    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                         FINANCIAL SERVICES AND GENERAL
                        GOVERNMENT APPROPRIATIONS FOR 2026
        _______________________________________________________________________

                                     HEARINGS

                                     BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                         ONE HUNDRED NINETEENTH CONGRESS

                                  FIRST SESSION

                                  _____________

            SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT

                          DAVID P. JOYCE, Ohio, Chairman

      STEVE WOMAK, Arkansas			STENY H. HOYER, Maryland
      MARK E. AMODEI, Nevada		MARK POCAN, Wisconsin
      ASHLEY HINSON, Iowa			MARIE GLUESENKAMP PEREZ,
      MICHAEL CLOUD, Texas			  Washington
      CHUCK EDWARDS, North Carolina	        GLENN IVEY, Maryland
      MARK ALFORD, Missouri			SANFORD D. BISHOP, Jr., Georgia
      NICK LaLOTA, New York,
        Vice Chair

      NOTE: Under committee rules, Mr. Cole, as chairman of the full
    committee, and Ms. DeLauro, as ranking minority member of the full
    committee, are authorized to sit as members of all subcommittees.

                         Kimberly Betz, James Galkowski,
                          Alex Yost, and Mike Patterson
                                Subcommittee Staff

                                ___________________

                                      PART 2

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      Federal Judiciary..........................................        49

      Federal Trade Commission...................................       113

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     			    ___________________

              Printed for the use of the Committee on Appropriations

                        U.S. GOVERNMENT PUBLISHING OFFICE
      62-243                     WASHINGTON : 2026
    -----------------------------------------------------------------------------------
                       HOUSE COMMITTEE ON APPROPRIATIONS

                          TOM COLE, Oklahoma, Chairman

      HAROLD ROGERS, Kentucky,
        Chairman Emeritus
      ROBERT B. ADERHOLT, Alabama
      MICHAEL K. SIMPSON, Idaho
      JOHN R. CARTER, Texas
      KEN CALVERT, California
      MARIO DIAZ-BALART, Florida
      STEVE WOMACK, Arkansas
      CHARLES J. ``CHUCK'' FLEISCHMANN,
        Tennessee
      DAVID P. JOYCE, Ohio
      ANDY HARRIS, Maryland
      MARK E. AMODEI, Nevada
      DAVID G. VALADAO, California
      DAN NEWHOUSE, Washington
      JOHN R. MOOLENAAR, Michigan
      JOHN H. RUTHERFORD, Florida
      BEN CLINE, Virginia
      GUY RESCHENTHALER, Pennsylvania
      ASHLEY HINSON, Iowa
      TONY GONZALES, Texas
      JULIA LETLOW, Louisiana
      MICHAEL CLOUD, Texas
      MICHAEL GUEST, Mississippi
      RYAN K. ZINKE, Montana
      ANDREW S. CLYDE, Georgia
      STEPHANIE I. BICE, Oklahoma
      SCOTT FRANKLIN, Florida
      JAKE ELLZEY, Texas
      JUAN CISCOMANI, Arizona
      CHUCK EDWARDS, North Carolina
      MARK ALFORD, Missouri
      NICK LaLOTA, New York
      DALE W. STRONG, Alabama
      CELESTE MALOY, Utah
      RILEY M. MOORE, West Virginia

      ROSA L. DeLAURO, Connecticut,
        Ranking Member
      STENY H. HOYER, Maryland
      MARCY KAPTUR, Ohio
      JAMES E. CLYBURN, South Carolina
      SANFORD D. BISHOP, Jr., Georgia
      BETTY McCOLLUM, Minnesota
      DEBBIE WASSERMAN SCHULTZ, Florida
      HENRY CUELLAR, Texas
      CHELLIE PINGREE, Maine
      MIKE QUIGLEY, Illinois
      GRACE MENG, New York
      MARK POCAN, Wisconsin
      PETE AGUILAR, California
      LOIS FRANKEL, Florida
      BONNIE WATSON COLEMAN, New Jersey
      NORMA J. TORRES, California
      ED CASE, Hawaii
      ADRIANO ESPAILLAT, New York
      JOSH HARDER, California
      LAUREN UNDERWOOD, Illinois
      SUSIE LEE, Nevada
      JOSEPH D. MORELLE, New York
      MIKE LEVIN, California
      MADELEINE DEAN, Pennsylvania
      VERONICA ESCOBAR, Texas
      FRANK J. MRVAN, Indiana
      MARIE GLUESENKAMP PEREZ,
        Washington
      GLENN IVEY, Maryland

                    Susan Ross, Chief Clerk and Staff Director

                                       (II)

       FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2026

                                  ----------

                                                  Tuesday, May 6, 2025.

                           DEPARTMENT OF THE TREASURY

                                    WITNESS

    SCOTT BESSENT, SECRETARY, U.S. DEPARTMENT OF THE TREASURY
        Mr. Joyce [presiding]. The Subcommittee on Financial
    Services and General Government will come to order.
        The hearing is titled the Oversight of the United States
    Department of Treasury.
        Members will have five legislative days within which to
    revise and extend their remarks and insert extraneous material
    into the record.
        I would note we have a hard stop today at 11:30.
        I now recognize myself for an opening statement.
        I would like to thank Secretary Bessent for being here
    today and for his leadership and his steady hand over the last
    several months.
        We are living in an increasingly complex world with no
    shortage of issues. Whether it be taxes or tariffs, rightsizing
    regulation, or creating a regulatory framework for digital
    assets, the Department of Treasury's role is fundamental to the
    resolution.
        When we think about it, this is why the Department of
    Treasury was created. The Department is central to maintaining
    a strong economy, creating jobs, and promoting economic growth,
    both here and abroad. It was created to bolster our national
    security and to ensure our economic stability, and it continues
    to thwart terrorists and criminals and protect the financial
    system from illicit activity every day.
        Fulfilling these responsibilities is no easy task. As the
    Department's fiscal year 2025 spending plan reveals, it takes
    significant resources. It starts with a strong workforce, the
    most updated technology, and appropriate working conditions,
    including buildings that are sufficiently maintained.
        But this doesn't happen in a vacuum. This also takes
    cooperation, transparency, and accountability. As this
    committee looks to fund the Department's future operations, we
    need to understand the priorities and how the Department is
    deploying resources across its divisions and bureaus, and why.
    There are definitely efficiencies to be identified, but changes
    need to be thoughtful and deliberate to ensure the Department's
    mission is still accomplished. We need to ensure our financial
    system, the economy, and leadership around the world is safe,
    secure, and thriving.
        Secretary Bessent, there are and will be challenging times
    ahead, but I believe you are the right person at the right time
    to overcome those challenges. I look forward to working with
    you.
        And I now recognize the ranking member for his opening
    statement.
        Mr. Hoyer. Thank you very much, Mr. Chairman.
        And welcome, Mr. Secretary.
        This is our first substantive hearing dealing with the
    devastating actions that the Trump administration has taken in
    the first three months of 2025--actions planned and predicted
    by Project 2025.
        I look forward to having more such hearings with other
    agencies under our jurisdiction, especially the principals of
    DOGE, OMB, GSA, and OPM, which are having such profoundly
    negative impact on our country.
        What we have seen in the first 100 days of this
    administration is unprecedented--and so, the polls tell us--
    disturbing to the American people.
        The new irresponsible, incoherent tariff policy has plunged
    the Americans and global economies into chaos. These past three
    months, the American economy shrank for the first time since
    the final days of the pandemic. The stock market fell more in
    the first 100 days of the Trump administration than in the
    first 100 days of any presidency in the past half-century.
        Consumer confidence is the lowest since May of 2020--the
    height of COVID-19. That uncertainty has also rattled the bond
    market with investors dangerously starting to doubt the full
    faith and credit of the United States.
        Most importantly, Americans are hurting. Families see their
    costs going up. Retirees watch their life savings losing value.
    Small business owners and farmers risk going under, as they
    struggle to navigate ever-changing tariffs. Our economy is in
    chaos, and so, I think, is our government.
        Donald Trump, Russell Vought, and Elon Musk are
    orchestrating an illegal purge of our federal employees. They
    clearly had a lot of ideas on how to remove these people and
    dismantle these programs as quickly as possible.
        Sadly, they had no clue, in my view, as to the devastating
    consequences of their actions on our country, our government,
    our allies, and the professionals we rely on to serve the
    American people.
        I am particularly concerned about the Internal Revenue
    Service, which has been severely understaffed and underfunded
    for decades. So far, the Trump administration has forced the
    IRS to cut as many as 11,443 employees, or over 11 percent of
    its staff. And that includes 6,700 workers who were fired at
    the height of this most recent tax session.
        Now, the administration is planning to reduce the IRS
    workforce, I understand, by another 40,000 jobs, or 40 percent.
    That includes up to half of the IRS enforcement staff.
    Additionally, Trump's 2026 budget cuts funding for the IRS by
    20 percent.
        These actions at IRS, in my view--and every other
    government office--have bludgeoned morale, destroyed
    efficiency, and increased waste. Cutting back on IRS
    enforcement makes it easier for the wealthiest individuals and
    corporations to cheat on their taxes and get out of paying what
    they owe. That, of course, increases what others pay and
    explodes the deficit.
        As the President and congressional Republicans undermine
    the ability to enforce our existing Tax Code, they are also
    pursuing massive tax cuts for the wealthiest among us.
        Furthermore, DOGE operatives are rifling through IRS
    databases that contain Americans' sensitive information,
    including their financial history, Social Security numbers,
    immigration status, and more.
        The story is the same across the federal government.
    Americans are reeling from this uncertainty in their economy
    and in their government. They need answers. More than that,
    they need an adult in the room. That is the role I hope the
    Treasury Department plays, and, Mr. Secretary, in particular,
    yourself.
        The economy and markets do not lie. We all depend on the
    Treasury Secretary to communicate clearly and transparently to
    the President, the Congress, the American people, and, indeed,
    the world.
        I have mentioned tariffs and the IRS, but I'm also eager to
    hear, Mr. Secretary, from you about our economic approach to
    the Russian-Ukraine War, especially in light of last week's
    mineral deal and recent questions about our sanctions regime on
    Russia.
        Former Secretary Mnuchin, whom I believe you know, sir, and
    I disagreed on some things, but we still found ways to work in
    a bipartisan fashion to inspire confidence in the economy. Mr.
    Secretary, I look forward to doing the same with you.
        Thank you, Mr. Chairman.
        Mr. Joyce. Thank you, Mr. Hoyer.
        Today, we welcome the testimony of the Honorable Scott
    Bessent, Secretary of the United States Department of Treasury.
        Secretary, without objection, your written testimony will
    be entered into the record. With that in mind, we ask you to
    please summarize your opening statement in 5 minutes.

