the thing i guess upsets me the most, that people don't see his whole body of work. what he's done for disability access, for public safety, what he's going to do on the community broadband, you know? what he's done to promote over-the-top video service. he's had a huge body of work in only about 14, 15 months and it's all in the public interest. so, you know i wish people would look more broadly. and i know when he does leave office gautham nagesh will do that story about how tom wheeler, former, you know wireless and cable lobbyist turned around and just supported the american people and passed policies that upset his former colleagues greatly. >> host: and gigi sohn is special counsel to the fcc. gautham nagesh is with the "wall street journal." ms. sohn, we look forward to having you back and we look forward to having the chairman on the show. >> guest: i love the show you know that, and i'd love to be back.

>> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> today independent vermont senator bernie sanders ranking member of the budget committee, outlines his ideas on the economy and the middle class and his legislative priorities. live coverage at 10:30 a.m. eastern here on c-span2. >> treasury secretary jack lew testified thursday before the senate finance committee on the president's 2016 budget request. he discusses many of the proposals in the $4 trillion plan along with other related topics. this is just over two hours. [inaudible conversations]

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>> the committee will come to order. [inaudible conversations] >> the committee will come to order to. today's hearing is on president obama's budget for fiscal year 2016. i i want to thank secretary lou for appearing before -- secretary lew for appearing before us today. and i'm not going to sugar coat anything. instead, i'm going to cut right to the chase. the president's budget proposes to hike taxes by $2.1 trillion. seemingly not content with the $1 is.7 trillion he and his allies have imposed over the past six years. the the president, with this budget wants to again raise taxes on savings, investment

small business and more somehow thinking that it will help the economy. sadly, this insatiable desire the raise taxes is not intended to bring our budget into balance. rather the president's $2.1 trillion tax hike is accompanied by proposals to further expand the government to an even greater share of our economy. the propositived budget never -- proposed budget never balances. deficits continue which means that the debt is a share of the economy -- as a share of the economy would remain at levels not seen in our nation's history outside of a few years surrounding world war ii. that outcome would mean continuing risk of what the nonpartisan congressional budge office has labeled a quote fiscal crisis, unquote. in fact cbo has warned us repeatedly about potential fiscal crises under president obama's tenure. they have also made clear that unsustainable entitlement spending is at the heart of the potential for a fiscal crisis. yet the president's budget

proposes precious little in the way of reining in spending on our health care entitlements and does virtually nothing to address social security. despite having pledged in 2009 that he would not kick the can down the road on social security, that is exactly what the president is now proposing to do with his budget even while the disability trust fund is projected to be exhausted next year. simply put, there are too many shortcomings in the president's budget to adequately address in my opening statement but they include higher taxes that would stifle job creation, economic growth savings and investment new wealth taxes muddled thinking about distributional issues a lack of significant reforms to our unsustainable entitlements, ongoing deficits and outside -- outsized risky federal debt and a repackaged bank tax that nods to the ineffectiveness of the dodd-frank law. the budget even puts forward a tax on section 529 education

savings which suggests that the budget's authors are out of touch with the american people. of course, we've heard that the proposal to tax 529 education savings has been withdrawn and labeled a distraction. but it's still supported on policy grounds by the administration although i'm happy to see it's withdrawn. this is unhelpful and that's the kindest word i can think of to describe that particular proposal and others like it that are apparently founded on the notion that the american people's savings are not their own but, instead, targets for more redistribution. like i said there's a lot i can complain about when it comes to the president obama's budget, but let's be honest, rehashing these complaints over and over again is not going to be the best use of the committee's time. so, secretary lew, let's try to look at some areas in the budget where the administration seems willing to go in a positive direction even if, in my opinion, it falls short on the substance. in those areas let's try to

work together toward what i believe is the shared goal of everyone here; to help americans where we can and get out of the way when we should. for example, i believe that we share a desire to reform our tax code which everyone agrees is severely broken, does not help american families and harms american businesses. and by businesses, i mean businesses of all types. not just one particular organizational forum. i believe we share a desire to renew trade promotion authority as you identify in your, in your testimony. i believe we share a desire to promote productive investments in infrastructure. of course, if we're going to effectively address these issues, the president and his administration owe it to the american people to suspend what often seems like an unending political campaign for enough time to at least explore bipartisan cooperation. i will close with a question for you, secretary lew. it's a question that you did not answer and evaded in testimony earlier this week.

the irs commissioner evaded a similar question when he was here on tuesday. secretary burwell did the same in our hearing yesterday. the american people deserve an answer to this question, and i hope you'll be willing to give us one today. the question is, do you have contingency plans in place in the event the supreme court invalidates the current structure of the affordable care act tax subsidies later this year? i'd like you to address this question in your opening remarks, if you will and i'll note that it's a simple question requiring only a one-word answer yes or no. once again, i want to thank secretary lew for appearing here today, and with that, i'll turn it over to the ranking member, senator wyden, for his opening statement. >> thank you p very much, mr. chairman, and thank you secretary lew, for being here on day three of what is, essentially, budget-palooza here at the finance committee. while we examine the budget

proposal today the underlying issue remains the health of the budgets of middle class workers and families trying to get ahead. the fact is too many middle class oregonians are hurting. our job is to put america's middle class on solid economic ground, lift wages and make sure that everybody benefits when the economy grows. the president's budget proposals go after that challenge in a number of ways, and many of them are designed to improve america's badly-broken tax code. for example, the budget proposes to make incentives for education, child care and savings more generous. it would take several accepts to address the -- steps to address the way middle class workers are treated compared to others. and i was pleased to see the proposal would move towards ending the system of tack deferral that traps -- tax deferral that traps the profits of america's businesses overseas instead of reinvesting them here in this country.

these are all strong ideas, but i see an opportunity to do something even bolder. when it comes to the tax code colleagues, why keep bailing water out of the boat instead of fixing the leaks? the most effective improvements congress can make to middle class tax incentives are going to come through comprehensive tax reform. that's the best route to a modern tax system that is simpler and fairer for all. and it's the best way to end the uncertainty caused by our tax code and to address its most persistent issues. through comprehensive reform, the congress can insure that incentives provide the biggest help to the people most in need. too often that is not how the code works today. comprehensive reform can do more than piecemeal changes to level the playing field for wage earners and make filing easier to the manage. to manage. and there is one indisputable

fact: a comprehensive approach to tax reform is the best option for middle class families, in the one that is focused exclusively on business taxes. a lot of americans and certainly, there are a number in the administration who have advocated a corporate-only or business-only plan for reform. i would not want to have to explain to a single parent in oregon why the congress overhauled the tax code for corporations but not for that middle class person. the corporate side of our tax code undeniably needs reform. tax reform and should make american -- can and should make business more competitive in the tough global marketplace. but it would be a grave mistake to leave millions of middle class families and small businesses out. now, of course, the finance committee's going to be working with the treasury department closely over the upcoming year on a variety of issues in addition to tax reform.

the treasury department is working hard to look at new approaches to make sure that american workers and american priorities are maintained in tough global markets. so i look forward to hearing about the administration's efforts to address misaligned currencies, particularly with respect to the ongoing discussions on the trans-pacific partnership. and it's important not to forget the treasury plays an integral role managing economic sanctions against countries like russia iran and cuba. we welcome secretary lew, as you know updates on how those sanctions are working and how the administration envisions them changing in the future. so there is a lot on your plate, secretary lew. we thank you for being here. and, colleagues, i just want to note as i tried to do yesterday when it seemed at some point the finance committee looked like it was becoming a mock trial kind of getting into a whole host of legal, you know, issues is i

think there is something ironic about the fact that a number of our colleagues on the other side of the aisle have filed a supreme court brief challenging the law and then keep demanding various cabinet secretaries explain how he or she plan to avert the disaster that's going to occur if their brief is successful. so i hope that we can have a discussion on the important issues relating to the budget and taxes and our competitiveness. i think we talked about this at great lengths yesterday. at some point i admitted that chairman hatch is a real lawyer, a trial lawyer. i'm a lawyer in name only having run the legal aid program for the great panthers. yesterday i felt like we were going back to the socratic method here in the finance committee, and i hope we can tackle these major issues in front of the treasury budget

today. and thank you, mr. chairman. >> thank you. i think you're a good lawyer and anybody who can do what you did with the great panthers has got to have some moxie is all i can say. [laughter] and i have a lot of respect for you. our witness today is treasury secretary jacob lew confirmed to his current position on february 27 2013. previously, secretary lew served as president obama's white house chief of staff and before that he was the director of the office of management and budget a position he also held in president clinton's cabinet from 1998-2001. before returning to omb secretary lew first joined the obama administration as deputy secretary of state for management and resources. secretary lew also has broad-based private sector experience. he served as chief operating officer for two different citigroup business units and served as executive vice president and chief operating officer of new york university. secretary lew has a long history

with the federal government including the federal budget and the budget process. goes all the way back to the tax bill in 1986 and the three years before that. i'm afraid, secretary l everything w, that if i detail your long history of public service, we'll run out of time for this hearing. so i'm ashamed that you had to work so long in the federal government -- [laughter] really very proud of you for all the work that you've done all those years. suffice it to say, secretary lew, that we genuinely appreciate your long history of service to our country. i want to thank you for being here today. i want you to proceed with your statement, and i have to, i have to open up the senate and then i have to be in judiciary because one of my bills is coming up, and so i've asked senator thune to take over until i can get back or at least until 11:00, then i'll -- if i don't get back by then, i will have others take over. so with that, let's turn the

time over for you for your statement. >> thank you, mr. chairman, for that very gracious introduction and welcome. thank you ranking member wyden members of the committee for having me here today to testify on the president's budget. a year ago president obama said that 2014 could be a breakthrough year for our economy. and the evidence is now clear that over the past 12 months america has made great strides. we're seeing real progress in job creation, economic growth, family wealth, energy independence manufacturing exports, retirement accounts the stock market, health care costs, graduation rate and the deficit. the fact is our businesses created nearly three million jobs last year, the most in any year since the late 1990s. this capped off roughly five years of job growth the longest stretch in our nation's history. and the creation of 11 million new jobs. in addition, the unemployment rate dropped to its lowest rate in six and a half years, and our economy continued to expand with healthy growth in the second third and fourth quarters of

