At today's Senate Appropriations Committee hearing, Sen. Chris Van Hollen (D-MD) questioned Treasury Sec. Scott Bessent.
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00:00Thank you very much again, Mr. Secretary, for illuminating us with that explanation.
00:05I'll turn to Senator Van Hollen, please.
00:07Thank you. Thank you, Mr. Chairman. Welcome, Mr. Secretary.
00:10And I know you've just returned back from London, I believe, where you were engaged in the trade negotiations.
00:18And I've been trying to keep up with reports as to where those stand.
00:22And I just have one question regarding that, and that's a headline here that reads
00:30that Trump eyeing easing U.S. chip export restrictions to secure Chinese rare earths.
00:39I think all of us recognize the vulnerability the United States has with respect to rare earths.
00:45It's something that China has decided to limit much more since this trade war got launched in the most recent iteration.
00:56But many of us have been very concerned about the diffusion of very high-end chip technology and AI technology to China.
01:06So I'm wondering if you can comment on that.
01:09Senator Van Hollen, to the extent that article makes it seem as though there is some quid pro quo, there is not.
01:23We have done an extensive analysis within Treasury, Commerce, and all the technology,
01:36the White House Office of Science and Technology, on any technology transfer.
01:44And we have been very judicious in that.
01:50So there is no quid pro quo in terms of chips for rare earths.
01:57Okay.
01:58I'm listening carefully, and I understand you're saying there's no quid pro quo.
02:02I take it to mean from that that there's – you're not saying that we won't increase the access to China of our highest-end chip technology.
02:12I'm not saying you're saying we are.
02:14I'm just asking you're not – you haven't ruled that out.
02:16Am I interpreting you right?
02:17What I'm saying, there's no – you're referring to NVIDIA chips mostly?
02:25I'm referring to NVIDIA chips and the other high-end chips and the manufacturing equipment to produce those chips.
02:32Yes, but in fact, we have done just the opposite.
02:36We put export controls on the NVIDIA H20, which I would regard as a very upper-end chip but not the highest-end chip.
02:46So if anything, we have –
02:49No, I appreciate the measures you've – some have taken, I would argue, building in some cases on the Biden administration, but this is why this caught my eye.
02:59I just returned from the Senate floor where I have been raising very deep concerns about the deal that was done with the UAE,
03:06where on the day before the president left on his trip, rolled back the safeguards that had been put in place by the previous administration,
03:15which with, I should add, strong bipartisan support, including the bipartisan joint committee in the House looking into China.
03:23So this is an area I think many of us are very concerned about, which is why this headline caught my eye.
03:30If I could turn to the cuts to the IRS, and I've followed your comments about how you're able to continue to bring in revenues despite the changes that have been made.
03:40I would suggest, Mr. Secretary, that it's way too early to tell.
03:45First of all, as you know, a lot of people were fired as probationary employees only to have to be brought back on an emergency basis for tax filing season.
03:54So I think it's important we understand that.
03:57And the idea that people can really turn around a ship and, you know, implement all these new technology and AI changes to expedite IRS collections,
04:09especially from very wealthy people, is something many of us have been pushing for for many years.
04:14But the notion that this has happened in a very short time, I think, defies logic.
04:18So are you predicting that the changes that you've made this year will not result in the IRS collecting less revenue,
04:29especially from higher-end individuals than would be predicted this year?
04:35Obviously, if the economy continues to grow, revenues grow.
04:38But I'm saying the – I'm sure you've seen the CBO projections.
04:42The CBO says when you make these cuts, you will bring in less revenue from very wealthy people than you otherwise would.
04:50Do you agree with that analysis?
04:52I don't because I could tell you a couple of things.
04:56In discussing with my personal tax advisors,
05:01that they say that anyone you could bring in with two to three years of training is virtually worthless.
05:08I would say it is like putting me on a basketball court with Steph Curry.
05:14And we have, from a whistleblower in Atlanta,
05:21and this was before I arrived, under Secretary Yellen,
05:27there was a problem with the rapid pace of hiring to the quality of individuals hired.
05:35If there were two criteria, many – two high criteria, many only satisfied one,
05:45and then there were a few examples of people who were not qualified at all.
05:51I appreciate that.
05:52I would just emphasize again,
05:54it would be helpful if your team could get back to me and members of the committee
05:58as to what specific assumptions, premises, and conclusions in the CBO report you disagree with.
06:06Can you provide us with that?
06:07Yes, sir.
06:08Because I'd like to – you know, the CBO is like our umpire here.
06:12They really don't wear a party hat.
06:14They call it as they see it.
06:15And it's – in this case, we're seeing very different projections
06:19that have very meaningful consequences for our deficit.
06:22So I'd appreciate that.
06:23Yeah, and what I would point out, in our technology innovation,
06:30the IRS technology stack update began in 1990.
06:35I believe $50 billion has been spent.
06:41We were due to spend $3.5 billion this year.
06:45We have cut that back because so much of it is wasted
06:50or it's just patches on patches on existing systems.
06:54And also, as I've said repeatedly, I have three goals, collections, privacy, and customer service.
07:09And, you know, I believe we can enhance all of those
07:14as you clearly are well-versed in AI.
07:19And I think that we are at the dawn of being able to greatly increase individual
07:29and experienced auditor productivity via AI.
07:34So for the upper-end tax collector auditors that you brought up,
07:43that is what would be considered a plum job.
07:46It is something that takes many years of experience.
07:49So our goal is to actually be able to enhance their productivity
07:54and collections ability with AI.
07:57I look forward to getting the analysis that looks at what the CBO has done
08:02and where you disagree.
08:03Thank you, Mr. Secretary.