House Dems grill Mnuchin during financial hearing

Channel: Fox Business
Published: 05/22/2019

Treasury Secretary Steven Mnuchin testifies during the House Financial Services Committee's hearing on "The Annual Testimony of the Secy of the Treasury on the State of the Intl Financial System - Part II." Mnuchin's last hearing before the House Financial Committee ended with an argument betwee...

The committee will come to order without objection the chairs authorized to declare recess of the committee at any time. This is part two of the committee's hearing on the annual testimony of the secretary of the treasury on the state of the international financial system, which convened on april 9th 2019, as agreed with the ranking member without objection, this hearing is deemed a continuation o ...
that hearing And we will go to members who did not have the opportunity to question the witness on april 9, we have the secretary until 10:45 this morning, which accounts for our early start today, the gentleman from new jersey, mr. goff heimer, is recognized for five minutes. Thank you. Mr. secretaryfor being here this morning, the recent tax hike bill had a devastating impact on my district, the 5th district of new jersey, gutting, the state-level tax deduction, better known as salt sharply limiting new jersey's property tax deductions and imposing a massive tax hike on new jersey's Families and businesses last year i worked in new jersey officials on legislation to provide real tax relief for my constituents via tax credits for charitable contributions to our towns. After new jersey passed law, the irs, without any legislative basis, against legal precedent and decades of previous ayat irs approvals issued provisional rules. That would severely limit new jersey's ability to offer tax relief through the charitable deduction undermining new jersey'snew law. Allowing our towns to use it. And it also hurt, as you probably know, 33 other states like alabama georgia and south carolina that'd be using the charitable provision for decades. Now it's not a red state or blue state issue, mr. secretary, but i really believe that congress didn't give you or the irs permission to interpret the new tax law as they see fit.

These look. These rules are still provisional. I just was asking you if you have a status update for us on the on the limits on the charitable tax deduction for these purposes. Well, first of all, let me just say i do appreciate it is the salt deduction is having impacton some of the economies, and we are monitoring that carefully. We did allow for a deduction that did cover a very significant amount of the people, as it relates to the charile deduction. This administration very much supports charitable deductions, as does the department. I think the issue that you're referring to is that there are no limits on charitable deductions where there are not a quid pro quo attached. The question i think you're referring to is where certain states tried to get around the federal law by passing certain laws, and i understand that's still under further review by the irs in our legal department. But well what about the 33? Oh there's the 33 state saidi've been using this for decades now, should they have to stop immediately? Well again, we've spent a lot of time on this guidance. We are trying to make sure that the legitimate use of tax credits is still allowed. I believe, with the guidance, is still under review and we're happy to follow up with your office. Do you have a sense of timing of when we're gon na have when those rules will go final? I think it's gon na it's gon na be out shortly.

It'S it is a priority of ours. Again we want. We want to make sure that legitimate use of charitable contributions is support it. I know you were very involved personally, which a little unusualin the approval process of these guidelines. Why did you feel need to get personally involved in these particular ones? I know some most, you don't right. Actually, that's not the case. We meet almost daily with a team at treasury office of tax policy, general counsel, all of our areas, and we review actually every single regulation. I think it's my obligation, given the complexities issues, to make sure that i'm briefed on them. So this this issue is no different than others. Thank you unsolved for a second, you advocated for solid cuts. By saying they quote predominantly benefited high-income earners to help pay for major tax cuts for american families, an estimated that quote approximately 5 % oftaxpayers will itemize and have state-level income tax deductions above the salt cap in my state, in new jersey, forty 2. 75, not 5 % Of tax payers in the fifth district, or approximately three hundred fifty nine thousand people in the four counties i represent, she claimed assault deduction, that's far from 5 %.

In fact, the average in in bergen county, one of my counties, is twenty four thousand seven hundred eighty three dollars after hearing the impact in reviewing this taxis in. Are you having any? Do you have a different view at all on these claims of what you originally said, sir? Well, we're monitoring it carefully. I mean i would. I would comment that there are a lotof people with salt deductions that do have amt relief. I do think it does hit the high end of taxpayers significantly, but we are. We are monitoring the impact on these economies and and watching it carefully. Thank you, sir. In the remaining time, if i can quickly ask you an iran question last november, the full set of sanctions waived under the 2015 nuclear deal with iran came back into effect. What impact you see these newly imposed sanctions having and where do you see issues with compliance? I see these new sanctions being very impactful. They are having the impact that we want, which is absolutely limiting the amount of money that's going to iran, that's usedfor terrorist activities, it's used for military purposes and we were very pleased with the progress and the enforcement of the sanctions. So it's something where we're monitoring very carefully. Thank you very much for your time, sir.