2014 and forecasts projecting above-trend growth for 2015. from a global perspective, we continue to outperform our trading partners, many of which are still trying to climb out of the vast hole created by the global economic crisis. at the same time, with the affordable care act in place, about ten million american now know the financial security of health insurance and health care prizes rose at the lowest -- prices rose at the lowest rate in decades. the automobile industry continued its rebound in 2014 even as we mark the official end of the auto industry rescue, and american taxpayers recovered more money than invested. finally, thanks to the administration's all of the above energy strategy, we moved closer to energy independence than we have within in decades, and gas prices fell providing a shot in the arm for families and small businesses. so today our nation has turned the corner on a number of fronts. yet as we know, this resurgence has not reached every american. for too many hard working men and women in this country, it's still too hard to get ahead and too hard to raise a family

afford childcare, pay for college, buy a home and secure a retirement. the president's budget meets these challenges by offering real solutions to grow the economy, strengthen the middle class and make paychecks go further. this budget is built around the basic idea that hard work should pay off. it's practical not partisan, and it lays out clear steps to rein in spending and eliminate wasteful tax breaks so we can reduce taxes for working families as well as many businesses and manufacturers. what's more, this budget replaces the across-the-board cuts from sequestration and increases our economy's competitiveness while maintaining a responsible fiscal path. as we know not long ago some were predicting that the president's policies would explode our deficits. a little history, though makes clear the opposite is true. in the 1990s i oversaw three budget surpluses in a row and we were on a path to pay down our national debt. but when this administration took office in 2009, there was a very different reality. after years of runaway spending

including tax cuts for the most well off and two wars, neither of which were paid for and then the financial crisis our deficits reached a post-world war ii hay. the president moved to right our nation's fiscal ship. the agreements forged with congress and a growing economy the deficit has fallen by almost three-quarters. the swiftest downturn since the period of demobilization following world war ii. the deficit is projected to decline even further in the next fiscal year. and today we're putting forward a plan to lower our deficits to about 2.5% of gdp over the ten-year budget window. our nation's improved financial footing has occurred even as congress was able to undo a portion of sequestration in recent years replacing these cuts with more sensible and balanced savings. still nothing has been done to address these dangerous cutsesses in 2016. without congressional action vital funding for our national defense and education infrastructure and research will be severely cut back.

the president's budget provides a path to eliminate sequestration while achieving the president's longstanding commitment to a balanced approach. to not only keep our fiscal house in order but to create room for pro-growth economic policies which are needed to keep our nation stronger for the future. one strategy is tax reform to restore basic fairness and efficiency to our system. by scrapping loopholes and tax breaks that reduce the taxes for the most fortunate americans but do not help our economy, we can provide critical tax relief for middle class families and those struggling to join the middle class. our economy should work for everyone and everyone should shoulder their fair share to maintain our nation's fiscal health. this budget also places a serious focus on achieving bipartisan business tax reform so that america is the best place in the world for businesses to locate grow and create the kind of good high-paying jobs that support middle class families.

this plan shows how members of both parties can reach common ground and realize the shared objectives of simplifying the system removing wasteful tax preferences and distortions and lowering tax rates so that we no longer have a system in which some businesses pay nothing while others pay highest rates in the developed world. it's time to stop rewarding corporations and industries that have the best lobbyists and most creative accountants and start strengthening businesses that build, hire and invest here in the united states. it's also time to make inversions a loophole that allows u.s. companies to lower their taxes after they buy foreign businesses, a thing of the past and this budget does that. a more fair and efficient tax system will help create good middle class jobs and grow our economy. we know with business tax reform there will be one-time transition revenues. the president wants to use some of these revenues to make long overdue repairs to our nation's roads, bridges and airports. the need to rebuild our infrastructure is irrefutable, and that's why this budget creates an extended period of sustained funding for a six-year

surface transportation bill and starting an innovative new bond program that will ignite more public/private partnerships in cities and states across the country. of course, keeping our comeback on track building on the momentum we've made and making it possible for every american to get ahead is going to require strategies that are both bold and effective. and that's what this budget is about. it proposes a series of targeted investments that have been proven to make a difference. it invests in education by exbanding student loans and -- expanding student loans and making community college free for those who earn it. it starts apprenticeship grants, enhassing job programs and boosting the earned income tax credit. it increases the childcare tax credit providing tax relief for families when both parents are holding down jobs and allowing more working families to earn paid leave. it invests in retirement security by making it easier for employees to automatically save for the future and businesses to provide 401(k)s to their employees, and it invests in

innovation by creating more advanced manufacturing institutes, creating cutting edge medical research institutes and bringing broadband access to more communities. in concert with these pro-growth strategies, this budget calls on congress to send measures to the president's desk that will help our economy now and far into future. this includes raising the minimum wage and fixing our broken immigration system. the president's trade agenda is another important component of our strategy to grow the economy and strengthen the middle class, and i look forward to working with all of you to pass trade promotion authority to expand the reach of america's exports and create a level playing field for businesses and workers. the strategies i've described are part of the president's plan to help improve the lives of millions of hard working americans while meeting our responsibilities to future generations. the task before us now is to put political brinksmanship aside and find areas of compromise and common ground. i am certain we can get this done, and i will work with each and every member of this committee so that we can deliver for the american people. i thank you and look forward to

answering your questions. >> thank you mr. secretary. i'm going to start with a couple questions here and, hopefully the chairman will return spoon, and i will -- return soon, and i will use five minute rounds and see where it goes from there. i'm particularly concerned about the administration's proposal to raise the capital gains tax and apply the tax when an asset is transferred by death not at gift ors not when the asset is sold as is the case today. that proposal, if enacted, would have a devastating impact on family farms and small businesses in my state of south dakota, and i want to give you an example. according to the south dakota state university agricultural land survey published last year land values in south dakota have more than doubled since 2010 and gone up seven times since 2000. so if you take a typical family farm in south dakota that bought a section of land which would be 640 acres back in 2000 for $640,000 which would have been

roughly the price at that time in certain areas of my state -- and i would note that in south dakota that would be considered a small farm -- today that same farmland is probably worth somewhere between $3.5 and $4.5 million depending on where it's located. so under the current estate tax law which excludes assets up to $5.43 million that family farm isn't taxed when it passes from one generation to the next. now, under the administration's proposal that family farm would be hit with a significant tax when it's transferred from, to the next generation of family members. now, your proposal -- as i understand it -- exempts $100,000 in capital gains or $200,000 per couple and raises the gains right 28%. so in that example, this south dakota family would suddenly find themselves facing a tax bill of a million dollars or more. so so most farms of this size would not have liquid assets to

deal with that large of a tax bill. the only way they'd be able to pay u.k.ing sam -- uncle sam would be to break up the family farm and sell off portions of it. so i know and, you know, the president likes to talk about loopholes and trust funds and the like but this capital gains proposal that you all put forward, you really need to talk clearly about what it would do. it is a punitive death tax on america's family farms and businesses especially in places like south dakota where we've seen significant price appreciation for land. so the question, mr. secretary very simply is, what is the administration's intent with regard to this tax? if it's to break up family farms, obviously it's going to have that effect. or is it simply an unintended consequence of your interest in imposing yet another layer of taxation at death which i think, again, would be very unfortunate? >> senator um, let me step back

and go to the reason for stepped-up basis and then get to the specific question about farms. you know stepped-up basis is really meant to make our system work in a way that's more fair. right now if any of us take savings in 401(k)s or iras for our retirement, we need to realize the income and pay income tax on that. for families that are able to accrue enormous fortunes that never need to realize the income, they're able the pass on in stocks and bonds and other assets without any taxes paid the appreciated value. stepped-up basis would treat those families the same as it treats all of us in middle class famils. we were very concerned -- families. we were very concerned that it not an impact as was intended on family farms so we do have exemptions that apply for the first $100,000 for individual $200,000 for a couple.

we also have ap exemption that applies if there's a modest income, and we also have provided 15 years for the payment of any of the capital gains so that it wouldn't require a forced sale. and we would look forward to working with you and the committee on trying to refine in any way we could to make this proposal -- which we think is fundamentally fair -- something that works well. >> well, i guess the way, the way that i look at this, i mean these are nonliquid assets. these are not somebody that's selling stocks or bonds. we're talking about, you know, these are -- farmers tend to be land rich and cash poor. and you're talking about shifting the point, the time the gain is realized you're talking about raising the rate, ask you're talking about it's -- and you're talking about it's just a huge tax liability for a lot of people who at a time when you want to see some of these assets transfer to the next generation.

