Lutnick Testifies on Budget Request

Moran (07:11):

Good morning, everyone. Subcommittee on Commerce, Justice, Science, and related agencies will come to order for its second budget hearing of fiscal year 2026 appropriations process. This hearing will consider the president's budget request for the Department of Commerce. I'd like to welcome our witness, Secretary Lutnick. Glad to see you again. Thank you for your presence here. You are easy to corral, and we appreciate that.

(07:38)
Your testimony comes at a pivotal juncture for the department and its agencies. I look forward to hearing about your priorities and how you plan to achieve them under the president's budget request. That request is outlined in a brief document transmitted to Congress last month and further clarified and materials published late last week proposes significant cuts across several agencies within the Department of Commerce.

(08:03)
We need additional information from the department, including the FY26 budget justification and the FY25 spend plan. The spend plan as required by law and the limited information to date is insufficient. The budget request proposes a 16.5% reduction in budget authority for the department and its agencies, including a 1.5 billion reduction in the National Oceanographic and Atmospheric Administration, a $325 million reduction in the National Institute of Standards for Technology, NIST, and the eventual elimination of the Economic Development Administration.

(08:42)
I support the administration's effort to save dollars. We do need to make certain that these reductions do not harm our efforts to expand manufacturing jobs and to promote Americans exports abroad.

(08:55)
One of the instances I'd like to highlight is this proposal suggests the elimination for the Hollings Manufacturing Extension Partnership, a popular NIST program that supports small and medium manufacturing firms in the United States and certainly in Kansas despite president's strong support for American manufacturing.

(09:15)
While NOAA's overall budget is reduced, I'm pleased to see that the budget appendix appears to support maintaining funding and operations for the National Weather Service. Last Thursday, I visited the Weather Forecasting Office in Goodland, Kansas, which I was unable to operate for the 24/7 since early May. I appreciate your help, Mr. Secretary, in lifting the nationwide hiring freeze impacting weather forecasting offices, a critical step in restoring normal operations, particularly in Kansas where it's now tornado season.

(09:53)
We'll also discuss your plans to unwind the [inaudible 00:09:56] program's burdensome regulations that have stifled domestic investment in broadband deployment. Secretary Lutnick, thank you for your testimony today. I look forward to working closely with you and throughout the appropriations process to provide the right level of federal resources to support the Department of Commerce and its agencies. I now recognize Senator Van Hollen, the ranking member for his opening statement.

Van Hollen (10:19):

Thank you, Mr. Chairman. Welcome, Mr. Secretary. I hope that this hearing will be a restart of what had been a strong and professional relationship between this committee, this subcommittee, both sides and the Department of Commerce.

(10:37)
And I say that because I think that it was the experience of Senator Moran that during the Biden administration whether they agreed or disagreed, the Department of Commerce was forthcoming in providing responses to questions, and that's also true when you go back to the first Trump administration, but it has been a very different and broken relationship since this administration took office, at least with respect to trying to get answers from this side of the aisle. I'm not fully aware of all of the chairman's inquiries.

(11:15)
But as you know, we have witnessed during this period of time since the beginning of the Trump administration an unprecedented and, in my view, illegal firing of thousands of federal employees, including many at the Department of Commerce, NOAA, and other places.

(11:31)
We've also seen the withholding of funds that have been duly appropriated by this Congress and signed into law. As you know, Mr. Secretary, Article II of the Constitution requires the president to take care that the laws be faithfully executed. Appropriations acts are the supreme law of the land. Executive orders are not. DOGE [inaudible 00:11:57] are not.

(11:58)
To that end, here's just a partial list of the Department's and the administration's failure to comply with the law or with reasonable requests from this committee. The administration is withholding $200 million provided to the Department of Commerce in the fiscal year 2025 appropriations law that the president signed in March.

(12:22)
The Department has attempted to illegally shut down the Minority Business Development Agency despite the appropriation and the recent bipartisan 2021 authorization law putting that into the permanent statute. The Department has not provided its agency riff and reorganization plan despite a letter that both the chairman and I sent to you and the Department requesting the specifics. The Department has illegally fired nearly 1,000 employees, including over 500 from NOAA alone. The Department has failed to provide a real spending plan outlining how you tend to execute the fiscal year '25 appropriations law. We have this two-page document. The chairman referred to the fact that this is still missing other than this two-pager.

(13:18)
Just to give you a point of reference, this was an equivalent from last year with respect to the plan to spend the remaining funds for this fiscal year, which as you know ends on September 30th. The Department has failed to respond to virtually all committee inquiries, at least on the Democratic side. Letters I've sent, I sent you two letters, Mr. Secretary, in addition to the joint letter I sent you with the chairman, and our staff has sent multiple inquiries. And I'll have some questions about the lack of responsiveness going forward.

(13:53)
This is, in my view, unacceptable, and I think it should be unacceptable to people on both sides of the aisle. And it's in this context that we're now taking up the fiscal year 2026 appropriations bill. And I've discussed with the chairman of the subcommittee, and I know that Senator Murray has talked with Senator Collins as an appropriations committee. We've got to figure out how when we appropriate resources for certain purposes that those are complied with.

(14:22)
Let me just say that beyond the issue of the numbers and the budget, this does come down to people. One such person is Carrie. She's a mom and a homeowner who lives in Maryland. She's a federal employee who worked at the Department of Commerce. She was proud of her mission. She worked to implement the CHIPS and Science Act promoting domestic semiconductor manufacturing, supporting good paying jobs. She received the so-called fork email offering her money to quit her job. She said, "I don't need to take that because I think I'm contributing."

(14:56)
Earlier this year, she was on medical leave to recover following a major spinal surgery. She then, a few days later, received the message to tell everybody what five things she'd done during the week. Her husband said, "Don't focus on that. Focus on your recovery." Instead, she worked from bed. Days later, she was fired. Then a judge ordered her and other employees to be reinstated, only for her to be fired again.

(15:22)
Making matters worse, not only was her health insurance canceled, but it was also retroactively backdated, meaning she had to pay for the surgery and medication out of pocket. One prescription alone cost her $2,500. She said, and I quote, "Right now, I'm working off faith. We have kids. We have a mortgage, car payments. I don't know what we're going to do."

(15:46)
Mr. Secretary, this is no way to treat patriotic federal employees who are doing the work for our country. And I look forward to today's hearing and the questions that will be posed from people on both sides of the aisle. Thank you, Mr. Chairman.

Moran (16:01):

Thank you, Senator Van Hollen. Mr. Secretary, as I welcomed you earlier, we now look forward to your testimony and then you may begin.

Howard Lutnick (16:08):

Sure. Thank you. Thank you all the members of this committee for having me here today. I very much appreciate coming to visit with you. Chairman Moran, Ranking Member Van Hollen and members of the subcommittee, it's an honor for me to join you today.

(16:26)
America is once again the most attractive destination for investment in the world. Under President Trump's leadership, the Department of Commerce is strengthening American industry from those that are the most popular to those industries that have been long ignored. We are focused on building in America and driving our economic growth. We will narrow the deficit of this country, both the trade deficit and our budget deficit, and we will deliver a new era of American innovation.

(17:03)
Businesses are no longer looking overseas. They are choosing to invest in America first. Through the President's executive order, establishing the investment accelerator, the Department of Commerce has already secured trillions, trillions of dollars in new commitments from world-class companies and sovereign wealth funds eager to build and invest here in the United States of America.

(17:29)
This surge in investment paired with renewed commitment to fair and reciprocal trade is reigniting American manufacturing. We are bringing car manufacturing back to Michigan and Ohio. We are reopening steel mills in Pennsylvania. Just last month, I went out to Arizona and welcomed the largest semiconductor investment in the history of the United States of America, $165 billion. Thanks to an investment of TSMC.

(17:59)
With respect to CHIPS deals, we are improving those commitments to more than $300 billion, doubling the previous investment of those companies receiving CHIP Act awards without costing the United States taxpayer a single additional dollar. Our Commerce Department is driving substantial investments across America.

(18:23)
Critically, the President's America first agenda goes beyond just economic growth and investment. The President is taking concrete actions to protect American workers and our national security. Under Section 232, the Commerce Department is conducting numerous investigations to protect to reshore and revive manufacturing capacity across our critical industries here in America.

(18:51)
The Trump administration is imposing tariffs and ending loopholes. In April, we ended the de minimis loophole, which allowed foreign companies to avoid paying tariffs to ship small shipments into America, completely undercutting and undermining American small businesses. New export controls are protecting cutting-edge technologies and finally protecting critical industries and American innovation.

(19:19)
In fact, the Bureau of Industry and Security working with our partners in the Department of Justice secured 22 criminal convictions, 32 arrests, 38 indictments, 231 detentions. We've seized goods of $185.5 million and additional seizures of another 40 million.

(19:41)
Under this administration, the US Patent and Trademark Office is tackling a mountain of unexamined patent applications left by the Biden administration, over 800,000. And we're successfully reducing the backlog for the first time in four years. In the past four months alone, we've removed 50,000 fraudulent goods and services from the trademark register that blocks the legitimate use of American businesses.

(20:10)
Many of these purported trademarks come from what they call a specimen farm, which is basically a fake website produced by AI producing fake products that aren't really for sale. And we ended them.

(20:23)
At NOAA, we are transforming how we track storms and forecast weather with cutting-edge technology. But remember, not cutting any instruments or data. We're adding. We're improving the understanding and prediction of how hurricanes intensify. This season, NOAA's research centers will deploy new small aircraft drone systems and underwater gliders.

(20:48)
This year, the National Weather Service will be running experimental AI-based forecast systems and all data will be publicly available. Together, this commitment to innovation means earlier warnings and increased accuracy for Americans no matter where they live.

(21:03)
For far too long, America has not protected its workers and its industry. Thanks to President Trump and this administration's efforts, we are reversing this trend. We are reshoring critical manufacturing. We are eliminating unfair trade barriers and practices. We are investing in American workforce. And with your help, we will continue to deliver growth and prosperity to Americans. Thank you for that. I appreciate it.

Moran (21:31):

Mr. Secretary, thank you. I recognize now the chairman of the full committee, Senator Collins.

Collins (21:34):

Thank you very much, Mr. Chairman. Mr. Secretary, welcome. It's great to see you here today. It probably won't surprise you given the many discussions we've had about the lobster industry that I'm going to start with my first question on that. Maine's lobster industry, as you know, is so important to the economy of Maine.

Howard Lutnick (22:02):

And to me as well, I love lobster.

Collins (22:04):

And I've always known that. And it represents Maine. It's really an iconic industry for us of hardworking people that sustain many of our coastal communities.

(22:20)
In 2022, the Biden administration proposed regulations that posed a threat to the very existence of the lobster fishery. If implemented, it would've shut down the lobster industry. The Maine delegation worked as a team, and we were able to successfully block those regulations and prevent them from going into effect for a period of years.

(22:54)
Subsequently, the Maine Lobstermen's Association sued the National Marine Fisheries Services in the Department of Commerce and overwhelmingly won the case in June of 2023. And I want to read you just a little bit of what the judge said, what the three-court panel said in its decision.

(23:26)
It said that the service had relied upon worst-case modeling that was quote, "very likely wrong," based on assumptions that the service conceded that it did not believe were accurate. Projections that are very likely wrong, obviously, are not likely to occur.

(23:54)
And what the court found was that the service acted in an arbitrary and capricious way and blocked the regulations from going forward. But obviously, it's costly to go to court and to do that.