Thank you i yield to the gentleman from tennessee. Mr. kozlov is recognized for five minutes. Thank you, madam chair, for convening this morning's hearing and mr. secretary. Thank you for coming back. This morning, back in november, ahead of the g20 summit, you released a statement regarding the us mexico, canada, trade agreement, and i appreciate you doing that two questions. As you know, congress is faced with with passing or not passing the u. s. mexico, canada trade agreement. Two questionscan: you address what happens to the economy if, in fact, we do pass the usmc a second question: can you address the effects on the economy if we don't pass the u. s.

mca sure? Well, i am hopeful that congress takes this up soon. I know ambassador light has had productive discussions with the speaker on this, because i think it has a very important economic impact. I think that's been estimated anywhere between thirty and a hundred basis points in terms of gdp, which is a very big number. These are two of our largest trading partners. This has a lot of support from the the governor's has a lot of bipartisan support from business. So the impactis is quite significant and i am pleased that we've reached an agreement with canada and mexico on steel and aluminium terrorists, which again is another reason to move forward with the agreement quickly. He, what would be the effect on the economy if we don't pass the us-mexico canada, it could be quite significant in the other direction, depending what happens whether we stick with the existing nafta deal or whether we terminated the nafta deal. So you know very, very positive. Economic to move forward on it, so i'm encouraged, and hopefully the house will take it up soon. Thank you is. It relates to cecil the current expected credit laws. I'Ve talked to a number of i'mconcerned with community banks, especially in in my area, which is west tennessee.

We have some really good, strong community banks who are concerned about the effects that that the cecil implementation would have one on them and their ability to lend money. If you or anybody in treasury or any regulators conducted a study to assess the potential impacts to banks and especially to community banks, if cecil is in fact implement implemented or those standards are implemented in the next year or so so i share some of your concerns. We'Ve had discussions at the f sock over this we've had discussions with the fed and other regulators about delaying the impact on it on trust, testing, andother things. So i think the regulator's are understand this issue they're trying to look at it carefully. It is an accounting provision, so it's it's something where we are focused on and we hope the transition will alleviate some of the concerns that your you've addressed. But this is an issue we continue to study. I appreciate that my district, which is part of memphis and then west tennessee, has a large ag component. In fact, it's the largest ag district in the state of tennessee. I hear from a lot of my farmers about tariffs and the impacts of tariffs. I'M characterizing, but generally the farmers are supportive of the president they're willing to endure short-term pain. Forlonger-Term gain. That'S generally, that's not everybody, but generally, if you were a member of congress representing an agricultural district, what would you tell farmers about tariffs and and and what the potential impacts and, and hopefully the potential positive effects that they may have? Well, i can assure you, the president is very focused on the agriculture community and the farmers.

Specifically, we talked about it. Almost weekly sonny perdue participates in our trade meetings and represents the farmers in those meetings. I think the good news is, as it relates to lifting some of these tariffs with mexico that will help the farmers substantially in terms of trade with mexico and reciprocal issues, and it relates to chinaif we can get a good deal. It will also be very good for the farmers i think you know is. Unfortunately, we were on track for that and we've gone backwards. The president and secretary perdue are looking at various different programs to make sure. As we take in tariffs, we can use some of that money to support the farmer, so i can assure you, the president is very focused on this. Thank you, mr. secretary and i yield back my remaining time. Thank you. The gentleman from utah mr. mcadams is recognized for five minutes.

Thank you, madam chair mr. secretary, thank you for coming back to the committee this morning. As you may know, utah leadsthe nation, with the highest number of children per family on average. I myself have four kids. So the cost of household goods and children's items specifically is a big concern in my district, a big concern for my constituents as they map out their household budgets every month. So i wanted to read to you a list of items. This administration is proposing to tax in its trade dispute with china, and i know you refer to these as tariffs, but in reality you ton's and utah business leaders and americans are the ones paying these costs. So i'll call them what they are attacks. I'M going to read a few of those of these items from the ustrfederal register notice on proposed list for tariffs, all of which will potentially be taxed up to 25 % baby diapers infant formula, children's footwear, infant nursery monitor systems, strollers high chairs and bouncers baby carriages And child safety seats - and these are just some of the items that are related to babies and infants - it's by no means an exhaustive list, because the list also includes all forms of clothing and items that you all that are also used by adults. In fact, you have 76 pages of items that you want to tax at a rate of 25 %. That'S these items right here in the federal register, 20 76 pages of items that will receive a 25 % tax somr. secretary.

