Treasury Secretary Mnuchin Testifies on Presidents 2020 Budget Request CSPAN March 14, 2019 2:42pm-3:40pm EDT
economic situation. many of those people understand that having this very antagonistic relationship to the west is really not the way to go if they want to have greater economic growth. >> watch "afterwords" sunday night at 9:00 eastern on c span 2. >> treasury secretary steve mnuchin testified about president trump's 2020 budget request earlier today. he was asked about tax cuts, cuts to domestic programs and recent increases in the nation's deficit and overall debt. the house ways and means committee is chaired by congressman richard neal.
mr. neal: this meeting will come to order. welcome our witness, secretary steve mnuchin. today we'll discuss president trump's proposal to cut more than $1.4 trillion from programs that help america's poor families. the president's fiscal year 2020 budget cuts to health care, medicare, medicaid, threatening social security, and undermining many critical programs for parents and other care givers will be in front of thus morning for discussion. it's no coincidence that this administration as they simultaneously look to cut trillions of dollars from these important initiatives come barely a year after supporting unpaid tax cuts for the wealthiest amongst us, totaling
$2.3 million of the nation's debt. now in this budget, the president wants to pay for those cuts on the backs of working families. i want to be clear that these tax cuts have not had themy rack louse economic effect we have -- the miraculous economic effect we have been told to believe. by some measures the economy is doing well and we understand the broad economic recovery has been under way for more than 100 months, including the efforts of president obama. at best the tax cuts were a short-term sugar high. credible and independent forecasters put growth about 1.%, a far cry from the promised indefinite growth of bf 3% no where near the 6% the president suggested could happen. tellingly, i've heard from many in massachusetts who haven't seen the $4,000 pay raise they were promised under the tax law. they can't afford med cases they struggle to keep up with basic expenses and they're being hit with the surprise of owing tax
this is filing season. this has been confusing and surprising to these filers. for tax pay wers a balance due question such as those finding that they owe taxes for the first time, the i.r.s. answered only 15% of their calls and the arch wait time was one hour. -- the average wait time was one hour. as the i.r.s. works to implement the new tax law and recover from the work backlog caused by the government shutdown, we need tone sure it as the resources to fully assist with and resolve taxpayer issues. that means supporting the agent sir's taxpayer services and reversing a decade of declining funds for the i.r.s. before i turn it over to my colleague, ranking member brady, i want to underscore that while we have differences of opinion, i know we agree that no one can beat american workers and businesses when they work on a playing field. i want to acknowledge your work on o.e.c.d.
i plan to pay close attention to these developments especially in light of france's imposition of a digital services tax. i encourage you to stay in close contact with us. i encourage you to reach out on the basis of staff work to shared priorities. at the top of the list is infrastructure. your comments have been encouraging. the president's comments have been encouraging on the issue of infrastructure, repairing roads and bridges, investing in the 21st century infrastructure system a win for everyone. i know and expect that we can count on you to partner with me and my colleagues on this very important initiative as well as other ways to grow the economy and increase opportunitiers in middle class. with that, i want to recognize ranking member brady for his opening statement and point out that mr. brady and i are in full agreement on st. patrick's day. mr. brady: absolutely. thank you, chairman neal, and thank you, chairman mnuchin, for
being here with us to discuss the president's recent budget proposal. you sat on that very chair to discuss the president's initial budget proposal and told us the number one priority was greth that tax reform and balanced regulations could enleash america. experts said there was a new normal in america, a sluggish 2% growth as far as the eyes could see. we had to accept that paychecks would remain flat, jobs would keep going overseas and u.s. manufacturing jobs were gone unless you wield a magic wand. larry somers scoffed that we believed in tooth fairy -- fairies and then leader nancy pelosi declared it would be armageddon for america. man, were they wrong. thanks to a new, modern tax code and balanced regulation, we have launched a new era of prosperity for america, where work verse first claim over their earn, small business and manufacturing is back and american companies can compete and win anywhere in
the world, especially here at home. america's economy is growing 50% faster than predicted by the obama white house. local businesses are investing four times faster than the last year of the prior administration. u.s. manufacturing is no longer losing jobs but growing six times faster than president obama's last few years. blue collar employment is surging. the unemployment rate is at historically good rates for those who were left mind in the past, hispanics, african-americans, asian americans, women, teenagers, those without a high school degree, and our neighbors with disabilities. paychecks stagnant for far too long are growing at the fastest rate in decades and even faster among those with low incomes who need it most. today, median household income rose above $61,000 for the first time since 1999 and hardworking americans haven't felt this optimistic about their financial future in a long time. new business starts are
skyrocketing. small businesses along main street are the most optimistic on record with historically high job openings, plans to hire more workers, higher paychecks and growing profits. here's what makes me optimistic. nearly five million americans have been lifted off food stamps since president trump was elected. the poverty rate for hispanics and african-americans have improved dra maltcally and is now the lowest on record. maybe that's why american consumer confidence reached an 18-year high recently. with the investment in jobs coming back from overseas, millions of workers with higher paychecks, bonuses and larger nest eggs, local businesses no longer saddled with billions of dollars of washington red tape, u.s. energy now the largest producer in the world and america once again the most competitive economy in the world, that optimism makes sense. but we must not go back to the bad old days by repealing the tax cuts and harming the very
