'I Hope I'm Wrong': Chris Coons Presses Scott Bessent Over Sanctions Policy Towards Russia

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At Wednesday's Senate Appropriations Committee hearing, Sen. Chris Coons (D-DE) questioned Treasury Sec. Scott Bessent.

Transcript

00:00Thank you, Chairman Hagerty, Ranking Member Reed, Secretary Besant.

00:04Welcome. Thank you for being here today.

00:07Chairman Hagerty, I'm impressed at your streamlining this hearing.

00:10It was striking, and I'm glad we're able to get right into the meat of the conversation.

00:18We are today spending more on the interest on our national debt than we are on our national defense,

00:23and I applaud your stated support for reducing the federal deficit

00:27and trying to get a handle on our national debt.

00:30But I struggle to square that with your support for tax policies

00:35that will, under CBO's analysis, add at least $2.4 trillion to our debt in the next decade.

00:41And given that credit rating agencies have just downgraded U.S. debt,

00:45I am concerned that by continuing to pile debt onto our national balance sheet,

00:50we will undermine growth, we will damage our ability to borrow,

00:54and we will lay the foundation for the next fiscal crisis.

00:57Do you share any of those concerns, and how do you see us making progress

01:00in improving our overall fiscal balance sheet?

01:04Senator, I don't think you and I have met in person.

01:08I think we had a long time.

01:09We have met, yeah.

01:10We did meet, and we also had a very long phone conversation, I remember.

01:14That the reason I'm sitting here today is because I became very concerned

01:21about our government's finances, and that in the trailing year,

01:27we will have had the highest deficit to GDP when we were not at war

01:32and not in a recession.

01:34Right.

01:34And so this is what we have inherited.

01:39If we look at the CBO scoring, and I'm not making a judgment

01:43on the good people who work at CBO.

01:47I'm making a judgment on their models.

01:49The models assume a static 1.7 or 1.8 percent growth,

01:54whether we have, whether we pass the one big beautiful bill

02:01or it fails, no matter what, we always grow at 1.8 percent.

02:07I believe through higher growth and the cost cutting that we are doing,

02:13that we can bring that under control.

02:15And I would note that if we want to use CBO scoring,

02:24CBO scoring, which I don't agree with,

02:27is at $2.4 trillion over the 10-year window.

02:31The CBO also scores the president's tariffs at $2.8 trillion.

02:37So that would be a surplus of $400 billion.

02:42Let me move on to some more focused questions

02:45on specific things in your agency.

02:46I would welcome a chance about the broader economic picture

02:49because I frankly don't believe the tariff income assessment.

02:53I do believe the tax, but we literally could debate this

02:57longer than I believe I have.

03:00Let's move to sanctions.

03:01If we want to agree on CBO, we have to agree on CBO.

03:04And I'll take that point.

03:07Secretary Rubio testified recently the Trump administration

03:10has not lifted any sanctions against Russia's

03:12and is that true?

03:15Not to my knowledge.

03:16And sanctions, which I've long followed,

03:18I've served on this subcommittee for many years,

03:20it's not a static game.

03:22For every company that's sanctioned,

03:24typically they then move to set up a front company

03:27to find another avenue.

03:29And with the Russians in particular,

03:30they're quite skilled at sanctions evasion

03:32by setting up new companies in other countries,

03:35including in the PRC.

03:36And for every sector that's sanctioned,

03:38there's a whole cottage industry devoted to evading them.

03:40Effective sanctions depend on follow-up,

03:44enforcement, and pursuit,

03:46which is why you have a whole talented team at Treasury

03:49focused on finding evaders and front companies,

03:52redesignating them publicly, closing the loopholes.

03:55Treasury and state were rolling out new sanctions designations

03:58every few weeks, much of last year.

04:01How many new Russian entities have you designated

04:04under your sanctions authority since January?

04:06I will get back to you with that number.

04:09The answer is zero.

04:10How many entities worldwide have you sanctioned

04:12for doing business with Russian companies

04:14in ways that undermine our sanctions and export controls?

04:17I will get back to you with that number.

04:18I believe the answer is zero.

04:19I hope I'm wrong.

04:21I'd love it if you'd get back to me and tell me I'm wrong.

04:24But the PRC is helping Russia's defense industry

04:26by providing dual-use components and advanced technologies.

04:30Last week, Chancellor Mertz briefed a bipartisan group of us

04:34on Russia's alarming rearmament with help from China, Iran, and North Korea.

04:39How many Chinese firms have been designated

04:42for doing work directly with Russia's defense industry?

04:45I will get back to you on that.

04:47I will tell you that we have sanctioned numerous Chinese companies

04:53for receiving Iranian oil,

04:55and we have been working on the shadow fleets are not independent.

05:02And I believe in what you said,

05:05the Russians and the Iranians are very good at evading sanctions

05:09with these so-called shadow fleets.

05:12So we are working on a large...

05:15We have been pushing on those.

05:17We have sanctioned what are called teapot refineries in China.

05:22So these are non-state-owned, privately-owned refineries.

05:26This is a new, innovative measure that we have done.

05:32We have chosen not to go after Chinese government-owned.

05:39We are also working on tracking down the owners of these refineries,

05:45whether they have any assets in the U.S., in Western Europe,

05:50and moving on those very quickly.

05:52I look forward to talking to you further about sanctions enforcement.

05:54Two last questions, Mr. Chairman,

05:56since I'm the only senator remaining.

05:58I will make them brief.

06:00IMF.

06:00I just met with the head of the IMF.

06:02The IMF is a sound investment in global financial stability.

06:06We receive billions in interest every year from them on credit that they extend.

06:11In 2023, members agreed to increase quota,

06:14the capital contributions to the fund.

06:15It's my understanding that the Treasury Department and the White House

06:19have shown support for a measure to increase quota.

06:23Can you just confirm it is, in fact, administration priority to increase our IMF quota?

06:29Yes.

06:29So, across the multilateral development banks,

06:36we believe that it is a very good way of leveraging tax dollars for U.S. power.

06:46And the managing director would have told you,

06:51or you may have seen that I gave a speech about eight weeks ago during IMF World Bank Week,

06:56that we are going to go back to basics,

07:00and we believe that they should be helping developing countries

07:04when they have a sudden stop and with development issues.

07:09Same for World Bank.

07:11I would love to work with you, Mr. Secretary,

07:14on making sure that the authorization for that increase actually happens this year

07:19so that we can move forward in our partnership.

07:21The Direct File program allows Americans with very simple tax returns

07:25to file their taxes for free.

07:27It's been a great success.

07:29According to IRS research,

07:3094% of Direct File users rate their experience as excellent or above average.

07:35For a government tool for paying taxes, that's pretty darn good.

07:39You've expressed support for streamlining IRS operations,

07:42and Direct File seems to support that mission.

07:44Do you continue to support Direct File,

07:46or should I be concerned about rumors that the administration plans to end it?

07:50We are looking at Direct File.

07:53We wanted to wait until we got beyond the window of tax filing season,

07:58so we are doing an assessment of that now.

08:04I will get back to you on that.

08:07One of the goals is to have more electronic filing,

08:10because I'm cupping the numbers,

08:15but in order of magnitude,

08:18an electronic filer who doesn't get a refund

08:21may cost us under $1.

08:24A paper filer who does get maybe up to $80.

08:29So I will get back to you on that.

08:31Thank you,

08:31because I do think it's a successful program

08:33and reduces costs and makes it easier for taxpayers.

08:35Thank you for your forbearance, Mr. Chairman.

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