I understand that you and this administration want to address china's unfair trade practices and i support that. But i don't i don't think the strategy and rationale behind this process has been properly explained and i don't think, you've properly consulted congress throughout the process. So i guess my question is: what do i tell mothers and fathers in my district when the price of their baby formula and diapers goes up what, if they can't afford those price increases, should they just go without buying diapers or not buy a car seat for Their kid: what do i tell them? What do i tell them i'll? Let you respond well. First, let me comment. I'D bei'd be more than happy to come up and meet with you and a bunch of your colleagues and explain in a smaller setting our thoughts on this and and and that you have a very valid point on these issues. So let me make a couple of points. First of all, these are proposed just tariffs. They are, they are not in place number two. There will be an exception process as part of this 301. We'Ve already had too many productive meetings with commerce and ustr and others, and three i can tell you, i am monitoring the situation very carefully. I was on the phone with the cfo of walmart, which is obviously one of the biggestsellers of the items yeah that you've described to specifically understand from walmart what things they can source from other areas and what items they can't. You know, i would say we haven't, made any decisions yet, but we will be especially sensitive to the consumer items and within the consumer items.

I assure you that items that particularly affect people on fixed salaries and and have for kids and others. So there there is, no decision been made on any of these items and i assure you we will monitor it very carefully before we raise all these items. Well - and i would just say i think people are alarmed - people are seeing their cost go up already. Inanticipation of these tariffs, as the administration set up the exclusion process that you refer to for round three on the china tariffs, we are working on the setting up the exclusion process. Now i haven't seen the prices go up. I'Ve been monitoring this very handful. Is there a plan for an exclusions process around four? Yes, there is, and i would also just comment given the depreciation of the chinese currency. A big component of this is being paid for by china because, as the currency depreciates, our companies are being able to buy things at lower prices, but we are very carefully monitoring the consumer prices and that's something that i can assure you. The president willbe very focused on before we make any decisions. Well, i just want to make sure i want my constituents to not be taxed, to not feel this pain in their monthly budgets. As they're trying to balance budgets put food on the table provide for their kids and their and their child's child rene fee, when can we expect any future announcement on the exclusion process? Well, i think you know the the process of round four. There won't be any decision, probably for another 30 or 45 days, and we will have an exclusion process built and ready if the president decides to go forward with that.

Thank you. I know that representative ron kind has introduced legislationhere in the house. That would require such a process as well, and i'm a co-sponsor of that legislation and, for the sake of you, know the peace and assurances of the american people. I hope we'll get this process moving as soon as possible. Thank you and i yield back the gentleman from virginia mr. rigell moon is recognized for five minutes. Thank you, madam chairwoman, and thank you mr. secretary i'm over here on the end and thank you mr. secretary, for coming back to committee this morning. I know the title. This hearing is the state of the international financial system, but before we get into that, i wanted to quickly discuss a tax issue. The irsrecently announced that corporate alternative minimum tax refunds received under the tax cuts and jobs act will no longer be subject to sequestration, but amt refunds received by taxpayers in lieu of claiming bonus depreciation under section 168 will remain subject to sequestration.

Taxpayers are no interest on amt, pre payments and are counted dollar for dollar against future liabilities. These pre payments operate as interest-free loans to the government that remain until the taxpayer incurs a liability to which the amt credit is applied. In many cases, these pre payments extend for decades. The only way to receive an amt credit is to pay the tax, so these are not loopholes exploited by american businesses, but serve as away to reduce our tax layer built ax liabilities. Should they owe money to our favorite uncle sam? I don't support a policy that treats these taxpayers differently, particularly in the case where the amt credits represent pre payments or overpayments of tax and should not be subject to sequester and sir. Can i get your commitment today that you will look into the actions that the irs can and should take on behalf of these companies on the amt credit specifically to remedy this situation? Yes, i can tell you i am familiar with it. It is a technical issue. We'Re working with omb on trying to resolve it. So thank you. Thank you and i knew that wasprobably a pretty quick answer. So, thank you for that and and following up on tax issues on march 5th of this year, the department of treasury released a policy statement on the tax regulatory process. This policy statement established the irs, is commitment to notice and comment rulemaking.

The limited use of temporary regulations in the proper role of guidance documents, one key assertion of this policy statement - says: sub-regulatory guidance is not intended to affect taxpayer rights or obligations, independent from underlying statutes or regulations and unlike statutes and regulations. Sub-Regulatory guidance does not have the force and effect of law. I wholeheartedly agree with this statement and what i love about bureaucracy is we actually have guidelinesabout guidelines? I think that's incredible so, but would you be willing to? Would you be willing to officially adopt a specific position as the chair of f sock, i will review that with fs. I can take it up with them sounds like a good idea. Thank you very much, so the i think the entire administration used to have the same view of guidance. I would argue that if this document is good enough for the irs, it should be equally appropriate for the f sock or any federal regulatory body in the united states and again it's just based on my my business background with regulations about regulations about guidance. I see my time is running alittle bit short, but one final talk topic i want to discuss is cybersecurity in june of 27 treasury issued a report titled non-bank, financial, fintech and innovation in this report. Treasury state's regulatory fragmentation overlap and duplication, however, can lead to ineffective regulatory oversight and inefficiencies that are costly to the taxpayers, consumers and businesses. By the way, mr. secretary, i think we see a theme in my questioning today. The report also says that cyber security is addressed. Among a broad group of federal and state regulators to the financial making information infrastructure committee fbi, i see when the prudential regulators were here last week.

