Mar 13 2014
Chairman Patty Murray (D-WA) and the Senate BudgetCommittee held a hearing with Treasury Secretary Jacob J. Lew to discuss the President’s Fiscal Year 2015 budget and revenue proposals. At the hearing, Lew also answered questions from Murray and members of the committee on the situation in Ukraine.
Chairman Murray called for bipartisanship on encouraging economic growth and job creation through the tax code.
“As we’re looking for ways to address each of these challenges—getting more Americans back to work and bringing down our debt over the long-term—we are going to have to take a close look at our tax code. Because right now, it is getting in the way. It is incentivizing activities that do not help job growth in the United States, and we are missing opportunities to end wasteful spending in our tax code and bring down our long-term debt.”
“Our tax code is riddled with wasteful loopholes and special-interest carve-outs…And far too many of these tax breaks are skewed to benefit the wealthiest Americans and biggest corporations, who need them the least. In other words, we’re spending a lot of money through the tax code on wasteful and inefficient giveaways to people and businesses who don’t need help, at a time when investing in better schools, infrastructure repairs, or medical research could strengthen our economy and help a lot of families who really do,” Murray said in her opening statement.
Murray highlighted that there has been bipartisan support for closing certain loopholes, and called on Congress to use the savings for investments like work incentives for struggling Americans and repairing our transportation infrastructure.
“I am very pleased that there appears to be some agreement about getting rid of wasteful, unfair tax loopholes. Chairman Camp would close a loophole —sometimes called the ‘John Edwards,’ or ‘Newt Gingrich’ loophole—that enables some wealthy business owners to get out of contributing their fair share to Medicare and Social Security. He would eliminate special tax breaks for oil companies and bring an end to Wall Street gaming in derivative contracts, which cheats taxpayers out of billions of dollars every year. And Chairman Camp would close the carried interest loophole that allows hedge fund managers to pay lower taxes on their income than many middle class Americans do. These are just a few of the unfair special breaks that both Democrats and Republicans agree we need to eliminate. In fact, every one of these provisions also appears in the President’s budget.”
“Now, even though closing wasteful loopholes is something many of us agree on, and even though many of us also agree that work incentives for struggling Americans and investments in our infrastructure make sense, I know moving the ball forward won’t be easy. Everyone here is well aware there are fundamental differences between our parties when it comes to making tax reforms. But as we saw in December, when both sides join together ready to make some tough choices and compromise, we really can deliver,” Murray said.
Read Chairman Murray’s opening statement here.
Democratic members of the Committee echoed Murray’s calls for closing unfair tax loopholes.
“I do this virtually every time, but I really have to point it out, yet again, that our friends on the other side talk a good game on the deficit, but whenever it's crunch time, they will stick up for the Carried Interest Exemption for billionaires. Instead of deficit reduction, they'll stick up for corporate offshoring of revenues and hiding from the tax guy offshore. Instead of dealing with the deficit, they'll protect oil subsidies rather than deal with the deficit. So, don't just look at their words when you hear this. Look at their actions. Because over and over again, they've showed that these special interest loopholes are preferred to dealing with the deficit. And, indeed, you heard the ranking member say today that closing loopholes is just a way of increasing taxes. And I guess they want to continue to defend this stuff. I don't see how that's defensible, and we're going to continue to have that -- that conversation,” said Senator Sheldon Whitehouse (D-RI).
Secretary Lew discussed with Republican members of the Committee the need to restructure the remaining years of sequestration in a balanced way.
Senator Graham (R-SC): “If I am willing to do revenue, would you be willing to do that?”
Lew: “I think what the president made clear in all of his negotiations is that he is willing to put together a balanced package, do hard things. I think it’s probably not the right time for me to say which of the things that we would do, but his bona fides are clear, he showed he was willing to do it. I think this is probably not the 6-9 month window when we are likely to get that done...”
Graham: “I agree.”
Lew: “And we have a lot of other things we need to make progress on. So this is a budget to do some of the other things that we can do to build our economy. But we know this is a conversation…”
Read Secretary Lew’s testimony here.
“I think if you look at what Ukraine needs, they need many things. They need to have a foundation to rebuild their economy. It's going to have to come from the IMF. It's going to be a package that could be as large as $15-plus billion. There's no one country -- certainly not the United States -- that could provide that level of support. That's why the IMF is so important. It is the first responder. It is the foundation. We, as the leading voice – we’re the only one with a veto power in the IMF -- have the ability to help drive the IMF to do what it needs to do in situations like this,” Lew responded
“Approving the reform strengthens our voice. Not approving them weakens our voice. We're already hearing calls by some to say, ‘If the United States doesn't approve its reforms, we should maybe move on without them.’ That's not a good place for the United States to be. Specifically with regard to the Ukraine, Ukraine increases the amount that it can draw from the IMF in terms of flexible funds, from $1 million to $1.6 billion when the reforms are approved. So it's in general important for us to be able to have the powerful voice that we have in the IMF. And it is specifically important to Ukraine in terms of how much they have access to,” added Lew.
Lew also noted that increasing resources to the IMF would be beneficial to the economic and national security interests of the United States, with virtually no cost to the American taxpayer.
Senator Graham (R-SC): “IMF. You’re making an argument in Congress that the reform package- the expansion of contributions - could really help our economic and national security interests, is that the message you are delivering to us?”
Lew: “Yes it is.”
Graham: “In terms of the Ukraine, it could have an exponential affect in terms of providing economic support to the Ukrainian people at the time they need it the most, right?”
Graham: “For a relatively small cost to the American taxpayer.”
Lew: “It’s truly a technical cost.”
Graham: “It is not even a rounding error. So to those of us who believe the world is rapidly changing and we need to be influential, being a member of the IMF… I mean, it’s a reformed organization. So the Congress has an opportunity here, to increase the effect of an international organization to provide economic stability in troubled regions, and that’s what you’re urging us to do? To seize the moment?”
Lew: “Indeed it is.”