[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
LEGISLATIVE PROPOSALS FOR FOSTERING TRANSPARENCY
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HEARING
BEFORE THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 23, 2017
__________
Serial No. 115-20
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Printed for the use of the Committee on Oversight and Government Reform
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http://oversight.house.gov
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Committee on Oversight and Government Reform
Jason Chaffetz, Utah, Chairman
John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland,
Darrell E. Issa, California Ranking Minority Member
Jim Jordan, Ohio Carolyn B. Maloney, New York
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Justin Amash, Michigan Columbia
Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts
Trey Gowdy, South Carolina Jim Cooper, Tennessee
Blake Farenthold, Texas Gerald E. Connolly, Virginia
Virginia Foxx, North Carolina Robin L. Kelly, Illinois
Thomas Massie, Kentucky Brenda L. Lawrence, Michigan
Mark Meadows, North Carolina Bonnie Watson Coleman, New Jersey
Ron DeSantis, Florida Stacey E. Plaskett, Virgin Islands
Dennis A. Ross, Florida Val Butler Demings, Florida
Mark Walker, North Carolina Raja Krishnamoorthi, Illinois
Rod Blum, Iowa Jamie Raskin, Maryland
Jody B. Hice, Georgia Peter Welch, Vermont
Steve Russell, Oklahoma Matthew Cartwright, Pennsylvania
Glenn Grothman, Wisconsin Mark DeSaulnier, California
Will Hurd, Texas John Sarbanes, Maryland
Gary J. Palmer, Alabama
James Comer, Kentucky
Paul Mitchell, Michigan
Jonathan Skladany, Majority Staff Director
William McKenna, General Counsel
Mary Doocy, Counsel
Sarah Vance, Professional Staff Member
Sharon Casey, Deputy Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
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Page
Hearing held on March 23, 2017................................... 1
WITNESSES
Mr. Hudson Hollister, Founder and Executive Director, The Data
Coalition
Oral Statement............................................... 6
Written Statement............................................ 8
Mr. Norman Kirk Singleton, President, Campaign for Liberty
Oral Statement............................................... 12
Written Statement............................................ 14
Mr. John Berlau, Senior Fellow, Competitive Enterprise Institute
Oral Statement............................................... 16
Written Statement............................................ 18
Mr. Thomas Fitton, President, Judicial Watch
Oral Statement............................................... 25
Written Statement............................................ 28
Mr. Richard Painter, S. Walter Richey Professor of Corporate Law,
University of Minnesota Twin Cities
Oral Statement............................................... 34
Written Statement............................................ 36
APPENDIX
Letter of March 13, 2017, to Chairman Chaffetz, submitted by Mr.
Cummings....................................................... 76
Letter of March 22, 2017, from Public Citizen, Every Voice,
Democracy 21, Center for American Progress, Supporting
Presidential Tax Transparency Act, Submitted by Mr. Connolly... 78
Letter of March 22, 2017, from Americans for TaxFairness
Supporting Presidential Tax Transparency Act, Submitted by Mr.
Connolly....................................................... 90
Hearing Follow-up Response Submitted by Mr. Hudson Hollister,
Executive Director, Data Coalition............................. 92
Response from Mr. Hudson Hollister, Executive Director, Data
Coalition, to Questions for the Record......................... 97
LEGISLATIVE PROPOSALS FOR FOSTERING TRANSPARENCY
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Thursday, March 23, 2017
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 10:29 a.m., in Room
2154, Rayburn House Office Building, Hon. Jason Chaffetz
[chairman of the committee] presiding.
Present: Representatives Chaffetz, Duncan, Farenthold,
Foxx, Massie, Ross, Walker, Blum, Grothman, Comer, Cummings,
Maloney, Connolly, Kelly, Watson Coleman, Plaskett, Demings,
Krishnamoorthi, Raskin, DeSaulnier, and Sarbanes.
Chairman Chaffetz. The Committee on Oversight and
Government Reform will come to order. And without objection,
the chair is authorized to declare a recess at any time.
Thank you all for being here. We are talking about some
legislative proposals for fostering transparency. I appreciate
the witnesses and your flexibility. I think we have had to
reschedule this hearing and then, based on the schedule of the
day, we bumped this back to 10:30 this morning. So I appreciate
your patience and understanding as there are some big
legislative things that are happening on the Floor. And again,
we appreciate the expertise that you bring here.
We are here because this committee, probably as much as
anybody, wants to do everything it can to foster transparency,
and it is critical to carrying out our committee's mission. As
those of us that have the privilege of serving in Congress, we
have an obligation to ensure the American people know how their
money is spent and how their government functions. In all the
undertakings, we seek to shed light on issues, share
information that matters to the taxpayer and advance
legislative solutions where necessary.
We are not only the Oversight Committee, but we are also
the Committee on Government Reform, and so with the reform in
mind, we will examine three legislative proposals and shine
light, illuminate the light in here as well, three legislative
proposals which strive to improve the way taxpayers access
information.
One bill is called the Audit the Fed, referring to the
Federal Reserve; a bill that I have championed, the Fanny and
Freddie Open Records Act of 2017. Fanny and Freddie have
obligations that the American taxpayers have that are literally
a staggering amount of number in the hundreds of billions of
dollars; and the Open the Government Data Act.
Last Congress, we passed bipartisan Freedom of Information
Act or FOIA legislation. It was signed into law and marked a
big step forward in reforming the process. We didn't solve all
the problems. There are still some that face us moving forward.
And I hope we can advance more bipartisan transparency
legislation in this Congress.
Audit the Fed, sponsored by Mr. Massie of Kentucky,
provides insight into the practices of the Federal Reserve
while continuing to support its independence as an instrument
of monetary policy.
The Open Government Data Act, sponsored by Mr. Farenthold
of Texas, requires Federal agencies to publish data in an open
machine-readable format on Data.gov. And the Freddie--I am
sorry, the Fannie and Freddie Open Records Act of 2017 applies
the Freedom of Information Act to Fannie Mae and Freddie Mac so
taxpayers have critical information they need while these two
entities are in conservatorship.
Members of the committee may raise additional pieces of
transparency legislation in the hearing today, but I think all
these three pieces of transparency legislation exemplify the
fundamental right of the American people to know what their
government is doing and what sort of obligations are in place.
Chairman Chaffetz. And with that, I would like to actually
yield time to the gentleman from Kentucky, Mr. Massie, who is
the chief sponsor of one of these pieces of legislation. Mr.
Massie.
Mr. Massie. Thank you, Mr. Chairman. And thank you for
persevering with this hearing in the face of many weapons of
mass distraction today on the Hill.
[Laughter.]
Mr. Massie. You have assembled a wonderful panel of
witnesses, and I just want to say something about the bill that
I have sponsored here.
Over the past century the value of the dollar has declined
by over 95 percent, and during those hundred years the Federal
Reserve, the organization established by Congress to manage
Congress' article 1, section 8, authority to coin money and
regulate the value thereof, has operated under a shroud of
secrecy.
My bill H.R. 24, the Federal Reserve Transparency Act,
would put an end to that reign of secrecy. And it is not a
controversial bill. In fact, Americans demand transparency, and
the House of Representatives has responded by passing this
legislation twice in previous Congresses by huge bipartisan
majorities.
But I think it is time for a hearing because a lot of the
reasons have been forgotten about why we need this
transparency. When the original author of this bill,
Representative Ron Paul, first carried Audit the Fed to the
Floor in the 112th Congress, it passed by a comfortable veto-
proof majority. Then, Representative Paul Broun brought it to
the Floor in the 113th Congress, and it passed by an even
larger majority, 333 to 92. In fact, members of this very
committee who were here in those Congresses, all Republicans
and several Democrats, voted for this bill on the Floor. Yet
some have still asked and will continue to ask why do we need
this legislation. And that is the reason this is such a good
hearing.
They ask isn't the Federal Reserve already audited? Well,
that question deserves an answer. It is true that the GAO
performs a limited financial audit of parts of the Federal
Reserve, but this audit is perfunctory. Due to the limits
placed on the GAO by Congress, the U.S. Code makes several
critical exceptions to the Fed's audit protocol of its most
crucial activities.
Number one, GAO is prohibited from examining Fed
transactions or agreements with foreign governments and foreign
banks. Number two, GAO is prohibited from examining all Fed
actions on monetary policy matters. Number three, GAO is
prohibited from auditing transactions made at the discretion of
the Federal Open Market Committee. And four, GAO cannot examine
any discussion or communication among or between anyone who
works at the Fed about any of the activities in the first three
areas.
When these restrictions were originally added in the 1970s,
GAO themselves testified that they, quote, ``could not see how
they could satisfactorily audit the Federal Reserve system
without the authority to examine the largest single category of
financial transactions and the assets that it has.'' So you
see, even though a cursory audit is done, a programmatic audit
needs to be completed in order for Congress to understand what
the Fed does and why the Fed does it. Without a complete audit,
Congress can't provide oversight of an entity that it created.
Let me say that again. Congress created the Federal
Reserve. Congress and Congress alone has the constitutional
responsibility to coin money and regulate the value thereof. We
can outsource the activity, but we can't outsource the
responsibility.
This brings me to the other question I frequently hear,
which is won't a full audit of the Federal Reserve compromise
the Fed's independence? Well, the answer is without a full
audit, how can we know it is independent? For instance, how is
it independent of the executive branch? The Fed's charter is
not to be a second Treasury Department. How can we know that
the Fed is operating independently of big bank CEOs and Wall
Street?
Given the revolving door of managers between the Fed, the
Treasury, and Wall Street, the opportunity for outside pressure
and conflicts of interest abound at the Fed. Only a full audit,
a full audit can demonstrate that the Fed makes decisions
independently of the political whims of the President and
independently of the profit goals of commercial banks.
An organization entrusted with daily decisions that affect
the value of Americans' paychecks and the value of their
retirement savings, an organization whose mission has morphed
into facilitating the bailout of foreign banks, folks, this is
an organization that requires a full audit and full oversight
from the elected body that created it.
I want to thank Chairman Chaffetz for his leadership on
this issue throughout many years and for including this bill as
part of today's hearing. I urge my colleagues to support the
bipartisan Federal Reserve Transparency Act so the people of
America can receive the transparency they deserve.
I thank you, and I yield back.
Chairman Chaffetz. I thank the gentleman. And I thank you
for the tenacious leadership that you have had in bringing this
bill forward, and I look forward to having a good, vibrant
discussion about that bill today. I yield back and now
recognize the ranking member, Mr. Cummings.
Mr. Cummings. Thank you very much, Mr. Chairman.
The purpose of this hearing is to examine legislation to
improve transparency in government. Mr. Chairman selected
several bills to focus on today, and we agree on some of those
bills. I like the Open Government Data Act, and we disagree on
one of them, the Federal Reserve Transparency Act. I appreciate
the opportunity for a healthy debate on these measures.
However, I believe that there is one transparency bill the
committee should prioritize over all others. The Presidential
Tax Transparency Act would require President Donald Trump and
all future Presidents and presidential candidates regardless of
party to disclose their tax returns to the American people.
This bill was introduced by Representative Anna Eshoo, and
it has 73 bipartisan cosponsors. Every Democratic member of
this committee is a cosponsor, as well as our Republican
colleague, fellow Oversight Committee member Mark Sanford.
Chairman Chaffetz has said what many of us believe, that
President Trump should disclose his taxes. Last August, he said
this, and I quote, ``If you are going to run and try to become
the President of the United States, you are going to have to
open up your kimono and show everything, your tax returns and
your medical records,'' end of quote.
Other Republican Members agree. Representative Will Hurd,
another member of our committee, said, and I quote, ``It would
be a good move for the President to release his tax returns.''
But we don't have to just sit around and wring our hands and
wait and complain. We are not potted plants. We are lawmakers,
and we can pass a law. Just like Congress passed the Ethics in
Government Act in 1978 after Watergate to require the President
to submit a public financial disclosure, we can pass a law
today to require the President to release his tax returns. And
that is exactly what this bill does.
There is widespread public support for this. A petition on
the White House website that received more than a million
signatures titled ``Immediately release Donald Trump's full tax
returns of all information needed to verify Emoluments Clause
compliance,'' end of quote, every other modern President has
done this voluntarily. But President Trump broke with this
precedent claiming that he did not release his tax returns,
which he said was being audited.
IRS Commissioner John Koskinen has already debunked this
argument. When he testified before the Judiciary Committee last
September, he was asked whether taxpayers are prohibited from
releasing their tax returns while they are being audited. He
responded and simply said this, and I quote, ``They are not
prohibited,'' end of quote. We need to see the President's tax
returns to confirm that he is acting in what he believes is the
best interest of the American people rather than his own
financial interests.
President Trump's conflicts of interest are very, very
real. They are extensive, and they are deeply troubling. He has
refused to divest his business interests and place them in a
blind trust in direct violation of the advice of the director
of the Office of Government Ethics, as well as Republican and
Democratic ethics experts, one of whom is testifying here
today.
The President continues to hold an interest in the Trump
International Hotel in direct violation of the lease, which
explicitly prohibits any elected official from being party or
to taking any financial benefit from a contract.
We also need to understand President Trump's entanglements
with foreign business interests and foreign governments. Just
this week, FBI director James Comey confirmed that the FBI is
investigating connections between President Trump's campaign
and Russian interference with our election. The American people
have a right to know what if any financial connections the
President has to the Russian Government or to Russian business
interests.
So I ask unanimous consent, Mr. Chairman, to place in the
record a March 13, 2017, letter that every Democratic member of
this committee is asking that the Presidential Tax Transparency
Act be considered at a business meeting before the committee
that was supposed to be held on March 16, 2017.
Chairman Chaffetz. Without objection, so ordered.
Mr. Cummings. We did not take up the bill at that time. We
have another business meeting, by the way, scheduled for next
Tuesday, but it is not on the agenda for that markup either. I
know there is serious interest in this bill on the Republican
side, and I have talked to many Members personally about this.
I sincerely hope that we can take it up as soon as possible and
pass it out of the committee unanimously. The integrity of our
government depends on it.
And with that, I yield back.
Chairman Chaffetz. I thank the gentleman.
We will hold the record open for five legislative days for
any member who would like to submit a written statement.