(24:15)
So Mr. Secretary, I know there's a new executive order that attempts to establish much higher standards for scientific research. It emphasizes rigorous evidence-based methodologies to inform federal regulations. Can you talk to us about how you believe that this new approach to regulation based in science will help protect the main fishing industry and our lobster industry from arbitrary and capricious regulations as the court found was done in the previous administration?

Howard Lutnick (25:03):

This administration views the main lobster industry as an American treasure, and we need to protect it. And you will see as we do our trade deals, they treat the main lobster industry horribly. And in the UK deal, they said, "We will invite you to 10 Downing Street, and we will have now a lobster dinner." Okay.

(25:25)
So we've opened, for example, the UK to lobster. We think this capricious lack of rigor in our science has got to end. So the gold standard executive order saying only real science, not opinion-based science has to be the rule, so we protect our fishermen, we protect our ranchers. These are key things that this administration is going to drive for. So I completely agree with you. We will protect the great main lobster industry because it is a treasure for America.

Collins (26:04):

Thank you very much, Mr. Secretary. We've also talked about how integrated the main economy is with Canada. And Canada's our closest neighbor, our dear friend, and our largest trading partner. And so I have been very concerned, and I know the Department and you personally are working very hard on this issue about tariffs on Canadian products.

(26:35)
Our lobster, our potatoes, our blueberries are largely processed in Canada and then come back across the border. We have a paper mill in northern Maine in Madawaska, Maine, whose sister mill is right across the river in Canada. The sister mill in Canada produces the pulp that is piped across the river to the paper mill in Madawaska, Maine.

(27:11)
So that's how close the partnership is. 95,000 Mainers are not connected to the New England electric grid. They get their electricity from Canada. I just mentioned these examples, 95% of our refined petroleum products come from Canada. 90% of potash, which is used, the fertilizer for potatoes, comes from Canada. Just to give you a few examples of how integrated our approach is. Could you give me a brief update on where we stand with Canadian tariffs?

Howard Lutnick (27:57):

Sure. So the overriding principle is USMCA. So if the products are actually made in Canada and actually made in the United States, they come back and forth, and it's easy for them to fall under the USMCA and that has no tariff. No tariff.

(28:16)
Things that are outside of that where companies chose to be outside of those rules, and those rules, as you know, have been in place quite a long time. If they're outside of those rules, then they have a tariff on them. They have the fentanyl tariffs because we needed to close the border and make sure fentanyl was not coming into the country.

(28:36)
And people say, "Oh, Canada doesn't do much in fentanyl." But if you look at the fentanyl rings in Canada, they were often manned by Mexican cartels. So we needed to shut that. And so those outside of USMCA do pay a tariff, but those inside of USMCA are free of tariff.

Collins (28:58):

Thank you. If you would provide us with a list of which products are under USMCA, that would be very helpful to us. I believe that a lot of the cases that I've mentioned will be under the USMCA-

Howard Lutnick (29:15):

Correct.

Collins (29:16):

… and thus exempt from the tariff, but it would be good to have some certainty in that area. So if we could work with you and your staff to try to get a more definitive list, that would be very [inaudible 00:29:31].

Howard Lutnick (29:31):

Sure. That primarily comes from USTR, but I will call them and I will have it to you.

Collins (29:35):

Thank you so much.

Howard Lutnick (29:35):

No problem.

Collins (29:37):

Thank you, Mr. Chairman.

Moran (29:38):

Chairman Collins, thank you very much. Senator Van Hollen.

Van Hollen (29:43):

Thank you. So Mr. Secretary, I mentioned in my opening comments the RIF plans. On February 11th, President Trump signed an executive order requiring agency heads to plan quote, "large-scale reductions in force," known as RIFs and agency reorganization plans.

(30:02)
On March 27th, Senator Moran and I sent you a letter requesting that you send us the plans the Department submitted to the White House. It's now June 4th. We've not received a response. We're in the middle of a budget hearing. First of all, you would agree, would you not, that your reorganization plans are relevant to the committee's consideration of the budget?

Howard Lutnick (30:28):

I think our proposal for the budget is clear. So I think it takes those things into account.

Van Hollen (30:33):

Mr. Secretary, let me ask you this. Are you going to provide us with the reorganization plan, and when?

Howard Lutnick (30:41):

I will certainly get together with the Department, and we will consider what information we can give you that makes sense. But I'm happy to work with you offline if you'd like.

Van Hollen (30:54):

Okay. Mr. Secretary, you're aware of the fact that a federal district court

Van Hollen (31:00):

… ruled that the RIF plans proposed by the Trump administration could not go forward because the judge stated that "agencies may not conduct large-scale reorganizations and reductions in force in blatant disregard of Congress's mandates. And a president may not initiate large-scale executive branch reorganization without partnering with Congress." That decision was upheld by an appellate court just a few days ago. I'm not asking you to opine on that legal decision. I'm simply asking you to provide the committee with the reorganization plan and your response is maybe yes, maybe no. Am I getting that right? I mean, are you going to provide the plan to this committee as we review the budget for the upcoming year?

Howard Lutnick (31:54):

Well, we at the department are going to follow the law. That, of course, is what we're going to do.

Van Hollen (31:59):

Well, the law actually does require that you submit these major changes to the Senate. Let me ask you this. I mentioned in my opening statement the fact that I'd sent a number of letters to you. Our staff has actually sent inquiries to your team. I have a lot of questions today, but there'll be a lot longer unless I can get a commitment that you and your team will respond to the inquiries we've made. These are simple questions, and I'll set aside for now the RIF plan. Mr. Chairman, I would ask unanimous consent to submit to the record the letters that I have sent to the Secretary and the staff inquiries that my team has made.

Moran (32:42):

Without objection.

Van Hollen (32:43):

Mr. Secretary, will you agree, say within a week, to get responses to these inquiries?

Howard Lutnick (32:49):

I can easily agree that I will go through your letters, and to the extent I can answer them, I will happily answer you within a week.

Van Hollen (32:55):

Well, when you say-

Howard Lutnick (32:55):

I don't know what the letter says-

Van Hollen (32:55):

This is oversight.

Howard Lutnick (32:55):

… as I sit here right now.

Van Hollen (33:01):

Well, okay, Mr. Secretary, I'll read through some of them later in the hearing. We can go through them one by one. They're pretty straightforward, simple questions about the implications of the department's actions on certain programs. Let me turn to the National Weather Service for a moment because, as you know, originally 600 staff were eliminated from the National Weather Service. Then all of a sudden it seems the department realized that this was not really a good idea as many weather stations around the country, and the chairman referenced some of them, said they couldn't be staffed full-time. We have a headline from just May 15th, Washington Post, "NOAA scrambles to fill forecasting jobs as hurricane season looms." I know that we're scrambling to try and rehire or hire 126 people, but Mr. secretary, it's my understanding that as of today, offices in Kansas, Alaska, and Oregon are no longer operating 24 hours a day. Is that accurate?

Howard Lutnick (34:12):

The department employs 2,100 meteorologists and hundreds of other forecasters. Okay. This is less than 5%. We are fully, fully staffed. There are no openings on the National Hurricane Center. Zero. It is fully staffed. We are fully ready for hurricane season, and our meteorologists are fully staffed, fully staffed.

Van Hollen (34:42):

Mr. Secretary, you did not answer the direct question about whether those weather offices are open full time. It's obvious that you all made a huge mistake. I mean, you've acknowledged it by having to rehire 126 people, but can you just comment on whether or not those offices I mentioned are operating 24 hours a day?

Howard Lutnick (35:02):

We have not made a huge mistake. I did not say such a thing.

Van Hollen (35:05):

I didn't say you did. It's pretty obvious from the actions. As I said, you fired 600, you're rehiring-

Howard Lutnick (35:16):

His report is inaccurate, obviously.

Van Hollen (35:16):

Obviously?

Howard Lutnick (35:16):

Obviously.

Van Hollen (35:16):

We're happy to follow up, and you can provide the facts.

Howard Lutnick (35:18):

Sure.

Van Hollen (35:19):

Thank you, Mr. Chairman.

Moran (35:22):

Mr. Secretary, in Kansas we have lots of manufacturers, and the aviation and aerospace industry is a significant component of that. That industry has a very positive trade balance, perhaps the best in our country.

Howard Lutnick (35:38):

Fantastic.

Moran (35:40):

I wonder how the Department of Commerce is going to act to protect that trade surplus as you have negotiations with other countries for trade agreements. There's a zero-for-zero tariff provision on aerospace parts and tools. Is that something that you would continue under the 1979 agreement in the aviation aerospace industry? Is that something you will pursue in trying to maintain so that trade balance continues to be such a positive for our nation?

Howard Lutnick (36:12):

Our nation's aircraft business is, as you correctly say, a fantastic asset of our country, one of the great exports of our country, and we are going to protect it. So we have a 232 in the Commerce department, but we do expect, as we did with the UK, we negotiated a zero tariff with them. And I would expect if other countries play ball with us that I would expect that's an offer we make provided they're buying our aircraft. Remember, in exchange for us doing a zero tariff, I mean, think of Donald Trump, he then gets an agreement by British Airways to buy $10 billion. They were competing with Airbus, and in part of that agreement, they committed to buying Boeing aircraft of $10 billion. That's exactly the way the Trump administration thinks about these kind of negotiations, make sure it wins for American industry.

Moran (37:07):

You mentioned Section 232 dealing with aircraft and jet engines in particular. The comment period expired I think yesterday. What do you expect to occur next?

Howard Lutnick (37:19):

Well, we expect probably by the end of the month we'll have an analysis and we'll set the standard for aircraft part tariffs. We're going to discuss it with the president, we'll discuss the analysis, and we will take due consideration on what to do. But the key is to protect our industry and make sure those who trade with us treat us fairly. I think we will use these tools to the betterment of American industry.

Moran (37:47):

In the aircraft and aviation aerospace industry, there are certainly large companies, you mentioned Boeing as a particular player in that field. And that's true in Kansas, we have some large companies who manufacture aircraft and aircraft parts, but there's also a lot of mom-and-pop manufacturers, small businesses in that arena. One of the ways we've been able to help those small manufacturers, aviation and otherwise, is the Hollings Manufacturing Extension Partnership program that we refer to as MEP. I've heard from manufacturers in Kansas about the importance of that program, and I am interested in knowing… It doesn't appear that in your budget it's not going to be requesting funding. How does the department intend to replace the manufacturers' assistance that comes from MEP to make sure that our small manufacturers have the best access to technology and techniques to compete with the larger companies who sometimes dominate manufacturing?

Howard Lutnick (38:56):

Programs that were set up by the Department of Commerce decades ago to assist in technology for manufacturing tend to be outdated. The new technology is AI-driven, automated. I think we need to reexamine and retool a whole variety of these programs so that we are able to provide the best technological assistance rather than just continuing a program that's decades and decades old. So I'm very focused, and our department is very focused, on making sure we're bringing our manufacturers the best tools and we're examining them. And we will do that. And you have a great plant for Panasonic in Kansas. It's fantastic. That's exactly the kind of manufacturing we hope to reshore to America.

Moran (39:45):

Thank you. Thank you for knowing about the presence of Panasonic in Kansas and its value to our state and to the country. I'm going to conclude my questions and next turn to Senator Kennedy, but I hope your budget that we will see I hope in the near future, shows us the path that you intend to take to make certain that the latest technologies are available to small manufacturers. Senator Kennedy.

Speaker 1 (40:10):

Thank you, Senator Reed.

Moran (40:12):

Oh, yes, it is. Senator Reed, I'm sorry, I spent time with you on the Senate floor yesterday and overlooked you today.