americans who need help the most. rather than wasting time in congress on a rush to impeachment, democrats and republicans need to work together to grow the economy. america needs more customers and more workers. this means approving the new, modernized u.s.-mexico-canada trade agreement this year so we can reach more customers, create more jobs, and sell more made in america products to our two best trading partners. it means working together on the challenges facing america today, our work force. lack of qualified workers is holding down growth across the country and will slow growth in the future. it means working together to ensure america remains competitive internationally by challenging france's recent proposal to tax cross-border digital services. this is a naked revenue grab that targets u.s. companies, double taxes our businesses and violates long-standing norms. i'm hopeful that together we can work on other shared priorities
like increasing retirement security for our workers and families, reforming the i.r.s., and growing america's infrastructure. mr. speaker -- mr. secretary, there are many good pro-growth proposals in the president's budget and we thank you for being here. i yield back. mr. neal: i thank the ranking member, mr. brady. all members' opening statements will be made part of the rule. we adhere to the gibbons rule, meaning when one was seated when the gavel came down. welcome, we've received your written testimony, i ask that you summarize those remarks in five minutes and then we'll begin questioning. please proceed. mr. mnuchin: thank you. chairman neal, ranking member brady, members of the committee, it's good to be here with you today. i'm pleased to report that president trump's economic program of tax cuts, regulatory relief and improved trade deals
is working for the american people. during 2018, real g.d.p. increased by 3.1% measured from the fourth quart over 2017 to the fourth quart over 2018. this is the highest growth rate since 2005. the unemployment rate remains historically low at 3.8% and earnings rose over 3% in 2018, the highest nominal increase in a decade. more americans are entering the work force because of a renewed sense of optimism. the world economic forum's most recentcom pettiveness report announced that the united states is the number one most competitive economy in the world. receiving the top ranking for the first time in more than 10 years. companies are investing hundreds of billions of dollars in new and expanding business operations in the united states. this is in large part because the tax cuts and jobs act made our tax rates competitive, moved
us from a worldwide system toward a territorial system of taxation and allowed immediate expensing of capital expenditures for hardworking families and also cut rates across the board, doubled the standard deduction and expanding the child tax credit. i would also like to highlight opportunity zones, a key component of tcja. opportunity zones will ensure that more americans benefit from economic expansion and robust job market. they provided capital gains tax relief to encourage investments in business located in distressed communities. this policy is -- has generated a great deal of enthusiasm. these measures are fueling growth along with our efforts to provide regulatory relief and our trade negotiations, we are aiming to break down barriers to markets around the world. as you know, china has gained many advantages through unfair trade practices. this administration is committed
to rebalancing our trading relationship in order to level the playing field for hardworking americans. we are negotiating with china on structural reforms to open their economy to our companies and protect america's critical technology and intellectual property. the administration is also prioritizing the u.s.-mexico-canada agreement, usmca. it's the most comprehensive trade agreement ever negotiated and will modernize our trading relationship across north america. the usmca will create the highest standards to protect intellectual property rights, support mule and mid sized businesses, open markets for agricultural products, spur manufacturing. i encourage all members of congress to support its passage because it will have a positive impact for american workers, business owners, farmers, and families. in addition to enhancing overall growth prospects, i want to note positive impact that the
administration's economic agenda will have on our country's debt and deficits going forward. during the last administration analysts predicted that 2% growth was the highest america could achieve and that it was the new normal. we have already shown that we can and bill wil do better. an extra 1% of g.d.p. greth per year mens -- means trillions of dollars of economic activity and more revenue to the government. turning to the budget, the policies and priorities in the president's fiscal year 2020 budget will foster stronger economic growth, redeuce spending, and create a more susnain -- a more sustainable fiscal outlook for the country by reducing the deficit as a share of g.d.p. of special interest to this committee, the treasury portion of the budget includes $290 million for modernization account funding which is foundational for a new sick-year i.r.s. i.t. modernization plan.
investment in modernization of i.r.s. information technology systems and infrastructure will protect the integrity of our tax system and improve customer service for taxpayers. i'm pleased to continue working with you on policies andest pearblely mr. chairman as you noted infrastructure that will help to create jobs and increase wages for the american people. thank you very much. mr. neal: thank you, mr. secretary. each witness will be recognized for three minutes to question the witness today so we ensure all members have an opportunity to inquire before the secretary's schedule require he leave. i begin by recognizing myself. the debt limb was reinstated at the beginning of this month and your department has started ex-trired -- extraordinary measures. thank you for your response to my january letter and the commitment we have to protecting the debt ceiling to protect the full faith and credit of the united states. we've seen what brinksmanship does on the question.
