Treasury Secretary Confirmation Hearing January 2017 Notes

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(All caps because of transcript)

Concerned about the growing gap between taxes owed and collected

“I HAVE BEEN A CHIEF ARCHITECT OF HIS ECONOMIC PLAN. WE BELIEVE THE MOST CRITICAL ISSUE IS CREATING ECONOMIC GROWTH AND PASSING TAX REFORM IS A MAJOR COMPONENT OF THAT. OUR TAX REFORM PLAN, WE BELIEVE THE TAXABLE OCCASION AND FEWER DEDUCTIONS ARE CRITICAL. YOU MENTIONED THE TAX GAP AND THAT IS SOMETHING I HAVE BEEN READING ABOUT AND STUDYING AND SOMETHING I AM INTERESTED IN. I WAS PARTICULARLY SURPRISED THAT IN LOOKING AT THE IRS NUMBERS, THE IRS HEADCOUNT HAS GONE DOWN DRAMATICALLY, ALMOST 30% OVER THE LAST NUMBER OF YEARS. I DO NOT THINK THERE IS ANY OTHER GOVERNMENT AGENCY THAT HAS GONE DOWN 30% AND ESPECIALLY FOR AN AGENCY THAT COLLECTS REVENUES , THIS IS SOMETHING I AM CONCERNED ABOUT. PERHAPS THE IRS JUST STARTED WITH WAY TOO MANY PEOPLE BUT I AM CONCERNED ABOUT THE STAFFING OF THE IRS, IT IS AN IMPORTANT PART OF FIXING THE TAX GAP AND I AM VERY CONCERNED ABOUT THE LACK OF FIRST-RATE TECHNOLOGY AT THE IRS”

I am concerned that regulation is killing community banks

” I BELIEVE IN PROPER REGULATIONS. BEFORE I HAD THE OPPORTUNITY TO PUT IN A BID FOR INDYMAC BANK, I HAD TO BE ISSUED A CHARGER, AND — CHARGER AND I WORKED — CHARTER, AND I WAS A BIG FAN OF YOU MERGING THE OTS AND THE OCC AND GETTING RID OF ANOTHER REGULAR FREE AGENCY BUT AT THE TIME I WORKED WITH THE OTS AND THE FED AND THE REGULATORS EXPLAINED TO ME AT THE TIME AND I TOLD HIM I UNDERSTOOD THE RESPONSIBILITY OF BEING GIVEN A BANKING CHARTER, I TOOK IT VERY SERIOUSLY. I MUST SAY THAT I ENJOYED WORKING WITH A VERY, VERY SMART REGULATORS. I HAVE TREMENDOUS RESPECT FOR THEM. IN ONE OF THE FEW THINGS THAT THE WALL STREET JOURNAL ACTUALLY WROTE NICE ABOUT ME, THEY MADE A COMMENT THAT I TOLD EVERYBODY WE HAD TO TREAT THE REGULATORS LIKE OUR BEST CLIENTS WHICH I BELIEVE , THE REGULATORS AND THE RELATIONSHIPS WITHIN AND FOLLOWING THE REGULATIONS, NOTHING WAS MORE IMPORTANT, GIVEN THE TRUST THEY HAD PUT IN US. I WITNESSED FIRSTHAND, HAVING SAID THAT, MULTIPLE REGULATORS. THE OCC AND FDIC AND CONSUMER PROTECTION BUREAU, THE FEDERAL RESERVE, AND IN CERTAIN CASES THERE WAS OVERLAPPING REGULATION. MY BIGGEST CONCERN AND I FULLY SUPPORT REGULATION FOR BANKS WITH FDIC INSURANCE BUT MY BIGGEST CONCERN IS THAT THIS REGULATION IS KILLING IMMUNITY BANKS, WE ARE LOSING BIG COMMUNITY BANKING BUSINESS AT LOSING THE ABILITY FOR SMALL AND MEDIUM-SIZED BANKS TO MAKE GOOD LOANS TO SMALL AND MEDIUM-SIZED BUSINESSES IN THE COMMUNITY WHERE THEY UNDERSTAND THE CREDIT RISKS BETTER THAN ANYBODY ELSE”

