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