last year it led us to a shutdown. american taxpayers suffered in the longest shutdown in history and similar brinksmanship is dangerous and reckless and irresponsible. do you support raising a clean debt ceiling extension sooner rather than late her mr. mnuchin: i do, and i encourage congress to do that sooner rather than later as you said. mr. neal: mr. secretary, we have had many encouraging conversations about infrastructure and the system we recognize in america today is suffering years of underfunding and neglect. i believe we have an opportunity to make a meaningful, sustained investment to lay the foundation for economic growth for years to come and create thousands of good paying jobs. we must be ready to put real federal dollars behind this commitment and maintain the traditional 80-0 split between federal and state spending. the president campaigned on a $1.5 trillion infrastructure package and mentioned
infrastructure again in this year's state of the union are you and the president still committed to the $1.5 trillion bold infrastructure package you previously outlined? mr. mnuchin: mr. chairman, the president and i are fully committed to that. i've appreciated the opportunity that you and i have spoken on the phone and had the opportunity to meet and talk about this and we very much look forward to working with congress on a bipartisan basis to pass infrastructure quickly. mr. neal: another encouraging note where i think there's opportunity for cooperation here is on the multiemployer pension plan, the limit the country is about to face. do you have plans to address that issue based on conversations i have had with many stake holders they've said that the words of the administration have been encourages. that is a huge problem, could conceivably take down the pension benefit guaranteed trust and i think working on it sooner rather than later makes good sense. is that still the administration's position?
>> it is. -- mr. mnuchin: it is. in my role as secretary of the treasury and as a member of the board of the pbgc, this is important to us. i have had the opportunity to meet with workers impacted by this, i know there's a bipartisan group working on this. we look forward to supplying you help and work with that. mr. neal: the legislation i proposed on this issue has many republican co-sponsors, i hope other republicans would sign up. i think just about every member of the democratic party in the house in the past session signed the legislation, i think it's a good starting point in the conversation for hopefully getting something done before the problem really gets out of hand. with that, let me recognize ranking member brady for three minutes. mr. brady: thank you. when i think of the work you did, i think of russell marine back home they gave their workers $1 million in bonuses. raised every's pay 10%. they bought millions of dollars of new equipment they couldn't
afford before. and they green lighted a new company office because the building i was in was plenty old. i think lone pint brewery in magnolia texas. they started this craft brewery a number of years ago. they told me because of tax reform they can give all 10 of their workers full health care. vision and dental. some of which their kids have never had before. the back porch we were standing on is going to be their new cold room because of the savings they have from the tax cut. i think of the two new manufacturing plants i toured a couple of weeks ago in the poorest part of my district in east texas built in part because now businesses can write off new equipment and machinery the very ear they buy it. people back home, the silliest thing they hear is that tax refunds are down so tax increases must be up. and while that claim has been fact checked as misleading and
nonsensical, the media covered it like it was life discovered on mars. as we know, your refunds have zero to do with your tax bill. it merely reflects what you overpaid the i.r.s. last year. we know that 95% of americans either got a tax cut or their tax bill stayed the same. so we also know refunds vary from year to year and even within the tax season. the truth is the new tax cuts and jobs act were designed of those families who live paycheck-to-paycheck, they got the help each month when they needed it rather than have the relief. can you give us an update on the tax filing season and where refunds are today? secretary mnuchin: mr. brady, thank you very much. i want to thank you for your incredible work you did on the tax act. i think, as you've known, based upon the most recent data, tax refunds are flat on last year. now, let me just give you an
example. for an average married couple with one job and two children under the age of 17, their taxes would go down from approximately $3,800 to $1,700, or a reduction of $2,000. if they had been properly withheld, their withholding -- their refund would have gone down 55% as well as their taxes. o the fact that refunds are an average the same means in essence people did not adjust their holding enough to take advantage of the tax act. we've encouraged people to use the calculator. i would just emphasize because taxes are down, refunds should be down. mr. brady: thank you, sir. mr. neal: thank you, mr. brady. with that let me recognize the gentleman from georgia, mr. lewis, to inquire. mr. lewis: thank you very much, mr. chairman. thank you, mr. secretary, for being here. . secretary, there were 11
disclosure of tax records last year under section 6103 of the tax code. mr. secretary, did you personally find any of these 11 billion tax records? secretary mnuchin: i'm sorry. i don't understand the question, mr. lewis. could you just repeat it? mr. lewis: well, i'll do my very best to make it plain and simple. there were 11 billion disclosure of tax records last year under section 6103 of the tax code. did you personally sign the form to release any of these 11 billion tax records? secretary mnuchin: i don't believe i did but i could check with my team. i am not aware of that, mr. lewis. mr. lewis: you don't have any ?dea who approved