if you want to maintain family farming and ranching operations, most of those require intergenerational transfers. i mean, that's how we keep that, that economy sustainable in states like south dakota. and it strikes me at least that this is just a very, very punitive tax on family farms and small businesses. >> senator, i would just say on the capital gains rate what we've proposed is returning to the capital gains rate that was in effect under president reagan at a time when we went through a period of economic growth with that capital gains rate. so i don't think the capital gains rate is something that is an untested one. in terms of the impact on illiquid assets, we designed it so that it wouldn't require a forced sale, and we would look forward to working with you to deal with issues that arise in the design of a provision -- >> even if the rate goes back to the 28% rate which it was before, i mean, you're still talking about shifting the time

at which the gain is realized and hitting people -- essentially, i mean, it's a death tax. you know normally for a gain to be realized somebody has to sell the asset. in this case, that doesn't happen. i mean this just seems like a really strange proposal, particularly if you represent a constituency like i do in a farm part of the country. ..

and i would just point out in the case of the estate tax, the estate tax cbo did a study that concluded only 65 farms in a given year would've been subject to the estate tax. i think a lot of the concern about the imposition of burdens have been out of line with the actual impacts. if there are issues here that we need to find fine tune we would look forward to working together. >> well again you've got a triple shot. you've got an increase in the raid, a change in the time of realization and you do away with step up bases all at the same time. these are pretty dramatic changes and i understand what you're getting at under a normal circumstance to try and ensure that like transactions are taxed in a like manner but we've always treated farmland and assets that are transferred and

thatit very to the way. my time has expired. mr. wyden. >> let's talk about the middle class for a few minutes secretary lew. you all put in a number of proposals, tripling the child care credit, expanding the american opportunity credit, all of them that are going to be well received. as you know there's been pretty solid debate here that's already emerged, people like the tax policy center, about whether this is going to put more money broadly, broadly into the pockets of middle-class wage wage earners or will it be selected groups like those with young children or college age children. i am of the few that we grow the economy from the middle out, that you've got to get the relief to a broad spectrum of middle-class americans. did you all consider a proposal such as significantly expanding the standard deduction? not only does this put a significant amount of money into

the pockets of middle-class people, it has bipartisan support. senator coats has been interested in that, former chairman dave camp was interested in that. i want to know what you think is in the budget that would for example, grow the paycheck for a 50 year old autoworker whose children are already out of the nest. >> senator wyden, we designed the budget that was obviously very much intended to provide meaningful relief and support for middle-class families. i think that from the education provisions that we have in the budget to the retirement provisions and the minimum wage proposal we have shown that we want people who are in the middle class and who are aspiring to be in the middle class to have more opportunity. the proposal to increase the standard deduction obviously would be of help to filers who don't have a lot of itemized

deductions, and in the context of individual tax reform is something that we would think is something to be looked at. we were taking the view that we needed to target the specific things that are the steps on the latter to opportunity, and our budget was designed around that. >> let's continue this discussion because, make no mistake about it those times of effort, particularly in terms of education are key to repairing is pretty tattered ladder of opportunity. i just want us to keep them in someone like a 50 year old autoworker whose kids are out of the nest, because a lot of those families are hurting, too. let me now turn to something you and i talked about and that's the question of tax certification. the national taxpayer advocate, and again we're talking about the middle-class, said that this year americans are going to spend $168 billion spend

6.1 billion hours trying to comply with the american tax code. you've got over 160 proposals in the treasure green book but to meet a lot of them look like add-on credits deductions, new preferences. and it seems to me that, again while i support very much this idea of getting relief to middle-class people, it looks like it's going to take taxpayers more time and more hassle. so tell me if you would want to come in your view is in the budget that would simplify taxes for middle-class people and then i'd like your thoughts on an approach i'm looking at. i would like to see middle-class people get their march april back rather than spending all this time and money and i'd like your thoughts and whether or not we ought to be looking at a tax reform system where many americans could fill a tax

return out by something that sits on a postcard. so what's in the budget that sympathize the tax system for middle-class people, and what do you think of this idea of our working together again on a bipartisan basis let's get the tax system for most people down to a postcard. >> senator, we've tried in areas like education to simplify some of the provisions. there were multiple provisions combining them to be easier for taxpayers to understand and take advantage of. i think the whole effort on individual tax reform is one where sophistication is something that we very much aspire to. we obviously also think it's important to provide strong incentives for things like education and retirement savings and the like. so there's a bit of a tension between the total supplication and having incentives -- simplification of things working

for the middle-class family. we very much look forward to working together to try to make the tax code as simple as possible. >> postcard size of a? >> i wish i could say that i thought that we would get it on a postcard. >> let's work for that. >> not a bad goal that it will be tough. >> you got the wto's. you've got a lot to work with right there. -- w-2s. senator stabenow and i think colleagues on the other side can working on the individual portion of the tax, that there's got to be a way to help the middle-class that are hurting like that autoworker and get people out from under the bureaucratic water torture which is what filling out all these forms are all about as the taxpayer advocated noted. thank you, mr. chairman. >> senator heller. >> mr. chairman, think you. i look forward to the continuation of this particular hearing. mr. secretary, thank you for

taking time. i want to follow up briefly on what my colleague from south dakota question. obviously bring from the that we have similar concerns and problems with some of these small family farms and ranches. in my state there's over 230,000 small businesses. it's my understanding, and correct me if i'm wrong, generally no tax would be do on small family businesses and those old. can you clarify to me what that business threshold would be? define what a small business is. >> senator there is a provision in our proposal that would exempt very small businesses truly small businesses spend what is the threshold? >> the threshold is million dollars. it's in the threshold and it was designed ease the burden on family businesses, the mom-and-pop stores.

i think that for larger businesses that are still medium-sized the 15 year provision that i described for a working business is way to take the incidence of the stepped-up basis and spread over a very long period of time, which we think is a way of addressing the needs of the larger and small business. >> mr. secretary, thank you. i don't like people are always right or always wrong for that matter. when the president is right i support him. but when he is wrong i don't. you make some comments in your opening statement that i appreciate and that's the efforts for infrastructure. and the priority for this administration to obviously i care quite a bit about infrastructure. i'm on the working group with my colleague senator bennet. look forward to moving forward on tax reform. i, like the chairman, believe our tax code is too costly, too

complex and too burdensome. i still would like to tackle this issue on infrastructure. i think that's good for the state of nevada, we bring more people in two portions of our state. and i think it's a core function of this government. i'm sure that you're aware of chairman dave jansen former ways and means chairman, as he introduced a tax refund discussion draft and one of the proposals that he had was a repatriation proposal that was imposed of two rates one for cash and one for assets. was there any reason why the administration didn't look at this and impose two different rates of? >> well, senator, there are a lot of similarities between the approach that we have and the approach that former chairman camp had. we think that the rate, rates we put in in our international proposals make good sense. we have two rates one would be a permanent rate of 19% and the

other would be what we call a toll charge for earnings that have built up over years, and that would be 14%. in each case they would be a credit for taxes paid overseas, calculated in an appropriate way here and we think that it would create a tax burden that would be very reasonable and would make it attractive for businesses to bring their taxes so. >> how were those rates decided? >> excuse me? >> how were the rates decided? >> the 14% rate is half of them we proposed a 28% rate and we set a toll charge at half of it, 14%. i don't want to overstate the scientific nature of it. congressmen cannot, when he put his proposal in at a rate of 8.5%. they are's rationales for different levels.

-- congressman camp. the 19 number was in the zone of we think it should be and it was at a level that was revenue neutral in our proposal. i think that if you look at the kind of structure of our proposal and the structure of the camp proposal shows there's a lot of room to work together the important thing about the toll charge with your interest in infrastructure is we use it to pay for a six-year reauthorization with a high level for surface transportation program. we think that would be enormously important. to get that toll charge for use for anything other than a one time expenditure, for example if it was used to lower rates permanently it would not be revenue neutral overtime. so we think that it is a perfect combination of things that are important to american business and the future of our economy. >> one quick question because my time is running out with the administration support voluntary repatriation to fund infrastructure? >> the experience in 2004 with the one time voluntary

repatriation holiday was not very good. it turned out to be a bad incentive because after a repatriation holiday, you start to build up overseas what does it is for the next holiday. secondly, we didn't see the reinvestment come from it. what we propose we think is the right way to do it, to of a transition to a new system where going forward businesses will bring their earnings home and go make their investments based on where they're most economical, not for the tax advantages is greater. >> thank you. >> senator schumer. >> thank you, mr. chairman. and thank you, secretary lew. i want to applaud the good work you and the president and all you could have done on the budget. i think it's focus on the middle-class is really excellent. i think your efforts to find some common ground and yet stay true to your principles, you thread the needle extremely well. i was impressed with the budget and i thank you for your hard work. on that budget, obviously one of

the things you are focused on we are all focused on is infrastructure. one of the ways you talk about paying for it is the one time 14% tax on previously untaxed foreign income that comes back. i'm very interested in that idea or some variation of but i think it makes a great deal of sense something i can talk about for quite a while and i think you have refined in a much better way than just that anybody has. here's my question. do you believe it is feasible to consider the toll charge deemed repeat repatriation by itself or in coordination with other international tax reform even if we cannot reach an agreement on a broader reform package? it is my view probably different from some, it would be really hard to get to real reform, particularly getting the rate below 28% which may not make too many people happy but the idea of some kind of deemed repatriation for a broad

infrastructure proposal i think can get broad support on both sides of the aisle. so tell me what you're thinking is on his. >> the best way to do it would be through a broad business tax reform. because if we don't do something about a high statutory rape, which is highest in the developed world, if we don't eliminate the incentive for companies to move overseas can if we don't close the loophole for inversions we are going to see a lot of the problems that we still have. that can't all be fixed just with the international provision. it's always hard to do brought tax reform act it was hard in 1986. it's going to be hard because there are interests that very much by the deductions and credits that they have right now. theoretically could you separate out the international peace? one could -- >> we know that's not your preference. >> it wouldn't solve the whole problem. >> i have to say on inversions,

