Senator Mike Crapo (16:24):
The committee will come to order. I would like to thank you Secretary Bessent for appearing before the committee today to discuss the president's fiscal year 2027 budget for Treasury Department and the administration's broader economic agenda. A central part of that economic agenda is driven by the landmark bill enacted by Republicans last year. The Working Family's Tax Cuts Act not only provided historic tax relief for working class Americans, but also made permanent critical pro-growth tax policies that are already increasing domestic investment and boosting economic growth. The magnitude of this success today was made possible by the work of the [inaudible 00:17:10] Department and the IRS in publishing immediate guidance on the new and restored tax policies in the lead up to the 2026 filing season. I appreciate all the hard work from Treasury and the IRS and their employees to release that initial guidance as quickly as they did.
(17:29)
Doing so provided rules of the road for tens of millions of people, claiming at least one Republican's signature new tax cuts, from no tax on tips and overtime, to increase tax relief for our seniors. Contrary to the Democrat narrative that the law only benefits the wealthy, these policies were claimed by over 60 million American working class citizens, nearly half of all filers. At the end of the tax filing season, over 7.5 million workers claimed the tips deduction. More than 29 million workers benefited from the no tax on overtime. And more than 35 million seniors' tax burdens were reduced, with an average additional deduction for them of over $7,500.
(18:21)
Additionally, over 5.5 million children have already been signed up for the Trump accounts, in large part due to Treasury's work to implement and promote the program. These savings accounts offer an important opportunity for young Idahoans and children across the country to begin building financial security. Hardworking Americans kept more of their money this tax filing season, and millions of people got more money back compared to previous years. Over $320 billion was refunded to taxpayers, an 18% increase from the last filing season. I note that again, an 18% increase from the last filing season, with an average refund of nearly $3,300, more than an 11% increase on average. And even the average refund amount does not tell the whole story. Many working class Americans who owed money when filing in prior years instead received a refund this year because of the Working Families Tax Cuts. Treasury's initial guidance has also helped the business provisions of the Working Families Tax Cuts, like full expensing for equipment and factories to drive domestic investment higher, productivity higher, and wages higher for American workers.
(19:50)
Nearly 26 million small businesses now have an increased confidence thanks to a permanent pro-growth 20% tax deduction. Estimates find that permanence will create 1.2 million jobs annually and boost small business GDP by $750 billion over the next decade. The permanent restoration of full expensing for US research and development will support domestic innovation and growth by large and small businesses alike. To maximize that growth, taxpayers need additional clarity from Treasury and the IRS so that they can plan and invest with certainty.
(20:38)
Issuing final guidance for these tax provisions will provide that certainty and further encourage domestic investment. Implementing the new provisions from the Working Families Tax Cuts was no small task, but the 2026 filing season proceeded smoothly for tens of millions of Americans. I look forward to hearing from you about plans for successful filing seasons next year, as well as the more work that needs to be done to implement the law and get technological investments made to more modernize the IRS. Regarding IRS modernization, ranking member Wyden and I released the Taxpayer Assistance and Service Act earlier this year. This bipartisan bill with more than 60 provisions and supported across the tax community is focused on modernizing the IRS, improving the taxpayer experience, and strengthening taxpayer rights. Many finance committee member priorities are included in the bill, along with a series of long requested provisions from the tax practitioners as well as the national taxpayer advocate.
(21:53)
I look forward to advancing this legislation in the very near future and welcome any comments from you on it. Beyond tax administration, I'm hopeful for similar support as we move forward with other priorities with a bipartisan foundation in this committee, such as establishing clear and durable tax rules for digital assets. Mr. Secretary, we're very glad to have you with us today, and look forward to your remarks. And with that, I turn to the ranking member for his opening statement.
Senator Ron Wyden (22:24):
Thank you very much, Mr. Chairman, there is lots to work on. Now, colleagues, it was just a matter of time before the Trump administration set the new high water mark for public corruption. That moment arrived a little more than two weeks ago with the settlement of Trump's ridiculous IRS lawsuit. This hearing is the first opportunity for Congress to examine it. So, let's start by zooming out to get a full appreciation of how dirty this whole situation has been. Donald Trump sued his own administration for $10 billion over a tax return leak that happened on his watch. A judge appeared ready to toss the lawsuit so Trump rushed a settlement for personal gain. The acting attorney general went out yesterday and said they're not moving forward with the $1.8 billion insurrection slush fund. The other part of this settlement apparently remains in place, and that is the part that presents the biggest direct benefit to Trump.
(23:31)
Todd Blanche let Trump off the hook for potentially $100 million in back taxes by canceling what's reported to be a long-running dispute with the IRS. Then he let the entire Trump family and the Trump organization off the hook for any tax crimes they may have committed in the past. As of right now, everybody in America is subject to audit except the Trump family. Unfortunately, the Senate Republican leader was quoted this morning saying that this is, "Business as usual, that it's a standard settlement." The reality is that's totally wrong. Two former IRS commissioners have now confirmed that this is completely without precedent. It's the ultimate case of an ultra wealthy individual living under one set of rules while everybody else lives under another. A crooked double standard that benefits Trump and family. I take it as an admission of his own guilt when it comes to tax cheating.
(24:43)
Trump and his family have been stuffing every dollar they can grab into their own pockets. If everything was on the level, seems to me he wouldn't need Todd Blanche to get the IRS off his back. Secretary Bessent owes the committee an explanation of what the treasury knows about the dirty settlement, that's because his department was involved from beginning to end. Treasury was a defendant and a negotiator in the lawsuit, it was informed by IRS attorneys that Trump had no real case, and it sure looks to me like Treasury's top lawyer quit his job in objection to the settlement. This is an abuse of the IRS that goes way beyond anything that I have any familiarity with. My view is this committee needs to investigate this on a bi-partisan basis. Blanche allegedly dropped the insurrection fund doesn't change that. So, what's particularly shocking about a corrupt deal like this is it comes when so many American families feel fearful about the economy.
(25:53)
I was home last week having four town hall meetings in parts of my state that are bright red, and what they talked to me about was the pain of inflation going up, wage growth going down, the job market flattening... The Trump administration doesn't seem to care. Last week, Secretary Bessent was asked during an interview about price increases caused by the Iran war. He said, I quote, "It was less than $200 in extra gasoline costs. All the Democrats want to talk about is beef and gasoline." Now, to me, you might think that a political leader couldn't get any more dismissive of people's economic concerns, but then Donald Trump topped it himself. When asked if American's financial situations made him think about ending the war that he started, he said, and I quote, "Not even a little bit." He continued, "I don't think about American's financial situation. I don't think about anybody." As chairman and colleagues, I've never heard of President of the United States talk in such a dismissive way about the hurt of the American people. And then he rambled through his ever-changing goals in the quagmire of a war. No sympathy for struggling families at all from the president. Americans are increasingly spending down their savings and going into debt to get by. The people running the country are ratcheting up the cost of living with wars, tariffs, and cuts to healthcare and basic services. It's cold comfort to somebody who had to max out their tax credit card to feed their kids that Trump might get his face on a $250 bill, but that's the kind of priority that apparently the Treasury Department is focusing on these days. Even outside of economic matters, the Treasury Secretary is simply out of step with the American people.
(27:56)
There's no better example than the fact that there's been a coverup of the massive file of Epstein's financial records for a year and a half. This is part of the effort I've made, it's the only one to follow the money in the Epstein situation, and yet there's been a denial of access to committee investigators, and lying in public about their significance. That subject alone deserves its own hearing. Senate investigators are trying to figure out who paid Epstein for girls, and unfortunately Secretary Bessent is involved in preventing that from happening. The bottom line in this administration is the machinery of government works to the benefit of Donald Trump before all else.
(28:44)
That's the corrupt framework that produces insurrection slush funds, protects pedophiles, and dismisses the concerns of people who are worried about being able to make rent and to feed their families. There is an awful lot for the committee to discuss today, Mr. Chairman, and I look forward to question and answers. Senator Crapo.
Senator Mike Crapo (29:04):
Thank you, Senator Wyden. Secretary Bessent, you may make your opening statement.
Senator Scott Bessent (29:13):
Chairman Crapo, ranking member Wyden, and members of the committee, thank you for convening today's hearing, I'm grateful for this opportunity to discuss President Trump's 2027 budget, which builds on this administration's progress in unleashing a new era of economic expansion.
Senator Mike Crapo (29:29):
Could you pull the microphone a little bit closer?
Senator Scott Bessent (29:31):
Sure. I last appeared before this committee just a few weeks before the Senate passed the Working Family's Tax Cuts, so on the heels of the most successful filing season in IRS history, I'd be remiss if I did not begin by thanking the committee for helping to deliver this once in a generation bill to the president's desk. This day, under President Trump, we celebrated how much more money hardworking Americans kept, not how much the government took. Over 62 million tax returns claimed at least one of the president's signature new tax cuts. No tax on tips, no tax and overtime, deductibility of American car loan interest, and enhanced deduction for low and middle income seniors. All told the average refund increased by over 11% with refunds increasing by 18%. But as important as what this legislation achieved is what it prevented. If opponents of the Working Family Tax Cuts had their way, our economy would have absorbed the largest tax hike in its history, over $5 trillion.