This is something i talked about. I also know that the fbi isee or the financial and banking information infrastructure committee is chaired by treasury and comprised of over 15 members from additional regulators. Can you quickly discuss how treasury is working with the numerous regulatory bodies to harmonize cybersecurity regulations to protect consumers without creating too cumbersome a framework? Yes, thank you. It'S it a major priority of mine we've added additional resources to the department. We'Ve met with public and private partnerships on this, and we really have two tasks. One is harmonization across the regulators. We'Ve recently had a productive meeting with the bank ceos and the regulators on that, and the second is making sure we have better coordination between our intel. Our technical people and and theprivate sector to make sure that we're fully prepared. Thank you very much, i think. Just in closing i would i would ask you know as we go forward. I would just hope that we don't have any guidance come out about sub-regulatory guidance, which is about the guidance. That'S not actually not regulations.

Thank you and i yield my time. Thank you. The gentlewoman from virginia, mrs. wixon, is recognized for five minutes. Thank you. Thank you. Madam chairman, and thank you mr. secretary for joining us here today, i'd like to talk a little bit about your refusal to comply with a lawful subpoena from the ways and means committee. As you know, section 60, 103, f 1says that the secretary shall furnish the ways and means committee with any return or return. Information specified and requests. You'Re aware of that, right, okay and you're also aware that nowhere in that section is, is the chairman of ways and means required to include a reason legislative reason for the request you're aware of that as well. I'Ve read the language okay, but in your letter dated may 17th chairman neal, you rely on advice from the doj in determining that the request lacks a legitimate legislative purpose.

Is that correct? That is correct? Okay, now you understand that that, where the legislative branch, so we make decisions about legislating right, i understand that there are threebranches of government and they perform different functions and you're the executive branch right. It was correct which executes the laws. You don't make the lumps right. We make the laws now we learned last night of a second opinion which was written by the irs chief counsel's office. Are you aware of that letter that memo i became aware of that memo when it was, we got an inquiry from the washington post and it was just recently published, i'm not sure who the author of that was, but i've seen it in the washing in post. Okay, so when did when did the washington post inquire of you about your, i believe the day before yesterday they calledus up, and we confirmed that. We that i and the commissioner were not aware of that letter and had not seen it. But you have, since that time reviewed that memo actually haven't reviewed it. I looked at it literally on the way up here. Someone handed me the printed copy of it, so i would not describe that as i've reviewed it did. Somebody make you aware that the memo states that the law does not require that the ways and means committee, finance, chair or jct chief of staff include a reason or purpose for the request. Again, i haven't again, let me just say the legal advice that we've relied upon and again i understand there'sthree branches of government and when it comes to constitutional issues, there could be different interpretations and that's why there's a third branch of government to enjoy? I'M sorry claiming my time you you are aware you are at least aware that the conclusion of that memo directly contradicts the conclusion that you're relying upon.

Oh, i actually don't believe. That'S the case that memo i understand is addressing a different issue and is not addressing the issue that we in the department of justice looked at, but it is again. Let me just say this is not a letter that came to our attention earlier time who, at the irs would have made the decision not to run thismemo up the chain. I have no idea. Are you going to find that out we're trying to find out who wrote the memo where it came from when it was and why it wasn't distributed? Yes, have you had any conversations with the president at any time, during your prior to your confirmation or today or to today, about your desire or willingness to to provide the president's tax returns to congress? I'Ve had no conversations ever with the president or anyone in the white house about delivering the president's tax returns to congress. I want to switch gears and talk for a minute about jamal khashoggi. The washington, post, columnist and virginia resident was brutally killed at thesaudi arabian consulate and it's istanbul, saudi and saudi government has already acknowledged its role in the killing of mr. kesh og. The cia has reportedly established with high cavett confidence that it was an assassination that was ordered by crown prince mohammed bin salman. Do you accept the intelligence community's assessment of what happened? Let me just first comment that it's obviously a horrible situation that that he was killed. I can't comment, i obviously the intelligence community's assessment again. What i was just like to say is: i have access to all of the classified information.