Speaker 2 (40:19):

Easily overlooked.

Moran (40:21):

Not intentionally. Senator Reed.

Speaker 2 (40:23):

Thank you very much, Mr. Chairman. Thank you, Mr. Secretary. We've all been talking about bottlenecks in the department and elsewhere throughout the government. In fact, last month, Senator Cruz warned about the growing backlog of contracts awaiting approval at the Department of Congress. He warned that NOAA alone has 5,700 contracts set to expire this year. And it's been reported in the press that you are insisting on personally reviewing every commerce contract over $100,000.

Howard Lutnick (40:56):

That is true.

Speaker 2 (40:59):

Well, that seems to be something that is not particularly efficient and that results in the 5,700 contracts just in NOAA. So again, if you can't find reliable support to do those reviews, I think you're wasting your time, frankly.

Howard Lutnick (41:18):

I am tasked with the responsibility of my department, and contracts over $100,000 should be reviewed by the secretary. Now, I may have more energy and more time, and if you drive by the Department of Commerce late at night, you're going to see our lights on because I'm going through it. I do it with my team. I do it with the people who run the bureaus and I teach them how to analyze contracts, not to push forward what was done before, and I'll give you one quick example. They come to me with planes, hurricane hunters, and they said, "There are $672 million." I said, "Wow, how many planes do we get?" "We get two." "Two planes? Wow. Can I see the plane, please? Just show me a picture of the plane we're going to… " And they show me this picture of a plane. You remember old planes, they had like mullions in the windscreen? And they show me that, three propellers on each side and I said, "My God, when was this plane new?" They said, "No, no, no, you're buying a new plane." I said, "No, when was the first one?" "1955."

Speaker 2 (42:20):

Excuse me, Mr. Secretary. Excuse me, Mr. Secretary.

Howard Lutnick (42:21):

These things have to stop.

Speaker 2 (42:24):

You're talking about a $600 million acquisition.

Howard Lutnick (42:26):

Correct.

Speaker 2 (42:26):

That's a lot more than a $100,000 contract to do something like cleaning in the buildings that you occupy.

Howard Lutnick (42:35):

We cancel huge numbers of absurd contracts for software nobody uses. I said, "How many people use this software?" "Zero." These are waste, these are fraud, or these are abuse and it's my job to teach my staff-

Speaker 2 (42:49):

How many CEOs of companies, major companies in the United States, are reviewing contracts at the $100,000 level? And if they would, what would the board of directors say to them?

Howard Lutnick (42:59):

The first year you're there, if you don't do it, you should be fired. You should know everything that's going through. You should do it with your staff. You should teach your staff how to do it, and then you should delegate them to do it once you've taught them. You don't do it, you're abdicating your responsibility. That's how I view it. That's how I ran my business privately, and that's how I'm going to run the government I'm responsible for.

Speaker 2 (43:21):

Well, let's go ahead and get those 5,700 contracts done-

Howard Lutnick (43:27):

There are not-

Speaker 2 (43:27):

… this weekend.

Howard Lutnick (43:27):

… under any circumstances, any contracts sitting there. There are none.

Speaker 2 (43:30):

How about this weekend? Can you get it done this weekend? Work overtime with the gang and get it done because-

Howard Lutnick (43:34):

There are no contracts waiting for me. And if they were, I'll be there all night tonight making sure they get turned out with my team, teaching my team how to do it.

Speaker 2 (43:43):

Right. NOAA budget cuts, I'm echoing what's been said before, but NOAA is a key aspect of our whole society. Farmers plant based on NOAA weather. We do research so that we understand changing oceans, et cetera. This cut as described by Craig McLean, who was served as NOAA's top scientists during the first Trump administration, has said, and it's quote, "The proposal to slash NOAA funding by nearly 30% would take us back to the 1950s in terms of our scientific footing and the American people." And I'm echoing what's said by many other people, you're going to destroy NOAA. Well, that's consistent-

Howard Lutnick (44:26):

Under no circumstances. We have 2,100 meteorologists and 120 retired this year and we hired them back. I was able to have them exempted from the hiring freeze. We care about meteorologists. We care about hydrologists who do the rivers and the ponds. So we are fully staffed with forecasters and scientists. Under no circumstances am I going to let public safety or public forecasting be touched, be touched. But I'll tell you what we did cut. We did cut programs writing children's books for climate anxiety. Yes, that was in NOAA, and you agree with me, that's not part of our mission. Our mission is to forecast. Our mission is to protect. Our mission is to advise. Our mission is to research, not write children's books on climate anxiety.

Speaker 2 (45:18):

How much money did you save there?

Howard Lutnick (45:20):

We saved tens of millions of dollars on nonsense-

Speaker 2 (45:23):

On books for children?

Howard Lutnick (45:24):

… out of NOAA, nonsense out of NOAA.

Speaker 2 (45:27):

I want to also associate myself with those comments made by colleagues about the MEP program. We find it to be very effective. And the notion that, "Oh, we're not going to repeat what we did 10 years ago, et cetera." It's working. In the US, it's been estimated in FY '24 that MEP secured $5 billion in new investments and created and retained 108,000 jobs. It's worth the investment. This notion that, "Oh, we have new techniques," yes, we have AI, et cetera, but we have very common things that businessmen look for like how do I establish my financial relationships with the banks? How do I get this new equipment, which is not sophisticated AI, it's machine tools, and how do I do that? MEP does this. Thank you very much. Thank you, Mr. Chairman.

Moran (46:18):

Now recognize Senator Kennedy, the senator I've been so anxious to hear from. We'll see if I was right.

Speaker 1 (46:25):

Thank you, Mr. Chairman. Thank you Mr. Secretary for being here today. Mr. Secretary, I think I'm like most Americans, I agree with some of the things that you and the White House have done on tariffs, disagree with others. It's clear to me that the president listens to your advice about tariffs, so I want to spend my precious time trying to understand how you think. If Vietnam, for example, came to you tomorrow and said, "Okay, Mr. secretary, you win. We're going to remove all tariffs and all trade barriers. Would the United States please do the same?" would you accept that deal?

Howard Lutnick (47:12):

Absolutely not. Absolutely not. That would be the silliest thing we could do.

Speaker 1 (47:17):

Why is that?

Howard Lutnick (47:18):

Vietnam has a $125 billion exports to us and imports from us $12.5 million. And you're thinking, "Vietnam exports 125 billion?"

Speaker 1 (47:34):

I'm aware of the figures, but tell me why you-

Howard Lutnick (47:35):

But where do they get it from? They buy 90 billion from China, then they market up and send it to us. They're just a pathway of China to us.

Speaker 1 (47:43):

So you wouldn't accept that deal?

Howard Lutnick (47:45):

Well, it's a terrible deal. We're the one with money. We're the one with the store, of course, they want us to take down.

Speaker 1 (47:49):

What's the purpose of reciprocity then? Is reciprocity not one of your goals? Are you telling the president that we shouldn't seek reciprocity? If that's what you're telling him, why are you trying to do these trade deals?

Howard Lutnick (48:04):

What do we want? We want to encourage Vietnam to produce products. They're great at producing.

Speaker 1 (48:09):

But I want to get back to reciprocity. You just said you don't accept reciprocity as a goal. What are you negotiating in these trade deals then?

Howard Lutnick (48:17):

Why would we open our bank account and their bank account when ours is 10 times bigger?

Speaker 1 (48:20):

Why are you are negotiating trade deals? You're trying to get other countries to lower their tariffs and trade barriers in return for us lowering ours. I think that's-

Howard Lutnick (48:32):

That's true for the things that they'll take from us.

Speaker 1 (48:34):

That's called reciprocity.

Howard Lutnick (48:35):

Of course.

Speaker 1 (48:36):

So are you or are you not seeking reciprocity in these trade deals?

Howard Lutnick (48:42):

We are absolutely seeking reciprocity with respect to things that can be reciprocal.

Speaker 1 (48:47):

But you just said-

Howard Lutnick (48:48):

But when they're importing from China and sending it to us, they're not.

Speaker 1 (48:51):

You just said that if a country came to you and offered you the ultimate reciprocity, no tariffs, no trade barriers in return for us doing the same, you would reject that.

Howard Lutnick (49:03):

Of course, because they buy it from China and send it to us. Don't you agree with me?

Speaker 1 (49:07):

Suppose they said, "We won't buy from China."?

Howard Lutnick (49:09):

Now we're talking. Now we're talking.

Speaker 1 (49:12):

Would you-

Howard Lutnick (49:12):

If it was Vietnam-

Speaker 1 (49:13):

Would you accept that deal?

Howard Lutnick (49:15):

We would consider it. For what things? For products?

Speaker 1 (49:18):

What would we want to change?

Howard Lutnick (49:20):

Well, there are certain products we want to re-shore. We don't want other people making them. We want to make pharmaceuticals here. We need to protect ourselves for certain.

Speaker 1 (49:30):

Let me ask you this because I'm going to run out of time. Are you advising the president that trade deficits are always bad in every situation?

Howard Lutnick (49:43):

No.

Speaker 1 (49:43):

Okay. When are trade deficits good?

Howard Lutnick (49:50):

Trade deficits, for instance, let's say there was a company that had the cure for cancer, let's call it Cancer Cure, and we were buying it and it was located in another country, we would obviously have a trade deficit with them because they have the only one of it. An example, our technology companies, our great technology companies, we're the only ones with it.

Speaker 1 (50:13):

So a trade deficit is okay if they're products we really need?

Howard Lutnick (50:17):

If they're the only ones with it and we can't do it, then of course it's fine. But if we can do it, then we darn well better think about whether we're supposed to do it and whether we want to do it and if it's in our interest as a country to do it.

Speaker 1 (50:33):

Well, here's what I'm getting at. I've heard you say that trade… Well, strike that. I'm running out of time. I want to come back to another subject. Tell me your understanding of the Trade Expansion Act.

Howard Lutnick (50:52):

I don't have a really good understanding of the term. I may know the Act, but I may not know its title.

Speaker 1 (50:58):

You're not familiar with the Trade Expansion Act of 1962, that gives the president almost unlimited authority to impose tariffs so long as you conduct an investigation? You don't know about that?

Howard Lutnick (51:11):

Oh, my 232s, of course I do.

Speaker 1 (51:13):

Okay.

Howard Lutnick (51:13):

Sorry, I just didn't know the title of the plan, but of course I know it.

Speaker 1 (51:16):

Why didn't you advise the White House instead of proceeding under other statutes? Why didn't you advise the White House to proceed under the Trade Expansion Act?

Howard Lutnick (51:31):

The president chose IEPA because he could do it swiftly and he could do its sweeping in order to address the underlying problems that had created the $1.2 trillion trade deficit that was haunting the United States of America.

Speaker 1 (51:47):

Have you read the opinion in V.O.S. Selections, VUS?

Howard Lutnick (51:52):

I have.

Speaker 1 (51:53):

What role does the major questions doctrine play in that decision?

Howard Lutnick (51:58):

I'm not a lawyer, so I can't speak to it with that kind of precision. That's a litigation that's under current investigation.

Speaker 1 (52:05):

Are you familiar with the major questions doctrine?

Howard Lutnick (52:09):

Not offhand, but I did of course read the decision.

Speaker 1 (52:13):

Well, about three-quarters of the opinion is on the major questions doctrine.

Howard Lutnick (52:18):

Again, I tend to not know the title. I know the topic and the details of it, but I tend not to focus on titles. Sorry.

