Debt limit and potential tax breaks for highincome taxpayers. This hearing is just over 90 minutes. Ill call to order this hearing for budget and revenue proposals. Good morning and welcome to our hearing on the president s fiscal year 2018 budget and revenue proposals. I want to thank you, mr. Secretary, for agreeing to testify today on the budget. Your agency, the department of treasury, as responsibility for fostering our nations Economic Growth and ensuring fiscal stability across our financial system. Our countrys growing debt and underperforming economy should be front and center in these conversations. America is faced with a mammoth nation debt that is over a patrol dollars and an economy thats holding back growth. We had a modest 2 rait over the next 30 years pro protections doubled from 77 in 2017 to 150 in 2047. In order for congress to tackle this enormous fiscal challenge it must reduce spending and ensure outlay growth does not outpace our economy. But wels must focus on the other critical part of the equation, growing our gross domestic product. Ive suggested including longterm debt to gdp targets in the federal budget process which would provide key goals and bench marks for the budgets of both congress and the president. If baseline projections do not comply with these targets, the administration would need to submit a plan to bring the current law projections back into compliance. Congress will be asked to raise the debt ceiling again this year to cover spending thats already obligated or essentially already spent. We must also prioritize changing the trajectory of our overspending. The administration has proposed a budget that balances and its been years since the white house has even attempted to accomplish that be goal, but Congress Must implement these reductions and deficit spending and Economic Growth policies to put our nation on a better fiscal path. One way to promote Economic Growth is through tax reform that does not increase the debt. Both parties and many administrations have recognized the inefficiencies in our tax code and the negative impact it has on Economic Growth. If we can broaden the business while lowering tax rates and simplify our tax laws, it will help limit government distortion of marketbased decisions, increase investment, and growth of businesses. I appreciate that President Trump and the treasury have identified guiding tax reform principles and want 10 to gauge congress about navigating a path forward. We do need a simpler, fairier, and more transparent tax system. We all agree that tax reform is long overdue and we need to take the steps to reform our tax system while promoting economic and job growth. Im confident that having an administration that set tax reform and stronger Economic Growth has priorities and that has committed to, would with skon gress will allow us to get a bill across the finish line. How the Budget Committee scores a comprehensive overhaul of our tax code is one question well continue to work on with the administration. Past scoring practices do not include the reaction of the general economy to major policy changes. That means lawmakers are only getting a partial picture of how an important policy might actually affect the economy. Dynamic scoring can add missing economic information that static scores do not provide making the score more complete. The joint committee on taxation has multiple Dynamic Models which they combine with different assumptions about Federal Reserve policy and labor supply elas stis sity that produce a range of results. Theyve reason providing these models for decades. In order to provide us with critical information on major policies that can promote growth and theyve consistently recognized the link between taxes and output in the economy. Having the joint Tax Committee select a single best point estimate for congress to weigh against the current law baseline is how we enforce the budget. This committee continues ton discuss how dynamic feedback can be used for enforcement and we welcome input from the administration and the treasury on this matter. Treasury also plays a key role in many of the other growth policies proposed by President Trump, regulatory relief, international trade, incentivizing private investment in the infrastructure to name a few. The zriegs has proposed a financial deregulation plan to rid the Banking System of red tape caused by the dodd frank act and announced to withdraw from the paris climate agreement. Each step gets us closer to 3 Economic Growth which returns our economy to its historic average rate. The Budget Committee sets congress preferred legislative path for growth. I look forward to considering a fiscal year 2018 budget that promotes the economy, creates jobs, and tackles our mammoth National Debt. Thank you for being willing to serve and i thank you for the great people that youve gotten to hip out. Senator sanders. Thank you, mr. Chairman, for holding this important hearing. Mr. Ma mnuchin, welcome. Mr. Chairman, during his campaign for president , donald trump told us that at a time of massive income and wealth and equality, the very, very rich are getting richer, almost everybody else is getting poorer, that he, donald trump, wars going to stand up for the working families of this country. He was going to take on the establishment, and he was especially harsh on his words about wall street greed. He said he was going to drain the swamp. He said, and i quote, we cant fix a rigged system by relying on the people who rigged it in the first place, end of quote. He said, im not going to let wall street get away with murder. Wall street has caused tremendous problems for us, end of quote. Thats an exact quote from donald trump. He included language, pushed language into the republican platform, which i happen to agree with stating, quote, we support reenstating the glass seeing it will act of 1933 which probts commercial banks from engaging in highrisk investment rishd of quote. He said was the only person in america, the only one, who could take on the corrupt political and economic establishment. He said, quote, we are gonna send the special interest packing and we are going to once again have a government of the people, by the people, and for the people, end of quote. Wow. Those are really dramatic statements. Here we have a president who ran hes going to take on wall street. He was going to stand up for the working families of this country. An those words no doubt must have gotten the billionaire class really, really nervous because he was taig saying all these things during the campaign. Unfortunately, as i think most americans understand, all of those words of donald trump were never meant to be taken seriously, it was Just Campaign rhetoric, good rhetoric, i must say, to get votes, but nothing that he ever had any intention of actually implementing. Donald trump talked about draining the swamp, talked about taking out wall street, but he now has more billionaires in his administration than any president in american history. Funny way to take on the establishment by having more billionaires in your administration than any president in american history. His administration, this is the guy whos going to take on wall street is filled with executive after executive from Goldman Sachs, one of the largest, the most powerful Financial Institutions on walling street. His economic advisers gary cone, chief economic adviser gary cone who was the president of Goldman Sachs and the man received 285 million severance package. His treasury wii delighted that your with us today, worked at Goldman Sachs for 17 years. Mr. Chairman, you one of the great scandals of our time which is still impacting millions of americans today is that virtually ever major wall street institution was involved in reckless, irresponsible, and illegal behavior which led to the great crash of 2008 which caused massive unemployment in this country, people lost their homes, people lost their savings. We had Financial Institutions who sold mortgagebacked securities that were worthless while they ripped off lowincome and work families throughout the country. In fact, among virtually every other major financial institution, as a result of their illegal activities Goldman Sachs alone paid a fib of more than 5 billion to the federal government. But instead of reforming wall street, which is what the president said he would do, instead of reinstating glass seeing it he will as he promised he would do during the campaign, President Trump endorsed a bill that passed the house last week that would deregulate wall street increasing the odds of yet another taxpayer bailout even bigger than 2008. Campaign for gls seeing it he will now he is deregulating wall street. In my few of Financial Institutions are too big to fail, they are too big to exist, it is time break them up. Now, mr. Chairman, with a cabinet of billionaires, it should come as no surprise that the budget that President Trump has proposed has been written by the billionaire class and for the billionaire class. Frankly, this budget that we have recently received is the most antiworking class budget, the most destructive budget in the modern history of america. This budget follows in the footsteps of the trump ryan healthcare bill which gives massive tax breaks to the people on top and throws 23 million americans off of health insurance, cuts medicaid by over 800 billion planned parent hood. The trump budget and i hope to be questioning mr. Ma mnuchin about this caused deaf stagt pain to tens of millions of families in our country by cutting nutrition programs, by slashing head start, by making massive cuts to affordable housing, by doing away with programs, life and death programs for working families. But guess what . Ghaes . Guess what . As part of a budget were looking at three billion dollars in tax breaks over a tenyear period to the top 1 . So the very rich get richer, working class in this country is shrinking roar trump budget gives unbelievable tax breaks to the wealthiest family in this country. It is immoral budget, it is a budgeting that must be defeated by the United States congress. So mr. Chairman, thank you for holding this hearing, theres a lot to discuss and i