Transcripts For CSPAN Treasury Secretary Testifies On Presidents 2023 Budget 20240707

television providers, giving you a front row seat to democracy. >> treasury secretary janet yellen acknowledge that the u.s. is dealing with unacceptable levels of inflation and that prices are likely to remain high making it a top economic clarity for the administration, she testified in front of the senate finance committee for two and half hours. >> the committee will come to order. this morning the finance committee welcomes treasuries for a hearing on the budget. this is an important opportunity to discuss big economic challenges. that is where i will begin. i'm coming off a string of town hall meetings across my home state of oregon, and colleagues, everywhere i >> the number one topic is inflation, people are feeling at the grocery store and at oregons going for five dollars, $.42. people are paying more in rent, in shops and at restaurants. this is taking place at the same time americans learned on friday that unemployment is 3.6%, near 50 year lows and wages have been rising steadily. overall, the job market is the strongest it has been in multiple generations. but in terms of what our families are feeling on the ground, inflation is causing real headaches. the challenge is how to tackle it. there is no cure all, but the focus in congress has to be on finding real solutions to drive down costs, protect everybody's ability to get ahead, and to strengthen our economy for the long run. a first example, democrats on this committee are leading the effort to bring down the cost of scription medicine. americans are getting mugged with every visit to the pharmacy window and it is long past time to get them relief. moreover, it is also past time to cut the cost pushed off onto american consumers by these middlemen in our economy and in the prescription area they are known as pharmaceutical benefit managers. a second example is energy and climate. americans are spending huge amounts of money on gas and electricity. prudence genocide a war in ukraine -- putting's --- -- putin's genocidal war in ukraine -- and stock buybacks that benefit wealthy shareholders, all the while the climate crisis grows around us. bigger and hotter wildfires, stronger and wetter hurricanes and a longer and more punishing droughts. it is a one-two punch. americans pay more for gas and they are paying more for the consequences of these unnatural disasters. i bet a lot of americans would be interested in a plan that would lower their energy costs, make putin poor and prevent climate catastrophes at the same time. that is a priority for senate democrats, beginning with the clean energy for america act, which passed this committee. the bill for the first time uses a technology neutral approach to taxes and it would put our country on a path to cut emissions in half by 2030. one recent analysis found that our bill would save the average household $500 per year. and the legislation, for the first time in the history of the finance committee, stipulates that the more you reduce carbon emissions, the bigger your tax savings. there is also interested in ensuring that oil and gas companies can't game the tax code to pay next to nothing in taxes. that is far too common today. next, senate democrats want to lower the cost of renting or owning a home. that means investing in new, cost-effective housing as well as cutting right tape, which i visited with the secretary about before the hearing, this is the approach congress took years ago when it passed and electronic signatures law that i was one of the authors of that helped buyers and sellers who are just making common transactions. the bottom line is congress should not address our economic challenges by making working families worse off, yet regrettably, that's what republicans want to do. the big economic plan coming from the republican campaign chief senator rick scott is to phase out -- the mcconnell plan is to phase this out, hush-hush. he was asked, whether republican senate would do when they took back the senate, he said that is a good question and i will let you know when we take it back. yet senator scott coughed up the truth. you can bet republicans will want to hand and first round of tax breaks to multinational corporations as well. there is a long history of republican monetary hawks rooting for unemployment, flat wages and programs cuts that help millions of families pay for necessities. there are clear contrasts to the approach to solving inflation. we will have a lot to discuss this morning. i want to think secretary yellen, she has a hectic schedule, for joining us this morning. i look forward to our colleagues and we are interested in working with the senators and our colleagues on the committee. >> thank you, mr. chairman. secretary yellen, thank you for being here. inflation is the top of my statement as well. inflation is hurting american families and eroding wages. people are adjusting spending even on basic necessities just to make ends meet. there being header -- hammered at the gas pump, in the grocery aisle, across the economy. as wages rise to keep up with inflation. odds of an inflationary wage price spiral rise. it became broad-based and accelerated this year following the untargeted american rescue plan act. that poured one point -- $1.9 trillion of inflation fueled in the economy with growing supply chain disruptions and elevated liquid sailings. -- savings. democrats push for reckless spending, the result was inflation at highs not seen in 40 years. this is no time to consider raising taxes or resurrecting reckless spending proposals from the house past build back better bill. the 10 year is also a sign that our national debt, currently at 35 -- $30.5 trillion, excuse me one moment. it is another sign we are on an unsustainable track headed to new record highs. inflation and accompanying hiring and -- higher interest rates and higher net interest cost to services -- that service the national debt, crowding out other fiscal priorities. as the economy has been in recovery from covert related shutdowns, revenue has dropped -- jumped sharply. they expected to rise the highest in more than two decades and well above the 50 year historical average. nonetheless, democrats want to raise taxes more in the face of rising odds of recession. one harmful policy is on financial statement -- a tax on financial statement or book income. both parties voted against this more than 30 years ago. this was -- would hit american fractures and undercut investments in innovation and emerging technologies. this is not the only proposal from democrats that would harm the competitiveness of american companies. another example is the international tax agreement treasury has negotiated with the oecd. under both pillars of the agreement, treasury has agreed to give foreign countries sweeping new rights to tax u.s. companies. in an attempt to bind congress, treasury agreed to terms without engaging in meaningful consultation with congress. for more than a year, my republican colleagues and i have requested information on the agreement and its potential effects. treasury however has repeatedly declined to provide analysis of the effect of the agreement on u.s. businesses, u.s. revenue or the economy overall. from what we can see, that impact will be significant on u.s. computer dutch companies, making them less competitive globally. we know the failure to share substantive detail for underlying flaws in a lack of -- terms will undermine this and encourage certain activities. the flaw as this agreement cannot be fully implemented without congressional action. in many cases, the terms can only be properly carried out with a multilateral -- by agreeing to sweeping changes of this nature without bipartisan support, treasury has put at risk tax certainty and a prospect of a durable or long-lasting agreement. beyond lack of information about the international tax agreements, nothing is more known -- nothing more is known about a possible leak of private taxpayer data from the irs to the left-leaning group pro public -- pro publica it then we knew a year ago. more work is needed to establish independent oversight in financial controls over the funding to states and localities in the american rescue plan come up where no meaningful oversight was established. treasury must be willing to consult congress on debt management, which has thus far only been comfortable doing with wall street and the federal reserve. the committee, which is the authorizing committee, deserves transparency and accountability then we have been receiving. i appreciate your service, and i look forward to hearing your testimony. >> thank you, senator. we will be working together as we always try. our first witness -- our first and only witness will be secretary janet yellen the 70th secretary treasury, the first person to have led the white house counsel on the federal reserve and the treasury department, should was a -- she was a distinguished fellow at the brookings institute, and she is the member of the american academy of arts and sciences and the council on foreign relations. she also was a founding member of the climate leadership council. we are glad to have you, secretary yellen. today we are going to be focused on moving expeditiously. the secretary has a hard stop at 1245 time. freeze -- please proceed. sec. yellen: thank you, chairman, members of the committee, thank you for inviting me to discuss the ministrations budget proposals. this budget prioritizes essential investments in education, medical care and affordable housing alongside tax reforms that enable deficit reduction and prioritize a pharaoh tasks system. over the past year and a half we have experienced a robust recovery characterized by strong economic growth, historically low unemployment and high household saving rates. this rapid, broad-based recovery has been buttressed by the congressional response to the challenges of the pandemic, beginning with the cares act at the beginning of the pandemic and continuing with the consolidated appropriations act in late 2020 and the american rescue plan legislated at the beginning of 2021. as president biden said last week, we are entering a period of transition, from one of historically covering to one that can be marked by a stable and steady growth. making this shift is a central piece of the president's plan to get inflation under control without sacrificing the economic gains we have made. we also managed to avert the far worse outcomes that were forecast at the beginning of the pandemic in 2020. after the onset of the pandemic, cbo forecasted on employment would exceed 9% in 2021. now, we are experiencing historically low unemployment. we are also witnessing reductions in the budget deficit, with cbo recently forecasting the largest nominal reduction to the federal deficit in history. according to their projections, the deficit is the share of the economy this year. it will be at a lower level than projected before the american rescue plan past. still, we face macroeconomic challenges, including unacceptable levels of inflation as well as the headwinds associated with the disruptions caused by the pandemic and its effect on supply chains and the effects of supply-side disturbances as well as the food market resulting in the war on ukraine. to dampen pressure without undermining the strength of the labor market, and appropriate budgetary stances needed to complement monetary policy actions by the federal reserve. moving forward, elements of the presidents proposed legislation, including the clean energy initiatives and plans to reform the prescription drug market, can help lower the cost paid by american consumers. the treasury has been working with congress on many challenges. most important is our joint response to russia's illegal and unprovoked war against ukraine. treasury is committed to doing what we can to ensure that foo'' -- potent's -- putin's brutal war is met with this response nationally. many nations accounted for more than half of the world economy, the u.s. government has imposed unprecedented financial measures on russia and its leadership. the kremlin has been cut off by the global financial system, the russian economy is experiencing severe contractions with most analysts projecting at double-digit decline in russian gdp in 2022, and they are experiencing sharply elevated inflation. we are grateful for the strong support of congress in this endeavor, including the recent provision of $40 billion in security, economic and humanitarian aid to the people of ukraine. our joint resolve is essential to supporting the people of ukraine against this brutal invasion of their homeland. over the past year and a half, we have collaborated with congress on the bipartisan infrastructure bill, a bill designed to do the hard, generational work of building more dynamic, structurally sound economy by smartly investing in the future. it will rebuild america's roads, bridges and rails, expand access to clean drinking water, ensure every american has access to high-speed internet and invest in communities that often have been