(30:36)
90% of American taxpayers would have seen their standard deduction slash, while 40 million families would have seen their child tax credit halved. Instead, this committee held the line and the American people had a better tax day because of it. Notably, President Trump's pro-growth policies don't stop at putting more money back in the pockets of working middle-class families, they extend to placing the American dream within the closer reach of their children. For context, nearly 40% of Americans have no exposure to our great US equity market, no stake in the companies they helped to build. Trump accounts represented profound re-imagining of that arrangement. They will ensure that every American child can benefit from private ownership and compound growth. That every American child in short is born a shareholder. To date, nearly six million Trump accounts have been opened with 1.4 million eligible for the $1,000 seed contribution. Of course, as his tax cuts deliver relief for working class Americans, President Trump's economic agenda is bolstered by two other distinct but reinforcing levers, trade and deregulation.
(31:51)
Let me briefly address both in turn. First, the president has undeterred his determination to open markets for US goods and services, while rebuilding US manufacturing capacity. Over the 12 months ending March 26, the trade deficit for goods declined by approximately $370 billion compared to the same timeframe ending March 2025. The economy has added 313,000 net private sector jobs and 13,000 manufacturing jobs in the past two months. Firm capital expenditures rose at an annual rate of over 17% in the first quarter, and companies are investing trillions to build and expand here at home. American industry is winning again to the benefit of American workers. A whole government approach meanwhile is coupling our manufacturing revival with a great regulatory reset. Properly calibrated regulation is essential for economic growth, capital formation, employment, and higher wages. So, at the outset of this administration, President Trump set the ambitious benchmark of slashing 10 existing regulations before issuing a single new one.
(33:03)
In 2025, we shattered the goal with a ratio of 129 to one. As a result, the regulatory actions generated more savings last year than those of the prior Trump administration combined. Separately, any one of our initiatives on trade, tax cuts, and deregulation would be substantial. Taken together, they are transformative. Before President Trump took office, our trading partners exploited America's markets, our regulatory states smothered businesses, and our tax code was poised to punish workers and job creators. Today, his policies are driving lower taxes, bigger paychecks, and broader prosperity. So, I thank you on this committee for its partnership and this critical work, and I look forward to building upon our stride through the president's budget for the year ahead. Thank you. And I had hoped to keep this in terms of the economy, Senator Wyden has mendaciously slandered the Treasury building in an attempt to cover up his son having an investment meeting with Jeffrey Epstein to ask for funding. Thank you.
Senator Ron Wyden (34:14):
Mr. Chairman.
Senator Mike Crapo (34:18):
Yes.
Senator Ron Wyden (34:20):
Let's be clear here, nobody is interested in the ramblings of a capo in the most corrupt regime in American history. We want to get some facts about this deal, that's what we're here for. Thank you.
Senator Mike Crapo (34:34):
Well, thank you, and I will ask my questions first today.
Senator Scott Bessent (34:37):
And we would like to hear what Adam Wyden and Jeffrey Epstein talked about. Your son's largest investment position was Rick's Cabaret. So, did your son and Jeffrey Epstein talk about pole dancing as he begged him for money using your limited credibility?
Senator Mike Crapo (34:57):
Should I just proceed? I'm going to proceed with my questions, and Mr. Secretary...
Senator Mike Crapo (35:00):
I'm going to proceed with my questions and, Mr. Secretary, I'm going to start with regard to the issues that Senator Wyden raised. There have been a lot of accusations about the settlement agreement between the president and the IRS over the leak of his tax returns. On Monday, the Department of Justice announced that it would abide by the district court's ruling in joining the creation or operation of the anti-weaponization fund that was established under the settlement agreement. Yesterday, Acting Attorney General Todd Blanche announced at a hearing that we are not moving forward with the fund, period.
(35:40)
With respect to other parts of the settlement agreement, I'd like to give you the opportunity to set the record straight. Understanding that there is ongoing litigation, what can you share with us about Treasury and the IRS's role in the settlement agreement? Specifically, since IRS CEO Frank Bisignano signed the settlement agreement, what can you share with us about Mr. Bisignano's role in reaching that agreement?
Senator Scott Bessent (36:09):
Thank you for the question, Mr. Chairman. As we have done throughout this matter, the Department of Treasury is following the direction of the Department of Justice. And as you noted, Acting Attorney General Todd Blanche testified yesterday that the government will not be moving forward with the fund. We intend to comply with that direction.
(36:28)
I do not have any additional details into what that means at this time, but I will note that even with the Acting Attorney General Blanche's statements yesterday, this matter is still subject to ongoing litigation, so I'm unable to comment further on it. As with all department litigation, the Department of Treasury and the IRS were represented by the Justice Department, so any additional questions about the settlement or the fund should be addressed to the Justice Department and Acting Attorney General Todd Blanche. Thank you, Senator.
Senator Mike Crapo (37:02):
All right, thank you. With regard to the Working Families Tax Cuts, affordability remains top of mind for families across this country. Last summer, Republicans acted to prevent what would've been the largest tax increase in American history and delivered meaningful pro-growth tax relief through the Working Families Tax Cuts, providing much needed support to American workers and families. Can you talk about Treasury's work so far to implement this groundbreaking tax relief, and what parts of the law do you view as the most helpful in addressing affordability issues?
Senator Scott Bessent (37:39):
Thank you, Senator. Since the Working Families Tax Cut was passed in record time on July 4th, I would describe the benefits as a barbell. On one side, we have seen for American business the immediate expensing of capital goods and factories, which have led to more jobs and construction jobs. On the other side, we have seen the president's signature policies, no tax on tips, no tax on overtime, reduced taxes on social security, and deductibility of American-made cars on the loans for those. 99% of the filers claiming any of those four deductions had incomes under 200,000. 90% had incomes under 100,000. We saw record tax refunds. And we are not able to measure the delta in the refund because we can only calibrate someone who had gotten a refund the year before so that we cannot calibrate if someone had paid in. And as I have traveled across the country, many people have said, "Paid a substantial amount last year. I've gotten a very large refund this year," and I think very importantly, too, the certainty that our small businesses have gotten.
Senator Mike Crapo (39:00):
Thank you. The Senate Finance Committee is engaged in productive bipartisan discussions on the taxation of digital assets. As the digital asset industry continues to grow and evolve, there's an increasing need for durable common sense rules of the road that provides certainty for taxpayers, support innovation, and help ensure that the United States remains competitive in the global digital markets. Does Treasury support congressional efforts to develop comprehensive digital asset taxation? And in your view, what are the risks of continued inaction, both in terms of taxpayer compliance and America's ability to remain competitive in the rapidly growing digital asset economy?
Senator Scott Bessent (39:41):
Senator, since President Trump issued his executive order, Treasury has been working tirelessly to implement the action on digital assets. We saw Congress pass stablecoin legislation. Clarity Act, which I would encourage everyone to get behind, is very necessary to bring US best practices onshore, and we work tirelessly in terms of custodying these assets and keeping them making the US the innovation capital of the world.
Senator Mike Crapo (40:17):
Thank you very much. My time has expired. I encourage all my colleagues to note when their time expires. We want to keep moving expeditiously. Senator Wyden.
Senator Ron Wyden (40:24):
Thank you very much, Mr. Chairman. Secretary, yesterday Acting Attorney General Todd Blanche indicated that the administration is not moving forward with the slush fund, but there's been no indication of what this means for the Trump alleged IRS audit immunity. So my first question is, does the IRS audit immunity given to Trump, his family, and his businesses still stand? I'd like a yes or no answer to that.
Senator Scott Bessent (40:54):
You can ask me the question. You can't tell me how to answer it. So, yeah, as I said-
Senator Ron Wyden (40:58):
I got five minutes. I'm going to use them for these questions.
Senator Scott Bessent (41:01):
You're using up your time now, sir. As I said, I'm unable to comment with this ongoing litigation.
Senator Ron Wyden (41:08):
Okay. So that we understand what's at stake here, this immunity deal is the biggest scam against the taxpayer in American history, and Americans are going to pay taxes, and Trump and his clan won't. So we'll start with that. Now, my second question is every president's tax return gets audited, Mr. Secretary. Who originated the May 19th addendum canceling Trump's audits? Was it Trump, DOJ, or Treasury?
Senator Scott Bessent (41:38):
Again, sir, as Albert Einstein said, doing the same thing and expecting a different answer is the definition of insanity.
Senator Ron Wyden (41:45):
You've given no answers on this subject, and that's why I'm going to ask these questions. Does the DOJ-
Senator Scott Bessent (41:49):
And because, as I said, there's ongoing litigation-
Senator Ron Wyden (41:52):
Does the DOJ have the authority to settle a tax dispute unilaterally?
Senator Scott Bessent (41:57):
The DOJ acts as the attorney, the afore Treasury, and the IRS.
Senator Ron Wyden (42:02):
So the tax code says the DOJ can only settle a tax dispute if you, the Treasury secretary, first deferred the dispute to DOJ in the case we're talking about. So here Trump, his kids, all of the business entities they own, potentially thousands of tax returns, and unless you referred every single one of those tax returns to DOJ, the addendum is invalid, where the Treasury and the IRS believe have been more involved in the scandal, as far as I can tell, than you've led us to believe. So I'm going to keep digging into the timetable here.