look forward to chatting with mr. Ma mnuchin on some of these issues. Thank you, senator sanders. Ill now introduce our witness. Our witness today is the honorable steve ma mnuchin, the secretary of the United States treasury. Secretary has a remarkable career including being a partner and chief Information Officer at the Goldman Sachs group, founder and ceo of the 1 west bank group and founder, chairman and koechlt of dune capital management. Prior to being sworn in he was a senior economic adviser to then president elect trump and finance chairman for his campaign. Apart from his professional roles, secretary ma mnuchin has been committed to various fill lan tlopic and charitable cause. Those cause include the ucla Health System board, la Police Foundation and Sculpture Garden right here in drks d. C. Just to name a few. Thank you for taking your time to be with us today and for being willing to serve. We look forward to receiving your testimony. Please begin. Thank you very much. Chairman enzi, Ranking Member sanders and members of the committee, its an honor to be here with you today. I am looking forward to working with members of congress in this committee on passing important legislation for American People. My number one priority as pressurery secretary is creating sustainable Economic Growth for all americans. The best way to achieve this is through a combination of tax reform, regulatory relief, and protecting taxpayers. Th this also includes making difficult decisions with are the respect to our budget. We are bearing the cost of ek excess government commitments of previous years and this has forced us into hard choices. But the remarkable thing about Economic Growth is that it builds on itself. If we develop the right policies today, our children and grandchildren will reap the benefits of an evergrowing economy. Indeed, in the next ten years if we return to the modern historic average of about 3 annual gdp, our economy would grow by trillions of dollars. This will be meaningful to every man, woman, and child in this country and future generations. Tax reform will play a major real in our campaign for growth. It has been more than 30 years since we have had comprehensive tax reform in this country. This administration is committed to changing that. We have over 100 people working at treasury on this issue. We are working diligently to bring tax relief to lower and middle income americans as well as make American Business competitive again. All of this comes as we simplify the tax code and make it easier for hardworking americans to file their returns. Finally wroir li finally, i would like to speak about the importance of free and Fair International trade. Trade deals that disadvantage American Workers and business can hardly be considered either free or fair. A in metings with my International Counterparts i have stressed this dual importance. Just three weeks ago i had productive meetings with the finance ministers of the g7 and earlier i met with members of the imf and world bank. They understand our concerns and we have approached our International Dialogue with a renewed spifrt mutual understanding. In the president s joint session to congress he spoke about the marvels that this country is capable of when its citizens are set free to pursue their visions. Fundamental to that freedom is removing imprudent regulation and uncompetitive taxes from blocking their way. This has been a significant few months at treasury. We have been studying, developing, and implementing policies that will put this country on the path toward sustained Economic Growth. In the current months we will work with this committee and congress and what we will look back on is an important time for this nations economy and our history. Thank you and i look forward answering your questions today. Thank you, mr. Secretary. S we turn to questions, let me take a minute to explain the process for the committee members. Each member will have five minutes for questions beginning with myself and then senator sanders. Following the two of us, well alternate questions between republicans and the minority. All members who are in attendance when the hearing began will be recognized in order of seniority. Those who arrived after it began in order of arrival. Ill begin with my questions. Mr. Secretary, the original estimate for exhaustion of extraordinary measures was for the fall for the debt limit but theres been an interest in raising or suspending the debt ceiling prior to the august recess. You can give us an update on when the debt limit needs to be addressed . Sure. Thank you very much, mr. Chairman. First, let me say as i notified. My strong preference is for the house and the senate to address this as soon as possible and my preference is for you to do this before you leave for the august recess. I think that the u. S. Drollar i the reserve currency in the world. We have the strongest credit and we need to maintain that. So i would urge you and the house to do this. In regards to the specific timing, we do have plans, if you dont do it before hand that we can fund the government through september when you get back, but, again, i urge given the importance of this, that we send a message to the rest of the world and to the markets that we take our credit very seriously. Thank you. The president s budget assumes deficit neutral tax reform and provides Core Principles for discussions with congress. It assumes that more efficient tax code can get our economy growing again. You can expand on the administrations view on tax reform and Economic Growth . Sure. Let me first say that fundamentally we believe that we can get back to 3 sustained Economic Growth. Thats not this year and thats not next year, but we can get there and thats going to be a combination through tax reform, regulatory relief, and trade. On the tax side, our fundamental principles are when we need to simplify personal taxes, cut down the number of brackets, cut down special interest deductions and make it is so that mofts americans can fill out their tax returns on a large postcard. On the business side, we have a very uncompetitive system. Our taxes are some of the highest in the world. We tax our companies or worldwide income. We have a schl deferral which leaves our companies to leave trillions of dollars offshore. We wont r want to correct that and we want to bring back trillions of dollars so it can be invested here in america to create american jobs. Thank you. Which which say good leadin to my next question in 2012 i introduced the United States job creation and International Tax reform act that would help fix our tax code and promote u. S. Economic and job growth. Bill could modernize our tax rules and make them more certain so u. S. Companies are not at a competitive u. S. Advantage with foreign companies. It would get American Companies incentives to create jobs in the United States and undertake activities here at home so they could win globally. It would urge u. S. Companies to develop and keep rights to their ideas and inventions in the United States rather than ship thechl them offshore. Do you agree that our current International Tax system is outdated and places u. S. Companies at a competitive disadvantage, that our system should move forward towards a territorial system . Yes, mr. Chairman. First of all, let me applaud you on the work that youve done and weve studied this as we look forward to tax reform. I completely agree that the system is outdated. We havent had tax reform for 30 years, thats way too long. And, yes, i also agree that we should be moving to a territorial system. Our worldwide system encourages kmz to leave their money abrud as opposed to bringing it home. Thank you. I also am hoping that as we do the Corporate Tax reform we keep in mind those thousands and thousands of Small Business that are passthrough businesses so that we can keep it fair for both. But i know that youll have some questions about state tax and i have a lot of ranchers, farmers, small and mediumsize businesses in my home state of wyoming and i believe the families caused by attacks on atax. Had they earned it they paid for it when they die they have to pay again. We should free americans from the burden of the death tax allowing them to preserve the livelihoods for their families and future again ragsz. Does the Administration Share this view and how does it plan to address that tax reform . Yes, mr. Chairman we do share your concern. We believe that americans should be taxed once and not twice that the death tax is unfair and especially for those Family Businesses that want to continue on and have been a large engine of driving growth in this country. Thank you. I appreciate the brevity of your answers as well. Senator sanders. Senator chairman, thank you. Thank you for leading me right into the question i wanted to begin with. We have a little bit kirch fake on. Purchase magazine mnuchin, as you know, the estate tax applies only to the top twoteths of 1 . 