Speaker 1 (52:27):

I'm way over. Thank you for your indulgence. Mr. Chairman.

Moran (52:31):

Senator Kennedy, thank you. Senator Shaheen.

Speaker 3 (52:34):

Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here today. In your exchange with Senator Kennedy you were talking about Section 232, which is really supposed to be used to help national security, but it is under the jurisdiction of the Commerce Department as you pointed out with respect to tariffs.

(52:53)
Well, last month I visited a New Hampshire company that makes ball bearings for the aerospace industry, and I agree we should be protecting the aerospace industry in this country. It's our biggest export in New Hampshire, aerospace parts. They were very concerned about the impact of the steel tariffs on their ability to get ball bearings. They said not only has their cost gone up, but the lead time to get the steel to make the bearings, they only have one domestic supplier. While they had suppliers in the Indo-Pacific and in Canada, those have been eliminated under the tariffs. They said that their lead times have gone from 20 weeks to two and a half years because of the tariffs.

(53:42)
I think this creates a real challenge with respect to our national security. About a good percentage of the work they do is with the Department of Defense. It's in the defense industry. So before expanding these tariffs, did the Commerce Department work with the president to evaluate the impact to our national security supply chain, and have you coordinated with the Defense Department? This is an issue that I've also raised in the Armed Services Committee with the Department of Defense because they don't seem to be aware of what the impact is on the defense industry of these tariffs.

Howard Lutnick (54:20):

Of course.

Speaker 3 (54:22):

You did consult with the Department of Defense?

Howard Lutnick (54:25):

Of course.

Speaker 3 (54:25):

And what was the determination about how you address those kinds of extended lead times for companies that are producing equipment that's critical to our national security?

Howard Lutnick (54:36):

It's really a cost issue, not an access issue. It might take a long-

Speaker 3 (54:41):

Well, not according to this company in New Hampshire. It's an access issue for them.

Howard Lutnick (54:48):

That would be illogical since it's just a tariff, which is monetary. It's not a sanction, it's just a monetary one. It would be more expensive-

Speaker 3 (54:57):

Well, it affects their ability to get the product, though, to get the steel that they need.

Howard Lutnick (55:02):

No, no, it changes the price point, meaning, if you're trying to buy it cheaper. The idea for the administration-

Speaker 3 (55:10):

I'm not going to argue with you. I'm just going to tell you what this company in New Hampshire has told me, and that is that their lead times have gone from 20 weeks to two and a half years. And at that rate, it's hard for me to understand how we can continue to support our defense industry when we don't have the ability to get the supply chain that they need to operate.

Howard Lutnick (55:32):

The big issue is you can't fight a war without steel and aluminum production in America. You have to be able to make it. If you don't have the ability to make your own steel and aluminum, you can't fight a war. And that is what the president's doing, he's trying to make sure that we make sufficient steel and aluminum to protect our defense industry. It's exactly what you're saying.

Speaker 3 (55:52):

Which I certainly support. I'm sure all of us support.

Howard Lutnick (55:52):

Sounds like we exactly agree.

Speaker 3 (55:55):

But I don't agree on the way it's being done, because we're not going to have the steel that we need immediately to provide the supplies that we need immediately. So we need to do a little better planning before we put in place those kinds of tariffs. But I want to go to another issue.

Howard Lutnick (56:11):

And I can explain offline how the steel works, but it goes to a spot price. It doesn't change supply, it just changes price. But we'll go over that offline.

Speaker 3 (56:20):

Well, let me just say, the company that I've been talking to in New Hampshire understands how it works and they have a problem. They don't need you to explain it to them. They know because they've been in business for years. But I want to go to the Manufacturing Extension Partnership because you suggested that this is something that has not kept up with the technology. In New Hampshire, they're doing additive manufacturing, they're doing AI. They are providing additional technology to help those companies. And so I just want to register my support with what the chair, the ranking member and others have said about the importance of this program. For every dollar invested in 2023, it returned $24 and 60 cents in new sales growth and $27 and 50 cents in new client investment. This is a program that makes a difference for companies in New Hampshire, and at a time when we've seen the third straight month of manufacturing decline in the US, it seems to me that we ought to be looking at how we can continue to support those industries and support a program that's been working. So I hope you'll take another look at that, and given the bipartisan support for it, that you'll decide that this is something that it's worth keeping because it's helping American companies. Thank you, Mr. Chairman.

Howard Lutnick (57:47):

You do know that my Office of the Inspector General cited the MEP as one of the most participating in waste, fraud, and abuse because the leaders of these things were just charging huge salaries for themselves. One of these offices had like a 90% compensation ratio and others had 60. So the concept is right, but I want you to let our department fix the waste, fraud and abuse and let's get back to its core elements, which I think are fine. So we are not arguing about the core elements, but you need to do it correctly.

Speaker 3 (58:24):

Well, if I could just respond, Mr. Chairman. I appreciate that there may be issues and that we should address those, and it would be helpful to have some transparency around that. I can tell you that in New Hampshire, the head of the MEP program is not making an inordinate salary because we watch that carefully in New Hampshire. Thank you.

Howard Lutnick (58:42):

Thank you.

Moran (58:44):

Senator Fischer.

Senator Fischer (58:46):

Thank you, Mr. Chairman. Welcome, Mr. Secretary. Nice to see you. I appreciate the review that you're doing in the department over the programs that you have there and as you try to make taxpayer dollars be spent efficiently. Looking at broadband programs, the broadband funding map continues to be a major priority of mine. The map tracks all federal dollars being used for broadband deployment, as you know, and the goal is to avoid redundant overbuilding and wasteful funding. However, we have had issues with agencies that do not collect or report this data consistently, if at all. By law, NTIA has a key role to collect this data from federal agencies in addition to submitting their own program data to the FCC, which houses the maps. Will you commit to prioritizing NTIA's work to support the broadband funding map and ensure that these dollars are optimized?

Howard Lutnick (59:54):

Sounds smart. Yes.

Senator Fischer (59:56):

Thank you. Are there any other areas where you think that NTIA's broadband programs can maximize funding to make sure that they meet the intended purposes?

Howard Lutnick (01:00:08):

We are hard at work rigorously pursuing the details of NTIA to make sure it can be the most efficient and effective along the lines that you were discussing, about telecommunications, both access and capacity for growth in America.

Senator Fischer (01:00:25):

You and I've talked about the BEAD program in the past, and I know you have your work cut out for you in reviewing that program, especially with all the red tape that the Biden administration created for that program. Do you have any on the timing for revising those BEAD program rules?

Howard Lutnick (01:00:47):

Yeah, so my expectation is we will put out the notice of funding opportunity, the NOFO, shortly, and then we would expect everyone to apply within 90 days. We're going to hold it hard at 90 days, and then I'm going to hold my department firm that within 90 days, if those applications are done without regard to favoring one technology over the other, just make sure we're giving the benefit of the bargain, what's the cheapest way to get broadband to these people, the most efficient way to do it, if they make that application, we will make all awards by the end of this year. So you had the Biden administration sitting on it for 30 months, right? And you're going to watch us distribute the money and get it out the door provided the applications are, let's say, technologically agnostic. Just do the right thing for the American people. Let's get the broadband to the people for the most efficient way, and we will put out the money.

Senator Fischer (01:01:48):

I'm excited to see broadband deployment take place to areas that receive no service. We have a number of companies in Nebraska

Senator Fischer (01:02:01):

That are able to do that through the Universal Service Fund, through the BEAD program to be able to get that connectivity out to these very sparsely populated areas. There's a vastness to my state as to others here. To be able to have that happen the mapping, back to the mapping is extremely important. But also to recognize I think the investment that many of these companies in my state and in other states have made and have been required to make. So I hope you will take that into consideration as you look at reaching these unserved areas, primarily unserved areas that need to be focused on. Will you commit to working with many of us here that face those obstacles in order to make those opportunities available to our citizens?

Howard Lutnick (01:03:06):

I'd be delighted to work with you so I understand your concerns and that we focus on them.

Senator Fischer (01:03:10):

Great. Thank you. You have many bureaus and you have many programs to cover in making sure that the Department uses taxpayer dollars efficiently. And among these are key grants that support Nebraska's development districts. I was pleased to see that they all received their grant approvals this week that greatly assists our rural communities across the state. As we move forward, can these development districts rely on consistent communication from the department about their economic planning grants?

Howard Lutnick (01:03:50):

Communication should be at the top of our list so that sounds like an excellent goal and strategy for us to try to achieve.

Senator Fischer (01:03:58):

I appreciate the openness you've had with my office. I hope that continues with all members of the Senate so that we can work together. You have an important job. You cover many, many, many areas. You have a broad jurisdiction and it's very important that these things get done and happen in a reasonable amount of time. So I thank you, sir.

Howard Lutnick (01:04:25):

Thank you.

Senator Fischer (01:04:25):

Thank you, Mr. Chairman.

Moran (01:04:26):

Senator Fischer. Thank you. I'm going to follow up Mr. Secretary and just make a point to your response to Senator Fischer's question about the BEAD program. We have many small companies in Kansas and across the country who've applied for BEAD grants. They've done through that through their state office and I hope they don't have to reapply again, re-fill out the application that they've spent a lot of time and money preparing and has been filed and approved with the State already. So we certainly need the reforms and changes to the criteria, but there's a very expensive process they've been through once before. So please take a look at how you expect a reapplication. That make sense?

Howard Lutnick (01:05:13):

Yes. Remember, the key point for me is that the American people get the benefit of the bargain. And we are focused on getting rid of the stuff that's not broadband access, so just all that noise and other things. And then literally, as long as the application is technologically agnostic, meaning does it matter if it's fixed wireless or fiber? The answer should be whatever's the most efficient way to solve that, I want to do that, and we will get the money out the door by the end of the year.

Moran (01:05:49):

Nothing you said do I disagree with. In fact, I agree with fully. Just trying to point out there's a bureaucracy that's taken place in the past that we do not want you to replicate.

Howard Lutnick (01:05:58):

I will try to reduce it. I promise that is my objective.

Moran (01:06:01):

Thank you.

Howard Lutnick (01:06:01):

I will definitely try to reduce it.

Moran (01:06:03):

We're joined by the vice chairman of the full committee. Senator Murray is recognized.

Senator Murray (01:06:07):

Thank you very much Chair Moran and Mr. Secretary.

Moran (01:06:10):

Nice to see you.

Senator Murray (01:06:11):

Nice to see you. Over the last few months I am deeply concerned because we have seen mass firings at NOAA that are really seriously jeopardizing the weather forecasting that we all count on. Funds have been frozen, grants and contracts have been abruptly canceled, and agencies that were created by Congress in a bipartisan way have been shuttered unilaterally, really ignoring the law and sweeping thoughtful tariffs that are crunching small businesses and raising costs for our families. And we have seen President Trump illegally block some emergency funding House Republicans included in their year-long CR, which has cut off funding your department counts on for trade fairness, export controls, NOAA satellites and more.

(01:06:58)
So needless to say, I don't think any of this helps advance the Department's mission to spur economic growth and strengthen America's competitiveness. And it does leave me very seriously concerned about whether the department is going to be able to carry out its job.

(01:07:13)
Now, before I turn to my questions, I do want to quickly raise your decision to cancel $48 million in tech hub funding for the American Aerospace Materials Manufacturing Center in Eastern Washington and Idaho alongside several other hubs. We've had a chance to talk about this yesterday, but I want you to know I have a lot more questions than I think you answered. This hub is really a partnership of industry, academia, military, governments at all levels. Canceling that funding and further delaying progress at the tech hub really damages our defense industrial base and limits our ability to compete with China, as I told you yesterday. So that is unacceptable and I look forward to you resolving that as soon as possible.