(42:37)
Career IRS attorneys wrote a 25-page memo preparing defenses against Trump's lawsuit, and they recommended DOJ move to have Trump's lawsuit dismissed. The IRS reportedly gave this memo to treasury officials in April before the settlement. Did you see that memo?
Senator Scott Bessent (42:56):
Again, there's continuing litigation, and I'm unable to answer.
Senator Ron Wyden (43:01):
Will you provide this committee with a copy of the IRS memo?
Senator Scott Bessent (43:07):
Again, sir, there's continuing litigation.
Senator Ron Wyden (43:12):
Mr. Chairman, I'm going to continue my questions, but I would like to ask you now to authorize a 6103 waiver and for Mr. Bessent to waive the attorney-client privilege, which I guess is part of what he's up to.
Senator Mike Crapo (43:26):
I'm not quite sure what you're asking, but I will not agree to ask him to waive his attorney-client privilege.
Senator Ron Wyden (43:33):
So the way we're going to get to the bottom of it is to have the committee look at these matters in a bipartisan way, and I'm going to continue with the questions that highlight my argument. The Biden administration prosecuted Charles Littlejohn, the Booz Allen contractor who leaked Trump's tax returns. Booz Allen, which helped with the prosecution, held contracts with the Treasury Department for years. Three days before Trump filed his lawsuit this year, you abruptly canceled all the contracts. It is hard to see that timing be a coincidence. Did you know in advance that Trump was going to file a suit against the IRS?
Senator Scott Bessent (44:08):
I did not.
Senator Ron Wyden (44:11):
All right, I've written to you twice asking for records related to this decision. Both times you refused. I'll ask again, will you send the committee all records documenting this decision so we can review this in a bipartisan fashion?
Senator Scott Bessent (44:26):
Again, there is ongoing litigation and, Senator, how we got here was a violation of President Trump's 6103 rights. And it wasn't just President Trump. There were 400,000 tax returns that were leaked by Mr. Littlejohn. And I will point out that Mr. Littlejohn was not prosecuted to the fullest extent of the law. He was eligible to be prosecuted on three counts. The Biden administration chose light touch and only prosecuted him on two counts.
Senator Ron Wyden (44:58):
We're going to continue these questions, and I come back to my point, Mr. Chairman, we need you to support this 6103 waiver so that this committee on a bipartisan basis can look into a matter like this. When you're talking about the president of the United States, it doesn't get any more important.
(45:15)
And I'll just close my opening effort to try to ferret out the facts here, Mr. Chairman, by saying, Mr. Secretary, this whole settlement in my view is the most brazen abuse of power ever in our history. And as of now, every American is subject to audit, except Donald Trump and his family. I think that's absurd. And you've been dodging questions. Each one of these, you had a legal argument for saying nothing. And I suspect you cleared the way for Trump's lawsuit when you canceled the contracts, and I suspect people right up to the highest level of the Treasury Department had a hand in crafting this unbelievably corrupt gift of a settlement. And I just want it understood, colleagues, I want to work with every senator on this committee to get to the bottom of this because we aren't getting the facts. And the secretary, in spite of the fact that he owes answers to the American people, is just dodging and bobbing and weaving. Thank you.
Senator Mike Crapo (46:12):
Senator Grassley.
Senator Chuck Grassley (46:14):
I'm going to start first with a comment and a commendation to the department in regard to a program that Senator Wyden and I have been involved in. And I think the department's doing the right thing, but I think you're getting pressure to change. So I want to commend you and the IRS for protecting the integrity of the conservation easement deduction by holding those engaged in abusive, syndicated conservation easements, hold them accountable. These abusive transactions generally rely on highly inflated appraisals that result in taxpayer investors saving $2 in taxes for every $1 spent. So to be perfectly clear, these arrangements perverted a charitable deduction to turn a significant profit.
(47:18)
In 2020 finance committee report that details Senator Wyden's and my investigation of these arrangements clearly shows that both the promoters and the taxpayer investors understood them to be tax shelters. So I encourage you and the IRS to stand by recent settlement offers and ignore those who I think are lobbying you to water it down.
Senator Scott Bessent (47:51):
Good. Thank you for your comments, Senator.
Senator Chuck Grassley (47:54):
In 1981, at the time of growing deficits and elevated inflation, Fed Chairman Paul Volcker advised Congress to cut spending and to pursue pro-growth policies. He urged Congress to focus on reforms that would incentivize Americans, in his words, to invest, to save, and to work. The Working Families Tax Cut law adhered to the Volcker approach. It reduced spending by over $1 trillion while making provisions of the 2017 tax law focused on spurring domestic investment permanent, like full expensing for new factories and factory improvements. How important has the Working Family Tax law been in terms of promoting economic growth, job creation, and wage growth?
Senator Scott Bessent (48:55):
Senator, it has been essential to the success that we have seen. For the past four quarters, the US economy has grown at 2.6%, and that is despite the Democratic government shutdown in the fall, and that is despite the Iranian conflict, which will make our country safer. And what we are doing, on the household side, as I said, almost 50% of the tax returns we receive had one of the president's four signature policies. On the other side, the pro-growth, the tax policy for our corporations, immediate expensing of capital equipment, of structures, including farm structures, and the 100% expensing for R&D and certainty, Senator. It is the certainty that allows both big and small businesses to be able to plan for the future, for hiring for capital expenditures, and it is this capital stock and investment that generates high after-tax returns and increases productivity, and productivity increases are what increases real standards of living, sir.
Senator Chuck Grassley (50:08):
This will have to be my last question. You've been a proponent of targeting annual deficits of 3% of GDP, which roughly aligns with the post-World War II average. During the last two years of the Biden administration, we saw a deficit of 6.2% and 6.3%. In 2025, President Trump's first year in office, a deficit came in at 5.8% of GDP. How does President Trump's budget and deregulatory agenda ensure the annual deficit stays on a downward trend towards that 3% that you advocate?
Senator Scott Bessent (50:53):
Senator, as I said all the way back as far as my confirmation hearing, we do not have a collection problem; we have a spending problem and we have a growth problem. So if we can constrain spending and grow our economy, then we have the ability to pay down debt and get back to the 3% target, which I believe that we can achieve something with a three in front of it by the end of President Trump's term.
Senator Chuck Grassley (51:22):
Thank you.
Senator Mike Crapo (51:23):
Senator Warner.
Senator Mark Warner (51:24):
Thank you, Mr. Chairman. Secretary Bessent, good to see you again.
Senator Scott Bessent (51:27):
Good morning, sir.
Senator Mark Warner (51:30):
Yesterday the administration took an action that, again... I thought I could no longer be surprised, but I was surprised. The president put in Bill Pulte as the director of national intelligence. Now, I know it's not your area, but the whole law that was set up establishing the director of national intelligence was to make sure that this position was filled by someone with a great deal of national security experience. Now, Mr. Pulte currently is within your domain. Do you know, does Mr. Pulte even have a security clearance?
Senator Scott Bessent (52:10):
Senator, I do not.
Senator Mark Warner (52:14):
Okay. And being head of the FHFA, isn't that a full-time job?
Senator Scott Bessent (52:19):
It's a very important position.
Senator Mark Warner (52:22):
Yeah. So the notion that Bill Pulte is going to remain as head of the FHFA and moonlight as the director of national intelligence, I don't understand, but to me, it seems insulting to the thousands of men and women who work in the intelligence community. Again, Mr. Pulte reports to you-
Senator Scott Bessent (52:46):
No, it's an independent administration. I-
Senator Mark Warner (52:51):
Or let me ask you this. How would you describe Mr. Pulte's temperament?
Senator Scott Bessent (52:59):
I spoke with Director Pulte yesterday and congratulated him and said I look forward to continue working with him on FHFA matters and wished him luck as he gets up to speed in DNI and told him that we had several pressing issues on Iran.
Senator Mark Warner (53:17):
So you're totally comfortable with the notion that Mr. Pulte, at least in press reporting, you've had quite a number of differences with, is going to be able to do both the director of FHFA and the director of national intelligence.
Senator Scott Bessent (53:31):
Well, sir, many teams squabble in the locker room and go out in the field.
Senator Mark Warner (53:36):
Okay. Well, Mr. Pulte has had a record of not respecting confidential information. He has weaponized mortgage information. I think everyone would at least acknowledge the factual basis of that, and the idea that he's going to suddenly be given the keys to the most classified secrets that keep our country safe... I just would have wished that someone in the White House would have gone to the emperor and said, "On this one, you got no clothes." And it's an embarrassment.
(54:16)
Let me get to another topic. Agentic AI, I think there's great promise from AI, there's also downsides. But as we think about agentic AI agents, I've sent you letters on this, I think we need a strong fiduciary regime around those agents. I mean, when Mike said to me recently, "If your agentic AI agent goes off and buys a bunch of retail stuff for you and you get it home and then a human being says, 'I don't want this stuff,' who bears the burden?" As you think about the notion, when we've talked about this in the past of agentic AI agents, do you believe that we need some level of strong fiduciary regime?
Senator Scott Bessent (55:03):
The president's executive order yesterday I think strikes a very good balance between innovation and safety because that is a calculus we are trying to optimize for. I've been in contact with all of the large language model labs; I was in San Francisco on Saturday meeting with them. And we have convened, at Treasury, we have convened the largest banks, and they are working diligently on their standards because, by their nature, they have the strongest cybersecurity departments. I think that the rest of industry can learn from them.