secretary mnuchin: i've been advised that's not something i would normally sign. it would be something that the i.r.s. commissioner would sign off on. mr. lewis: is there a representative of the i.r.s. commissioner present here today? secretary mnuchin: no. i would be happy to follow up with you in your office. mr. lewis: mr. secretary, didn't you prohibit the i.r.s. director from meeting with us? secretary mnuchin: i believe we made available the i.r.s.'s team of experts that are available and i believe at the appropriate time the i.r.s. commissioner will come and testify as i am doing. mr. lewis: when is the time right? when will the time be right? secretary mnuchin: i'd be more than happy to follow up with the chairman and schedule it at a mutually available time. mr. lewis: thank you. mr. chairman, i ask unanimous consent to submit a statement
from veterans' groups against this budget. mr. neal: without objection. mr. lewis: thank you. i yield back, mr. chairman. mr. neal: the chair would recognize the gentleman from florida, mr. buchanan, to inquire. mr. buchanan: thank you, mr. chairman. i want to thank the secretary for his leadership in terms of the jobs act and tax thing that we put together, but one of the big issues is on growth. for 50 years, as you know, or the last 10 years, it's been the slowest growth that we had in the last 50 years. so the impact that this has had is very clear when you look at -- if you want to look at it from a report card standpoint. optimism is at all-time high. that makes a big difference for people that are in business going forward. wages at 3.1% in terms of growth. consumer confidence an 18-year all-time high. unemployment is lower in terms of the last 50 years. and seven million claimed job openings available today for
folks across the country. so to me, when you look at the report card, there's no question the impact that the jobs act and tax has had a huge difference. let me ask you. the fed is looking at -- they have been raising rates. a lot of people think is kind of throwing a cold blanket somewhat on the economy going forward. what's your thoughts? i know in the last go-around they have backed off a little bit. it seems a lot of people feel, why don't we have the opportunity to realize the full potential of this economy going forward? so i just want to get your comments in terms of the fed's actions on raising rates. secretary mnuchin: well, first, let me just comment on the growth, as you've mentioned. i do agree with the growth has led to tremendous opportunities for hardworking americans. i think, as you know, i meet with the fed chair on a regular basis. we do discuss the economy and
other issues on a weekly basis. it would be inappropriate for me as treasury secretary to comment on specific fed actions in the future. mr. buchanan: thanks. and with that i'll yield back. mr. neal: i thank the gentleman. i thank the secretary for that answer, incidentally. let me recognize the gentleman from texas, mr. doggett, to inquire. mr. doggett: mr. mnuchin, i am surprised to see you here. during the time that the massive tax breaks for those at the top and the multinationals being forced here neither you nor any member of the administration had the courage to be conand talked about the contradictions in that move. you refuse to be questioned in public for the putin's buddy. you ignored chairman neal's letter to permit a reasonable time for congressional review of this shady deal even after congress voted to stop it here in the house. you continue to deny every
request for documents from multiple congressional committees about this wrong. you did show up one time here and insisted like the day that questioning of you be limited to a few minutes. and then with mr. brady's very effective protection, you managed to give no oral answer to the questions that i posed. instead agreed you'd supply written answers to those questions in writing that i still don't have more than a year later. let me just ask you directly, since you are fully aware that -f-1 of the internal revenue code says upon written request of the chairman of the committee on ways and means the secretary shall furnish such committee with any return or return information specified, end quote. are you willing to provide and fulfill the command of the statute in your mandatory duty to properly release any
personal and business tax returns of president trump that you're requested to provide? secretary mnuchin: well, mr. congressman, let me first comment on the first part of that. mr. doggett: i just want to be sure i will get an oral answer. secretary mnuchin: i will make sure i will answer the end. mr. doggett: you have a minute to do it. secretary mnuchin: this is highly unfair. first of all, i did come and give a classified briefing. mr. doggett: yes, sir. secretary mnuchin: to the entire congress. mr. doggett: which the speaker called a waste of time. secretary mnuchin: that's your view. mr. doggett: that's her time. mr. brady: mr. chairman, if the witness could be allowed to answer. mr. doggett: let me ask you, mr. secretary. you can give any explanation, the chairman and mr. brady will provide, but will you comply with the command of the statute and provide the returns under 6103, yes or no? secretary mnuchin: i will answer that. mr. doggett: will you just answer it now? you have 30 seconds. secretary mnuchin: the answer is i will -- if i receive a request, which i presume from
what i read in the press i will receive, i will consult with the legal department within treasury and i will follow the law. that's my answer, mr. congressman. i would like to answer the previous part, which i think -- mr. doggett: you're welcome to do so. have you received any instruction or guidance from anyone regarding how to handle these requests? secretary mnuchin: i'm more than happy to answer your question. in due respect, i'd like to finish with my previous answer which is, mr. chairman, i think i worked with you on a mutual date. i was not aware of that the committee didn't think they had enough time today. i'd be more than happy to stay an extra half an hour if that's necessary so people feel like they have the proper amount of time to answer -- ask me questions. and i believe that we've accommodated all requests from the committee and if there's open requests on documents or anything else, mr. chairman, we'd be more than happy to work with you and mr. brady. i think there was a second part of the answer i didn't answer? mr. doggett: yes.