and you don't get enough credit or take enough credit, the reforms that you have made internally have stopped most conversions in their track and the financial people in new york i talk to say in most of all cases, it's not worth anymore. so you done an excellent job. >> thank you. we went -- i'm sorry. >> we only have time and i want to go to a less happy topic, at least one between you and me which is the trade bill and currency manipulation. look, over all on trade my views have shifted some. i think the decline of middle-class incomes is the greatest problem america faces bar none. we'll have a different country if he keeps going for another 10 years. and if and obviously this will be disputed by members on both sides, but if these trade agreements even though they might increase gdp and even though they might increase corporate profits, serve to decrease middle-class wages

because the company makes money, whether it makes the product here or in china so they will make profits and you might even get some gdp game for a lot of reasons. i can't support trade agreements like that anymore, all right? i just can't because of my value system where middle-class decline in income has become so great. and so i am looking, and i talk to you about this, i've talked to the president about this something where we can counterbalance many of the things that you want to do in tpp, and many of which are good and the geopolitical stuff is indisputable that you want to do. and currency is the most logical one because it has broad support, currency bill that i offered along with senator brown, senator stabenow senator graham, senator collins and senator sessions got 60 votes a while ago. and so what i am asking you is now, we heard some talk from the

administration that currency is not going to be part of tpp whether against japan which is part of tpp or more important to me, although japan is important to me china which takes more jobs away doesn't play fair steals our intellectual property. when america has a good product, 80% of the time were so they don't let it in. we just shrug our shoulders. it's estimated that millions of jobs have gone away. so my question because i know my time is running out okay, we'll be administration support some kind of rigorous controls on currency manipulation aimed alongside this bill of china, if not in the bill and in the bill aimed at japan? i've heard that we set of the currency should not be part of tpp, and that would be i think a really wrong move. tell us about currency and its

relationship in your view to tpp and tpa. when i say tpp i mean both. >> senator may i respond to speak with this. you get the last word. my time is up. >> i'm asking the chairman if i can take a couple of minutes. senator schumer, let me start by strongly agreeing with you that if countries do things do anything in the way that is designed to gain unfair advantage in trade it is wrong and we oppose it. we don't just oppose it. we take very strong action in international bodies, g7, g20 and the imf. and most important i'm utterly. i can tell you when i meet bilaterally with countries where there's any question, it is the number one topic that we raise. when we push back, there is a response. i think we been quite successful pushing back on even the hint of interventions that have those characteristics in the time that we have been here. i think the challenge in the

context of a trade agreement is how to address the issue in a way that helps and doesn't hurt. i would be concerned that the effectiveness we have the link to the existing channels could be diminished in some ways it some approaches were taken. i think that we need to make sure that we use every tool that we have to make sure that countries don't take the steps to intervene in ways that are unfair. if you look at recent years we've been quite successful. the g7 agreement -- >> that's where we disagreed. >> their servlet our historical problems if we go back, but i'm talking about the immediate to present. you know, two years ago there was an agreement at the g7 that we grow forward which is that countries can only as domestic tools for domestic purposes. we had qb policies in the united states, united kingdom had qb

policies. qb policies have been critical to getting economies moving after the great recession. quantitative easing monetary policy. i don't think any of us think that those kinds of policies should in any way be equated with unfair intervention. we have not seen the kind of interventions that i think you're describing as much in recent times, and we've actually made progress pushing back on it. with that said we want to work together as we go through the discussions on trade legislation to see if there is a way for us to build a bridge between the tools that we have an an a trade discussion. i look for to having that speed is i which is a one sentence. we have not been very successful against china. i totally disagree with you. we need much more. >> can i just say one thing senate, in response to china? since 2010 we've actually seen an appreciation that bounces

around today today but roughly 10% and china's currency. we have -- bounces around day today. china intervening in ways that they had been. they have agreed to limit their interventions to macroeconomic circumstances. we have pushed our for transparency policies. they have agreed to subscribe to the imf's transparency policy but i'm not going to say there haven't has totally been issued to our cars report makes it clear that we've made progress working through these issues spend you guys country on this conversation outside the ring the senator stabenow. >> well, thank you. to continue this conversation, welcome, secretary lew. i do want to say not to debate it but just for the record are talking about another issue that i appreciate your efforts to address currency manipulation international forum like i met andy g20 but these actions have not kept pace with increasing

adverse impacts of currency manipulation and the index and u.s. businesses and workers. and we are seeing this across the clinical spectrum, the economic policy institute, the peterson institute, former adviser to president reagan all of greed that currency manipulation is costing the united states millions of jobs. specifically on tpa in tpp as you know what's coming before us and japan, the most closed auto market in the world in the poorest of the middle-class economy in america of the auto industry, and i appreciate very much this administration standing with us in the auto industry, but as you know we've seen a top financial executive at one of our u.s. automakers, ford motor company said recently that a wiki and its japanese competitors as much as $11,000 more profit -- a week

yen, per car per year. for $11,000 per car is a big deal in a very sensitive market place. i want to actually talk about something else. i know you're concerned about that. i disagree that quantitative easing and domestic policy is the same as intervening in foreign currency. we will debate that more later but this is a big deal. with 60 of us in the senate, bipartisan letter senator graham and i led 60 of the thing we want currency addressed in any trade agreement. i hope you understand that we are very serious about this. >> senator, as we discuss we look forward to working together to see if there is language that we can work through that would address the concern in the way that the system with our legal obligations and policy but if i can say one word about japan. for 15 years we had to do that

it was bad for the u.s. economy and the global economy for japan to be in an economic right. they initiated a monetary policies that were similar to those that our fed put into place, and they initiated fiscal policies. for the first time gave the japanese become a bit of a boost which was good for the global economy and good for the u.s. economy. they are not growing as fast as they should be. they need use all the tools to immediate fiscal policy tools. they need structural reform. i think if you look at the monetary policy that they put into effect it doesn't meet the criteria of unfair practices in these last few years. they are different from want of happen in the 70. i'm not going to see the wasn't bad behavior in the past. i think we just have to be careful not to define a standard that would lead to a set of rules that would make it impossible for monetary authorities to get economies out of recession. >> i appreciate that but let me just say since they agreed to the imf that they were going to do this, i have done it like

300 tons, something like that i've seen a number. all i will say is we are an open market. japanese companies benefit by everything including what we've done in our monetary policy on quantitative easing. and yet they are the most closed market. we can't get into them. we can't sell an auto dealership in japan. he can see an american made vehicle. >> we totally agree that barriers need me to come down. >> i want to change the subject. something that we agree more on. just silly to ask you to respond again to the big structure in terms of how we move forward into economy. i think we ought to talk about what works, not just in theory. when you look at the clinton years we actually raise the top two rates on americans, asking them to pay all a bit more to balance the budget, created 22 million jobs, actually saw a robust economy asking folks at the top to do a little bit more. the bush years which every since

one to go back to only help those at the top here leave everybody else waiting holding their breath will the trickle-down, go to work and don't pay for to have a reckless speculation going on in wall street, don't regulate it. we saw what happened, greatest recession. that we are back. the end of 20 to we asked those at the top to do all the more. our friends to the world within. it didn't end. we reduced the annual deficit by two-thirds 11 million jobs. i wonder if you might vary greatly to speak to the macroeconomics of putting money in people's pockets paying down the debt the right way and growing the economy through a strong middle class. >> i think we had an experiment. we saw what the tax rates and policies of the 1990s did. we have the longest period of interoperable -- i'm interrupted growth in history. we saw what happened in 2001- 2001-2004 where we had policies

that cut taxes taken at the top and as you say had wars another thing that we didn't pay for and we ended up with a financial crisis on top of that producing the biggest deficits we've had in history. the economic old we've been digging ourselves out of. so i think we have had a test of the two theories which is why i'm confident that the tax proposals that would put forward are good for the economy. >> thank you. thank you, mr. chairman. >> you know, i've only been on the committee three weeks and then sitting out there in the left-field bleachers with my friend from nevada. i noticed senator warner in the right field bleachers had other things to do. and all of a sudden i'm here at home plate with a gavel in my hand. ron wyden lanes leans over and says i'd were continued to get to this spot. you've been here for three weeks in a mr. goodell and i feel like recognizing myself for a long

speech but they would never ask me back if i did that. senator cantwell, you are up. >> thank you, mr. chairman. mr. secretary, thank you for your comments this morning and your focus on the economic strategy moving forward and for your emphasis on exports. my views are little different from some that event expressed by my colleagues but we have a more integrated trade dependency on the current in the pacific northwest so when future views on a couple of things that i believe are critical for this opportunity that 95% of consumers live outside of the united states, that the doubling of the middle class around the globe in the next 18 years is great economic opportunity for the u.s. and what are the policies that we need to pursue to take advantage of the.

so things on our agenda, i almost feel like our economic agenda should just have the word export on the. freight mobility, improving our freight infrastructure so we get product to market quicker state export assistance program which is a key tool for small business to become exporters. one of the stumbling blocks we are facing right now is the reauthorization of the export-import bank. if you could talk a little bit about what you think the importance of that structure is in this context of how important it is for the u.s. to not only just have financing tools but also the fact that when you are actually a member, if you i shall have an export credit agency then you can participate in a world dialogue of credit agencies around the globe for policies that are fair and transparent.