Senator Mark Warner (55:44):
Well, again, we may agree to disagree. And the notion that a simply voluntary regime... Fiduciary duty would apply some duty. I've talked to many of the banks. They think with Mythos, they are totally unprotected. And the idea that we're going to have only a voluntary regime I believe will put our banking system at risk, clearly our national security at risk, and I felt like the president's earlier draft made a lot of sense. I was very disappointed it was watered down. Adhere to the chairman's-
Senator Scott Bessent (56:14):
Senator, the only difference in the draft was 90 to 30 days.
Senator Mark Warner (56:16):
Secretary Bessent, the draft I saw earlier had a stronger than strictly voluntary regime. But I want to get my last point in quickly. We still got to get the CDFI money out. We got 32 senators, 16 on each side, including the chairman. The money is sitting there. It needs to get out.
Senator Scott Bessent (56:42):
Yes, sir. We have gotten out what we have been allocated from OMB. OMB did not apportion it until April 8th. And we are getting that funding out.
Senator Mark Warner (56:54):
It's June, but still hasn't awarded a single dollar of the money.
Senator Mike Crapo (56:58):
Thank you. Senator Scott.
Senator Tim Scott (57:00):
Thank you, Mr. Chairman. Secretary, thank you for taking some time to be here with us today. Good to see you again. Hope you're well.
Senator Scott Bessent (57:05):
Good to see you, Senator. Hope all is well in Charleston. I don't get back much.
Senator Tim Scott (57:08):
Well, we miss you there, so find a way back to the Holy City. We need to see you more often. Let me just first say to you, and particularly to your staff as well, on the issue of homeownership. As you know, we worked in the banking committee for a long time on the 21st century road to housing. Your team has been fantastic to work with. And frankly, this is an issue that is not a Republican issue or a Democrat issue. Every member of the Democrat side of the aisle as well as Republicans work together hand in glove to make sure that we keep America's priorities first, and that makes 2026 the year of affordability. Your team has been fantastic to work with on the issue of housing. So I want to say thank you on that one.
(57:43)
Number two, I will have a question for the record around an issue of 45Y Clean Electricity Production Tax Credit as an issue that I would love to get a response from you, not now, but later on.
(57:54)
But I do want to ask you a question, Mr. Secretary. As you know, economic security is national security, and the Treasury Department plays a critical role, the United States national security apparatus. With the emergence of digital assets, I was curious if you could touch on the Treasury's role in fulfilling President Trump's executive order that set up the Bitcoin Strategic Reserve and Digital Asset Stockpile. Could you give me an update on where things stand with the implementation of the executive order?
Senator Scott Bessent (58:25):
Yes, sir. And I couldn't agree more with you that economic security is national security. I gave a speech at the Reagan Library outlining my thoughts on that and how for 25 years the US has been asleep, and under President Trump's leadership, we are moving forward very quickly on that. And part of that is our Digital Assets Initiative. The Strategic Bitcoin Reserve is something... This is new technology. This is new ground. We are proceeding with all deliberate speed, and we are making sure that as we are doing this in this complicated process, that we use best practices and things will be durable for the future. And look forward to working with you and your team on that, and I look forward to the Clarity Act being passed this summer.
Senator Tim Scott (59:17):
Great. Thank you. Another question on IRA accounts. President Trump signed another executive order, 14403, to increase Americans' access to IRAs for those workers who lacks employer-sponsored retirement plans. Also, the order directs you to prepare legislative recommendations for building upon the TrumpIRA.gov. Do you have a timeline, something in mind that would be helpful for us to appreciate as it relates to perhaps a Trump Accounts 2.0?
Senator Scott Bessent (59:49):
So, sir, we have the launch of Trump Accounts on July 4th, and we are consumed with that. So they will begin July 4th, a Saturday. They will begin trading and go live on July 6th. And then we will be laser-focused on the IRA accounts directly after that.
Senator Tim Scott (01:00:11):
Excellent. I do think it's important for us to take some time on the finance committee to recognize one of the more important issues facing the American people as it relates to those. Half our workers do not have access to, maybe not quite half our workers, but a significant portion of our workers do not have access to an IRA. And frankly, having this focus from the administration I think is powerful and important and recognizes the importance of making sure that everybody has a chance to accumulate equity in this country, which typically comes through either homeownership, business ownership, or an equity position in the stock market. This approach provides access to that opportunity.
(01:00:44)
Speaking of opportunity, as you know, it would probably be just inappropriate and shocking if I did not mention Opportunity Zones because I do every single time I see you, because I do think it's one of those consequential pieces of legislation that has a generational impact in a positive way for the poorest communities in this country. Governors across the country are right now currently working on figuring out where they want the designations within their states on this 10-year new window. I'd love to have an update from you as it relates to streamlining the Opportunity Zone nomination process, as well as if there are any best practices that governors should take into consideration that you have become aware of, it'd be great to hear.
Senator Scott Bessent (01:01:28):
Yes, Senator. And as a reminder, every Democrat voted against Opportunity Zones.
Senator Tim Scott (01:01:33):
Thank you.
Senator Scott Bessent (01:01:34):
So what was especially great about this bill is it created stronger rural Opportunity Zones, so that is part of our guidance to the states. Treasury is engaging with state officials ahead of the next nomination round, and we're working to provide transition guidance so that investors will have the clarity they need to keep putting capital work in the communities that need them the most.
Senator Tim Scott (01:02:00):
Mr. Chairman, I know I have two seconds left, so I'll use those two seconds pretty quickly here. Here's a bipartisan piece of legislation not supported by my friends on the other side, but every mayor that I've run into around the country, blue or red, love Opportunity Zones.
Senator Scott Bessent (01:02:13):
Thank you. Yes, and Senator, several of your colleagues from the other side of the aisle have called me because they were distressed that their state may be losing an Opportunity Zone, and I pointed out that they voted against them, but because of your goodwill, we would be working with them.
Senator Tim Scott (01:02:29):
God bless you. Yes.
Senator Mike Crapo (01:02:31):
We all love Opportunity Zones. Senator Hassan.
Senator Maggie Hassan (01:02:35):
Well, thank you, Chair Crapo and Ranking Member Wyden, for holding this important hearing. Good morning, Secretary Bessent, and thank you for testifying.
Senator Scott Bessent (01:02:43):
Good morning.
Senator Maggie Hassan (01:02:44):
I want to start with a question that I think should get bipartisan support. The Treasury inspector general for tax administration recently said that the Treasury could prevent a billion dollars in fraud if Congress moved up certain deadlines for businesses to file information returns. This would help give Treasury the information it needs earlier in the year to stop fraudsters from stealing taxpayers' identities and their tax refunds. Will you commit, sir, to working on a bipartisan basis with members of this committee to advance this proposal and help the Treasury stop identity theft and fraud?
Senator Scott Bessent (01:03:19):
We look forward to working with both sides of the aisle on that, Senator.
Senator Maggie Hassan (01:03:23):
Thank you very much. And just an observation, Mr. Chair, there's been discussion of a so-called settlement of a lawsuit between the president and the IRS. I just want to note that the so-called settlement is being challenged because of collusion, it appears, by the president and the IRS to the point where I'm not sure a settlement agreement actually exists because a court is considering whether this is a legitimate lawsuit to begin with.
(01:03:53)
But what the acting attorney general did say yesterday was that despite the slush fund being off the table, at least for now, that the grant of immunity for tax liability to the president and his family still was going to be on the books. So this is a sweetheart deal for the president. It apparently is still going forward unless a court puts a stop to it. And I think it's going to be important for the secretary to level with the American people about how much this sweetheart deal will cost them. Some news report suggests it's at least $100 million just off the top.
(01:04:27)
Now, Secretary Bessent, in May the president said that he does not think about Americans' financial situations. Do you think about the financial situation of the American people?
Senator Scott Bessent (01:04:38):
I do. And as the ranking member distorted my statement, as he often does, I had prefaced my statement with we understand that these are challenging times for the American people, that we will get over this, and that at present, the average household has paid about $200 more in gasoline. And we-
Senator Maggie Hassan (01:04:58):
Well, let's-
Senator Scott Bessent (01:04:58):
... think about this every.
Senator Maggie Hassan (01:05:00):
Well, I'm glad that you do. Do you think your boss should too?
Senator Scott Bessent (01:05:04):
I believe the remarks were taken out of context.
Senator Maggie Hassan (01:05:09):
No, look, here's what he said.
Senator Scott Bessent (01:05:10):
He was talking about it-
Senator Maggie Hassan (01:05:10):
He said, "I don't think about Americans' financial situation. I don't think about anybody." So I'm asking you... That's the direct quote. Do you think about how the American people are paying more for gas, groceries, and utilities, since the president clearly said he didn't? And you speak with the president regularly; are you trying to tell him the truth about how much costs have increased for the American people?
Senator Scott Bessent (01:05:34):
Well, Senator, I'm going to have to disagree with you on some of that, because I have groceries are going down. And to be clear, since President Trump took office, food prices, or as many people like to call them groceries, food at home in the statistical data is up 2.5%-
Senator Maggie Hassan (01:05:50):
When's the last time you were in a grocery store? Because my husband and I were just in one. And look, the average granite stater-
Senator Scott Bessent (01:05:55):
No, but Senator, the...