secretary mnuchin: on the tax return -- mr. neal: let me say something. by precedent here, the witness is always allowed to finish their answer. mr. doggett: not last time when i asked a question, there was no answer given. secretary mnuchin: i want to make sure i will answer. was there anything else i didn't answer? mr. doggett: have you received any instruction or guidance of any kind about how to handle -- mr. brady: can you answer that question -- secretary mnuchin: from whom? mr. neal: let the witness finish the questioning. mr. doggett: have you received any instruction or guidance of any kind about how to handle congressional requests for president trump's tax returns and if so from whom? secretary mnuchin: i have because i read this in the press so first of all, i haven't received the request. if you have the request for me today, i'm happy to accept it. if not, if you decide in the future to deliver this we will receive it. i can't speculate on the request until i see it. i have discussed with the legal department in the treasury that we will most likely receive
this request. as i said, based upon the request, we'll examine it and we will follow the law. mr. doggett: thank you. secretary mnuchin: i would expect we would -- i am not aware if there's been a request for an elected official's tax return but we will follow the law and we will protect the president as we would protect any individual taxpayer under their rights. mr. doggett: on the meaning of the word shall? mr. neal: with that let me recognize mr. smith to inquire. mr. smith: thank you, mr. chairman and thank you, mr. secretary, for appearing before the committee today. i know time is short so i'll try to be brief. i want to thank you for ensuring the final regulation, implementing section 199 cap k which appropriately renging businesses which -- recognizes businesses such as grain elevators and energy services firms eligible for the deduction and not lumped in with paper traders. both industries with economically important for my state of nebraska and this was an important issue addressed. at the same time i do continue
to hear concerns about implementation of many provisions of tcjj, particularly the international provisions. as you know, our goals for tax reform included simplifying compliance, modernizing international taxation and ensuring that many people benefited from tax relief. do i hear concerns that regulations implementing provisions known -- called guilty in beat are not easy to comply with and in many cases are capturing long standing legitimate transactions which no reasonable person would consider tax avoidance strategies as newly taxable events which is not and certainly was not our goal. could you provide us with some insight as to why this seems to be happening regularly as the regulations are produced and can you assure us that tcja is implemented as intended by those of us who were so involved in its passage and being signed into law? secretary mnuchin: i can assure you it's been implemented as
intended. we reach out to try to make sure we have the proper interpretations of these issues. i will tell you i want to thank the hardworking people at the i.r.s. and at the tax group within treasury. we meet on a daily basis. there were very many regulations, as you know, that were left to us to draft. we want to make sure we do this carefully and a way to protect companies and implement the law, and we've gone through an extensive period of reaching out to affected people. i personally met with many companies, and will go through a comment period on these issues. so as you said, the guilty and beat issues are things we are looking at very carefully. thank you for your comment on the commodity as we worked hard on that. mr. smith: very well. thank you, mr. secretary. i now yield time to mr. brady. mr. brady: mr. secretary, you are asked about $1 $1 billion for 6103 provision. $9 billion is routine request
from states as they verify their state income. other is to comply with the affordable care act. and those requirements passed by our democratic friends. g.a.o. and joint tax also makes routine requests. so that congress can be provided information about the impact of policies and, of course, the census makes those requests. here's the key number, zero of those requests are for purely partisan reasons that weaponize the tax code. i yield back. mr. neal: i thank the gentleman. with that let me recognize the gentleman from california, mr. thompson, to inquire. mr. thompson: thank you, mr. chairman. i'd like to ask unanimous consent to submit this article into the record that reads, the headlines reads "trump vowed to eliminate the debt in eight years. he's on track to leave it 50% higher." mr. neal: without objection. thompson thotches thank you, mr. secretary, for being here this morning. when the republicans and president pushed through their tax cut last congress, the warning from democrats and outside experts was very clear. if you pass an irresponsible
$2.3 trillion tax bill that explodes our national debt and deficit to benefit the richest americans and large corporations, it will inevitably be working families and our nation's most vulnerable who end up paying the bill. this president's budget unfortunately could not be clearer in bringing that warning to reality as this budget reads like a laundry list of cuts to our country's essential programs. $500 million in cuts to medicare, $1.5 trillion from medicaid, cuts to chip, food stamps, affordable housing, the list goes on. all while the very same budget would make permanent a reduced p rate, over $11 million estate tax exemption and other loopholes benefiting the richest 1% of americans.