if we don't have that and we also won't be partisan in this international discussion. >> senator cantwell, i think you are totally right that exports are key to our economic future. that's why we are pursuing trade promotion authority why we are negotiating the tpp. we're looking at where the markets are growing. we want american companies to access to the markets and that would be a way to greet good middle-class jobs in the united states. that's the only reason that we are focused so much on this trade issue. the export-import bank is a critical component of our export strategy. in a world where nobody had export subsidies one could have a conversation about whether or not we should have one. but in a world where our competitors have export programs, and we might not that's putting a burden on our exporters that's just not fair. if you are selling from washington state i know

aircraft are a big issue if you're so aircraft against companies that have export financing, because the programs like the export-import bank and we don't that's something that you can't make up for just by running a tighter operation. now, we have discussions going on on an international basis to see whether we can on a global basis lower the export subsidy programs. in that kind of environment, it would be a different question. we can't unilaterally put our companies imposition where exporters from other countries have export support and they don't. i think the reauthorization of the export-import bank is critical. >> what do you think that what would the administration like to see as congress, we are moving towards a theory, i think it is may 31 or something. >> we have for a long time advocated a reauthorization that

would provide longer-term certainty around the program. i think the sooner it's it enacted the better because uncertainty is not a good thing. >> thank you. thank you, mr. chairman. >> thank you, senator. senator menendez arrived just in the nick of time. >> thank you. >> to secure the next spot. >> thank you, mr. chairman. mr. secretary, i want to raise an issue with you that have huge bipartisan support in the senate, and also the support of the administration which is reforming the foreign investment and real estate property act so that foreign pension funds can put much-needed capital into the u.s. commercial real estate market. we've talked about this before and how this can create jobs right here at home. as you know the current tax on

we listed investment trust shares owned by foreign pension funds was due to an administrative action, not a legislative one. and, indeed up until treasury issued a notice in 2007 foreign pension funds investing in reits were treated equally with their domestic counterparts. so it seems to me that treasury made this change in the first place. it could also undo this policy and eliminate a barrier. i am pleased to see that once again the president agrees with me on the need for ferc reform is illustrated in his budget. so since we all agree that this is a bad policy and treasury clearly has the authority to reverse this ruling, i hope that you would look at taking some sort of action on this. so my question is, one doesn't make any sense to great obstacles for foreign investment in the u.s., particularly considering our dire need for infrastructure investments?

and will you commit to working with me and there's a bipartisan group of members of this committee and beyond who support this effort? >> senator, we've discussed this before and as you acknowledge we agree that this should be fixed. we believe it needs to be fixed through legislation to i hope in the discussion were having about these tax reform it provides an opportunity for us to do this in a bipartisan way. we've put forward a legislative proposal again and i would look forward to working with you on it spent so you're not going to do with it administratively obviously. so the question is, but you do support the administrations -- >> yes. >> okay. let me ask you in the same light, one of the main themes of the president's budget is the need for extensive investments in roads, bridges and other critical infrastructure. one of the most effective ways to help local municipalities, and i say this as a former mayor, make these critical

investments is through private activity bonds program. unfortunately the caps on water and wastewater infrastructure projects make it extra be difficult for local communities to take advantage of the program for these critical needs. that's because water projects are often multi-year ventures making it impossible to fit under the annual caps. i have legislation i plan to reintroduce that passed through this committee that would move the caps for water and wastewater infrastructure projects, and a pleased to see the president's budget included positive reforms in this regard. would removing the caps help local committees upgrade their antiquated infrastructure and? >> senator we did put the new proposal in our budget to try to accomplish the same goal. i'm raising the caps would provide more room for local authorities. we think what we have proposed is the way it's a similar theory behind it and we would

look for to working together to get something enacted into law to enable local projects to go forward more easily. >> and finally we have record job growth and the administration has done i think economically a great job lowest unemployment and some longer at a time private sector job growth for a long period of time deficit as a percent of the gdp probably the lowest in 50 years, and the whole post about the positive economic factors the wisdom of a stagnant, which you refer to in your opening statement. long-term unemployment rate is still, however, far too high. leaving millions out of the recovery. they're stuck on the sideline and while they do that their skills and networks become out of date which hurts them in trying to get back into the economy. i've introduced legislation called the better education and skills training for america's workforce that would provide a robust tax credit for businesses who pay for training for

long-term unemployed workers and would create a competitive pool of tax credits for business clusters who come together to set up training programs at community colleges. i see the presence initiative on community colleges. do you believe that designing a job training program focused on providing the long-term unemployed with the skills and demand would help reduce the disposal high rate of long-term unemployed people in our country? >> senator we have, through the policies we put in the budget, i think embrace very strongly the idea that we need to make sure that training is able to help people get into or get back into the workforce. that's for our community college proposal comes in, were other training proposals coming. there are multiple ways one could accomplish it. we put in our budget the ways we think would be most effective but we look forward to working together. >> i will close by saying we would like to work with you. i understand to support the

presence broader initiative by how we give and focus on long-term unemployed is a critical element. >> totally agree but if you look at the kind of potential tpp in the medium-term, getting people back in the labor force is not just something that's right for the individual but it is a way to make sure our economy is growing more. >> i'm thrilled to find at least three places we can largely agree. >> senator carper? >> thank you sir. thanks, mr. chairman. welcome. it's good to see. i just want to start by thanking you in the administration for working so hard with us last you to try to find common ground on health insurance. if we can work that out we can work out some these issues as well. mr. secretary, you mentioned have you started off talking about the strength of the economic recovery. i will acknowledge it's not everything we would like but for us it's encouraging even by

today. today we received from the department of the latest unemployment filings. the numbers are averaging right around 280000. right now we're running around 280. what's it going to do is we know it will tighten up the labor market and hopefully it will have a positive effect on wages for a lot of people who haven't had much of an increase in wages for a while. went to the things that i have cited is coming out of the election is to forget what are some areas we can agree on. you touched on a number of those in your testimony and in the present state of the union. i'm not 100% in agreement my hope is we can move forward on trade including tpa. my hope is we can afford on cybersecurity to protect, better protect our intellectual seedcorn and a lot of are in the work being done by companies like colleges and come granted

tax reform. would like to do that. you mentioned the need to do that. it's a tough nut to crack but so important. immigration reform we need to take immigration reform that reduces the deficit. it raises i think a gdp for a substantially over the next five, 10 years. we ought to just do that. workforce, i like the president's proposals with respect to community colleges and trying to encourage folks to continue their education coming out of high school. lastly want to make it is transportation. several of my colleagues have mentioned it. we have the jurisdiction over that. environmental public works asia is the authorizing committee. we are the committee that has to be counted they for these improvements. we very much need to make them. i'm intrigued by what the president has proposed, what the administration has proposed. i'm not an advocate of repatriating money. if we repatriate, lower the rates every 10 years companies

will continue to lead money parked overseas until we lower it again. giving them a free pass but i don't think that's a very good idea. i think the ideas are intriguing. it will be difficult to achieve. but i'm interested in exploring it with you and my colleagues. i've been, over the last six months, i think i've talked with just about everybody on this committee. a lot of republicans in the senate and in the house democrats in the senate and the house on what do you think we should do for transportation funding. i've gotten a number of interesting ideas and want to mention them today. one of those is the use of the 3 cents or 4 cents a year, index. simply bare bones approach and gives us not passionate about $101 a year which has been in of what, 16 building, 100 billion over six years. bare bones is what we need.

second idea that's talking to my republican colleagues i never said why don't we open to additional areas for oil or gas exploration? some of the revenues that flow from that could go into transportation trust fund. it turns out the president has proposed that the areas off of virginia, north carolina, south go on and george be opened up for exploration. that could actually merit and administration idea with some ideas i've heard from my republican colleagues. i heard from a number of our republic and collects and democrats like it would forget how to do transportation projects less expensive? what are some ways we can get a better result for less money? u.s. beauty last year had legislation that outlined a number of ways. they have new ideas this year. but maybe something the administration and the republicans could agree on. those are just some of the ideas that i've heard. i think, i like to talk about energy policy.

as in all the above approach. i think there might be sort of in all of above approach on transportation funding than i thought a year or so ago. your reaction, please? >> we obviously very strongly sure the sense of urgency to get a long-term surface transportation bill enacted. there's no way to effectively plan infrastructure going six-month at a time or even a year at a time. you need to have the time to plan complicated projects. we put in our budget a proposal that i think has the basis for bipartisan support. we genuinely want to pursue it and we think it's the best approach. if that were turn out not to be the approach that could muster bipartisan support, we would work together to look at other creative options. i actually think that there is a reason to be optimistic that we

can get the president's proposal, or a form of it enacted into law. it draws on principles that are shared on both sides. it's in the best interest of the country. it's good for the economy. it will create good middle-class jobs. we are going to kind of roll up our sleeves and try and get it done. >> thanks so much. i would just say to you and the recommend, states are beginning to shut down construction projects in the spring and in the summer. because of the lack of certainty and predictability i think the president's idea has merit. i think it's going to be hard to do. so the question for us is if we're not able to do that for a while, what other going to do in the meantime? the answer can't be nothing. thanks so much. thank you, mr. chairman. >> okay. let's go to senator cardin. >> thank you, mr. chairman. and secretary lew, thank you for your service. very much appreciate your

long-standing commitment to public service an effective job you're doing as secretary of the treasury. i first want to talk about an area that talking once before about them and that's our community banks. we are still saying community banks in maryland been challenged to be able to survive, not because of their viability individually but because of the new regulations et cetera. they were not the speculators that brought about the financial collapse, and they are trying to figure out a way to remain relevant in today's banking world. one area where we could help is during the part period, the preferred stock of community banks -- t.a.r.p., held by treasure and want to buy back that preferred stock but there obstacles in the way. i would just ask that they get on your radar screen to see whether we can facilitate the viability of community banks through considerations at

treasure to make it easy for them to recoup their preferred stock. >> senator cardin, we share the view that community banks played a critical role in local economies and in creating an engine for small business growth and local economic activity. in the t.a.r.p. program we worked with community banks, we will continue to. we have certain constraints in the t.a.r.p. program in terms of how we can dispose of assets but am happy to look into it again. >> appreciated very much. i was interested in your exchange with senator wyden in regards to the u.s. harmonizing with the international community on tax rates and the fact that we have high corporate tax rates. i also was interested in the exchange on simplification where you're trying where senator wyden wants to get the code much more simplified and i agree. i would at least put in a plug

that you take a look at the progressive consumption tax that i filed. taxpayers, joint textures under $100,000 would not have to file an income tax and we got the lowest marginal tax it in a just world. if we're going to harmonize the let's take a look at where the rest of the oecd countries are receiving the revenues if want to be competitive. i just want you to take a look at because i think it would answer some of your questions. i want to get your comments in regards to the administration's position on doing business tax reform. along with senator thune i coach or a working group that we look at the tax issues. we have concern as to how small businesses treat it. dvd of just with corporate tax rates, then those who have passed through entities, or use s. corporations, would be at a competitive disadvantage if that's all we do. because of high individual rates.