left behind. however, our work is not done. building a fair and stable tax system that promotes broadly shared growth is important to both adequately funding investments and reducing deficits and debt. i look forward to working with congress to ensure that we continue to make progress in this regard. in the administration's fiscal 23 budget, we suggest smart, fiscally responsible investments, cutting deficits and keeping the economic burden of debt low. the investments are more than fully paid for through tax code reforms requiring corporations and the wealthiest americans to pay their fair share, closing loopholes and improving tax initiation. it is no secret that i'm keenly focused on moving forward on the global agreement on the international tax reform, including a global minimum tax that will level the playing field and raise crucial revenues to benefit people around the world. last fall 137 countries representing nearly 95% of the world's gdp, agreed on a deal that would stabilize our tax systems, provide resources to invest in security and respond to crises like covid-19 and it sure corporations fairly share the burden of financing government. i am hopeful congress will also implement this global minimum tax as part of its legislative agenda. thank you and i look forward to taking your questions. >> thank you very much madam secretary, and colleagues, let me just say in the beginning we've got many members with questions, so this morning we have to stick to the five minute rule. let me start with cutting costs and fighting inflation. some of my republican colleagues have proposed increasing taxes on 75 million middle-class families by almost $1500 a share alone and nearly half of small business owners. instead of taking money out of these pockets, president biden and democrats propose to -- childcare and housing. we would also make the wealthy and large corporations pay their fair share. the president and i believe strongly that billionaires should not be able to use current tax laws to pay little or no taxes for years on end. my question, madam secretary, to start is how with these policies reduce costs for middle income families? sec. yellen: thank you, senator. the president supports measures that congress -- congress legislating measures that would ease the burden on lower and middle income families. this would involve, for example, continuation of the child tax credit, lowering the cost of prescription drugs, investing in affordable housing, lowering the cost of health care and the energy investments that you referred to that could cut utility bills significantly. he would pay for those proposals fully and more than fully, the president believes we should have deficit reduction and revenue raising proposals involve asking upper income taxpayers and large corporations to pay their fair share. so we believe, i agree with president biden, proposals like this would lower the cost and ease the price pressures that blow in middle income households are facing due to rising energy and food costs, the supply chain problems that have been associated with the pandemic and deficit reduction would complement the work the federal reserve is doing. >> let me get a couple of questions on the irs. irs audit rates have fallen by more than 72% over the last decade, and by 86% for those earning more than $5 million per year. this lack of oversight in effect has given high flyers a free pass to cheat. the irs estimates we are losing about $600 billion each year from taxes that are owed but not paid. the irs commissioner testified that our losses could be as high as $1 trillion a year. the president is requesting $80 billion to the irs over 10 years . according to the congressional budget office, this would raise over $200 billion in revenue, primarily from high income tax chiefs. can you talk about why this is a smart investment and how it would help fight inflation? >> -- sec. yellen: tackling the annual tax cap is important in ensuring fiscal responsibility. it would generate substantial revenue in an that is efficient and fair. it would enable deficit reduction and help ease price pressures by providing the funding, part of the funding we need for the urgent fiscal priorities we discussed. more broadly, the irs is an agency that entered the pandemic without the funding that was in any way needed to navigate the challenges they faced. it is remarkable they were able to perform as well as they did in getting out child tax payments and the economic impact payments. but we have to invest in the irs to close the tax gap, which reflects opaque sources of income, mainly by high income earners that are not tax, wage payers who earn w-2 income, really pay their fair share and they need the resources to serve taxpayers to be able to answer the phone, ensure the receive the payments and they need to modernize the technology, which is the oldest, dating back to the 60's, in the federal government. >> i time has expired. if my colleagues have not asked and i will ask it for the record, but oregonians who filed paper returns this year are wondering if the irs has lost them. some are desperately in need of that tax refund to pay bills. i will talk about it further. >> thank you. you have heard from both the other senator and me today about the pain americans are suffering because of inflation that has accelerated and become broad-based following the enactment of the american rescue plan last year. democrats are claiming republicans are trying to raise taxes. nothing could be further from the truth, when the reality is as we speak democrats are trying to negotiate a new massive plan that would raise taxes significantly. do you believe it would be prudent fiscal policy to increase taxes or engage in more stimulus spending with an economy facing the prospect of stagflation? sec. yellen: thank you for that question. as indicated in my response, i believe there is a lot that congress can do to ease the cost burdens that households are experiencing. with respect to energy, the administration has done everything they can to bring down energy costs for example through a historic release of a million barrels a day from the strategic petroleum reserve and energy prices, gas prices, while very high, have risen a lot. they would be higher without that. the war in ukraine is having impacts on energy and food prices globally. we are not the only country experiencing inflation. you can see that in virtually every developed country around the world, what congress can do and what the biden administration would like to see is investments in programs like lowering prescription drug costs , investing in clean energy and renewables that would free our dependence on global oil markets , which are subject to geopolitical risk and could bring down utility bills, affordable housing, help for child care expenses that would enable higher labor force perfect -- participation, medical costs. these are ways that congress and the administration can address bringing down some of the costs that households face and it is appropriate to pay for it or more than pay for it, to have deficit reduction. we are supportive of deficit reduction and think that asking high income taxpayers and corporations to pay their fair share is the right way to finance these investments. >> i heard you say it is ok to raise taxes right now and it is proper to have more stimulus spending to deal with this crisis. i had to say i disagree on that. what i also did not hear you say is that we should increase our production, our domestic energy production, rather than depressing our domestic energy production, to continue to believe the president's policies with regard to reducing our capacities to develop our own oil and gas reserves and the potential is the appropriate approach to this? you mentioned taking from our strategic petroleum reserves, which i think weakens us. but you did not mention increasing our domestic production of energy. sec. yellen: well, oil production in the united states fell during the pandemic. i think oil producers did not anticipate the strength of the recovery and the fact that oil prices would recover and they certainly do have incentives to enter -- increase oil production. they are sitting on thousands of leases on federal lands that they have not yet drilled. cooks but the permits are not being facilitated and the orders have shut down the pipeline, they have stopped the issuance of more leases, they have stopped the progress on the permitting of the leases. they stopped the offshore oil production. we were energy independent and now we are not. it is not the result of the failure of our capacity. sec. yellen: we may be energy independent and we are exporting oil, but we are part of global oil markets, which are subject to geopolitical influences and given the global nature of these markets, it is virtually impossible for us to insulate ourselves from shops like the ones occurring in russia that move global oil prices. over the medium-term, the critical thing is we have become more dependent on the wind and the son that are not subject to geopolitical influences and passing clean energy credits that will boost non-renewables is really critical to addressing climate change and our energy costs for households. >> my time has expired but i wanted to get into the information and maybe in the areas following, we will have the opportunity to discuss the fact that there are serious concerns about the impact on our economy of those changes being negotiated by treasury. >> thank you. senator? >> thank you good morning. on the issue of gas prices, after waiting for a long time to have enough chips in this country to get my electric vehicle, i got it and drove it from michigan to hear this last weekend and went by every single gas price -- gas station, did not matter how high it was. i am looking forward to the opportunity to move to vehicles that are not depended on the whims of the oil companies and the international market. let me just back up second because when president biden came in, he inherited a mess. the reality is even starting with the deficit, a percentage of the dead in the company was created during president trump, including the largest tax cut for rich people and corporations. so huge, and thank you for bring that down. the deficit is bringing that down faster than we would have hoped. there was no system for distributing vaccines, children were not in school, we do not have testing, let alone on testing. we do not have medicines. small businesses and restaurants and theaters, everyone worried about where -- were we going to be able to save lives and get through this? the good news is we did a big piece of that was what was done in the american rescue plan to make sure we have vaccines and can help children get back in school and help our restaurants and how people survive and so on. i want to just reiterate the fact that based on that effort, we have seen the u.s. add 8.7 million jobs since president biden took office, including 540 5000 manufacturing jobs, which i am excited about. business investment is up 20%, more small business applications in 2021 than any previous year. that is good news. here's the challenge that we know, which we are all talking about now. despite this great news when you have a global supply chain, and we are not getting enough of those chips for automobiles, we have consolidation in the food industry and we have all these other issues, people have more savings, they want to buy things, but things are not there to buy. that is supply chain breakdowns and that leads to inflation, which is where we are now, what we are talking about. it is very real for everyone. the exact story is different in different parts of the economy, but bottom line, people have more savings to buy things, not enough things to buy, prices go up, so here we are. you did not create that, president biden did not, it was the result of what has happened in this global economy, frankly that i think we need to rectify by bringing jobs home, making more things in america, which i appreciate the bite administration doing. if you could -- the biden administration doing. if you could talk more about what you think we could be doing in congress to bring those prices down, it is great political theater to point and say prices are up, my reaction is duh. the question is what are we going to do about it. so talk a bit more about what we should be doing to bring prices down. sec. yellen: i think ringing inflation down should be our number one priority, and president biden in an op-ed on inflation in recent remarks has indicated that it is our top priority. we do have to recognize the federal reserve is charged as an important role to play and they are committed to doing what it takes to bring inflation down and president biden is strongly supportive of the independence of the fed and getting out of the way and giving them the room to do what they need to do. i think we can complement that by deficit reduction. beyond that, the president has done what we can to address supply chain challenges, and as discussed with chair widen -- with senator, the chair, i