                       STATEMENT OF SCOTT BESSENT

        Secretary Bessent. Good. Thank you, Mr. Chairman,
    Congressman Hoyer. Thank you, Members.
        Chairman Joyce, Ranking Member Hoyer, and members of the
    subcommittee, I'm grateful to join you today. Treasury is eager
    to work with Members of Congress to fund key priorities to
    strengthen our economy and we look forward to coordinating with
    you on the President's budget as soon as it is released.
        Today, I wish to highlight the Department's efforts to
    boost U.S. economic growth, improve government efficiency, and
    target illicit actors that threaten our national security.
        The core components of the Trump economic agenda are trade,
    tax cuts, and deregulation. These are not standalone policies.
    They are interlocking parts of an engine designed to drive
    economic growth and domestic manufacturing.
        Tax cuts and cost savings from deregulation raise real
    incomes for families and businesses. Tariffs create an
    incentive for reshoring jobs and fair trade. And deregulation
    complements tariffs by making it easier to invest in energy and
    manufacturing projects.
        Already, this agenda is bearing fruit. In the first 100
    days of the new administration, 464,000 new jobs were added to
    the economy. In April alone, over 177,000 American jobs were
    added--more than 40,000 more than economists predicted. All the
    while, unemployment remains low while real hourly wages
    continue to grow.
        As important as spurring job growth is wrangling inflation.
    And in this endeavor, the administration continues to make
    tangible progress. The CPI for energy goods declined in March,
    as did the price index for core goods. And the CPI for all
    items declined for the first time since the COVID pandemic.
    While the cost of goods is decreasing, so are energy prices.
        Complementary to our efforts to grow American prosperity,
    we are focused on improving efficiency across all levels of
    government, but especially the IRS. We just concluded a
    successful tax-filing season, but the IRS still needs
    significant reforms to deliver efficient and cost-friendly
    results for the American people.
        In this endeavor, we have successfully cut $2 billion from
    the IRS IT budget without any operational disruptions. We
    achieved these cost savings by eliminating, renegotiating, and
    descoping wasteful IT and professional services contracts and
    addressing longstanding inefficiencies, such as auto-renewed
    licenses, unused for years. This intervention alone will save
    taxpayers hundreds of millions of dollars each year.
        We are also taking steps at the IRS to reduce
    administrative cost with a particular focus on paper
    processing, which has been a longstanding bipartisan goal. Last
    year, the IRS spent approximately $450 million on paper
    processing, with nearly 6,500 full-time staff dedicated to the
    task. Through policy changes and automation, Treasury aims to
    reduce this expense to under $20 million by the end of
    President Trump's second term.
        In addition to making government more efficient, Treasury
    is committed to working alongside the White House to make
    America safe again. To that end, we have launched a maximum
    pressure campaign against violent cartels and terrorist
    networks. We have assessed tens of millions of dollars in civil
    penalties against organizations facilitating money laundering
    along the southern border, and by leveraging sanctions, we are
    choking off the financial lifelines of terrorists, criminals,
    and hackers from Mexico and Guatemala to China and Iran.
        In the first 100 days of the new administration, we have
    set the table for a robust economy that allows Main Street to
    grow. With Congress and the White House working hand-in-hand,
    we expect to see even more positive results over the next few
    months.
        The key to expanding economic opportunity for all Americans
    is making the Trump tax cuts permanent. We look forward to
    working closely with the members of this committee to pass this
    bill into law. Together, we can build a stronger, safer, and
    more prosperous America.
        Thank you.
        [The information follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Joyce. Thank you, Mr. Secretary.
        I now recognize myself for the first questions.
        Secretary, let's fast-forward a year. Where do you see the
    United States with respect to tariffs and the overarching
    strategy? Do you anticipate all trade deals being bilateral or
    could there be multi-country trade pacts, of which groups of
    countries agree to a tariff schedule?
        Secretary Bessent. Mr. Chairman, this will be path-
    dependent on our trade partners. As I have said before, there
    are 18 very important trading relationships. We are currently
    negotiating with 17 of those trading partners. China, we have
    not engaged in negotiations with as of yet.
        So, I expect that we can see a substantial reduction in the
    tariffs that we are being charged, as well as non-tariff
    barriers, currency manipulation, and the subsidies of both
    labor and capital investment. So, that is proceeding very well.
    Many of our trading partners have approached us with very good
    offers, and we are in the process of renegotiating those.
        With the economy, I would say that this is a three-legged
    stool--trade, tax, and deregulation. Trade was first. The
    House, according to Speaker Johnson, expects to move their
    portion of the bill over to the Senate on or about Memorial
    Day. So, we are looking forward to that.
        And then, deregulation necessarily takes longer to affect
    the economy, but I would expect in the third and fourth
    quarters we would see substantial benefits from deregulation,
    that by this time next year could be at full force.
        Mr. Joyce. We have seen a few numbers discussed in terms of
    how many countries with whom you have started tariff
    negotiations. What is the actual number? What is the status of
    those negotiations? How many deals do you anticipate by the end
    of the year and the first quarter of 2026, or the second
    quarter? And what are the biggest challenges you see to
    negotiating tariffs and getting trade deals done?
        Secretary Bessent. Again, sir, approximately 97 or 98
    percent of our trade deficit is with 15 countries. Eighteen
    percent of the countries are our major trading partners. And I
    would be surprised if we don't have more than 80 or 90 percent
    of those wrapped up by the end of the year, and that may be
    much sooner, I would think that perhaps as early as this week,
    we will be announcing trade deals with some of our largest
    trading partners. They have come to us with very good offers.
        And what I will tell you is that, in negotiating with some
    of them, they may not like the tariff wall that President Trump
    has put up, but they have them. So, if tariffs are so bad, why
    do they like them?
        And then, more insidious, we can see, from a practical
    matter and from academic research, are the non-tariff barriers.
    If you were to look prior to the escalation, I believe Chinese
    tariffs were only 5 percent. So, clearly, there is something
    else going on, if they are accumulating these gigantic
    surpluses.
        Mr. Joyce. The President released his skinny budget for the
    year, fiscal year 2026, on Friday. The budget calls for
    approximately a $2.5 billion cut to the IRS. As you know,
    Congress has been pulling back money from the IRS over the last
    several years, somewhere in the range of about $41.7 billion.
    Some may ask, what is left to cut from the IRS? Why don't you
    talk about your vision for the IRS and why streamlining
    operations will benefit taxpayers and not hurt them?
        Secretary Bessent. Well, Mr. Chairman, the IRS is 30 years
    behind--30 years behind--on an IT modernization project, where
    perhaps up to $50 billion of taxpayer money has been wasted. We
    are rightsizing that.
        So, the substantial decrease in the IRS budget is largely
    in IT. We have had a large number of employees take the option
    for early retirement or for retirement.
        Again, let's look at the numbers. We are just taking the
    IRS back to where it was before the IRA bill substantially
    bloated the personnel and the infrastructure.
        Mr. Joyce. Thank you.
        I now recognize Ranking Member Hoyer for any questions he
    may have.
        Mr. Hoyer. Thank you very much, Mr. Chairman.
        Let me ask you a broader question, Mr. Secretary, at the
    outset. The President has been talking about recession and
    accept of a recession in the short term. Do you believe we are
    in a recession now?
        Secretary Bessent. Congressman, I believe in data, and
    there is nothing in the data that shows that we are in a
    recession. As a matter of fact, the Jobs Report had a surprise
    to the upside.
        Mr. Hoyer. The Jobs Report, of course, was less than the
    average for the Biden administration in 2024, but the GDP went
    down this first quarter of the Trump administration. If we have
    a negative growth in the second quarter, which is, I suppose,
    the traditional definition of a recession, would you agree that
    we are in that recession of which the President speaks?
        Secretary Bessent. Congressman, these economic numbers are
    noisy and subject to substantial revision. So, I, having looked
    at detailed analysis, would believe that the first quarter GDP
    would be revised upward.
        And I would also, with regards to your remark about where
    we were last year, last year we were spending 6.7 percent--we
    had a 6.7 percent fiscal deficit, the largest we have ever had
    during peacetime or non-recessionary times. So, the easy thing
    to do would be to keep spending to keep the economy running on
    an unsustainable path of government spending.
        Mr. Hoyer. Let me remark, because you mentioned this I
    think in our meeting, we have a spending problem, not a revenue
    problem. I want to talk about the revenue problem.
        Let me suggest to you my view is it is neither a revenue
    nor a spending problem; it is a pay-for problem. If we would
    pay for what we buy, whether it is defense or non-defense, we
    wouldn't have increased the deficit.
        So, I think, looking at--I'm a big proponent of paying as
    you go. Unfortunately, we haven't pursued that on either side
    of the aisle, maybe for different objectives.
        Let me go to IRS. You probably know these figures, and
    these are somewhat old at this point in time. But what they
    reflect, as you will see, is a substantial decrease in the
    resources of the IRS, particularly in enforcement--as the blue
    representing an increase in filings and the orange representing
    the nominal, and the dotted line, the net actual value of the
    funding for IRS, particularly enforcement.
        The budget proposes substantial cuts. Have you or anybody
    done an analysis of the ramifications of those cuts, both in
    the short term and in the long term, in terms of your ability
    to collect revenue?
        Let me paraphrase--not paraphrase, but give a--in your
    discussions, you said you were not going to sabotage--that we
    had in my office--sabotage collections. Are you confident, in
    light of the fact that any IT--and I agree with you we have
    wasted a lot of money on IT--that any IT will be accomplished
    within the next 36 to 48 months, and therefore, justify a
    reduction in personnel?
        Secretary Bessent. Congressman, let me work backwards. So,
    I am confident that we will make substantial progress in the IT
    and rightsize the payments, the payment system, the collection
    system. As I have repeatedly said, my priorities are
    collections, privacy, and customer service.
        And again, the substantial increase in the enforcement
    group, there is nothing that shows historically that, by
    bringing in unseasoned collections agents, that that results in
    more collections or high-end collections. It would be like
    sending in a junior high school student to try to do a college-
    level class. Becoming a high-end IRS collections agent is
    something that one grows into.
        So, I believe, through smarter IT, through this AI boom,
    that we can use that to enhance collections. And I would expect
    that collections would continue to be very robust, as they were
    this year.
        Mr. Joyce. The chair now recognizes the gentleman from
    Arkansas, Mr. Womack, for any questions he has.
        Mr. Womack. Thank you, Mr. Chairman.
        And thank you, Mr. Secretary, for your service and for
    being here today in front of my colleagues.
        I'm going to ask a question that I'm sure you have never
    been asked before, but I will give it a try here. When is X
    date?
        Secretary Bessent. Congressman, we are--as I said earlier,
    we still take in a large amount via paper returns. So, every
    Friday, I get a summary, and if you can believe it--as you
    know, tax day was April 15th--we are still tallying that. So,
    we don't have--we will share with Congress when we believe we
    are approximating that date. So, that will be forthcoming.
        But I will tell you, just as an outfielder running for a
    fly ball, we are on the warning track, and when you are on the
    warning track, it means the wall is not far away.
        Mr. Womack. So, it is not today. It may not be next week,
    but it is fast approaching?
        Secretary Bessent. And, of course, the United States
    Government will never default; that we will raise the debt
    ceiling and Treasury will not use any gimmicks. We will make
    sure that the debt ceiling is raised.
        Mr. Womack. You have already answered a couple of questions
    about the President's budget, and I'm going to ask maybe a
    little differently. The President's budget request for fiscal
    year 2026 looks very different from President Biden's budget
    just last year. And I have been a long-time proponent of
    getting our fiscal house in order, and I applaud the
    President's attempt to get our fiscal house in order.
        During my tenure as chairman of the House Budget Committee
    many years ago, I co-chaired the Joint Select Committee on
    Budget and Appropriations Process Reform, and many of our
    recommendations are included in Trump's request.
        It is no secret we are heading toward big and needed change
    within the federal bureaucracy. That said, his budget request
    for the Treasury is $11.5 billion compared to fiscal year 2025
    enacted at $14.2 billion. Now, that is a 19 percent decrease.
        You have already mentioned that we have savings achieved in
    contracts regarding IT services and this sort of thing, and we
    have saved the American public a lot. But you also said that IT
    remains one of our biggest challenges, particularly within the
    IRS.
        So, how is it that you are going to operate with a smaller
    budget that still serves the needs of the American people?
        Secretary Bessent. Sir, part of that has been bringing
    people back to the office. So, on March 10th, we reinstituted a
    work from your office program. And again, I think it is going
    to be efficiency.
        We have asked for more money for many of the priorities,
    the Treasury Foreign Intelligence Network and the Office of
    Foreign Assets Control, OFAC. So, we will be keeping the
    American people safer.
        And again, we think, through efficiency gains--the federal
    government, historically, does not have productivity increases.
    And as I have continually pointed out, DOGE is the Office of
    Government Efficiency, not the Office of Government Extinction
    or Eradication.
        So, I think that it is not a big leap to do much more with
    less.
        Mr. Womack. Are there $2.5 billion worth of efficiencies?
        Secretary Bessent. Well, again, just two of it is in the IT
    department. And if you were to look, Treasury processes about
    1.5 billion payments per year, which is like a mid-sized U.S.
    regional bank. We have had many of these banks come in and talk
    to us about their payment programs, and their departments are
    one-tenth the size and one-tenth the budget. So, allowing for
    the redundancies that we would need as a government agency,
    then we think that we do need to be bigger, more fulsome, but
    there are substantial savings to be had.
        Mr. Womack. Well, I want to ask one more quick question,
    because I know we are probably not going to have a second
    round.
        You have been a proponent for better financial literacy in
    this country, and your background is evidence of that. Quickly,
    can we do a better job in this country of educating young
    people on matters of financial literacy?
        Secretary Bessent. Any increase that we do would be a
    better job. But we just hosted Financial Literacy Month at the
    Treasury. I only had two months to get ready for it. I can tell
    you that every April we are going to do more and more. But the
    key to financial independence is financial literacy, making
    good choices, and not--you know, I don't think it comes from
    more regulation. I think it comes from more financial
    education.
        Mr. Womack. Thank you very much.
        Mr. Joyce. The chair now recognizes the gentleman from
    Wisconsin, Mr. Pocan, for 5 minutes.
        Mr. Pocan. Thank you, Mr. Chairman.
        And thank you, Mr. Secretary, for being with us.
        You know, my main concern is, well, people are looking at
    the economy. You know, the first 100 days, lowest stock market
    since Richard Nixon--not usually a measure people are shooting
    for.
        On tariffs, the fact that last year we had an effective
    rate of about 2.5 percent. I think the Yale Budget Lab--and I
    believe you went to Yale--has said that effective rate is
    closer to 28 percent, the highest since 1901. I know some of
    that has changed because the tariffs are on again/off again,
    some on again/some off again. Somewhat chaotic, I believe is
    your term--is what, Crazy Ivan style? I compare them to how a
    monkey throws dung; you are not exactly sure where they are
    going to land.
        And that is the concern I have, as a small business owner,
    and I know Ms. Gluesenkamp Perez is as well. You know, I have
    got small businesses really worried.
        You made a comment, while cargo volumes have dropped 60
    percent, you see this as a temporary detox. But for a small
    business that is getting by day-to-day, that is much bigger.
        You talked about Main Street; we want to finally focus on
    Main Street, not Wall Street. I think you were at a global
    investor conference in Beverly Hills yesterday. That is the
    cocktail party where you mentioned the Crazy Ivan theory. And
    before that, you were at a JPMorgan Chase/World Bank investor,
    private investor summit. All those things are not Main Street,
    right? Main Street is an auto body repair, a specialty printer.
