U.S. Senator Steve Daines today discussed the importance of certainty and permanency of the tax code and the small business deduction with President Trump’s Treasury Secretary nominee Scott Bessent.
Watch Daines’ and Bessent’s full exchange HERE.
Daines: Chairman, thank you. Mr. Bessent, good to have you this morning. I think what we’re seeing here in this committee is we really do have a divide between two very different philosophies about how to go forward and what’s best for the American people in this economy and what’s best for global competitiveness. I remember sitting right in this chamber as we were debating whether or not we should launch the multiple trillion-dollar massive spending bills, which was a $2 trillion dollar COVID bill, the Inflation Reduction Act, massive multi-trillion dollar bills that even Democrat former Secretaries of Treasury said could be inflationary, and indeed it was. You compare that outcome to what we are going to return back to, the policies of the prior Trump administration, that when you lower taxes for businesses and the American people, you create more tax revenue, you create more economic activity, you create more wage growth, particularly for minorities as well. And you start to get back into winning in terms of global competitiveness. We stopped the inversions. It was absolutely like ‘boom,’ went from multiple inversion to zero once we moved forward with this. And I couldn’t be prouder of what we did boldly back during the Trump administration when we tried to fight against, during this administration, these massive out-of-control spending bills that were inflationary, and the American people suffered greatly with these high levels of inflation, higher mortgage rates and so forth. And so I’m glad to have you as our next Secretary of Treasury and work with you to restore sanity back to where we were under President Trump. So, congratulations on your nomination and your willingness to serve.
Daines and Bessent discuss permanency of the tax code:
Daines: With the expiration coming of these tax rates, we’re facing a $4.3 trillion dollar tax increase if we don’t act this year. As we begin drafting this bill, and I applaud Chairman Crapo, he brought us together as ranking member last year prior to getting the majority back, anticipating we might have this moment. And we started talking about, what are some key themes? Then we got into the details over several months of working groups for this next tax bill, to renew and protect and preserve the tax rates and prevent a $4 trillion tax increase. One of the key words was permanency. Permanency. I’ve expressed my support for the use of current policy baseline. I’ve expressed my support for permanency because we add uncertainty here in Congress with expiring tax code provisions. It’s time to make them permanent, to take one additional burden away from the American people wondering what’s going to happen with Congress, whether my tax rates will depend on what happens in the next election or what happens if Congress can’t act? Let’s take that off the table with permanency. My question, Mr. Bessent is you’ve said we need to grow our way out of our current economic situation. I couldn’t agree more. And that’s just the philosophical divide we face here. Somebody who embraces more of the supply side idea, reduce rates, unleash capital into the free markets, and let those markets decide where that investment relies versus a bunch of bureaucrats here in Washington with wasteful spending. How does permanency and certainty of the tax code affect our ability to grow out of these problems?
Bessent: Senator Daines, I’ve enjoyed getting to know you over the past year with your work on the National Republican Senate Committee and talking to you in your office and also discussing your history in the private sector, both of the big company and small companies. And a question like that makes it clear to me that you understand the incentives, that it is incentives that drive everything in tax policy. And I can tell you that since November 5th, for small businesses, we have seen the biggest increase in optimism since they have been keeping the metrics. So…small business owners, many of whom they are pass through corporations, believe that we will get the tax TCJA across the line. I think we could see a bigger increase in optimism. In economics when we have something we can’t define, we call it ‘animal spirits’ and I think we are seeing animal spirits, a nascent move up, but permanency and forward guidance gives people certainty. We get capital investment, we get hiring, we get real wages, the employers want to keep, train and expand their workforce. So everyone wins with permanency, certainty…A kind of forward guidance for tax policy I think would be one of the things that could unleash this new golden age that President Trump has talked about.
Daines and Bessent discuss spending:
Daines: When you take a look at the private sector jobs in America, there are about 140million private sector jobs. 88 million of those jobs are from pass-through entities. That’s about 63 percent…and that’s the part that’s expiring. I mean, the corporate rates are staying permanent. It’s the pass-through rates, those 88 million jobs, 63 percent of the private sector jobs are taking a look at what’s going to happen here in Washington over the course of the next six to eight months. Very, very important we make these rates permanent and prevent a tsunami of $4.3 trillion tax increase that will come if we don’t act.