I will now recognize our panel of witnesses. I am pleased
to welcome Mr. Hudson Hollister, founder and executive director
of The Data Coalition; Mr. Norman Singleton, president of the
Campaign for Liberty; Mr. John Berlau, a senior fellow at the
Competitive Enterprise Institute; Mr. Thomas Fitton, president
of Judicial Watch; Mr. Richard Painter, S. Walter Richey
professor of corporate law at the University of Minnesota Twin
Cities; and also with the Citizens for Responsibility and
Ethics in Government, also known as CREW. We welcome you all
here today.
Pursuant to committee rules, all witnesses are to be sworn
before they testify. If you will please rise and raise your
right hand.
[Witnesses sworn.]
Chairman Chaffetz. Thank you. Let the record reflect that
all witnesses answered in the affirmative.
Many of you have testified before us previously. We would
appreciate it if you would limit your verbal comments to no
more than five minutes. Your entire testimony will be made part
of the record, as well as any attachments or other things that
you may have to go along with that testimony. But it will all
be made part of the record.
Mr. Hollister, you are now recognized for five minutes.
WITNESS STATEMENTS
STATEMENT OF HUDSON HOLLISTER
Mr. Hollister. Thank you, Mr. Chairman.
Chairman Chaffetz, Ranking Member Cummings, members of the
committee, thank you for inviting me to testify.
In 2012, after serving on this committee's staff, I founded
The Data Coalition. We represent 36 technology companies,
employing over 200,000 Americans. Fourteen of our members are
startup companies founded within the last decade. Ten are
public companies with a combined market capitalization
exceeding $1.5 trillion.
To open up Federal information as a public resource to
deliver transparency and fuel economic growth, we
enthusiastically support the Open Government Data Act.
This committee's mission is to investigate and exercise
effective oversight over the Federal Government to expose waste
and fraud and abuse. To support that mission, Chairman
Chaffetz, under the rules of this House and this committee, you
wield the authority to issue congressional subpoenas. This
committee and its staff work hard every day to review the
information that you receive in response to those requests and
subpoenas to uncover hidden waste, fraud, and abuse, to expose
those things through hearings like this one, and to craft
reforms that safeguard Americans and their money from
government malfeasance in the future.
However, even considering the awesome power of the subpoena
and the professionalism of the staff, this committee needs
Americans' help. In 2016, the Federal Government took in over
$3 trillion and spent roughly $3.5 trillion, accounting for
over 1/5 of the gross domestic product. By revenue, that's
bigger than the 10 biggest companies in the world combined.
Our Federal Government is not just the largest organization
in human history, it's also the most complex. When I was an
Oversight Committee staffer, I asked OMB, the GAO, and the
Congressional Research Service how many agencies there are in
the Federal Government. I received three different answers. To
conduct oversight across such a scale and complexity is a
daunting challenge.
Fortunately, that is where transparency comes in. By giving
Americans direct access to their government's information, we
can deputize millions of citizen inspectors general to help
this committee fulfill its mission.
This committee pioneered and passed and has championed the
Freedom of Information Act for over 50 years, but FOIA's basic
model of request and response, although it's still an essential
avenue for transparency, is no longer the most efficient one.
Because most of the government's operations and decisions are
electronic, information technologies now make it possible for
the government to operate in the open online without waiting to
receive a FOIA request.
The Data Act of 2014, which Ranking Member Cummings, then-
Chairman Issa, and this committee championed, makes open data
the default for Federal spending information. The major
deadline of the Data Act is 47 days from now. By May 9, 2017,
every Federal agency must begin publishing all of its spending
as standardized open data.
But the Data Act is limited to spending. Representatives
Farenthold and Kilmer are introducing the Open Government Data
Act to take the next step. The Open Government Data Act
provides that all government information, unless it is legally
restricted, should be published online using machine-readable
data formats.
The Open Government Data Act won't just help Americans
conduct citizen oversight; it will also help agencies cut
costs. Most of the expense of big data projects comes from
extracting information from different sources, transforming
those data sets into the same format, and then loading them
into new systems to be analyzed. If Federal data sets were
consistently available using machine-readable formats to begin
with, those expensive one-off projects would not be necessary.
Finally, the Open Government Data Act specifies that when
the government publishes its information, it needs to use
nonproprietary data formats, formats that nobody owns. I'm
going to close by explaining why that technical detail is so
important.
Currently, the Federal Government uses an electronic
identification code called the D-U-N-S Number to identify every
grantee and contractor receiving Federal funds. The D-U-N-S
Number is proprietary. It is owned by Dun & Bradstreet,
Incorporated, which is itself a contractor. This means nobody
can download Federal procurement or grant information without
purchasing a license from Dun & Bradstreet. Taxpayers paid for
that information to be compiled, and they paid for the grant
and contract awards that this information describes, and yet
they can't download or analyze this information without paying
again for it every time. The Open Government Data Act
challenges Dun & Bradstreet's protected and profitable monopoly
by requiring the government to use nonproprietary data formats.
I look forward to the committee's questions. Thank you very
much.
[Prepared statement of Mr. Hollister follows:]
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Chairman Chaffetz. Thank you.
Mr. Singleton, you are now recognized for five minutes.
Please make sure you bring that microphone up close and
personal and push that button and we are off to the races.
There you go. Push that talk button there.
STATEMENT OF NORMAN SINGLETON
Mr. Singleton. Thank you. On behalf of Campaign for
Liberty's almost half-a-million members, I appreciate the
opportunity to appear before you today to talk about the
Federal Reserve Transparency Act, more popularly known as Audit
the Fed.
Campaign for Liberty is a public policy organization
founded in 2008 by Dr. Ron Paul to advance the principles of
individual liberty, free markets, and limited government. Audit
the Fed has been our signature issue since we were founded.
Audit the Fed has been introduced by Representative Massie
this year in the House. In the Senate it's introduced by
Senator Rand Paul also of Kentucky. It currently has 93
cosponsors in the House and 14 cosponsors in the Senate. As Mr.
Massie mentioned, it has twice passed the House in 2012 and
2014, both by overwhelming majorities. In 2016, it received 54
votes in the Senate, just six shy of achieving cloture. It was
also supported by every Senator running for President last
year, including--and it also has the--had the public support of
then-candidate and now President Donald Trump.
Audit the Fed is a simple one-page bill that removes the
provisions in law that prevent the General Accounting Office
from doing a full audit of the Federal Reserve's conduct of
monetary policy. Specifically, the bill allows the GAO to Audit
the Fed's dealings with foreign central banks, governments of
foreign country, or private international financing
organizations. It also allows the GAO to look into
deliberations, decisions, or actions on monetary policy
measures, including discount window operations, reserves of
member banks, securities credits, interest on deposit, and open
market operations.
Finally, it allows the GAO to look at transactions made
under the direction of the Federal Open Market Committee or as
part of discussion or communications among or between members
of the board and officers and employees of the Federal Reserve
system.
Passage of this bill will remove congressionally imposed
limits that prevent the GAO from doing its job and thus allow
Congress and, more importantly, the American people to finally
know the truth about the Federal Reserve's conduct of monetary
policy, which is something that directly affects the economic
well-being of every American.
The case for this bill is strengthened when one considers
that the Federal Reserve's conduct of monetary policy can
charitably be described as disastrous. As Mr. Massie pointed
out, since the Fed was created in 1913, the dollar has lost 95
percent of its purchasing power. According to some, you would
need $24 today to purchase what you could buy with $1 in 1913
when the Fed was created.
The Federal Reserve is also responsible for the boom-and-
bust cycle that has plagued the American economy over the past
hundred years. Every economic downturn from the Great
Depression to the 2008 market meltdown can be laid at the feet
of the Federal Reserve.
The Federal Reserve--one reason why the Federal Reserve
might oppose the audit is revealed by a limited audit that was
authorized by the 2000 and--was it '10--Dodd-Frank legislation,
which was limited to examining the Fed's response to the 2008
market crash. That audit found that between 2007 and 2010 the
Fed committed over $16 trillion, which is more than four times
the annual budget of the United States, to foreign central
banks and politically influential private companies.
The Federal Reserve also has a history of lobbying to
oppose transparency. In fact, according to Dr. Robert Auerbach,
a professor of public affairs at the University of Texas, the
Fed actively coordinated efforts by financial institutions,
which are under the Fed's regulatory jurisdiction, to lobby
against an attempt to allow the GAO to fully audit its conduct
of monetary policy during--in the '70s. The result of that
effort was the restrictions that the current audit bill would
lift.
I ask the Members of Congress to consider how you would
react if it came out that any other congressionally created
agency was working with private industries that were under its
jurisdiction to hide the full truth about it its operations
from the American people.
In conclusion, Mr. Chairman and members of the committee,
Congress has allowed the Federal Reserve to conduct monetary
policy in secret for over 100 years. The result has been a
steady decline in the dollar's purchasing power, a series of
financial crises, the growth of a major government fueled in
large part by the Federal Reserve monetization of the national
debt, and an increase in income inequality and crony
capitalism.
Therefore, on behalf of Campaign for Liberty and, more
importantly, the nearly 75 percent of Americans who support
auditing the Fed, I urge Congress to take up and pass this bill
as soon as possible.
I thank the committee for giving me the opportunity to
testify, and I look forward to answering your questions.
[Prepared statement of Mr. Singleton follows:]
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Chairman Chaffetz. Thank you.
Mr. Berlau, you are now recognized for five minutes. Again,
bring that microphone nice and close.
STATEMENT OF JOHN BERLAU
Mr. Berlau. Yes. Thank you, Mr. Chairman.
Chairman Chaffetz, Ranking Member Cummings, and honorable
members of this committee, thank you for this opportunity to
present testimony on behalf of my organization, the Competitive
Enterprise Institute.
CEI is a Washington-based free-market think tank that
studies the effects of all types of regulation on job growth
and economic well-being. We propose ideas to regulate the
regulators and hold them accountable so that innovation and job
growth can flourish in all sectors.
A first step towards such accountability is for government
agencies that exercise power over American entrepreneurs,
investors, and consumers to be as transparent as possible. How
can citizens hold these agencies accountable if we cannot see
what they are doing? That is why my colleagues at CEI and I
have long sought to bring sunshine to regulatory agencies
through Freedom of Information Act requests and insistence on
public meetings.
I am pleased that the bills and legislative proposals being
discussed at the hearing today, including the bipartisan Open
Government Data Act and Federal Reserve Transparency Act, as
well as the chairman's own Fannie Mae and Freddie Mac Open
Records Act and Congresswoman Norton's Open and Transparent
Smithsonian Act, take significant steps to move transparency
laws into the 21st century by ensuring that new technologies
are used to enhance government transparency rather than to
evade it. These bills should begin to correct the major problem
of excessive secrecy we have seen at Federal financial
regulatory and housing agencies over the last decade.
For instance, the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 promised to bring
accountability to the financial sector. However, it created new
bureaucracies that are unaccountable to the President and
Congress and have been able to skirt some of Congress' basic
laws for openness. Dodd-Frank, for instance, exempts the
Financial Stability Oversight Council which it created from the
Federal Advisory Committee Act's open meetings laws and gives
the council vast leeway to hold meetings closed to the public
and shield details of those meetings from the public.
The council is tasked with designating firms as
systemically important, essentially too big to fail. It keeps
only minimal records of its meetings and provides virtually no
information as to how it designates financial firms as
systemically important even though such decisions can
dramatically affect financial markets in the wider economy.
Legislation requiring openness and policy deliberations
about the government-sponsored enterprises Fannie Mae and
Freddie Mac such as that proposed by Chairman Chaffetz is
especially important. These are corporations chartered by
Congress that are now under the conservatorship of the Federal
Government. Taxpayers have propped them up after the housing
collapse to the tune of $185 billion. As long as they remain
under a government conservatorship or receivership, taxpayers
deserve some sunshine in return for the money they have spent
on these two entities.
Government officials' deliberations on the fate of the GSEs
must also be made public. The Obama administration incredibly
claimed executive privilege when private-sector shareholders of
Fannie and Freddie asked for information regarding the Treasury
Department's third amendment of 2012 in which the government
began to confiscate and asserted the right to confiscate all of
the GSE profits even after the GSEs paid the government back
for bailing them out.
We have urged the Trump administration to reverse its
predecessor's unprecedented use of executive privilege, which
should be reserved only for rare information requests that may
compromise national security. We also urge this committee to
investigate the Obama administration's secretive practices in
this regard.
Finally, we urge passage of transparency legislation.
Thank you again for inviting me to testify. I look forward
to your questions.
[Prepared statement of Mr. Berlau follows:]
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Chairman Chaffetz. Thank you.
Mr. Fitton, you are now recognized for five minutes.
STATEMENT OF THOMAS FITTON
Mr. Fitton. Thank you, Chairman Chaffetz, and thank you,
Congressman Cummings, for allowing me to testify today on this
important topic.
Judicial Watch is a conservative nonpartisan educational
foundation dedicated to promoting transparency and
accountability in government, politics, and the law. We were
founded in 1994, so we have a lot of experience using and
litigating under the Freedom of Information Act.
Without a doubt, we're the most active FOIA requester and
litigator operating today under that law. Unfortunately, during
the Obama administration, Judicial Watch had to work overtime
making FOIA requests obviously, but when the administration
ignored those requests and obstructed access to public records,
we had to file lawsuits to force executive agencies to comply
with this vital open-records law.
Our nation faces a transparency crisis. To be frank, the
Obama administration was an enemy of open government and
transparency. The administration's casual lawbreaking,
especially its defend-everything-approach with the Clinton
email scandal, is President Obama's real legacy on
transparency.
Judicial Watch filed nearly 3,000 Freedom of Information
Act requests with the Obama administration. We've had to file I
think over 200 FOIA lawsuits oftentimes just to get a yes or no
answer from the agencies as opposed to just fighting over what
documents they were or weren't giving us. There is a way
forward out of this transparency crisis, and part of that is
using a committed Congress to pave the way for outside watchdog
groups like Judicial Watch and citizen activists to investigate
and expose corruption and malfeasance within the government.
Judicial Watch shows that even in a hostile political
environment, one citizen group using the Freedom of Information
Act independent oversight can help the American people bring
their government back down to earth and under control how much
more effective we'd be only if Congress were to enact further
transparency reform.