        So, my concern is on the tariffs. Who pays tariffs, Mr.
    Secretary?
        Secretary Bessent. Congressman, let me work back----
        Mr. Pocan. No, no. No, actually answer the questions I ask,
    please, because I only have 5 minutes.
        Who pays tariffs?
        Secretary Bessent. Sorry. Well, there's----
        Mr. Pocan. Who pays tariffs?
        Secretary Bessent. Sorry----
        Mr. Pocan. Mr. Secretary, please.
        Secretary Bessent. Excuse me.
        Mr. Pocan. The question is very simply, who pays tariffs?
        Mr. Chairman, I would like him to answer that question.
        Mr. Joyce. Well----
        Mr. Pocan. He wants to answer other questions.
        Secretary Bessent. Well, Congressman, if the exporters
    dislike tariffs so much, why wouldn't they if--I think what you
    are trying to get me to say----
        Mr. Pocan. Did you remember the question? I'm not sure you
    did. Who pays tariffs?
        Secretary Bessent. The, the--it is a very complicated
    question.
        Mr. Pocan. Reclaiming my time, people pay tariffs, right?
        Secretary Bessent. No, not----
        Mr. Pocan. I'm a small--reclaiming my time, Mr. Secretary--
    --
        Secretary Bessent. No, no.
        Mr. Pocan. Reclaiming my time, Mr. Secretary,
        Secretary Bessent. No, no, sir----
        Mr. Pocan. Reclaiming my time, you clearly aren't going to
    answer.
        Secretary Bessent. No, sir----
        Mr. Pocan. I'm not going to waste my time having you go uh,
    uh, uh, uh.
        Secretary Bessent. Sir----
        Mr. Pocan. Mr. Secretary, reclaiming----
        Secretary Bessent [continuing]. It should be----
        Mr. Pocan. Mr. Secretary, I asked, reclaiming my time.
        Secretary Bessent [continuing]. Who can pay tariffs----
        Mr. Pocan. Mr. Chairman?
        Mr. Joyce. You asked a question and he is answering it.
        Mr. Pocan. And I asked to reclaim my time, did I not?
        Mr. Joyce. Can he finish his answer?
        Mr. Pocan. No, I said, ``Reclaiming my time,'' because he
    is clearly not answering it.
        Mr. Joyce. Can he finish his answer?
        Mr. Pocan. Yes, so, as a small business owner--and
    unfortunately, I would like that time back, since you failed to
    recognize me for 30 seconds.
        So, I just recently from one of my suppliers got the tariff
    surcharge on things. And in addition to the tariff surcharge,
    guess what else got raised? American-made walnut plaques. That
    has nothing to do with tariffs, but companies take advantage
    and do that.
        So, right now, we are getting screwed right and left
    because of the indiscriminate use of tariffs. That is the
    reality for Main Street.
        And you go off to Beverly Hills for private investor
    conferences to talk about Crazy Ivan theories. Answer that.
    What is the Crazy Ivan theory of tariffs that you mentioned at
    the summit?
        Secretary Bessent. Well, first of all, sir, I have had
    meetings with more than 50 small lenders. So, I want to clarify
    that.
        I would also say that, in game Theory, strategic
    uncertainty of which you seem to like the name Crazy Ivan----
        Mr. Pocan. Well, it is your words, correct? Didn't you use
    Crazy Ivan at the----
        Secretary Bessent. Well, you have used it five times.
        Mr. Pocan. He didn't answer the question, Mr. Chairman.
        Secretary Bessent. I am saying the strategic uncertainty is
    part of negotiations. Should we say----
        Mr. Pocan. Okay, but----
        Secretary Bessent [continuing]. Oh, here's what we'll
    accept, please take this?
        Mr. Pocan. Okay. I have got your answer. Thank you. I'm
    going to reclaim my time again.
        So, for a small business, we don't have that luxury, right?
    When the ports are empty in California and we can't get goods--
    the people are stocking up for Christmas goods--Crazy Ivan is
    great for--please don't take offense--really rich people like
    you. But for people like me, it is not, right? That is what
    makes small businesses fail. That is what makes people lose
    their jobs. That is what makes the stock market tank.
        So, I will ask one more time, who pays tariffs?
        Secretary Bessent. Sir, the history would show that it is a
    complicated mix of who pays the tariffs over various times.
        Mr. Pocan. So, that is exactly the problem. If your
    answer--and you are very educated person; you have a very
    impressive bio--cannot the question who pays tariffs because
    you won't answer that. And you say it is a complicated issue.
    It is not complicated.
        Consumers pay Trump's tariff tax. That is the reality.
        And I will yield back, Mr. Chairman, but I do think, next
    time, if I ask to yield back, I would appreciate having my time
    yielded back.
        Mr. Joyce. The chair now recognizes the gentlelady from
    Iowa, Mrs. Hinson.
        Mrs. Hinson. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary. Thank you so much for taking
    the time to come and answer our questions.
        I appreciate what the Trump administration is doing to try
    to level the playing field for American consumers and restore
    our economy to where it needs to be. So, I really appreciate
    the work that you were doing to make that happen, Mr.
    Secretary.
        And I certainly, as an appropriator, recognize the
    importance of making sure that every tax dollar is spent
    appropriately, and I appreciate your opening comments as such.
        So, with that, the GAO estimates the federal government
    loses between $233 and $521 billion annually to fraud. Those
    are alarming numbers, hard wasted--hard-earned tax dollars just
    wasted.
        President Trump has certainly acknowledged the absurdity of
    this level of waste, and he signed Executive Order 14249, to
    protect America's bank account against waste, fraud, and abuse.
        And I was proud to support this effort by introducing a
    piece of legislation to codify that, the Protecting American
    Taxpayers from Wasteful Spending Act.
        One of the provisions of this EO is directed at your
    Department, the Department of Treasury, to establish pre-
    certification and pre-award procedures across the federal
    government to prevent fraud and improper payment.
        So, can you define for the committee today what an improper
    payment is and some examples of what you are seeing, and why
    these procedures were not already in place before, Mr.
    Secretary?
        Secretary Bessent. Well, it is mystifying why they weren't
    in place. And what we are seeing is that there was a very
    complacent upper level of management in many departments across
    the entire government.
        What I can say at Treasury, that of the 1.5 billion
    payments we send out every year, they are required to have
    something called a TAS, a Treasury Account Symbol. We
    discovered that more than one-third--one-third--of those
    payments did not have a TAS number.
        So, as the Appropriations Committee, you should be shocked
    by that. Because how can a payment be tracked back to an
    appropriation? Only through the TAS number. So, there was no
    accountability. So, that is why the 450 organizations that sit
    above Treasury, where Treasury acts as the paymaster, are
    unable to pass an audit.
        So, we have cracked down on that. Every payment now
    requires a TAS number. It is very simple.
        And I will tell you that the mid-level employees who I have
    had come into Treasury to talk to me about that feel liberated.
    They tell me, I've been here 20 years. I've always wanted to do
    this. I've been here 14 years. And they feel as though they now
    have agency and are making the difference towards saving the
    American taxpayer money.
        Mrs. Hinson. So, this is not only a complacency issue that
    you have fixed, but it is a morale issue for these employees
    who are helping to make the Department much more efficient for
    taxpayers?
        Secretary Bessent. They are very energized by their
    participation.
        Mrs. Hinson. It is certainly unbelievable when you think
    about that this was not in place. And certainly, we have lots
    of examples from the previous administration of some of those
    catastrophic failures.
        Who would you say is benefitting from those improper
    payments? And how could a government agency really justify
    standing idly by while those errors were seeping into our
    system and making our government less efficient?
        Secretary Bessent. I can't speak to who was benefitting,
    but I can just speak to the attitude that has been shaken up;
    that this is okay. This is not okay and this is taxpayer money
    and we are charged with protecting it.
        Mrs. Hinson. What other plans are in place to help
    implement that Executive Order? You have talked about the
    Treasury Account Symbol. Are there other things in that
    Executive Order that you are executing on today?
        Secretary Bessent. Well, again, the President, as you
    mentioned, has passed--we are trying to go more paperless with
    the checks, with very important checks that the citizens across
    the United States receive, whether it is Social Security,
    veterans' benefits, tax refunds. A substantial number of those
    are stolen. So, the President has issued an Executive Order to
    try to make that more electronic. That will protect the
    integrity of those payments, as well as cut down on costs.
        Mrs. Hinson. Have you been able to claw back any improper
    payments for the taxpayer, reclaim those dollars?
        Secretary Bessent. Yes, we have clawed back tens of
    millions of dollars.
        Mrs. Hinson. That is fine. We will look forward to
    continuing to work with you to improve those efficiencies and
    execute on that Executive Order.
        I appreciate the work you are doing at Treasury, Mr.
    Secretary. Thank you.
        Secretary Bessent. Thank you.
        Mrs. Hinson. I yield back.
        Mr. Joyce. Thank you, Mrs. Hinson.
        The chair now recognizes the gentlelady from Washington,
    Ms. Gluesenkamp Perez.
        Ms. Gluesenkamp Perez. Thank you, Chair.
        And thank you, Secretary Bessent, for being here.
        So, I ran an auto repair shop before coming here. And I
    know that people who are turning wrenches, who are filing
    Earned Income Tax Credit in their tax return, you know, they
    are about four times more likely to be audited.
        And I'm wondering if you could talk to me about what the
    plan is for ensuring that, regardless of what income strata you
    are in, your probability of being audited is equitable.
        Secretary Bessent. Well, Congresswoman, I think that was
    one of the problems with increasing the enforcement. There was
    nothing to say that there would have been more enforcement at
    any distributional level. So, that what you were saying is that
    those receiving the Earned Income Tax Credit are more likely to
    be audited. That would have just meant more auditing.
        There was also a proposal to track small payments, $600 on
    Venmo, and things like that, which has been pushed back also.
        Ms. Gluesenkamp Perez. But what is the forward program to
    ensure that there is an equitable--I'm not just--I mean, I have
    some quarrels with what you said. But what is the plan, the
    implementation plan, to ensure, moving forward, we are getting
    towards a more equitable enforcement rate?
        Secretary Bessent. Look, we are reviewing the processes for
    who is audited at the IRS. There's been a great deal of
    politicization of that. So, we are trying to stop that. And we
    are also going to look at the distribution of who was audited
    and why they were audited.
        Ms. Gluesenkamp Perez. I look forward to hearing more about
    how that is being implemented and how we can help you with
    that.
        So, I think you and I agree that the current trading system
    has failed working people, people who are turning wrenches,
    driving trucks, changing diapers.
        Could you expand on how the proposed tariffs would ensure
    that there is upward pressure on wages?
        Secretary Bessent. Well, I think that there are many parts
    to that, but the key to upward pressure on wages is more job
    opportunities. And what we have seen since the so-called China
    Shock, after China entered the WTO, was a large decrease in
    manufacturing jobs. And studies have shown that workers in
    manufacturing jobs have more potential for large-scale wage
    increases than service workers do. So, moving more workers from
    service work to manufacturing should do that.
        And the administration is also trying to bring down the
    costs for working families.
        Ms. Gluesenkamp Perez. You know, I agree, right, if you are
    trying to earn a living as a barber, you have to move to a city
    to earn a high wage. But if you are in a rural community where
    there is a factory job, you can own land; you can own your
    home.
        And I think one of your points about financial literacy is
    ensuring that we do have economic self-determination. You can
    buy the pair of boots that will last five years and not be in
    this place.
        But there is a lot of work to do here building real wealth
    and not the nominal kind of--I'm not really here to be a
    defender of the stock market. Most of the people I know don't
    trade stocks in my community.
        You know, it is a question of being able to own land,
    having that capital access, start your own business, and
    frankly, some of the antitrust work to ensure there is a level
    playing field for small businesses like mine.
        I'm hearing from constituents who have questions about
    their tax returns and are having trouble getting a real person
    on the line to speak to. What can we do? What is your plan for
    decreasing wait times, for having someone be able to actually
    talk to a human being when they call the IRS?
        Secretary Bessent. Well, again, this goes back to my three
    priorities: collection, privacy, and customer service. So, we
    are moving money into customer service at the IRS. And it is
    almost unimaginable that the phone banks had the same number of
    operators 24/7, 365 days a year.
        So, if one of your constituents called on Christmas Eve,
    they would probably get through, because there were so many
    idle phones. If they called on April 14th, there was no surge
    to help them.
        So, as President Trump has repeatedly said, this is a
    common-sense administration. So, we are going to have common
    sense for the IRS. Playoff season for the first is from January
    15th to April 15th. Game day is April 15th. So, we are going to
    make sure that it is better staffed then.
        Ms. Gluesenkamp Perez. Thank you. I yield back.
        Mr. Joyce. Thank you very much.
        The chair now recognizes the gentleman from Texas, Mr.
    Cloud, for his 5 minutes of questions.
        Mr. Cloud. Thank you, Chairman.
        And thank you, Mr. Secretary, for being here.
        I think it was Albert Einstein who said that you can't
    solve problems with the same kind of thinking you used when you
    created them.
        And that is one of the things I certainly appreciate about
    you and the Trump administration and what you are bringing to
    the table.
        For a long time, we have seen the managed decline of
    America, and while many who run for positions that we hold will
    campaign on the need to do something, what we have seen is too
    often, and even because of some of the politicking we have seen
    today for the sake of politics, we have not been able to do the
    big, hard things that we need to, to change course and get us
    out of the $36 trillion debt pathway, and growing pathway, that
    we are on leading to that wall that you talked about.
        The American people have watched this all play out,
    realizing that their Nation has been in decline and seeing what
    they thought was kind of the promise, that if we put the
    experts in charge, they would run the government. We would have
    a regulatory pattern that worked. The wealth gap would close.
    America would be strong. And that has not happened.
        What did the experts get wrong that you are correcting?
        Secretary Bessent. Well, sir, under President Trump's first
    administration, the wealth gap did close. The bottom 50 percent
    of households by net worth saw their net worth increase
    substantially more than the top 10 percent. And we are aiming
    to do that again.
        Under President Trump's first term, hourly workers' wage
    gains were higher than supervisory workers. And, look, what
    people got wrong was the shock, and there was this terrible
    policy of--it was, essentially, compensate the losers. And I do
    not think that the American workers are losers. They were
    simply cast aside as the necessary collateral damage in this
    unfettered free trade.
        And free trade is not always fair trade. And we can see
    that from the large surpluses that these countries are
    accumulating on the other side. So, we are aiming for fair
    trade, to bring back high-paying, precision manufacturing jobs
    to the United States. And we are doing that. We are using
    tariffs, but we are also using the substantial deregulation,
    energy dominance. So, we want to continue to make the United
    States an even more attractive location for manufacturing.
        Mr. Cloud. It is interesting, you talk about manufacturing.
    And I think it was in 2008 the intelligence community put out a
    report. I talk about it a lot because they said the greatest
    transition of wealth, power, and influence is happening right
    now. And this was some years ago. They said we expect it to
    continue.
        And it was going from the Western countries to the Eastern
    countries. And they said it was happening because we were
    sending manufacturing overseas and we were sending oil and gas
    revenues overseas.
        And yet, they said it was like an unsolvable solution. Yet,
    we have the Trump administration who is coming in and solving
    what seems to be not an easy solution, but a very clear
    solution in bringing manufacturing back and bringing oil and
    gas back. And I appreciate it.
        I wanted to ask you, because there was a comment about the
    bond markets, and certainly, that really is a concern. We need
    to make sure that they stay strong and that the dollar stays
    strong.
        Are the bond markets more affected by the tariffs, and the
    concern we see in them now, are they more affected by the
    tariffs or out-of-control debt and the fact that Congress can't
    seem to get our fiscal house in order?
        Secretary Bessent. Well, you know, I will tell you that the
    large stock of government debt is why I'm sitting here now, as
    opposed to back in the private sector. I became so alarmed by
    what was going on under the previous administration, this
    deficit that we had, the highest ever when we weren't at war or
    weren't in a recession, and it is unsustainable.
        And I thought it was deeply cynical. And if we had done