believe congress and the president can do a lot to mitigate some of the most important and burdensome costs that households face, whether it is that they can't find affordable housing, the prescription drug prices are too high and we can address that while also raising revenue for the government, whether it is high health-care care costs or high energy costs by making the investment in renewables that are necessary to bring down utility bills and shield us from geopolitical developments that provide shocks to our economy, these are things that congress can do and in the course of doing that, we will expand for supply side of our economy because we know private investment is an important investment we need to make to improve the economy's potential. there are others, infrastructure investments, in people and education and treatment -- training, investment in childcare and early childhood education, eldercare that would enable greater force participation, all of that could help to bring down inflation and lead to strong, sustainable, stable growth. >> thank you, senator. our next will be senator grassley, senator cantwell and senator portman. senator grassley is coming back, senator cantwell. >> madam secretary, thank you for your statement about inflation and trying to tackle those issues. i believe if we work together in a bipartisan fashion, there are things we can do on those sectors that you mentioned. i think the information age has given us information on pbm's or transparency in oil markets and various things but i wanted to ask specifically about this issue of a chip shortage, a semiconductor shortage. the fact that we basically see a 40% increase in the price of used cars. our colleague said she is buying and getting access to a new electric vehicle, but the price of everything has gone up. we have our trucking industry saying they can't even ship built trucks because they don't have the chips to put into the truck. every aspect of our economy is now more expensive because shipping costs are going up. so we are trying to send a priced -- price signal in a competition innovation bill to get america's investment in semiconductors up to a level that will show people we are going to have domestic supply and we will be on the cutting edge of the next generation of chips, while dealing with the legacy shortage that exists in automobiles. our colleagues don't understand the international competition and how fast they are moving to make the same investment. how critical is it that we get this done in this work period, otherwise are we losing a much bigger race than just the challenge of inflation? sec. yellen: it is important, i think, to pass this and make investments in semiconductors that will keep the united states in the lead in this critically important industry and to make sure we have the capacity to produce advanced chips at home. this is a national security issue as well as an economic issue and i think this is an important bill i would like to see past. we found ourselves in an almost unimaginable situation, where the pandemic resulted in such an explosion of demand for chips globally as people switched increasingly to digital work and communications that our auto factories found themselves unable to get chips. here you have something that is caught is significant please -- peace of the inflation we face the results from structural shifts induced by the pandemic and insufficient capacity at home to build semiconductors. i think this is critically important investment. >> to be clear, you are saying the ship that the chip shortage has added to our inflation woes. >> absolutely. about a third of inflation is new and used cars and manufacturers have been forced to cut production of cars when they face record demand for those vehicles. it is all due to a shortage of semiconductors. >> since this market is so strong, gets confusing but $20 billion a pop to build a foundry and most companies don't have $20 billion sitting around. the tray -- the chase to get those industries in those countries, i don't know if you think that is a seminal moment for us, i just look what has transcribed over the past decade and how hungry asia is, how competitive is the financing environment and other countries? sec. yellen: there have been subsidies in many countries of semiconductor production and certainly a conscious drive in china and other places to boost semiconductor production and it has drifted away from the united states. i think it is critical that we develop that capacity and certainly american companies understand but this would make a big difference. >> thank you. >> i think my colleague. next will be senator portman, then senator menendez, -- cortez. >> thank you secretary for being so candid and presenting today before the committee. let me start with affordable housing. we are lacking affordable housing in the state of nevada and across the country. i do know that the state and local fiscal relief funds provided in the american rescue plan provided dates -- states the ability -- in nevada we expect to build 3000 affordable homes with these funds. it is important that the american rescue plan funds leverage the nation's most reliable and impactful affordable housing investments, the most -- the low income housing credit. i'm concerned that in my state and some of the states across the country, they are not able to use the funds they received through the relief and they were not able to leverage those against the income credit. my hope is that the treasury department will help clarify. i'm curious your thoughts on that process. sec. yellen: we are absolutely encouraging the state and local relief funds to be used for affordable housing. we recently published a fax sheet that explains practices we have found promising and highlighting some of the ways in which these funds are being for this purpose, but certainly we are strongly encouraging these funds be used to boost the affordable housing. on the low income housing tax credit, i know there has been an issue around average income regulations, and that was something congress intended to provide flexibility to entities that use that credit. it is our highest priority for attacks team to make sure that those -- for our tax team to make sure those regulations cap about flexibility. >> thank you, i am hearing that by aligning with state and local funds, it is the difference between 3000 units and 8000. i have introduced an act that allows the state to loan those funds to low income housing tax credit projects. the loan authority is necessary because of the obligation to spend all of the state and local fiscal relief funds by 2026. that is my first priority, to pass that. as you can see, there is a challenge in getting republicans and democrats on board, essential legislation to lower cost for families. my next ask is that i am hopeful the treasury department clarifies in its final rule and allows those type of loans, blended loans, grants to nonprofits that provide loans, just clarifying that those funds can be used in that way will help us build more affordable hose -- homes in my state and across the country. sec. yellen: i will make sure my staff is in touch with yours to make sure we are addressing now. >> i appreciate that. let me jump to social security administration. i appreciated that recognition in the budget of the challenges faced by many individuals in accessing social security administration services. communities are still reeling from the public health and economic impacts of the pandemic, and the services and supports the social security provides are key to helping individuals recover. can you talk through the investment in the social security administration that you proposed in the budget, and how will they help folks access earned benefits when they need them? sec. yellen: i know that is the purpose of those investments, i will need to get back to you on details. >> please do. i was in my home state and we were talking about the high cost we are seeing and the extent can work together to lower cost for all families, including those relying on social -- social security will be beneficial in nevada and across the country. thank you event -- again for being here. >> think my colleague, very interested in working on these housing issues that are so crucial. >> thank you, mr. chairman. madam secretary, welcome back to the committee. i'm going to talk about a subject on which you and i disagree, which won't surprise you. but i think it is important that we have a candid conversation about the tax reform of 2017 and the danger that i associate with the administration's attempt to throw it out. let me remind my colleagues, these are objective facts. in the wake of the tax reform of 2017, take 2019, the first year for which it was implemented, we had the best economy of my lifetime. the lowest unemployment rate in 50 years, or job openings than people looking for jobs, record low poverty, median household income at an all-time high, strong wage growth and this is important. wage growth was faster than the rate of inflation. so american workers were becoming more affluent. they were able to improve their standard of living, contrary today with a wage growth is not keeping up with inflation since today's workers are falling further behind under the current economic circumstances. but getting back to post-tax reform, corporate inversions had stopped entirely. we have not been able to identify a single corporate inversions since our tax reforms, which was designed in part to stop corporate inversions. there's also the shift in the tax burden, which, contrary to what some of our colleagues suggests, the 2017 tax reform shifted the tax burden even more to higher income people. the top 1% of wage earners paid a greater share of the total tax burden as a result of the 20 tax reform. the bottom 50% paid a lesser percentage and today, the top 1% makes about 20% of the income in america, pays about 40% of the taxes. but what about federal tax revenue? not surged -- that surged. and it looks like it will reach another record high. so far this year, 22% higher than last year and last year was a record. for this year, corporate tax revenue is on track to be at the highest level of gdp since 2015. the statistics are unbelievable. i don't know how you could even conjure up a better economic outcome than what we had right before the pandemic hit. you could suggest it is all a coincidence, the tax reform resulted in exactly what some of us predicted and suggested might happen, and acceleration of investment, strong economic growth, repatriation of a huge amount of overseas money, but that is improbable. the fact is we had the best economy of my lifetime i far and it was working best for low income americans, ethnic minorities who historically have not had as good an economic result as others. so the biden administration says let's look at this data and throughout the tax reform. it is unbelievable. my understanding is that apparently is still on the table out of, in part, this concern that if we don't do this two pillar tax reform i know you have negotiated, madam secretary, what you characterize as a race to the bottom, which to me is competition among countries to have an attractive environment for investment, frankly i think we should be looking to win that race, not prevent it from taking place. i understand we have got this negotiation. what we have not seen is how this gets implement it. two quick questions and i will let you respond. first, i am concerned about the impact the proposal will have on american competitiveness. my understanding is the treasury department has data about the impact on american business if the tax reform you have proposed would go forward. so we know when we can get access to that data. second, since pillar one of your two pillar model requires modification of existing tax treaties, it seems clear to me that has to come to the senate for ratification. i have not yet heard an agreement that that is going to happen and i have yet to have an explanation for why, since the constitution requires it, why should not. with that, i will yield to the secretary. sec. yellen: very quickly, with respect to access to data, the data relating to pillar two is available and that was included in the house passed bill and sport by jct. --escorted by jct. must be referring to pillar one and the impacts that would have, so i would say it could go either way depending on the details which have not yet been decided in the pillar one negotiations. the impact on fiscal revenues will be small. pillar two has a big impact, pillar two will have a small impact. -- pillar one will have a small impact. we are a large market economy, we will gain revenue from our ability to tax form corporations doing business in dutch foreign corporations doing business in the -- lauren corporations -- foreign corporations doing business in the u.s., -- it could be positive or negative, depending on details not yet worked out. that is why we have not yet provided data. we will when details are clear. >> and the ratification process? sec. yellen: the ratification requires congress's