It would be inappropriate for me to make comments on the cia intelligence that my time, madam chair, okay, so let melet me back up a little bit, so you met with crown prince mohammed bin salman less than three weeks after that appearance of disappearance of miss turkish Og right i did, i was scheduled to speak there, which i cancelled, but i did meet with him and talk to him about terrorist financing, and i obviously there's there's a picture that was tweeted out by the by the kingdom on october 22nd. Is that you, in that picture with, we also had private conversations about the khashoggi investigation at that time? Okay, so you, you were fine with appearing publicly with with mohammed bin salam come on. I cancelled my public speech. I was in a meeting privately andthere were photographers and i thought it was the appropriate thing to deliver a message to him from the president woman from missouri. Ms magner is recognized for five minutes. I thank the chairwoman and secretary minuchin. Thank you for the courtesy of coming back today, i'm especially pleased it as a vice ranking member of financial services and also the vice ranking member of foreign affairs that we are focusing on the state of the international financial system. Here today the secretary, i was pleased to see that the u. s. seized a north korean cargo ship earlier this month carrying coal. North korea has also conducted missile tests this month, for the first time in almost a year, anda half with missiles that appeared to resemble russian technology as talks with the north koreans stall in north korea demonstrates in its increasing aggression. What specific measures can we expect to come from treasury, sir? Well, the president is determined that we continue our efforts to enforce of the un sanctions and the us.

Sanctions against north korea and they've had a very important effect on bringing the chairman to the negotiating table and we will continue to enforce those sanctions, especially in the banking arena across multiple arenas. Yes, they've all been very effective. Mr. secretary, the obama administration mistakenly believed that burma was on the path to reform and it lifted sanctions and embraced eye-fi investment. Giventhat burma has continued to commit atrocities against ethnic groups across the country. Do you think ifis should continue engaging with burma and if so, how can they help prompt a more rights respecting environment, i'm concerned about the situation there. We will continue to have discussions with the if' eyes and others and monitor this situation so that there is the appropriate outcome. Well and again, i just i hope that we will impose additional sanctions that were lifted by the obama administration, given the path that has been taken, visa vie the atrocities that are happening against so many different ethnic groups. Burmese civil society organizations have expressed concerns with the ifc's lending proposals in luxury development, projectsinfrastructure and agribusiness, given the country's corrupt business environment and at lack of property rights. How has the ifc used its position to promote transparency and inclusive economic development in burma? Well, let me just say i share your concerns. I know our international department has been having conversations and i expect to see david malpass very soon, and i will raise this specifically to his attention there. There is no reason in my mind that the ifc and others should be doing this without the appropriate conditions attached well, and i've been very pleased to send some information along some questions.

If you'll be having those discussions, we still thank you. After issuing its first u. s. dollar denominated bondissue issue this month, the china-backed asian infrastructure, investment bank or the aii be raised 2. 5 billion dollars and attracted orders of more than 4. 4 billion dollars. The aib has said that the funds will be used to invest in infrastructure projects across asia, where the ai ib is a major financier of belt and road projects. What are the world bank, imf and asian development bank doing to support the belt new road initiative? Well, i can speak for the the imf and the world bank, and they are both very focused on that transparency and making sure that china follows rules of debt, transparency that are consistent with the paris club and others and in making sure thatif debt is taken on By these countries that it is sustainable and that they can afford it and if there's proper financing for infrastructure, that's one thing. But if there's money, that's designed to loan to own that's inappropriate and how is the u. s. ensuring that countries aren't aren't becoming overly indebted to china or entering predatory contracts? Well, those are conversations we have at the g20 consistently and i think there are. There is a lot of support from all of our allies on this issue.

Thank you i'm about to run out of time, but i would like to forward some information about burma to you for your further discussions. Thank you. I yield back madam chairmanthank, you from connecticut. Mr. himes is recognized for five minutes. Thank you, madam chair, and thank you. Mr. secretary for being here, i want to revisit treasury's decision to delist rusul en+ and associated entities owned and controlled at the time by russian oligarch. Oleg deripaska, i'm just to remind you of the fact pattern here. Congress has informed on december 19th, literally the day we are breaking for the holiday break, that it is treasury's intention to delist these entities. Nonetheless, congress acts on january 17th with strong veto-proof majority in the house to disapprove of the delisting the senate acts as well, but not with veto-proof majorities and despite this disapproval on the part of the unitedstates congress on january 27th, the treasury, in fact, d lists rusul And en+ as a result of the deal that was struck since then, mr. derry pastas net worth and as much as i can calculate, it has risen by two billion dollars, largely as a result of the doubling of the share price of vn+ and his remaining stake.

That'S what we can see visibly lord barker of battle who engineered this deal. The executive chairman of en+ received a five million dollar bonus for his success in engineering. This deal lured barker a battle of course denied access to classified information by the british parliament because of his ties to russia and what i worry about, mostis, what the leader of russia, vladimir putin, says or sees deripaska says i don't separate myself from the russian state. I have no other interest, so vladimir putin sees the treasury act in contravention of the will of congress to deliver this remarkable gift to mr. deripaska, a guy who associates himself with russian interest at a time that we're really coming to understand the full effect of the Russian interference in our election. We know what they're doing in syria, we know what they're doing around the world. So, mr. secretary, my question is, and i got into the weeds with you on this - i know on in a classified session. I had the opportunity to talk. Toover fact i understand the process and the mechanics, but i wonder if you can tell me what american interest was served, what strategic interest was served by the decision to delist en+ and to massively increase mr. dairy pastas net worth well, let me give you a brief Answer now and i'd be happy to follow up with you. First of all, let me just say many people in treasury, including myself, and a large group of career staff, spent a long time on this transaction and negotiating this transaction.

