests across the globe . Again, i think youve raised some very interesting comments and i would be happy to follow up with you. And im sure the president elect will put out more information on this and im happy to inquire with him. So i understand your issues. Is there anyone who has income under 200,000 who will receive even a dime from repealing of obamacare and the tulingts that goes with it . Again i think were looking at overall tax reform. Ok . My question is about repeag obama care. In repealing obamacare youre going to repeal the taxes in obamacare that strengthen medicare and do all those things. Youre going to repeal if you repeal obamacare it will be a tax cut. My question is, will anyone who makes less than 200,000 a year receive even a dime from that tax cut . Again, i think were going to look at tax reform as overall and what it does. And no different than when obamacare was put in it was a tax hike on those people. People who made over 200,000 a year. No question. Most of it was on people who make more than 1 million a year. So the answer is not one dime of a tax cut did the Republican Congress is about to do on the repeal of obamacare will go to one american who makes less than 200,000 a year. Finally, let me talk about pensions. You supported the bank bailout. So did i. You support the stimulus, so did i. We talked about this in my office. I think we both agreed it was necessary in light of what our country was facing. But to the pensions. You have an incredibly Important Role in the stability of guaranteed pensions in this country in the new job that you seek. I have 32,000 people in my state that worked hard for decades. Most of them driving trucks. And they planned their lives around their pensions. My question to you. We can find the bailout for the banks and we can provide stimulus. We can do an awful lot of things for a lot of people who have a lot of money. Will you commit to meet with some of the Truck Drivers from my state so they can look you in the eye and explain to you that the guarantee of their pension you know, your new boss did an amazing job connecting with people like these missouriens all over the country. He looked them in the eye and he said to them im not going to leave you behind. I want to hear from you i will that youre not going to leave these people behind. I will commit to work with them and work with your office on with your office on us figuring out what is an appropriate bipartisan solution to this issue that i appreciate the pension issue weve talked about several times today is a significant issue. Thank you. I wanted to start with a question youve no doubt come across in your preparation, and it may have been raised today hat i didnt hear. Being at other hearings. Currency manipulation, which is the simple way for me to describe it in the context of pennsylvania is when a country like china cheats on their currency, pennsylvania loses jobs. Thats irrefutureable and thats unfortunately been an all too common occurrence. Maybe now that the at maybe not at this moment but when it happens its a substantial hit to workers and Companies Across our state. Let me just get some basics down in terms of the posture you would take and the disposition you have on this issue were you to be confirmed as treasury secretary. First, this basic question. Do you believe that currency manipulation is a violation of International Trade laws and that a country who engages in that activity, that behavior, should be held accountable . Yes, i do. Second, while chinas currency policies have shifted of late, would you commit to me and to this committee that if china began to manipulates its currency again you would recommend to the president that the government former form ally name china a currency manipulater . I would. I am hear to hear you answer yes because this is the kind of issue that cuts across both parties, cuts across all different points of view. I wanted to move to some tax issues. You and i when you came to my office talked not extensively but for a little while about tax reform and your perspective on that. I wanted to focus on the middle class. Correct me if im wrong but i think youve repeatedly said you want to provide middle class tax cuts. Is that correct that is correct. What specific provisions would you support that would get to what you would define as a set of policies or trade policies that would provide that kind of middle class tax cut . I think theres two different issues. As see the trade policies doing things that are beneficial for the American Worker and the American Companies and i see the tax will s as things that simplify and reduce middle income taxes. I hope we can be more specific. I think the American People need to know that when any deal is reached as it relates to taxes, whether reform or something more limited, that the middle class doesnt get left behind as they often have in tax policy. I shared with you that piece from the New York Times this when he did a review, the middle class got 22 . The top 1 got 5 full Percentage Points of addition. You may debate and say other analyses are wrong but i hope that at the end of a period of time when this Incoming Administration is working with Republican Congress has had a an agreement i would hope we would not see that almost unfethrd give away to the very wealthy. Last question i have gets to us basic concern a lot of have. Youre seeking to be not just part of a cabinet and not just part of a government but arguably one of the top 2 or 3 positions in a new government at any time. I think thats been true since the founders. And one of the reasons why a lot of us have concerns about your record or concerns about your work and concerns about your views is that you havent been through the scrutiny frankly that Public Officials go through. Even appointed Public Officials. I know youre in the midst of that. Tell me in terms of your whole either Life Experience or Work Experience what qualifies you or what has prepared you not just to do the fulfill the duties of the office. Thats one question and thats worth a significant review as weve tried to do here today. But tell me what prepares you and what part of your life is relevant to the question of preparing to do Public Service in one of the most complicated departments of the most complicated government on the planet earth, the federal government of the united tates. Some people would point to experience they have outside of their normal daytoday job but tell me what prepares you to do Public Service in addition to the duties of a treasury secretary. I do think ive gone through an incredible amount of scrutiny in my private and public life. Thats part of the deal. I am saying, and ive fully disclosed everything. I consider it a great honor to be able to serve the country. I think going back from the beginning of time the idea is that citizens would come in to the government and serve the people. Thats something im doing, no different than the president elect trump has been a businessman. He decided to step away from his business and serve the country. Hes spent the last two years campaigning and being on the road because he wants to serve the American People. I share that desire. In regards to whats prepared me, ive had several different careers. At Goldman Sachs i had tremendous experience in both the Financial Markets and in technology. I think both of those are very important things and expertise for a treasury secretary to have. After that, ive been in the investment business. And more importantly ive been a regional banker. I think that being actually a regional banker whos lent money i think that i have actually a unique combination, unlike hank paulson who scrust ran a big investment bank, i ran a big part of Goldman Sachs. I had trading experience very similar to what bob ruben did who was at Goldman Sachs and served the country. And on top of that, ive had the added benefit of being a regional banker and lending to companies. And thats something that ive been doing. On top of that, ive worked very closely with the president. I think one of the important parts of this job as the treasury secretary has to have a close relationship. I view my job as serving the president and being a conduit between the president s mission and between the senate and the house. And i think i have a unique set of skills and thats why hes chosen me for the job. I just i would add to my earlier comments in this way. This is Public Service. Its not just being able to fulfill a duty or a job. Youre a servant of the people. Theres an inscription on a building in the State Capitol in my home state of harrisburg, a building i worked in for ten years, its describes Public Service the best way that ive ever seen. Public service is a trust given in faith and accepted in honor. That accepted in honor part is challenging for all of us. So i just hope that you bear that in mind were you to be successful in the confirmation process. 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