Senator Maggie Hassan (01:05:56):
The average granite stater has paid... Let me be clear. The average granite stater has paid $3,000 more since Donald Trump took office for basic goods and services.
Senator Scott Bessent (01:06:07):
That's incorrect on groceries.
Senator Maggie Hassan (01:06:07):
Meanwhile, the country lost 100,000 manufacturing jobs in 2025. So do you tell the president this information or not?
Senator Scott Bessent (01:06:16):
Again, except for inflation, which is, I believe, going to be a short-term blip, the economic data is very strong. The jobs data has been very strong. The manufacturing ISM has been very strong.
Senator Maggie Hassan (01:06:29):
No, actually, that's incorrect. So let's move on, because what's clear to me-
Senator Scott Bessent (01:06:33):
Which part was incorrect, Senator?
Senator Maggie Hassan (01:06:34):
No, what is very clear to me is that neither you, nor the president, nor this administration are willing to acknowledge how much more people are paying at the gas pump, at the grocery store, in utilities, for healthcare, for all aspects of American life, nor have you acknowledged the number of manufacturing jobs that were lost in 2025. Now lets move on to another issue-
Senator Scott Bessent (01:06:56):
Senator, Americans are paying 2.5% more for groceries since President Trump took office, which is half the annual amount under Biden administration, and you all-
Senator Maggie Hassan (01:07:06):
We're not talking about Biden. We're talking about this administration-
Senator Scott Bessent (01:07:09):
No, no, no. We are talking about what you all did...
Senator Maggie Hassan (01:07:10):
... and its promise to lower costs and the fact that this president says he doesn't care. Now let's go on to a-
Senator Scott Bessent (01:07:16):
We brought it down. It was half the-
Senator Maggie Hassan (01:07:17):
Mr. Secretary, my time is limited. I'd like to reclaim a little bit of my time because I have one more question. The administration has claimed that its top priority is lowering costs for American families, but the president instead continues to pursue vanity projects at a significant cost to taxpayers. He requested a billion dollars for the White House ballroom, spent $45 million on military birthday parade, proposed a $100 million arch at Memorial Circle, and now Treasury is planning production of a $250 bill with his face on it. Mr. Secretary, how does the president's requested billion-dollar ballroom or all of these other vanity products lower costs for American families or help constrain spending?
Senator Scott Bessent (01:08:00):
Senator, first of all, you're incorrect. There is no cost to the American people. If there is a new bill for the ballroom, the decorative part of the ballroom is privately funded, and everything that you were talking about-
Senator Maggie Hassan (01:08:13):
The president requested a billion dollars for the White House ballroom in our budget. He has spent 45 million on a military birthday parade. So-
Senator Scott Bessent (01:08:24):
Look, it goes on outside my office every day, I've watched it progress, and it is national security matters that the billion dollars is for-
Senator Maggie Hassan (01:08:32):
That's ridiculous, and I think you know it. I'll yield back my time. Thank you, Mr. Chair.
Senator Mike Crapo (01:08:38):
Senator Johnson.
Senator Ron Johnson (01:08:40):
Thank you, Mr. Chairman. Mr. Secretary, I don't recall back in, let's say, June of 2022 when the average national price of gasoline was $5 a gallon, when we were experiencing 40-year-high inflation, about 9%, I don't recall Democrats being all that exercised and coming to these hearings and battering the Biden administration officials on why living is so unaffordable. Do you recall that back in 2022, 2023?
Senator Scott Bessent (01:09:07):
Well, what I do know, sir, is that pyromaniacs like fire, so they can't stop talking about what they did. As I was trying to tell the senator, since President Trump came into office, food at home has increased by 2.5%, moving back toward the Fed's 2% level, and every year averaged 5%. So it is half the price. We elevated the level. And to be clear, Senator, what we have not heard is an apology to the American people.
Senator Ron Johnson (01:09:42):
So the other thing we haven't heard is a concern over the massive amount of fraud that we are being told about every day. Democrats wanted a clean extension of the enhanced subsidy under Obamacare, even though once it expired, people got the subsidy anyway. But they could care less that there are maybe six million people-
Senator Ron Johnson (01:10:00):
... at the subsidy anyway. But they could care less that they are maybe six million people now is what the current estimate is. Six million people or phantom people taking advantage of those subsidies costing the Treasury $25 to $35 billion a year. No concern about that from the other side of the aisle. I want to focus on fraud. The lowest estimate on an annual basis comes from GAO at $250 billion a year. We had the CEO of Lexus Nexus, I didn't realize they do this kind of research, they put the annual figure about $1 trillion. I think you've come up with your own figure. What do you estimate, annual amount of fraud in the federal budget?
Senator Scott Bessent (01:10:38):
At least $500 billion, sir.
Senator Ron Johnson (01:10:40):
So again, this is a range of somewhere between 3.3% and 13.3% of our budget. A recent story, I heard it on the radio this morning, of a fraudster in California in one year from May 22nd to April 2023, $270 million of claims. He was paid $178 million in fraud in California out of Medi-Cal. Okay, he's been prosecuted, he's been convicted. Do you know how much of that $178 million was recovered?
Senator Scott Bessent (01:11:16):
Sir, what I can tell you is once the money goes out the door, it's very difficult to recover. The best way to prevent the fraud is prevent it before it goes out the door. And Senator, I will tell you the other heartbreaking part of this is I did a round table in greater Minneapolis and there were several owners of autism clinics there, valid clinics, who are having trouble getting funded, and they are doing the right thing for these families and for those children.
Senator Ron Johnson (01:11:47):
So the fraud prevents the money going to the people who truly need it, it's really intended for. And that's my point. I don't think this is up-to-date, but it's the most recent figure we have. The Department of Justice publishes their list of indictments and prosecutions. About $4.7 billion is being prosecuted out of a total of somewhere between $250 billion and $1 trillion in fraud. So I know Dr. Oz suspended payments to, what, 400 of hospice centers in California. Los Angeles has a third of all hospice centers. They suspended payment to 400 and not one of them complained. Why wouldn't one of those 400 hospice centers not complain about losing their funding?
Senator Scott Bessent (01:12:36):
Again, Senator, we could speculate that it's fraudulent. And the key here, Senator, is transparency. We need to be able to see where this money is going. For everything that went on in Minneapolis and Minnesota, there was transparency. There was a list of the Learing Center. You were able to see, received this much. This is the address. These are the people.
Senator Ron Johnson (01:13:00):
But Democrat government officials ignored that transparency, didn't they? It was right in... They had access to it. They ignored it.
Senator Scott Bessent (01:13:06):
Well, they ignored that. But in many states, like New York state, Illinois, they refuse any level of transparency.
Senator Ron Johnson (01:13:13):
I believe that's true of the governor of Wisconsin as well, refusing to turn over records on some of the welfare benefits of Wisconsin [inaudible 01:13:23], correct?
Senator Scott Bessent (01:13:23):
It should be a bipartisan issue, sir.
Senator Ron Johnson (01:13:25):
So what can you do? I mean, to prevent it? Dr. Oz obviously just suspended payments. I'd imagine you're somewhat limited there. I know Vice President Vance has got a fraud Task Force. We've got to get our arms around this. And we're not going to get any help from the other side of the aisle, so it's going to have to be done through executive action. What can you actually do?
Senator Scott Bessent (01:13:46):
We are supporting Vice President Vance in this Task Force. There has been a new Assistant Attorney General appointed to do this. And this is an all of government effort by the Trump administration.
Senator Ron Johnson (01:13:58):
Well, we wish you luck. It's crucial. Thank you, Mr. Chairman.
Mr. Chairman (01:14:01):
Thank you. Senator Whitehouse?
Senator Whitehouse (01:14:05):
Thanks very much. Secretary, welcome. Have you identified any precedent in Treasury or IRS history for the agreement not to audit, investigate, or pursue any tax claims against the Trump family or businesses?
Senator Scott Bessent (01:14:37):
I can't identify any precedent where 400,000 tax returns, including the people you just mentioned and all of their employees, were leaked in a violation of one of the most sacred duties of the IRS, which is privacy, Senator.
Senator Whitehouse (01:14:54):
[inaudible 01:14:54]. The leak was by a contractor. Can you tell me what contribution is being sought by Treasury or by the IRS for the harm done by the contractor? To a certain extent, your organization and the IRS are the victim of the contractor's malfeasance or negligence. What is being pursued by way of contribution by that contractor?
Senator Scott Bessent (01:15:22):
Well, the ranking member chastised me for cutting the contractor's contracts off, and we have removed their contracts, their ability to do business with Treasury and the IRS.
Senator Whitehouse (01:15:35):
But there is no contribution into this particular case?
Senator Scott Bessent (01:15:41):
Again, Senator, you weren't here earlier, but I'm unable to discuss most of this because of ongoing litigation.
Senator Whitehouse (01:15:47):
Yeah, I know you like... Everybody likes to say that, but the constitutional-
Senator Scott Bessent (01:15:52):
We like to follow the law, Senator.
Senator Whitehouse (01:15:54):
... and the law is that the Congress has constitutional oversight functions that do not disappear simply because there is litigation, however convenient it may be by way of providing answers. So we have no precedent for it. No contribution is being sought from the contractor at fault. Was there any consideration to the government in return for the benefits of no audit, no investigation, no challenge or pursuit of refunds or other penalties?