99 of americans will not gain a nickel if the state tax were repealed. So pli my first question is why do you think at a time when the middle class is shrinking and millions of our families are struggling struggling to put bread on the table, people are working three jobs, why did you think its a good idea to throw 23 Million People off of health insurance, to cut nutrition programs for lowincome, pregnant women and their babies, why do you think its a good idea to make massive cuts in lie heap so that older people in vermont can say warm in the wintertime, why do you think its a good idea when all over this country people are paying 50 , you 60 of their ib come for housing why do you think its a good idea to make massive cuts in those programs and yet with repealing the state estate tax give the wealthiest family in this country, the Walton Family, up to a 52 billion tax break . Do you think most americans who are struggling think its a great idea to cut programs that impact working families and give unbelievable tax breaks to the wealthiest families in america . Thank you for your question. Receipt me first assure that you as part of tax reform the president very much wants us to have a middle income tax cut thats focused on spurring the economy. Now, as it relates to the estate tax, the super rich have plenty of gimmicks so that they dont need to pay the estate tax. This is about eliminating the estate tax so that americans who have built businesses and cre e created jobs and want to pass those companies on and continue their farms and industry dont have to sell those businesses to pay the death tax. Thats not what its about. My good friend chairman enzi mentioned ranchers and farmers and were all concerned about it. Last study 50, 50, ranchers and farmers maybe impacted. But this is really about, or we should be honest about it, is that people like the Koch Brothers, second wealth yefts family in america, have spent hundreds and hundreds of millions of dloorz get benefits like this. Ooh do you really think had you talk about families like the Koch Brothers and the Walton Family and by the way the trump family who would get Something Like a 4 billion tax break, do you really think that it makes sense, again, to cut programs that people desperately need, need to stay alive and give massive tax breaks to the children of the wealthiest family in this country . Well, im not going to comment on the specifics of the waltons or the cokes, im sure theyve done plenty of Estate Planning and theyve both been very fill lan tlopic in their charitable contributions. What this budget is about and our tax reform is about creating 3 growth. And what this budget is about is send a message that, one, the Trump Administration believes we should have a balanced budget and, two, weve made very difficult decisions and i understand some of those programs i agree with are great worthy but weve made very difficult zoigsz funtd military to protect americans. I apologize for disrupt u interrupting we just dont have a lot of time. You made difficult decisions to give tax breaks to multibillionaires and to cut programs for working families. I dont think those are difficult decisions, think those are immoral decisions. Let me ask you another question. President Trump Campaigned on the fact that he was going to take on wall street, he supported a 21st Century Glass seeing it he will act, thats what he said during the campaign put just recently introduced a report on wall street reform. You can tell me where i could find the establishment of a 21st Century Glass steegel act . What page might i find that at . First of all, let me comment that i think, as you know, i had the pleasure of traveling the country with the president during the campaign. I met with hundreds an hundreds of small and mediumsize businesses. During the campaign we specifically said that we believed in a 21st Century Glass steegel. That was differentiated from what was the Republican Party view of glass well, let me get this right. I dont mean to interrupt. You are interrupting me youre not let egg me finish my dment. But i have very limited time and what youre saying is the language that trump put into the republican platform is not really the language that he believed in. Again, let me be clear. The president did not put everything into the republican platform. There was the republican platform and there was the trump position, which i was very involved in and i had the pleasure of speaking to senator warren about this when i testified several weeks ago and i followed up with her office and had a personal meeting with her. And i explained to her the difference between what we had thought of as a 21st Century Glass steegel and made it very clear in my last testimony in front of the senate that the president did not support breaking up big banks. We think that that would hurt the economy, that would ruin liquid in the market. What we are focused on is safe and prudent regulation for the large banks so we dont have taxpayer risk. In other words, the campaign, the Trump Campaign campaigned only reinstating glass steegel. No, it did not. It never campaigned on that, senator. Just put it into the platform, i stand corrected. As i had said to senator warren, if we had believed in it we would not have labeled. 21st century thats the name of legislation right now, as you know. I understand that and thats an unfortunate coincidence. Right. Senator crapo. Thank you, mr. Chairman and secretary ma mnuchin i appreciate you being here. I dont know ive ever seen a secretary of the treasury who whats been more willing to engage with congress whether its at testimony in hearings or coming out as i indicated meet id havely with senators or dmit tease and working with us to achieve the objectives that we agree need to be achieved so thank you for that. Thank you. With regard to your i want to quickly highlight something. You indicate that had the budget that you are working on assumes 2. 9 growth over ten years; is that correct . That is correct. Thats significantly what president obama used in his original budget of 4 growth as i might point out. That was going to be my question. 4 by way of comparison, president obama has assumed almost a percent of growth higher for the first four years of his budget, and and something you already said but just context i would like to get this out as well, a 3 growth rate, to seek a 3 growth rate for our country is not a unusual thing. Its higher than that. Thats what i thought. N let me move for the remainingha time that i have, the one that was referenced by senator sanders. T i was very cleared to see this report come out. Youve been tasked by the president and others have beenas working to analyze our regulatory system which i believe is becoming one of the biggest drains on our ability to achieve Economic Growth. The Regulatory Burden is estimated by some groups to be 1. 8 trillion of cost to our economy on a years basis, thats not a tenyear summary. Thats a yearliest mate. I appreciate the report you issued. A this report is an important step in the effort to evaluate effectiveness of post crisis regulatory regimes and i commend the excellent work youve done. Includes a plethora, stress testing, living wills and while im still going through the report, im encouraged by the reports recognition that rules need to be better tailored to reflect the size and complexity of Business Models of the business that is are regulated. Can you talk a little bit about the need to tailor and give examples to us maybe of rules that can be more effectively tailored to reduce the overwhelming compliance, burdens that institutions are facing . O burdens that are institutions in america are facing . Thank you very much, senator. First let me comment i think its been a significant a. Time since dodd frank was passed and there are legss on learned add the good news is that our Banking System is 2340u sufficiently capitalized. Our overarching theme is that we want to make sure that Community Banks, Credit Unions, and regional banks can grow properly. The top 8 gsivs account for 50 of the assets in the u. S. Banking system. While over 12,000 regional banks and Community Banks and Credit Unions make up the rest. Those are not the banks that are putting our system at risk. So we want to make sure that the regulations are ta lord, that small Community Banks dont have undue burdens of regulation, that they can afford to lend to small and mediumsize businesses. They understand how to make credit decisions, they understand community banking, and the primary focus of the report is around that sector of banking. Well thank you very much for that. With regard to last congress there therewas some bipartisan support for change the singlethy threshold and the application of enhanced prudential standards. If congress had some noncomplex regional banks and streamlined the requirements for other banks, how would that impact broader Economic Growth . We think that critical to Economic Growth and we think thats also critical to not having the large banks entirely fund the u. S. Economy and have a situation where we dont put taxpayers at risk. So, as id said earlier, part of our mission is getting to 3 growth tax reform, Regulatory Reform and trade. And our part of Regulatory Reform is around financial services. So thank you. Thank you. One last question. Report makes a number of recommendations to simplify and clarify the requirements of the vul ker rule and encure the rule is applied in a more tashlged fashion. You can discuss the costs and difficulties institutions have had trying to comply with the rule in its current form and how simplifying it can help spur Economic Growth . So let me just say i dont think the vul ker rule is what created the financial crisis and i know that chairman hench linger and the repeal act which we look forward to you working with him on additional legislation. Our main focus is what can we get done to fix it right now. And ive already been working with fsok members and our biggest concern is that we want to make sure that Market Makers can provide liquid iltty and market make and were going to work with the different regulators around the definition of the rule not to allow proprietary trading within these banks but to make sure that proper marketmaking function dos occur. I was recently at the g7 and one of the economists spoke on this and they said banks trading desks needed a lawyer and psychiatrist to sit there and interpret what a trader was doing to be in compliance. Thank you. Senator wyden, having questioned the witness at the finance committee and here. Yes. Thank you. Mr. Chairman. Mr. Secretary, i thought it was very unfortunate yesterday, and i listened to what amounts to a multipa nocio performance with respect to the ma mnuchin rule, and i want to walk this through carefully. Ten days ago you repeated in an interview the comment that you had made earlier on cnbc, that was your statement there would be no absolute tax cut for the wealthy. And, as you know, in the finance committee when i heard that i said, that sounds good. Were going to call it the ma mnuchin rule. You picked up on that in that recent interview when you said, i felt i was in Great Company with the buffett rule and the vul ker rule, now theres a ma mnuchin rule. Had you a real sense of pride that there was something called the mnuchin rule which said there would be no absolute tax cut for the wealthy. Yesterday you walked