approval. there's no doubt about it, but the form that needs to take is to be determined. >> thank you, mr. chairman. >> think my colleague. one of the first things we stated at the outside was we have senate republicans proposing thing -- and on nearly half of small business owners. senator. >> thank you. thank you for your short area service over the years. i don't know what you're doing when you were 29 years old, i was elected state treasurer of delaware and we had the worst credit rating in the company dutch country. we were tied with puerto rico, no pension fund, management system, and i got to be state treasurer. i have been an advocate for a fair and well functioning tax system since that day and i still am. one way to achieve this goal and spy making sure taxpayers don't have to jump through hoops to file their taxes. the irs free file program which was established for this purpose to help low and middle income families file their taxes easily and walk out unnecessary fees. the program has not lived up to its potential. the recent years have faced a number of challenges, withdrawal from a program of major providers, deceptive marketing from providers and a low participation rate among eligible taxpayers. a recent report, one i requested, recommends that the irs work with stakeholders to develop additional options for free online filing of tax returns. what steps should we hear in the congress and the irs take to improve accessible and affordable tax filing options for the american people? sec. yellen: let me say that i totally agree with you that filing taxes can be costly, complicated and time-consuming for american families. and there is a study that shows it takes 17 hours on average and cost about $230 to complete a tax return and it's very worthwhile and we are exploring options to reduce these burdens. on top of that i would like to add what's also important for american families is to be able to access payments that they are entitled to whether it's the eit's or the child tax credit or economic impact statements. that's another way in which they interact with the irs and it is important that we make tools available that make that easy and get those payments to the families that are entitled to them. the fundamental problem we have here is that the irs is just horrendously under resourced. i think it is miraculous -- sen. carper: that bears repeating. sec. yellen: the irs is horrendously under resourced. it has fewer staff then it had i believe 40 years ago. our economy has grown in size, it is operating with technology from the 1960's, using a programming language that is archaic and is no longer taught in any school in the country. it does not have the resources it needs and the pandemic was a huge -- left it with a huge backlog of returns and information that had to be processed, it's really top priority. we've asked get out three different economic impact payments, child tax payments and it's amazing they were able to do it. i think it's important. we are looking at it this is something that the irs needs to do. given all the other burdens, we really have to and i think it should be very high priority to congress to give the irs the resources it needs, not to mention closing the tax gap. sen. carper: i'm tom carper and i approve this message. how can common sense reforms to a state and gift taxes make our tax code fairer and more fiscally responsible? sec. yellen: i believe there are loopholes there that should be closed. we put out a number of proposals relating to a statement -- estate and gift taxation in the green book and we are exploring ideas where we can curtail some techniques that are used that we can do under existing authority. that's an area to be scrutinized carefully. sen. carper: alaska to respond more fully in writing. -- i will ask you to respond more fully in writing. >> senator langford is next. >> this morning ascent over letter to you because it is the one year anniversary of the pro-public a release and the challenge we have is getting information about taxpayer information and how it is kept secure. we have asked for just a briefing to be able to sit down with you and your team and say how was taxpayer information being protected. what's changed in this, we are not asking for the 6103 information, and not trying to get into this specifics. but at the one-year anniversary, we want to yes or no answer. , get a briefing with you and your team on a taxpayer information is being protected and what's changed. sec. yellen: i will ask my team about that and have them get back to you and we will try to arrange something. let me just say it is very high priority, disclosure of confidential government information is illegal, it is something we take very seriously , there are procedures and controls in place. sen. lankford: we are just a year into it we haven't got information on what happened. we heard that but we don't know what's actually happening behind the scenes. we continue to see if information leaked out over and over again. we want to get information on what's being done and how things have changed. sec. yellen: absolutely. i don't think there is information that's being leaked out over and over again. if there is i'm certainly not aware of it. sen. lankford: we will follow up on that. on the oecd question, this is a challenge for us as we try to keep the flow of information as well of what's actually happening on it. in this case, we have an american company, they've done everything we've asked them to do based on tax policy, their jobs are here, their intellectual property is here, of the research and development is being done here. they have done that according to the tax code the congress is passed incentivize that. know all these countries in the dark blue will have leverage over those american companies that are following our tax law to be able to determine how much they will now pay overseas. so china or the u.k. gets a subsidy, instead of actually having r&d credits on it, then suddenly these american companies following american law will now pay more. our concern on this agreement is it seems to be structured to incentivize companies to move their ip internationally that would allow them to build a balance other tax portfolio. sec. yellen: i don't understand that. we are the only country that imposes any minimum tax on the foreign earnings of our multinational corporations. it is currently attending a half percent on a blended rather than country by country basis. no other country does this and with this deal is going to do is enforce every other country around the world that signed up under the 37 countries that have signed agreements to impose a minimum tax on their corporations and their overseas earnings of at least 15%. sen. lankford: our understanding is they will impose that minimum and then they will take out things like their subsidies where are credits that been passed into law won't count among that. but their subsidies well. sec. yellen: many credits will count on that. it is structured so that direct subsidies aren't counted whether we give them or they give them. on the tax side it does count. we certainly would work with congress to make sure that the benefits congress intended for the business credits are structured so. sen. lankford: that is reassuring to hear because we have not had the sense of working with congress through the process. it seems to be a negotiated deal everywhere else and coming back to us. revenue changes have to be done through congress and have to be voted on here, seems to be an incentive to move something different. this is the same thing were dealing with foreign tax credit. the regulation was actually put out in january, a lot of companies including companies in oklahoma are struggling to understand that. we've had folks from treasury that have said more guidance is needed, but it seems to be the train is still moving and they are still trying to figure out only with an audit at some future day if they were following the rules are not on this because the guidance did not come out on time. is this going to be delayed or is this still going to be implement it this year when there's not guidance. sec. yellen: we have issued a regulation but we do understand there are some issues that businesses have around eight and we certainly wish to work with you to address those. sen. lankford: will it be delayed? >> tom of the gentleman is expired. you can give an answer to that. sec. yellen: i don't think it will be delayed. but we will work to address issues with it. >> senator cafferty is next. >> several things. so security is gun solvent -- insolvent. is there going to be a plan moving forward from the administration to address social security insolvency which is 12 and 13 years away now with the implications of further delay? sec. yellen: we gained one year in terms of the life of social security fund, how long it continues to fund benefits. >> taking a 75 year scoring. it will be at $211 trillion deficit over 75 years, so saying it's going to be extended one to two years seems almost silly, no offense. sec. yellen: it is certainly true that it's not sustainable on a 75 year basis and this is something that congress and the administration should address. this is not news i would say, we have known about this for least 30 years and have not taken steps to address it. sen. cassidy: so you agree it's important to take those steps. sec. yellen: i do believe it is something we should do. sen. cassidy: let me move on. as regards to inflation, what variable potential impacts the price of oil and gas. you've mentioned how the international market and there is some limit to the impact of what we do locally. but that said, of administration has proposed decreasing tax incentives for the production of oil and gas. if you decrease tax incentives you will have less oil and gas produced. that's going to decrease supply and contribute to the upward pressure. does that make sense? sec. yellen: over the medium-term we absolutely need to move to green renewables. sen. cassidy: i'm speaking about right now. if we decrease tax incentives to produce, that will decrease supply and yet the administration is proposing to do that. i'll just make that point and move on. if we want to speak about, apparently one of the major problems with producing oil and gas right now is the cost of oilfield services. here's the quote from the ceo of occidental who says to paraphrase given how expensive drilling and oilfield services of god and, it's all most value destruction if you try to accelerate anything now. what would you think about increasing the tax incentives to drill oil and gas, recognizing what the ceo of occidental says the cost of oilfield services are so great it is value destruction to attempt to accelerate. sec. yellen: prices are very high in part because -- importantly because of russia's war on ukraine and i believe the incentives are there to boost production and that is something we need in the short run. sen. cassidy: so if we could make a case, the domain to be rude, if we could make the case that increasing the incentive, increasing the tax credit for three to five years to offset the increased cost of oilfield services could increase production, would that be something that should be entertained? sec. yellen: i think it is profitable as it is. prices have gone up a lot and that tends to offset those costs to help oil companies cover them , so the price system is working and provides incentive. sen. cassidy: what be a tragedy was lower the cost -- let me just move on. we are in a situation right now as regards russia and the price of oil. because of the restrictions on purchasing russian oil, their oil profits have increased. so they are selling less but at a higher price, russia now makes more money from oil and gas sales than it did before we begin to apply sanctions. the europeans have considered coming together as a buying block to limit the price we will pay. we will pay the price of production but no more and so therefore we don't pay the higher price at the pump but they don't get the increased revenue. as the administration participating in that? is that something we would entertain. sec. yellen: absolutely. our objective -- sen. cassidy: we are involved in discussions to come up with a buyers block? sec. yellen: yes we are. sen. cassidy: can you give a kind of assessment of where those negotiations are. sec. yellen: extremely active. i think what we want to do is keep russian oil flowing into the market to hold down global prices and try to avoid a spike that causes a worldwide recession and drives up oil prices, but absolutely the object of is to limit the revenue going to russia and the kind of strategy you suggest, there are very different ways technically of accomplishing that what it is desirable, the strategy. sen. cassidy: i think my colleague. >> senator cardin. sen. cardin: the first one to agree with my comments by sender widen in sustained funding for the internal revenue service. we need staying power here. i've been working with senator portman, we were both in the house of representatives trying to modernize the