Howard Lutnick (01:07:58):

Okay. We have not canceled anything. And just to let you know, I do have, since we discussed it yesterday, I do have the 220 million. We did draw it down before the date it was due. And we have the funding for the tech hubs. We are going to fund the tech hubs.

Senator Murray (01:08:18):

Okay. We look forward-

Howard Lutnick (01:08:20):

I have the funding, the 220, and the additional 280 comes when there's a forward auction. But I have the money, we will fund them. I'm not canceling them. I just need to make sure they do the benefit of the bargain-

Senator Murray (01:08:29):

I appreciate that.

Howard Lutnick (01:08:30):

… and they do it correct.

Senator Murray (01:08:30):

And as I said yesterday, we need an answer that everybody understands is critical.

(01:08:36)
Now, I do want to ask you while you're here, one of the agencies that you oversee is NOAA. It is absolutely essential to supporting sustainable fisheries, protecting our natural resources, and making sure that we have accurate weather forecasts. Cutting away at NOAA you've been doing and as your budget proposes to do further is going to do serious harm. Among other cuts, your budget would completely eliminate the Pacific Coastal Salmon Recovery Fund. That would be catastrophic failure. It would abandon our communities, our tribes, our industries who rely on salmon. And across the Pacific Northwest Salmon are not just fish, they are a way of life and they are foundational to our economy and our culture.

(01:09:19)
So I would like you to explain quickly why you proposed that cut. And I want to ask you, did you consult with our tribes or fishing communities who count on it before making that decision?

Howard Lutnick (01:09:32):

The issues are that we do the same thing in multiple ways in NOAA. We have not cut any hydrologists, which are the people who study the water.

Senator Murray (01:09:44):

But you eliminated the Pacific Coastal Salmon Recovery Fund. That is what I'm precisely asking you about. Did you talk to our tribes or a fisherman before you did that?

Howard Lutnick (01:09:53):

Of course.

Senator Murray (01:09:54):

Well, I have spoken to the tribes, I've talked to the scientists, I've talked to the fishermen. No one, no one in the Pacific Northwest supports those cuts. And I want everyone to know I will not vote for an Appropriations Committee or Appropriations bill that eliminates that funding.

(01:10:10)
Now, staying on NOAA, facilities like the Northwest Fisheries Science Center, which is in Seattle, are really in dire need of investment. For this reason, this CGS Appropriations committee has long included language requiring the Secretary of Commerce to include the cost estimates for NOAA construction projects of more than $5 million in the Congressional budget justification materials as well as the five-year cost estimates for those projects. Are you aware of that requirement?

Howard Lutnick (01:10:42):

My understanding is we filed our budget according to the CR with exact precision.

Senator Murray (01:10:47):

Well, have you submitted the department's FY '26 Congressional budget justification? It did not include the list of projects.

Howard Lutnick (01:10:56):

My understanding is-

Senator Murray (01:10:56):

Which it's required to do.

Howard Lutnick (01:10:59):

… the CR had certain obligations for us and we followed them with precision. That's my understanding.

Senator Murray (01:11:05):

Well, the fact is that you are required by law to submit the NOAA PAC construction list to Congress with the budget. That wasn't done. Can we get that list by Friday?

Howard Lutnick (01:11:14):

I'll happily take a look at it and if it's required of course I will send it in.

Senator Murray (01:11:18):

Okay. It is required.

(01:11:21)
Mr. Secretary, I wrote a law, it was called the Digital Equity Act, to help close the digital divide and it passed with overwhelming bipartisan support. Now, the administration has arbitrarily canceled billions of dollars for the Digital Equity Act claiming it's unconstitutional. This is a program that every state Democrat and Republican has applied for. Every single state in the country. It distributes laptops in Iowa, it helped people get back online after Hurricane Helene washed away computers and phones in Western North Carolina. It's a program in rural Alabama where they taught seniors, including some who have never used a computer how to use the internet. I wanted to ask you, has the Supreme Court declared this bipartisan law unconstitutional? Has any judge?

Howard Lutnick (01:12:09):

No. It will go through the courts and the courts will decide.

Senator Murray (01:12:12):

No one has declared this unconstitutional. No one. Your job, Mr. Secretary, is to carry out the law that Congress has passed. You don't get to keep laptops from our kids because the President doesn't care about rural communities, kids in rural communities. My advice to you here, it is a law. It is not unconstitutional. And I would urge you to get those Digital Equity dollars out the door and save everyone the legal fees because the law is very clear.

Howard Lutnick (01:12:40):

I hear you.

Senator Murray (01:12:46):

Okay. I just have a few seconds left and before I finish, I do want to underscore my state, Washington State, is one of the most trade-dependent states in the nation. 40% of our jobs are connected to international trade. And President Trump and your department continue to pursue this chaotic tariff policy that businesses in my state stand to lose billions of dollars.

(01:13:08)
I have heard from businesses across my state, from manufacturers, from small retailers, they are struggling to absorb the cost increases on everything from napkins to car parts. And this uncertainty has really left them scrambling, which has delayed investments and caused serious supply chain disruptions, especially at our ports. These actions in addition have really harmed our relationships with our key allies like Canada. Heard Senator Collins here earlier talking about Maine's being their neighbor. It is our neighbor in Washington State. They're one of our biggest trading partners. And let me be clear, this is causing chaos, disruption, anger, and we have got to get this resolved because farmers, our people, and our small businesses and our communities are really hurting. T.

(01:13:58)
Hank you, Mr. Chairman.

Moran (01:14:00):

Thank you, Vice Chairman.

(01:14:01)
Senator Murkowski.

Senator Murkowski (01:14:02):

Thank you, Mr. Chairman. Mr. Secretary, welcome. I'm glad to follow the ranking member as well as the chairman of the committee in talking about fisheries. You know I'll never disappoint you. When you come before the committee we're going to talk about fish. And I appreciate what you have shared with Senator Collins about the administration's desire to protect our fishermen and we're pleased with the executive order relating to American seafood competitiveness.

(01:14:33)
I had an opportunity just yesterday to visit with one of our seafood industry leaders in the State of Alaska. I thought we were going to be talking about some of the tax provisions that are included in the reconciliation package. But he basically said, "If we can't deal with the trade issues when it comes to Alaska's seafood, we're not even going to need to worry about the tax pieces because the trade implications are going to kill us in Alaska."

(01:15:02)
Russia has declared war on Alaska's seafood and they have been very direct and very open about it. They are using their dominance in the seafood market to really help fund their war against Ukraine. And the effort is one that we are looking at and needing to make sure, I mean, really desperate to make sure that the administration fully understands the implications of what is happening right now. We've got the largest federal fisheries in the nation. About 60% of America's harvest by volume. Seafood processing is 70% of Alaska's manufacturing employment. The Alaska seafood industry generates six billion in economic output for the state. It employs 48,000 people in Alaska right now. We have Secretary of the Interior and the Secretary of Energy and the Administrator of EPA up in the state all focused on that aspect of resource. But the other great resource for our state is our fisheries and they are in peril.

(01:16:13)
I would ask for your commitment to sit down with leaders of the Alaska seafood industry, those important stakeholders, so that we can talk about a path forward on some of these issues that are really harming our industry right now. Can you give me that commitment that we can work with your team to identify a time to do just that?

Howard Lutnick (01:16:36):

Why don't you organize it? And it would be my pleasure to come and do it together with you. We can all do it together so we can make sure every topic is on the table and we address it. Because our trade policy is out to protect our fishermen, which are a key resource of the United States of America. We are on it, we know about it. I know all about the Russian issues. They've been attacking us for years. This is nothing new sadly, but let's do it together. And this administration is on your side and is on it.

Senator Murkowski (01:17:09):

Excellent. I look forward to that and we'll be working with you on that.

(01:17:12)
A couple more issues. There's been a lot of discussion about NOAA and the budget cuts as well as with the impact on the National Weather Service. We've been working with the Secretary of Transportation, Secretary Duffy, about aviation safety. We are going to make some headway. There's good support within the budget now to do that. But we have a connection here with the Department of Commerce in that the automated surface observing systems, the ASOS systems as they are known, which provide for the aviation safety are managed by the National Weather Service.

(01:17:54)
So right now we're looking at about a 40% staffing shortage and I've heard what you've said to other colleagues about you're not cutting in key areas. I need to make sure that we are looking critically at the National Weather Service staffing in Alaska to make sure that we are not compromising in any way the systems that are vital to transportation, commerce, and safety. We need them to stay operational. So if you can just commit to me that you'll look at that?

Howard Lutnick (01:18:27):

Sounds sensible to me.

Senator Murkowski (01:18:29):

Another one that works on this safety side, and again it ties into our extraordinary oil resources. We have to move that oil by ship out of Valdez. It has to go through Prince William Sound and they rely on the National Data Buoy Center to manage not only the buoys there in Prince William Sound, but over 1,000 buoys that are operated by both domestic and international partners. Right now we have a buoy, the Seal Rocks Weather Buoy that's right outside of Valdez, but the tankers can't leave Valdez unless they get the wave height information from the buoy, the weather buoy that's sitting out there, right? This buoy's been out of commission for months and we're told it's due to funding for operation and maintenance in NOAA's budget.

Howard Lutnick (01:19:30):

It's really old.

Senator Murkowski (01:19:30):

It is old.

Howard Lutnick (01:19:31):

It needs to be replaced.

Senator Murkowski (01:19:33):

I don't care how-

Howard Lutnick (01:19:33):

Oh my, God. If I showed you what that looked like, you and I would hold our heads in our hands.

Senator Murkowski (01:19:38):

We all look at them. And the problem is it's not just the buoy out there at Seal Rock. It is this system, this constellation that is designed to be the information source, the protectorate for the safety. So let's work on this, but I highlight-

Howard Lutnick (01:19:57):

Got to modernize it. We've got to.

Senator Murkowski (01:19:58):

… I highlight because we've got some work to do but it all knits together. So I've highlighted a couple of specific instances.

Howard Lutnick (01:20:08):

I promise we're in it together. I promise. I agree.

Senator Murkowski (01:20:09):

I won't make you go out there if you'll commit to me that we're going to upgrade these systems. But in the meantime we're going to get them operational so that we're not compromising safety.

Howard Lutnick (01:20:19):

Absolutely sensible.

Senator Murkowski (01:20:20):

Appreciate it.

(01:20:20)
Thank you, Mr. Chairman.

Moran (01:20:22):

Senator Coons.

Senator Coons (01:20:23):

Thank you. Mr. Chairman, Ranking Member. Welcome, Mr. Secretary.

Moran (01:20:25):

Thank you.

Senator Coons (01:20:26):

Look forward to working with you. You are, I believe, the first Secretary of Commerce to be a patent holder and I personally am excited to work with you on protecting American innovation and patents. I have four different areas I want to touch on: AI chips, patents to PTO and IPEC, Manufacturing USA, and the MEP. Let me briefly in one sentence say: I agree with comments made by members of both parties that the Manufacturing Extension Partnership is worth improving and saving and I look forward to working with you on it. I've seen it in the field. I've seen the impact it can have. It could be modernized and focused. Absolutely. But in my state, they delivered cyber tools to small manufacturers and they've delivered state-of-the-art support. One down.