that back in the House Appropriations committee. You said, and i quote, that now the mnuchin rule is an objective. Maybe it will happen, maybe it wont, but it was no longer a pledge, no longer a commitment, and then regrettably you went on to say that the president wouldnt veto a massive tax break for the wealthy. So it seems to me there was a very substantial retreat yesterday from what, a, you said, b, you said there would be a mnuchin rule with no absolute tax cut for the wealthy. So my question to you is, will you reverse course again and return to your original commitment that is part of tax reform there will be no absolute tax cut for the wealthy . So, first, its a pleasuretor see you and i look forward to working on tax reform with you. And i am honored that you named a rule for me, as ive said before in several these testimonys. I didnt make this is a rule, you made as it a rule. Yes, in my first cnbc interview, and ive been through this now several times, i did comment that that was what we were trying to do. And that was the objective of the president. We are working closely with the house and the senate on trying to get tax reform done because its been too long. And as ive said in the past, that our objective is to create a milled income tax cut no, mr. Secretary, you made a commitment that there would be no absolute tax cut for the wealthy. And yesterday you changed that. You said we have an objective to do that. So maybe it will happen, maybe it wont. Tell me why you changed from something, a, you said, and, b, you took great pride in when thats the way we developed it in the finance committee. It was based on your words, thats why i thought it was promising and now it looks to me like its basically been set aside. First of all, weve had several conversations on this so ive testified on this now at least three or four times and ive clarified this three or four times. Yesterday was nothing new. So let me first say again, i am quite honored that i am in good company with other people who have rules. So the second thing i would say is, our focus is on getting tax reform done. To get tax reform done, its my job to figure out what meets the president s objective, what meets the house and the senate so that we can get something signed into law. And there will be compromises along the way on this. So, yes, you made it a rule, i didnt make it a rule, i was honored that you named it. No, no, mr. Secretary, you took great i said you took great pride as we repeated what you said and you, again, ten days ago referenced the original comment by saying it on cnbc. You are the one who has walked it back. Nobody else has walked it back, you are the one who walked it back. I have walked it back from my cnbc interview which i think was in january. But weve had the opportunity to talk about this several times and, again, i look forward to coming to your office and talking about tax reform and, again, tax reform at the end of the day, the president will evaluate whats on his desk and hell make a decision whether he wants to sign it or not. My objective is to deliver tax reforms that we can get the economy back going. And as ive said before, our focus is on reducing and creating taxes for the middle class. Now, i just will comment one thing. My time it up and i just want to close with one point. Okay. I think my colleagues especially on the finance committee know that i have a smeshl commitment to bipartisan tax reform. Ive written what are the only two complete bipartisan tax reforms since 86. We will not get bipartisan tax reform when the secretary of treasury walks back a pledge to have no absolute tax cut for the wealthy. We need tax reform which is what our colleagues including dan coats most recently now the director of National Intelligence agreed to is we had tax reform that gave everybody in america the chance to get ahead. Thats why we got bipartisan proposals, can he didnt get them because the seskt treasury walked about pledges. Thank you, mr. Chairman. Well, when we have the final a plan thats more than the one i will say i continue to get hammered by the new york and california contingency who assures me there will be tax increases fbi proposed plan. I look forward going back to two proposals to make sure there are no breaks for the rich as se well. Senator tomey. Thank you, mr. Chairman. I would like to echo comment about accessibility and interaction can members of the senate in a variety of settings, we appreciate that, secretary mnuchin, so welcome back. I would like to stress your emphasis on Economic Growth. I think youre right and essential. Misguided policies in the last eight years have gave us thegh weakest recovery since the Great Depression and the u. S. Economy can give measure 2 meager points. Some problems cant be involved unless the economy is booming and when the economy is booming and i think this is an important point and its unfortunate that our Ranking Member has left because i think some of our friends on the other side of th ill like to suggest that youre mission is to reduce spending on various welfare programs in order to give a tax cut to wealthy people. Thats what theyd like to say when in fact, if we get tax reform right, we are going to have so much more growth that far fewer people will need the welfare programs because theyl have jobs and have higher wages and they wont need these programs to the same degree and i think that should be the goal and so if you take a moment, doe you agree that the fundamental dynamic here is stronger Economic Growth diminishes the extent to which people have toyn fend on these programs . People have to depend on these programs . I agree with you completely, senator, not only does it diminish their need, but it creates opportunities for people who have left the workforce because they cant find jobs. Although the Unemployment Rate is one of the lowest its been in very long periods of time, theres a lot of people who have left the workforce. And if you take into account other numbers, were actually closer to an 8. 5 or 9 Unemployment Rate. So were committed to creating good paying jobs and other jobs that people havent had good job wake increases can see that. And many economic studies show that more than 70 of the burden of Corporate Taxes are passed on to the workers. Right. So our objective to fichlt Corporate Tax system is good helping American Workers. Absolutely. So lets talk a little bit about how we get there. Part of getting there is to have a really progrowth tax code instead of this terrible tax code that we have flou. I would also suggest that the 800 billion in tax increases that president obama gave us that have nothing to do with obamacare, theyre still with us, thats still a drag on our economy. And, as you know, federal tax revenue as a percentage of our total economy is above its historical average. Its my view that we dont need to permanently lock in those tax increases and we shouldnt do so. Its also my view, and i know you shared this view, that it would be just mathematically toe into account the tax revenue surge that comes from a bigger economy. That growth, that extra economic output is all taxed and so we need to dynamically score this. One of my concerns is that our friends at cbo and joint tax, good people who do good work may not take into account as much as many of us do this dynamic feedback. If they dont, then i hope we will acknowledge that the goal should be to maximize growth and get the right tax code, not to be held captive by this score that may not take into account that full growth. So as you know, if our democratic colleagues dont want to work with us on this, we need to use the reconciliation tool that a budget resolution gives us. As you know, any increase in the deficit according to our score keepers outside that budget window is not permitted and so youre in this bind where youre stuck with a temporary tax code, one that has to expire at the end of the budget window. I would like to suggest that you seriously consider a longer budget window than the traditional ten years. As you know the statute simply says the budget window must be at least five years. A permanent tax reform is the best, but it takes bipartisan support and you just heard were not going to get that. So the next best thing is a temporary great tax code but making it long enough that we can actually enjoy the benefits. I would just ask you to comment on and think about a longer budget window so we can have the real tremendous benefits from a progrowth tax code. First, let me just say i am hopeful that we can still get some bipartisan support because the issues were focused on are about creating opportunities for the middle class about simplifying the tax code, about making business competitive so that more americans can have good paying jobs. But as you said, if we cant reconciliation is an alternative and i look forward to working with you and the senate on ideas such as a 20 year window as opposed to a ten year window to explore that and yes we fundamentally agree with you on dynamic scoring. Thank you very much and thank you mr. Chairman. Senator whitehouse. Thank you, chairman. Secretary mnuchin, welcome. We heard your testimony before the finance committee that the president s tax reform plan would be paid for, i quote you here, with Economic Growth and base broadening. On the same day omb director mulvaney said the president s tax reform plan would be deficit neutral without regard to growth, which one of you is accurate . Which will be the plan . So, first let me say that were hard working on tax reform, although we did put out a very short overview. The devils in the details and we hope thats something we can release soon. Answer my question. I understand that. When the budget was done we didnt have tax reform done, so mulvaney didnt have tax reform to put into the budget, okay . Now theres lots of different youll agree with me that whether dynamic scoring is a figurement of the republican imagination or whether its real, you cant count it twice . We have no intention of counting it twice. As i said before, i can assure you that when we come we agree on that absolutely. The budget will be updated with updated projections and there is no intent and