And Judicial--I would note that despite this culture of
secrecy we've had with the last two administrations, Judicial
Watch has frequently succeeded in prying loose documents that
have been denied even to Congress. We saw that with Benghazi,
we saw that with the IRS. As a result of Judicial Watch's
disclosures on Benghazi, we had a Select Committee, and even
the Select Committee couldn't--still couldn't get documents
that Judicial Watch was continuing to receive in terms of
breaking open news on how that Benghazi attack occurred and the
circumstances of the cover of behind it.
We have of course one of the most egregious violations of
Federal transparency law since FOIA was passed nearly 50 years
ago, which was the Clinton email scandals. And obviously our
work on that is history, but there would be no knowledge about
her emails if it weren't for our FOIA litigation. It really
wasn't the Benghazi Select Committee that developed that
information or forced the disclosure of her email practices. It
was our FOIA litigation that forced the agency to finally admit
to the courts that they had these emails that hadn't been
reviewed as required according to law.
You know, before suggesting ideas for greater transparency,
let me reflect on some of the problems we're currently having.
Many people ask, including members here, how does Judicial
Watch get documents when they're not able to? And the easy
answer is that FOIA is straightforward, and it gives access to
citizens and groups like Judicial Watch to documents under
court order oftentimes. Congressional investigations even with
subpoenas are political by nature and require, under the
current practice, effective enforcement in court with the
cooperation of a conflicted Justice Department.
We had an example of that with the Fast and Furious matter
where Eric Holder was held in contempt over documents that were
not turned over to Congress. Congress sued in court, couldn't
get anywhere with that litigation until Judicial Watch had a
separate FOIA victory that essentially broke open the dam on
that. So it wasn't--Congress couldn't even get the information
once it even went to court.
Judicial Watch has urged President Trump to commit to a
transparency revolution, and today, we asked Congress to join
in that transparency revolution by reforming FOIA and giving
private citizens and groups like us stronger and better tools
to hold the government to account.
And speaking of FOIA reform, Congress should apply the
freedom-of-information concept to itself and to the Federal
courts, the two branches of the Federal Government which many
of your voters will be surprised to hear are exempt from
transparency laws that the President and his executive agencies
must follow. Certainly in the least, the administrative
functions of Congress and the courts should be subject to the
same transparency rules as the executive branch.
Now, in the meantime, we're interested in at least two of
the proposals for increased transparency, the Fannie and
Freddie Mac transparency effort and the Smithsonian Institution
transparency effort. We filed a Freedom of Information Act
request back in 2009 for Fannie and Freddie documents about
their political giving, and we were told in one of the first
major decisions by the Obama administration on transparency
issues, despite the FHFA taking custody and control of all
those records, they were not subject to FOIA.
Unfortunately, the courts in the end concluded the agency
could withhold that information from us because even though
they had custody and control of these records of agencies that
were now controlling pretty much all the mortgage market and
have $5 trillion in taxpayer liabilities attended to that,
because the agency supposedly, quote, ``did not use these
documents,'' we couldn't get access to any of that information.
That is a remarkable standard. We can get documents from the
CIA, the NSA, but not FHFA. And that has got to change. And
obviously this legislation can help change that.
And then we have the issue of the Smithsonian Institution,
another taxpayer-funded entity that is not subject to FOIA. The
Smithsonian, which operates as a government instrumentality or
a trust, received $840 million of taxpayer funds in fiscal year
2016. Most of their employees are Federal employees, but the
Freedom of Information Act doesn't apply to the Smithsonian. At
least the courts have interpreted the law. And as a result,
Americans must rely on voluntary disclosures by the
government--by this government institution.
Judicial Watch, for instance, is trying without success to
obtain documents from the Smithsonian about its decision-making
regarding this inclusion of Justice Clarence Thomas in its
African American Museum. And rather than relying on the
kindness of strangers to find out how billions of dollars are
being spent, we ask that the--this committee strongly consider
Delegate Holmes Norton's bill to apply FOIA explicitly to the
Smithsonian Institution.
Thank you for your time.
[Prepared statement of Mr. Fitton follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Chaffetz. Thank you. I appreciate it.
Mr. Painter, you are now recognized for five minutes.
STATEMENT OF RICHARD PAINTER
Mr. Painter. Thank you very much, Mr. Chairman,
Congressman Cummings, other members of the committee.
I strongly support the Open Government Data Act and with
some qualifications support the other two bills. Open
government data is absolutely critical, and it needs--we need a
regime where government data is accessible to ordinary
Americans, and that's not what we have right now.
I would strongly urge, however, that this bill be expanded
to include a mandate that the White House visitor logs be
disclosed to the public, and that should include Jackson Place
where a lot of those meetings are taking place outside the
gates, and we know what's been going on there for a while, and
also the government agencies and Congress. I have the right to
know when campaign contributors, lobbyists, and others are
visiting my Congressman to try and get him to waste my taxpayer
money on something. I have the right to know who's coming in
and out of the government agencies and the halls of Congress.
So I support this bill but would expand it significantly.
With respect to the Fannie and Freddie open records or
applying the Freedom of Information Act to Fannie and Freddie,
I approve of that or a similar measure, but it should expand
beyond the period that these entities are in conservatorship.
The idea is to prevent another financial crisis. And similar
disclosure requirements should apply to other banks that are
securitizing mortgages. This wasn't just by Fannie and Freddie.
It was by Lehman Brothers, Merrill Lynch, Bear Stearns, and the
rest of them.
If shareholders of those banks had had access to records to
find out what was going on instead of the nonsense that was
shoveled at them in the 10-K forms by those banks, which quite
frankly I think were fraudulently prepared, it's quite clear
that those private entities that were securitizing mortgages
were lying to their shareholders. We wouldn't have been in the
situation that we were in in 2008 if there had been more
transparency from all of the financial institutions, including
but not limited to Fannie and Freddie, which were securitizing
mortgages. So I think that's a good bill, but once again, that
concept of exposure--of disclosure needs to be expanded to the
rest of the mortgage securitization industry, which has such a
dramatic impact on our economy.
With respect to the Federal Reserve, I support this bill in
principle. The question is whether the Comptroller General
should conduct the audit or someone else. And it's critical
that we understand the transparency at the Fed and good
management is crucial to public confidence in the Federal
Reserve Bank. We--I've written on the history of the Federal
Reserve. We tried twice to establish a Bank of the United
States under Alexander Hamilton and Nicholas Biddle, and one of
the reasons those efforts did not survive is corruption and
lack of public confidence. We need to have public confidence in
the Federal Reserve Bank and the Federal Reserve Board.
But I also am strongly opposed to the attacks on the
Federal Reserve, the populist rhetoric that we've had going all
the way back to William Jennings Bryan, who was attacking sound
money in the years before we had a Federal Reserve. This is not
the way to manage economy through ill-informed attacks on our
Federal Reserve system and on sound money. And I know that
there are always going to be politicians who want to push the
Fed to have easy money, particularly in election years, and if
we politicize the Fed and we destroy the independence, we
undermine the independence of the Fed, we are in serious
trouble.
Now, turning to the Presidential Tax Transparency Act, I
strongly support this bill. We have a right to know about money
that is coming into our President's business interests,
particularly from outside the United States. While this
committee was spending hours and hours fussing around with
Hillary Clinton's emails, we had espionage conducted inside the
United States by Russia and apparently with the assistance of
Americans. We don't know who they were, but whoever they are,
those people committed treason.
And I do not mean to suggest that the President of the
United States was involved, but we have the right to the
information on the following forms: Return of U.S. persons with
respect to certain foreign partnerships, statement of specified
foreign financial assets, annual return to report transactions
with foreign trusts in receipt of certain foreign gifts,
information returned by a shareholder of a passive foreign
investment company or qualified electing fund, information
return of U.S. persons with respect to certain foreign
corporations.
These are among the many forms that need to be filled out
by a U.S. taxpayer who is receiving money from abroad. We have
the right to that information from our President. He has failed
to disclose his tax returns. Every other President has
disclosed his tax returns. In an environment where espionage
has been conducted against the United States and some Americans
may have engaged in acts of treason, we have the right to that
information from our President. I urge this Congress to pass
that bill as soon as possible.
[Prepared statement of Mr. Painter follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Chaffetz. I thank you all for your testimony.
I will now recognize Mr. Massie of Kentucky for five
minutes.
Mr. Massie. Thank you, Mr. Chairman.
My first question is for Mr. Singleton. Can you talk about
the role the Fed played in the housing bubble in 2008? Was
there any role there? Press your microphone, please.
Mr. Singleton. Sorry. Yes, sir. There was a tremendous
role. The Federal Reserve under Alan Greenspan following the
collapse of the .com bubble in a Federal--which is a Federal
Reserve-created bubble, consciously began to pump money into
the economy, as it does. That money flowed this time into the
housing market because the Bush administration was making a
decision to emphasize housing through working with vehicles
like Fannie Mae and Freddie Mac, and the Federal Reserve was
also very cognizant and supportive of this policy.
Without the Federal Reserve pumping money into the economy,
you would not see that money flowing into specific sectors,
whether it's .com in the '90s, whether it's housing in the
aughts, which sends distorted signals of pricing and supply and
demand to investors and businesses and workers, who then go and
overheat those markets. At some point it becomes clear that
they misread the underlying fundamentals of the economy and the
whole thing collapses. And that's what we saw in '07 and '08.
If you actually go back and read what my former boss Dr.
Ron Paul was saying when he was a member of the House Financial
Services Committee in 2003, 2004, he predicted exactly what
would happen. And exactly what he said would happen in '03 and
'04 happened in '07 and '08. And it's not that Dr. Paul has
some great soothsaying ability. It's that he understands the
fundamentals of the economy. He understands why the Federal
Reserve is dangerous.
And that is why--one of the reasons why he founded Campaign
for Liberty was to try to continue his efforts to shape and
make Congress take a more aggressive role in promoting sound
economics by doing things like auditing the Federal Reserve so
that we--so that more people could understand what exactly this
organization is doing and how its policies affect the American
economy and the American people.
Mr. Massie. So you mentioned there were a lot of people
that--Dr. Paul among them but he wasn't unique in this regard--
that were warning that it might have been superheated, yet the
Federal Reserve, the board proceeded with this monetary policy.
Are you in any way saying that Congress should be responsible
for setting interest rates?
Mr. Singleton. Oh, no. No.
[Laughter.]
Mr. Singleton. God forbid. No offense ----
Mr. Massie. Well, who would--how would interest rates be
set or how should the Fed do it differently?
Mr. Singleton. Interest rates, like everything else,
should be set by the market. Money is fundamentally a unit of
exchange. The value of that should be set by the market as it
reflects individuals' preferences. The interest rate is a time
preferences of how individuals view having money for current
consumption versus their willingness to forgo current
consumption in order to save it, in order to invest it in the
future. That needs to be set free of government interference in
order for it to accurately reflect the preferences of the
individuals.
That does not happen when you have a Federal Reserve which
artificially distorts the interest rates. And that is the root
of the boom-bust cycle and things like the '08 market meltdown,
the .com implosion of the--of 2000 and 2001, and even of the
Great Depression.
Mr. Massie. Well, this is not the subject of this
legislation but it is the subject of another piece of
legislation very similar to the bill come to be known as Audit
the Fed, which is some have proposed rule-based monetary policy
as a way of making sure that Congress doesn't set the monetary
policy and that the Fed is actually less perhaps political or
inclined to try to manage the economy. Would rule-based
monetary policy provide the transparency or some check on the
Fed?
Mr. Singleton. Campaign for Liberty does not take a
position on whether or not the rules-based monetary--on the
legislation proposing rules-based monetary policy. I think
there are some concerns that have been raised by our chairman
and others that it would still allow the Federal Reserve to
influence and set the interest rates, and so it would not
totally clear out the distortionary problems caused by having a
central bank that has this--the power to set monetary--to
determine the value of the dollar unhinged from any other
outside influence such as being tied to a precious metals
standard, for example.
Mr. Massie. All right. Thank you, Mr. Chairman. My time is
expired.
Mr. Duncan. [Presiding] Thank you, Mr. Massie. Mr.
Cummings?
Mr. Cummings. Thank you very much, Mr. Chairman.
Mr. Painter, on Monday you published an op-ed in USA Today
together with Ambassador Norm Eisen, the ethics lawyer for
President Obama entitled, quote, ``Trump's Unprecedented War on
Ethics,'' end of quote. You and Mr. Eisen wrote, and I quote,
``The problem starts with the tone-deafness at the top. Trump's
hotels, golf courses, and other enterprises continue to do
business with foreign and domestic entities that have interests
before the government he heads,'' end of quote.
You also wrote, and I quote, ``This unprecedented situation
is exacerbated by the fact that we do not yet know the full
extent of Trump's conflicts. That is because he has failed to
disclose his tax returns, as we were just reminded, when two
pages of his 2005 returns turned up,'' end of quote.
Why is it important that President Trump disclose his tax
return? We need your mic. We have got to hear this. We want the
President to hear you.
Mr. Painter. First and foremost, as I mentioned, we need
to know about any financial relationships between the President
of the United States and foreign powers, whether it is a
foreign power that spied on Americans, conducted espionage here
in the United States, apparently with the assistance of
Americans who may have been working for the Trump campaign.
Whoever it is, as I say, committed treason. But we have the
right to know our President's relationship with all foreign
countries, not just Russia, including these forms which I just
mentioned. I'm happy to have a member submit to the record if
you so please. That is of critical importance.
The President is also conducting trade negotiations with
foreign countries, including China, where he has many
trademarks that he has just received. We have a right to know
how much money is coming under the table to the President while
he's conducting trade negotiations that affect American jobs.
So this is important to our national security. It's important
to our stance on trade.
Mr. Cummings. When you were the ethics counselor for
President George W. Bush, did President Bush release his tax
returns to the public?
Mr. Painter. Absolutely, as did President Obama, President
Clinton did. Every other President has released his tax returns
because if Americans are going to be expected to pay taxes, we
have the right also to know that our President is paying his or
her fair share. We have the right to know what is going on with
respect to our President's financial relationships inside and
outside the United States.
Last, we have the right to know whether our President is in
debt to people inside or outside the United States. How much is
he in debt? How much does he depend on the banks who may very
well be deregulated when the administration proposes the repeal
of Dodd-Frank? All of this is information the American people
have a right to.
Mr. Cummings. Did President Bush require the individuals
being considered for Cabinet positions in his administration
disclose their tax returns as part of the nominations process?