    it--if we continued it, then we would have gone into a malaise
    where we couldn't grow ourselves out. We would have probably
    been forced into looking more like a European-style economy--
    very high government spending, lack of innovation, and lack of
    mobility.
        Mr. Cloud. And that would matter for us here at home, but,
    certainly, even for the world. Because we have kind of been the
    innovation engine of the world.
        Secretary Bessent. Yes. Yes, sir. But what we have created
    in the United States is this barbell economy, and the Trump
    administration is attempting to remedy that. On one side, we
    have financial services and the tech sector, which are forward-
    looking and the envy of the world. On the other side, we are a
    natural resources economy, led by energy, which the previous
    administration, they refused, you know, stopped permitting for
    LNG facilities.
        Mr. Cloud. Yes.
        Secretary Bessent. But the arc in between is what we are
    missing, are these manufacturing jobs. And that is what we are
    trying to bring back.
        Mr. Cloud. Thank you, Mr. Secretary.
        Mr. Joyce. Thank you.
        The chair now recognizes the gentleman from Maryland, Mr.
    Ivey, for 5 minutes of questioning.
        Mr. Ivey. Thank you, Mr. Chairman.
        I appreciate you being here today, Mr. Secretary.
        I wanted to ask you a few questions about DOGE and the role
    it is playing at Treasury.
        You came into office--I guess you were sworn in on the
    27th, was it? You were confirmed by the Senate on the 27th? Is
    that about right?
        Secretary Bessent. The 28th.
        Mr. Ivey. The 28th? Okay. And then, you started working at
    Treasury immediately after that?
        Secretary Bessent. Yes, sir.
        Mr. Ivey. All right. And DOGE began working there as well
    with respect to the payment systems?
        Secretary Bessent. They--two people, two individuals from
    DOGE who were actually Treasury employees were onsite.
        Mr. Ivey. Okay. And I believe you were approached by the
    highest-ranking career official at Treasury, David Lebryk. Am I
    pronouncing his name correctly?
        Secretary Bessent. I believe it is Lebryk.
        Mr. Ivey. Lebryk?
        Secretary Bessent. Yes.
        Mr. Ivey. Okay. What was the nature of that conversation? I
    assume this was about the DOGE issue, but tell me briefly what
    that conversation was about.
        Secretary Bessent. Well, that conversation was about a
    discussion of the payment system. And what I go back to, what I
    didn't know--I think I walked in the office around 3:00 p.m.,
    and I think he and I were having a conversation at 4:30.
        And he----
        Mr. Ivey. I have got to ask for the short version.
        Secretary Bessent. Oh, no, no, no.
        Mr. Ivey. Okay.
        Secretary Bessent. But I will tell you that, when we were
    talking about the TAS, that it was people like this individual
    who were hitting Send on the payments. So, you know, I have
    come to find out that at least part of the----
        Mr. Ivey. Okay. I apologize. I will have to get that later
    from you.
        Secretary Bessent. Yes.
        Mr. Ivey. Feel free to send in the substance of the
    discussion in a letter.
        But I guess what I was going to ask was, you just mentioned
    there were two people who were working with respect to DOGE at
    the time?
        Secretary Bessent. Yes, sir.
        Mr. Ivey. And Mark Elez was one of those?
        Secretary Bessent. I am not sure.
        Mr. Ivey. Not sure? You are not familiar with that name?
        Secretary Bessent. I don't recall that name. I interviewed
    Tom Krause and personally recommended him to work at Treasury.
        Mr. Ivey. Okay. Well, Mr. Elez had worked at Mr. Musk's
    SpaceX company. And The Wall Street Journal issued a story, I
    think around February 7th, that talked about statements that
    Mr. Elez had made in the prior year.
        One was, ``You could not pay me to marry outside my
    ethnicity.'' Another was that he wanted to normalize Indian
    hate. A third was, ``Just for the record, I was racist before
    it was cool.'' And another was, ``I just want a eugenic
    immigration policy. Is that too much to ask?''
        This man resigned shortly after that article was published,
    but you haven't--you don't recall----
        Secretary Bessent. No. No, Congressman----
        Mr. Ivey [continuing]. Him being there?
        Secretary Bessent. Congressman, I did not recall that
    individual's name, but that individual was terminated.
        Mr. Ivey. He was terminated? Okay. Well, I appreciate that,
    although it appears that he, then, later turned up and he was
    rehired, I guess. And then, he has continued----
        Secretary Bessent. Not by Treasury, sir.
        Mr. Ivey. Okay. But he was continuing to do work for DOGE,
    but in this instance, HHS, and three other departments?
        Secretary Bessent. I----
        Mr. Ivey. You have no idea?
        Secretary Bessent. I didn't follow his career.
        Mr. Ivey. Okay. Well, you didn't catch JD Vance saying that
    he didn't think he should be terminated? Did you miss that,
    too?
        Secretary Bessent. I don't recall that.
        Mr. Ivey. All right. Do you recall Mr. Trump saying that he
    should have a second chance?
        Secretary Bessent. I don't recall that.
        Mr. Ivey. No? Okay. And do recall Mr. Musk saying he should
    be given a second chance as well?
        Secretary Bessent. No, sir.
        Mr. Ivey. All right. Well, I guess the main question, too,
    here is, what exactly was the vetting practice that you had in
    place before you brought on these two people and gave them
    access to the payment system, which is $6 trillion?
        Secretary Bessent. Well, sir, they did not have access to
    the payment system, or perhaps we have a different definition
    of access. They only had read--they had read-only abilities and
    it was for--they were there for tech support, tech support to
    look at the payment system, the ERP system, just like any
    private enterprise.
        Mr. Ivey. Is this an individual that you would have brought
    on, even in that capacity, if you had known that he had made
    these statements prior to him becoming part of that team?
        Secretary Bessent. Congressman, I think it is very
    difficult to monitor everyone's social media----
        Mr. Ivey. That is not what I asked.
        Secretary Bessent [continuing]. Before they are hired.
        Mr. Ivey. If you knew that he had made these statements,
    would you have brought him on in the capacity that he had at
    the Donald Trump?
        Secretary Bessent. I think the Office of Personnel
    Management would have flagged that.
        Mr. Ivey. Would you have brought him on?
        Secretary Bessent. Sir, again, I'm not going to speculate.
        Mr. Joyce. The chair now recognizes the gentleman from New
    York, Mr. LaLota, for his 5 minutes.
        Mr. LaLota. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary. Good to be with you this
    morning, sir.
        I would like to use my time to talk about taxes and trade.
    As head of Treasury, you advise the President on taxes and
    trade, sir?
        Secretary Bessent. On both, sir.
        Mr. LaLota. Among many other things?
        Secretary Bessent. Yes.
        Mr. LaLota. Yes. And, Mr. Secretary, in your estimation,
    how did President Trump's 2017 signature tax bill affect
    American job creation, employment, and wage growth?
        Secretary Bessent. Mr. Vice Chair, it provided a
    substantial non-inflationary impetus to the economy, which
    resulted in real wage gains on a non-inflationary basis for the
    American people and a robust economy.
        Mr. LaLota. I would add--I'm with you 100 percent--I would
    add some data in there: 4.9 million jobs between the passage of
    the tax bill and the COVID pandemic. Employment rates dropped
    from the 4s to the 3s, and we had a lot of wage growth,
    especially within the middle class.
        And that sets me up for my next question. Congress now is
    considering extending those tax cuts, which expire at the end
    of this calendar year. Would that be a good idea, Mr.
    Secretary?
        Secretary Bessent. Congressman, what Congress is
    considering is making them permanent, which is a better idea.
        Mr. LaLota. We are considering a lot on the tax bill. We
    are also considering SALT, which I think is an awesome idea as
    well.
        But, nevertheless, on the greater bill, public polling
    suggests that you are right, and that 8 of 10 Americans agree
    that extending those tax cuts is a good idea, recognizing that
    they help grow wages. They help lower unemployment and help
    personal wealth.
        But I want to use the remainder of my time to talk about
    trade policy, Mr. Secretary. Is it true that America's trade
    deficit is about $1.2 trillion?
        Secretary Bessent. Approximately, yes, sir.
        Mr. LaLota. And with China, Mr. Secretary, about $300
    billion?
        Secretary Bessent. Yes, and I believe it may have increased
    slightly.
        Mr. LaLota. Yes. And, Mr. Secretary, what impact is China's
    exploitation of child labor and near-slave-like labor, what
    impact does that have on the trade deficit?
        Secretary Bessent. Well, sir, that it creates an unlevel--
    you know, aside from the values problem that Americans do not
    believe in this behavior, that it creates an unfair trading
    advantage. And we can see that from the size of the deficit,
    but, more importantly, from the size of the large surpluses
    they are accumulating.
        Mr. LaLota. And, Mr. Secretary, what impact does China's
    notorious theft of America's intellectual property have on our
    $300 billion trade deficit?
        Secretary Bessent. Well, I think that that is a problem for
    not the United States, but for every other country. And to the
    extent that they are able to leapfrog, whether it is with
    technology, whether it is with products, then that creates a
    huge advantage that has given them--it is back to one of the
    cornerstones of the problem of trade; that if you don't have to
    spend money on R&D, then you can spend it on manufacturing,
    cheap manufacturing.
        Mr. LaLota. And, Mr. Secretary, are tariffs a tool to
    reduce America's trade deficit, specifically, with China?
        Secretary Bessent. Right. Yes, sir.
        Mr. LaLota. And are they also a tool to protect American
    jobs, Mr. Secretary?
        Secretary Bessent. A hundred percent.
        Mr. LaLota. And, Mr. Secretary, you can probably tell by
    how far I sit on the dais, I'm somewhat new to Congress. But,
    yet, hypocrisy still offends me and there is a lot of double-
    talk and hypocrisy in this town.
        I'm going to read you a couple of quotes, Mr. Secretary,
    and I would like you to tell me if you think President Trump or
    somebody from the administration said it, or if you think
    Senator Schumer has said it on tariffs.
        Quote: ``Tariffs are a necessary step towards addressing
    the unfair imbalance of China's trade relationship with the
    United States.'' Did Schumer say it or did Trump say it?
        Secretary Bessent. I would imagine the President.
        Mr. LaLota. Schumer said it, sir. Schumer was, just a year
    ago, in February of 2024, talking about tariffs being the
    answer to combat some of those issues in China specifically--
    ripping off our intellectual property and exploiting slave
    labor and child labor.
        Secretary Bessent. Well, Congressman, I would also note
    that many government officials, including Presidents, were also
    in favor of a border wall until President Trump was.
        Mr. LaLota. Good point, and it leads me to my second
    question. Who said it, Schumer or Trump, that ``Tariffs are
    vital to protect American workers, American manufacturers,
    American innovation, and our national security.''? Who said it,
    Trump or Schumer?
        Secretary Bessent. I would imagine it was the ranking
    member.
        Mr. LaLota. It was the Senate Minority Leader. Chuck
    Schumer said it.
        And like what you said, it was cool until Trump got in
    office, and now, he is opposed to it.
        My time is about to expire, Mr. Secretary, but I want to
    commend you for fighting for American middle-class workers. I
    do think that extending the tax bill with a couple of tweaks,
    like SALT, is important. I do think that fighting for our
    middle-class workers is important. And I implore you to stay on
    the right path, sir.
        I yield.
        Secretary Bessent. Good. Thank you, Congressman.
        Mr. Joyce. Thank you for getting that SALT plug in, Mr.
    LaLota, twice.
        The chair now recognizes the gentleman from Georgia, Mr.
    Bishop.
        Mr. Bishop. Thank you very much, Mr. Chairman. Thank you
    for being here, Secretary of Treasury. I wanted to ask you some
    questions about the reports that the administration is cutting
    IRS workforce roughly in half with the goal of 50,000,
    including many of the front men enforcement positions. Recent
    studies concluded that this is a result of a loss of $19
    billion in foregone revenue just in 2026 and left $250 billion
    over the next decade. Such substantial cuts in staffing could
    cause reductions in voluntary compliance as taxpayers will feel
    emboldened to cheat on their taxes and IRS officials previously
    testified that a simple one percent decline in the compliance
    rate translates into $30 billion in lost revenue for the
    Government.
        If the administration is truly concerned about reducing the
    federal deficit, as you indicate, why would it consider
    staffing reductions that reduce the IRS' capacity to let much
    needed revenue that could be used to reduce the deficit or pay
    for critical services?
        A recent Treasury Inspector General for Tax
    Administration's Report indicates that the IRS compliance
    workforce would be drastically hit by 31 percent with revenue
    officers of 18 percent. They are paying the maximum taxpayer
    compliance responsibilities that are needed for revenue for the
    Government.
        It appears that 31 percent of the reduction in force and I
    think since January the federal workforce has been reduced and
    IRS started out with 103,000 and now it is down to 91,600,
    which is an 11 percent reduction in the workforce. That is a 31
    percent loss in revenue agents, 18 percent loss in revenue
    officers, 10 percent loss in contact representatives, and 10
    percent loss in tax examiners. It seems to be really, really
    foolish to pursue that.
        Can you tell me why that makes sense briefly?
        Secretary Bessent. So I think there are two things here.
    There is the actual decrease which you just cited which is
    about 11 percent. And then if you could tell me where you are
    getting this number where there is going to be a 40----
        Mr. Bishop. The IG's report.
        Secretary Bessent. Sorry?
        Mr. Bishop. The IG's report.
        Secretary Bessent. That there is going to be a 40 to 50
    percent decrease because--sir, I will tell you that was the
    goal before I took this job. I didn't particularly like the
    term fake news. Now that I have it, I think it is probably not
    strong enough.
        On March 22nd----
        Mr. Bishop. Let me change the subject. Let me move to
    another subject, Mr. Secretary. Thank you. If you want to
    elaborate, you can.
        Secretary Bessent. I will be happy to have my office follow
    up.
        Mr. Bishop. Let me say that since this administration has
    come to the White House, the price of groceries has increased
    by five, six percent in only two months. According to a recent
    report about a Groundwork Collective, the price of meat,
    poultry, fish, and eggs has grown the fastest, up 2.9 percent
    since January of 2025. Eggs at a record high of $6.23 a dozen,
    up from 26 percent in January '25 alone. What is the
    administration doing to bring down the cost of food? What is
    the administration doing to ensure that the impact of the
    tariffs don't disproportionately fall on our nation's farmers.
    I have got a list of headlines from farmers all across the
    country that are complaining about the impact of the tariffs on
    their capacity to sell their products.
        Can you tell me what the administration is doing to bring
    down the cost of food?
        Secretary Bessent. Well, a couple of things, Congressman.
    First of all, you may or may not know, I am a farmer. Secondly,
    that we inherited a momentum. Food prices, like monetary
    policy, have long and variable lead times. The price of eggs
    was up substantially during the Biden administration. It has
    been brought down 52 percent in the past few months.
        Mr. Bishop. It just went up the last two months. I just
    told you.
        Secretary Bessent. No, sir. I think that is not 100
    percent----
        Mr. Bishop. Since January.
        Secretary Bessent. And finally----
        Mr. Bishop. Fifty-six percent.
        Secretary Bessent. And finally, we are bringing down energy
    costs. And energy costs, transportation is one of the single
    biggest factors in food pricing, so diesel prices across the
    country have come down and that will result in lower food
    prices.
        Mr. Joyce. The Chair now recognizes the gentleman from
    North Carolina, Mr. Edwards, for any questions he may have.
        Mr. Edwards. Thank you, Mr. Chair. Mr. Secretary, thanks
    for being with us this afternoon. Earlier this year, I co-
    sponsored a bill, the Anti-CBDC Surveillance State Act that
    would prevent the Federal Reserve from issuing central bank
    digital currency. Many of the folks that I represent are
    concerned about the security of such a currency and the privacy
    of their information were such a currency to be used.
        Can you give me your perspective and maybe the
    administration's perspective on the place for digital currency?
        Secretary Bessent. Sir, we believe that digital assets
    belong in the private sector and my personal view is that
    having a central bank digital currency is a sign of weakness,
    not strength, because really the reason if there is a reserve,
    say reserve manager or a foreign central bank holds U.S.
    dollars, then there is a wide variety of U.S. assets they can
    invest in. You would create a central bank digital currency
    just for ease of use because there are no good choices for
    underlying assets.
        Mr. Edwards. And so you are saying you would not be in
    favor of the Federal Reserve issuing such a currency?
        Secretary Bessent. No, sir.
        Mr. Edwards. Thank you. Can you tell us real quick at what
    point do you believe that our debt levels would no longer be
    sustainable? And then, the second part of that is what would
    that look like if our debt were no longer sustainable? What
    would that look like to the American family?
        We talk a lot about debt up here. We put forth some
    elaborate graphs and charts and we hear all kind of economists
    using big long words. I need to be able to describe to the