obviously we understand math there will be no double counting. I didnt think the dynamic scoring was something that was completely along a republican and democrat line. Pretty close. Theres plenty of democratic economists that support it. Pretty close. Particularly in its unconstrained version. With respect to concern about the deficit, most of the witnesses, if not all of the witnesses that have come before this committee have recognized that spending through the tax code that reduces revenues and gives benefits to either individuals or corporations has just as direct an effect on the deficit as appropriated spending and the tax spending and appropriated spending are from a deficit point of view the same thing. Do you agree with that . Let me just first say, were very concerned about the deficit. Were concerned about the debt having gone from 10 trillion to 20 trillion and yes, we need to make sure that if we have tax reform, which is not just tax cuts but tax reform, that its paid for and accounted for. And if were looking at trying to bring the deficit down, it would be important to close lets say it would be valuable with regard to deficit reduction to close loopholes and indeed it would be just as valuable on a dollar basis as the same dollar value again, depends on what the impact is. The tax code and the changes we are trying to make to the tax code are all about creating Economic Growth that will create more revenues and will cut Government Spending on variousus entitlement programs. One of the issues that we are going to face, i hope sooner or later in this committee, is the issue of savings in the Health Care System as you probably know the american Health Care System is more expensive than virtually all of our ocd competitors by ae lot, twice what the average is and we dont do particularly well on basic measures of health that you think that much spending would pay for. So i look forward to working with you on that. One of the things that we have seen as cbo reduced the outyear projections for ederal Health Care Spending downwards by 3. 3 trillion since the Affordable Care act. So i would urge you to keep an eye on that and not let those savings go to waste in the pursuit of the Affordable Care act and in the matter of that, it appears that the Affordable Care act is being repealed through a secret process in which there will be no opportunities for democratic amendments, mr. Chairman. And there was so much criticism from the republican side about the one moment when we used reconciliation for a last piece of the bill, but the bulk of the bill was done through our help committee, as youll remember. And you yourself, mr. Chairman, got more than 50 amendments in that process or at least had your name on 50 amendments. We put 160 through that 160 republican amendments passed in the help committee as i recall. We had days of hearings. We had amendment after amendment after amendment after amendment. The one that created the imaginary death panel was an amendment by Johnny Isakson was number 157 of the amendments that we took up in that committee. So i think were turning the senate into something very unfortunate if zero amendments are going to be allowed other than through the voter ramma process and for those of you on the republican side who actually had amendments during that process, i think its really double dealing and i hope we dont go that path. Thank you, chairman. Senator johnson. Splemr. Secretary, i want too confirm what senator crapo and toomey are saying. Because of that engagement, i got my own ideas on Corporate Tax return that would treat c corps like other pass through entities and tax corp income at the ownership levels. The elimination of the harm caused by the double taxation of dividends. Senator sanders was talking about, you know, the death tax only applies to the top. I come from a what i start out as a Small Manufacturing Company that eventually became a medium sized manufacturing company. The exact businesses i think youre talking to that you engage in the campaign that are forced to sell to larger competitors, they pull them out of the free Market Competition of free market economy, and thats exactly what the death tax does. Its also what double taxation dividends does. In my own business, we probably had maybe a few hundred potential customers over 30 years consolidated because of double taxation dividends, the hoarding of cash by large corporations, consolidate down to a few dozen. I think thats bad for free market economy and i just want you to speak to that aspect of tax reform because from my standpoint, the more small and medium sized manufacturing companies, the more innovation, the more competition, the more restrain in priesz, the Higher Quality because of innovation and thats progrowth. It is depressing to hear my colleagues on the other side dismiss the benefits of dynamic scoring. Whats the point in tax reform if its not going to be progrowth . Static bases that make you show you lose revenue you gain it back on a dynamic basis. Just talk about your own experience talking to small medium sized manufacturers about what theyre complaining about why theyre not growing . We look forward to continuing to work with you on tax reform and we absolutely believe that Small Businesses that operate as pass thrus that they should have the benefit of the business tax, that it just shouldnt be about lowering Corporate Taxes. And we want to make sure that we do that and also in a way that we protect wages are properly taxed as well. So we look forward to working with you on that and again as it relates to dynamic scoring, obviously the only reason were trying to change the tax code is to create more growth which the difference between 2 and 3 gdp is over 2 trillion of additional revenue to the government. Were all trying to do the same thing, which is more growth, more revenues, more good paying jobs for American Workers. By the way, im making some pretty good progress. Ive been tenaciously talking to ceos, cfos. You think it might be a little bit too much were biting off but im actually quietly gaining pretty good support for this concept. I definitely want to work with you. Thank you. The other point the biggest impediment to growth, particularly for small medium sized businesses is over regulation. The Big Companies can deal with it. They can higher the compliance officers and hire the lob i didntists and make sure the rules work for them, dont work so good for their smaller competitors. We have a Competitive Enterprise Institute just updated their last study. 2 trillion, 15,000 per year per household the cost compliance regulation. I applaud this administration for focusing on that. Speak a little bit about your why that is so important . We heard the same thing. Number one thing we heard from business was regulation. Number two thing we heard was tax. So we agree with you completely and i would just also say that as we develop this tax reform plan, weve literally met with hundreds and hundreds of business people. Weve had listening sessions both for business, for think tanks, a meeting with members of the house and senate. So we want to take a lot of input into this process. I think the president s we actually had a joint hearing on this. Thats a really good start. Everything in washington is add tif, heres finally a process thats subtractive. With onb its going to be incredibly important that we really focus on overwriting regulation to eliminate old an outdated regulation that is hampering our economy. Thank you. Thank you. Thank you, mr. Chairman. Senator van hollen. Thank you, mr. Chairman. Good morning mr. Secretary, how are you . Good to see you. Good to see you. I have a question on infrastructure and its the Budget Committee normally we wouldnt be asking the secretary of treasury that many questions about infrastructure, but since at least what i understand the plan shaping up may look like it would involve a lot of tax Code Provisions so a lot of us had hoped that we might get off to a start in this congress in a bipartisan basis focusing on modernizing our infrastructure. Senate democrats put forward a trillion dollars plan, the president talked during the campaign about a trillion dollars plan but here we are in the Budget Committee and if you look at the president s budget while it has some plus ups in the area of infrastructure, it also has some cuts in the area of infrastructure and the university of pennsylvania Wharton School, the president s alma mater looked at it and concluded that on net this budget would cut our national Investment Infrastructure by 55 billion. Have you had a chance to look at that Wharton School study . I havent but i look forward to. Ill reach out to your staff and well get a copy of it. I can assure you that the president is very focused on infrastructure. This is a big investment we need to make and i hope this is an area where we can definitely have bipartisan support because it is a huge issue in this country. We need to build out our infrastructure and rebuild our aged infrastructure. Theres no doubt about that and as i said, i had hoped that may be we would begin with Something Like that. All the talk i hear out of the Administration Says maybe well get to it in 2018. We havent seen any plan beyond the one pager for infrastructure just like we have a one pager on the tax policy. And what we do have thats real in some sense any way is the Budget Proposal which is as i said the Wharton School study cuts it by 55 billion which was a surprise to many people. Let me talk briefly about the tax issues. When you appear before the banking committee, you and i had a discussion about the tax provisions in what is called the Health Care Reform bill here, which as you know has significant tax cuts and those tax cuts do go disproportionately to wealthy people. Lets set that aside for a moment. Well be debating that. I hope we have some amendment processes as senator whitehouse said, no amendment opportunities yet, but let me ask you this about the proposals that youre thinking about. I know theres been some conversation already this morning. The first question is will it adhere to the statement that you nde last so i already had the pleasuro of talking about