as disturbing as these cuts are, as harmful as they are to children and to seniors, the president's budget will add $1.1 trillion to our deficit next year. and that, i might add, is based on numbers that most experts don't see as real. the 3.2% economic growth, far above the 2.3 growth that c.b.o. says that we should be expecting, which, by the way, drops in the outyears in 2019 to 1.8%. secretary mnuchin, could you please explain to us, to the children and the seniors across the country who are going to be expected to pay for these tax cuts to the richest americans why they should be paying for them? secretary mnuchin: thank you very much. so first, let me just comment on the tax cuts themselves. as i said in the past, i do
think with additional growth the tax cuts -- mr. thompson: excuse me, mr. secretary. we have very limited time. we know what the tax cuts did, but this budget makes children and seniors pay for the tax cuts that the richest people are going to receive. can you please justify that? secretary mnuchin: i don't believe that it's paying for the tax cuts, as you said. i believe that the tax cuts will pay for themselves through previous growth. what i would say is that -- mr. thompson: you know it and i know it and the budget is very explicit. the cuts are right there in black and white. we all read them. secretary mnuchin: mr. chairman, can i answer the question? mr. neal: by precedent, the witness can answer the question. secretary mnuchin: again, i just want to separate the two issues. the previous tax cuts, ok, which were $1.5 trillion, ok, the difference between policy and baseline is $250 billion. at takes it down to $1.250 million -- billion.
if we do get the growth we expect it will pay for themselves. as it relates to the budget budget going forward, we've not cut those programs. we reduced the rate of growth on those programs. mr. neal: thank you. with that let me recognize the gentleman from texas, mr. marchant, to inquire. mr. marchant: thank you, mr. secretary. thank you for being here today. and thanks to your team for working through all of these difficulties interpreting some technical aspects of the tax reform bill. many businesses in my district have called me and i've assured them that the treasury is really working hard on trying to correct them. one of the big issues that i am hearing from my constituents and small businesses in my district that have over the years paid their taxes on time, withheld the proper amount,
etc., but in this -- in this year of transition, many of them, whether they got bad advice from their h.r. department or whether they just guessed wrong or were too optimistic, some of them had -- do not have enough withheld. they're now faced with a penalty for the first time in their lives. they never paid a penalty and it's creating a hardship. my ask today is, will the treasury, will you consider -- i know that you've said you would lower the penalty from 90% to 85%, the penalty, before you fell into the penalty. but would you consider 80%? because we believe that there is some confusion, some genuine confusion out there. i think it would be a good faith effort on the part of us
to our hardworking constituents. not the ones that are trying to con the system or, you know, calculate how much they can get by with, but just normal people that are trying to do the right thing? secretary mnuchin: as you know it we reduced it from 90% to 85% to try to take into account many hardworking people that got caught. we'll review it with my team. mr. marchant: thank you. mr. secretary, the other thing i would like in my remaining time to ask you to consider, the 800,000 people in my district in texas value the integrity of the i.r.s. and the treasury department. they do not want their tax returns -- they do not want to go to bed at night thinking that there might be some
possibility that the i.r.s. or the treasury could view their tax return and make that tax return public to anybody, not somebody on this committee, to anybody. so as a member of congress, to you, before you make that kind of decision, please take that into consideration. mr. neal: i thank the gentleman. with that let me ask the gentleman from oregon, mr. blumenauer, to inquire. mr. blumenauer: thank you, mr. chairman. mr. secretary, appreciate you joining us again. i am encouraged by some of the conversation we've talked about in terms of infrastructure. i'd like to turn to that for a moment, but i would like to submit a written request to you for the department to help clarify some of the activities going forward dealing with the financial status of the cannabis industry and how it's going to be treated in terms of banking and treasury, if i could submit that to you for
your conversation. secretary mnuchin: i'd be more than happy for you to submit it. i think you know we are struggling with these issues of federal law versus state law. you know, putting on my i.r.s. hat for the moment, it's not in our interest for people to bring in hundreds of thousands of dollars of cash into i.r.s. locations where we have to build safe -- mr. blumenauer: i agree. i'll submit that to you in writing and appreciate further clarification. i would like to turn, though, to the infrastructure question. we had a very encouraging hearing with leadership that has been invited by our hairman, the head of the afl-cio, head of trucking association talking about the need to invest in our infrastructure. it's a priority for us. the president in the course of his campaign talked about trillion dollars, a trillion and a half, and i appreciated the encouraging comments a little moment ago between you
and the chairman. however, the budget that is submitted calls for only $200 billion in infrastructure. and in the past, that was paireded with cuts to infrastructure spending by the federal government. can you tell the committee how you propose to finance a trillion and a half if that's the goal for infrastructure funding? secretary mnuchin: well, thank you very much for bringing up infrastructure. i would just emphasize that anything we do on infrastructure needs to be done on a bipartisan basis, so whether it's the issue of how we spend the money, how we work with the states, how we pay for it, we very much look forward to working with you and the committee on this to see if we can reach an understanding. mr. blumenauer: i agree with that. i am trying to get a sense of what the administration will support. the president in the past has lked about 25 cent gas tax