i would ask how can you really just do corporate tax reform and be fair to small businesses in our country? >> senator cardin we have always talked about business tax form, not corporate tax reform, because we think it's important that when we do business tax reform we look at small businesses as well as the corporate site. we have in our proposal, for example, an expansion of section 179 provision that allows for the taking of depreciation so that if you spend $1 billion a year as a small business you can take a full deduction in the year he you make an investment and don't have to do it over time. we've done an enormous number of the simplification is to make it easier for small businesses. i think redesign provision that are going to help small businesses. we are open to ideas, if there are ideas that come out of the come out of the conversations

you in senator thune have. we look for to working with you. i would just point out that if you end up in a position where one of the reasons businesses choose to file past individual businesses as opposed to corporations is that it's better for them to do. if it becomes advantageous they can also -- >> switchback. but it changes the current competitive situation that small businesses are already challenge today. i understand they can make that choice back and forth. i want to get one last point and if i might, and that is on retirement and savings. once again a progressive consumption tax would help reward savings and retirement. one of the things that we've learned working with senator portland we were both announced is that the tax incentives alone are not enough for working middle income families. that's why the saver's credit is important but that's what employers sponsor plans when they put money on the table is

important. i would just urge you as you look at your proposals for retirement securities that we don't have the unintended consequence of adversely affecting employer-sponsored plans where the money on the table, where we would only be using the tax deferral as an incentive. i don't think that's enough spent we agree and we have a proposal in our budget to make it more advantageous for firms to contribute for small businesses especially, to make a contribution into an employees retirement plan and we look forward to working with you on that. >> thank you. thank you, mr. chairman. >> thank you, senator. senator brown. >> thank you, mr. chairman. secretary, welcome. good to see you again. first off, a short statement. i know that senator schumer and senator stabenow asked you about currency. i want to echo the remarks but i also want to remind you and ambassador froman that there is strong, strong support in the

senate for real currency provisions, both tpa ntpp better and stronger than negotiating objectives but real enforceable currency standards. i don't need you to comment on it now. i forgive him as before but am hopeful as we move forward on the weekend bring you in our direction a little bit more. i want to walk through the country by country global minimum tax that you and the president have proposed just a series of questions because i think it's often difficult to sort of process this. the global minimum tax you're proposing is 90% correct? >> that's correct. >> if corporations get a credit that is 85% of the effective tax rate that they pay for the last five years in every country where they do business correct? >> that is correct is what. >> if a corporation shifts its profits to bermuda or the corporate tax rate is zero that they would now own 19% to our

government on those profits correct? >> correct. >> is the same corporation put profits in south korea whether tax rates slightly over 24% or india where it is higher, or germany were is in the high 20s, the corporation would potentially not own a single dollar more and use taxes correct? >> that's also correct. >> this is a proposal that funded the shuts down tax havens as we've discussed before in prevent the global race to the bottom. your opinion? >> i think that's a very accurate description. when we are in international meetings their future discussion of what's called base erosion & profit shifting. there's two halves to that problem. one problem is the tax haven status of the race to the problem -- to the bottom to. the others have these ridiculous high statutory rates. we put in a proposal that we think that's what we need to do to solve a problem that pushes companies to tax havens and we will be vigorous in the international setting to push against the tax haven rates to

the bottom raise. i think we have enormously better argument if we have done our part. >> two what do you ascribe the opposition to proposal in congress and among some in this community, not nearly all but to what do you ascribe to? >> look, i think there will always be an argument for a lower rate if there's there is a possibility of getting a lower rate. it's not surprising we are hearing an art but it should be lower than 19 or lower than 14. we haven't heard arguments that undermine the basic integrity of the approach, and i don't think that we have heard arguments to suggest that there's not the basis for a bipartisan discussion to work through this. we don't think that the numbers that we have picked have kind of absolute truth to them. we could've gone a little higher, we could've got a little bit lower. we ought to be would work this out and it would fix a broken tax system and keep american jobs here.

>> speaking of something we can work out, thank you for that and we have worked out bipartisanly for decades. that is the social security insurance, social security disability insurance but the president's budget supports everything accounting measure called reallocation but we have had hearings on this last year when senator wyden was the chair senator hatch was ranking member. we've had discussions with pretty much everybody on this committee on the issue of reallocation. it doesn't cost taxpayers money. it's been done in 11 times before bipartisanly. walk us through what you suggest, what the administration suggests on reallocation and tell us what will happen if we refuse to do it and why we should do it. >> senator, we have a two-part proposal. one is we do have proposals that would do things like continue disability reviews and incentives to get back to work, currently it is a pilot program

to help people get back to work from disability. by don't think there are any experts who believe that any approaches that you could design would fix this than the shortfall in the short term. we saw a huge increase in that this bill the rate during the economic crisis for a variety of reasons. the only short-term solution is a reallocation of the rates. i've been doing this long enough that i remember when i had to reallocate from disability to the old age and survivors trust fund were to get to the 1983 reforms. it's many times that there had been reallocation and they have gone in both directions. i think we do need to work together on kind of a long-term solution, but i don't see any alternative but to have to be a reallocation to deal with the upcoming challenge. >> and we knew, if my recollection is we've been known for some time after warily about, in fairly good fair and

accurate prediction, right, when this would happen? >> the exact month shifts as you do updated projections but we have known it was in the zone of the next year for some time spent okay. mr. chairman, thank you. >> senator bennet. >> thank you, mr. chairman. antifolate a hearing. mr. secretary, thank you for being here. just when things couldn't possibly get worse congress distinguished itself at the end of the last congress by passing a tax incentive though, include an extension of the wind production tax credit or two and half weeks. you have just, and in that context and understand the context, in your answer to senator brown you, the specter of the treasure of the united states of america, described our tax code as broken and ridiculous. and there isn't anything in any person on this committee who doesn't agree with that characterization of the tax code. either been around for a long time and no i think quite a lot

of wisdom over that period of time. i think the people of colorado what they would like to know is what are the conditions that are required to actually fix this tax code to reform the tax code? what do we have to do to put this committee in the position to actually do the people's business, do not do this insanely mine and ridiculous legislating, but actually get to a place where we can fix this code? >> well, senator -- >> and allow the private sector to compete in the global economy. >> senator, i couldn't agree more that short-term extenders are a terrible way to do business. for a company that at the beginning of 2014 wanted to know what their tax status would be waiting until the last week of the year doesn't help you plan your business. it's all retroactive were decisions that were made when people did know what the tax

code would be. it couldn't possibly have the incentive effect that he would have if it was a prominent tax law. we proposed in with extenders in the context of tax reform so that we picked the ones that should be made permanent, make them permanent, pay for them in the context of tax reform and have a tax code that had the stability and certainty to. i think the answer of what we have to do, we learned in 1986 with the answer on tax reform is. have to work together and we know there are going to be interest that oppose losing whatever special business they have but on a bipartisan basis say it is worth broadening the base, closing loopholes low-earth orbit, having an international system that makes us competitive. if we do it together we can get it done. i am more optimistic than many because it just makes such profound sense to do it. i also think that if we don't do it come it's going to lead to an economy where we've seen more companies doing things we don't like. that's not a good outcome.

>> i want to thank the chairman for putting us in these working groups because i think that at least present a bipartisan start for our efforts. i remember a principle of the charter school in my school district i once asked him you could hear a pin drop in this place and i said, how do you create these conditions where you can get this done? he said i visualize the conflict in advance and then when it comes, i know it's going to be there and we can get through it. i think that's what we need to do on this issue. it's not going to be easy to do but we can do it. ..

>> american opportunity credit more refundable. i wonder whether you could discuss some of the limitations of the current patchwork of credits and deductions in more detail and also describe how simplification and better targeting might actually increase overall college affordability. >> you know, senator we share the concern that the current array of patch work of benefits, tax benefits and grants makes it very difficult for family to take full advantage of everything that's available to them. one of the reasons that we put together this approach was to simplify it, to make it so that families would understand what it is that they have available and to take it into account. you know we've consolidated the

education tax credits into an expanded aotc we've simplified taxes for pell grant recipients, we have improved reporting of tuition and related expenses for scholarships. part of this is that the reporting is more straightforward, it will be easier. we've, you know repealed the student loan interest deduction for new students but allowed debt forgiveness to be excluded from income, and we have reduced the tax benefits of education savings accounts, you know, that -- well, we've actually said we're not going to do that, so -- >> okay. i'm out of time, mr. chairman. but i also want to call your attention, mr. secretary, to a bill that senator alexander and i have that would reduce the questions on the financial aid form, the fafsa form from 108 questions to 2 questions. i think that would align with the work that you're trying to do, and i hope you're paying some attention to that. >> thank you senator.