Mr. Painter. I told everybody that came into my office
when I talked to them that the Senate committee that was
considering them for confirmation might very well demand their
tax returns, and many of those committees did, particularly in
areas that were relative to the national defense or the
economy. I specifically remember Senator Grassley of Iowa being
very meticulous about the tax returns of anybody we sent over
for the Treasury Department. So everybody had to be prepared to
publicly disclose their tax returns just like the President
did.
Mr. Cummings. On January 5, Representative Anna Eshoo
introduced the Presidential Tax Transparency Act. This bill
would amend the Ethics in Government Act to require the current
President, as well as future Presidents and candidates for the
Office of President to disclose tax returns for the most recent
three years to the Office of Government Ethics with their
financial disclosures. Since President Trump has refused to
release his tax returns on his own, do you believe that
Congress should actually require him to release the tax
returns?
Mr. Painter. I believe that Congress should pass the bill,
but I would make that five or eight years. I'd like to know how
much money was coming in from foreign powers to someone I was
going to vote for for President of the United States, and I'd
like that information a little bit further back than just three
years.
Mr. Cummings. Would requiring President Trump and future
Presidents and presidential candidates to release their tax
returns be out of line with what past Presidents have required
of their nominees for Cabinet positions?
Mr. Painter. This is unprecedented, a President refusing
to release his tax returns and indeed the White House made it
very clear that the tax returns, people need to sign a tax
return waiver with the IRS so they could be considered for
positions because the White House may very well want to take a
look at it and the Senate committees that are confirming may
want to see it. And most of those committees indeed do for some
of the most important positions.
Mr. Cummings. Mr. Chairman ----
Mr. Painter. Tax returns must be ----
Mr. Cummings. Mr. Chairman, as I close, all Democratic
members of the committee have cosponsored Representative
Eshoo's legislation. Congressman Mark Sanford, our colleague on
the committee from across the aisle, has also cosponsored the
bill, and all Democratic members of this committee have sent a
letter to our chairman urging H.R. 305 be considered at the
next markup. And I want to thank you.
Chairman Chaffetz. I thank the gentleman.
Mr. Cummings. I yield back.
Chairman Chaffetz. I now recognize the gentleman from
Tennessee, Mr. Duncan, for five minutes.
Mr. Duncan. Well, thank you, Mr. Chairman, and thank you
for holding this hearing and for the work that you are doing on
these bills.
Mr. Singleton, I am fascinated by or I guess astounded by
this $16 trillion figure. Would you go into a little more
detail about where that came from and how they have the
authority to do that? I mean, that just--I know nobody can
humanly comprehend of a trillion-dollar figure, but tell us
more about that, about where that money went and so forth.
Mr. Singleton. That is from the Dodd Fed audit that was
authorized in--like I said in the bill--Dodd Fed Bill, and that
money basically comes from the Federal Reserve's open-market
operations when they buy treasury securities, which is how also
they managed to support a lot of the spending that goes on
across the street in the capital.
And one of the problems is that the Fed has--if you look at
the Federal Reserve statutes, there are parts of it--the
specific sections escape me now--but that actually do give the
Fed very open-ended authority to intervene and buy assets,
private-sector assets of both domestic and international
companies, foreign banks, foreign reserves.
And we don't really have a good handle on what they're
doing with this. We don't have a good handle on their future
plans. We don't have a good handle on how they're going to--on
how they have intervened in a situation like Greece or how
they're going to intervene in future situations. What we do
have is this limited amount of knowledge that they did make
dealings to the amount of $16 trillion. I believe it was buying
reserves, buying other assets during this period.
And their excuse was they needed to prop up the economy.
That was also their excuse for the unprecedented intervention
in the economy by the Federal Reserve under the name of
quantitative easing, which was supposed to--when they saw that
their record-low interest rates--which, by the way, I believe
interest rates are still at a near or record low amount despite
the Fed's recent actions in raising them--that that has failed
to generate an economic growth, even a phony economic growth
that it has in the past.
And these are all reasons why, unfortunately, the fact that
you won't get a clear answer, Mr. Duncan, to your question
until Congress passes the Audit the Fed bill. Fortunately,
whatever else you think of his other policies, President Trump
is on record as wanting to sign an Audit the Fed bill as
supporting the Audit the Fed bill.
And also, as I mentioned before, this bill does have broad
bipartisan support. It was supported by every Senator running
for President. And when I said that, I don't just mean the
Republican Senators. Senator Sanders voted for the bill last
year, and he has been a longtime champion of Federal Reserve
transparency. I--I'm not 100 percent about this but I'm pretty
sure that you won't find many issues that can unite Rand Paul,
Ted Cruz, Marco Rubio with Senator Bernie Sanders.
Mr. Duncan. Well ----
Mr. Singleton. And so I would suggest that--so I would
again suggest that it's very--that this is very important. If
Congress ----
Mr. Duncan. Well ----
Mr. Singleton.--really is serious about changing the
economic direction of this country, that you start with great
transparency and start by considering Audit the Fed, along with
the Fannie and Freddie transparency bills.
Mr. Duncan. Okay. Well, I'm running out of time so let me
just say very quickly I appreciate the work that all of the
witnesses, all of you are doing in these areas.
Mr. Hollister, I hope you can end this Dun & Bradstreet
monopoly.
And, Mr. Fitton, I appreciate your work that you have done.
You have been before this committee before, but Fannie Mae and
Freddie Mac, we have a report here, government-sponsored luxury
paying $3.9 million to the chief financial officer, $4.5
million to the general counsel, $4.6 million to the chief
financial officer of Fannie Mae, $5.1 million to general
counsel for Freddie Mac, $7.8 million to the chief executive
officer, $9.3 million to the chief executive officer for Fannie
Mae.
I mean, it is ridiculous that these entities have been
losing this money during years that they were losing money they
were spending all this money to pay these excessive salaries
and then golden parachute packages to leave. And now recent
reports say Fannie Mae is spending $56 million to relocate its
headquarters in downtown D.C. They are out of control, and we
need more specifics both on this $16 trillion and also on what
Fannie Mae and Freddie Mac are doing, Mr. Fitton. And I applaud
you for your work there, and I yield back the balance of my
time.
Chairman Chaffetz. I thank the gentleman.
I want to recognize the gentlewoman from New York, Mrs.
Maloney, for five minutes.
Mrs. Maloney. Thank you, Mr. Chairman, and I thank all of
the panelists for their hard work and their testimony today.
I support the Open Data Act and H.R. 305, the Presidential
Tax Transparency Act, which Ranking Member Cummings and Mr.
Painter so eloquently spoke about the need to know about the
influence of foreign money in our elections.
But I want to say that I am strongly opposed to what I
believe is a dangerous bill, H.R. 24, which would seriously
undermine the independence of the Federal Reserve. First of
all, we are still reeling from the financial crisis where some
people say it was $16 trillion, others say it was $18 trillion.
But we do know it was trillions of dollars of loss to our
economy, millions lost their homes, millions lost their jobs,
and it was the first economic crisis that Dr. Hall, a Bush
appointment to head the Bureau of Labor Statistics, said was
totally a result of mismanagement, corruption, greed in the
private sector. It was preventable.
Christina Romer testified before this Congress that the
economic impacts of that crisis was five times greater than the
Great Depression, yet we survived. I can remember constituents
calling and screaming at me we are going down, we are going
under, our banks are going under, money markets are going
under, and many people are given credit for helping us survive,
Congress, the President, and certainly the Federal Reserve that
moved in many ways quickly and effectively to respond to the
financial crisis.
Even though it began in our country--by all accounts, we
came back stronger and faster than any other country in the
world. We had 38 months of economic growth, the longest span in
history out of the biggest depth of depression we have ever
had. Would we have liked to have been more? Yes. But when
President Obama went into office, this country was shedding
700,000 jobs a month. It was a huge financial crisis.
And I want to be clear that the Federal Reserve is already
audited. The Fed's financial statements are audited by an
independent accounting firm every year, and those audits are
publicly available. GAO has also conducted extensive audits of
the Federal Reserve. The only thing that GAO is prohibited from
auditing is the Federal Reserve's monetary policy decision-
making. Everything else that the Fed does the GAO can already
audit.
But this bill would change that longstanding rule and would
allow the GAO to audit the Fed's monetary policy decisions.
This would have a number of harmful effects. It would seriously
undermine the Fed's independence, would cause the markets to
lose confidence in the Fed's ability to conduct sound monetary
policy, and would lead to a rise in inflation fears and general
interest rates. This would ultimately be harmful for the
economy, for economic growth, for jobs in this country.
And the Federal Reserve did not cause the economic crisis.
They were part of the solution in helping us bound back. In
2010, the Dodd-Frank Wall Street Reform and Consumer Protection
Act expanded the types of audits GAO may conduct, as well as
the data that must be disclosed to the public. The Dodd-Frank
act opened to GAO audit discount window operations authorized
under section 11(s) of the Federal Reserve Act, and the Dodd-
Frank Act's provisions were crafted to expand transparency
surrounding the Federal Reserve's operations without
undermining its independence.
Further exposing the Federal Reserve's deliberations could
influence the deliberations that are conducted and the policies
that are chosen, degrading the independence of the Federal
Reserve and its monetary policy decisions. Members of Congress
could actively seek to influence the Federal Reserve's
deliberations by the types and subjects of audits they request
from GAO. They could also seek to obtain the matter materials
GAO assesses in performing audits, including documents related
to the Federal Reserve's deliberations.
Now, I would like unanimous consent to place in the record
a list of questions relating to this issue with the Federal
Reserve and also the very important bill that the chairman
mentioned.
Mrs. Maloney. But this is a very, very serious matter, and
I feel strongly about it. I feel that it would be dangerous to
our economic policy, and I urge a no vote on H.R. 24. Thank
you.
Chairman Chaffetz. I thank the gentlewoman.
And questions for the record may go to the panel if any
member will have a couple of legislative days in which to
submit those. And we appreciate the panel getting us a timely
response.
I will now recognize myself for five minutes. And, Mr.
Fitton, I would like to start with you, and I really want to
talk about the Federal Housing Finance Agency which in
September of 2008, as you know, seized Fannie Mae and Freddie
Mac. What is the financial liability? Do you know off the top
of your head the liability taxpayers have for that? It is
something like $5 trillion in mortgage liabilities. Is that
about your ----
Mr. Fitton. Between two agencies it's about ----
Chairman Chaffetz. Microphone, sir.
Mr. Fitton. I'm sorry. Between two agencies they either
directly own or insure about $5 trillion worth in mortgages.
Chairman Chaffetz. I just want people to settle in on
that, that taxpayers are on the hook for this amount of money.
And it is true, right, that the Federal Housing Finance Agency
is subject to a Freedom of Information Act request, correct?
Mr. Fitton. Generally speaking, yes.
Chairman Chaffetz. In May of 2009, Judicial Watch put in a
FOIA request for documents related to political contributions
made by Fannie Mae and Freddie Mac. How did the FHFA respond to
that FOIA request?
Mr. Fitton. They acknowledged the records were in their
custody and control but they were not agency records subject to
disclosure under FOIA.
Chairman Chaffetz. And the FHFA denied the FOIA request
sing the agency, quote, ``did not control them.'' So are Fannie
and Freddie wholly operated by the Federal Government now? Who
is actually running that agency--those entities?
Mr. Fitton. It is--they've acknowledged repeatedly that
they do run the two entities, Fannie and Freddie, the Federal
Housing Finance Administration.
Mr. Painter. They're under a conservatorship. They're
under a conservatorship, were taken over in 2008 under the
powers the government has under the Housing and Economic
Recovery Act ----
Chairman Chaffetz. Thank you. Thank you. I understand. I
understand.
The statute granting the FHFA conservatorship over Fannie
and Freddie states that the FHFA has, quote, ``all rights,
titles, powers, and privileges of Fannie and Freddie and of any
stockholder, officer, or director,'' end quote. Mr. Fitton, is
that your understanding of it as well?
Mr. Fitton. Yes, and it's been acknowledged by the agency
itself.
Chairman Chaffetz. I believe that the statute also says
that FHFA has, quote ``title to the books, records, and assets
of any other legal custodian of,'' end quote, Fannie and
Freddie. Is that your understanding, Mr. Fitton?
Mr. Fitton. Yes.
Chairman Chaffetz. Is it true that under FOIA an agency
record is subject to disclosure unless a specific exemption
applies, Mr. Fitton?
Mr. Fitton. Yes. Generally speaking, yes.
Chairman Chaffetz. So did FHFA suggest to Judicial Watch
Fannie and Freddie records were somehow exempt from FOIA?
Mr. Fitton. They did not subject--they did not say they
were subject to FOIA but exempt from disclosure. They said they
were not subject to FOIA at all.
Chairman Chaffetz. So how does one conclude that Fannie
and Freddie are not subject to FOIA?
Mr. Fitton. Well, that's for the--you know, judges figured
that out for us, and they said that an agency, even though they
had the records, unless they, quote ``used them,'' they weren't
subject to FOIA, which just struck me as wrong and still
strikes me as wrong, but that's the court decision. And so it's
going to be up to Congress to fix that.
Chairman Chaffetz. So that's why I introduced this bill.
And to members on both sides, what are we afraid of in terms of
exposing the liabilities that Fannie and Freddie are creating
for us? And there are exorbitant sums of money going out the
door, again, that the American taxpayers are liable for.
I have got to shift gears here to Mr. Hollister just a
little bit. I want to talk about the data collection. If you
can kind of explain in layman's terms how the D-U-N-S Number
works because things were given a code and Dun & Bradstreet, a
contractor, that system is owned by Dun & Bradstreet. Could you
kind of explain that to us and how that works and what it costs
the taxpayers to do?
Mr. Singleton. Yes, sir. In the 1990s the General Services
Administration contracted with Dun & Bradstreet to track
Federal contractors governmentwide. Dun & Bradstreet operates
the system that does this. Now, that's pretty normal as far as
Federal practice goes. What's unique is that the contract
doesn't just give Dun & Bradstreet the ownership of the system
that's used to track the contractors; it also gives Dun &
Bradstreet an interest in the identification code itself. This
means that nobody can use the information that's encoded using
that number unless they purchase a license from Dun &
Bradstreet.
Now, the Federal Government has a governmentwide license,
applies to most agencies. It doesn't apply to special-purpose
entities like the Recovery Board, which is why Recovery Act
spending had to go dark because they didn't have a license. But
it doesn't apply to citizens. Citizens, researchers,
journalists, they can't download and analyze information about
Federal spending unless they purchase a license from Dun &
Bradstreet. That means they pay for the information twice.