    people back at home what that might look like in their lives
    where we no longer sustain debt?
        Secretary Bessent. It would look like a sudden stop in the
    economy as credit would disappear, as markets would lose
    confidence. And I am committed to that not happening. And
    again, it is a tipping point in debt sustainability, very
    difficult to pinpoint, but what is not difficult to pinpoint is
    a trajectory. And the trajectory is unsustainable when the--
    when and if the market were to rebel against is very difficult
    to know.
        I think, just as I talked about the warning track for the X
    date, I think it is very important not to go on the warning
    track and we have got to get to the other side of this and
    start reducing the debt. And the debt numbers are indeed scary,
    but Secretary Yellen and I both agree that it is the debt to
    GDP that is the important number. So we are trying to both
    control the absolute level of debt, pay it down, but also grow
    the GDP.
        Mr. Edwards. And so I appreciate, I applaud your approach
    towards the debt. Give us an idea of where is that tipping
    point? How close do you think we might be to that?
        Secretary Bessent. Again, sir, I think what the market--
    having been in markets for 35 or 40 years, what the market is
    more concerned about is a trajectory, are you on a trajectory
    that is unsustainable or are you, as we said during COVID,
    bending the curve? So the goal here is both bend the curve, but
    to grow the denominator and use growth and spending constraint
    to solve this problem.
        Mr. Edwards. And thank you for that. And as part of the
    President's cabinet and seeing more inside what is taking place
    than any of the rest of us, what role would you say that DOGE
    is playing right now in prolonging that tipping point and
    reversing our fiscal trend?
        Secretary Bessent. Well, I think DOGE or any other measure
    to constrain the spending is admirable, important, and
    necessary. And if we don't do that, as I said, and the Ranking
    Member mentioned it, we do not have a revenue problem. We have
    a spending problem. And we have to bring this spending under
    control.
        Mr. Edwards. Thank you. I have got just a few seconds. Can
    you tell us what keeps you up at night regarding cyber threats
    to our Treasury system?
        Secretary Bessent. It is cyber threats across the entire
    financial system, sir. And that is why at the Treasury we are
    leading the effort for more resilience within the entire
    financial system, whether it is across the banking system, the
    payment system, and the Treasury system. As you would have
    seen, Treasury was hacked last year. We have just discovered an
    OCC hack that was discovered last year. So these hacks are real
    and dangerous.
        Mr. Edwards. Thank you, Mr. Chair, I will yield.
        Mr. Joyce. Thank you. The Chair now recognizes the Ranking
    Member of the full Committee, Ms. DeLauro, for any questions
    that she may have for five minutes.
        Ms. DeLauro. Thank you very much, Mr. Chairman, my
    apologies for being late and apologies to you, Mr. Secretary,
    but lots of hearings happening.
        Just a couple of points and then I want to ask my question.
    Just a follow-up on this IRS piece, I think it is very
    interesting that, well, first of all, I totally disagree with
    you, Mr. Secretary. We have a revenue problem and that is where
    the IRS comes in. And we think about the debt. We think about
    the $2.3 trillion that was debt really built up with the tax
    cuts to the wealthiest and the biggest corporations in 2017. We
    are now looking at an additional $4.5 trillion in tax cuts
    which are making their way again to the richest and to the
    biggest corporations. That is debt and that is something that I
    don't know about yourself and others in the administration who
    refuse to see that kind of debt and the almost unbelievable
    piece of this is the IRS, 2024, we invested in it, able to
    recover more than $1.1 billion from roughly 1,600 millionaires
    projected at the time when investments in high end enforcement
    data and analytic that an additional $851 billion would result
    in revenue over the next 10 years.
        The Inspector General has said the IRS lost 30 percent of
    auditors under Elon Musk's illegal purge, people who are
    wanting to ensure that millionaires and billionaires are paying
    their taxes. And the issue here is that we are going to pay for
    those taxes by taking it out of the hide of Medicaid and of
    children of low-wage workers and of seniors.
        The issue that I want to try to get to and I am going to
    make another point is your comments on--your recent comments
    seem to call into question the vitality of the textile industry
    in the United States and national security. I applaud the
    administration for the steps they have taken on de minimis and
    closing down that loophole. I think it was very, very important
    to do this. We need to go further. It needs to be applied to
    all countries, not just to China. But unbelievable commentary
    on the U.S. textile industry provides good jobs across this
    country, particularly in rural areas. The supply chain directly
    employed 471,000 workers, produced roughly $64 billion in
    products in 2024.
        Let me get to my question. I have only two minutes to go
    here. This is the--dealing with and standing up for a mechanism
    in the U.S. that screens our investments in China, to ensure
    capital, technology, and know-how are not fueling the
    capabilities of the Chinese Communist Party. I have had a
    bipartisan bill to do that for years, help negotiate the
    bipartisan bill that nearly passed last year and I strongly
    support executive action to address the issue. In fact, we got
    appropriated funding from Treasury to implement the Executive
    Order on outbound investment.
        Mr. Secretary, I understand that the administration is
    currently reviewing the Executive Order. There is a clear
    bipartisan consensus on the need for an outbound mechanism of
    that screening regime. Let me ask you, do you support the
    implementation of such a regime?
        Secretary Bessent. Thank you, Congresswoman, it is a very
    important issue. The outbound security program is an important
    new tool in our effort to restrict the PRC from exploiting U.S.
    investment. The program just began a few months ago and we are
    learning and we anticipate gaining important visibility into
    U.S. persons' investments involving PRC entities. We appreciate
    the interest from Congress and while legislation is important
    and helpful, I would like some time for our process to inform
    any legislation. We would like any legislation to be both
    flexibility and durable.
        Ms. DeLauro. Well, you know, in your confirmation hearing
    in January, you noted, and this is a quote: ``We should have a
    very rigorous screening process for U.S. investments in key
    sectors that could go to China.'' And in March you said, ``We
    will make sure that our outbound investment doesn't get used
    against us. We are going to continue investigating this and
    where necessary to block it.''
        I heard your answer and quite frankly it sounds a little
    bit wishy-washy. I want to be clear about this. You have
    expressed support for outbound investment for months now. Has
    that changed in any way? What is the status of the
    administration's review of that order? What about the time line
    on this because it is an important issue? And can you commit
    that your department will enforce its Executive Order to its
    fullest extent?
        Secretary Bessent. I have not changed my position. As I
    said, we are looking at what is working, what isn't, and the
    best enforcement mechanisms and when a bill comes forward,
    again, we want it to be fulsome and durable and a 2025 bill for
    all the nuance that goes with this.
        Ms. DeLauro. I am out of time, but please understand, we
    have bipartisan support. It made it into the Continuing
    Resolution, but for the influence of Mr. Musk. And it is
    critically important for our competitive edge and I don't
    believe there is any reason for the administration to roll
    back. My hope is that we will move forward and keep the
    pressure on in order to be able to preserve our competitive
    advantage and not cede to the Chinese----
        Secretary Bessent. We are in complete agreement.
        Ms. DeLauro. Thank you. Thank you, Mr. Chairman.
        Mr. Joyce. I would not want to interfere with that
    bipartisan moment.
        Ms. DeLauro. It is bipartisan legislation as you know.
        Mr. Joyce. I appreciate that.
        Ms. DeLauro. It is a great piece of legislation.
        Mr. Joyce. And the chair will now recognize the gentleman
    from Nevada, Mark Amodei, for five minutes of questions.
        Mr. Amodei. Thank you, Mr. Chairman. Hi, Mr. Secretary.
    First of all, I want to thank you for your availability during
    this time since you have been confirmed and stuff like that. I
    know nothing has been going on that affects the Treasury
    Department in any way and I appreciate having access to you via
    phone over an issue that was of importance, so thank you very
    much.
        I want to just ask you a couple of questions kind of
    relative to our conversation and that is I know that the
    President has said quit producing the penny for a lot of
    reasons, arguably, you lose two and a half plus cents for every
    penny you produce in seigniorage and you don't have to get up
    too early to do the math on that sort of thing.
        But I think in the timing of doing that, if we are going to
    eliminate the penny which has to happen here, I would like to
    know who it is, who is kind of the point, the tip of the spear
    on your staff at Treasury? I already have the Mint information,
    but at Treasury as far as those issues go. And I will tell you
    why I want to know is I think there are some issues regarding
    what it costs to produce a penny. I don't think it will get you
    down to a cent. So there won't be that argument. But quite
    frankly, stacked up behind it is what it costs to produce a
    nickel and what it costs to produce a dime. I don't know about
    the quarter, but anyhow, to make sure that we are at least
    giving your Department and the Bureau of the Mint the tools
    necessary to, if you will, untie their hands when they are
    looking for who they buy their blanks from and stuff like that
    that goes directly into what it costs to produce one.
        So my first question is who is kind of in charge of that
    since I know you have got other things to do, but ultimately so
    that we can start that dialogue with where do we go from here
    and if we are going to get rid of--and I know there has been
    legislation introduced in the Senate to get rid of the penny
    altogether except for collectors. So who is the point man or
    woman on your staff?
        Secretary Bessent. Congressman, it would be my recently-
    confirmed deputy, Mike Faulkender.
        Mr. Amodei. Okay.
        Secretary Bessent. And I would also say with the nickel and
    the dime, the nickel costs more than a nickel to produce, but
    we are looking at material changes in the material that would
    reduce the cost to or below a nickel and then I believe the
    dime is profitable.
        Mr. Amodei. And I guess that brings me to--there is
    legislation you might want to warn your recently-confirmed
    deputy, H.R. 1278 bipartisan gives you guys the chance without
    coming to us every time to basically make changes in the metal
    of that sort of stuff so that you can keep ahead of those sorts
    of things so if you would, unless it is sitting here, whatever,
    like hey, we are going to be calling you up. The idea is to
    solve the problem, if it is solvable and move on from there so
    you guys can do other things with your time.
        Secretary Bessent. Yes, sir. We have been reviewing that.
        Mr. Amodei. Good. Glad to hear that. So have you taken a
    look at the set of bills that says no more pennies and I guess
    other countries have rounded up to the nearest five cents? My
    research says well, it wasn't the end of the world.
        Secretary Bessent. Well, sir, we are also encouraging
    rounding down.
        Mr. Amodei. Okay. That is a great answer. You know what, I
    am going to reward good performance. I yield back, Mr.
    Chairman.
        Mr. Joyce. Certainly appreciate that, Mr. Amodei. I
    understand you have a hard stop at 11:30. I would like to honor
    that. I want to be fair to my fellow committee members though,
    in doing so, not all of us will be eligible for a second round,
    but certainly my Ranking Member Mr. Hoyer would request that he
    have a chance to ask you another question before the stop.
        Mr. Hoyer. Mr. Secretary, first of all, let me say that I
    believe the Congress is being taken for granted in the policies
    being pursued. I think, frankly, some illegal things are being
    done, not by you, I am just talking about the administration in
    terms of federal employees. I represent 77,000 federal
    employees who came here to work for the Government and that is
    why they are here.
        I have worked very well with Republicans throughout my
    career which is now in its 45th year. I want to do that some
    more because I think that is in the best interest of the
    country. I believe you are one of those who has a shot at
    keeping us on a somewhat even keel. I mean that as a
    compliment, but obviously it is also a concern.
        When you say and I want to reiterate this, that we have a
    spending problem and I retort to you no, what we have is a
    paying for problem. If I make a million dollars, I can spend
    $999,000 less taxes, but if I make $500,000, I spend a million
    dollars, that is a paying problem because I don't pay for it
    and I accumulate debt. That is how debt is.
        Now I was here in the Reagan administration, some period of
    time ago. We were told that the tax cuts that were passed in
    1981 were going to pay for themselves. It did not. Perhaps it
    will surprise you, maybe you know this figure, the largest
    increase in the national debt was under Ronald Reagan, the only
    President who had a triple digit, 189 percent increase in the
    national debt during the course of his term. It might also
    surprise you that Clinton is the only one who was 30 percent or
    lower since Ronald Reagan. Clinton is the only one who balanced
    the budget.
        Now one of the reasons we did so is because we had
    bipartisan objectives. The Republicans wanted to cut taxes
    which is their mantra. We wanted to invest, as we call it, as
    opposed to spending, in children's education and people's
    healthcare and safety, et cetera, et cetera. If we continue
    this logic that we have a spending problem and discount taxes
    as spending, when we did the tax increase under George--excuse
    me, in 2017, you may recall, the Republicans gave themselves a
    $1.5 trillion head room. The reason it was limited to that is
    because the Senator from Tennessee wouldn't go higher than
    that. So in other words, a $1.5 trillion unpaid for head room
    to give a tax cut. That is spending because you are cutting
    prices while increasing costs. That is what costs you deficits.
        Some of my Republican friends, I am a strong supporter of
    national defense, but I do not delude myself that raising $150
    billion in national defense expenses don't cost taxes. We don't
    have $150 billion to either cut taxes with or to spend money
    with, so we borrow. And when my friend talks about hypocrisy,
    we all know if you spend more than you get, you go into debt
    and that is what we do as a country on both sides of the aisle.
    And we need people like yourself to be honest with those with
    whom you work and honest with the Congress of the United States
    in terms of the ramifications of the actions.
        I know you are a strong supporter of permanent increase and
    a strong supporter of paying for it. And you can cut all of
    non-Defense discretionary spending and you won't get there. And
    this game that Mr. Musk has played, he had no sense of the
    ramifications of the actions he has taken. He knew how to do
    it. He was prepared, as one article in the Atlantic Journal
    said the Blitzkrieg, which our speaker calls flooding the zone
    and pretty effective at that is trying to watch where the ball
    is and see if you can respond.
        And Mr. Secretary, I have a lot of questions. I am going to
    send them to you, ask them to you, and would like to take some
    time with you on that. I have great respect for your background
    and your abilities. And I am really praying that you will bring
    a voice of reason and rationality to our deliberations.
        My time is over and I appreciate the chairman's
    forbearance, but this is serious business, very serious
    business. And I agree with you. A $37 trillion debt is not
    sustainable and we all have to do it, but we have to do it
    together. That is the only way it will get done. Thank you, Mr.
    Chairman.
        Mr. Joyce. Do you have a response, Mr. Secretary?
        Secretary Bessent. Congressman, thank you for that and I
    would note that while President Reagan substantially increased
    the Defense budget, the Clinton administration was able to
    capitalize on the peace dividend. But as you said, the Defense
    budget dropped dramatically via post the fall of the Iron
    Curtain which contributed to the fiscal soundness and through,
    as you said, through bipartisanship working with Speaker
    Gingrich, they worked together. So I would hope that we could
    that again.
        Mr. Hoyer. Which by the way cost Gingrich his job. The
    right wing of his party was incensed that he did that and what
    it did was had a rational policy because both sides
    participated.
        Secretary Bessent. And the Senator from Tennessee is
    actually my neighbor, so I see him quite often. Look, there are
    ramifications here and----
        Mr. Hoyer. You are not talking about any current Senators
    from Tennessee. He has left.
        Secretary Bessent. Wanted to make sure we had the right
    Tennessean.
        Mr. Hoyer. Senator Corker.
        Secretary Bessent. Yes, yes. Is my neighbor. And I look
    forward to inviting a bipartisan solution.
        Mr. Joyce. Thank you, sir. With that, our time is
    concluded. I would like to thank you, Secretary Bessent for
    being here today. Maybe some members, as Ranking Member Hoyer
    has indicated will have some questions, will want to submit
    those questions for the record and we will ask any to submit
    those questions to the subcommittee staff within the next seven
    days. I would ask that you try to respond to them within the
    next 15 business days after receipt. Thank you with that. The
    subcommittee stands adjourned.
        [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                               Wednesday, May 14, 2024.