I would like to examine the effect of the Volcker rule on liquidity

“I WILL, SENATOR, AND LET ME COMMENT ON THE FOCAL RULE — FOCAL RULE — THE CONCEPT OF PROPRIETARY TRADING DOES NOT BELONG WITH BANKS WITH — THE FEDERAL RESERVE PUT OUT ITS OWN REPORT THAT THAT RULE HAS COMPLETELY LIMITED LIQUIDITY IN MANY MARKETS AND THE FEDERAL RESERVE IS CONCERNED THAT THE INTERPRETATION OF THE VOLCKER RULE DOES NOT ALLOW BANKS TO CREATE ENOUGH LIQUIDITY FOR CUSTOMERS. THAT IS SOMETHING I WOULD ABSOLUTELY WANT TO LOOK AT.”

Need better technology at the IRS

“I THINK ONE OF THE BIG ISSUES IS AROUND THE IRS IS TECHNOLOGY AND I WOULD USE MY EXPERTISE IN TECHNOLOGY TO MAKE SURE THAT WE BRING THE IRS UP TO DATE WHICH IS A FUNCTION OF — I UNDERSTAND OLD EMAIL SYSTEMS, OLD PRIVACY SYSTEMS, WE ABSOLUTELY NEED TO MAKE SURE — IN THIS WORLD OF CYBER SECURITY AND IT BEING SUCH A BIG ISSUE, WE NEED TO PROTECT AMERICAN TAXPAYER INFORMATION AND THERE SHOULD BE SIMPLE WAYS THAT THE IRS CAN INTERACT WITH THE AMERICAN TAXPAYER.”

Let’s bring down tax rates for businesses so that they can bring money back

” THE FACT THAT WE HAVE COMPANIES LIKE APPLE THAT HAVE HUNDREDS OF BILLIONS OF DOLLARS OFFSHORE BECAUSE OF THE DIFFERENTIAL IN TAX RATES AND THEY ARE BEING PENALIZED TO BRING BACK MONEY, ONE OF THE THINGS I THINK — WE ALL AGREE ON AND I HAVE TALKED TO THE PRESIDENT-ELECT AND HE BELIEVES WE CAN BRING TRILLIONS OF DOLLARS BACK ON SHORE SO THAT THAT MONEY IS INVESTED IN AMERICAN BUSINESSES AND CREATING JOBS. I LOOK FORWARD TO WORKING WITH YOU AND YOUR OFFICE ON TAX REFORM AND BRINGING DOWN BUSINESS RATES FOR BIG BUSINESSES AND SMALL BUSINESSES AND MAKING AMERICA BUSINESS THE MOST COMPETITIVE IN THE WORLD SO THAT WE ARE NOT SHIPPING JOBS OVERSEAS AND MONEY OVERSEAS.”

He wants free and fair trade

” THE PRESIDENT-ELECT IS INTERESTED IN FREE AND FAIR TRADE. THIS IS NOT ABOUT LIMITING IMPORTS IT IS ABOUT GROWING EXPORTS AS MUCH AS WE CAN. YOU COMMENTED ON INTELLECTUAL PROPERTY, ONE OF THE PROBLEMS IN TRADE AGREEMENTS IS AMERICAN INTELLECTUAL PROPERTY IS NOT BEING KEPT, BEING TAKEN IN FOREIGN COUNTRIES. NAFTA, THE PRESIDENT-ELECT INTERESTED IN RENEGOTIATING NAFTA SO WE CAN KEEP MORE JOBS HERE. HE PICKED UP THE PHONE AND CALLED MANY CEOS, I CANNOT REMEMBER THE LAST TIME A PRESIDENT OR PRESIDENT-ELECT DID THAT AND WORK FOR THE AMERICAN WORKERS.”