irs through resources for the level of service, for the fairness and enforcement. i want to underscore the commitment needs to be there for sustained period of time that the irs can provide service the americans expect. provide fairness in our tax code. a question in regards to affordable housing. i was on the eastern shore of maryland in cambridge looking at the challenges we have there for affordable housing. we go to urban centers, rural areas, we have housing issues. there are several issues in the administration's budget that have bipartisan support. you conduct about the historic tax credits in regards to cambridge, the new market tax credits we've introduced legislation that would extend to make permanent the new market tax credits. low income housing tax credit has been an issue that had bipartisan support. i want to concentrate on the neighborhood home reinvestment act. it's in the administration's budget. there are neighborhoods in which you cannot refurbish homes because the market price makes it impossible to put that investment in. in the neighborhood home reinvestment act deals with that appraisal gap by providing a credit so that we can have a larger stock of affordable housing and communities today that are being neglected. can you share with the committee the priority of this administration in regards to affordable housing and the neighborhood home investment act? sec. yellen: we are supportive of that. affordable housing i think is one of the most serious and growing challenges we face in this country and the administration is trying to think of everything we really can to promote the building of affordable housing, the low income housing tax credit, the new markets initiative and other things the administration can do internally to try and promote affordable housing. sen. cardin: as we talk about american family struggling today because of increasing prices, housing is one of the key areas. i hope you would put a priority on it. we have bipartisan support, not only for your support, but your active engagement in order to get this to the finish line. we have strong support on this committee and i hope we will see it in one of the tax bills that will make it to the president's desk for signatures. another tax issue moving in congress, the house is taking action on retirement security, our chairman and ranking member are bringing all of us together in regards to retirement security. we are looking at how we can get people adequate incentives, help for small businesses to create saving opportunities for their employees, provide more certainty and flexibility for americans in retirement years, all of these are areas that are bipartisan, but once again if we are going to be able to have that three legged stool for retirement security, social security, private savings and retirement. we need your push here to get to the finish line because a lot of stakeholders and interest groups and we have to come together in a relatively short period of time. is the administration going to help us get a retirement security built of the finish line? sec. yellen: we look forward to working with you on it. our staff can talk to one another, we are certainly glad to work with you on that. sen. cardin: i appreciate that, we will need some priorities here from the administration to help us. there are different views and we have to reconcile different committees here in the house and the senate. i know there is a lot on your plate but i would urge you to give this a high priority. sen. wyden: we will give that bill a high priority. senator portman is next. sen. portman: thank you for your focus on that front. thank you for asking that question, we hope to provide technical assistance and get one of the great bipartisan opportunities we have to help people we represent at a time when people's savings are under more and more stress, during covert a lot of people took money out of their savings. it deals with really before five concerns on a bipartisan basis in the retirement system. thank you for working with us on that. on the issue of foreign tax credit, i'm concerned with the new regulations, particularly the lack of notice and comment in the final draft of that. it's a pretty simple issue to me. countries around the world provide more tax credits so there's a double taxation. if a u.s. company cases -- pays taxes overseas. you want more u.s. companies to pay oversee -- procter & gamble has over 10,000 employees. 40% of those workers support global sales, international sales. so this is great for us. service jobs and back-office -- back office jobs helps strengthen our ohio economy. the interest in avoiding taxation is when you look the new regulations. we saw if businesses were able to compete, they tend to do well. with more money, back into the country because of that and we stopped inversions altogether. we were wringing our hands about and being concerned about companies becoming foreign companies to avoid taxes, we shut them down. i think what you're doing with these new regulations is drawing us in the wrong direction and back to where we were not competitive. i appreciate you've indicated you want to make changes while upholding a portion of the rules, but i also understand you won't be amending the rules with the ability on taxes or services. that's a lot of what we do in this country. my question to you would be do you agree we want to have global competition in america with jobs here and taking advantage of what the global community does which is tax credits for services or are we just on a different philosophical plane here? second, would you be willing to take a look at these regulations as they relate to services particularly to jobs here and further applications for withholding taxes on services. sec. yellen: let me say first of course we will look at any concrete suggestions you have and will work with you. we understand there are concerns about these regulations and we certainly will revisit them and look at comments. philosophically let me say we think that these regulations are very important to protect critical interests of the united states. the fundamental principle is we should allow credit for foreign taxes only with a foreign taxing jurisdiction has the primary right to tax the income. what we are seeing around the world are new kinds of taxes like digital service taxes where foreign countries are essentially trying to expand their taxing jurisdiction to extraterritorial taxes and these are taxes that should not be entitled to take the foreign tax credit and if we grant it, we are just encouraging countries to impose taxes that we think in the case of digital services taxes we found them to be unfair trade practices. sen. portman: i have limited time. i would disagree on the digital services tax. i understand your position on that and i share your position on companies unfairly targeted. i'm talking about withholding taxes. i think it's important we have final regulations that have received notice and comment from american workers and american companies because it's very different than the initial regulations in that regard. sec. yellen: we will certainly work with you on that and we are reaching out an understanding with the concerns are. sen. portman: one idea floated is a one-year delay to give us a chance to get the notice and comment and understand it better. sen. wyden: the time has expired. did you want to respond to that secretary? sen. portman: i was just going to say -- sen. portman: i was just going to say -- sec. yellen: changes can be implement it on a retroactive basis. sen. wyden: i very much hope we can get senator casey who has been so patient. senator daines. sen. daines: i do want to talk about inflation. the chairman mentioned that in his opening remarks. it's truly remarkable what's happening with the inflationary hurricane force winds blowing today. it's in the minds of people i serve every day, they are seeing at the gas pump grocery store. see it prices for farmers. the biden administration is attributed those broad-based rapid inflation that began last year to putin. two profiteering, the one thing we have not heard from the administration say is that there may have been a contributing factor with the 1.9 trillion dollar spending package that was passed in march of 2021 by this congress. that we were calling out the concerns of the inflationary pressures would create in the economy, even former obama administration officials, we saw that with larry summers, was also present clint secretary-treasurer. he warned this would spark inflation. he was right. recent federal reserve bank of san francisco research paper titled why is u.s. inflation higher than in other countries. analysts confirmed the strong connection between heightened u.s. inflation and the government spending which was occurring earlier last year. a large portion of that was in the $1.9 trillion package. there was over $1 trillion unspent covid dollars coming in december of 2020, we warned everybody appear you can spend another $1.9 trillion it will have inflationary effect. i've not heard the mr. risch and zany thing about that. i want to allow you the opportunity to set that record straight. do you agree with the san francisco fed that the nearly $2 trillion mark spending package was significant causal factor in the high increasingly broad-based accelerating inflation we've observed in the past year. sec. yellen: we are seeing high inflation and a most all developed countries around the world. they have very different fiscal policies. so it can be the case that the bulk of the inflation that we are experiencing reflects the impact of the arp. sen. daines: was it a causal factor when we had $1 trillion unspent, doing the quick math year about $3 trillion that was put into this economy from december through march of 2021. sec. yellen: i guess the way i see it is when president biden was inaugurated, he inherited an economy with very high unemployment and the congressional budget office and other forecasters were envisioning that this could last for very long time and we had to address the possibility that this could be a downturn to match the great recession. in designing a follow see there are various risks that need to be taken into account. of course inflation was one of them. but the overwhelming risk was that americans would be scarred by the deep and long recession and that they would live over their heads and not be able to feed their families. sen. daines: if there was a forecaster was worried about the high employment on and plummet rates, that forecast was i think massively off and we are seeing now the biggest challenge of course is families cannot afford to keep food and fuel. >> inflation -- there's no question. sen. daines: i want to talk about oecd. we seen china's recent history of noncompliance on international agreements. i'm concerned they won't play by the rules of this agreement. whether they will ever play by the rules when it just becomes a question. here is a question, what makes you confident china won't similarly stonewall efforts in the oecd agreement. in this case backing the sec issues and so forth. sec. yellen: china agreed with 137 countries agreed to comply with these rules. and we expected to do so. but if it fails to do so, this agreement contains an enforcement mechanism that will allow the united states or any other country that is adopted the global minimum to impose taxes on chinese companies that would be the same as if china had lied. so there is a tough enforcement mechanism in this deal and if china does not comply, within the u.s. and other countries where chinese firms do business will be allowed to collect taxes on those chinese firms, on their business outside china that china hypothetically refuses to collect its self. sen. wyden: the time of the gentleman has expired. you are next, i was hoping we could get senator grassley and senator casey, but we have had a number of colleagues coming in. let me ask my colleague from indiana, have you voted? >> i have not. >> i have not either. sen. wyden: we will go with senator grassley and then back to the regular order. sen. grassley: i can't remember if you said anything about corporate greed being the cause of inflation but several members of your political party have in your we have mainstream democratic congressman -- economists reject the greed theory. jason furman called it a sideshow. larry summers said it was a diversionary, benjamin page said it was a red herring and catherine for the washington post refer to it as an inflation conspiracy theory. what is your opinion? this corporate greed explain the broad-based price increases consumers are currently facing? sec. yellen: i see the bulk of inflation as reflecting demand and supply factors and on the supply side we've had huge supply chain issues through the pandemic and shifts in the pattern of consumption away from services and towards goods. we have had a norm is increases in food and energy prices, partly reflecting russia's war on ukraine. sen. grassley: i think you're answering the question in a way i'm glad you answered because i think that rejects