Senator Scott Bessent (01:16:34):
Again, Senator, I'm unable to comment because of litigation. Treasury is represented by the Department of Justice in all matters. They act as our attorneys. So I would suggest that you direct your questions to acting Attorney General Blanche.
Senator Whitehouse (01:16:50):
Yeah. Well, I've had a lot of times people who are before us invite me to ask my questions of somebody who's not before us. But you are the one who is before us, and I think you ought to know if there was any consideration offered or paid in return for that settlement. It's a very simple fact question. Was there or was there not consideration?
Senator Scott Bessent (01:17:15):
Again, there's ongoing litigation and I suggest that you speak with the Treasury attorneys.
Senator Whitehouse (01:17:24):
If this kind of behavior is okay with the chairman, I'll just pursue other questions. But what goes around comes around in terms of dodging questions.
Mr. Chairman (01:17:33):
I believe it's very clear that witnesses of any kind cannot discuss ongoing litigation.
Senator Whitehouse (01:17:40):
They can certainly discuss a fact that they are aware of. The fact that there is some litigation out there doesn't mean that a witness can't say, "Yeah, there was no consideration," or, "Yes, there was consideration." Was there a defense analysis memo? It's referenced in the judge's decision in Florida. Was there a defense analysis memo prepared by the IRS? And more specifically, did you see it?
Senator Scott Bessent (01:18:11):
Again, I'm not going to be able to comment on these matters.
Senator Whitehouse (01:18:17):
Mr. Chairman, this just makes no sense at all. I've been a lawyer all my life. I have some idea of what is protected when you have a ongoing bit of litigation. Whether this individual has seen an official memo from within his own department is a very simple question to answer, and I think it's completely inappropriate to have this game of dodgem be pursued without any consequences.
(01:18:54)
Well, last of all, here's another question. Was there any analysis of what harm befell President Trump from having his taxes released when every president since Nixon released their taxes, and he had promised to? Did anybody analyze whether there was actually any harm at all to him in those circumstances?
Senator Scott Bessent (01:19:26):
So there was a crime. President's rights under 6103 of the IRS code was violated, and equally as important, 400,000 taxpayers had that right violated, including every employee of the Trump administration, the housekeepers at Doral, the greenskeepers, the cashiers. And none of you seem to care.
Senator Whitehouse (01:19:47):
And you're welcome to pursue all of that, but it doesn't answer the question of whether the President actually suffered harm, and you're not answering that question either.
Mr. Chairman (01:20:00):
Senator Cortez Masto.
Senator Cortez Masto (01:20:03):
Welcome, Secretary Bessent. Let me ask you this on a separate subject. Federal law prohibits the image of a living person from appearing on a U.S. currency, and that includes the President of the United States. Isn't that correct?
Senator Scott Bessent (01:20:20):
That is correct, Senator.
Senator Cortez Masto (01:20:22):
Thank you. There's reporting that your U.S. Treasurer, Brandon Beach, and his senior advisor, Mike Brown, have been repeatedly urging staff at the Agency's Bureau of Engraving and Printing to prepare prototypes of the note, a $250 bill with President Donald Trump's face on it. And in fact, in August and September, Beach provided bureau staff with mock-up designs for the note, including one that shows President Donald Trump's face in the center of the $250 bill between the signatures of the president and your signature. It is also reported that the artist who said he designed the mock-up told The Post that he had spoken with Trump about it. Is it true that your staff is pursuing a mock-up of this bill with President Trump's face on it?
Senator Scott Bessent (01:21:12):
That was in coordination with pending legislation in the Congress to change the requirement that a person must be deceased to be on the currency.
Senator Cortez Masto (01:21:24):
So you're acting before legislation has even passed to authorize it, is that correct?
Senator Scott Bessent (01:21:29):
Just as we did with the Working Families Tax Cut, we were prepared in advance. At Treasury, we do things in advance. My predecessors seem to scramble to do things at the last minute.
Senator Cortez Masto (01:21:40):
So if the law does not pass, do you intend to still move forward without the authorization from Congress?
Senator Scott Bessent (01:21:47):
Of course not. We will follow the law.
Senator Cortez Masto (01:21:51):
Thank you. Let me ask you this question with respect to the agreement and the lawsuit settlement that a lot of my colleagues have been talking about, shielding the president, his family, and corporations from any future audits. You are the acting IRS commissioner, correct?
Senator Scott Bessent (01:22:07):
That is incorrect.
Senator Cortez Masto (01:22:08):
What is your position right now with the IRS?
Senator Scott Bessent (01:22:10):
My term expired.
Senator Cortez Masto (01:22:11):
So you have no position with the IRS whatsoever?
Senator Scott Bessent (01:22:16):
The IRS is a bureau that reports to Treasury. When there is no commissioner, those duties float up to me.
Senator Cortez Masto (01:22:21):
All right. So there's no interaction that you have right now or responsibility over the IRS other than the commissioners there, the commissioner has free reign, and you don't have any authority to stop anything?
Senator Scott Bessent (01:22:34):
No, there is no commissioner, so I assume those duties.
Senator Cortez Masto (01:22:37):
So there is no commissioner, so you're acting commissioner?
Senator Scott Bessent (01:22:39):
No, that's incorrect.
Senator Cortez Masto (01:22:41):
Okay. So for purposes of the public, let's get it straight so the public knows your involvement. There is no commissioner. There's somebody that is acting.
Senator Scott Bessent (01:22:48):
No. I had previously been the acting commissioner. Senator Warren, who likes to send me a lot of letters, was kind enough to send me a letter and remind me that I was no longer the-
Senator Cortez Masto (01:22:55):
Yeah. I'm just trying to figure out your role with the IRS. For the purposes of public and transparency, what is your role currently with the IRS and your authority?
Senator Scott Bessent (01:23:03):
... I am performing the duties of the commissioner.
Senator Cortez Masto (01:23:06):
Oh, so you are? Okay, got it. So let me ask you this, because you talked about not only Donald Trump and his family, but there were 400,000 taxpayers' information that was also leaked by Mr. Littlejohn, the contractor working for the IRS. Do you intend to give them the same immunity as President Trump and his family received?
Senator Scott Bessent (01:23:27):
Again, you were not here at the beginning. I had a statement that I read to Chairman Crapo that I am unable to provide any additional detail-
Senator Cortez Masto (01:23:36):
Well, that's not part of the litigation.
Senator Scott Bessent (01:23:37):
... due to litigation.
Senator Cortez Masto (01:23:39):
The 400,000 taxpayers aren't part of the litigation. You have said there were 400,000 taxpayers' information that was also leaked. They're not part of that litigation. Do you intend to give them the same immunity that you gave Donald Trump and his family and corporations that were part of the litigation?
Senator Scott Bessent (01:23:56):
Senator, you may have missed the first part of this, but Treasury does not give any of that. We are represented by the Justice Department.
Senator Cortez Masto (01:24:05):
That's right. You're the acting commissioner. As acting commissioner, you had said earlier you had concerns about those 400,000 taxpayers whose documents were leaked by a independent contractor with the IRS. If you have concerns about those 400,000, as acting or whatever role it is you have as the IRS commissioner, do you intend to give them the same type of treatment?
Senator Scott Bessent (01:24:29):
We will follow the instructions and the settlement by-
Senator Cortez Masto (01:24:35):
That was not part of the settlement. That was not part of the settlement. That was not part of the settlement.
Senator Scott Bessent (01:24:41):
... we will follow the instructions.
Senator Cortez Masto (01:24:41):
It's been very clear you're dodging this and you're trying to use it as an excuse. That's just outrageous, on behalf of the American public.
Senator Scott Bessent (01:24:48):
That I am representing my counsel-
Senator Cortez Masto (01:24:49):
Let me just move on.
Senator Scott Bessent (01:24:49):
... and that I will follow the law is an excuse, Senator?
Senator Cortez Masto (01:24:52):
When you were going through your confirmation process, you stated that your goal was to get the federal budget deficit to 3% of GDP by the end of President Trump's term. However, the administration's budget proposal for this year projects a deficit of over 5% of GDP by 2029. Do you no longer intend to achieve that 3% goal?
Senator Scott Bessent (01:25:14):
I do. I said something with a three in front of it. And we in fact had a fiscal contraction last year, so we are already in the five range.
Senator Cortez Masto (01:25:25):
You said something with a three in front of it. All right. I appreciate you being here.
Mr. Chairman (01:25:30):
Senator Young?
Senator Young (01:25:32):
Secretary Bessent, great to have you here today. You and I have discussed shipbuilding in the past and the importance of shipbuilding. I've seen you recently offer your thoughts about the importance of this issue and the importance of rebuilding our shipbuilding enterprise here in the United States. The president has also spoken quite forcefully about the threats associated with having a shipbuilding enterprise that is weak and unable to produce enough ships for the needs of our nation. In fact, his executive order on restoring America's maritime dominance and a subsequent maritime action plan, he highlighted with some specificity the challenges and the opportunities that we face. So I'm grateful for his leadership, grateful for yours, because we know China has invested heavily in this industry. They of course have essentially planned economy in so many respects and they've overinvested in their capacity. I've been briefed that China can actually build over 1,000 ocean-going vessels in a year. United States built one last year, one ocean-going commercial vessel.
