Hearings to examine the President's proposed budget request for fiscal year 2026 for the Department of Treasury and tax reform.

2025-06-12

Summary

The meeting was convened to discuss President Trump's budget for fiscal year 2026 and ongoing tax reform efforts, including critical trade negotiations with China.[ 00:24:12-00:24:31 ] While the Chairman highlighted the budget's aim to cut wasteful spending and boost economic growth, the Ranking Member raised concerns about a "disastrous bill" being drafted that could lead to significant cuts in healthcare and food assistance. The Secretary of the Treasury affirmed the administration's commitment to improving national finances, creating jobs, and strengthening the economy under the President's economic agenda.[ 00:32:52-00:33:12 ]

Themes

Tax Reform and the "One Big Beautiful Bill"

Republicans strongly advocated for the permanent extension of the 2017 Trump tax cuts, framing it as essential to prevent a $4 trillion tax hike and to stimulate economic growth.[ 00:25:16-00:25:22 ] Chairman Crapo asserted that these tax cuts benefit American families and workers, particularly the middle class, and emphasized that the country faces a spending problem, not a revenue problem.[ 00:24:58 ] Secretary Besson supported this, stating that failure to extend these cuts would be "cataclysmic" for the economy, leading to job losses and an increased deficit, while the bill would significantly boost take-home pay and incentivize manufacturing investment.[ 00:39:08 ]

He also highlighted the positive impact of the 2017 tax cuts on real wage growth and household net worth for lower-income workers.

Conversely, Democrats vehemently opposed the proposed legislation, labeling it a "class war" that would disproportionately benefit the wealthy at the expense of millions of Americans. Senator Wyden warned of catastrophic cuts to Medicaid, the Affordable Care Act, and Medicare, which he predicted would devastate the lives of countless individuals. Senator Bennet (CO) characterized the bill as a transfer of wealth, accusing it of taking healthcare from millions, cutting nutrition assistance, and adding $2.4 trillion to the national debt, while primarily benefiting the top 5% of earners. Other Democratic senators, including Elizabeth Warren, Tina Smith, Ben Ray Luján, and Raphael Warnock, echoed these concerns, challenging the Secretary's economic projections and arguing that the bill prioritizes tax breaks for billionaires over essential social programs.

Secretary Besson defended the administration's approach, arguing that the Treasury had successfully improved IRS efficiencies and that the bill's economic benefits for the working and middle class would be substantial.[ 00:33:28-00:33:48 ]

He dismissed the deficit projections from the Congressional Budget Office (CBO) as based on a flawed static scoring methodology and argued that when dynamic growth projections and tariff revenues are included, the bill would actually lead to a surplus or deficit reduction. Besson also stated that Medicaid reforms, including work requirements, were designed to focus benefits on mothers and children and to address what he termed 'illegal aliens' on the program.[ 01:54:14 ]

Trade and Tariffs

The discussion on trade centered on the administration's aggressive tariff policy and its impact on the economy. Chairman Crapo and other Republicans praised the President for re-engaging in bilateral trade negotiations, aiming to rebalance the global economy and hold countries like China accountable for unfair practices.[ 00:38:55 ]

Secretary Besson reported successful negotiations, including a historic US-UK trade deal and progress with China, which he stated would lead to a 'golden age economy'.

In contrast, Democratic senators expressed deep concerns that tariffs would raise costs for American consumers and businesses. Senator Wyden highlighted company statements about price increases due to tariffs and challenged Besson's assertion that consumers would not bear the cost, providing specific examples of higher prices on goods.[ 00:45:51 ]

Senator Hassan presented evidence of increased costs for baby products and a New Hampshire distiller paying significant tariffs on imported lemons, asking if the Treasury would reimburse such businesses. Secretary Besson, however, maintained that empirical evidence showed no overall inflation from tariffs and that foreign producers often absorbed the costs, dismissing specific examples as individual business decisions or 'tariff derangement syndrome'. He also clarified that strategic industries like semiconductors, steel, and pharmaceuticals were targets for bringing manufacturing back to the U.S. through trade policies.

Fiscal Responsibility and National Debt

The issue of the national debt and fiscal responsibility was a central point of contention throughout the hearing.[ 00:24:31-00:24:34 ] Republican members, led by Chairman Crapo and Senator Johnson, argued that the country suffers from a 'spending problem' rather than a 'revenue problem,' criticizing what they viewed as excessive spending under previous Democratic administrations.[ 00:24:58 ] They emphasized the need for significant spending reductions and economic growth, which they believed the proposed tax bill would foster.[ 00:26:52 ]

Conversely, Democratic senators raised alarms about the "One Big Beautiful Bill" potentially exacerbating the national debt. Senator Bennet (CO) pointed to the bill adding $2.4 trillion to the national debt and the nation's credit rating being slashed, questioning how this aligns with the Treasury Secretary's stated concern for fiscal health. Senators Warren and Luján repeatedly pressed Secretary Besson on whether the bill would increase the deficit, citing CBO and other expert analyses.[ 01:51:05 ]

Secretary Besson maintained that the administration inherited a difficult fiscal situation and was committed to improving national finances and reducing the deficit to 3% of GDP.[ 01:31:38 ]

He contested the CBO's deficit projections, arguing that they failed to account for the dynamic economic growth stimulated by the tax bill and revenue generated from tariffs. He emphasized that economic growth, spurred by the permanence of tax cuts and expensing provisions, would be a "game changer" for the national debt.[ 02:49:06 ]

Tone of the Meeting

The meeting was marked by a contentious and polarized tone, reflecting deep ideological divisions between Republican and Democratic members.[ 00:31:14 ]

Exchanges frequently became antagonistic, with senators on both sides challenging the Secretary's statements and interpretations of economic data.[ 00:53:44 ] Secretary Besson maintained a confident and assertive demeanor, consistently defending the administration's policies while often directly refuting or re-interpreting questions, leading to expressions of frustration from some senators regarding his perceived evasiveness.[ 00:43:56 ] The debate was characterized by each side presenting differing economic figures and analyses, contributing to the overall charged atmosphere.[ 00:24:55 ]