Chairman Chaffetz. So the American taxpayers, they pay for
the government, right, and the government has a contract, but
you are saying that the taxpayers who have already paid once
have to go back and get another license?
Mr. Hollister. That's right, sir. They have to pay again
because there is a--Dun & Bradstreet, which itself a private-
sector contractor, has an ownership interest in the information
about contractors.
Chairman Chaffetz. And they get to see it first then I
would assume?
Mr. Hollister. They do get to see it first and they use it
for their other business. For example, in order to maintain all
of this information and its Federal transparency, you might
need a few data fields. You need to know the name of the
company, you need to know the address. You might need to know
what kind of business they're operating. Dun & Bradstreet uses
its monopoly. It requires every contractor to register with
that company. And they don't just collect that--those few
pieces of information. They collect 1,500 additional pieces of
information and then they sell that.
They use their monopoly on this identification code not
just to make money off the taxpayers who want to download the
information but also to coerce the--those who must register
with them to provide additional information that they then sell
as a vendor.
Chairman Chaffetz. And it is something we need to spend
some more time on because it is quite a monopoly and given to
them by the American people, paid for by the American people,
and they want to charge it again. And we do have a bill, a good
bill here I think in order to tackle that.
My time is far expired. I will now recognize the
gentlewoman from Illinois, Ms. Kelly, for five minutes.
Ms. Kelly. Thank you, Mr. Chair.
Mr. Hollister, in 2014 Congress enacted the Data Act. That
law requires agencies by May of this year to report spending
data in accordance with governmentwide data standards. If it is
implemented properly, the Data Act will result in a major
improvement in the transparency of government spending data. Do
you agree with that?
Mr. Hollister. Yes, Ms. Kelly, I do, and we appreciate
your vigorous oversight as the ranking member of the
subcommittee on the implementation of the Data Act.
Ms. Kelly. Thank you. The Open Government Data Act will
take another step toward expanding the availability of
government data. It would in part codify an Executive order
President Obama issued in 2013 that set as the official policy
of the Federal Government that government information be open
and machine-readable whenever possible, even though that is not
what we have heard here today. Is that right?
Mr. Hollister. Yes, that's right, and in fact that's why
the Congressional Budget Office has scored the Open Government
Data Act at zero.
Ms. Kelly. In a January 7, 2017, blog post you said that
President Obama's Executive order, and I quote, ``succeeded
brilliantly in changing the culture of open data.'' Why should
Congress codify that Executive order?
Mr. Hollister. Well, Ms. Kelly, I think that we've seen
today that it's very difficult to pass transparency reforms
when there is a current political controversy. For example,
this idea of presidential tax returns, there is certainly a
political controversy about that right now, and so there's a
division.
However, with the Data Act, as you might remember, it
passed unanimously. Everyone agreed that we ought to have
consistent access to Federal spending data. If it's fully
implemented, it's going to reveal things that nobody
anticipated. It might reveal those GSA lease payments, for
instance, and yet it was supported by everybody in Congress.
That's why it's important to now, when there's not a political
controversy, for Congress to affirm as a permanent matter we're
going to publish and we're going to standardize Federal data.
Ms. Kelly. Okay. The Open Government Data Act would also
require agencies to use open licenses for government data when
possible. There's no doubt that open data supports jobs,
innovation, and entrepreneurs. Can you speak to the potential
for our economy and in particular the startup economy that open
government data could have or create?
Mr. Hollister. Yes, I can, Ms. Kelly. There are 14 startup
companies in The Data Coalition, and all of them want to do
things with government data. Some of them want to apply
analytics and find insights. Some of them want to republish it
on platforms. And some of our companies want to automate
compliance, reducing the need for lawyers and accountants. All
that becomes possible when the government adopts consistent
data formats.
I can give you one example. Bernie Madoff could have been
caught if we had consistent data formats. The--Mr. Madoff's
firm was reporting to the Securities and Exchange Commission
two different offices, but because they didn't identify
themselves electronically the same way, those different SEC
offices never knew about each other's investigations. If we had
consistent data formats, it would be possible for data
analytics, including maybe the products that are offered by the
tech industry, to find connections like that. It's great for
the tech business. It's also good for oversight.
Ms. Kelly. Much of the potential depends on proper
implementation of these policies. That's why the Obama
administration created an eight-step plan for implementing the
Data Act. One of the steps of that plan encouraged agencies to
inventory their data. Would the inventory requirement under the
Open Government Data Act be duplicative or do you think there
is a benefit in including it in the new law?
Mr. Hollister. Good question, Ms. Kelly. The inventory
requirement in the Open Government Data Act was modeled on the
one that's in the Executive order.
Ms. Kelly. Right.
Mr. Hollister. And I think agencies therefore could comply
with it simultaneously.
Ms. Kelly. And are these lessons learned from the
implementation of the Data Act that could improve
implementation of the inventory requirements in the Open
Government Data Act?
Mr. Hollister. Yes. We've learned from the implementation
of the Data Act, which we'll have the first results of that
on--in May 2017. We'll see if agencies are able to report a
consistent data set covering all their spending.
The most important lesson there I think is that standards
matter. There needs to be somebody insisting that the
information has got to be structured the same way across all
the agency stovepipes, and that insight is going to carry us
after the Open Government Data Act becomes law.
Ms. Kelly. Thank you so much. It is critical that we make
government data as accessible as possible, and the Open
Government Data Act would improve the accountability of
agencies by making government data more transparent and usable.
Thank you so much.
Mr. Hollister. Thank you, ma'am.
Ms. Kelly. And I yield back.
Mr. Farenthold. [Presiding] Thank you very much.
We will now recognize the gentleman from Wisconsin for five
minutes.
Mr. Grothman. Okay, Mr. Fitton, I want to talk a little
bit more about Fannie Mae and Freddie Mac. One thing, you know,
they have been very active politically giving almost $5 million
in in political contributions the last 10 years. The biggest
recipient of those was Senator Dodd, former chairman of the
U.S. Senate committee on Banking, Housing, and Urban Affairs,
which is kind of disturbing. One of the biggest recipients was
then-Senator Obama. Despite being a new Senator they took, you
know, apparently a big interest in him, you know, developing
apparently a very close personal relationship with him. Do you
think information about the amount of money that a powerful
important Senator Dodd was getting or then-Senator Obama was
getting--do you think that is easily accessible enough to the
public?
Mr. Fitton. Thank you. Certainly, it's not accessible in
terms of what the Fannie and Freddie decision-making were
related to their political contributions. They took care of
politicians on both sides of the aisle, and certainly there was
a particular focus on those that were friendly to them in terms
of oversight.
Secondly, they put both Republicans and Democrats on their
boards as well. So if we're looking to find out the failures of
Fannie and Freddie and why they were allowed to take on so much
problematic debt or encouraged problematic housing activities
with--and put the taxpayer potentially on the hook for billions
of losses, one of those reasons we'd want to find out, well,
did they manipulate the system or benefit from political giving
and their relationships with Members of Congress in terms of
Congress providing protection from significant oversight and
reform?
Mr. Grothman. Okay.
Mr. Fitton. None of that's available under law right now,
although the documents arguably might be there and should be
looked at, but they ----
Mr. Grothman. Why are the documents shrouded in secrecy?
How did we wind up that way with such an important--I guess
you'd say the governmental or quasigovernmental agency?
Mr. Fitton. Well, it was a decision made early on by the
Obama administration not to make these documents available to
the public. I recognize initially when the government took over
all these government agencies--when the government took over
these two agencies that, my gosh, well, FOIA has to apply here.
I also kind of think the same about GM at the time. But, you
know, we didn't get into that as much.
But the administration took the position that we're not
going to release any of these records, they're not subject to
FOIA, and ----
Mr. Grothman. Can the administration release them to this
day?
Mr. Fitton. Well, this administration can change that
policy in a heartbeat.
Mr. Grothman. Okay. Now, we will go to Mr. Singleton. In
your testimony you cited a provision of Dodd -rank which
authorized a one-time audit in 2007, 2008. What did this audit
reveal about the Federal Reserve?
Mr. Singleton. Basically, as I said in my testimony and in
response to Mr. Duncan's questions that during the market
meltdown of--or following the market meltdown between '07 and
2010, the Fed, as part of their policies in an attempt to re-
inflate the economy, they committed over $16 trillion to
foreign central banks and private companies. That's just a--
actually, a fraction of--I believe of their total activities.
If you look at since that time they've had the quantitative
easing program, which involved more intervention into the
private economy in an attempt to re-inflate the economic bubble
that had burst in '07.
Mr. Grothman. We don't get a lot of time here. We had
somebody from I think the Fed--I think it was on this
committee; I am not sure. Could you explain quantitative easing
to me and the degree to which it benefitted private companies?
Mr. Singleton. Quantitative easing was the Federal Reserve
went in and they bought private assets in order to put more
money into the economy.
Mr. Grothman. Did they pay fair value for those assets?
Mr. Singleton. You know, off the top of my head I'm not
sure. They would probably say that they did. This is--might be
one reason--another reason why we need an audit, to find out
more about what they do. I know their financial statements are
audited, but I think we do need more details about their
transactions in order to fully answer some of these questions.
Mr. Grothman. Okay. I will ask you again. Okay. When they
funded $16 trillion into foreign entities, could you elaborate
on that a little bit more?
Mr. Singleton. I can try and find the details. Off the top
of my head, I'm not familiar with every--with all of the
details for that.
Mr. Grothman. And which countries would have benefited?
You can't?
Mr. Singleton. I'm sorry. I'm--I can get you that
information.
Mr. Grothman. Okay. Well, we'll wait to get that
information. Thank you.
Mr. Farenthold. Thank you very much.
I will now recognize the gentlewoman from New Jersey for
five minutes.
Mrs. Watson Coleman. Thank you very much, Mr. Chairman,
and thank you, gentlemen, for your testimony and being here
today.
I certainly support transparency in Federal Government. I
think taxpayers need to know how government is functioning and
whether or not we are functioning effectively, efficiently, and
without corruption.
Mr. Filfitton?
Mr. Fitton. Fitton, yes.
Mrs. Watson Coleman. Fitton. Hi. My question is to you
first. Do you have a FOIA request in to see the current
President's tax returns?
Mr. Fitton. No, we don't. They're not subject to FOIA. The
White House is not subject to FOIA specifically.
Mrs. Watson Coleman. Do you think that they should be?
Mr. Fitton. Tax returns? Well, typically tax returns would
not be subject to the Freedom of Information Act. Sometimes
disclosure records related to--that may have information from
the tax returns do but ----
Mrs. Watson Coleman. But we do have very consistent legacy
of past Presidents releasing their tax returns.
Mr. Fitton. We have an inconsistent legacy I would say
Mrs. Watson Coleman. Do you believe that the tax returns
could reveal more information regarding obligations, debts,
spending, earnings, and sources of earnings than is available
on disclosure statements?
Mr. Fitton. Yes.
Mrs. Watson Coleman. Thank you.
Mr. Painter, in an interview with the ABC news in September
2016, then candidate Donald Trump said, and I quote, ``I
released the most extensive financial review of anybody in the
history of politics. It is either 100 or maybe more pages of
names of companies, locations of companies, et cetera, et
cetera, and it is a very impressive list and everybody says
that, but I released a massive list, far more than you--you
don't learn much in a tax return.''
Just to be clear, was Mr. Trump required by law to file a
financial disclosure form as a presidential candidate, or was
this something he was doing voluntarily?
Mr. Painter. He was required to file form 278 ----
Mrs. Watson Coleman. Thank you.
Mr. Painter.--as a candidate.
Mrs. Watson Coleman. Thank you. To your knowledge, has any
modern President had business entanglements that are as large
and complex as those of President Trump that we can understand
given the limited information that he shared with us?
Mr. Painter. Nowhere close.
Mrs. Watson Coleman. Mr. Painter, last year, you published
an editorial, together with Norman Eisen, the ethics lawyer to
former President Barack Obama entitled, quote, ``What Trump's
Tax Returns Could Tell Us about His Dealings with Russia,''
close quote. You and Mr. Eisen wrote, and I quote, ``Trump says
his tax returns reveal nothing that is not already disclosed on
his official candidate financial disclosure called form 278e.
As ethics counsels to the past two Presidents, we dealt with
both their tax filings and their form 278s. And so we know that
Trump is wrong,'' close quote. What would we learn from a tax
return that would not be contained in the financial disclosure?
Mr. Painter. I will assume that the tax return is
truthfully filled out and not loaded up with alternative facts.
But if it is truthfully filled out, it will disclose in detail
information about payments received by pass-through entities,
LLCs, and corporations. Where there is pass-through taxation,
the entity doesn't pay a separate corporate tax, but the
taxpayer, if you're the President, pays and I read into the
record a number of the tax forms that would disclose
information about dealings with foreign entities that to me is
of utmost concern to our national security. But there is much,
much more information as well.
The key difference between the tax forms and form 278 is
that the 278 financial disclosure form he filled out lists
these entities that he has a controlling interest in, sometimes
a 100 percent controlling interest in, but schedule 278 does
not list the liabilities of those entities and the income
streams of those entities. None of that is listed. Schedule B,
which has liabilities, only has to list the liabilities that he
is personally liable for or that he has personally guaranteed.
So the entity on schedule A could owe hundreds of millions
of dollars to the Chinese Government, the Russian Government.
We don't know who and we're never going to find out. A lot of
that you find out through the tax returns. We're entitled to
that information from our President.
Mrs. Watson Coleman. And tax returns are auditable, but
these other financial disclosure forms are not auditable per
se. Is that so?
Mr. Painter. That is true. We are on an honor system
within the financial disclosure forms. Of course, if you make a
false statement ----
Mrs. Watson Coleman. Yes.
Mr. Painter.--that's a criminal offense. But there is an
audit, the IRS, of the tax returns. The President apparently
has an awful lot of returns with an awful lot of audits if
that's his excuse for not releasing them.
Mrs. Watson Coleman. Well, we are certainly finding out
each and every day that there's greater concern as to this
President's entanglements and the impact on his ability to
govern this country in a safe and secure manner. It is simply
not the case that what he has given to us is sufficient thus
far, and we need to continue to require that he gives us a full
disclosure.