(01:21:13)
Two, AI chips. What's your sense of the importance of AI to the 21st century? It's my sense that it's going to redefine our economy, our security, and our place in the world. And what's your sense of where US advanced AI chip manufacturing stands relative to the Chinese right now?

Howard Lutnick (01:21:32):

So I agree with you that AI and the AI industrial revolution is our revolution in our lifetime. It is the industrial revolution of our lifetime. America has invented all of the great chips

Senator Coons (01:21:46):

And how many chips will we make versus the PRC This year,

Howard Lutnick (01:21:49):

Currently we're making 200,000 wafers, right? And we have demand of 10 million. Now, the chips deal that I made with TSMC, that the Department of Commerce made increased that. We'll have 1.2 million chips. Wafers.

Senator Coons (01:22:05):

Wafers.

Howard Lutnick (01:22:05):

1.2 million wafers. So we'll be at about 12% of our demand. It's woefully inefficient.

Senator Coons (01:22:12):

And how much will the PRC make this year of advanced chips?

Howard Lutnick (01:22:16):

They say they're making them and they are not. We have restricted the tools to make the highest-quality chips.

Senator Coons (01:22:26):

And I think, look, the FT reports that they're making fewer than 400,000 chips. Maybe less than that.

Howard Lutnick (01:22:31):

Yeah, I think probably closer to 200,000.

Senator Coons (01:22:33):

So let's say it's 200,000 of the most advanced chips being made in the PRC, millions in the United States. Let's just agree that this is bipartisan, sustained over two administrations, and critical to our future because we want the most advanced frontier AI compute to be in the United States, the most advanced models to be in the United States, and this to drive this century for the United States.

Howard Lutnick (01:22:58):

I agree.

Senator Coons (01:22:59):

So my concern is that the diffusion approach of the previous administration, the AI diffusion rule, and that mandated more than half of AI compute be located in America has been set aside without, to my knowledge, a clear replacement. And I'm concerned about the deal with the UAE and what it means if we provide to the UAE a significant quantity of chips without a clear path for a greater amount of compute to be here in the United States.

(01:23:32)
Could you just tell me how you see this new deal? I'm concerned that we are at risk of dependence on Middle East compute rather than US compute given some of our real challenges. And I don't agree with the argument that's been made by others, not by you, that if we don't provide these chips to the UAE the Chinese will. How do you view that point?

Howard Lutnick (01:23:53):

So number one, I agree and the administration agrees that compute, more than 50% of compute must be on our shores in America. So we completely agree. The deal with the UAE said, "If you buy a significant number of chips, you will invest in America and build data centers in America for an equal amount of chips." So that investment must be dual, there and here. That's required.

(01:24:22)
The AI diffusion rule was very confusing in that, for example, the prime minister of Poland hunted me down and said, "What did I ever do to you that you have me as a tier three? I'm part of Europe? What are you doing?" And it was illogical. It was hastily rushed through at the very end of the Biden administration. Our view is we are going to allow our allies to buy AI chips provided they're run by an approved American data center operator. And the cloud that touches that data center is an approved American operator. So we control it while it's over there.

Senator Coons (01:25:04):

Given the shortness of time, thank you. I look forward to working with you on this. I think it is absolutely critical. You spoke with another senator, Senator Shaheen, about the urgency of retaining steel and aluminum for our defense. AI compute is going to be absolutely central to our defense.

Howard Lutnick (01:25:19):

Absolutely.

Senator Coons (01:25:20):

You made a comment earlier, "We want to make pharmaceuticals here," in response to I think it was Senator Kennedy. You're familiar with Manufacturing USA?

Howard Lutnick (01:25:29):

Yes.

Senator Coons (01:25:30):

One of the things I was pleased to see was that it retained level funding. There are institutes around the country, there happens to be one in Delaware, are you familiar with it? It's the National Institute for Innovation in Manufacturing Biopharmaceutical.

Howard Lutnick (01:25:45):

Yes, it is. Yes, it is. That's true.

Senator Coons (01:25:46):

And it is two-to-one private sector match for government investment and is on the verge of demonstrating a new way of manufacturing at scale pharmaceuticals in the United States. It is critical to our being competitive. I'd love to talk to you about that in more detail.

(01:26:02)
My last point quickly. I agree that there are too many unexamined patent applications. PTO fee diversion in the past has robbed the Patent Trademark Office of critically needed resources to hire more and better examiners to reduce the backlog and to improve that speed. I have a bipartisan bill with Senator Tillis that would permanently prevent fee-diversion, which increases the backlog. Would you work with me to support that?

Howard Lutnick (01:26:30):

I'll be glad to work with you. I think the Patent Office is one of the least understood and most incredible value for the United States of America. I think we undercharge. The fact that we have our amazing judicial system, that you can have access to it for $2,000. $2,000, and the US judicial system should just do whatever you want seems extraordinary. Now, we want the price to be low so that the inventor can come in. But over time I think we should have more money and I think that's something that we're going to talk about. So I want to make sure we capture the benefit as well as the cost that's coming from the Patent Office.

Senator Coons (01:27:10):

There is a long-standing but underutilized capacity, the Intellectual Property Enforcement Coordinator, that is meant to corral IP enforcement across the administration. I'd also like to talk to you about why I think that should be funded and why we need some function like that, no matter how configured.

Howard Lutnick (01:27:26):

I look forward to talking to you about it.

Senator Coons (01:27:27):

Thank you, Mr. Secretary.

Moran (01:27:31):

Senator Merkley.

Senator Merkley (01:27:32):

Thank you, Mr. Chairman. And I believe the chairman has already raised the issue of the Manufacturing Extension Partnership. Last week I met with about 20 small manufacturers in Oregon who had benefited from this and they were telling me their stories of how much more they've been able to increase their efficiency due to the expertise brought to bear through through MEP. There are 13 MEP centers signed up to re-compete their 10-year cooperative agreements. I don't think that process has been initiated yet. Are you planning to initiate that process soon?

Howard Lutnick (01:28:08):

Well, I have to sort it out with, I have the office of the Inspector General has been really, had a very, very negative report. So we need to clean it up and we need to modernize it. So that's what we're working on. And then we're going to go forward, try to figure out what to do next.

Senator Merkley (01:28:23):

Can you meet with those of us Bipartisan fashion that have seen the powerful impacts on supporting American manufacturing by small businesses through MEP to maybe go over the Inspector General's comments and think about how if we need to reform the system we can reform it, but then we can get this renewal, this contract [inaudible 01:28:42]-

Howard Lutnick (01:28:42):

Well that sounds like a great idea. I'd be glad to do that. That sounds great.

Senator Merkley (01:28:44):

That would be terrific. Thank you.

(01:28:46)
I wanted to turn to the CHIPS world. To implement the CHIPS Act Commerce signed contracts with American chip makers. But you have noted publicly that you are not planning right now to distribute the CHIPS award dollars even to folks who have satisfied the contract conditions. So just to be clear, yes or no, are you currently withholding the funding to chip makers who already had these contracts?

Howard Lutnick (01:29:15):

I think the benefit of the bargain, there are numerous contracts that can be made better. For example, the TSMC contract had a $6 billion award for 65 billion of building. And then we were able to modify the award for the same six billion of funding but 165 billion a building. I think commitments of 4% or less, or more appropriate than a 10% funding just seemed overly generous and we've been able to renegotiate them. So if the question is: are we renegotiating? Absolutely for the benefit of the American taxpayer. For sure.

Senator Merkley (01:29:53):

Well, I'll just note that I'm concerned. I'm concerned because the whole goal was to reinvigorate American chip manufacturing. And to some degree you may be able to strike a better bargain, but at some point it doesn't become a better bargain. And we reduce the acceleration of our re-energizing the chip industry here.

Howard Lutnick (01:30:17):

I can't be more confident than if you spend time with us you will see that all the deals are getting better. And the only deals that are not getting done are deals that should have never been done in the first place. But all the deals are getting better. Micron offered to go from 25 billion in commitments to 60 billion in commitments. I mean, the commitments of building in America are going better. We're just getting more value for the same dollars. So we are planning to distribute money only if we get much more building in America, which we both agree is totally in the interest of America.

Senator Merkley (01:30:50):

Well, I hear your point. I will say that when companies find, when they put a lot of work into striking a deal, that that contract then is up for renegotiation down the line that also discourages folks from being able to rely on the contracts that they've struck. So I'm just registering concern about that and hope the rest of the deals that were struck, if they can be renegotiated to the favor, I hope they can be done and we can proceed because I don't want to slow down the work that we invested in a bipartisan fashion to reinvigorate chip making here in the United States.

Howard Lutnick (01:31:35):

Sure.

Senator Merkley (01:31:35):

Thank you.

(01:31:36)
I wanted to turn to the tech hubs. And the Department has canceled a number of, well, I think quite a few of the tech hubs awards and maybe it's a similar situation. I think you're planning to recompete them, correct?

Howard Lutnick (01:31:55):

Correct.

Senator Merkley (01:31:56):

And in doing so, are you committed to a full and fair process with no discrimination against those who won in the first round?

Howard Lutnick (01:32:07):

Of course.

Senator Merkley (01:32:08):

Absolutely. Great. I appreciate that. I'll tell you, the microfluidics hub in Oregon, the challenge of cooling chips is such a key part of advanced chip making as many, many, many more layers are added to try to reach the maximum amount. And that's such an important technology for the future. And so I can tell you the community in Oregon was very excited about the investments they've already put into this strategy. And I think it's very, I know they were very competitive the first round. I'm sure they'll be very competitive the second round, but I just want to put in a word of how important it is that technology continue

Senator Merkley (01:33:00):

Continue to be pursued aggressively.

Howard Lutnick (01:33:02):

I look forward to reading.

Senator Merkley (01:33:02):

Thank you very much.

Moran (01:33:04):

Senator Britt.

Senator Britt (01:33:05):

Thank you so much, Mr. Chairman. Mr. Secretary, it's wonderful to have you here today. I'm thrilled to have you in front of this committee, and just to kind of build off of what my colleague just said, obviously I wanted to highlight the good work that's done by Southern Research and their Birmingham Biotech Hub. The Birmingham-based experts and scientists are national leaders in oncology, precision medicine, population health and infectious disease, and are well positioned to make sure that any groundbreaking advancements that are made can be done there. And my only question to you, and I really appreciate your commitment to making sure the process is fair and thoughtful moving forward, is that if there's some senators from both sides of the aisle that would love an opportunity to just sit down with you and would you just commit to giving us a few minutes of your time to talk about it?

Howard Lutnick (01:33:52):

Sounds great. Happy to commit to it.

Senator Britt (01:33:54):

Thank you so much. I appreciate it. So I want to highlight a success story of the automotive industry in the great state of Alabama. Auto manufacturing has truly transformed our economy. It has literally driven us into the 21st century. It started in the late-1990s with our very first OEM right outside of Tuscaloosa, Alabama, and since then we've added more than three along with countless suppliers, 150 tier one and tier two suppliers throughout our great state. So in a little over 25 years, Alabama has become the premier host for the automotive industry. We are also the number one auto exporting state in the country. Alabama auto exports are sent to 78 different countries and actually one of our OEMs exports more than two-thirds of its product.

(01:34:40)
I wanted to work with you to make sure that Alabama continues to be the premier and the work that we're doing, I think is exactly what President Trump wants to see more of, on-shoring jobs and providing life-changing opportunities for the citizens that I serve. And so I want to know how are you going to work to replicate the great work that's being done in places like Alabama and other states?