First of all, is our decision to put him on the sanctions list, despite what we knew this would do to the aluminum markets. We were pleased with thenegotiations. We think that this shows that sanctions work. That not only is this administration done more sanctions on russia than anybody previously, but mr. treacher, i don't mean to be rude, but when you say they, i've heard you say that before that sanctions work and i've heard you say on multiple occasions at the point of Sanctions is to change behavior. So please elaborate on what you just said. How in this case, did sanctions work? How did mr. derry posture change his behavior russia changes behavior? What? How did they work in this case? Well, what we've done is we've effectively separated him from the company we've put in a compliance system with us and european peopleon, the board, which is unprecedented and as it relates to strategic issues, i would just also comment: there were many workers throughout europe. This isn't just workers in russia, and we think this is a perfect example of where sanctions work. There was a change in behavior by the company. The company was delisted, but tell me what the change in behavior on the part of the company was the change in behavior. Is the company has separated themselves from deripaska and has agreed to an unprecedented compliance program with a board, a russian company now controlled by a board of non russians? It'S it's somewhat unheard of well.

First of all, they haven't separated themselves. The deripaska continuesto own, a 45 percent stake in the company and there's questions about whether he continues to control it, and i understand you may have feel some obligation to european workers. But my question really was what american interest, what american strategic interest was served by this deal, which which had the effect undeniably of massively in reaching mr. derry puska again, this was never about kind of trying to make deripaska as net worth go up or down. This was separating deripaska from the company. His voting interest went down to 35 %. He has no management responsibilities. We have unprecedented visibility into one of the largest russian companies in the second largest aluminum company in the world. This iswhy, i'm just i understand the mechanics, sir. I'M having a hard time, understanding, look and i and miss gaki came and spent a lot of time with me. I got the mechanics, i understand them. I still do not see what american interest was served here and that's my question to you.

I believe the american interests were served in separating the company, but i'd be more than happy to talk to you more about it. Thank you thank thank you. Mr. secretary, i yield back the gentleman from oklahoma. Mr. lucas is recognized for five minutes. Thank you, madam chair. Mr. secretary, i really only have one question and i think it's a relatively simple question. I wouldopen with an observation that you're, obviously a man of patience or you wouldn't be here again today. I consider myself also to be a person of patience, might be a better way to describe that and before. I ask my question just to observe that i have been like the chairwoman and a handful of other members, a member of this committee for a very, very long time, and i view us in many ways like a corporate board responsible to the entities that own the Enterprise responsible, the customers responsible for the success of the process, so i come at that from with my question.

In 2017, the treasury's capital, the treasury department's capital markets, made recommendations, relatedto the lack of harmonization between cftc and banking regulators regarding initial inter-affiliate margin as your well. The regulators have not yet decided to implement your recommendation. Last week i asked the heads of the banking regulators. If they intended to prioritize implementing your recommendation based on their answers, i'm now very concerned, they may try to make it a part of a much larger review of the feds regulations, one which could lit through we drag out four years. So this is my concern and i've been raising it for nearly five years, but it remains unaddressed. Do you agree that a fix on inter-affiliate margin requirement should be a priority, and will you impress upon those agencies ofthe importance of acting yes and yes, and thank you for acknowledging my patience absolutely mr. secretary, because if we don't address this, we will drive resources and We'Ll drive business out of this country, a reflection i think, of the topic of this hearing and after pursuing this for nearly five years, i would simply say when i chaired another committee, it took me two and a half years to pass a farm bill that would Successfully pass a republican house, a democrat senate and be signed by a democrat president, i and my colleague, former colleague from tennessee when it came time to do what was necessary to reauthorize. The export-import bank literally used an extraordinary legislative processfrom 1910 to take it away from a venture minh and over the heads of an entire majority leadership to get a piece of legislation all the way to the president's desk to be signed. I just simply observe after five years it's time and if the agencies can't bring themselves to focus to address this issue, perhaps it's time to help them. I simply use you as the courier of the message. Mr. secretary, i appreciate your responses yield back, madam chair.