Growth is the top priority

“THE SORT — SHORT ANSWER IS I HAVE SAID PUBLICLY AND BELIEVE THAT WE SHOULD BE ABLE TO GET 3%-4% SUSTAINED GDP. I THINK THAT IS IMPORTANT AND I THINK THAT AS A COUNTRY, THE MOST IMPORTANT ISSUE WE HAVE IS ECONOMIC GROWTH, THAT WHATEVER ISSUES WE HAVE AS REPUBLICANS OR DEMOCRATS, I THINK WE CAN AGREE THAT WITH MORE GROWTH, IT IS A LOT EASIER TO SOLVE THESE ISSUES AND WE SHOULD ALL BE FOCUSED ON THINGS THAT HELP GROW THE ECONOMY. IN 1984, WE HAD 7% AND IN 1998 WE HAD 5% AND IN 2005 WE HAD 3%. THAT WAS THE LAST TIME WE HAD APPROPRIATE GROWTH RATES. I SHARE THE PRESIDENT-ELECT’S CONCERN OF LOW GROWTH. OUR NUMBER ONE PRIORITY FROM MY STANDPOINT IS ECONOMIC GROWTH AND I CAN ASSURE YOU I WILL WORK TIRELESSLY IF I AM CONFIRMED TO CREATE GROWTH IN THE ECONOMY AND CREATE PRO GROWTH PROGRAMS AND I COMMIT TO WORK WITH ALL OF YOU ON THAT. I BELIEVE THE TAX REFORM WILL BE OUR FIRST AND MOST IMPORTANT PART OF THAT.”

We believe in appropriate regulation

” I WILL TELL YOU THAT BOTH MYSELF AND THE PRESIDENT-ELECT BELIEVE IN APPROPRIATE REGULATION. NOT JUST IN FINANCIAL SERVICES, THERE IS EXCESS REGULATION INHIBITING JOBS, IN GROWTH, HURTING THE AMERICAN WORKERS”

Trump’s strong dollar comment was a short term comment

” LET ME COMMENT ON THAT BECAUSE I THINK THE U.S. CURRENCY HAS BEEN THE MOST ATTRACTIVE CURRENCY TO BE IN FOR LONG PERIODS OF TIME. I THINK IT IS IMPORTANT AND I THINK YOU SEE THAT NOW MORE THAN EVER THE CURRENCY IS VERY STRONG AND WHAT YOU SEE IS PEOPLE FROM ALL OVER THE WORLD WANTING TO INVEST IN THE U.S. CURRENCY. I THINK WHEN THE PRESIDENT-ELECT MADE A COMMENT ON THE U.S. CURRENCY, IT WAS NOT MEANT TO BE A LONG-TERM COMMENT. IT WAS MEANT TO BE THAT PERHAPS IN THE SHORT TERM, THE STRENGTH IN THE CURRENCY AS A RESULT OF FREE MARKETS AND PEOPLE WANTING TO INVEST HERE MAY HAVE HAD NEGATIVE IMPACTS ON OUR ABILITY IN TRADE, BUT I AGREE WITH YOU, THE LONG-TERM STRENGTH OVER LONG PERIODS OF TIME IS IMPORTANT AND THAT IS A REFLECTION OF — I BELIEVE WE HAVE THE MOST ATTRACTIVE INVESTMENT ENVIRONMENT IN THE WORLD AND WE JUST HAVE TO PROTECT OUR U.S. COMPANIES SO THEY ARE NOT FORCED ABROAD”

We should not be in the business of bailing out big banks

“WE SHOULD NOT BE IN THE BUSINESS OF AILING OUT — BAILING OUT BIG BANKS AND I 100% AGREE WITH YOU THAT I SHARE CONCERNS ON TITLE 2. I THINK WE NEED TO LOOK AT THE BANKRUPTCY CODE AND WHAT WE CAN DO AS AN ALTERNATIVE”

The US Debt needs to be honored

“THE PRESIDENT-ELECT HAS MADE IT PERFECTLY CLEAR THAT HONORING THE U.S. DEBT IS THE MOST IMPORTANT THING. I HOPE THAT WHEN WE GET TO THE POINT IF I AM CONFIRMED THAT WE HAVE TO HAVE THE DEBT CEILING — THAT WE WILL NOT GO THROUGH ANOTHER ONE OF THESE ISSUES BECAUSE THERE ARE CERTAIN THINGS THAT I WOULD HAVE THE POWER TO POSTPONE THIS. I FIRMLY BELIEVE THE U.S. HAS THE OBLIGATION TO HONOR:

I Would like us to raise the debt ceiling sooner rather than later

“LET ME BE CLEAR, I WOULD LIKE US TO RAISE THE DEBT CEILING SOONER RATHER THAN LATER”

I will be the one taking the lead on tax reform

” THINK IT IS IMPORTANT THAT PRESIDENT TRUMP HAS A PROGROWTH ECONOMIC TAX PLAN AND WE ARE SENSITIVE TO THE COST OF THE PLAN. YESTERDAY I DID HAVE THE OPPORTUNITY TO MEET WITH SENATOR WYDEN AND WE TALKED ABOUT THE PROCESS FOR TAX REFORM. I WILL BE THE PERSON FROM THE ADMINISTRATION TAKING THE LEAD ON THAT AND I WOULD LOOK FORWARD TO WORKING WITH THE HOUSE AND THE SENATE, BOTH REPUBLICANS AND DEMOCRATS TO MOVE FORWARD ON TAX LEGISLATION”

We have a tax system that incentivizes capital to be kept abroad

” I THINK WE HAVE A LOT OF CAPITAL IN THE UNITED STATES NOW , BUT WE HAVE A BUSINESS TAX SYSTEM THAT IS INCENTING U.S. COMPANIES KEEPING THE CAPITAL OF BROAD. THE OTHER THING WE WANT TO INCENT IS THAT MONEY COMES BACK TO THE UNITED STATES NOW AS WELL AS GOING FORWARD AND THAT MONEY CAN BE DEPLOYED TO CREATE NEW BUSINESS HERE AND CREATE JOBS AND THAT WE STOP THINGS LIKE INVERSION BECAUSE IT MAKES ECONOMIC SENSE FOR U.S. COMPANIES”

Fannie and Freddie play an important role

“LET ME BE CLEAR THAT I DID MAKE COMMENTS ABOUT THIS. MY COMMENTS WERE NEVER THAT THERE SHOULD BE RECAP AND RELEASE. I HAVE BEEN AROUND THE MORTGAGE INDUSTRY FOR 30 YEARS AND I HAVE SEEN THIS FOR A LONG PERIOD OF TIME. THIS IS AN AREA I BELIEVE I HAVE EXPERTISE IN. FOR VERY LONG PERIODS OF TIME I THINK FANNIE AND FREDDIE HAVE BEEN WELL RUN WITHOUT CREATING RISK TO THE GOVERNMENT AND THEY PLAYED AN IMPORTANT ROLE — I KNOW YOU ARE RUNNING OUT…I BELIEVE THESE ARE VERY IMPORTANT ENTITIES FOR LIQUIDITY FOR THEWHAT I HAVE COMMITTED TO IS THAT I WILL WORK WITH BOTH THE DEMOCRATS AND REPUBLICANS. WHAT I HAVE SAID AND BELIEVE, WE NEED HOUSING REFORM. WE SHOULD UNJUSTLY FANNIE AND FREDDIE AS IS OR THE NEXT FOUR OR EIGHT YEARS UNDER GOVERNMENT CONTROL WITHOUT A FIX. I BELIEVE WE CAN FIND A BIPARTISAN FIX FOR THESE. ON THE ONE HAND, WE DON’T END UP WITH A GIANT BAILOUT. ON THE OTHER HAND, WE DON’T RUN THE RISK OF COMPLETELY LIMITING HOUSING FINANCE.”

The overall goal is to simplify personal taxes

“I THINK THE OVERALL GOAL, AS WE HAVE THE OPPORTUNITY TO DISCUSS — AND THANK YOU FOR MEETING WITH ME — IS TO SIMPLIFY PERSONAL TAXES, DELIVER A MIDDLE INCOME TAX-CUT, MAKE U.S. TAXES COMPETITIVE WITH THE REST OF THE WORLD SO THAT WE CAN COMPETE EFFECTIVELY AND AGGRESSIVELY AND CREATE MORE JOBS. THIS IS ALL ABOUT CREATING BETTER ECONOMICS AND MORE JOBS FOR THE AMERICAN PUBLIC. I AM VERY CONCERNED ABOUT THE NUMBER OF JOBS THAT HAVE BEEN LOST, THE DECREASE IN MANUFACTURING, THE NUMBER OF PEOPLE THAT HAVE LEFT THE WORKFORCE. THESE ARE ALL VERY CONCERNING ISSUES”