Howard Lutnick (01:35:05):

Our objective, especially in auto, is to reshore. I think we have 250 billion of committed reshoring in auto alone, and I know that Alabama, they love for whatever reason… You've done a great job, because they love Alabama and I think your State's going to be a great beneficiary. As Senator Graham knows, they love South Carolina just the same. So auto is coming back to America and the President is on it and he's driving it and we feel it every day, right? You had an announcement the other day by General Motors saying they were bringing their engine manufacturing back into America. I mean, these are the things we need to employ our people and it's coming. So thank you.

Senator Britt (01:35:53):

And I know you considered an export credit. Is that something that's still on the table?

Howard Lutnick (01:35:58):

The idea of the export credit comes with a trade deal. If you're a country and you're willing to open, Japan, Korea, who export to us, if you're not willing to open your market, why are we giving you anything? But if you're going to open your market, now, let's talk. And that's exactly the President's view. If you don't want to open it, you can pay a tariff. If you want to open it, then we're here to talk.

Senator Britt (01:36:26):

Well, we hope to continue to grow the automotive industry in the great state of Alabama and just want to set the record straight, and I appreciate you saying it as well, but these are jobs that change what is possible for the people in those communities and they have been able to achieve the American dream as a result of these opportunities and we want to make sure that they keep coming. So thank you so much. Last month you launched an investigation into the effects of the US national security of imports of commercial aircraft, jet engines and their parts. Mobile Alabama is home to the fourth-largest manufacturing location for commercial aviation in the world. Will you consider the production needs of both Airbus and Boeing to meet the extreme commercial backlog that we've seen, I think it's now over 14,000 aircrafts, in order to make sure that we are doing what we need to meet the needs of our country.

Howard Lutnick (01:37:19):

Can I say exactly? Yes, exactly the way you've said it.

Senator Britt (01:37:23):

This is a lot easier than I thought. Excellent. Thank you so much. Okay, can you help us understand how the administration might address companies that are actively investing in on-shoring today so that they can supply domestic customers with their US operations? And when I'm looking at this, I'm talking about aluminum and we're looking at kind of the President's tariff policy as it continues to work to Rebalance the US economy through the on-shoring of manufacturing activities and the fortifying of domestic supply chains. So when you're looking at stuff like aluminum and other things, how are you approaching that from your perspective?

Howard Lutnick (01:37:59):

The steel and aluminum industry are huge… To produce steel and aluminum, the biggest input is power. Imagine melting that iron ore, that power, and so what happens is the foreign government subsidize their utilities and they provide the electricity just too darn cheaply, and so what happens is the Chinese and these foreign governments, they just dump steel on us, they crush… We've had 40 steel mills and now we have 10, and as the President says, "You don't make steel, you can't fight a war." So he's protecting that industry, bringing it back. You're going to see more steel and aluminum furnaces and mills in the history of this country be built over the next three years and they're all committed to it and they're coming.

Senator Britt (01:38:50):

Yeah, and we're proud to do that in the great state of Alabama as well. Thank you.

Moran (01:38:55):

Senator Peters.

Senator Peters (01:38:57):

Thank you, Chairman Moran. Secretary Lutnick, good to see you here. Thank you for being here today.

Howard Lutnick (01:39:02):

Nice to see you.

Senator Merkley (01:39:03):

I know you've talked about this issue a fair amount today, but it's important to me and I want to bring it up as well. The National Weather Service Forecasting offices are absolutely critical to public safety, and I know my colleagues have raised this issue, but I think it's important for me to restate so you just know how important it is for all of us here. The employees in these offices issue weather and flood warnings, as you know, maintain critical observation equipment, protect life and property, and literally for decades, they've always been open 24/7 because weather happens at night too, not just during the day. It happens all the time. However, we have a self-inflicted staffing shortage on part of your department that has left us with too few employees to ensure round-the-clock operation in a number of locations around the country already and has also left other offices, such as the one up in Michigan's Upper Peninsula in Marquette, spread so thin that they're concerned that they will not be able to provide the 24/7 coverage.

(01:40:03)
So this is a major concern for us, particularly in a very rural part of the state, and while I was happy to see Monday's announcement that the National Weather Service has been granted an exemption to President Trump's hiring freeze, you never should have allowed things to get to that point in my mind, but I'm happy that that's happening. Certainly, it's people's lives we're in taking. So I'm going to ask you just a yes or no questions. So this will be really short and we can get onto another issue. Will you commit to me that the forecasting office in Marquette, Michigan will not cease its round-the-clock operation yes or no would be great? Yes or no would be great.

Howard Lutnick (01:40:41):

You don't understand it yet because no one's explained it to you. These are hard drive computers literally that no one has seen in 25 years with green screens in these offices. They should be on a cloud. Our 2000 meteorologists should be able to watch them round the clock, the concept that we're talking about, a green screen and a hard drive-

Senator Merkley (01:41:03):

So the answer is no, you're saying?

Howard Lutnick (01:41:05):

No, we were going to modernize it. We are going to staff those offices. I can commit that we're going to staff those offices, but I will commit to you that the next time you see me, the concept of having three people at some regional office will be laughable because our 2000 meteorologists and our hundreds of hydrologists will be able to stay and forecast and protect us in a modern way instead of these green screens and hard drives, and it's hard coded and it's absurd.

Senator Merkley (01:41:35):

Okay, so a no answer. One of Congress's biggest bipartisan achievements I think over the past few years was the passage of the BEAD program, which gives funds to individual states to connect every citizen to the fastest, the most reliable internet that's possible. Right now your department is slowing down these broadband projects has a 90-day freeze. States are ready to move forward, Michigan's ready to move forward, broadband providers are standing by and the summer construction season is already underway, and it's a short season in Michigan, particularly in the northern parts. Unfortunately, you've indicated your department is planning to release new rules that would force states to restart their bidding process and tell states that they can't choose which are the best performing broadband technologies for their individual community.

(01:42:26)
You said that you care about efficiency, I appreciate that, but let's be clear, forcing states to start a process over would waste millions of dollars, add months, potentially years of delays to shovel-ready broadband projects that are ready to go this summer, especially in states like Michigan with a short building season, millions of Americans including over 250,000 Michigan households are on the brink of receiving low-cost, high-speed internet, and your department, I believe, shouldn't stand in the way of this. So again, another yes or no question. Do you agree that it would be a huge waste of money at a disservice to Americans who need reliable internet service to restart a bidding and proposal process?

Howard Lutnick (01:43:12):

No. The Biden administration had 30 months and they did nothing. We are going to say within the next 90 days, as long as you are technologically-agnostic and you agree to provide the broadband at the cheapest price to per user, then we will get it 90 days for application and out the door by the end of calendar year 2025. 30 months under Biden, no funding. 100% under Trump administration by the end of 2025. That's impressive. And you should at least agree if we get it all out by the end of 2025, that'd be super.

Senator Merkley (01:43:50):

Well, we'd like to have a faster than a 90-day process. The states have been working on this for some time. The state of Michigan is there. It is technology-neutral. So that is something that you've talked about, and it should be easy-

Howard Lutnick (01:44:01):

Right. If they're technologically-neutral, it'll go like that.

Senator Merkley (01:44:04):

Well, can I work with you to get that done for Michigan?

Howard Lutnick (01:44:06):

Sounds great. I'm happy to do that for you.

Senator Merkley (01:44:08):

Great, thank you. That's super. Thank you, Mr. Chairman.

Moran (01:44:12):

Senator Graham.

Senator Graham (01:44:14):

Howdy.

Moran (01:44:15):

Nice to see.

Senator Graham (01:44:15):

All right, we're going to do this real quick. President Trump's decided that whatever you charge us in tariffs we're going to charge you. Has he decided that?

Howard Lutnick (01:44:27):

To a point. To a point.

Senator Graham (01:44:30):

All right. Well, that's more-

Howard Lutnick (01:44:32):

You can't use my bank account if I can use yours. If mine is a hundred times bigger than yours, that's not fair.

Senator Graham (01:44:38):

Reciprocity.

Howard Lutnick (01:44:39):

Logical reciprocity for sure.

Senator Graham (01:44:42):

Okay. Well, that makes sense to me. Whatever you do to us, we're going to do to you and we'll reach out, maybe we'll go to zero, that'd be great. But the idea of pushing back against people who have higher tariffs than we do make sense. I'm glad you're doing it and that's what you're doing, right?

Howard Lutnick (01:44:58):

Of course.

Senator Graham (01:44:59):

Okay. I'm also glad you're using tariffs to change people's behavior. If you're going to let your country be a dumping ground from fentanyl, maybe we should tariff your stuff. Does that make sense?

Howard Lutnick (01:45:14):

Yes.

Senator Graham (01:45:15):

Well, to the world out there, if you want people to change, make it in their interest to change. Pat them on the back or kick them in the. I don't care what works. So in Mexico, these labs are out in the opening. They're killing more Americans, 3000 a week, we're going to do something about it under Trump, and if you don't want to get tariffed, change your behavior. If you manipulate your currency as an unfair trade practice, you're going to get tariffed, right?

Howard Lutnick (01:45:45):

Well said.

Senator Graham (01:45:46):

If you close like agricultural markets in France, you're going to get tariffed.

Howard Lutnick (01:45:53):

Well said.

Senator Graham (01:45:54):

If you require a business partner, Chinese business partner to American company in China, then that's no longer acceptable.

Howard Lutnick (01:46:05):

It'll just cost money.

Senator Graham (01:46:07):

Cost money, and they can cheat and steal our stuff.

Howard Lutnick (01:46:09):

They do.

Senator Graham (01:46:10):

So these tariffs have a purpose to make us safer and stronger, and we've been talking about China, we've been talking about getting ripped off. I want to thank you and President Trump for doing something about it. Is it fair to say that a lot of people would like to talk to you about new trade deals?

Howard Lutnick (01:46:31):

That is definitely true.

Senator Graham (01:46:33):

Okay. I can tell you the major car companies in Germany came over here and met with the President. Are you aware of that?

Howard Lutnick (01:46:38):

I was in the room.

Senator Graham (01:46:39):

They make BMWs in South Carolina, Volvo, they make Mercedes in Alabama, and they talked to you about making more of the car in America, didn't they?

Howard Lutnick (01:46:50):

Oh, they offered almost a hundred billion in investment in America.

Senator Graham (01:46:55):

So thank you to those car companies.

Howard Lutnick (01:46:56):

Absolutely right.

Senator Graham (01:46:57):

The American dream is to own a German car.

Howard Lutnick (01:47:00):

As long as if it's made in South Carolina, that sounds fine to me.

Senator Graham (01:47:06):

I own one. Bubba makes wheels. BMW. So what you've done is you've got people to come here and talk to us differently. They're talking about making the engine now in South Carolina, right?

Howard Lutnick (01:47:17):

That is correct.

Senator Graham (01:47:18):

They're talking about more content in South Carolina.

Howard Lutnick (01:47:20):

That is correct.

Senator Graham (01:47:21):

And this export credit makes sense to me that 70% of the cars, 60% made in South Carolina are sold overseas. That helps our balance of trade. Do you agree with that?

Howard Lutnick (01:47:31):

I agree.

Senator Graham (01:47:32):

Okay. So this is working folks. Some of the tariffs maybe I'll have a problem with, but what you're doing good. You're telling people if you rip us off, you're going to pay a price. Stop poisoning America. Stop cheating. Stop closing your markets. Now, do you know that China and India buy 70% of oil from Russia?

Howard Lutnick (01:47:58):

I do.

Senator Graham (01:48:00):

Do you think it is helpful for China to buy cheap Russian oil to keep the Putin war machine going? Is that a good thing for China to be doing?