>> thank you, mr. chair. >> senate scott? -- senator scott? there's a vote that just started, we'd like to finish it so you don't have to sit around, mr. secretary. >> thank you chairman. i promise not to take more than 30 minutes. i appreciate -- >> you're the only one that can get away with that right here right now. >> and i'm smart enough not to try. >> you sure are. [laughter] >> secretary lew, you have done something that i am very surprised at and almost bewilders there. you've actually answered questions, which is a remarkable experience for a new senator from a witness. so thank you very much. i haven't liked your answers consistently, but at least you've provided true and clear direction for this committee and i really appreciate that. i want to go back to a question that you heard from senator thune and senator heller as it relates to the inheritance tax. i started a small business a number of years ago and grew that business from zero accounts no cash to being worth

some real money, from my perspective. and let's say that it ended up being worth $2 million. so i know there is a million dollar threshold that if you're a small business or you don't pay taxes on inheritance on that, so i passed that business on to my nonexistent child and give that business. $2 million value. what's the tax that's owed? >> well, senator we do have the million dollar exemption -- >> so the first million is gone. >> the first -- i'm sorry, are you asking about the estate tax or stepped-up basis? >> stepped-up basis. >> will yeah. so we have a million dollar exemption. >> yes. >> and then we also -- >> 15 years. >> 15-year payment period. >> yes. >> and it would be taxed at the rate of the individual's income, so if they were -- if they were not earning a lot, they would pay a very low rate. if they were earning more, they

would pay more. >> so a couple hundred thousand likely. >> over years. >> right. the rule is anytime you have a liquid asset that you are required to sell in order to get the resources to pay the government, you reduce the actual value of that asset which then means that for small business owners and specifically minority business owners the way that you create wealth in this nation is by being in a position to create a profit. creating a profit only happens a couple ways through the market that we've talked about through the business ownership and real estate. so in the area of business ownership, when you are in the position to create that profit you have to be able to pass it on generation to generation hence the fords and chevys and all these big businesses. well, the proposal from the president actually impedes the ability for small and minority business owners to transfer wealth so you actually create wealth. i would love to see you guys go back to the drawing board and perhaps have some -- be at least a middle malleable in this -- a little malleable in this area.

a million dollar threshold on a nonliquid asset really is worth about $of -- $600,000 in my experience. >> senator we obviously, tried to make it not be overly burdensome. i think if you look not at the illiquid assets but things like stocks and bonds it's much harder the to make the case. and most of the money that's involve inside stepped-up basis is in those kinds of assets because that's where substantial wealth is transferred from generation to generation. >> and trying not to take the 30 minutes i promised not to take, perhaps there's a part of the narrative that is factual. unlike farms that maybe only 65 farms that are impacted by this conversation, there are hundreds and thousands of small and minority business owners that would be impacted severely and negatively by this conversation. but let me ask you a separate question in a different direction. i think it's section 165 of

dodd-frank that really gives the fed unlimited discretion to make sure that banks and financial institutions are not taking on too much, too much risk. yet the president in his budget includes a new tax or a fee on banking liability supposedly designed to curb excess of risk taking. i believe that any new tax on banks ultimately finds its way to the consumer. mr. secretary, does the request for this new bank tax or fee suggest that the president believes that the dodd-frank -- a law that was passed entirely it seems on party lines -- does not provide ample tools for reining in excessive risk? >> senator, we think that the dodd-frank act is working very well and has very much reduced the risk in the system. we think the the tax proposal we put forward is entirely consistent with the dodd-frank act. it's designed to make it a bit more expensive for firms to be

highly leveraged, and that is one of the factors that contributes to risk. um, i think that if, um if you look at our overall tax proposals by reducing the corporate tax rate that's going to also have a benefit for financial institutions and other companies. i think if you look on balance we treat financial institutions quite fairly. >> well, i would tell you that the seven basis points that you increase it by may mitigate risk but at the same time, it passes on a greater burden to the consumer which makes it even more difficult for small business owners to borrow money. looking at, as my time is running out, the proposal on the corporate tax restructuring, i would note that a 28% rate would be a positive rate and it would put us in a position to be globally competitive. however, for us to get there the 14% repatriation deemed rate is you must know, a nonstarter in the conversation about actually bringing home -- i guess you don't even have to bring it

home. you're going to get taxed if you bring it home or not. you must know that has to be a nonstarter on our side of the aisle. so it would be helpful to actually have a characteristic that has a realistic expectation or opportunity to make progress. >> senator, i would just say the structure of it is similar to the proposal put forward by the former republican chairman of the house ways and means committee, so we view it very much as being in the realm of an issue that we could have a good, constructive, bipartisan conversation on. >> conversation, yes. >> senator, thank you. >> progress, probably not. thank you. >> senator portman? >> thank you, mr. chairman. and i appreciated the fact that tax reform got so much notice here today, because i do think it's an opportunity in this budget for us to try to make progress. i think senator scott's right, i think it's one where we have differences in terms of what the deemed repatriation rate is and, for that matter, the minimum tax. but i do think the structure is consistent with what many of us have talked about on this side

of the aisle. and, look, we need to do it. in ohio, as you know, we just had another company choose to invert meaning buy a smaller company overseas and mean move the domicile from ohio to one of our, you know, global trading partners in developed countries. and this is happening all over the country. more importantly, i think a lot of companies who are u.s. companies can't compete. u.s. workers can't compete so foreign companies are buying them. there's a study coming out from ernest and young soon that says over 9,000 u.s. companies have been acquired by foreign companies in the past ten years alone. and finally it's just tougher to compete. so even if you're not taken over by a foreign company, you tend to have a difficult time expanding. and i've heard this testimony from all kinds of biocompanies. one small business came in recently and said they completed a deal and all the negotiations in a korean company and a germany company waltzed in and said we'll pay 19% more because they can afford to, and so this

is happening and it's american workers who are taking the brunt of it. i want to commend you for putting into the budget i have great concerns about the budget as you know. both of us used to be in the budget job, and i don't think it takes on the challenge of our time which is the mandatory side of the spending. but with this particular provision, i think it gives us a chance to try to do something that'll help american workers and, therefore not just increase economic growth, but actually create those middle class jobs we're always talking about because these jobs are the very ones that are at stake right now, and that's who loses out if we don't lower the rate. there's a great study done by the congressional budget office that shows that. this is not about the boardroom it's about the workers. so i guess the one question i would have for you today on this notion of helping the highway trust fund because this came up with a lot of the different members. there's been discussion of saying why don't we just do a tax holiday -- in other words as we did 10, 20 years ago tell folks you can bring money back

to this country at a lower rate and, therefore we'll be able to fund the highway trust fund. if we didn't do tax reform, what would be the impact on revenues? >> senator, we have looked at it in both the joint tax committee and our estimators and the office of tax policy have determined that it costs money. it doesn't save money. >> so it wouldn't create additional revenue for the highway trust fund. >> not through congress vexal scoring -- conventional scoring. >> okay. >> as we were discussing earlier, a one-time tax holiday doesn't solve the structural problem. it tells companies keep all your earnings overseas until the next tax holidays. it doesn't regularize the tax treatment in any meaningful way. by putting in place a new structure with a toll changer, i think we have -- charge i think we accomplish the goal so that business decisions will be made on economic terms, not on tax-determined terms. and i think that it will create

better a climate for creating jobs in the united states. so while i don't think the one-time voluntary tax holiday works well and accomplishes the goal, i do think that the proposal we put in structurally does. and as you and i have discussed, the question of whether -- where you set the rates is something that people can disagree about. i think there is a basis for bipartisan conversation. >> well, i hope you will reiterate today for the record what you have said publicly and at some of our meetings that this is a starting point in terms of the rates because i do think senator scott mentioned we're going to have differences in terms of the rate. we want to make sure this works to make our workers more competitive, and if we end up with a rate of 19%, for instance some would argue we have not accomplished that because you look at the comparable rates around the world, the effective rate has to be, in my view, in the mid 20s in order for us to be competitive. and if you look at the tax rate

here plus the 19% minimum the average rate actually is above the average of the oecd countries. so we hope you'll work with us on the rate and also to insure that we do have the ability to help on the highway trust fund. i think we have to come into some understanding on how we're going to deal with the extenders. maybe those could be part of this, which would make all the sense in the world and let's be sure we are working together to find a baseline that works. if you did do the deemed repatriation, which is part of the overall tax reform you do think there could be some revenue for a highway trust fund? >> yeah. i do think there could be revenue for the highway trust fund, and just to be clear, as we deal with the expiring provisions, we need to deal with the individual provisions that ebbs pyre as well. >> -- expire. >> mr. chairman, i'd like to put in the record. >> without objection, so ordered. >> two different plants back in ohio, it's about this issue of currency. i do think that currency manipulation does affect rate.