And with that, I believe that this committee should
consider and pass the Presidential Tax Transparency Act to
require that President Trump discloses taxes so that we can
have a more complete view of his finances and so we can find a
degree of confidence in his governance.
And with that, I yield back. Thank you very much.
Mr. Farenthold. The gentlewoman's times expire.
We will now go to the gentleman from Iowa, Mr. Blum.
Mr. Blum. Thank you, Mr. Chairman, and thank you to our
panel today for being here.
Time and time again, John Koskinen, the head of the IRS,
has asserted, quote, ``We produced all the emails,'' end quote.
He also has asserted numerous times, quote, ``We spent a
significant amount of time trying to provide all of the
information we had,'' end quote. Mr. Fitton, do you know
approximately when John Koskinen made these claims?
Mr. Fitton. He made them repeatedly over the last few
years, and the IRS generally has been making similar claims in
court saying they've looked everywhere they needed to look and
there's nothing else to be found. And just recently, the IRS
acknowledged there was a category of a least--a group of at
least 7,000 or so documents that they needed to search in
response to one of our Freedom of Information Act lawsuits
about improper auditing that they hadn't searched. And these
were records not only responses to Judicial Watch's FOIAs but
my understanding is would have been responsive to congressional
investigations on those subject matters.
Mr. Blum. How long does it take them to receive these?
When did he make these claims that we've turned over all the
emails?
Mr. Fitton. Well, the IRS told us that they didn't need
it--that they were done searching and there was nothing else to
be found reasonably a year-and-a-half ago. We've been fighting
on this very issue about where they were--needed to search for
many years though since the scandal was first uncovered in
2013, and we've been faced with nothing but obstruction and --
--
Mr. Blum. Seven thousand emails ----
Mr. Fitton. There was another group ----
Mr. Blum.--18 months later, is that correct?
Mr. Fitton. We don't know when we're going to get all
those responsive records yet either.
Mr. Blum. Why in your opinion, Mr. Fitton, is this
significant?
Mr. Fitton. Well, we need to know that our tax agency is
being used for lawful purposes. And we need to have the laws
protect us in that regard in terms of assuring that's
occurring, and that--one of the key laws, one of the few ones
that the citizens can use is the Freedom of Information Act. It
doesn't allow us to get access to anyone's individual tax
returns, but we can get access to decision-making about their
policies and such, and to get that information out has been--
required extraordinary legal efforts.
Mr. Blum. Do you think the IRS Commissioner was lying when
he said we produced all the emails, we've spent a significant
amount of time to pry out all the information we have? Do you
think he was lying?
Mr. Fitton. Well, I'm sure they spent a lot of time, but
they didn't produce all the emails. And the IRS Commissioner
specifically made a decision not to inform Congress for several
months about a major issue they had with email production
specifically with relation to Lois Lerner and the fact that
emails from her were not backed up or were backed up but,
depending on what time of day it was, they got a different
story out of the IRS. But the Commissioner was not forthcoming
with Congress for months on that issue.
Mr. Blum. Not forthcoming. We call that something
different in Iowa, but I will accept that.
So, Mr. Fitton, nearly five years after Lois Lerner
preempted the inspector general with a planted question that
the IRS was in fact targeting people for their political
beliefs, still, still 18 months later no one has been held
accountable and documents are apparently still outstanding,
correct?
Mr. Fitton. It's longer than 18 months. It's 2013 and
we're now going into 2017. So it's four years and we're still
waiting for documents on that issue.
Mr. Blum. This is exactly why transparency is so
important. It's exactly why this hearing is important. It
should not take years of FOIA requests, congressional
investigations, and court battles for Americans to get answers.
The folks in my district applaud--when I say no one, including
no one in Washington, D.C., is above the law.
Thank you for your testimony. I yield back my time.
Mr. Fitton. Thank you.
Mr. Farenthold. Thank you very much. The gentleman yields
back.
I will now recognize the gentleman from Maryland, Mr.
Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. I want to thank the
panel.
Mr. Painter, I am glad you are here, and I want to thank
you for your work and your focus on these issues of conflicts
of interest.
You said, and I certainly agree, that the example, the
standard of transparency disclosure, accountability has to be
set from the very top, that the President of the United States
has to demonstrate a clear commitment to those principles. And
obviously, when you served when your colleague Norm Eisen
served, that was the kind of standard that was adhered to. I
don't think we are seeing that from the current administration,
and I think that the examples set or lack of examples set is
kind of trickling down, finding its way into the various
Cabinet appointments into the way those agencies are operating,
which puts an extra responsibility on Congress and on
committees like this one, the Oversight and Government Reform
Committee, to press for that kind of transparency and
accountability.
I think this committee could be doing a lot more in that
regard frankly and some other standing committees in the House
and the Senate to press on the administration for the
accountability and transparency that we would like to see.
We have pulled together a task force, Democracy Reform Task
Force, which I chair and is vice-chaired by a number of my
colleagues to try to push on this issue of conflicts of
interest. And we have been cataloguing all of the efforts that
have been undertaken by Members of Congress on our side of the
aisle over the last six, seven weeks to try to elicit some
decent information about what is happening with the Trump White
House and with the various agencies.
Legislation has been introduced, and I will turn in a
moment to the Tax Transparency Act to speak to that, but there
are many other bills that have been introduced by members of
Congress to try to get more information and accountability. We
have been introducing amendments in various committees to
insist upon that disclosure. Democrats have brought privileged
resolutions to the Floor of the House seeking disclosure of the
President's tax returns for all of the reasons that you have
enumerated.
In committees we have been filing resolutions of inquiry,
which are one of the few tools we have available to us when the
leadership of those committees doesn't, on its own initiative,
seek to get the kinds of answers that we need. And we have
sent, through standing committees and Members on their own
initiative have sent nearly 120 letters to representatives of
the Trump administration on a whole variety of topics where we
are seeking good information.
Those have gone unanswered. So it has been very
frustrating, but I come back to the notion that transparency,
disclosure, those standards begin at the top. And of course the
President has refused to disclose his tax returns, which I
think has kind of set the tone.
And, you know, when I talk to people across the country on
this issue, and 70 to 80 percent of Americans would like to see
those tax returns, and they want to see them because they just
want their anxieties to be addressed. I think people are
worrying that there may be some divided loyalty here, that the
President isn't putting his responsibility and the public trust
that goes in the Office of the Presidency ahead of these other
business concerns. Maybe he is, but without getting the
information, there is no way we can know that.
And I think that is why the public is expressing this
degree of anxiety and saying, look, just come clean. Let us
just see, as all other Presidents have done, what is in your
tax returns.
I am running out of time but I want you to address again
the fact that, you know, the average person, when they file a
tax return, they don't have all of these assets and foreign
entanglements and business interests so they may not realize
what kind of information you can actually get from an extended
tax return. Can you just touch on one more time the various
schedules and what they provide in terms of information and how
important that is for us to get some assurance with respect to
our concerns about conflicts of interest?
Mr. Painter.--President we already have substantial reason
to believe that he may owe his job to Vladimir Putin. We ought
to at least know whether he has financial dealings with the
Russians, with the Chinese, any other foreign governments with
oligarchs in those countries.
The schedules I read into the record are very relevant
here. Most of them focus on that flow-through taxation. If you
own an entity, a corporation, or an LLC and it does not
separately file a tax return and pay taxes, the profits and
losses, the debt payments, all of those flow through to your
taxes, the taxpayer. And so you would fill out these forms that
would disclose those payments, income and debt payments to
those entities such as the form on information return of U.S.
persons with respect to certain foreign corporations or
information return of a shareholder of a passive foreign
investment company of qualified electing fund, annual return to
report transactions with foreign trusts in receipt of certain
foreign gifts, statement of specified foreign financial assets,
return of U.S. persons with respect to certain foreign
partnerships.
Those are only a few of the many return forms that would
divulge this information. None of it is on schedule A of a form
278. This is information that particularly in this context,
given what foreign governments have done to conduct espionage
inside the United States, given the apparent cooperation of
Americans with that, we have the right to this information
about our President. He should be disclosing it voluntarily,
immediately without having to have a bill passed by Congress.
Mr. Farenthold. Thank you. The gentleman's time is expire.
I will now recognize the gentleman from Kentucky, Mr.
Comer, for five minutes.
Mr. Comer. Thank you, Mr. Chairman.
I yield my five minutes to my fellow Kentuckian,
Congressman Massie.
Mr. Farenthold. The gentleman is recognized.
Mr. Massie. I thank the gentleman from Kentucky for
yielding.
I wanted to ask Mr. Singleton--I didn't get a chance to ask
this before--what has happened to the Fed's balance sheet since
2008?
Mr. Singleton. It's exploded. The Federal Reserve has a
lot of--more assets again in its attempt to reignite the
economy from the highs of the '04, '05 when the housing market
was really exploding to the crash of '07 and '08. And there's a
lot of concern expressed by a lot of people that the Fed needs
to start unwinding these--the balance sheet.
Mr. Massie. Can they unwind the balance sheet without
having any economic ramifications?
Mr. Singleton. And that's the other problem. If they
just--if they start dumping these assets onto the market, it's
going to cause major turmoil, and it's also going to negatively
impact the Fed's position because if you have a lot of things
that you want to get rid of, if you put them all out at once,
it's going to decrease the value of any given--any individual
asset. So the Fed is really kind of stuck between a rock and a
hard place right now in terms of the need to unwind the balance
sheet.
Mr. Massie. So, you know, and going back to 1977 I think
it was there was a Reform Act where Congress imposed a mandate
on the Federal Reserve that is called a dual mandate ----
Mr. Singleton. Right.
Mr. Massie.--but there are actually three mandates in
their which are price stability, moderate long-term rates, and
maximum sustainable employment. Are those always complementary
goals?
Mr. Singleton. I think in the free market they actually
are. With the Federal Reserve monetary policy and the way that
it's traditionally been looked at, no, there is the argument
that you can have inflation or unemployment, that there's a
choice between them. I think that the experience in the '70s--
and hopefully, we're not coming to that but it could happen
again with stagflation, show that you can actually have high
unemployment and high inflation at the same time.
I think that, you know, saying that we're going to trust
the secretive central bank in 1977 was six years after Richard
Nixon severed the last link between the Federal Reserve and
gold, which really kind of cemented our fate in terms of the
problems that we would have from a fiat monetary system, is
that the idea that the Fed can just somehow pinpoint the exact
right interest rates, the exact right level of inflation that
will lead to the exact right level of unemployment where you
won't have long-term unemployment, you'll just have the regular
unemployment you have as people change jobs, retire, et cetera,
is wrong.
I mean, we hear a lot about Russia today at this hearing
from critics of the current administration, but one thing I
think we need to consider looking at Russia is didn't their
experience in the last century teach us that Soviet--that
central planning doesn't work, and if central planning didn't
work for Soviet Union agriculture, what makes you think that
it's going to work for America and the world monetary policy
system?
Mr. Massie. It doesn't seem like it is working for us, at
least not in the last several decades.
Mr. Painter, in the time I have remaining, you expressed
some reservations about this particular bill, but you were
somewhat supportive of auditing the Federal Reserve more fully.
Can you expand on that?
Mr. Painter. I believe there needs to be full disclosure
of what's going on at the Federal Reserve. I think transparency
is critical for public confidence. But I think the statements
made today about the Federal Reserve by Mr. Singleton and the
statements that I have heard repeated by the far left and the
far right about the Federal Reserve are dangerous. It is
dangerous for this Congress to take any steps with respect to
the Federal Reserve without bringing in professional
economists, perhaps former governors of the Federal Reserve and
others, to explain to you how it works.
This is a situation where if we equate the Federal Reserve
with Soviet Russia and we proceed to make policy in that way,
we are exposing our economy to financial collapse ----
Mr. Massie. So what ----
Mr. Painter.--and that's a very dangerous situation.
Mr. Massie. What areas of transparency do they not now
have that you would support providing?
Mr. Painter. I believe that the audit that is suggested
here, whether it be the--by the Comptroller General or by
somebody else, that would be very helpful to know more about
what is going on with respect to monetary policy, to have more
transparency, to make sure that nothing leaks out of the Fed so
that there's insider trading based on projections about what
might happen by people who have inside information.
It's absolutely critical to have public confidence in the
Fed, and if more transparency will give that to us, that is
wonderful, but what I am very scared about is these conspiracy
theories that are being pushed, equating the Federal Reserve
with Soviet Russia. That is just false. And if you take that
testimony and enact legislation based on that type of testimony
without consulting economists, without consulting experts who
know what the Federal Reserve does ----
Mr. Massie. Let me ask you, are you concerned about their
balance sheet tripling in the last ----
Mr. Painter. I am concerned ----
Mr. Massie.--decade?
Mr. Painter.--but I want you to hear from people ----
Mr. Massie. So I don't think that is a conspiracy theory
or the fact that they played an adverse role in the housing
bubble.
Mr. Painter. They did, but Wall Street did, too.
Privately-owned banks, Lehman Brothers, Bear Stearns, Merrill
Lynch ----
Mr. Massie. A lot of those folks work at the Fed. All
right. Thank you. I yield back.
Mr. Farenthold. The gentleman's time has expired.
I will now recognize the gentleman from Maryland for five
minutes.
Mr. Raskin. Mr. Chairman, thank you very much.
Mr. Painter, I have admired you since I knew you slightly
in college as a high-ranking official in the Bush
administration. As chief ethics officer, you have always been a
little conservative for me but most people are, so I am not
going to hold that against you.
You are one of the Nation's leading ethics authorities if
not the leading ethics authority in the United States of
America today, and the questioning from my friend from Kentucky
puts me in mind of a letter that was written by James Madison
to a Kentucky farmer where he said that, ``popular government
without popular information is but a prologue to a farce or a
tragedy. The people who mean to be their own governors must arm
themselves with the information and the power that knowledge
brings.''
So I want to ask you about the Emoluments Clause which
prevents the President and all of us from collecting payments
from foreign governments, princes, kings, and foreign offices
and states. In your experience as an ethics official for
President Bush, if a President were to receive a trinket, a
painting, a statue, or something from a foreign government,
what would you do if you wanted to keep it according to the
terms of the Constitution?
Mr. Painter. Well, you would have to have consent of
Congress.
Mr. Raskin. So how do you go about getting the consent of
Congress?