this morning, i think, before you got here. Let me now say identify now testified on this at least five or six or seven times. Again, i think the best thing we should do is we hopefully will soon have a more detailed plan that we can release and when we have the detailed plan, obviously its going to be scored. We are going through w distributions and happy to go through it at the time. Ive heard all different types of feedback. As ive said, we have eliminated almost all deductions other than charitable and mortgage interest. I heard from many state who is dont like us getting rid of tax break for high taxes and wordti about taxes going up. When we have the tax plan out, im more than happy to get grilled on the details of it. Senator johnson was asking you about in terms of dynamic scoring. Weve had a long debate here. The reality is the joint Tax Committee will be doing dynamic scoring of whatever plan comes down and my question to you is, will you agree that it would be a bad idea to pass a tax plan that the joint Tax Committee using their dynamic scoring analysis concludes will increase the deficit and the National Debt . Again, what id say is our intent when we come out with the full tax plan is to have complete transparency. Thats not my question isnt transparency. My question is on the deficit. Im answering the question. So we believe in complete transparency and ive been very clear in saying that there is a static score which we dont agree with. There will be a joint tax and when we see the joint tax scored, we have over 100 people that run models. If we agree with the joint tax score, i will tell you that. If we dont agree with it, i will explain why. So again, weve said this tax plan will be paid for and well go through the details when it comes out. All right. Mr. Secretary, i hope at that time youll also explain how your growth projections of over 3 which wed all like to see without having provided us a plan why theyre so out of whack with every other forecaster which i assume you depended on during your time in the private sector. I look forward to that answer as well. Senator kennedy. Thank you, mr. Chairman. Welcome, mr. Secretary. Like our chairman i appreciate your brief answers. The United States taxes our companies on income they earn in Foreign Countries but only if they bring that money home, is that correct . That is correct. We know that there are billions, perhaps trillions of dollars offshore staying there because they dont want to pay those taxes, is that correct . Thats correct. Why would they . Why dont we why dont we make a deal with them reach an agreement on how much taxes that they would have to pay, get bipartisan support from both democrats and republicans in the United States congress, bring that money home and use it for infrastructure . Well, first let me say, my primary objective is to fix the tax code and i think as youve outlined a major fix has to be we need to move to a territorial system because otherwise that money is not going to come back even if we had a one time issue. Weve got to fix it permanently. I get that part. Why dont we fix it, work a deal we can get bipartisan support and use it for infrastructure . Youre matching nonrecurrent revenue with a nonrecurring expense so its not going to add to the deficit in any way . Again, i look forward to working with you and others on any idea that has bipartisan support at the end of the day, the cash is fungible. We want to spend money on infrastructure, we want to bring that money back. Whether we link them or dont link them, i look forward to working with you and the rest of the senate on that. What do you think about that . I think its an interesting idea. My job for the moment is to figure out what the right tax plan is for the American People and for the American Public and something that can get passed and as we look for ways to package that, to get it through the house and senate, we look forward to working with you so we appreciate your ideas. Thats not a yes, is it . I think it is a yes, but what im saying is, again, you know, theres theres the form and the substance. Im focusing on how we fix the tax code and thats important. And well work with you and others on how we get it through the senate. Look, we have infrastructure needs. We know our tax code generates money thats sitting offshore so thats within within your playing field. I think we could get bipartisan support on it. Youd be matching nonare you current revenue with a nonrecurring expense. It wouldnt add to the deficit and we wouldnt have to borrow money. Just think about it. Just think about it. You talk to the president a lot. Talk to the president about it. I think we could get bipartisan support. Lets talk about the tax code. If you add up all the exemptions, exclusions, deductions and credits, refundable and otherwise in the United States tax code, how much money are we talking about . Its a staggering number. I dont have it off the top of my head but its a monstrously staggering number. Okay. The more you tax something, the less you get of it. Thats correct. The less you tax something, the more you get out of it. So presumably when we choose not to tax something were supposed to get something in return. Generally jobs. Do you have people going through all the exemptions, exclusions, deductions and tax credits in the tax code and asking, okay, why did we create this . What was the cost and whats the benefit, presumably economic development, jobs is the benefit greater than the cost . Weve said everythings on the table and were looking at all of them as youve suggested. I think some people call those tax expenditures, right . Yes. Okay. Tell me what your tax reform proposal will do for the middle class the working class . Im not talking about the folks at the top, im not talking about the folks at the bottom that we take care of through our social programs. Im talking about the men and women that get up every day and they go to work and they pay their taxes and they obey the law. Im talking about a mom and dad each making 45,000 a year, 90,000 bucks, theyve got two kids. Theyre not getting any breaks and theyre getting further and further behind. What are we doing for them . Our objective is one, for them to have a tax cut. Two, for them to have simpler taxes so that they can do it simply and three, by making the business tax code more competitive as ive suggested over 70 of Corporate Taxes are born by the worker that they will have better higher paying jobs by us fixing the business tax system. Thank you, mr. Secretary. Thank you. Roads, infrastructure. Its something we can get bipartisan agreement on. We look forward to working with you. Thank you. Senator king. Thank you, mr. Chair, thank you mr. Secretary. Secretary, after we Congress Reached a continuing resolution at the end of april working together, compromises made by both houses, both parties, the president tweeted out a few days later that he thought it might be time for a good shutdown of the government in september. That was the tweet a good shutdown in september. Do you think theres such a thing as a good shutdown of the United States government . Its an unfortunate outcomes. At times there could be a good shutdown and times where not. I represent a state thats got a lot of federal employees, i got a lot of people on medicaid, Social Security disability, medicare, who the thought of a shutdown just scares them to death, the 13 day shutdown in october of 2013 was deeply unsettling to them. It was an injection of uncertainty into the state of National Economy that does better when theres certainty. Tell me what a good shutdown would look like. First of all let me say i wasnt here in 2013 so i cant comment on it. Umhum. Second, its not our primary objective. Good. To have a shutdown. So you dont want to high apologize size what a good shutdown would look like, i think thats wise not too but i mean im haepg to talk about the budget or things you have on the budget. Im not here to define what good shutdowns are or bad shutdowns. But you are the secretary of the treasury so you are somebody that should have an opinion about whether shutting the government of the United States down is ever a good thing. There could be times again, we could go through a lot of hypothetical things today. There could be reasons at various times why thats the right outcome can you see anything good about shutting the government of the down . I would never be in a position to want to shut down any of the Critical Infrastructure of the United States government if we were spending too much money on things and we couldnt come to agreements on things that were not critical, but i can assure you just as ive said with the debt limit, our number one objective is to raise the debt limit and i can also assure you that we would never shutdown critical functions of the government. Great. Would you agree with me in your testimony you talk about things that you think are important to sustainable Economic Growth, the best way to achieve this is through combination tax reform, regulate relief protecting taxpayers. Would you also agree that providing some certainty is more helpful to growing the eco again, we are getting into hypothetical questions which i cant answer without knowing all the details. If the certainty is bad, i would rather have uncertainty that could lead to good outcomes than certainty that assures bad outcomes but these are very hypothetical situations so ifut you want to describe a specificc one. Defaulting on the debt ceiling or defaulting on debt. I couldnt be clear that as it relates to debt ceiling, i would like to have certainty and would like cang to act before they leave. How about having a budget versus not having a budget . I obviously prefer having a budget than not a budget. Doing a appropriations bill o rather than continuing resolution. Ng again, these are issues for the senate to figure out but obviously dealing with appropriations, the sooner we can get through appreciations and spend money, thats better for the u. S. Economy. E u. S. Eco the way i described to my constituents the difference between an appropriations bill and a continuing resolution is i say, one is like driving, looking through the windshield, looking