increase. is that in the realm of possibility? do you have specific proposals that we could work with on a bipartisan basis to fund the trillion and a half dollars without -- secretary mnuchin: i heard the president talk about the gas tax. i don't think any decision has been made. i heard the c.e.o. of ups and fedex basically tell me they would be in favor of increasing it if the money were spent on roads. i would emphasize, because this needs to be done on a bipartisan basis. this is something we want to sit down and listen to your ideas and work with you and the rest of the committee on this. mr. blumenauer: thank you very much. mr. neal: i thank the gentleman. with that i want to recognize the gentleman from new york, mr. reed, to inquire. mr. reed: thank you, mr. chairman. thank you, mr. secretary, for being here. as always to making yourself accessible to our office and to work with you. i want to narrow in on an issue that's directly related to my home state of new york state. and there's been a lot of conversation and a lot of public statements by my
governor. governor cuomo of new york that says the state and local tax deduction cap of $10,000 that many of us here worked very hard to get into the tax cut bill hurts, quote-unquote, low nd middle-class income workers. i believe that statement is blatantly false. why do i say that? i look at the tax policy center, often an expertise and experts in the field of taxation relied upon by many of my colleagues on the other side of the aisle to support their criticisms or objection of tax policy here in d.c., and as they concluded, the benefit, if you restore the full state and local state deduction goes to 50% of that benefit goes to the top 1% income earners. top 1% income earners are $755,000 per year taxpayers. 96% of the benefit goes to those in the top/5 of the
income earners. those -- 1/5 of the income earners. they are making $153,000 per year. mr. secretary, first of all, do people making $755,000 per year, $153,000 per year, is that a definition of a low and middle-income worker from your perspective? secretary mnuchin: i don't believe so. mr. reed: is governor cuomo's assertion, then, that the state and local tax deduction cap of $10,000 hurts low and middle-class workers, true or false, in your opinion? secretary mnuchin: mr. reed, i think it's false. we worked very closely with you and others and mr. brady on the $10,000 to make sure that most people -- now, i will tell you, there's no question that wealthy people in new york have been impacted by this. i can tell you i personally pay taxes in new york and california, and my tax rate did go up because i no longer have the salt deduction.
mr. reed: and one area of agreement i will agree with our governor on and that's because people are mobile. especially on the upper income level. those making $750,000 and higher, correct? so people respond to increased taxes by avoiding those taxes. that seems to me to be human nature, would you agree with that higher taxes causes people to react to that situation? secretary mnuchin: i read, i'm sure as you have, that people are leaving new york and going to florida because of the differential of tax rates. i am not an expert of human nature and this area. having 11 older brothers and sisters -- [laughter] people are leaving because of high tax policies, high taxes on their income. with that i yield. mr. neal: the gentleman's time has expired. with that let me recognize the gentleman from wisconsin to inquire, mr. kind. mr. kind: thank you, mr. chairman. mr. chairman, i ask unanimous consent to have included in this record at this time an
article titled "trump's budget-gs on economic growth -- budget hinges on economic growth numbers." mr. neal: without objection. mr. kind: right $2.3 trillion worth of hot checks and we'll give you the illusion of short-term growth and prosperity. there was a jam through to the tax code a -- in 51 days with no hearing, riddled with mistakes and errors and unintended consequences. now, according to most budget forecasts, when you include interest on the debt, will increase our debt by $2.3 trillion over the next 10 years. 83% of the benefit, by the way, goes to large corporations and the wealthiest 1% and now appears as if this sugar high is ending. you know, last two years of the obama administration, they had stronger job growth and higher wage growth than the first two years of this administration.
yet, my friends on the other side of the aisle are like the rooser that crows and takes credit for the sun rising. but my fear is that the debt this administration has embraced is when things do turn sour, and they will again, there will be another economic downturn, we're not going to have the monetary or even the fiscal tools in which to combat that because of this huge debt that's been racked up. i'll tell you what won't fly with hundreds of thousands of seniors and families in isconsin is this president's dget that calls for $845 billion worth of cuts to medicare and another $500 billion to medicaid. clearly this is an attempt to pay for those tax cuts on the backs of those seniors and families that rely on those programs, the health care needs back home in wisconsin. but let me pivot real quick on a subject that we do agree on. i was one of the authors of the opportunity zone legislation
woong with my friend, pat -- along with my friend, pat tiberi, on this committee. and we think it holds opportunity, trying to get that early stage capital in. but i want to make sure it works the way it was intended. we're going to need your help because right now there's no accountability or data reporting requirements -- as far as where these investments are going -- nor is there government data at this time tracking the number, the characteristics of the qualified opportunity funds because it's all just self-certifying at the time of tax filing. can you tell me what treasury is doing to try to bring more transparency and accountability to this program and can you let us know what you can do on your own or what you might need legislatively to try to put this in place we have a good accountability system? secretary mnuchin: mr. kind, thank you very much. first of all, i appreciate your words on the opportunity zones which i share will be an important issue. let me just say on data accountability, we agree with you. if there are specific things you think we should be