Mr. Painter. Through a bill ----
Mr. Raskin. Okay. So ----
Mr. Painter.--or through a resolution of Congress ----
Mr. Raskin. so just tell me technically if you are working
with the President and the President says I am concerned I am
getting all this money from abroad, I am getting presents and
gifts, I want to make sure I am clean with the people of the
United States and the Constitution, what do I do?
Mr. Painter. Step one, disclose it. If it's over the
amount already authorized under the Foreign Gifts and
Declarations Act, sit down with Congress. Here President Trump
could sit down with a Republican-controlled Congress and say
this is what I've got. How much can I keep?
Mr. Raskin. So who would you ask, your White House
counsel, your ethics officer to go to, who, the Speaker of the
House?
Mr. Painter. I would go--I'd have the White House counsel
work with the lawyers in both chambers and discuss and discuss
what the President has and disclose what the President has.
Mr. Raskin. Did you ever do that as the White House ethics
officer?
Mr. Painter. Oh, no, because the President wasn't
receiving payments from foreign countries.
Mr. Raskin. Okay.
Mr. Painter. We didn't have that kind of thing going on in
the Bush administration.
Mr. Raskin. Okay. And do you know of other cases in the
past where Presidents have received a painting or a gift that
they want to keep and they go to Congress to receive it. Are
you aware of that?
Mr. Painter. Not recent--not in recent memory. They ----
Mr. Raskin. Okay.
Mr. Painter. The gifts would be declined or turned over to
the United States Government.
Mr. Raskin. Okay.
Mr. Painter. If someone tried--a Saudi prince tried to
give a Rolex watch to someone in the security--in the White
House in the national security area, and I think we said no,
that's not going to work.
Mr. Raskin. Okay. And without going to Congress you just
refused it?
Mr. Painter. No, we don't take Rolex watches from the
Saudis.
Mr. Raskin. Okay. So let me ask you this question then. We
have never had a President at least in our lifetimes who has
the kind of extensive foreign business empire that this
President has with the Trump hotels and the Trump golf courses
and the business contracts, the trademarks, the deals all over
the world, entanglements directly with foreign governments, as
well as corporations controlled by foreign governments. And
there are lots of allegations that he has been collecting
emoluments from day one. There has been no attempt to come to
Congress to ask us for our consent.
Now, the question is if he had to disclose his tax returns
and they divulged a relationship with a foreign government that
suggested emoluments were taking place, we would be able to act
affirmatively. But this President, the first President in
modern memory not to disclose his tax returns, hasn't given us
that information so we don't know. Do you think that we need to
legislate as the U.S. Congress to compel the President of the
United States to turn over his tax returns?
Mr. Painter. I think you may have to because this
President will not turn them over. But what this committee
should also do is use its subpoena power with respect to the
Trump organization and every one of those entities listed on
schedule A of his 278 to find out what money is going to those
entities from foreign governments with a focus first and
foremost on the foreign government that has conducted known
espionage inside the United States. And that could be done by
using the subpoena power with the support ----
Mr. Raskin. What are some of the entities you are talking
about?
Mr. Painter. Any of the corporate entities that are owned
by the President. There are hundreds--they're right--they're
listed on form 278 schedule A. They own everything from
trademarks to licensing arrangements to buildings. With the
buildings we don't know where the debt is coming from.
Mr. Raskin. Got you. Let me pause you just there because I
am running out of time. All of the Democrats on this panel have
said that we should have a legal obligation for the President
to turn over the tax returns. Most of the Republicans said
there is a moral obligation, he should do it. Do you think it
is a moral obligation or do you think it should be a legal
obligation, too?
Mr. Painter. I think it's a moral obligation right now.
You should make it a legal obligation by passing this bill.
And, as I say, this committee should subpoena all the relevant
information. The Intelligence Committee should be subpoenaing
the relevant information from the Trump business entities even
before that bill passes. This is absolutely critical that we
get this information, and I think it's unfortunate this is a
Democrat/Republican issue.
You opened up by saying that I was more conservative. You
are--I guess I am. I still believe in sound money. I guess the
Republicans are walking away from that stance. And I believe in
open government and disclosure, and that includes the
President's tax returns, and I think those are conservative
principles and everybody needs to stand up for open government
from the very top on down. That's what these bills--that's what
they're about, and that includes the President.
Mr. Raskin. Thank you very much for your testimony. And I
would yield back, Mr. Chairman. Thanks for your indulgence.
Mr. Farenthold. Thank you. The gentleman's time is
expired.
I will now recognize myself for five minutes.
And we are going to shift gears a little bit. And in the
spirit of this hearing and full disclosure, the Open Data Act
that I am going to ask some questions about is actually
legislation Representative Derek Kilmer and I are authoring and
will be reintroducing later on in this Congress.
And as I am sure you have heard, it is the legislation that
basically by default makes government information public. We
want it out in open-source, easily accessible, machine-readable
format. You know, Americans' tax dollars went to create this
data, and the American people ought to have easy access to this
data.
And with the state of innovation going on in the tech
community and actually all throughout the world today, we have
no idea what information we will be able to glean out of this,
how the government might be able to save money, what new
inventions might be coming, what scientific advances may
happen.
But I do want to be open-minded on this and ask an open
question to the entire panel. Do you guys see any problems with
this bill or anything that needs to be added to it to make it
better? And, I tell you what, since I am sure Mr. Hollister has
the longest answer, this will go in the other direction and
start with Mr. Painter.
Mr. Painter. It is a very sound bill, yes. There are
things I would like to add to it. I would like the White House
visitors log, including, as I say, Jackson Place, what is going
on over there, the Federal agencies. We ought to know who is
going in and out of the Federal agencies and lobbying. When the
campaign contributors are making their pitch, there ought to be
a lot more information about those types of contacts and also
Members of Congress.
There's a healthcare bill that's going to be voted on later
today. There are a lot of people in my district, the second, in
Minnesota who feel strongly that that bill isn't going to give
them anything other than take away their health insurance. We'd
at least like to know who is talking to our Congressman Jason
Lewis about that bill. So I'm sure that members of your
districts would like to know who's coming in and out and
talking about that healthcare bill that's going to have such a
dramatic impact on their lives.
So I think there ought to be more disclosure about what's
going on in government that I'd send over to Congress as well
as the executive branch, but this bill is an excellent start.
Mr. Farenthold. Great. Mr. Fitton?
Mr. Fitton. Oh, I can come up with all sorts of amendments
along the lines as Mr. Painter suggested, but I don't have any
comments specifically on the ----
Mr. Farenthold. All right. And if you all want to submit
those in writing at some point, I certainly would be open to
hearing what they are.
Mr. Fitton. Thank you.
Mr. Farenthold. And, Mr. Berlau. I am sorry. I
mispronounced your name. Could you ----
Mr. Berlau. Berlau. Everybody does.
Mr. Farenthold. Berlau.
Mr. Berlau. It's an ----
Mr. Farenthold. I am sorry. I ----
Mr. Berlau. It's an excellent bill and I like that it
makes the data user-friendly that, you know, data can be of no
use when it's just in a data dump and people--you can't
separate the wheat from the chaff to use the analogy, but that
it makes a user-friendly and accessible to--so the taxpayers
can focus in on what governments are doing.
But again, I think there are more things Congress can do.
The Financial Stability Oversight Council, which has almost as
much power as the Fed in terms of deciding whether a financial
firm is too big to fail which can, you know, both adversely
affect the firm with more regulation and as well as give it,
you know, advantage it by giving it--you know, saying the
government would bail it out, and yet we don't know anything
about those deliberations so that that agency, like the Fed,
needs to be made less secrecy, and we need to investigate why
in the world there was executive privilege claimed with regard
to going beyond FOIA, an actual lawsuit in the discovery
process in Fannie Mae ----
Mr. Farenthold. Now ----
Mr. Berlau.--so those other abuses as far secrecy need to
be addressed.
Mr. Farenthold. And I don't want to run out of time; I
want to give everybody a chance. Mr. Singleton?
Mr. Singleton. From what I know of the bill, I don't have
any problems with it. As a former congressional staffer, I do
think that there might be some concerns with making information
about congressional schedules and particularly what
constituents they meet with. Contrary to--I'm going to call it
a conspiracy theory that Mr. Painter seemed to be painting
here, not everyone that you meet with in Congress is some evil
lobbyist that's going to line your pockets. A lot of time it is
average citizens exercising their First Amendment rights to
petition their government, and I don't know if we need to
violate the confidentiality of their meetings in order to have
a more transparent government.
Mr. Farenthold. Thank you very much.
Mr. Hollister?
Mr. Hollister. Mr. Farenthold, I think your bill is wise
because it makes a distinction between operations and
deliberations. If we were to mandate that the Jackson Place
logs be made public, as Mr. Painter is recommending, wouldn't
everybody just move across the street to Pete's Coffee? By
making that distinction, which is what the FOIA makes, we focus
on the decisions and the operations of the Federal Government,
and that's where you'll find the really valuable transparency.
Mr. Berlau talked about transparency of the Federal--the
Financial Stability Oversight Council. While separately the
Financial Transparency Act, which we thank you for
cosponsoring, would require the agencies of the Financial
Stability Oversight Council, specifically by amending their
statutes, to adopt standardized data formats for all the things
that they do. Sometimes there's a need to focus in on a
particular area like financial regulation, which is what that
bill does.
But I have no changes to recommend for the Open Government
Data Act because it sets that foundation.
Mr. Farenthold. Thank you very much. I see my time is
expired.
I will now recognize the gentleman from California for five
minutes.
Mr. DeSaulnier. Thank you, Mr. Chairman.
And I want to thank all of the witnesses, but I really want
to focus on Mr. Painter. You are in a very unique position both
from your business background and your public service I think,
and also obviously as other members have stated, your service
in the Republican administration of George W. Bush.
So my understanding the Ethics in Government Act in 1978
that was passed by bipartisan effort in 1998, significant
amendments, those were done with bipartisan efforts. Is that
your understanding?
Mr. Painter. Absolutely.
Mr. DeSaulnier. And they came out of the consequences and
the tribulation of Watergate, correct?
Mr. Painter. Absolutely.
Mr. DeSaulnier. So to me this shouldn't be a partisan
issue, and I try to tell people who, when I bring this up in
the district, that if Mr. Trump decided to be a liberal
Democrat tomorrow, which I think is conceivable given his
history, that I would feel the same way as you do, that this is
much more important than Republican or Democrat.
So getting to that point, as you have said, the history of
the act in good faith going consistent with the act but not
legally prescribed for the act, since President Ford, every
President has submitted his tax returns and every President--
well, President Carter, Reagan, H.W. Bush, Bill Clinton, George
W. Bush, Barack Obama have all put their assets in a blind
trust, correct?
Mr. Painter. Yes. They put some of the assets in blind
trust. Other assets have been conflict-free assets, mutual
funds, bank accounts, treasury securities, and other conflict-
free assets.
Mr. DeSaulnier. So from my understanding on that press
conference President Trump did before he got inaugurated with
his attorney who I think background is real estate attorney,
they made the argument--and I am not a lawyer--that this was a
unique situation, to put it in a blind trust would not be
possible for him because of the nature of his international
involvement. So would you respond to that? Is there anything in
the law that you have discovered that allows for a President or
an administration to say normal business practices should be
different or handled differently?
Mr. Painter. Well, the law applies to the President like
it applies to everybody else, and the Emoluments Clause of the
Constitution prohibits him or any entity that he owns from
receiving payments and benefits from foreign governments. So
that had to be dealt with as of January 20. I do not believe it
was dealt with, and that's why Citizens for Responsibility and
Ethics in Washington has filed a lawsuit up in New York to seek
discovery as to what's going on with emoluments.
There are other laws as well, bribery and gratuity statutes
that could be triggered when the President owns businesses and
his sons are running all over the world trying to cut deals
with people with Secret Service in tow.
There's a lot of risk for the President, and that's why I
urge that he dispose of these businesses as soon as he was
elected. He could have done that. And the notion that he can't
sell these businesses, that he can't sell real estate and these
companies--I mean, he is the author of the book The Art of the
Deal. He's got lawyers, New York lawyers working for him. I've
never heard anybody up there in New York say, well, real estate
isn't liquid. They're buying and selling it all the time and
securitizing it, moving it out the door. So he could sell it,
and that's what he should have done to avoid these conflicts.
Mr. DeSaulnier. So following on my colleague from Maryland
who has more expertise in the legal aspects of this, but it is
my understanding that President Washington asked permission
from Congress to accept a gift of a painting that was alluded
to. President Jackson I think came to Congress to ask for a
gift of a medal. So how do we get to the point first
politically to get us to feel in a partisan--given the history
of bipartisan way that this should be separate from Republican
or Democrat?
And then secondarily, you are involved in a lawsuit,
without disclosing anything that you feel uncomfortable with
disclosing, how would you force this discussion? Because every
day this goes by my assumption is, given due process and the
assumption of innocence, but it certainly circumstantially
looks at whether you are here in Washington, D.C., at the Trump
hotel, whether you are in Indonesia or whether you are in New
York or Azerbaijan, it certainly appears that he is accepting
gifts under the Emoluments Clause.
So how do you get to a point in this environment, given the
history both of the Ethics Act but the Constitution? What are
the triggers, to follow up on my friend from Maryland, to get
us to a conclusion here where we find out whether he is in
violation or not, that he gives us his tax returns and we find
out about these relationships?
Mr. Painter. This committee should be subpoenaing the
relevant information from the Trump business organization. The
way to make this bipartisan is to discuss this with the people
in your districts. Republicans and Democrats feel the same way
about transparency in government with respect to the President
and everyone else, and that's why Republicans and Democrats
would support this bill with respect to transparency and making
the records accessible.
And I am fully supportive of that, but I think the American
people also expect to see what's going on with the President's
tax returns and his dealings particularly with foreign
governments, particularly a year in which a foreign government
has conducted espionage inside the United States.
So the way to make this bipartisan is to go back to your
districts. We are going to be discussing it in the Minnesota
2nd Congressional district where I live. We are going to be
discussing it all through our State. I think it's going to be
time for every member of this committee, Democrat and
Republican, ask the people who sent you here how they feel
about a President who will not disclose his tax returns, and
then come back to Congress and represent the people who elected
you.
Mr. DeSaulnier. Thank you, Mr. Painter.
Thank you, Mr. Chairman.
Mr. Farenthold. The gentleman's time is expired.
I will now recognize the gentlelady from the Virgin
Islands.