                               FEDERAL JUDICIARY

                                   WITNESSES

    AMY ST. EVE, CHAIR, BUDGET COMMITTEE, JUDICIAL CONFERENCE
    ROBERT CONRAD, SECRETARY, JUDICIAL CONFERENCE
        Mr. Joyce [presiding]. The Subcommittee on Financial
    Services and General Government will commence to order on
    oversight of the federal judiciary.
        Members will have five legislative days within which to
    revise and extend their remarks and insert extraneous material
    into the record.
        I now recognize myself for an opening statement.
        I would like to thank both Judge St. Eve and Judge Conrad
    for being here today and for their service to our Nation. The
    two of you combined represent over 60 years of federal civil
    service and we are grateful for your time.
        A special congratulations to you, Judge Conrad, on your
    recent retirement from District Court work in North Carolina.
        As a former prosecutor, I know the American judicial system
    the gold standard for fair, equal, and impartial treatment
    under the law. It is a critical part of our democracy and has
    been since our Nation's founding almost 250 years ago.
        It is incumbent upon us to ensure that our partner branches
    of government have the tools they need to execute the duties of
    their office. Courthouses across the United States serve not
    only as a place of employment, but as a symbol of what makes
    our country great.
        But many of the courthouses need repair to keep pace with
    modern times. At the same time, the judicial system faces the
    reality of modern threats to both its physical and cyber
    security. Protests across the country have damaged federal
    property and threatened the safety and security of judges,
    officers, and staff who work every day to serve the American
    people.
        Countries like China and Russia focus their efforts on
    gaining access to the IT systems of the judiciary to undermine
    American democracy at its core. And now, federal judges find
    their names in the news or on social media, and they are met
    with online vulgarity and in some cases physical harm to them
    or their loved ones.
        As the judiciary's fiscal year 2026 spending plan reveals,
    it takes significant resources to operate the federal
    judiciary. We need to understand their priorities and
    resources, how they are being deployed across its divisions and
    why.
        Judge St. Eve and Judge Conrad, let me again commend you on
    your leadership during these unique and challenging times. I
    look forward to working with you.
        I now recognize the ranking member for his opening
    statement.
        Mr. Hoyer. Thank you very much, Mr. Chairman.
        I want to thank Judge Conrad and Judge St. Eve for being
    with us and for the meeting we had, which was very helpful as a
    preface to this hearing.
        If the judiciary, Mr. Chairman, is to meet this pivotal
    moment and preserve the rule of law, we must ensure that it has
    the resources and independence it needs to function as a
    coequal branch of government.
        That is why I am very disturbed to see certain House
    Republicans call for retaliation against judges who rule on the
    law as they see it, but with which the present administration
    may disagree.
        Judiciary Chair Jim Jordan sent a letter asking this
    committee to limit funding the judiciary uses to issue and
    enforce injunctions. Other House Republicans have filed
    Articles of Impeachment against judges, not for any misconduct,
    but rather for ruling against the administration.
        Federal judges who block Trump's illegal executive actions
    are just trying to their jobs and interrupting the law. That is
    their role and that is critical to our democracy.
        Many were appointed by Republican Presidents; some were
    even appointed by Donald Trump himself. I agree with Chief
    Justice Roberts's assessment earlier this week that retaliation
    against them has, to use his words, ``endangered the rule of
    law.''
        You can't claim to stand for law and order when you
    threaten the independence of the branch responsible for
    upholding law and order. Some of my colleagues across the aisle
    agree, and I hope they will stand up for the judiciary.
        Our subcommittee needs to ensure our courts receive the
    resources they need to fulfill their duties under the
    Constitution. Doing so is especially important, considering the
    recent Continuing Resolution did not provide any funding
    increase for the judiciary in fiscal year 2025. Six of the 11
    judicial branch appropriations were funded at a freeze for a
    second year--meaning they were forced to continue operating at
    fiscal year 2023 levels.
        For fiscal year 2026, judiciary requested $9.4 billion in
    discretionary funding, an increase of $800 million, or 9.3
    percent, over the 2025 Continuing Resolution. Most of that
    increase, however, some 68 percent, is just to offset
    inflation, while the rest is for programmatic reassessment.
    Failing to fulfill that request would threaten the judiciary's
    ability to perform basic constitutional and statutory
    functions.
        I'm particularly concerned, Mr. Chairman, about our Federal
    Public Defender Program, which has faced a severe staffing
    shortage and budget shortfall for years. As a matter of fact,
    we made a mistake in this committee, and the Senate made a
    further mistake, which was corrected, which would have
    completely undermined the ability to perform the Public
    Defender Service as is necessary.
        The judiciary has requested $1.77 billion for Defender
    Services, an increase, a substantial increase of $350 million,
    or 22 percent, over the fiscal year 2025 CR, again, a freeze at
    2023 levels. Without that funding, courts will struggle to
    ensure that Americans are provided their constitutional right
    to an attorney, a competent attorney.
        We also need to ensure that our courts can keep up with the
    increasing caseloads. That means following through on the
    request to increase funding for the Court of Appeals and
    District Courts by $345 million, or 6 percent; and again, for
    the Administrative Office of the U.S. Courts by $8 million, or
    8 percent, over the 2025 CR. Again, we are talking about 2023
    levels, essentially.
        Without these increases to help our courts hire staff as
    needed and cover basic operational costs, case backlogs will
    only continue to grow, making it harder for Americans to
    receive timely justice and due process. I know all the
    committee members understand this, but criminal cases must come
    before the civil cases because of the right to a speedy trial.
    That means small businesses and other Americans will be pushed
    to later resolution of their cases.
        We also needed to vote more resources to keep our judges
    and courts safe at the time when Donald Trump and his allies
    are vilifying our courts. The public hears that and it has a
    tendency to inflame those who may be irrational, that may be
    mentally ill, or just may be angry.
        We ought to fulfill its request for a full $142 million, or
    19 percent increase above the 2025 CR for court security. Now,
    court security is a euphemism for making sure our judges are
    safe, making sure that our judges are not intimidated, making
    sure that justice would be served unrelated to the threat of
    violence.
        I look forward to the hearing, hearing more from Judge
    Conrad and Judge St. Eve, although I want to say to you, I'm
    going to go back to my other hearing. I'm going back and forth.
    But my staff will be here and I'm going to hear everything you
    say, but it may be virtually.
        Everyone who stands for law and order, Mr. Chairman, ought
    to be united in the mission of ensuring that our judiciary is
    safe, neutral, and articulating their thoughts regarding and
    opinions with reference to the law unrelated to intimidation
    and foolishness beyond their control.
        I yield back.
        Mr. Joyce. Thank you, Mr. Hoyer.
        Today, we welcome the testimony of the Honorable Amy St.
    Eve, Chair of the Budget Committee for the Judicial Conference
    of the United States, and dear friend of Magistrate Jonathan
    Greenberg, and the Honorable Robert J. Conrad, Jr., Secretary
    of the Judicial Conference of the United States.
        Without objection, your full written testimony will be
    entered into the record. With that in mind, we ask you to
    please summarize your opening statement in 5 minutes.
        Judge St. Eve, you are recognized for 5 minutes.

                       STATEMENT OF JUDGE ST. EVE

        Judge St. Eve. Good morning. Chairman Joyce, Ranking Member
    Hoyer, and members of the Subcommittee, my name is Amy St. Eve
    and I'm a judge on the 7th Circuit Court of Appeals in Chicago.
        On behalf of the Judicial Conference Committee on the
    Budget, which I chair, I am pleased to appear before you today
    to present and explain the fiscal year 2026 budget request of
    the federal Judiciary. Thank you for the opportunity to do so.
        An effective, efficient, and independent judiciary is
    foundational to our system of government. Adequate and
    consistent funding is absolutely critical to conduct our
    constitutional and statutory responsibilities, and we are
    reliant on this subcommittee to help ensure that those
    resources are in place for us.
        The branch's fiscal year 2026 funding request must be
    looked at in the context of the recently enacted continuing
    resolution for fiscal year 2025, where every component of the
    branch was held to its fiscal year 2024 enacted funding level,
    regardless of any change in workload or other requirements. And
    for most of our accounts, this is the second straight year of a
    hard freeze.
        Among the impacts of the full-year CR are the deferral of
    dozens of judicial security projects at a time when threats
    against judges are increasing; the suspension of more than two
    months of payments to private attorneys who have provided
    constitutionally required representation to indigent
    defendants; the continuation of a long hiring freeze in federal
    defender organizations; and a year-over-year reduction in the
    allotments made to courts and probation and pretrial services
    offices to serve and protect your constituents.
        While the Judiciary's fiscal year 2026 request of $9.4
    billion may seem large, these resources are needed to rebuild
    and restore critical functions of the courts and the federal
    defenders that were not sufficiently funded in either fiscal
    year 2024 or 2025, and to address new and potentially
    significant workload increases, based on the law enforcement
    initiatives of the Executive Branch.
        Our request includes $6.9 billion for the courts and
    probation and pretrial services offices. More than 85 percent
    of the requested increase in this area reflects just standard
    adjustments to maintain current services, with the remainder
    funding critical new investments in staffing, space and
    physical infrastructure, and information technology, including
    the next installment of funds that is essential for our
    multiyear cybersecurity and IT modernization plan.
        The Defender Services request totals $1.8 billion. Well
    over half of the requested increase in this account is needed
    just to mitigate the effects of the suspension of payments to
    private attorneys that was necessitated by the fiscal year 2025
    CR. The remainder will support current service levels and allow
    a resumption of hiring in the federal defender offices.
        We are also requesting almost $900 million for our Court
    Security program to address a complex and evolving threat
    environment facing judges and the judicial process overall. The
    request fully funds contractual obligations to our Court
    Security Officers and helps recapitalize our systems and
    equipment budget, which was slashed due to two straight years
    of funding freezes in this account. The request also continues
    the expansion of our Vulnerability Management Program, which
    was instituted to improve the safety of judges and their
    families after the murder of the son of Judge Esther Salas and
    the critical wounding of her husband in 2020.
        Finally, our request includes the $19 million that we
    project will be needed to fully fund grand and petit juror
    requirements for the year.
        As we ask the Subcommittee to make this substantial
    investment in the Judiciary, I want to assure you that we take
    very seriously our commitment to be responsible stewards of our
    funds. My committee has an entire subcommittee that is
    dedicated to finding opportunities to achieve efficiencies,
    adapt innovative business practices, and reduce or limit our
    costs without negatively impacting the quality of judicial
    services. At any given time, we have numerous cost containment
    measures that are at various stages of implementation, and
    those are described more fully in our budget request.
        Again, thank you again for the opportunity to appear today
    and for your support of the Judiciary. I understand that the
    fiscal year 2026 budget we have put forward is a large one and
    that this is a difficult budget environment, but it is
    necessary to support the fair, efficient, and secure
    administration of justice in this country.
        I ask that you please make a part of the record my
    statement and those provided by the Court of International
    Trade, the Federal Judicial Center, and the U.S. Sentencing
    Commission, on whose behalf we submit requests.
        I would be pleased to answer your questions at this time.
        [The information follows:]
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        Mr. Joyce. Thank you, Judge.
        Now, I will recognize for 5 minutes the Honorable Judge
    Robert Conrad.