(01:26:51)
For those who are skeptical of industrial policy, and I think that's a healthy skepticism, there's a reason we don't have a centrally planned economy, but from time to time, you need to deviate from the catechism. Adam Smith himself, the father of free market economics, identified shipbuilding is the one industry that a maritime nation cannot be allowed to have offshore.
(01:27:17)
So you and several other members of the Cabinet, Mr. Secretary, have highlighted this need to restore our maritime industrial base, but we know we can't do it without giving the President of the United States additional authorities, resources and authorities he needs. And that is why Congress, in a bipartisan way, needs to pass the Ships for America Act and pass it now. Mr. Secretary, how are you thinking about these issues, and do I have your commitment to work with Congress to start building ships in America again?
Senator Scott Bessent (01:27:53):
Senator, as you know, President Trump signed an executive order to restore U.S. maritime capacity. I gave a speech at the Reagan Library on Friday where I talked about the critical industries that we need to reshore, and top of mind there was the shipbuilding industry. And as important as the industry is the reservoir of knowledge that we have should we get into a great power conflict.
Senator Young (01:28:18):
That's exactly it. We literally don't have, because of cheerful scenario planning in the future, we haven't thought through how we're going to repair all our Navy vessels, and if necessary, build new Navy vessels in a time of a long war scenario. Long war is a war that might exceed just a couple of months. So it's an acute issue. I agree with you, Mr. Secretary.
Senator Scott Bessent (01:28:42):
Senator, we look forward to working with you to connect industrial capacity, logistics, resilience, and we want to work with you and your team toward this end.
Senator Young (01:28:52):
That's highly encouraging. I'll take you up on that, sir.
(01:28:56)
I'm going to pivot very quickly to China's advantage as it relates to critical minerals, not just as it relates to the supply. But they've come up with a way to manipulate our markets. They shape prices, they restrict exports, they absorb losses. They create all this uncertainty that keeps private capital from financing U.S. or allied critical minerals projects. I've come up with a solution to help address this. We call it the Secure Minerals Act. Mr. Secretary, it's designed to create a Strategic Resilience Reserve. This would be a government corporation. It would employ tools like loans, acquisitions, non-recourse lending, advanced market commitments, contracts for differences, and partner country co-investments, so all these different financial tools. But the goal is of course not to compete with or replace private capital; it's to create enough price stability and demand certainty to build domestic and trusted partner capacity. We want people investing in processing and digging new mines and all the rest.
(01:30:18)
So Mr. Secretary, as the administration considers tariffs on processed critical minerals and derivative products, my question is, should those tariffs be paired with a financing mechanism like the Strategic Resilience Reserve to make the capacity we need commercially viable?
Senator Scott Bessent (01:30:39):
Through EXIM Bank, we are working on Project Vault to do much of what you are talking about. It is critical to have critical minerals. And as you said, the predatory pricing that China has done for 25, 30 years, just like in shipbuilding, critical minerals is one of the key industries that we're focused on.
Senator Young (01:31:00):
Well, my hope would be that I can work with you to give more legal certainty to that very important project, Project Vault you're working on, so that after the Trump administration leaves, which will just be in a couple of years, there can be a legacy of enduring law and operations so that we've addressed this challenge related to our critical minerals vulnerability. Might I work with you on that effort?
Senator Scott Bessent (01:31:24):
We look forward to working with you, Senator, and it is a priority for this administration, and for Treasury and indeed for myself.
Senator Young (01:31:32):
Thank you, Mr. Secretary.
Mr. Chairman (01:31:33):
Steve, are you ready? You want to go with him? Senator Daines?
Senator Daines (01:31:54):
Mr. Chairman, thank you. Secretary Bessent, it's good to have you here this morning.
Senator Scott Bessent (01:31:58):
Good to see you, Senator.
Senator Daines (01:32:00):
I'm grateful for all you are doing, a steady hand of wisdom there in the West Wing as you are working and solving some of our difficult challenges we face as a nation. So thanks for your service and appreciate you being here today.
(01:32:12)
I want to start by emphasizing how pleased I was when I saw the IRS' settlement offer for taxpayers involved with conservation easement tax disputes. For years, I've been sounding the alarm here on Capitol Hill on the abusive, syndicated conservation easements that falsely were claiming a charitable donation solely to turn a profit. I'm an avid outdoorsman, a guy from Montana protecting our farmers and ranchers, and championing conservation is one of my biggest priorities as I represent the state of Montana here the past 13 years. I know this is a shared priority for you in this administration, which is why I commend you for your help in implementing and enforcing this settlement. So it's a thank you.
Senator Scott Bessent (01:33:02):
Good. Thank you.
Senator Daines (01:33:04):
I also want to thank you for your hard work as we worked together over much of the last year on the Working Family Tax Cuts Act that was passed and signed to law. We're seeing some great results in Montana. In fact, Montanans received an average nearly $3,600 tax cut on their tax return this year, and about 105,000 Montana small businesses will benefit from permanent tax relief to that 20% pass-through deduction. And as we know, the pass-through side of the equation actually supports more jobs than the SECOR side. So we did something here that's going to be helpful to create more jobs, and importantly, job growth and income growth here for so many American people.
Senator Scott Bessent (01:33:54):
Senator, I have very clear recollection of you in the Cabinet room expressing to myself, White House staff, the president, the need for permanence. I think that that will be one of your great lasting achievements once you retire.
Senator Daines (01:34:11):
Well, Secretary Bessent, thank you. I know we both knew that permanence was an important part of the equation to remove the uncertainty that's oftentimes found in the tax code with expiring tax provisions. There's enough uncertainty on Capitol Hill sadly that happens, because of whether it's overreaching regulations or uncertain tax policies. But to take that off the table, I think, was one of the great achievements that we faced, but thank you for your kind words. And I do think that we're going to see the benefits of this bill for many years to come. On Capitol Hill, anytime we pass something that's 800 pages plus in length, usually the more you dig into something, the worse it gets oftentimes with big pork barrel spending bills. In this case, the more you dig into that Working Family Tax Cut bill, the better it gets.
Senator Scott Bessent (01:35:01):
Sir, the statistics are unbelievable. We saw at the IRS that 61 million filers, they filed for at least one of the signature policies. And we are seeing an industrial renaissance because of the immediate expensing for equipment, factories, and farm structures.
Senator Daines (01:35:24):
Well, it's music to our ears. It's what we predicted would happen. You put that kind of incentive structure in place. And I also believe to think about our China strategy, having that 100% expensing and the R&D investment to incentivize innovation will be another lasting legacies from what we accomplished together over the course of last year.
(01:35:47)
I'd like just to ask you an open-ended question around how passing that largest tax cut, or said another way, preventing the largest tax increase in American history, why by making it permanent is that making the American taxpayer better off?
Senator Scott Bessent (01:36:07):
Sir, I believe that, as you said, giving great certainty, whether it's to households, small business, or large business that provides for them to create capital stock, capital spending, and increased productivity, and increased productivity is what leads to higher standards of living across the country.
Senator Daines (01:36:33):
Last question they have is on digital assets. Digital assets have moved from the margins now more to the mainstream. It's been clear that our tax code hasn't kept up. We bear that responsibility now to put a tax structure in place. I'm taking the lead here in the finance committee. As many in this committee know, that's why we've been developing now a framework that could give us clearer rules for digital asset taxation. Following the pass of the GENIUS Act, digital assets are becoming more integrated in our financial system, and I believe they're going to play a growing role in our economy and the potential to keep driving investment in the United States. The numbers speak for themselves. The total crypto market cap reached $4 trillion for the first time in history. Stablecoin transaction volume was $33 trillion, a 72% increase from 2024. The number of crypto mobile wallet users reached an all time high, up 20% from last year. I do believe it's important that we provide some clarity as it relates to tax code, and that's our responsibility here that I'm working out at the moment.
Speaker 1 (01:37:46):
The time of the gentleman has expired.
Senator Daines (01:37:48):
Can I finish one final question if I could?
Speaker 1 (01:37:50):
Sure.
Senator Daines (01:37:51):
Secretary Bessent, as the administration continues its work in digital assets, will you commit to working with Congress on implementing digital asset taxation legislation and anticipate that'll very much be a two-way street?
Senator Scott Bessent (01:38:08):
I will commit to that, and tax certainty as we've seen with every other industry is the key to innovation.
Senator Daines (01:38:15):
Great. Mr. Secretary, thank you.
Speaker 1 (01:38:16):
The time of the gentleman's expired. The chairman's returned. Senator Smith?
Senator Smith (01:38:21):
Thank you, Mr. Chair and ranking member. Welcome to the committee, Secretary Bessent. So though I've not been in the room, we have this thing called closed circuit television in the Congress, so I've been able to watch the hearing in my office. Many of my colleagues have tried to get at this so called Anti-Weaponization Fund that was created in a settlement with the president after he sued his own IRS for $10 billion. It includes this provision that bars the IRS from auditing or taking any enforcement action on any of the president's tax returns or those of his family. I understand I've heard you repeat many times that you cannot respond to this because of ongoing litigation. And I want to just associate myself with the points that Senator Whitehouse made, which is that I don't quite understand how we're able to do our oversight responsibilities if we can't ask any questions when anything is even in the vicinity of ongoing litigation.