Thank you. The gentlewoman from iowa, ms acne, is recognized for five minutes. Thank you, chairwoman waters and thank you secretary minuten for being here again. I appreciate it i'd like to talk to you a littlebit about tariffs and trade, i'm from iowa. So, of course, we're being hit hard. First of all, i appreciate the removal of the section 232 tariffs on steel and aluminum. However, those were put on by your administration, but thank you so much for removing those. But i want to talk to you about the tariffs that were just placed on chinese goods this month and the tariff is almost on 200 billion dollars of imports and it was just increased from 10 % to 25 %. Do you agree with president trump that china is footing the bill for these tariffs? I agree that china is fitting most of the bill for it. Yes, so who's paying the price forthese. Well again, when you look at the tariffs, there's probably three or four different things that are going on. One is a change in the currency which leads to a lower price for us that we can buy things to its margins that are being absorbed by companies in china and three.

There may be, in certain cases, a impact passed on to our consumer and we're closely monitoring that and that'll be part of the exception. I appreciate your bringing up that last piece because major retailers, like walmart, have said they will raise prices as a result of your administration's tariffs. Do you understand how a tariff operates and could you tell us a little bit aboutthat, i'm not sure if you were here when i mentioned earlier that i just spoke to the cfo of walmart. We speak on a regular basis, so i'm monitoring with them very carefully. So our tariffs attacks on imports. Tariffs are a tariff on imports. They are not a tax. Their tariffs are a tax on imports and they're paid for by the us companies who import those goods. So do our companies like nike and adidas and walmart, who have said they're going to pass on these prices to consumers? Would you not consider that an increase on costs on folks, like mine in iowa and americans across this country well mentioned earlier, and the reason why ispoke to walmart is because obviously they have a lot of these consumer issues? The way the tariffs were designed was the last tranche was really the consumer issue. We are monitoring carefully. There will be some exceptions. My expectation is a lot of this.

Business will be moved from china to other places in the region so that there will not be a cost so reclaiming my time, i'm not getting a straight answer here. Do you agree that american consumers will be paying more as a result of these tariffs? I don't necessarily agree with that and that's something we're monitoring very carefully and we'll be issuing exemptions. So you disagree with all of our key retailers, inthe country and experts, who understand that a tariff is most likely passed on to consumers, because that's historically what happens you disagree with that as the secretary of the treasury. I just spoke to many of these ceos. Many of you disagree with that that the tariffs will won't be passed on to consumers in any way, shape or form. Again there may be a small number of items where the tariffs may be passed on and those are the things we will specific. So you agree that american consumers will be paying more because they will tariffs, but we've made no decisions on that. The last tranche is is subject to the president's approval and subject to exemptionsi. Think it's the importers that make the decisions on that. Isn'T that correct? It'S their products that they're importing excuse me if the decision is being made by the the folks in our country who own the companies who are importing the products, not necessarily you who's, deciding what price they're going to put out on their product. Well again, if we issue an exemption it doesn't, then there will be no price increase and again most of those companies are moving products. They'Re claiming my time moving on.

Can you tell me what the average iowan makes in a year? I can't tell you exactly, but i would guess it's: can you tell me what the average americanfamily makes in a year yeah it's it's it's between, depending upon whether you use the mean or the median it's between 45 and 65 thousand yeah. It'S it's median is sixty thousand closer to seventy nine thousand. For the mean, can you tell me what cost these tariffs will put on these american families? I don't expect there will be significant costs on the american families and that's something that we are absolutely focused on. Have you done research on this? I have, as i said, i've just spoken to all the major companies that provide consumer goods. So if you've done research on this, how come we haven't seen this research, i i haven't seen it. I don'tthink my colleagues have seen it. Why hasn't that been passed on to us to ensure that the constituents in our district aren't paying the cost for this? Well, let me just comment. The last tranche is under investigation. The president has not yet made the decision and the consumer products are by design in the last tranche. So will you commit to providing us this research then again at the appropriate time. We will brief congress on what the economic impact is of it. Yes, okay! Well, let's move on the gentleman from texas.

Mr. gooden is recognized for five minutes. Thank you. Mr. secretary also wanted to congratulate you, because after today you hold the record for thelongest time served in the hearing by any secretary of the treasury, so apologies for not marking the occasion better. Thank you. I think it'll be five hours. Oh, very good! Well, we're happy to have you. I was gon na ask more about these tax returns. My colleagues across the aisle seem to be so obsessed with these tax returns. Have has anyone in the administration asked you to release tax returns for members of congress or anyone else for political purposes? No, they haven't in in both chairman brady when he ran the committee and now chairman grassley have not asked for those returns which they would have. The right to ask for subject to constitutional protections and i'vealso heard that it's important for the ways and means committee and others in congress to determine whether or not the irs is actually auditing our president and vice president.