Need to have better tech at the IRS

” I THINK THERE IS SOME EXTERNAL TECHNOLOGY, WE NEED TO HAVE INTERNAL EXPERTISE IN THE IRS TO MANAGE OUR OWN TECHNOLOGY SYSTEMS. IN THIS DAY AND AGE, LIKE ANY OTHER ENTITY, WE NEED TO HAVE GOOD CUSTOMER SERVICE. IF PEOPLE ARE PAYING TAXES, THEY HAVE THE RIGHT TO GET THE INFORMATION, THEY HAVE THE RIGHT TO UNDERSTAND THEIR INFORMATION. I THINK THAT WE SHOULD BE ABLE TO INTERACT ELECTRONICALLY, SECURELY, KEEP PEOPLE’S INFORMATION SAFE. I CAN GO ON AND LOOK UP MY REAL ESTATE TAX BILLS IN CALIFORNIA AND SEE MY INFORMATION THERE. I DON’T SEE WHY WE DON’T HAVE GOOD SYSTEMS THAT PEOPLE WHO PAY TAXES CAN SEE THEIR INFORMATION SECURELY ONLINE. SO I LOOK FORWARD TO WORKING WITH YOU, AND I ALSO THINK THAT WE SHOULD BE MONITORING CUSTOMER SATISFACTION, LIKE ANYTHING ELSE WE SHOULD UNDERSTAND WHAT THE TAXPAYERS THINK OF THE SERVICE WE PROVIDE THEM.”

I don’t support going back to glass steagall as is

” I DO NOT SUPPORT GOING BACK TO IT AS IS. PERHAPS WE NEED A 20 CENTURY GLASS-STEAGALL, BUT NO, I DO NOT SUPPORT GOING BACK AS TO TAKING A VERY OLD LAW AND SAYING WE SHOULD ADHERE TO IT AS IS”

The average american worker has gone nowhere

“THE AVERAGE AMERICAN WORKER HAS GONE NOWHERE, AND PRESIDENT-ELECT IS COMMITTED, AS AM I, AS HIS ECONOMIC ADVISOR, TO WORK FOR THE AMERICAN PEOPLE AND GROY THE AMERICAN ECONOMY SO — GROW THE AMERICAN ECONOMY SO THE AVERAGE AMERICAN WORKER DOES BETTER AND THAT’S WHY I’VE BEEN WILLING TO SELL ALL MY INVESTMENTS, OK. I’VE BEEN WILLING TO GIVE UP MY BUSINESSES. MY DESIRE IS TO WORK FOR THE AMERICAN PEOPLE TO CREATE A BETTER ECONOMY AND I UNDERSTAND THAT”

Concerned about the retiree issue in this country

“I THINK PENSIONS ARE A VERY IMPORTANT ISSUE, AND I’D BE HAPPY TO WORK WITH YOUR OFFICE ANOTHER TIME, OK. I THINK THE PEOPLE WHO HAVE EARNED PENSIONS ABSOLUTELY DESERVE TO HAVE THOSE PENSIONS MAINTAINED AND BE SAFE. AND I’M VERY CONCERNED ABOUT THE RETIREE ISSUE IN THIS COUNTRY,”

No border tax

“HE’S NOT SUGGESTING A BORDER TAX. WHAT HE’S SUGGESTED IS THAT FOR CERTAIN COMPANIES THAT MOVE JOBS, OK, THAT THERE MAY BE REPERCUSSIONS TO THAT. HE’S NOT SUGGESTED IN ANY WAY AN ACROSS-THE-BOARD 35% BORDER TAX. AND IF ANYTHING, QUITE THE CONTRARY, AS YOU SAID, HE HAS CONCERNS ABOUT THINGS THAT IMPACT THE PRICE OF GASOLINE AND”