                       STATEMENT OF JUDGE CONRAD

        Judge Conrad. Thank you, Chairman Joyce, Ranking Member
    Hoyer, and other members of the Subcommittee.
        My name is Bob Conrad. I am the Director of the
    Administrative Office and Secretary of the Judicial Conference
    of the United States. Before being selected to this post by the
    Chief Justice, I served as a United States District Judge in
    the Western District of North Carolina for nearly 20 years.
        For the second straight year in fiscal year 2025, our Court
    Security program received flat funding. We are concerned about
    this. We are also concerned about the increase in threats being
    made against federal judges and courthouses in the last several
    years.
        The independence of the judicial branch is jeopardized when
    judges are threatened with harm or impeachment on the basis of
    their rulings. Our constitutional system depends on judges who
    are sworn to ``administer justice without respect to persons.''
    In doing so, they must be free from threats and intimidation.
    This is essential not just for the safety of judges and their
    families, but also to the pursuit of justice and equal rights
    for all. Threats of reprisals and retribution erode the rule of
    law.
        So, we have safety concerns, compounded by the consecutive
    years of flat funding. I respectfully urge the Subcommittee to
    fully fund our fiscal year 2026 Court Security request.
        Second, we have in recent years discussed our need for
    additional resources to address the sharp increase in the
    number and sophistication of cyberattacks on Judiciary IT
    systems. The Judiciary is a high-value target for cyber
    criminals.
        We have a classified briefing scheduled for next Tuesday,
    May 20th, to share some additional details on cyberattacks with
    House and Senate Appropriations Committee leadership and FSGG
    Subcommittee leadership.
        We do require ongoing resources to secure and modernize our
    systems and we ask for the Subcommittee's support.
        Third, I would like to turn to our efforts to ensure a safe
    and respectful workplace for all Judiciary employees. I am
    proud to chair the Federal Judiciary Workplace Conduct Working
    Group, created by Chief Justice Roberts in 2018. For seven
    years, this group, comprised of some of the sharpest, most
    experienced judges and other court leaders, has worked to
    accomplish the Chief Justice's directive to create an exemplary
    workplace. We have made significant improvements to our
    workplace conduct policies and practices.
        Last fall, we issued our first annual report on workplace
    conduct. In March of this year, we released the Working Group's
    analysis of the Federal Judicial Center's first national
    workplace survey of Judiciary employees. The survey went out to
    28,000 employees. A statistically impressive 50 percent
    responded. Ninety-one percent of respondents indicated they had
    not experienced wrongful conduct of any kind. Over 80 percent
    responded that they were proud of their work, liked their jobs
    and would recommend their place of employment to family and
    friends.
        In addition, the survey showed us areas where we might
    improve, and the Working Group has issued additional
    recommendations to improve training, make reporting misconduct
    easier, and eliminate fear of retaliation. We will use the
    survey results to guide our efforts in making further
    improvements to workplace conduct policies.
        Turning to the AO budget, the fiscal year 2025 full-year CR
    represents a second year of flat funding at the fiscal year
    2023 level. Because staff salaries and benefits comprise 96
    percent of the AO budget, the impact of funding shortfalls
    rests almost entirely on our ability to retain and hire staff.
    For fiscal year 2025, we are forced to leave a number of
    important positions unfilled.
        The AO's fiscal year 2026 request seeks $110.5 million, a
    7.6 percent increase above the fiscal year 2025 enacted level.
    The requested $7.8 million appropriations increase is comprised
    of $6.2 million for adjustments to base for standard budgetary
    increases and $1.6 million to hire new staff to improve AO
    operations and enable us to better support the courts and
    federal defender organizations.
        My written statement discusses our need for new judgeships.
    Last Congress, we made the case for an additional 66 positions.
    A bill passed unanimously in the Senate and received post-
    election bipartisan support in the House. Unfortunately, it was
    vetoed at the last minute. A compelling case for new judgeships
    remains.
        My statement also discusses our new courthouse priorities,
    which are funded under GSA. Our top priority is a new
    courthouse annex in San Juan, Puerto Rico, which the Judicial
    Conference designated as a space emergency in 2020. I urge you
    to make yourselves familiar with the plight of Judiciary
    employees in Puerto Rico, working in trailers behind concertina
    wire due to a courthouse that is outdated, unsafe, and built on
    a seismic fault line. It represents a compelling case for
    emergency funding, and I would ask that you heed our call.
        Our other space priorities are new courthouse projects in
    Hartford, Connecticut; Chattanooga, Tennessee; Bowling Green,
    Kentucky; and Anchorage, Alaska. All told, we seek $863 million
    in fiscal year 2026 for GSA for these priority projects.
        I am prepared to answer the Subcommittee's questions.
        [The information follows]:
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        Mr. Joyce. Thank you, Your Honor.
        I first ran into the red, yellow, green when I worked in
    the federal court. So, I know you have seen this before. But we
    try to make sure that everybody has a chance to answer
    questions. People will be moving in and out. So, please don't
    let that bother you as you follow up.
        I'm a former defender and prosecutor myself. I understand
    the publicity that sometimes comes to a judge, whether they
    want it or not. They are randomly selected. However,
    technology, social media, and the 24/7 news cycle have
    increased the likelihood that a judge's name will be reported
    on all media sites. This now leads to an unprecedented amount
    of attention on the individuals responsible for overseeing a
    federal case.
        Would you describe the threat environment and how it has
    evolved over the last decade or so with respect to federal
    judges? And what is the federal judiciary doing to ensure that
    tragedies like the murder of Daniel Anderl don't happen again?
        Judge St. Eve. The threat environment is dynamic and
    complex, and it is important and essential for us to have our
    Court Security account funded to address this--not just outside
    of the courthouse, but in the courthouse as well.
        There have been, since 2020, a lot of attacks on
    courthouses and damage to courthouses. The Court Security
    account funds our Court Security Officers, who are really the
    frontline officers at courthouses and who screen individuals
    coming through to make sure that the judges, when they are
    there, are safe. It also funds the essential equipment at the
    courthouses, the screening equipment, the video equipment, the
    magnetometers, and it funds our Vulnerability Management
    Program.
        The Vulnerability Management Program is something that the
    courts have taken on to help get personally identifiable
    information, or PII, of judges off of the internet. As you
    indicated, it is very easy to find things out, including home
    addresses of judges, off of social media or the internet. And
    our Vulnerability Management Program is an easy way to help
    judges pull that information off of the internet. As of April,
    77 percent of our active federal judges have enrolled in the
    program and work with the specialists to help get this
    information off.
        Judge Conrad. We use the DeleteMe Program, which attempts
    to remove personally identifiable information of judges from
    the internet. As Judge St. Eve said, almost 80 percent of
    judges have signed up for it.
        We have taken steps to enroll judges in the Home Intrusion
    Detection Systems program to protect them when they are at home
    and, also, are engaged in hardening projects across the country
    with respect to our courthouses.
        So, the threat environment is real. It has been present for
    a number of years, and the Judiciary and the United States
    Marshals Service take it seriously, which is why we are asking
    for this money.
        Mr. Joyce. I can attest to the fact of bomb threats and
    having my home swatted, and using the programs you are talking
    about didn't take my home address off, because we still have to
    put it down on places like where we put in our application to
    run for office, the title of my home. And that is unfortunate.
    I understand you are going through the same problem.
        But, as you realize, this administration has made cost
    savings a priority across the federal government. How would you
    elaborate on the judiciary ensuring fiscal response on the
    activities they are undertaking with cost containment in mind
    and are there internal groups or programs to ensure that that
    is taking place?
        Judge St. Eve. Yes. Thank you, Mr. Chairman.
        As I indicated in my opening statement, the Budget
    Committee has an entire subcommittee devoted to cost
    containment. And at any given time, we have various measures
    that are in place.
        Recently, one such engagement we had was to put in place a
    cap on spending that individual chambers can have on library
    books, encouraging the use of electronic research and sharing
    of library materials.
        We are looking into the use of technology for detainees who
    are housed far away from federal courthouses, so that probation
    officers and pretrial services officers and attorneys who are
    representing them don't need to travel--sometimes a significant
    amount of miles--to go and visit with them; instead, they can
    do it electronically through equipment. And that would save
    quite a bit of money and time for all three of those
    categories.
        We are also looking at shared resources. My courthouse in
    Chicago, we have the court of appeals, the district court, the
    magistrate bankruptcy judges, all in the same courthouse. So,
    something that we recently instituted is that we are sharing HR
    among the district court, the magistrates, and the court of
    appeals now. So, we have combined those. And we are looking at
    doing the same for IT. Other courthouses are looking at shared
    resources that they can engage in.
        So, at any given time, we have different things in place.
    As you know, we have the ``no net new'' policy in place on our
    space program, which means that courts cannot expand their
    space without giving up some. And we are focusing on space,
    which is quite expensive for us and a chunk of our budget. We
    are looking at other ways that we can save with space.
        Mr. Joyce. Thank you.
        As I said before, people are going to be moving in and out.
    I am going to run down to a THUD hearing. The vice chair, Mr.
    LaLota, will take over at this point.
        The chair now recognizes Mr. Ivey from Maryland.
        Mr. Ivey. Thank you, Mr. Chairman.
        Glad to see my colleague is moving up to the big chair
    here.
        I do want to thank you all for coming in to testify.
        I certainly share the views of Mr. Hoyer with respect to
    the need for the increases for the judiciary.
        Cybersecurity I think, in particular, is an interest of
    mine, having served on the Homeland Security Committee last
    year.
        But personal security for judges and personnel is a big one
    for me, too. We had a state judge who was assassinated in 2023.
    He had made a ruling earlier in the courthouse that day. The
    aggrieved party followed him home and shot him in his driveway.
        And I'm aware of the case--I believe there is an individual
    who threatened, I think it was Justice Kavanaugh, and he is
    being prosecuted currently.
        So, we know these things are out there and we know they
    happen on both sides. I happened to work on the task force last
    year with respect to the attempted assassination of then-
    Candidate Trump.
        But I do want to say this, though--and I think it is
    important because there are these issues on both sides and the
    judiciary and beyond--I think what we say in politics and as
    elected officials is very important for us to pay attention to.
        I do think, as Mr. Hoyer pointed out, House Committee--
    Judiciary Committee Chairman Jordan's comments with respect to
    cutting funds to the judiciary, depending on some of your
    rulings, I don't agree with that policy for sure. I think it
    impedes on separation of powers and in the independence of the
    judiciary.
        But there are certainly others that have crossed the line,
    and ironically, I think President Trump, now-President Trump,
    certainly falls into that category with some of the statements
    that he has made. I think, with respect to Judge Boasberg, who
    is practicing here in the District of Columbia, or he is
    sitting here in the District of Columbia, calling him a
    troublemaker and an agitator, calling him a crooked judge, that
    he should be impeached, I thought was totally inappropriate and
    over the line. Talking about judges as lunatics is another one
    that I think is bad.
        And then, with respect to Judge Chutkan, who was sitting in
    one of his criminal cases, he said, this judge is ``the most
    evil person'' during the pendency of that case. I just don't
    think that is the kind of language that we should be projecting
    into the public, especially in these times.
        Because we know these are polarized times politically. I
    know people have strong views out there about what is
    happening. I have strong views, too, but I think it is
    important for us to not cross that line and say things that we
    think, or should think, could generate some sort of violent
    response.
        And then, from a legal and constitutional standpoint, the
    independence of the judiciary, I think that is critical, too.
        I have got seven House Republican colleagues who filed
    Articles of Impeachment against sitting judges. One of the
    judges I mentioned a moment ago is one of those seven. No
    showing or even allegation of wrongdoing particularly; just
    disagreement with the rulings that they issued in those
    particular cases that happened to involve the Trump
    administration. And they certainly have a right to their own
    views, but, again, I think it is important for us--not so much
    because that might create an issue of violence, but just
    respect for the Constitution and what it should mean when you
    start talking about impeaching judges. That is a big step.
        And I think, you know, to my colleagues here and beyond, we
    should be sensitive about making those kinds of statements and
    crossing those lines. When I was a staffer here in the late
    eighties, we impeached two judges and they clearly crossed the
    lines with respect to bribery, for example, and I thought
    impeachment was clearly merited there. Because under the
    standard set by the Constitution, they broke that and they
    broke the trust of the American people.
        But throwing that term around, issuing Articles of
    Impeachment kind of willy-nilly, is beneath what this
    institution should be doing.
        So, thank you so much for the work that you all are doing.
    I know these are going to be challenging times with respect to
    seeking the increases that you are seeking.
        I share the need for the increase for federal public
    defenders, having practiced, and I have been on both sides of
    that. It is critical to make sure we have got enough people
    there to handle the workload that is coming through. That
    workload certainly in the District of Columbia is increasing
    and we need to make sure that we are up to the task on that
    front, and making sure that people have a chance to get equal
    justice.
        So, thank you for the work that you do. I appreciate your
    testimony.
        And I yield back.
        Mr. LaLota [presiding]. The gentleman's time has expired.
        I now recognize the gentleman from North Carolina, my
    friend, Representative Edwards, for 5 minutes.
        Mr. Edwards. Thank you. Thank you, Mr. Chair.
        Judge Conrad, with over 800 federally owned or leased court
    facilities, the judiciary is one of GSA's three largest
    tenants. How have organizational changes in the GSA affected
    the facilities of the federal judiciary?
        Judge Conrad. We have an ongoing relationship with the GSA,
    both in terms of courthouse construction and maintenance. We
    have historically asked for more than they can deliver with
    respect to their funding.
        I mentioned the Puerto Rico emergency situation, where the
    courthouse is outdated, unsafe, and built on a seismic fault
    line, in a district where there is a very high-volume violent
    crime caseload.
        And so, there's ongoing efforts at doing things
    efficiently, but the ability to maintain our courts, and
    particularly our older courts, is stressed in good times. And
    in these times it is a real challenge for us.
        And so, I have met recently with the Public Buildings
    Commissioner. We have ongoing dialogue with the GSA. We have,
    actually, in light of some recent developments, had the ability
    to hire some really competent GSA people who were looking for
    jobs. They have come with us and bring with them a real
    knowledge of how things work on the other side that will enable
    us to communicate better.
        Mr. Edwards. I recognize that 10 federal courthouses
    appeared on the now-redacted list of non-core federal
    facilities released by the GSA. Six courthouses currently
    appear on GSA's list of assets identified for accelerated
    disposition.
        How frequently does the judiciary dispose of properties
    from the real estate portfolios?
        Judge Conrad. We have a Space and Facilities Committee of
    the Judicial Conference that looks at this question with some
    degree of intensity.
        I can speak from the district that you come from in the
    Western District of North Carolina. We, years ago, had five
    federal courthouses. We now have three.
        And so, that is an ongoing examination by our branch.
    Caseload changes and population changes are all taken into
    consideration. Resident or non-resident judges in courthouses
    impact the decision whether to close a courthouse or not.
        I have had three conversations this week with different
    judges across the country who are actively considering whether
    to close down a courthouse or keep it open. And so, I think,
    with our budget request, we are also acting responsibly to try
    to contain our courthouse footprint and ask you for funding
    only when it is absolutely necessary.
        Mr. Edwards. Does the judiciary currently own or lease any
    courtroom or office space that is not currently occupied or in
    use?
        Judge Conrad. I don't have on the top of my head the number
    of--you are asking about non-resident judge courthouses?
        Mr. Edwards. Well, any federal courthouse or office.
        Judge Conrad. There are districts that have courthouses
    where judges travel from one courthouse to another to serve the
    needs of a different division. I don't have the exact number of
    those courthouses.
        Mr. Edwards. The final question is, when preparing for
    hearings like this one, I, typically, find Inspector General
    reports to be a really good resource for information on how
    agencies can improve their performance. And I really was
    intrigued to learn that, while the Department of Justice has an
    Inspector General, the federal judiciary does not. And I was
    just curious to know your thoughts on why or why not should the
    federal judiciary have an Inspector General.
        Judge Conrad. We are a separate and independent branch of
    government that is decentralized in its structure. And we don't
    have a single Inspector General audit. We have approximately
    100 audits that go on every year from the various district
    courts across the country. We have an Audit Committee.
        Our governance is through the Judicial Conference, as you
    know, and we have 25 different Judicial Conference committees
    made up of volunteer judges and others who create policy for us