Howard Lutnick (01:48:11):

It doesn't sound good to me.

Senator Graham (01:48:13):

Good. I'm going to give you another example of how we can use tariffs. We want peace. We're not out to humiliate Putin, but we want to stop the killing. To China, you're propping up Putin's war machine. You're the largest purchaser of his cheap oil. You're providing component parts to his military. You want to be normal, act normal. We have legislation in the Senate that would've put a 500… Make you look weak, Howard. 500% tariff on any country that props up Putin's war machine, and we'll have a carve out for any country helping Ukraine, you're good to go. So China, if you want to avoid tariffs, help Ukraine. This is coming, Howard. We've had it with this war. I appreciate President Trump talking to Putin, sending Witkoff over, trying to make it a win-win.

(01:49:13)
He ain't interested in peace, so the Senate is ready to roll, and to our friends in China, if you keep helping Putin and propping up his war machine, we're going to hit you hard because you're destabilizing the world, you're putting our nation at risk, you're rewarding bad behavior and we're going to extend the concept President Trump started. If you're screwing America and you're making the world an unsafe place, we're coming after you. Thank you Howard for all you do.

Howard Lutnick (01:49:45):

Thank you.

Moran (01:49:49):

Senator Van Hollen. We have votes at 11:45, which is fast approaching. We'll have a second round of… As soon as Lindsey leaves. Only the people in this room.

Van Hollen (01:50:02):

Thank you. Thank you, Mr. Chairman. Mr. Secretary, thank you, and I do hope we will vote soon if we don't see any progress toward peace on the Graham-Blumenthal legislation. So I want to follow up on Senator Coons's questions with respect to the deal with the UAE and AI, because I know you share our concerns about diffusion of technology to China. In fact, you're doing a number of things in your department to try to crack down on exports of very sensitive items. I think we need to go into this very clear-eyed. I mean, the UAE has conducted recently the Falcon Shield exercises with China. They've hailed a, quote, "Golden era," in UAE-China relations. I think it would be helpful, Mr. Secretary, if you could provide, if you haven't already, and I don't think you have, if the administration could transmit the text of the agreement with the UAE, including the side letters and security annexes to Congress before any licenses are issued. Can you commit to doing that?

Howard Lutnick (01:51:18):

I'll just follow whatever the rules of the State Department are, but I'd be happy to go over it with you privately. But if you want it to be public, I'll just let the State Department decide how they play those things. That's for them to decide, not me.

Van Hollen (01:51:30):

Yeah, I think it would hopefully allay some concerns and I have some very big concerns about the agreement as I currently understand it, but I look forward to seeing it. I just want to point out that the Republican-led select committee on the Chinese Communist Party said last year about a much smaller deal that was contemplated by the previous administration involving UAE, and I'm quoting from that Republican-led select committee. Quote, "An agreement of this significance must be properly vetted by both Congress and the executive branch." They also called on the National Intelligence Council to provide Congress with an official assessment of the risks posed by the deal between Microsoft and G42, and they went on to say, "Only once the agreement has received this level of scrutiny should the US government allow it to move forward." Do you think that was good advice from the Republican-led select committee?

Howard Lutnick (01:52:28):

I don't know what the topic they were addressing was, but well, this was done in the whole of the administration talking through it, and it's not a legally-binding commitment. It's a framework on which to pursue things.

Van Hollen (01:52:42):

I understand that. I think the concern is that we make sure that we lock down the terms, at least that we understand the terms, or Congress has some information about the terms as we go forward. That's not unreasonable, is it?

Howard Lutnick (01:52:57):

No. As I said, I'd be glad to go over it with you, but if it's that you want me to transmit it, I think the State Department would have to say that's okay, and that's just their prerogative.

Van Hollen (01:53:08):

Understood. Quick question on the patent office, and I agree with Senator Coons's comments and yours as well about the importance of the patent office. I've also been concerned about DOJ getting access to unpublished patent applications.

Howard Lutnick (01:53:27):

That's not happening. No. No, no.

Van Hollen (01:53:27):

Not happening?

Howard Lutnick (01:53:32):

No, no. And I gave a little laugh of no, you heard all that.

Van Hollen (01:53:35):

So you can provide 100% assurance that's not happening?

Howard Lutnick (01:53:38):

100% no.

Van Hollen (01:53:40):

Thank you. Thank you, Mr. Secretary. I appreciate that because that would be obviously of great concern. So look, I look forward to the chance to get together. There are lots of statements you've made over time, I'm not going to take the time today to interrogate you about them all, although I do want to ask you this one question. I assume after yesterday, you're no longer advocating to people buy Tesla stock?

Howard Lutnick (01:54:10):

I would say on Jesse Waters he showed arsonists burning cars and attacking a company, then he showed Tim Walz literally attacking Elon Musk's stock. Not the man, not the product, literally his stock, and I just thought a terrorist attack on a great American stock seemed to require a response from me, and that's why-

Van Hollen (01:54:39):

Mr. Secretary, I think probably you would agree that Secretary of Commerce probably should not often be offering suggestions on stock purchases, but I'm going to leave it at that. I'm not going to go through some of these other statements today. I do want to end, and I'm going to pass it over to the Chairman, where I started. I do hope that at least from our experience so far in the first four months, when I say ours, I'm speaking at least for the Democrats on the Committee, that we can hit the reset button with you and the Department of Commerce. And I would welcome the chance to sit down with you and go over all of these issues, because we've got a budget to deal with. We hope that we can resolve it. I'm going to be working in good faith with the Chairman. So can we get together and go over a number of these issues I've raised and some that I haven't?

Howard Lutnick (01:55:38):

Be my pleasure.

Van Hollen (01:55:39):

Thank you, Mr. Secretary.

Moran (01:55:41):

I think you've been truthful to that last sentence. It'll be my pleasure.

Howard Lutnick (01:55:46):

Quite an honor.

Moran (01:55:48):

Mr. Secretary, just a couple of wrap-up things. First, I've been involved in trying to make sure the United States is prepared for foreign visitors to our country, particularly with the FIFA and the soccer tournaments that are approaching quickly. The US Olympics is in Los Angeles. We have great opportunity to showcase our country and I want to make sure that the Department of Commerce is interested in pursuing opportunities to make sure that the visitors are eligible and able… Those who are eligible to be here are here. We need help with the State Department in regard to visas, communities need infrastructure support, but I just want to highlight that the tourism and travel industry is something that is important and should be very important to the Secretary of Commerce, and I'd love to hear your thoughts in that regard.

Howard Lutnick (01:56:46):

It is. In ITA, we have a group dedicated to tourism, and I mean, this is a wow, right? We've got the club championship, right, the FIFA Club Championship, FIFA World Cup, the Olympics, and our 250th anniversary. I mean, if there's ever a time for America to shine, it's right now. We've got to take out all the stops and make sure we are putting our best foot forward and I'm happy to work with you. We've got to make sure the Department of Homeland Security and the State Department issue those visas and we've got to make sure our infrastructure is there and the tourism experience is second to none, and I'm happy to work together with you on that purpose because this is just a great opportunity for America.

Moran (01:57:35):

Mr. Secretary, Senator Klobuchar and I co-chair the Senate Travel Tourism Caucus. I'm not exactly sure what the name of it is, but this is a highlight for us.

Howard Lutnick (01:57:45):

I testified that I'm not good at names either, right? I know the content, I don't need the title-

Moran (01:57:51):

Title of the caucus, but we need to make certain that we are prepared and those days are fast approaching and I look forward to working with you to make sure that's the case. And working with ITA, President Trump appointed an inter-agency organization to coordinate activities within the administration. I think that's very useful and I hope that they're hard at work. I'm going to see if I can get you to respond to a way that Senator Peters would not think you're saying no to a question that you might be saying yes to, and that is he and I… I've introduced legislation he's agreed to co-sponsor that would permanently designate the National Weather Service employees, that certain category of employees as essential and therefore not subject to a hiring freeze. They are essential under the law, as I understand it today. If we don't do our job as a Congress and get a appropriation bill done and governments shut down, they're still working, they're essential, and my understanding is that you're supportive of that legislation, and I'm trying to have you say that my understanding is correct.

Howard Lutnick (01:59:03):

I am of course supportive of keeping our meteorologists and our hydrologists protected, but I think it's important that we spend some time that you understand how inefficient we do things and that if we did it more efficiently, then we may not need so many or be… Because we have them sort of put out in the field, they could be centralized, and I'd just like you to understand that and we'll work together on that so you understand it and we'll do that together, but I of course am supportive of your macro topic for sure.

Moran (01:59:37):

And I meant to preface my question to you by a lead in that would've said understanding we need to utilize new technologies and update our National Weather Service. In the meantime, we need these people at work. And then perhaps finally, we worked with Ambassador Greer on an issue of Chinese-owned ships and fees for their dockage in the United States, and from a Kansas perspective, but from an American perspective, so much agricultural produce is shipped abroad. Senator Murray indicated she's an export state, a trade state, Kansas airplanes, aviation, agriculture, and the concern that we were trying to address and Ambassador Greer, I think, was very helpful in understanding of the circumstance, but absolutely we want to have American-built ships transporting our goods around the globe.

Howard Lutnick (02:00:44):

First we have to make some.

Moran (02:00:45):

We have to make some, and that's the problem. You've already hit on my point. In the meantime, we can't punish those agriculture producers and ag companies who export our ag products around the globe because they can't yet get an American ship. So cart and horse, once again. Would you commit to me that you'll be helpful to that cause in making sure that we don't damage agricultural exports while we take the steps necessary to over hopefully a short period of time, move our country in the direction of manufacturing ships again?

Howard Lutnick (02:01:25):

Be my pleasure.

Moran (02:01:26):

Thank you, Mr. Secretary, it's my common practice to give the witness… I hate to do this because I don't… You might actually take advantage of it, which is the opportunity to correct, to set the record straight on something you said, wish you to expand upon. I just want to give you the last 60 seconds to say anything that you'd like to say to make certain we understand a point that you were trying to make.

Howard Lutnick (02:01:52):

No, I just want to thank you for the respect, the demeanor, the way this whole hearing was arranged. I appreciate it. I appreciate you both and I want to say thank you.

Moran (02:02:04):

Thank you, Mr. Secretary. I do want to join on behalf of all of my colleagues and indicate that this committee, this subcommittee and the full committee needs information from the Department of Commerce, and particularly by law you, the department, is required to provide us with FY '26 spend plan, which we need and want, and I'm hoping that you'll commit that we will see it soon and I'll ask you that question. And also, we of course, are lacking the details of the President's budget and we're hopeful that that is provided to us as quickly as possible. Can you commit to providing us with the spend plan and the budgetary information just as soon as the budget is finalized?

Howard Lutnick (02:02:51):

Well, my understanding is we filed that, which was required by the CR, with precision, but I'm happy to work with your office. If there's more information you'd like or need. Let's go over it together and we'll try to sort that out.

Moran (02:03:04):

Okay. If you'd take the word spend plan back to your staff and ask if they could find where that is and give it to me, that'd be wonderful outcome.

Howard Lutnick (02:03:14):

I hear you.

Moran (02:03:16):

All right. With that, we're going to conclude the hearing. And there's magic words I need to say. With no further questions, senators may submit additional questions for the subcommittee's official hearing record, and we request you, Mr. Secretary, to respond to those additional questions that would be provided in writing within 30 days. The subcommittee after thanking you for your presence is adjourned.

Howard Lutnick (02:03:42):

Thank you.