forward, an appropriations bill, projecting forward and a continuing resolution where youre kind of, you know, doing what you did for the past is like looking through the rearview mirror. As a general matter, it would be better to budget looking forward based on plans and priorities that youve committed Going Forward than just doing it based on looking at what you did in the last few months. Id say as a general matter maybe at some point it makes sense to review the entire budgeting process and link the debt ceiling to budgets and look at capital budgeting and others. Theres obviously a whole bunch of ar cain parts of government budgeting that im learning. And not so ar cain. I think theres profitable areas of working together between congress and the white house on budget reform issues and i know the chairman is a big fan of this and i am too. We would look forward to working with you on that. Just to use one example, back in the certainty thing, im a certainty freak because i was a mayor and governor and i always felt like if i could be certain everybody would at least know what to adjust to its hard to adjust to an asterisk or question mark. One of the areas that we talk about a lot in this committee deals with debt, how much debt is too much . We have hearings on things like dangerous debt but i can never get a witness to tell me what a debt policy should be . Do you have an opinion as secretary of the treasury about, for example, what our debt to gdp ratio should be or what percentage of our annual budget outlay should go into debt Service Versus current programming . I mean, first i would say i have a general concern about the size of the National Debt and how its grown from 10 trillion to 20 trillion and we want to make sure that it goes back in the other direction at some point. I think as you know that the last time we had a surplus it was when we had Economic Growth. So the issue here is we need to create Economic Growth. Thats the number one way of dealing with the debt problem in my mind. Senator garton. Thank you, mr. Chairman and thank you secretary for your service and your time today. This question on debt and debt policy, ten trillion debt now 20 trillion debt and growing, one of the things im most concerned about is how we drive federal spending at my time at the state legislature. I watched as the state would look for ways to shift funding out of state spending and off of state revenues and on to federal dollars. I think most recent reports very census data shows a third of states revenue comes from the federal government to the. Obviously in education it can vary greatly and welfare programs what the state is depending on the federal government for their share, transportation another one. In your conversations across the country, do you speak with governors about how states are driving federal spending and what can be done as that becomes part of a focus of our debt policy . I think its a very important issue and something that i look forward to working with you on. It hasnt been my focus for the moment but i think its a very important point. Thank you. And mr. Secretary, i was at a hearing with secretary tillerson before i came into this hearing and it was brought up by chairman cardin that rarely our committees on budget about the budget and theyre about other things and so im going to vary from the script of the Budget Committee hearing, if you dont mind. I want to draw your attention and the colleagues to the attention that two reports that came out this past week regarding north korea and the first report released yesterday by an independent organization known as c 48 ds. They identified over 5,000 Chinese Companies that are doing business with north korea. These chinese businesses are responsible for about 7 billion worth of trade with north korea. Thats about 90 of north koreas total global trade. Moreover the report from c 4 said that only ten of these companies, only ten of those 5,000 Companies Control 30 of chinese exports to north korea that was just in 2016 and one company alone out of those ten, out of the 5,000 controlled nearly 10 of total imports from north korea. Some of these Companies Even had satellite offices and businesses in the United States. The second report that i highlight released by the Royal United Services institute in the United Kingdom last week concluded the report finds that not a single component of United Nations sanctions regime currently enjoys Robust International implementation. In february of this year, the u. N. Panel of experts on north korea similarly addressed that pyongyangs elisity networks were increasing in scale, scope and sophistication. If these reports in mind and what were seeing from reports of the u. N. , what efforts can we undertake to strengthen global enforcement, and what efforts are you taking and what efforts is the administration taking to date as it relates to these sanctions and our efforts to peacefully denuclearize the north korean regime. I do take my responsibility over seeing our tariffs financing and intelligence functioning very seriously. Im spending 50 of my time on these issues right now and let me first say that the president and we believe in sanctions. We think they work. We think in the case of iran its the only reason they came to the table and we think we couldve had a better deal. They work best when there is international cooperation. I think as you know the president is concerned about the recent activity in north korea and the missile tests. During our meeting with the chinese, President Trump and president xi specifically discussed north korea. I am having discussions with my counter parts there also every single meeting i have with my foreign counter parts of the g7 or g20 i talk about sanctions whether its north korea, iran on their Ballistic Missile program, their Terror Financing syria, i assure you we are doing everything we can. As it relates to the report you just referenced that came out yesterday, i did just get briefed on it this morning. I havent had a chance to go through the entire findings but i can assure you im focused on that with my staff. Yesterday i think youre aware the secretary mattis declared that north koreas the most Urgent NationalSecurity Threat facing the United States. I know President Trump and president xi has had some conversations. However if you look at the First Quarter trade between china and north korea, that trade activity increased by roughly 40 between china and north korea just in the first part of this year alone. So do you believe that china is meeting its agreements that it has said it would carry out with the Trump Administration . Again, i want to be careful about talking about confidential or classified issues in this setting. Id be more than happy to followup with you in a different setting. I can assure you we take these issues very seriously. I agree with general mattis in his comments and were going to do everything we can with sanctions and other ways of dealing with this. Thank you. Well follow up on some time line matters. Thank you, mr. Chairman. Senator merkel. Thank you mr. Chairman and good to have you with us. Thank you. I wanted to share with you part of a letter i received from john rows of arbland. He said the president s tax plan contains less detail than some supermarket receipts, it would explode the deficits by stealing from Everyday Americans by giving more to the rich including the president and his family. Now his commentary could not be truer when it comes to the tax cuts included in the Gop Health Care proposal. The acha plan. I have a chart which demonstrates the winners and losers of the tax cuts included in the Republican Health care plan. The winners are clear, that Health Care Plan which is estimated to strip health care from 23 million americans deliveries to americans making more than a Million Dollars an average 50,000 tax cut. Hard working americans making less than 200,000 are the losers and this is seems like just bizarre that slashing health care the piece peace of mind that goes and you wont go bankrupt in the process, but using that bill to actually do a giveaway the treasury to the richest americans. And theres the socalled mnuchin rule an insurance that you made that the president s tax plan would benefit middle class taxpayers, not the highe well, again, ive commented a few times earlier today on the the what wasnt my naming of the rule, but senator wydens naming of the rule. Let me just comment on the health care and the chart that you just put up. The health care is just reversing a trillion dollars of taxes that were put on this economy and most of those taxes are on capital and the problem with taxing capital is that taxes that capital can move freely, can move freely between countries, it can move freely between opportunities and capital is what createss investment that creates productivity, creates jobs. So just to be clear, youre comfortable with the notion of giving 50,000 on average to the richest americans while slashing health care from 23 million americans . Again, im not going to comment on the specifics of the Health Care Bill which im less involved in. What i will comment on is that it is reversing a trillion w dollars of taxes which is a drag on the economy. So, yes, that part is just a pure drag on the economy. Well, if we turn to the fiscal year 2018 Budget Proposal, it also lays out a strategy of including 3. 