(01:39:22)
So let me see if I can ask a question that I don't think has anything to do with the ongoing litigation. My first question is this, Secretary Bessent. Did Brian Morrissey, your former general counsel, ever raise concerns over the establishment of the Anti-Weaponization Fund before he left his position before he resigned?
Senator Scott Bessent (01:39:46):
Again, that's attorney-client privilege, Senator.
Senator Smith (01:39:47):
Pardon me?
Senator Scott Bessent (01:39:48):
That would've been a privileged conversation.
Senator Smith (01:39:51):
Well, let me ask this. Does Treasury agree with the Justice Department in thinking that the court decision blocking payments out of the slush fund was incorrectly decided?
Senator Scott Bessent (01:40:03):
Again, we do not have agency in this. We defer that Department of Justice act as our attorneys and they represent us. So you should refer any of those questions to acting Attorney General Blanche.
Senator Smith (01:40:21):
Okay, I'm going to come back to that, but do you at least commit to following any and all court decisions regarding the establishment or the administration of this slush fund? Do you see those court decisions as legitimate that you would follow?
Senator Scott Bessent (01:40:33):
We follow the law.
Senator Smith (01:40:34):
You follow the law. So that would mean that you would follow a court decision. You wouldn't have your own opinion about what the law is; you would follow the decision of the court? Am I understanding you correctly?
Senator Scott Bessent (01:40:45):
We will always follow the law.
Senator Smith (01:40:47):
You'll follow the decision of the court?
Senator Scott Bessent (01:40:48):
We will follow the law.
Senator Smith (01:40:49):
That's not what I'm saying. Mr. Secretary, you've said that Acting Attorney General Blanche is representing Treasury and the IRS here. Would you have any... I'm wondering, Mr. Chair, if maybe the committee should call acting Attorney General Blanche to appear before our committee if Secretary Bessent is unwilling to answer any questions about the IRS, which as Catherine, my colleague Senator Cortez Masto established, Secretary Bessent is overseeing? I don't expect a response to that, Mr. Chair, but I mean, I ask a question just reasonably. How are we going to find answers to these questions if we can't get them from the secretary?
Mr. Chairman (01:41:31):
Well, as the secretary has said many times, the attorney-client privilege and the relationship they have with Justice Department requires him not to answer the question.
Senator Smith (01:41:39):
I'm aware.
Senator Scott Bessent (01:41:40):
Senator, you asked if I would follow the law on a court ruling. I am following the law here.
Senator Smith (01:41:46):
Yeah. But I noted, Secretary Bessent, is you didn't say that you would follow the court and their interpretation of the law. You said you would follow the law, which is different as we know with this administration.
(01:41:55)
But I have just a few minutes, a minute and a half left. I want to get actually to the farm economy. This is something that you and I have discussed many times starting when you first came into my office. You called yourself a soybean farmer, though I think that Minnesota farmers would differentiate between wealthy landowners who rent their land versus people who actually do the farming. But I can tell you that in Minnesota, Mr. Secretary, a lot of farmers are really feeling the pain. According to the Farm Bureau, farm bankruptcies were up almost 50% this last year. Minnesota has the most farm bankruptcies in the country in the first quarter of 2026. And the Farm Bureau tells us that six out of 10 farmers are reporting declining financial situations. So it's rough out there. Fertilizer prices are up, diesel prices are up. Could you just explain to me and to farmers in Minnesota how those increased prices driven by the war in Iran are worth the pain that they are feeling right now?
Senator Scott Bessent (01:43:07):
Senator, do you believe that Iran can have a nuclear weapon?
Senator Smith (01:43:11):
Mr. Secretary, this is my time to ask you the questions. How do you respond to Minnesota farmers who cannot afford the fertilizer they need?
Senator Scott Bessent (01:43:20):
Well, I think if you were to look in the dictionary, the definition of a farmer is someone who owns a farm and farms the land. And so as a former farmer, I will tell you, and maybe you know, that 75% of the fertilizer had already been purchased this year.
Senator Smith (01:43:37):
That is not what my farmers in Minnesota are telling me, sir. They are telling me that they cannot afford their fertilizer and they know the reason why. They know the reason.
Senator Scott Bessent (01:43:45):
There is no doubt that farmers have been struggling. But much of that, that there was a record crop last year, Senator. And what do record crops lead to?
Senator Smith (01:43:56):
What my farmers are telling me-
Senator Scott Bessent (01:43:57):
Lower prices.
Senator Smith (01:43:59):
... so I'm sure, I will take that back. I will take that back to my producers in Minnesota, that they have somebody in this Department of Treasury, a former farmer, who is feeling their pain. Thank you.
Mr. Chairman (01:44:15):
Senator Lankford?
Senator Lankford (01:44:16):
Mr. Chairman, thank you. Mr. Secretary, thank you. A year later after passing the Working Families Tax Cut Act, I have to tell you, it's been remarkable how fast Treasury has moved on implementation in a lot of the areas. We worked a lot together on things like full expensing and making that permanent and trying to be able to get that established long-term. That makes an enormous difference for our farmers and ranchers that are trying to buy equipment right now to be able to do that expensing. Commodity prices are down, fertilizer prices are up. But I would tell you, fertilizer prices started spiking under the Biden administration, not in the past two weeks here and certainly not in the past two months. Gasoline prices now are what they were during the Biden administration spike and there wasn't a war in Iran. And under the Biden administration-
Senator Lankford (01:45:00):
... administration that has a spike and there wasn't a war in Iran. And under the Biden administration, we had 9% inflation during that time period. So there's been tremendous amount of growth in the economy here, which I appreciate your partnership on. We've also worked a lot on the charitable donation side of things. And I appreciate the substantiation requirement information that Treasury and IRS has put out that helps a lot of folks that are donating now to nonprofits and the work that we've done together. There is still work to do on the donor advised funds. There were some Biden administration regulations that came out that were directly targeted at the donor advised funds that have caused real problems. Those are folks that are directly helping nonprofits and charities all over the country on it, but they're feeling some real pain from some additional changes in regulation. So I know this administration has been very aggressive at reviewing regulations and looking at it.
(01:45:55)
I would only ask you to review as well the Biden administration regulations on donor advised funds because that's directly taking money away from people that need it the most and folks that want to be able to help.
Senator Scott Bessent (01:46:07):
Senator, I will be happy to instruct our office of tax policy to work with you and your staff on this. I know it's an important issue for you.
Senator Lankford (01:46:14):
It is. Thank you. Look forward to that cooperation together just to be able to look at it, to be able to make sure the regulations work for every American. I want to talk a little bit about what you've done so far on the sanctions on drug smuggling. And specifically targeting all of these cartels that are in Mexico and in Central America and South America and trying to be able to go after that. You've seen some progress, some new techniques have been done to be able to target individuals and entities to try to limit the amount of smuggling. I want to just get an update from you. Dollars have been allocated. You've asked for additional dollars directly related to terrorism and drug smuggling cartels. This is a budget hearing. What's happened so far? Have those budget dollars previously been used? What are you asking for additional dollars for in that?
Senator Scott Bessent (01:46:59):
So Senator, we have designated the Mexican cartels as foreign terrorist organizations. We have also put in effect on the US Mexican border in certain counties, what are called geographical targeting orders so that we can better identify problems in our banking system and money that is being laundered through sooner. And this is a combination through FinCEN, the Financial, the Crimes Enforcement Network, and OFAC. So if we use FinCEN to follow the money and then OFAC has been used to sanction, we sanctioned, about this time last year, two Mexican financial institutions that were riddled with drug money.
Senator Lankford (01:47:46):
So you're doing the same thing to a lot of these, the shadow fleet that's out there moving Iranian oil and others as well. Give me an update on success dealing with that targeting specific sanctions on Iranian illicit movement of oil and other goods that they're trying to be able to move.
Senator Scott Bessent (01:48:05):
We began with a maximum campaign pressure in March of 2025. We have continued that and approximately seven or eight weeks ago, President instructed me to take it up to maximum. We call it Operation Economic Fury. And the Iranians, one of the many mistakes they have made was targeting, with missiles, their Gulf neighbors. We have good partners in the Gulf, but many of them were not completely transparent with us, what may or may not have been going on in their banking system. And we have achieved a much greater level of transparency. And we have seized a substantial amount of crypto assets, we have sanctioned ships and in fact the Navy has seized some of these ships, and we are tracking mostly the IRGC funds and we are freezing those for the day that they can be given back to the Iranian people.
Senator Lankford (01:49:04):
Okay. I look forward to that. I know just got a few seconds left. In Oklahoma we had a massive influx of Chinese illegal aliens had moved into our state, set up illegal grow operations for marijuana, and started shipping it literally all over the country. It was a tragic thing to be able to watch what happened to the human trafficking, the labor trafficking, the sex trafficking that these Chinese individuals were doing into my state. Not only trying to be able to purchase land and to be able to set up this operation, I want to be able to follow up with your team on just ways that we can work on following the money of illegal Chinese money coming in to buy American farmland and to also try to be able to control some operational locations near some of our sensitive sites and what you're doing there. I know you're doing a significant amount of sanctions on drug issues and such, but want to be able to just follow up on that.
Senator Scott Bessent (01:49:55):
We look forward to working with you on that Senator.
Senator Lankford (01:49:56):
Thank you.
Mike Crapo (01:49:58):
Thank you. Senator Warren.