Is there any reason to think that the irs isn't doing their job with respect to audits, we've offered to brief the committee on the audit process. They haven't taken us up on that, but i don't see any reason why they need access to actual returns to understand that the process of the audit is is fair and going through correctly. You were asked earlier today in today's washington post. There'S a story about potential memo from the irs: do you make your decisions based on? What'S on thefront, page of the washington post or confidential memos that you haven't seen? Is that how you do business as the treasury? Very rarely? I don't think i've made a decision on that basis. I would also just comment. The memo is marked draft. It was not a final memo, but i don't know how it got to the washington post. It would have been more interesting if it had got to me or the commissioner to review. Well, i want to thank you for your work. I want to thank you for standing up for the american taxpayer. I don't believe that tax returns should be used for political purposes and i believe you share that republicans certainly sharethat when they were in power in the house a few months ago, and i want to encourage you to continue fighting for the american taxpayer and thank you For your work, i assure you weaponizing, the irs is a major concern of ours that affects all taxpayers in both parties. Well, i think, if you're looking for evidence that the us congress doesn't need tax returns of american citizens, you can look no further than the house financial services and ways and means committee.

So thank you. I yield back the gentlewoman from north carolina. Mr. adams is recognized for five minutes. Thank you, mr. chairman. Thank you secretary minuchin for returning. You know you said you're patient i'mpatient too, but i've got to tell you i'm losing patience with the president. Do you know how many times the president trump has publicly offered to release his tax returns? I do not well, we should have something on this he's personally offered to give us a glimpse of his tax returns at least 24 times. It was scrolling on the screen and it'll probably be back up. It was april 19th 2011 in an interview when he first said that, and he said that if president obama would release his birth certificate, then he'd released his tax reforms. But of course the president obama did do what he said.

He'D do and the president did not do whathe said he'd do so. Do you think the american people have a right to know? What'S in those tax reform? No, i don't. Presidents are not required to the american public knew that he didn't release him before they voted for him. So that's why i'm reclaiming my time now. Do you know what the president's hiding you repeat that i'm sorry, you know what he's hiding i mean he doesn't when he might see him. Certainly not not scott. I don't think he's hiding anything. But okay, so you don't know, we don't know anything about his tax rate all right. So we've heard a lot of excuses over the years about why he could not release themhe said well. It was under audit and it, but once they finished that he would release them, but an irs commission to confirm that an ordinance not necessary for you to release your tax returns. Are you aware that i am but that's the president's decision and i'm not involved in the president's decision right? Let me reclaim my time i want to get through my questions. So are you familiar with congress's oversight authority? Yes, i am okay, so it's found in the constitution and public laws and the house and senate rules, and it does say that, when the request is made by the appropriate offices that that you should release him, are you aware of thati've read the law? I'Ve also been advised of the interpretation of the law, and i understand the constitutional issues all right.

So why haven't you complied with with chairman neal's request, because i think that would be unlawful, as advised by the department of justice and that's. Why there's a third branch of government that most likely? Let me clean my time, sir. So are you aware, then that by denying this that you are in direct violation of the law? No, absolutely not! I have been advised. I am not violating the law. I never would have done anything that violated the law and, quite the contrary, i've been advised to had. I turned them over, i wouldbe violating around once. So. Are you alleging that chairman neal lacks a legislative purpose, and that is the basis for your refusing his request? Well, given that this is now most likely going to litigation, i think my letters have been quite clear and why we have denied the request and that's all right, very much so are you intending to comply with the request at all? No i've made clear and him a letter that it would be unlawful for all right. Okay, sir, would claim in my time now have you told the irs not to respond to chairman neal's request the irs independently, the chairman independently, wrote a letter concurring with them. Yes, can you giveme yes or no? Have you you repeat the question? Have you told the irs not to respond to the request? Again, i just said the irs independently wrote a letter. Okay, let me clean my time. Can you give me yes or no? I don't all right, okay, you might not you, you won't give me yes or no all right.

So let me ask you. First of all i did. I did a little research myself and i know that you've done some work with goldman sachs and in the investment banking sector. Have you ever lost a billion dollars? I have never lost a billion dollars. Would you enter into a business relationship with someone who hada track record of losing a million dollars? It depends if they made ten billion and lost a billion all right. Okay, then you'll move on. Would you invest in a business venture that has lost a b now again if it made ten billion? Thank you, sir. Let me clean my time real quickly. I do have some concerns about the the opportunity zones. I sent a letter to you. We haven't gotten a response, yet i hope that you will be able to respond to to the questions that i've asked in that letter. Are you gon na do? Did you get the letter? I i assure you that i will check with my group this afternoon.

We verymuch support the opportunity zone, so we will be very reasonable right. I hope that you'll ensure that the program does not accelerate disruptive gentrification in those designated sense attracts sir, i yield back. Thank you very much share your concern. Thank you. Thank you. I want to acknowledge gentleman from colorado. Mr. tipton is recognized for five minutes. Thank mr. chairman mr. secretary, thank you again for taking the time to be able to be here.

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