the corporate greed argument that we've been hearing. next question, my concern with the current focus on so-called corporate greed is it risks taking us down the failed roads of the 1970's where when we had price controls and windfall profit taxes, these policies led to rampant shortages, most notably gas lines around the block. do you agree neither price controls nor windfall profit tax are viable solutions to inflation and would have serious negative consequences? sec. yellen: i do believe in a strong antitrust policy and that's something that's been a priority of the biden administration, having active competition in markets i think is critical to innovation and to consumer well-being, and so enforcing a strong antitrust policy i think is important. but with respect to the broader inflationary trends, the fed has to play a critical role, i think deficit reduction deserves a complementary role and we've discussed earlier in this hearing ways in which congress can bring down many of the costs of possibly not food and energy, but costs that are burdening americans whether it's prescription drugs, lack of affordable housing. sen. grassley: i think i take your answer as with all the reasons you've given that you are not advocating or thinking price controls or windfall taxes have anything to do with fighting inflation. i will yield back my time because i have to go over and vote. i'll put questions in writing. sen. wyden: just so we're clear for the record, clean energy for america as in this committee according to independent analysts will say families $500. let's see. now we have an order of appearance, senator menendez. sen. menendez: our country is suffering from a mass shooting epidemic, this year alone there been more mass shootings than days in the year. 22 schools of, under gunfire including robb elementary school were 19 children were killed in cold blood along with two teachers buying assault rifle. according to the washington post, more than 311,000 children and 331 schools have experienced gun violence at the school since the 1999 columbine shooting. after decades of republican obstruction to efforts to address this epidemic of school shootings we are now learning the long-term costs of this trauma. researchers at northwestern university found students who are survivors of gun violence at school are less likely to graduate high school and less likely to attend or graduate college. these survivors are less likely to be employed as adults than their peers. and if they are employed, they are likely to earn lasts over the course of their lives. what is the economic cost of allowing the trauma of unabated gun violence in our communities and schools to continue unaddressed. sec. yellen: let me first say i am also horrified by gun violence. what we've seen in recent weeks and over many years. and i do hope congress will take long overdue action and put in place commonsense measures to reduce gun violence. i am not an expert at all on the psychological impact of gun violence on student learning or human capital accumulation, i am not knowledgeable with the study. i do know there is large literature in economics that -- and documents of the events that take place in early life and childhood can have a lifelong impact on life outcomes on labor market outcomes, on psychological well-being. so it only stands to reason that the spread of violence in schools keeps our kids -- and sen. menendez: northwestern university study found students who are survivors of gun violence are less likely to graduate high school, less likely to graduate from college. and more likely to earn lasts over the course of their lives, doesn't that have an economic impact. sec. yellen: of course it has a negative impact on these individuals and on our economy. i don't know what the aggregate size of that is, but it is certainly -- new sen. menendez: the washington post reported the administration was considering canceling $10,000 in federal student loan debt for individuals under 150,000. the same article states it was unclear whether the administration will simultaneously require interest to resume at the end of august when the current pause is scheduled to lapse. consumer financial protection bureau issued a report in april of this year finding 15 million borrowers or 60% of all borrowers that it passed -- had their loans on pauses march 20 have difficulty resuming their student loan payments when the pause is over. are you concerned with economic impact if we turn student loan payments on prematurely? sec. yellen: this is something the administration is weighing what the right policies are here. we are in the middle deliberations on it. -- new >> are people called upon to pay and cannot in default, that is a real consequence as well is in their lives it is a real consequence to the economy. that's what we been urging the president to seriously consider loan forgiveness. a study published by the washington center for equitable growth found over 118 million homes across the united states, a black and to store -- hispanic homeowners visit 10% to 13% higher property tax burden when compared to similarly situated white homeowners. would you agree the federal salt reduction is an important tool to reduce the effects of regressive tax policies to tax relief? sec. yellen: i'm not aware of that study. i will have a look at it. that is something i need to look at. sen. menendez: on the broader proposition if i give people property tax relief and i have a disproportionate number of the university -- property tax owners who ultimately face a greater consequence of higher burdens, than i would assume helping them with that burden gives a type of relief that goes to the benefit not only those families but communities as a whole. sen. wyden: i don't know what this does to the brown kc friendship. but senator brown is next after senator casey has been so patient. sen. brown: we know while the secretary is not saying it's the main driver of inflation, we know a number of american industries, oil, pharmaceuticals, shipping companies and others have used, have used the pandemic and use the war with russia to raise prices and have seen gargantuan profits from a number of those industries and not by accident. let me shift to one of our favorite topics. that's the child tax credit. and earned income tax credit. the work you did, and a public forum when you and commissioner reddick did with chairman wyden's involvement to get the irs advance ttc payments ready to go. we talked about the excitement of that bill passing on march of 2021. by july those checks were going out to 60 million -- to the families of 60 million. we should celebrate that more than we do. it slashed hunger rates by one third. that swam fighting alongside the chairman and others to make sure this gets extended because it's so important. some of criticize the child tax credit for all kinds of things. would extending the child tax credit, ctc has a primary driver of inflation, comment on that and answer question would extending the expansion help families keep up with rising costs. sec. yellen: absolutely it would. the aide this was provided through the child tax credit during the pandemic. and as you mentioned, it reduced property biomes to half and all the elements suggest that the ctc reduced inequality, it increased demand somewhat. consumption in 2021 was opposed to pre-pandemic levels. what that means is families were using additional resources that they got from the ctc to feed their children. did have some marginal impact on food prices, possibly. what's important is fewer kids went hungry. this is just not a significant factor, the child tax credit impacting inflation. there are a lot of things driving inflation. we have had multiple covid variants. we early unexpected the pandemic would ease and we would get back to life as normal. we've had ongoing supply bottlenecks, there are covid related shutdowns all around the world including china from food prices, russia's invasion of ukraine is having dramatic impacts, food prices that have literally nothing to do with the child tax credit, it was a relatively small expenditure, it was spent out over the full year 2021 and it resulted in the dramatic reduction in child poverty and financial security for american families and contributed little. >> in effect, let me shift my last minute or so. the team teamed up with senator warner on an international tax record that would put americans first and would get rid of incentives and the tax that reward companies for moving overseas and ensuring that no companies paid -- international, base pay their fair share. he did great job rallying the world around a plan that would stop this global race to the bottom and put workers first. i commend you and your very apt team on that. why is it important for congress to take action this year on the international tax issue. i would american workers be worse off as the rest of the world move forward in the u.s. is left out. sec. yellen: i think it's an extremely important initiative as one of the leading economies in the globe, given that it's an issue where you're headed. i believe we should do it. and think we need the revenues, it will raise considerable revenues, i think deficit reduction is important. we also need revenues to spend on the wide array of programs with affordable housing or making health insurance more affordable, energy investments will bring down utility bills. we need the revenue to support this investment into support investments in people and making the economy more productive and lowering the burdens of households. sen. wyden: thank you senator brown. particular with senator warner. i thank you for it. >> i will start by thanking you for your enduring commitment to public service yet again taking on a tough job and we are grateful for that. your presence here today in the work you've done. i want to think the chairman and senator brown as well for the work they did to make it possible to have the child tax credit, of the enhanced version of that in place. in my home state of pennsylvania, at 2.2 million families benefited from that reduction in poverty and that reduction occurred as much in rural areas as it did in urban areas. we are grateful for that. i want to ask one or two questions about the tax code and workers. when you compare what the tax code has done as it relates compared to corporations, we know in 2017 the corporate rate went way down from 35 to 21. that drop was about 1.4 trillion dollars over 10 years. but what is not talked about a lot is what workers lost in that tax bill. they lost their ability to deduct moving expenses when a job forces them to relocate, they also lost the deduction for the cost and their union dues. workers can deduct the cost of their union dues but corporations are still permitted to productive -- protected in the cost of running antiunion campaigns for this is an insult to american workers, it should be an insult to every american. it's also an insult and direct contradiction of the 1935 national labor relations act. earlier this year the president 's task force on work organizing and empowerment spoke to these issues. two bills to restore the tax deduction. madam secretary at ask you to respond to this. you agree we need to restore and improve the union dues tax deduction but the 2017 tax bill took away and and the taxpayer subsidization of antiunion campaigns but corporations. = sec. yellen: i do sec. yellen: i do and let me -- sec. yellen: i do and let me say a support with taskforces doing. we look forward to working with you and other members of congress to develop legislative provisions in support of that vision. >> the last question i have is about the code again, in 2017 corporations had their rates cut by the 21% that i mentioned. it would percent right off on their personal taxes, but that same cut was not available to workers. the irs reported by 2017 it had all but stopped auditing taxes of wealthy private business owners. less than .2% of pass-through businesses were audited in 2017 so while they're getting huge tax cuts no one was checking to see if they were paying the taxes they owe. we know the earned income tax credit recipients were five times more likely to be audited then a business owner. so people making $40,000 or less five times more likely to be audited. can you speak to the steps the administration is taken to make sure wealthy business owners pay their fair share of taxes? sec. yellen: it is an appalling stead of to stick set of statistics. we have an enormous tax gap. workers who receive w-2 income pay what is owed the error rates are absolutely tiny and most of the tax gap has to do with high income taxpayers including those who benefit from pass-throughs. that have opaque sources of income. that we know less about. the resources of the irs have been cut to the point where there largely cut back on the complicated audits, the ones that are harder for eyeing -- shine, taxpayers. the fact that such a large share goes to the audit the eei tc is very unfair. i strongly urge congress to approve the $80 billion we requested for the irs to be able to administer -- ensure people are paying the taxes that they do. it is very unfair to workers and lower income households the way things work now. >> you and the secretary of given a little teach in about this double standard in america with respect to audit and it's time to change it. everybody ought to be held accountable and it has to be done in a fair way and the point you made is that's not being done today to the expense of people of modesty. >> thank you for holding the hearing and giving me the chance to ask questions. secretary yellen, a thinker for your service and being here today. speaking of horrible statistics, this country is 38 out of 41 industrialized countries in the world in terms of the scale of our childhood poverty. the poorest people living in the united states are our children and for one brief shining moment, for six months think your efforts and the efforts of your employees at treasury, we expanded the child tax credit based on the bill that i wrote with senator brown, cut child poverty are most in half. benefited 95 90% of the kids in this country, reduced hunger by 25%. it's hard to think of anything that we've done here in generations that is made more of a difference for working families and tragically we let it expire. there were people in the front end of this who said this is a terrible idea and will disincentive eyes people from working. people will use the money for all kinds of illicit purposes. i can tell you madam secretary, people spend the money in colorado on their kids and the list is long, from school supplies to lessons on instruments, to back-to-school clothing. but the one thing everything -- everyone has in common when i asked them what their experience was with the credit is the amount of stress that it relieved from their family. people in colorado live in the same economy is this entire country lives in. it worked well for the top 10% of americans and hasn't worked great for everyone else. washington's response has been to make worse the income inequality by cutting taxes to the tune of about $8 trillion. almost all the benefit of that went to the wealthiest people in the country. it made our deficits worse, our income inequality worse. it's staggering that that we would do. the enhanced earned income track -- tax credit. at the end of the year we turned our backs. the 90% of kids that had the benefit this, i've been here year after year. at midnight on new year's eve on christmas eve, extending tax cuts. we didn't have any trouble extending tax extending tax cuts for the biggest corporations but when we lifted kids out of poverty when all theed stpoudz i have seen -- studies i have seen demonstrated it worked as intended and didn't dust subjectize people from working we cut it off. families were tkwgt dollar 450 a month and my understanding the entphraegs casted about $300 a month. that was more than covered by the tax credit. so the last men inform let me say how grateful i am for consider. and the i.r.s. effort and employees that work for you the heroic effort they put in place it build a system that we do not have to accept the rates of childhood poverty as a permanent feature of every democracy and that was thanks it the work kwr folks did. i would love to hear consider reflection on these tax credits on children and families and what is your general reaction. >> you have spoken eloquently of the benefits of the child tax credit. i completely agree with your comments. it cut childhood poverty dramatically and gave themes a little bit of breathing room and help testimony afford knew treasures food and clothing and played a critical role. i think you know the president has repeatedly said he strongly supports extension and would love it see conditioning enact that. it has made a huge difference itten quality. i feel very proud of the work that treasury and i.r.s. was able to do to get this money out and do everything we possibly could to ensure that nonfilers, all the many households that that were not required it filed tax raoeurpbs to make sure they received the credit. i would -- we have been talking about investments in the i.r.s. one thing that investments in the i.r.s. would do would make sure the i.r.s. has the modern tools it needs when we've tax credits lake that it make sure they go it the families that deserve it whether at the file taxes or not. >> i thank my colleague. the secretary has a hard 107 of 12:45. i think we're in good shap 2 achieve that. in connection in alone would be senator warn. i will run and vote and come back and if senator has conditions can char in my absence. >> thank you for being with us, mad document secretary. today's hearing focuses on the budget and thanks it a 1-2 punch from republican budget cuts and the i.r.s. is 12:00 with 1970's computers and that costs honest hard working americans a the lots of grief the average american spends about 1 hours and $240 every year to file their taxes it. sure, some people have complicated taxes that tack time but for maybe half of americans techniqueses can be as easy as looking at a form the i.r.s. has shown the w-2 and 1099 income and using the credits you owe or how big the refunds will be. if you don't agree, check no and fell it out. but the i.r.s. didn't have that program. instead years ago the i.r.s. cut a cool it send tax parse 2 intuit and h&r block and they were supposed it major they tax filings for 70% of american techniques parse. secretary yellin, what percentage of tax parse use free file right now? >> i believe that last year about 4% did. >> so it is supposed it be 70%, turns out it was 4% and you know that is not appear accident. they threubtly sabotage the program and steered people 20 products they can charge inner. companies looken -- like intuit use problems so 24edz to spend more it figure out how were they owed. the f.t.c. has sued intuit over their software and last month the state attorneys general, transacted a settlement for the scams. teams that one ran the g.a.o. said why the i.r.s. develop their own system sag they face mounting risks by relying on the tax prep industry it provide the free services. it sound look the free file has worked out great for corporations look intuit which racked in billions but did you agree the current system is not working for american techniques parse and time for the i.r.s. it develop a free file program and if we can get you the resources will you commit it developing a program that works for american tax expires? >> i'm absolutely agree with the comments that you made about free file. it hasn't worked. we need it develop a new system. there's in reason a modern economy shouldn't have a system that makes it easy for such a large group of tax parse it 2350eu8 their returns. beyond that i would add that it is important that households be able to access the benefits that congress often wants to provide like the earned income tax credit, child tax credit when that was available. economic impicture payments and for srdz this don't have it file tax returns this could be extremely difficult >> i'm still listening to the part if we can get it the resources will you commit it the i.r.l. will build its own free fail program and make it valuable? >> we are certainly looking into it but i want to make a point which is that the i.r.s. is under siege. it is suffering from huge underinvestment. it is -- it has master problems it is dealing with. right now to the number one priority is dealing with the back log of tax returns. the i.r.s. right now doesn't have the authority it hire the people in needs to deal with the backlog. >> i'm to the attacking the i.r.s. i'm trying to get you the resources the i.r.s. needs to go after wealthy tax cheats. what i want to know is are we going it fight it get the resources will you commit it build the free file program. >> it is definitely a priority and something we should do and when the i.r.s. is and quitely resourced it is something that will happen. i think it is something we need to do. >> i have a bille reintroduce it that with require you to do this but i want to make clear you could do this if you would make it treasury has the authority now and needs it use it. >> nor, i will defer to you. >> thank you, madam chair. mad tkpl secretary, as succeed know president biden wrote it took telling inflation is the top economic am priority and that is a week development for the president it knack objective. it was not it long ago they were claiming extraordinary increase in cost of living was trance tier t. i know you have respondeded to do but did you review inflation as transitory or do you expect an extended period of raised inplace. >> when i said it would be transitory what i was not patting was a scenario in which we would ends up conditioning with multiple variants of coble that would scramble or economy and global supply chains and i was not,visions is impacts on foods prices it russia's invaluation of ukraine. we could have used a better term than trance tier. there is no question we've huge inflation pressures it inflation is our top economic problem at this point and critical that we address it. so i do expect inflation to remain high although i very much hope it will be coming down now. >> the president's budgets projects in234r5eugs at 4 by 7% for 2022 which seems to be un unrealistic given inflation the first half of the year is well above that rate. has the administration as assumption proved accurate for today or should it be revised higher? jurisdiction we are in the prosecutes of rusting in the first for the mid session review the numbers are not locked in but it is likely it be higher. >> hopefully we won't have it wait long for that the. when does this review come out. >> i'm not sure what the date is. >> there's a couple things the president is suggested it the inflation narrow numbers are the result of ukraine and if you look at the c.p.i. data it was lambly collected before the russian inevaluation. feels he wrong to blame it thaop and do you think it is at all attributable to the overheated economy it was accelerated by the $1.9 trillion part of the spending bill? >> when president biden tack office the united states faced a really horrendous problem in that it was projected that unemployment with stay extremely high for many years. c.b.o. projected unemployment in excess of 9% and he had it decide what was an appropriate policy to address what all of us thought at that time was the greatest risk facing our country, which is that we were seeing cars line up at food banks, people going hungry, people beginning it lose the roofs over their heads >> worried that they would not be able to got jobs and we would have a generation that was scarred by high unemployment. he designed a program in the a.r.p. that not only was intended to address those reservation but succeeded in doing so better than anyone could have anticipated. right now we have about the lowest unemployment rate we have had in persist war history. in a recent federal r survey households have described their financial situations as strong and in a question could you manage it pay an unexpected $400 expense a records of people since that survey started said they could. so we have accomplished a lot. we have the fastest recovery of any developed country. there's no question inflation is too high and has to be addressed. but we are doing that from a situation of strength and of course it is important it bring inflation down. >> i would say that the economic crisis american people are. something this extraordinarily high inflation rate which again it the agree there may have been jobs created and wage increases eaten up the american people are getting a pay cut because if of inflation and gas processes contributing largely it that and i see no strategy out of the administration to do anything it cool with rising guys prices and the $2 trillion boule overhesitated the economy and why we have the most we've today. >> thank you, senator. good afternoon, secretary yellin and welcome. inflation is the number within economic issue i hear and supply chain challenges and peyton's invasion of ukraine have driven up costs and are up straining the budgets of families and small businesses. as one way it lower consists i have led ledge legislation it cut taxes for home owners who upgrade to more efficient appliances. . do you agree that passing champion energy tax cuts as propped to my bill with help her costs for gran night stateers? >> yes, i do. i think various incentives and tax credits that with support clean energy are critical was in which we can help lower middle income families cut their cost. off set price pressures and address khrauplt change and reduce our dependence on fossil fuels and global oil markets are geopolitical reservation are often causing spooks in oil prices that if we were more didn't on the sun and one-hand we will not face this. >> thank you. in 2020 i helped lead a successful bipartisan. it ensure all small businesses struggling in the pandemic will access it tax cuts but i have heard from small businesses position hatch -- hatch new hampshire what is prosecution doing it clear the back log of the claims and