collecting, please send us a letter and we will take that into consideration. our view has been that we want to implement this quickly. so be self-certification was to get this up and running. we do intend there will be data accountability and whether it comes out immediately or whether it comes out in the next six months. we do intend to collect data and we appreciate your input on that, thank you. mr. kind: we'll follow up. thank you, mr. chairman. mr. neal: let me recognize the gentleman from pennsylvania, mr. kelly, to inquire. kel mitchell mr. secretary, thanks for -- mr. kelly: mr. secretary, thanks for being here. the "tale of two cities," this it was the best of times -- no, it was the worst of times. it was the age of wisdom. no, it was the age of foolish ness. it was the season of light. no. it was the season of darkness. it was the spring of hope. no. it's the winter of despair. the sugar high is not a sugar high. if it's a sugar high i tell you people back in my district love it. they are doing so much better
today than they have done in so many decades and nobody can deny the economic growth that came out of the tax cuts and jobs act. it's undeniable. it may not be unacceptable, depending which side of the aisle you sit. i tell you for people back home, it's an incredible lift. one of the towns i represent, city of erie has done exceptionally well with opportunity zones. we have eight opportunity zones in erie. mr. kind talked about this. the erie downtown development corporation is led by a guy named john person. a good friend of mine. another friend, walker. these guys have put together a piece that is available to everybody in the country because they are on top of it right now. they are about and moving and we're looking again at growth, growth, growth and more growth and investment in places that nobody would have invested in before but because of the tax cuts and jobs act, it is bringing vitality in a dynamic economy -- and a dynamic economy back to these areas. the one thing, though, i would ask you, if i could. it comes down to trying to put
together all the different ideas that we have to do and basically, the secretary traunch of regulations -- this comes down to -- the office of information and regulatory affairs, there is some confusion on the regulations. and you know how soon we will be able to come out with other regulations? i got to tell you, in the understanding of it, listen, i've never seen anything like this in my life when it comes to growth, economic growth. and when we talk about the acceleration and debt, i was here, also -- i was alive in 2008 and 2009 and 2010 and i saw that debt go from $9 trillion to $20 trillion. at that time there wasn't a senator murry: or whisper about it. it was ok. i got to tell you, i appreciate everything you've done. when it comes to the regulations, that second traunch coming out, it's like the erie downtown corporation, when can people like that see and also i'd like to ask you, if you ever have a chance, would you please come to erie, pennsylvania, and walk with me through the opportunity zones and see what it's like to put
life back into a community because of tax policy that was done right here in this room? this has been if he none national. secretary mnuchin: mr. kelly, i would love to find a time to go to erie. i think the opportunity zones are important and i want to visit the specific areas. the additional regulations are going through an internal clearance process at the moment and we are very much trying to get them out on an expedited basis so thank you. mr. kelly: thank you. the poor zip code in pennsylvania is in that town. thank you. mr. neal: i thank the gentleman. with that let me recognize the gentleman from new jersey to inquire, mr. pascrell. from here we will proceed two to one in terms of ratio and members are advised there is likely to be a vote on the house floor at 10:00. it's the chair's intention to proceed with the hearings so that members on the first row, at the end of the dais, might want to come back. mr. pascrell. mr. pascrell: thank you, mr. chairman. good morning, mr. secretary.
the federal tax laws should be administered in a partial and nonpartisan manner. what firewalls or safeguards have been put in place at the i.r.s. to guard against political interference in the decision to disclose tax records pursuant to a congressional inquiry under -f-1 we made this 2017? in february of most everyone didn't know 6103 of this tax code. what have you done? secretary mnuchin: well, first, let me just say i agree with you completely. the i.r.s.'s job is to protect taxpayers and -- mr. pascrell: what have you done, mr. secretary? secretary mnuchin: you're referring to 6103, are you referring to your potential request for the president's tax
return or normal operation? mr. pascrell: don't think what i'm thinking. i'm asking what you're thinking about my question? secretary mnuchin: well, as it relates to the normal operation of 6103, that's done by the i.r.s. i believe they do it on an impartial basis. and as it relates to any potential request, i said we'll review it at the time. mr. pascrell: let me ask you this question. mr. trump claimed he would -- president trump, he would not personally benefit from the tax cuts in the tax bill of december of 2017. how can we know without seeing his tax returns, can you tell me that? secretary mnuchin: well, i am not aware of the president's financial situation other than what i read in the -- mr. pascrell: apparently nobody is. secretary mnuchin: i would just comment, i assume that that comment is that he has properties in new york and other places that are impacted by the salt deduction.
mr. pascrell: well, it's happening and it's coming so be prepared. september, 2017, you promised not only will this tax plan pay for itself, it will pay down debt. you said that. i didn't say that. you also claimed that for the highest earners their taxes won't go down. which they obviously did in the final bill. so do you agree that those statements have been proved false? secretary mnuchin: no, i don't. on the first part, i would say -- r. pascrell: let me ask it this way. secretary mnuchin: can i answer? mr. pascrell: i'll give you two seconds. secretary mnuchin: so as i said before, on whether it will pay down debt -- >> we are going to step away from this hearing briefly to hear from senate minority leader chuck schumer following the senate vote this afternoon on president trump's emergency declaration. live coverage here on c-span.