i hope that you, mr. lew in your work on this issue will help us to try to put in some enforceability standards on currency. it does affect the way american workers can compete globally. thank you, mr. chairman. >> senator grassley, are you ready or would you like me to go? [laughter] >> why don't you -- >> i'm happy to have you go. >> if you, if we're limited to five minutes, you go ahead. i need -- >> okay great. >> yes, go ahead. >> secretary lew let me kind of walk through what looked like the transportation choices you had. because i think that's an important part of this depavement to me there's sort of three entrants in the discussion. there is the gas tax, you know, issue, and we got a sense last year that it would be hard to build significant bipartisan support for major hike in the gas tax. then there is the repate a ration issue. and i'm certainly open to

looking at this. the question of, you know taxes and transportation, there is clearly an infrastructure, a nexus there because we have -- gesundheit -- we have, of course, trust funds, and we have excise taxes. so there is a you know, clear nexus there. i think we also have learned from the 2004 experience that there is no repatriation rainbow out there. and, in fact my sense is that if you make it voluntary with respect to the whole process, the joint committee on taxation our sort of scorekeeper won't score it. so that's certainly a path worth debating. the path that we know works because we've done it is the bond question, the question of getting some of this vast sum of money off the sidelines and into infrastructure. this is a good investment, and

bonding works. it was in this room close to six years ago after a decade's worth of bipartisan efforts chairman baucus talked about build america bonds, and people want to know what might happen. i told people we might sell $3-$5 billion worth of them. and in a year and a half, $183 billion worth of build america bonds were sold all up and down the eastern seaboard. and senator casey's state governor rendell and others major supporters of build, you know, america bonds. you can debate what kind of bond they ought to be as well. in other words, there are different types and i think we understand it. but, you know, to me, a because it has actually worked and get more revenue b, because there is a bipartisan, you know, history there, i think it would be very helpful you all have

been interested in something you call qualified public infrastructure bonds. as you're aware i've had a great interest in a variety of new approaches here that will draw more private investment into the country's infrastructure. give us your thoughts on how the approach that you all are talking about would lend itself to a bipartisan alliance to get more private funding into infrastructure. >> senator, as you and i have discussed, this is an area that we violently agree on. i think that the -- >> violent agreement oh my -- >> yeah violent agreement. your leadership in the design of bond provisions here has been extremely important. we have worked with you on these. i hope we can work on a bipartisan basis to get either the qualified public infrastructure bonds or you can name it any number of things whether you call them build america bonds or america fast forward bonds or qualified

public infrastructure bonds. >> right. >> the idea is to create opportunities for private capital to be informed in infrastructure -- invested in infrastructure. one thing that we know for sure is even if we are successful in extending ours surface transportation bill for six years at a higher level, that will only meet a fraction of the infrastructure needs that we have in this country. so this isn't a case where we should do an either/or. we need to do both. and we also need to pursue public/private partnerships as a third avenue. our infrastructure deficit is one of the real serious economic challenges for us to deal with "news of the world" to make sure that -- in order to make sure that the future of our economy is as bright as it's been in the past. we can't have ports that aren't adequate to take the deep draft ships that are going to be coming through. we can't have airports that are subpar and behind their international competitors. you know we can't have roads that take make it take hours

longer to get from one place to another than it should. that costs time it costs money, and it's a drag on economic growth. so we believe that obviously, there's short-term benefits of job creation in infrastructure. long term, you know, for the entire history of our country it's been one of the keys to our economic success that we build the infrastructure that we need for the future. >> my time has expired. senator casey's next, senator grassley in order, and i know colleagues have been very patient, and i appreciate it. >> i want to thank the ranking member. i want to apologize that i was not here earlier mr. secretary. i didn't have a chance to hear your testimony. it was one of those, one of those conflicted mornings. but we're grateful that you're here -- >> if you can't sleep tonight, you'll probably get another chance. [laughter] >> that's right. we can, we can watch the video later. but we're grateful you're here and certainly grateful for your work at a difficult time. as you know, we had ambassador

froman here just a number of days ago and one of the, one of the parts of his both testimony and then the back and forth of questions clearly indicated that an issue that you and i have talked about a lot over the years as well as others, currency manipulation, that that has not been addressed in the tpp negotiations. he directed questions to you, and that's the reason i raise it. first and foremost. i raise it as well, obviously, because of the concern i have. and that concern is rooted in the economic and often devastating economic impact of currency manipulation. as you and i have discussed, my main concern has been about china. but with these negotiations, of course, some of our potential tpp partners, including japan,

cause us concern as well. the other concern, of course, is down the road were china to be a part of the tpp, that is, that is of great concern on currency manipulation. just in term of some data, and then i just want to ask you maybe two questions about this, just as it relates to japan the economic policy institute recently found that currency manipulation was the main driver of our growing deficit with japan and that this growing deficit displaced 896,000 jobs nationwide in 2013 including 40,100 jobs in pennsylvania. now, not every one of those is directly attributable only to currency manipulation. it's a broader measure of trade deficit. but they did find that currency manipulation is a driver. so it's very frustrating when we've raised this issue a number

of times, and i know that you've, you've worked on this that in the negotiations this doesn't have a primacy or a priority that i would argue that it does. i i think currency manipulation is both unfair and very damaging, and it would be -- and it's kind of a double insult if it isn't raised and then tpp goes forward and tpa goes forward and we haven't addressed it. >> well, senator, first of all i want to agree with you that if countries pursue policies that are designed to gain unfair advantage on exchange rate for the purpose of trade advantage, it's wrong. we should push back. we do push back in the current international fora, the g7, the g20, the imf. but even more importantly, bilaterally. and i think that the epi study on japan is not entirely

accurate. there is no evidence that in last several years japan has intervened in a way that would meet the standard that you're describing. i think that the activity that that report is pointing to is not government activity but it's the investment of funds in the private pension fund. private pension funds in the united states as well as ore countries -- other countries have mixed portfolios. i think if you did the analysis, the united states invests in other countries as much as other countries invest in the united states. and i don't believe that there's any evidence of any manipulative investment. i will say that i have raised the issue of currency with our japanese counterparts more times than i can count. we don't just hold them accountable for their actions we hold them accountable for their words. if their language even suggests that they're deviating from using domestic tools for domestic purposes, we come down very hard. and i must say in all the bilateral engagements that i've

had if we do that, we see a change this language and restraint on policy. but i do think the question of kind of looking at macroeconomic tools is a very important one. you know be you look at our qe policies to other countries we're very disruptive but without qe, we would not have been automobile to dig ousts out of the recession. i think japan has the right to use quantitative easing as well. so we can't compare situations that can macroeconomic to unfair manipulative practices. >> i would just say this in response i think both of us agree that whether there's a dispute, whether you raise a dispute about one particular study, we can agree that currency manipulation has been damaging to our economy. i don't think there's any question about that, number one. number two is i'm not willing to kind of let japan off the hook on this. we can debate that. but the broader question is even goes even beyond japan.

i get the sense -- and this is one of my real frustrations -- that it is raised, it is prior advertised. i remember talking to your predecessor, senator geithner about it. i understand that it's raised, i understand that it's asserted in bilateral discussions or even negotiations. but the problem i see is we never seem to get something tangible a result that would put our workers at least on a level playing field or our companies on a level playing field. that's the frustration and i get the sense that the administration doesn't place the priority that i place on this issue. >> well i actually think that we are second to none in terms of pushing back on what are unfair practices. and i know i have raised it not in just an occasional off-handed way, but i make it central to our relationship with another country. and i have seen it have effect. so i think we have been aggressive. and as i've said earlier we're

open to a discussion of how to build a bridge between trade you know discussions and trade legislation and the processes for dealing with currency through the current authorities. and i would look forward to that conversation. >> and i would as well. i'm sorry we're over our time but thank you. >> yes. i want to start out by telling you that i agree with senator casey, and i probably wouldn't have ever gotten around to asking that question, but this is how i phrased the question that i was going to ask along that line, and i'll give you my opinion. i don't expect you to -- i don't even want you to take time to answer it. following on our meeting a week or two ago with mr. froman, ambassador froman, and then he said -- like senator casey did -- that it was up to the secretary of treasury that was negotiating this or dealing with this subject. my question would have been specifically is the

administration doing anything of consequence to address the currency manipulation by our trading partners around the world. and my feeling not just watching the obama administration, but previous republican and democrat administrations that everybody's afraid to tackle it, and i don't know why pause if there aren't -- because if there aren't consequences, there isn't going to be any change of behavior. and particularly, it's frustrating for me that we don't take on china because they're not involved in tpp, but they are involved in this whole business of currency manipulation. and i don't think that -- i think we're afraid to take 'em on because every time you mention something about it, they say you're interfering with our internal affairs. >> well, senator, i know you didn't want me to respond, but we have taken china on. the president's taken the president on, i've taken the senior vice premier and the president and the finance minister on on this issue. they have actually responded to our pressure. you know, they have changed

their policy and i think we have -- i'm not saying that there isn't need for ongoing vigilance and pressure, but we have taken it very seriously, and i think have made progress. >> i wouldn't want to say that you aren't -- i know that those steps have been taken, but you know what the chinese say, they'd never admit that you had anything to do with it. >> but, you know, they have actually admitted this year that they would refrain from intervening. they didn't use to anytime that they intervened. they now say they will refrain in most circumstances from intervening. they have never been willing to abide by the transparency requirements of the imf. this response to repeated -- in response to repeated pressure, they have now said that they're a going to abide by the imf transparency so we can see what their doing in intervention. i am in no way saying it's not a serious issue. it's a very serious issue, but we're very actively engaged and pushing very hard on china on

this issue. >> are well then let me say thank you if you're doing more than what i perceive you're doing. >> well -- >> i want to follow up on something that you discussed with thune and then more specifically with senator scott. you spoke about a $1 million issue as far as the way the president's plan was going to work. when speaking with senator scott, you mentioned that $1 million threshold. specifically. is this an exemption, or is it a dividing point between determining what is or is not a small business? if a business is over -- then more specifically, if the business so over $1 million, are they taxed on the whole gain -- >> we'll leave the last couple of minutes of this program. you can watch it anytime at c-span.org. we now take you to the brookings institution in washington, d.c. where vermont senator bernie sanders is outlining his 12-point agenda that focuses on climate change, college