ensure that small businesses receiver this tax relief as soon as they can? >> i'm aware of this problem and whether i can tell you is that i.r.s. is receiver as dill skwrpbltly as it can if clear what is a huge pandemic related backlog. things that are filed in paper i.r.s. is still in the prosecutes of opening these. i think a hrltd of these employee retention tax credit filings were paper fillings that are part of informed backlog. so, i think that is partly responsible for the delays. i think there will not be penalties for situations that arise where additional income tax may be owed and taxpayer is waiting for this refund payment to be able to pay taxes owed, penalties will be waived. i know that the i.r.s. has issued system guidance and told the filers they may be eligible for releave. it is a very regrettable situation and i.r.s. is working as rapidly as they can to solve. i will keep encouraging i.r.s. to work as quickly as they can and won't have to make sure the i.t. systems are modernized and i.r.s. has the staffing it needs. >> this is really a reflection of decades of underfunding and it is frankly amazing that the i.r.s. is able to do as much as they can getting out child tax credit payments and chick impact paplgts. >> i understand that but i will continue it push on this because i was talking it with a small business on saturday on the edge waiting for this. let me talk about one other thing which is russian gold reserves. vladimir putin has stockpiled billions of dollars in gold it unfluctuate the russian economy. i would like it thank treasury from heeding the call to ensure u.s. sanctions freeze their assets. can you update us on that attempt by putin it prop up russian economy by selling off his gold stockpile? >> there is an important matter and we have issued guidance that goaltend related issues with russian may be sanction 35b8 under the president's executive order and we are khostly monitoring any efforts that we can see to circumvent our russia related sanctions through the use of gold. >> thank you very much. thank you, mr. chair. >> thank you, madame secretary. thank you for being here to testify. things have gotten worse since the last tame you many testified. inflation is a 40-year anaheim packeting americans. when president biden took office the price of a equal of stkwas $2.38. today it is $4 by 92. this memorial day was very expensive for people to travel p. my home state rural areas people who volunteer it drive for meals on wheels have had to stop volunteering not bags they don't have the time or heart but they don't have the money for the gas. that is the number one issue. a few weeks ago wet the interior secretary testify i asked if she thought gas prices were too she. she didn't think it was an easy question. didn't have an answer. did you think that gas price respect too high? >> absolutely. >> the people of wyoming and americans agree on the question is what are we going to do about it. in your proposals as part of the propped tax hikes you specifically target u.s. energy production. the administration trying to end oil and guess exploration and gas approximate on federal lands. it announced a sue and settlement with environmental extremists that calls into question millions of acres of leasts including 2,000 leases in my him state of wyoming. some of them have been let 2015 item through the end of the last administration. the president will his op ed in the waupbl "wall street journal" said we need to take every 10 to make it more affordable but tax hikes will make it worse. making it more expensive it produce american energy with lead it higher prices for consumers. once that centering produced it needs to be transported and gas stations. pipelines are an important piece of that but on cnbc last week you suggested they don't in matter. on one hand both you and the president say gas prices are too high but you target american energy with taxes resulting in higher costs for americans is suns you agree the price respect high can you explain the inconsistency with the many policy of the department of prosecution and segregation? >> i would say as a medium term matter the way it reduce prices for americans is promote credits energy policy that boosts the production of renewables that will reduce our dependence on global oil markets where gee yes politicalle factors can cause energy prices to spike as we are seeing with russia and the kroeupbl and can lower utility prices for americans. in the short run before that happens we have high prices as you pointed out for oil. i believe that producers are sitting on 37 million acres of land under lease from which they can drill and produce additional oil and high prices are motivation to do that. so, we do need additionaloil. the prices americans pay are influenced by what happens in global markets so i'm promoting the production of additional global oil to help relieve supply shortages in the global market but it won't completely stimulate americans from global oil market prosecution in the short run. >> i would point out in addition it the leases you need the per manages it drill and this administration has blocked that and this sue and settle agreement is taking many of those 5eurbgs and freezing this will so they cannot be used and with $5 gas is the president calling on using the defense production act to build solar panels and that seems the wrong plus to use that. i would point out, mr. chairman yesterday's adds front partly sunny story picture of you and the president of the united states yesterday "u.s.a. today" headline small risk of unnation swelled to a global threat underneath white house waved off economists' warnings and they quiet you from abc march of 2021 is there a risk of inflation. you responded i think there's a small risk. this is with regard to signing the american rescue plan and i think it is millionable. given tax that makes me wonder why americans should put think confidence in your pronouncements and recommendations today. thank you, manager. >> thank you very much. madam secretary good to have you with us it is the end of a long morning for you. in january of 2021 more than a year ago we passed the beneficial ownership legislation that the senator was a champion of and passed with strong bipartisan support. a lot of time has gone by and aware still waiting for the rule it come out of treasury. i just helped get you tkhraurp 22 million in additional funding to help accomplish that. meantime because there's in rule tax justice has put america at the top of the american secrecy index number one. can you tell us anything about when you're going to be condition with the beneficial ownership rule? it has been over a year. >> last december a notice was purchased r -- was published of the reporting requirement and that is the first rulemaking. the second will govern access to the beneficial owner information system and that will be published certainly this year. we appreciate the extra funding but to fully implement this we will in the fiscal 2023 we need full funding for building of this data base but away appreciate the funds that were in the ukraine supplemental effective implementation of the corporate transparency act is really top priority and is getting our full tanks. >> if you can instruct your people it pick up the pace that would be helpful. it has been a year since the regs were specified to be accomplished and there different rules are necessary and only one has on been proposed. so there's a the -- there's a lot of room for improvement and i help you will see to that. the other topic we talk with is is the problem of the 501c's. you have created that the political dark money at the is a problem for our country and you have said that you will give it serious review and study:i want to flag it for you because i'm in the seeing the serious review or study. the problems are specific. you have a why 3 and c4 that are indishable. they have the same office, staff, board chief executive and it is just a fanciful distinction. in my wourld call technical piercing the current valley. this is one you can pierce with a bad none. this is not legit. to look into that i think is well worth doing. the other issue is the so-called 50% limit. the 5% limit is ignored by circles of affiliated nominal corporations so that if somebody makes a donation to one they can then spend 50% on politics and put the other 50% to an affiliated organization which spends 5% of it on politics and puts the remainder to another affiliated organization. if you have just if you are of those organizations working in concert together you are over 90% of the donor's money going for political advertising and that's not what the rule intended. i think the i.r.s. is not looking at these essentially phony set-ups that are allowing the anonymous folks it get around the letter and intent of the law succeed again please serious review and serious study i think are in order. what we have had in the mean r meet has been a false narrative blown up byer your own inspector none r general that this was a wicked target against conservatives and an e-new orleans propaganda effort was done but we are living with the after-as a matter of fact and nobody is telling the truth in the treasury department about what happened and how the system is being gained by unbe distinguishables 501c. in r 3 east of so you can spend it all. on politics instead of the nominal 50%. so so if you can look at that i would be grateful. could you understand that. >> i understand the importance of this issue and agree we absolutely need to get dark money out of politics. we will work with you to try to do that t. >> if we can look at those specific things that would be helpful. >> members, you have a week to submit written questions and we will have you out the door early and just one thought on coasting. it seems we are closing where we began which is that congress has a big role to play in cutting costs which helps to cut inflation. we talked about prescription drugs. that is key. medical expenses are gobbling up everything in sight and most of the areas that we are talking about mean you have tackle some very entrenched interests. it seems nobody in america that i meet is saying gee, medicines care shouldn't negotiate to hold down the cost of medicine. the biden administration, colleagues on this side say of course you ought to negotiate for these expense serve drugs, cancer drugs. same many with clean energy for america. what we said to hold down energy cost is we will take those 4r provisions in the tax code on energy and throw them in the treasure can and say that for the future it will be about clean energy and transportation and it energy efficiency and we will say we will have a technology neutral market oriented system where the more that you reduce carbon emusts the more the savings but both in health care and energy you will have it take onning about interests it cut consists. that is why i'm so glad you kept putting it right back at us because i think this is what we have to focus on. we talked about some administrative overhead that can be cut. i saw over the break people in the housing business say that would be beneficial and i want to thank you for being out this day after day saying everybody has to be part of this effort. the executive branch, biden administration will be, you told conditioning you can show up and help cut cost. i want to say as you leave i'm all in and look forward to working with and we'll excuse you. >> thank you, chairman. i look forward to working with you. >> the house begins debate on gun violence bills in response to the school shooting in aou valid, texas. one increases the age limit from 18 it 21 and another provision creates red flag laws to allow officials it take someone's guns if a judge declares them to be a drank and bans with respect stocks that allows semiautomatic guns to fire faster. follow c-span or stream online with c-span.org. after months of investigations the house january 6 committee is set to go public tune in as they question key witnesses about what transpired and with why during the assault on the capitol. watch beginning thursday 8:00 p.m. eastern on espn, or espn.org. c-span, your unfiltered view of government. in >> c-span is your unfurthered view of government funded by these including charter communications. broad band is a force and why charter invest shrd billions to ball infrastructure empowering opportunity and communities big and small. charter sr. connecting us. >> charter communication supports c-span as a public service with these or television providers giving you a front row seat to democracy. >> members of the texas congressional delegation gathered on the house floor to recognize the victims of the school shooting in aou you valid and they then had a moment of silence. >> may 24, 202219 children and two teachers were killed at robb elementary. my district had a reflection of every mall town as i rise with my fellow texans to honor the victims i'm ranked of matthew 54 blessed are those that more than for they should be comforted. i pray for

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