He hasn’t referred to a border tax

“AGAIN, I THINK WHEN HE’S REFERRED TO A BORDER TAX, OK, HE’S REFERRED TO A SMALL NUMBER OF COMPANIES THAT HAVE MOVED THEIR JOBS OR ARE MOVING THEIR JOBS, PUTTING PRODUCTS BACK INTO THE UNITED STATES AND TAXING THEM. SO HE’S IN NO WAY CONTEMPLATED A BROAD 35% BORDER TAX THAT COULDN’T BE FURTHER FROM ANYTHING THAT HE’D POSSIBLY CONSIDER”

We cannot eliminate access to capital for the housing market

“I AM AN EXPERT IN FANNIE MAE AND FREDDIE MAC. IT WOULD BE ONE OF MY PRIORITIES TO WORK WITH YOU. WE NEED HOUSING REFORM AND A SOLUTION. THE STATUS QUO IS NOT ACCEPTABLE OF JUST LEAVING THEM THERE. THERE ARE TWO EXTREMES ON THIS AND IT IS SOMETHING I LOOK FORWARD TO SINTTING DOWN AND TALKING WITH YOU. ONE, WE DON’T PUT THE TAXPAYERS AT RISK AND TWO, WE DON’T ELIMINATE CAPITAL FOR THE HOUSING MARKET. I’M VERY CONCERNED THAT MIDDLE OF INCOME PEOPLE WHO NEED MORTGAGE LOANS HAVE ACCESS TO THE CAPITAL.”

Our tax reform should not increase the size of the deficit and middle income families should not be asked to pay more

” I THINK WE ALL WOULD ACKNOWLEDGE THAT OUR INCOME TAX RATES ON GLOBAL COMPETITION PUTS THE U.S. AT A DISADVANTAGE. IT IS SOMETHING WE NEED TO DEAL WITH. WE ALSO RECOGNIZE THAT FROM A BUSINESS TAX POINT OF VIEW, IT IS NOT JUST A CORPORATE RATE, IT IS ALSO THE INDIVIDUAL RIGHTATE. I WANT TO TALK ABOUT TWO STANDARDS THAT I HOPE WILL JUDGE THE REVIEW OF TAX REFORM SO WE CAN HAVE A SIMPLIFIED TAX STRUCTURE, ONE THAT IS FAIRER TO THE AMERICAN PEOPLE. I WOULD HOPE THAT YOU WOULD AGREE THAT WE DO NOT WANT TAX REFORM TO INCREASE THE SIZE OF THE FEDERAL DEFICIT…THE SECOND IS THAT TAX REFORM SHOULD BE AT LEAST PROGRESSIVE AS OUR CURRENT TAX CODE. THAT IS, MIDDLE INCOME FAMILIES SHOULD NOT BE ASKED TO PAY MORE IN REGARDS… I SHARE YOUR CONCERNS ON THE FIRST THE FIRST ONE, AGAIN, WE DO BELIEVE IN DYNAMIC SCORING WITH THE APPROPRIATE GROWTH. WE WANT TO MAKE YOUR THAT TAX REFORM DOESN’T INCREASE THE SIZE OF THE DEFICIT. IN REGARDS TO THE SECOND ISSUE COME AS I HAVE SAID IN MY DISCUSSIONS WITH THE PRESIDENT-ELECT, HE IS VERY INTERESTED IN AS PROVIDING A MIDDLE INCOME TAX CUT THAT IS HIS PARTY.”

Not as close on the obamacare discussion

“I AGREE WITH YOU. I’M NOT AS CLOSE TO THE WHOLE OBAMACARE DISCUSSION RIGHT NOW, BUT I WILL DEFINITELY FOLLOW UP WITH YOU ON THAT.”

I see tax and trade policies as two different things

” THERE ARE TWO DIFFERENT ISSUES. THERE ARE TRADE POLICIES AND TAX POLICIES. I SEE THE TRADE POLICIES AS DOING THINGS THAT ARE BENEFICIAL FOR THE AMERICAN WORKER AND AMERICAN COMPANIES, AND I SEE THE TAX POLICIES AS THINGS THAT INCENTIVIZE BUSINESSES TO BE COMPETITIVE HERE”