Ms. Plaskett. Thank you, Mr. Chairman.
Good afternoon, gentlemen.
It seems that every day there is a new revelation about the
contacts between the President's campaign or the President's
associates and Russian officials. And we are having a
discussion today about transparency, so I thought this topic
might be kind of relevant to what we are discussing.
First, there have been reports that former foreign policy
advisor Carter Page traveled to Moscow in July of 2016, gave a
speech. He was critical of the United States. The campaign has
admitted that it was aware of Mr. Page's trip. Then, after
initially denying it, Mr. Page admitted that he had another
meeting with the Russian Ambassador last year. There are
reports about Roger Stone's connections to WikiLeaks after
their reports have indicated that Paul Manafort, Rick Gates
have connections to pro-Russian groups in the Ukraine. Mr.
Manafort abruptly resigned at that point as chairman of the
campaign. And just yesterday, the A.P. reported on a secret
agreement between Paul Manafort and a Russian oligarch to
receive millions of dollars to work for, quote ``benefits of
the Putin government.''
President Trump fired General Michael Flynn from his role
as national security advisor after it was revealed that he
secretly communicated with a Russian Ambassador about U.S.
sanctions and then lied about the communications to Vice
President Pence and the public. And I tell you it is very
difficult for me to say the words that the individual lied
because that is a very strong characterization, but in this
case there is nothing else that we can call it.
Then, there were reports about connections to Russian
interests involving the President's son-in-law Jared Kushner,
his son Donald Trump Junior, and J.B. Gordon, a foreign policy
advisor. In fact, according to media reports, Donald Trump
Junior stated at a 2008 business conference that, quote,
``Russians make up a pretty disproportionate cross-section of a
lot of our assets,'' end quote.
It was revealed that Attorney General Sessions claimed
under oath that, and I quote, ``I did not have communications
with the Russians'' was demonstrably false and the Attorney
General then recused himself from the investigation into
Russian interference in the 2016 election.
Never mind the nexus in terms of government and the
Russians. We have been spending a lot of time talking about the
President's tax returns, but we do know what assets he has and
the assets that are very--as Donald Junior said, a cross-
section of assets with the Russian Government or with Russian
assets on the ground.
Mr. Felton--is it Fitton?
Mr. Fitton. Fitton.
Ms. Plaskett. Okay.
Mr. Fitton. Fitton.
Ms. Plaskett. We know that it is not appropriate to have a
FOIA request about transition activities and what happens in
the President's transition requests, but do you intend to have
a FOIA request for the activities related to this Russian--the
investigations that are going on in the same way that you had
investigations and brought the Congress' attention issues with
Benghazi? I mean, you have stated how we rely on you for that
----
Mr. Fitton. Right.
Ms. Plaskett.--and that is important.
Mr. Fitton. Yes, we have well over a dozen Freedom of
Information Act requests pending on the very issues you're
talking about. Also, we have filed at least two lawsuits that--
over requests that have gone unanswered and, you know, I have a
particular interpretation of what went on, but the documents
are going to show what went on hopefully if we get full
disclosure.
And it's an opportunity for the administration to clear the
air on all of this and, you know, I think personally it would
probably benefit the administration to release this material as
quickly as possible.
Ms. Plaskett. It is interesting that you say you have a
different interpretation. Will you allow the documents to speak
for themselves or are you going to try and interpret them?
Mr. Fitton. Well, we'll get all the documents out. Our
practice is to release the documents we get and, you know,
we'll highlight things we think are important, but all the
documents are available to the public.
Ms. Plaskett. And will the importance of the things that
you highlight be the things that you would like us to think
about or the things that you think the American public are
interested in ----
Mr. Fitton. You mean ----
Ms. Plaskett.--because I see a line of--your testimony
seems to be geared towards a specific administration that you
find more fault for than necessarily this upcoming one as well.
Mr. Fitton. Well, you know, I think of the information we
have for sure we know that classified material was illegally
leaked presumably by the prior administration, and that ought
to be very concerning. It doesn't mean that everything the
Trump transition did either before or after the election was
appropriate, and there may be documents there that show it
wasn't appropriate. And we've asked for the questions in a way
that we'll get it all ----
Ms. Plaskett. Great. And what I am concerned with ----
Mr. Fitton.--good or bad for President Trump.
Ms. Plaskett. What I am concerned with not so much as what
happened before but what is going to be going on in the next
three years with his relationship to the Russian Government,
his assets, and the growth of his own interests and fortune and
his placement as President of the United States with the
Russians and those assets. Are you concerned with that?
Mr. Fitton. I think it's an area of oversight certainly.
He's a President who has a massive business wealth and business
assets, and people are going to want to ask questions. I
think--unlike Mr. Painter, I think he's taken ----
Ms. Plaskett. Because we don't want him to grow his
business on our backs. That is I think the concern.
Mr. Fitton. We don't--no one wants the President to abuse
his office for personal gain, that's for sure.
Ms. Plaskett. Thank you.
Mr. Painter. Treason is an issue of oversight.
Mr. Farenthold. The gentlelady's time is expired.
We will now recognize the gentlewoman from Florida for five
minutes.
Mrs. Demings. Thank you so much, Mr. Chairman.
Good afternoon to our witnesses. Thank you so much as well
for being here.
Mr. Painter, I will start with you. In 2009 President Obama
began releasing the logs that disclosed who came to the White
House for meetings, tours, or social events. This was widely
viewed as an improvement to White House transparency. I believe
you have already spoken about this one but I will ask you
again. Do you agree that this widely improved White House
transparency?
Mr. Painter. I will concede that point.
Mrs. Demings. The Obama administration visitors logs
revealed a significant amount of information. Just recently, it
was revealed that Secretary of State and former ExxonMobil CEO
Rex Tillerson lobbied the Obama administration against
sanctions for Russia. Should President Trump--and this is to
you again, Mr. Painter--continue the practice of the Obama
administration and release his visitor logs?
Mr. Painter. Absolutely. And that release should extend to
the executive branch agencies as well. We need more
transparency with respect to who is coming and going, whether
it's lobbyists, whether it's foreign nationals, whether it's
people who are foreign agents. A lot of them apparently don't
feel like registering under the Foreign Agents Registration
Act. We need that information about who's coming and going from
the top executive branch agencies, including the White House.
The American people are entitled to that information.
Mrs. Demings. Thank you. Mr. Fitton, in August of 2009
Judicial Watch sued the Secret Service for access to White
House visitors logs that had been withheld in previous
disclosures. You said, and I quote, ``The courts have affirmed
that these White House visitor records are subject to release
under FOIA law. If the Obama administration is serious about
transparency, they will agree to the release of these records
under the Freedom of Information Act,'' unquote.
Do you believe, Mr. Fitton, that President Trump and his
administration should release their White House visitors logs?
Mr. Fitton. We believe they should at least follow the
voluntary disclosure of the Obama administration.
Unfortunately, the appellate court here in the District ruled
they're not FOIA records. We think that they--he--they should
reinstitute the policy first changed by President Bush,
continued by President Obama, to pretend they weren't
government records subject to FOIA, and President Trump should
stop that. That's fake law in my view to use a poor turn of
phrase, and start following the law in FOIA.
These are records maintained by the Department of Homeland
Security's Secret Service. Those are agencies under FOIA. And
the idea that those records aren't subject to FOIA is, you
know, to me at odds with the law the way I would read it. The
courts have read it differently, but the President can choose
to follow the law here. We shouldn't rely on voluntary
disclosures of that type of information in this circumstance.
Mrs. Demings. That is correct. As you said, following the
court's decision that President Obama, and I quote, ``doesn't
want people to know who is visiting him'' and that he, quote,
``took the ball from Bush and ran with it.'' You also testified
earlier that the administration could make a policy change in
Freddie and Fannie Mae if they wanted to, so I am assuming you
believe that the administration could make a change as it
pertains to this as well.
Mr. Fitton. I often jokingly say I'm waiting for the Trump
administration to come to power and they should enforce FOIA
the way they're enforcing immigration law.
Mrs. Demings. Mr. Hollister, President Trump has not said
whether he plans to continue President Obama's practice of
disclosing visitor logs. The White House website for visitor
access records currently includes no visitors log. The website
says, and I quote, ``This page is being updated. It will post
records of White House visitors on an ongoing basis once they
become available.'' Do you agree that President Trump should
disclose his visitor logs?
Mr. Hollister. Yes, ma'am, I do. I think the Trump White
House should continue the practice that the Obama
administration followed of releasing the visitor logs.
As I mentioned in response to some earlier questions,
though, I think we need to remember that these logs are going
to be of limited usefulness. A lot of meetings take place in
the coffee shops in the area, and you're never going to get all
the deliberations.
What's really important is to track what the government is
doing, the decisions and the operations and particularly the
money. That's harder to hide, and you see the results there.
Mrs. Demings. Thank you. I yield back, Mr. Chair.
Mr. Farenthold. Thank you very much.
I will now recognize the gentleman from Virginia, Mr.
Connolly, for five minutes.
Mr. Connolly. Thank you, Mr. Chairman.
Mr. Fitton, I was just listening to you talk about your
passion for FOIA. Was Judicial Watch equally passionate about
wanting to see the names of the energy executives with whom
then-Vice President Dick Cheney met with in the White House,
which the White House refused to disclose you will recall?
Mr. Fitton. Yes, we sued the Cheney Energy Task Force
under the Federal Advisory Committee Act. We also had multiple
lawsuits I think on the Freedom of Information Act on the
Energy Task Force, and we took that issue all the way up to the
Supreme Court. In fact, we sued the Bush administration twice
as often as we did the Clinton administration under the Freedom
of Information Act.
Mr. Connolly. Good for you. By the way, on FOIA, I was in
local government in Virginia, unbelievably strict FOIA
requirements. I had like five working days to respond to any
FOIA request.
Mr. Fitton. That's right. There are a few State
Legislatures subject to FOIA.
Mr. Connolly. But that is what I was going to say. You
have got some work to do in the General Assembly in Richmond.
They have exempted themselves from their own FOIA laws, and I
would love to see them subjected to the same laws they
subjected us to.
Mr. Fitton. One of the other rules Virginia has you have
to be a Virginia resident to ----
Mr. Connolly. But, you know, the interesting thing was it
worked. For 14 years I was subject to some of the strictest
FOIA requirements in the country, and you know what, it did not
disrupt the operations of government. It actually worked.
Openness can be inconvenient for some politicians, but it
certainly allowed the public and special groups within the
public to know what was going on and to make sure we were
accountable. And I would rather take my chances with that ethos
than what we are dealing with right now.
I assume you would agree that every President should
release his or her tax returns in the spirit of this
transparency.
Mr. Fitton. Yes, the more transparency the better. I would
----
Mr. Connolly. Okay. Absent cooperation voluntarily, do you
support statutory requirement for such?
Mr. Fitton. Well, I just heard about the legislation
yesterday, and I have a constitutional concern about requiring
Presidents to release their tax returns and particularly
targeting this President through legislation specifically,
which seems to be the excuse for the legislation ----
Mr. Connolly. All right.
Mr. Fitton. It's not the broader issue; it's about getting
Trump's tax returns, which may have some constitutional
infirmities associated with that.
Mr. Connolly. Professor Painter, your view on the subject?
Mr. Painter. I do not think there's a constitutional
problem here. On the other hand, I have urged in my testimony
that we ought to require disclosure of the information that's
on tax returns with respect to everyone who is high up in the
government with respect to national defense. We ought to have
information about foreign government money coming in and out of
closely held entities owned by the President, the Vice
President, the Secretary of Defense, Secretaries of Army, Navy,
Air Force. Matter of fact, we had some Secretaries--I think was
Army and Navy nominees who pulled back because they didn't want
to go through the process. I have no idea why.
Mr. Connolly. And I respect the constitutional concerns,
separation of powers, and so forth, but frankly, the public
right-to-know it seems to me also has to be weighed here, and
if you don't get voluntary compliance, that we have to look at
the statutory recourse.
Mr. Painter. Absolutely right. And you can require it
because 278 can simply be amended to require a schedule of the
tax returns. And you could apply it to people other than the
President if that's going to be a concern that he's singled
out. Fine, we'll add those other people.
Mr. Connolly. Okay. Professor Painter, because of my time
because I know, Mr. Fitton, you want to comment, but I have
very little time left unfortunately.
Professor Painter, my set of concerns is what could go
wrong with that. Absent knowing questions of debt obligation,
relationships, taxes owed or earned, we look at situations
like, you know, Trump investments in the Philippines, Trump
investments in Turkey, Trump investments all over the world.
And one asks oneself, well, what could go wrong with that, not
knowing all of the details and not addressing the inherent
conflict of interest through no fault of his own. He is a
businessman, successful, that is now President, but you are
President. What could go wrong with all that?
Mr. Painter. We don't know yet. But where would we have
been in December 1941 if President Roosevelt had owned
buildings in Frankfurt and Berlin and a $300 million revolving
line of credit from Deutsche Bank? We don't know what the next
crisis is going to be, but our President is going to face
dangerous situations around the world, and he needs to be loyal
only to the United States.
We have had a foreign government that has conducted
espionage in the United States and has interfered in our
elections, and now we have a President who will not disclose
his dealings with foreign governments, with foreigners, and
with others. We need those tax returns. We need them now. You
can pass the bill, you can subpoena the information from the
Trump business organization. We need that information now.
Mr. Connolly. Thank you.
Mr. Farenthold. Thank you. And I would like to thank our
witnesses for being here with us today and for their testimony.
I would like to ask unanimous consent that members may have
five legislative days to submit questions for the record.
Mr. Connolly. Mr. Chairman? Reserving my right to object
but I will not object, I forgot to enter into the record--may I
ask unanimous consent while you are on it to enter into the
record statements of support for the Presidential Tax
Transparency Act from a number of groups, including Public
Citizen, Every Voice, Democracy 21, Center for American
Progress, and Americans for TaxFairness?
Mr. Farenthold. Without objection, they will be made part
----
Mr. Connolly. I thank the chair and I withdraw my
objection.
Mr. Farenthold. All right. So let's just do it again just
to make sure. Unanimous consent that all members have five
legislative days to submit questions for the record.
All right, without objection, that is so ordered.
If there is no further business, without objection, the
committee will stand adjourned.
[Whereupon, at 12:46 p.m., the committee was adjourned.]
APPENDIX
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