6 trillion in tax cuts with three quarters of that going tog the top 1 of americans and, wow, so here we are already in america, the top 1 control 40 of the wealth and top 10 control 30 of the wealth, top 10 receive 50 of the income. So we have the very few at the top doing very well indeed. So why would there be a tax proposal contrary to the principal you assert that had this administration wasnt going to be about, enriching the rich but helping the middle class, why would there be completelyss dedicating even more to the richest americans while taking away basic programs that support struggling and working families . Well, again, and id like to separate the discussion on whats health care and whats tax reform. When we come out with the full tax reform, we will go through and outline of what the distribution effects are and now we think it impacts the middle class and the economy. Can you pledge today that you will make sure that that taxts reform proposal, in fact, doesnt give away the treasury to the richest but strengths the foundation for struggling and working families . What i can say is that the president s objective to create Economic Growth simplify taxes and create middleincome tax cut and we are working closely with the house and senate on this. So youre completely abandoning the principal that you asserted before . Again, im not abandoning anything. Weve said all along, our objective is not about creating tax cuts for the rich. Our objective, okay, is to simplify the tax code and in tht case of the wealthy, weve taken away every single deduction other than charitable contributions and mortgage interest and when we come up with the full tax plan, im more than happy to talk about it andd again, i would be happy to focus on budget things today. Mr. Chairman, my allocated time is is done but i see im the last person here. Do you want to continue the committee a bit longer or are you anxious to wrap it up. Im anxious to wrap it up, but if you have one more question, i will allow it. Thank you. Thank you. I will ask just one of the many i have here but we had a real crisis that was driven by predatory mortgages both mortgages that were undocumented and mortgages that had exploding Interest Rates that included kickbacks to the origin whorgtd originators and had big banks ensured by the federal government and those two things, the voeker rule and control that mortgages are a fair square wealth building American Dream rather than american nightmare. Those two things we have improved on greatly. Do you support dismantling either or both of those foundations for success . . Well, again, i think let me first comment on the mortgages which i have firsthand experience and let me clarify. I havent been Investment Banking in over 15 years. Ive been focused on regional banking. I know the mortgage and so we are a 100 committed and i can assure you in my job, we are 100 commit today make sure that americans have access to Mortgage Capital but that they can afford those mortgages. And as it relates to the voeker rule, people dont do proprietary trading within the bank but outside the bank but withholding companies. Our objective to fix the voekert rule and thats what we are working on. Oull. Mortgages back into the marketplace. Thank you. Thank you. Mr. Chairman, thank you for being here. I think i may be the only thing between you and lunch so ill be direct. I want to go back to your earlier comments today talking about growth because i know the administration has talked about that. And the purpose of the growth, we have a 20 trillion debt. You refer to that earlier. Yes. What we arent talking about is unless we do something now to this baseline budget that we have today that we exists today well add another 10 trillion to that debt over the next ten years. Ive got several questions. To get the growth to deal with this insurmountable debt in my mind theres some 200 trillion of debt in the world totally, 60 of that is basically solve ren debt. We have a third of that sovereign debt today. And my question to you today, the size of the debt bothers you , but i think you have saidme peripherally, so the question is if Interest Rates were at a more historic norm around 5 , wee would be play pain about a trillion dollars of interest on this debt today and also there duration of our debt is short, 60 or over half his three years or less whereas britain has moved there position to about o 48 is 20 years or longer, soas the question i have, first of all is the position of the debt, what is the treasuries position relative to the budget, how it is dysfunctional, how it impacts the debt and how its draining the ability to grow because its a sucking mort debt capital to the needs of the federaluc government . Lets me first comment on the duration, which you have commented on and i talked about this publicly that we are exploring what we call ultra long bonds, 50 or 100 year bondr to explore lengthening the duration and we have reached out to the Treasury Borrowing Committee as well as investors to explore whether mixed even moving more sorry to interrupt even more to 30 years would help. It would and we explore with the capacity is at two different parts of the market and what the most efficient way is to extend the maturity and not something we are looking at. Lets continue on with the debt. About 6 trillion and some estimates are greater that about 2 trillion on the russell sheet, 2 trillion and small regional banks and somewhere around two to 3 trillion overnka seas. Id know when your one tax proposal and you eliminate their repatriation tax what else can you summarize for the committee that this tax bill will do relative to growth and dealing with unleashing that capital because it seems to me the economic miracle happen because of innovation, Capital Formation and the rule of law and we have messed around with Capital Formation the last 18 years i want to know what the administrations position isgh relative to growth and what we are doing regarding capital relation. I agree with you completely and on the business side we need to simplify and make the business tax system more competitive in that starts witht a business rate that is way too high, one of the highest in the world. As you suggested we tax worldwide income that encourages deferral and encourages companies to leave trillions of dollars offshore and we want to bring that money back and we want to make the system work so they dont forward coming spring back there forward earnings and reading test here and we are also committed not just on multinationals, buted small and mediumsize businesseo should have tax relief as well. S would you repeal. Dot frankf if you working for a day . If i were king for day i would. I would start all over and i i think most of it is unnecessary, but since i am not a king for the day, we went through what we thought the critical portions werent we delivered to the president yesterday on our executive order and we think about 70 or 80 of whichch critical we can get done, we can get done through executive orders and working with regulators and we look forward to working without sense of it on other things. When will we see that . It came out last night and we will make sure its delivered to your office. If the budget process is broken and has only worked for tens of the last 43 years, this year well, over the last 43 years we have used 178 year continuous resolutions and i just want at a Armed Services committee regard the entire straits of if we have another cr this year it is almost guaranteed we will not have a budget process that will be affected normally this year and we are headed for either a cr at the end of september, i think we have 43 days senate days working left, so the best we could hope for would be before that time. When the director of 0m the was before the communicable weeks ago we talked about this and youre involved in this from the treasury. What is your perspective on thet budget process that has noto you worked since a 74 and what do you think we need to do to make this relevant to fund the government which is the number one priority of the Congress According to article one, which we are not doing and since 1921 when that 0m the or the budget capability of the investors was created it seems like the legislative responsibility has become less and less and less every year. So, how would you as part of the administration advise us to move on this budget process bots not working . If i got to the king for a day would probably choose to fi the budget process even over dodd frank. Would you really . I would. Its completely broken and i think the process of the budget, theres the process of spending in the process of appropriation and its not going to be resolved this year, but this is something that i would look forward to working with you on. Well, it is dire. We are supposed to appropriate 12 busy year to fund the government and over the last 48 years we have average to an half. Not a good record. No sports team would do well with that. The coach would be gone, the quarterback would be gone, everyone would be does the reason to drain thec swamp. Exactly. Mr. Chairman, i think we are out of questions that i went to thank you for a. Before the committee today in your full statement will be included in the record. All senators questions for the record are due by 6 00 p. M. Today delivered by to the committee clerk. C the secretary will have seven days to respond with answers. With nowhere no further business, this meeting is adjourned. The Bipartisan Task force to end Sexual Violence will investigate the backlog of rape kits and access to Sexual Assault nurses. Panelists will include lawn order actress. Live coverage at 9 00 a. M. Eastern here on cspan2 and in the afternoon and discussion on the threat of terrorism in the west took a panel will look at the recent attacks in the uk with efforts to combat radicalization. Live coverage from the Washington Institute starts at 12 30 p. M. Eastern on cspan2. Sunday on q a. Barack is deeply committed to presenting his story and i think that is different from history. Part one of our interview with pulitzer prizewinning david ichiro talking that his book rising star the making of barack obama covering Barack Obamas wife up to live winning the presidency. I think his political aspirations and sense of destiny lead him to push she let jagr aside. During that time there was a wellknown political figure in chicago, hugely respected man, senator dick new housing who everyone a black chicago believed could never go higher because he was married to a white woman. So, in the political tradition of black chicago in the late 1980s, in the early 1990s for a black man to aspire to represent black chicago is necessary to have a black staff. Sunday night at 8 00 p. M. Eastern on cspan q a. Next, russian president Vladimir Putin hold his annual program in moscow. He took questions on domestic and Foreign Policy including us relations and russias role in syria and also commented on former fbi director james comeys