    and conduct audits. We have access to CPA firms that conduct
    audits for us.
        And our belief is that we are very responsible in the use
    of the funds that you give us and that we are very careful with
    our Judicial Conference Audit Committee, with our Budget
    Committee, and the other structures that we have in place. And
    although we don't have a single IG audit that you speak of, we
    have the information necessary to tell you where the money is
    spent and how we are using it.
        Mr. Edwards. Thank you. I appreciate your time.
        Mr. Chairman, I yield.
        Mr. Joyce [presiding]. Thank you.
        The chair now recognizes the gentleman from Texas, Mr.
    Cloud, for any questions.
        Mr. Cloud. Thank you, Mr. Chairman.
        Thank you both for being here. Thank you for the work you
    do in our all-important judiciary.
        I had a couple of questions I wanted to bring up.
        One, I read through the strategic plan, and my
    understanding is those come out every five years. So, we should
    be expecting another one this year, is that correct?
        Judge Conrad. Yes.
        Mr. Cloud. About when could we expect that?
        Judge Conrad. We have spent time at the last two Judicial
    Conferences getting out the strategic plan to the committee
    responsible for it and to the other Conference committees that
    have input in it.
        Mr. Cloud. Is there a time? I'm sorry----
        Judge Conrad. It is a work-in-progess and----
        Mr. Cloud [continuing]. I have a lot of stuff to go
    through. So, is there a date that we can--roughly? I'm not----
        Judge Conrad. The next Judicial Conference is in September
    of 2025.
        Mr. Cloud. Okay. Is that when we would expect the report,
    shortly thereafter?
        Judge Conrad. It is possible that it would be produced at
    that time.
        Mr. Cloud. Okay. You had mentioned, Judge Conrad, in your
    statement the importance of us protecting judges against hurt
    or threats of impeachment. I think it is dangerous to combine
    those two in the same sentence. Against hurt, yes, we should
    definitely protect them. But that would be like you telling me
    that I should not be worried about what the people will think
    who elected me.
        Impeachment is a constitutional role to hold the judiciary
    accountable. And certainly, you know, Congress created these
    courts, with the exception of the Supreme Court, and that is
    our mechanism to deal with the legal system that has gone
    wayward.
        So, we want to do everything we can to protect the judges
    and anyone involved in the legal process, but I think it is a
    dangerous ground to say that. And I was actually disappointed
    by this Chief Justice when he came out, with everything going
    on in the judiciary right now, for him to come out and take
    issue with the President, when there is a lot of work to be
    done within the judiciary, is very concerning.
        Now, one of the big issues, and the second one in the
    strategic plan, which I certainly appreciate, was preserving
    public trust, confidence, and understanding. And it talked,
    basically, about the need to educate the public about
    everything that is going on. Now, a lot has happened in five
    years, and we have seen a lot of what some would say is
    lawfare. I certainly would agree with that; I think a number of
    Americans do.
        And I'm wondering what you will do as we approach the next
    strategic plan to deal with these sort of things, where we see
    lawyers who represent President Trump disbarred and threatened
    just for representing him in some cases, and then, we see those
    prosecuting President Trump, basically, given a free pass.
        And so, you could go down the long list of bad practices
    that have happened--you know, from Jack Smith to Fani Willis
    was disqualified from a case, and Nathan Wade from his case,
    but nothing, neither of them have faced disbarment.
        Alvin Bragg turned a misdemeanor into invented law,
    basically, in order to bring indictments. He has not been
    referred for disbarment.
        Letitia James has been, basically, under investigation for
    the very thing she accused President Trump of, and Elise
    Stefanik and others have called for her to be disbarred. She
    has not been referred, you know.
        So, we see a duplicity here and that is where we are
    getting a lot of the mistrust that the Americans have in the
    judiciary right now. I am wondering what your strategic plan
    will do to address those concerns.
        Judge Conrad. So, I would like to go back to your first
    comment and work from there, where you identify that in my
    opening remarks I had referred to the physical security of
    judges and impeachment in the same phrase or sentence. Your
    point is a fair one, and I take it----
        Mr. Cloud. Well, thank you, sir.
        Judge Conrad. As clarification, from the independent
    judiciary's perspective, they do represent two harms. The first
    harm is to judges and their family members who have been
    threatened either by intimidation or actual physical violence.
        In the last several years, the Marshals have----
        Mr. Cloud. Well, we can have the Supreme Court and the
    administrative judge discuss this. You know, I don't think
    there is debate across the aisle as to whether we should
    protect judges, at least, hopefully, in this chamber.
        Judge Conrad. And then, a second point----
        Mr. Cloud. My concern is, what are we going to do to
    restore trust in the American people in a judicial process that
    seems very partisan.
        For example, District judges who think that they can impose
    executive mandates. I mean, you go read Federalist 78 and it is
    very clear the judiciary will have no force or will over the
    purse----
        Judge Conrad. Right.
        Mr. Cloud [continuing]. Or the sword. And yet, we have a
    number of judicial judges who seem to think that they have been
    elected President.
        Judge Conrad. And our system, for 250 years, has functioned
    with one branch having the sword, one branch having the purse,
    and the third branch being, supposedly, the least dangerous of
    the branches.
        There is disagreement, strong disagreement, passionate
    disagreement, with the rulings of district court judges. Our
    tradition of justice has been to challenge those rulings, to
    appeal them, and to get the ruling that you think, as a
    litigant, you are entitled to. It has never----
        Mr. Cloud. But my question was, what were you going to do
    in the strategic plan?
        And my time is up, Chairman, but----
        Mr. Joyce. Your time is up. Thank you.
        The chair now recognizes the gentlewoman from Iowa, Mrs.
    Hinson, for 5 minutes.
        Mrs. Hinson. Thank you, Mr. Chairman.
        Good morning. Thank you so much, Judges Conrad and St. Eve,
    for being with us today and answering our questions.
        In my district in northeast Iowa, we are home to the
    Northern District of Iowa for the U.S. District Court, and we
    are very blessed to have the leadership of our Chief Judge C.J.
    Williams and the strong presence of the court in our community.
        So, I just want to say thank you to the great people who
    work in our federal courthouse. My office also happens to be in
    the building. So, we get to see them on a regular basis.
        And I know how committed our officials are to really
    protecting the integrity of their operations. And I do want to
    make sure that they have the tools necessary to respond to the
    evolving threats that we are seeing.
        And I'm running back and forth between the Homeland
    Security subcommittee meeting and this one. And so, I just want
    to go to kind of an issue that kind of ties into both.
        I also serve on the Select Committee on the Chinese
    Communist Party, and I remain deeply concerned about the state-
    sponsored cyberattacks and threats that we have seen coming out
    of the CCP. This really affects all branches of the federal
    government, including the judiciary. So, we have seen how those
    actors with the PRC are really targeting our federal networks,
    the critical infrastructure there, and even attempting to
    exploit many of those vulnerabilities within our judicial
    institutions.
        So, given this threat landscape that we continue to see
    from the PRC, what specific steps are being taken from the PRC,
    what specific steps are being taken to ensure that the
    judiciary's IT systems and applications are protected from
    these attacks from foreign adversaries? And is there a higher
    level of coordination happening with CISA, with the marshals,
    other federal agencies, to ensure that these systems are safe
    and secure?
        Judge St. Eve. Yes. Thank you.
        Cybersecurity has been a priority of the Judiciary,
    especially since 2021. We have an IT Committee that focuses on
    this. And, yes, we are coordinating with CISA. We have gotten
    input from them on our systems. We have coordinated with the
    White House national cyber director.
        We have a five-year plan that we started in 2022 with this
    committee. We submitted a five-year funding plan for
    cybersecurity and IT modernization.
        On the security side, we have implemented a lot of changes,
    including zero trust architecture and multifactor
    authentication. So, a judge or staff member can't sign in at
    their desktop or remotely without dual authentication now. That
    is one of the standards we have been recommended to put in
    place.
        We are also putting a great effort forward to modernize our
    equipment. Some of it is obsolete, and because it is so old, it
    is really at a security risk. So, by modernizing our equipment,
    we are prioritizing security with that new equipment. And with
    that just comes increased security procedures.
        So, we thank this subcommittee, because a couple of years
    ago we had a cyber debriefing and we talked about the need for
    a five-year plan. And we put a five-year funding plan in place,
    and it is important that we continue to get that money. And we
    have been putting it to good use, yes.
        Mrs. Hinson. Well, I would love to get some more details on
    some of the other things that you have put into place, just
    kind of an accounting of that so far. So, a five-year plan,
    obviously, you know of end up in 2027 to kind of look at maybe
    next steps there. I just want to make sure that we are keeping
    pace with what we need to keep up with that threat.
        Judge St. Eve. We are happy to do that.
        Subsequent to the hearing, the Administrative Office of the
    U.S. Courts provided the requested information directly to the
    office of Rep. Hinson.
        Mrs. Hinson. Yes. So, I appreciate that maybe on follow-up.
        And then, one quick question, as my time is coming to an
    end. You know, when I look at a rural state like mine here in
    Iowa, we know that there can be some barriers to accessing
    federal courts.
        You mentioned judges that are going back and forth. I had
    lunch with the Chief Judge a few weeks ago to talk through some
    of those concerns, especially as the caseloads continue to
    grow.
        So, what are some of the challenges that courts are facing
    in managing this demand and how critical is it that we have the
    adequate number of judgeships to meet those growing caseloads?
        Judge Conrad. So, thank you for that question, because I do
    think there is a need that we proved last year for more judges
    and we hope to use the momentum that we established with the
    Senate and the House last year in terms of all three entities
    agreeing with respect to that need.
        We have a judges bill that is currently in the House right
    now. Our Judicial Conference has recommended 69 new district
    court judge positions and two appellate court positions. And
    those are based on a very careful study of the 94 districts in
    the country and the places where judgeships are most needed.
    And so, that is an area where we could benefit tremendously if
    the positions were created.
        Mrs. Hinson. I think it is the JUDGES Act. So, yes,
    absolutely.
        Well, I appreciate you testifying today, and I think I will
    stay tuned for round two.
        Thank you, Mr. Chairman.
        Mr. Joyce. Thank you, Mrs. Hinson.
        And the chair now recognizes the gentleman from Maryland,
    Mr. Hoyer----
        Mr. Hoyer. I want to thank the chairman.
        Mr. Joyce [continuing]. The ranking member.
        Mr. Hoyer. Thank you very much.
        I don't have any questions, but I do want to make an
    observation on Mr. Cloud's comments.
        I have been here a long time, but in the history of the
    country, I do not think we have had--well, let me, in recent
    times, we have not had the challenge to the Congress's
    authority as we have seen in this administration.
        There are judges, including the Supreme Court, who have
    concluded on a TRO basis, or a temporary basis--I don't know a
    final decision--that the administration is not following the
    law.
        Mr. Cloud observes that the District Court judges are
    somehow accruing to themselves executive authority. I defer
    with the gentleman. What they are saying is, in their judgment,
    the executive does not have the authority that they are
    exercising. That is what checks and balances means. That is the
    essence of our democracy. That is the essence of how one branch
    checks the other branch.
        And I want to make it very clear that the disdain that is
    directed at judges for saying that the executive department is
    not acting consistent with the law and with the separation of
    powers is not accruing to itself executive authority. It is
    doing its job of asserting what the balance, correct balance,
    under law and under the Constitution, is between the three
    branches of government. And I, for one, would hope that judges
    would continue to do that.
        And very frankly, I have been upset with judges in the
    past, as we all get upset, because we disagree with them. That
    is our democracy; we disagree. I have disagreed strongly with
    the Supreme Court, but I have never suggested that, therefore,
    one of them be removed or a group of them be removed because of
    decisions that I didn't like.
        We have a structure to do that. We have Constitutional
    Amendments, which are very difficult. We have statutory law,
    which is not nearly as difficult. And we have elections for
    Presidents and Congress to change policy.
        But I want to make that observation, Mr. Chairman, because
    I think the assertion that somehow judges are accruing to
    themselves authority which they do not have is inaccurate.
        Thank you.
        Mr. Joyce. Thank you, sir.
        Mr. Hoyer. And I'm going to go back to my other hearing
    now, Mr. Chairman.
        Mr. Joyce. Thank you, Mr. Hoyer. Yes, thank you, Mr. Hoyer.
        The chair now recognizes the gentleman from New York and
    the vice chair of this committee, Mr. LaLota for any questions
    he may have in 5 minutes.
        Mr. LaLota. Thank you, Chairman.
        Before I get to my questions, I'm going to yield a minute
    of my time to Mr. Cloud.
        Mr. Cloud. Thank you, and I will keep this really brief.
        I appreciate Mr. Hoyer's thoughts. I would point to the
    Biden administration who willfully did not listen to the
    Supreme Court when it came to student loan programs, among
    other things.
        The District judge's jurisdiction is in the title itself;
    it is a District judge. And the idea that they can have these
    federal injunctions that limit the President's executive
    authority that is clearly--clearly--given to him in the
    Constitution is well beyond the Constitution and should be
    dealt with by this Congress, including impeachment.
        Mr. LaLota. Thank you.
        Judge St. Eve, how are you?
        Judge St. Eve. Fine, thank you.
        Mr. LaLota. Thanks for being with us today.
        You mentioned earlier the increased prosecutions tied to
    immigration crimes, including illegal reentry and cartel-
    related trafficking. Your Honor, do you believe we need more
    immigration judges in this country?
        Judge St. Eve. We probably do. That is outside of Article
    III and outside of my specialty. I get appeals from the Board
    of Immigration Appeals after they have gone through immigration
    judges. But in terms of our budget, that is outside of my
    expertise.
        Mr. LaLota. You have 23 years on the bench----
        Judge St. Eve. Twenty-three years on the bench, but----
        Mr. LaLota [continuing]. In District Courts. You are now a
    Circuit Court of Appeals judge, pretty prestigious. It must
    come with a ton of experience.
        Just as a matter of judicial efficiency, supply-and-demand
    concepts, a lot of immigration cases come before our courts.
    Would we be able to dispense with them more expediently if we
    had more judicial staff?
        Judge St. Eve. Yes. What I see in appeals is that
    immigration proceedings get backed-up because of the volume.
    So, yes, from a pure efficiency standpoint, more immigration
    judges would be able to help process the immigration
    proceedings.
        Mr. LaLota. And based on your 23 years' experience on the
    federal bench, what is the consequence of judicial
    inefficiency, specifically, with respect to not being able to
    dispense with some of these immigration cases?
        Judge St. Eve. It clogs up the system. You see some things
    that take years to complete. That backs up everything behind
    them. And it is expensive.
        Mr. LaLota. Sure. So, let's talk about asylum for a moment.
    My understanding is, roughly, three of every four asylum claims
    are adjudicated in the petitioner's--against the petitioner's
    request; that three of four don't qualify for traditional
    asylum.
        And yet, the standard of this country has been, at least
    under the Biden administration, when somebody claims asylum at
    the border, Biden paroled them to the interior of the country,
    pending their immigration case. It takes years often for that
    case to be heard.
        So, isn't it a consequence of a judicial inefficiency,
    those years it takes to get to those cases, these folks, three
    of four who don't ordinarily qualify for this--isn't the
    consequence you have a bunch of folks in this country who are
    not really here under the authorities traditionally granted
    under asylum?
        Judge St. Eve. It is hard for me to generalize like that
    and say it is because of judicial inefficiency. I don't know.
    Some of the appeals that I see, there are lots of extensions
    requested by the lawyers. There are extensions requested while
    you are waiting to get a lawyer. So, I think it is hard to make
    a general statement that everything could be blamed on judicial
    inefficiency.
        Mr. LaLota. I'm sure we are not blaming everything on it,
    but I would posit that you have a lot of folks in this country
    who feigned asylum on their way in and took advantage of the
    system that was laid out to them--probably not fault of their
    own. The door was wide open. They got paroled into the interior
    of the country. A lot of them found their way to New York,
    where they got the free hotels and the health care, and it was
    an incentive to get there.
        What I'm offering is, if we had a quicker judicial system,
    more judges to dispense with these cases, we could get to the
    point of the game where, okay, you don't qualify for asylum;
    now you've got to go back home.
        So, my question, Your Honor, is, what is the judiciary
    doing to get to a proper staffing?
        Judge St. Eve. So, for staffing, again, immigration is not
    within the budget request that I'm here testifying about today.
    But in terms of staffing, we have work measurement formulas,
    based upon real statistics of what our caseload is. And the
    staffing we request that is in our Salaries and Expenses
    account is based upon those work measurement formulas and what
    our anticipated workload is and what the anticipated caseload
    is. And that is what we base our budget on in our request.
        Mr. LaLota. Great. Real quickly, with the few seconds I
    have remaining, with respect to the border District Courts, are
    they getting the judges and the staffing they need or are we
    stretching existing personnel too thin?
        Judge St. Eve. We are definitely stretching existing
    personnel too thin. And I think, in addition to the court staff
    and the staff in the clerks' offices, there's probation and
    pretrial services staff. And at the border, when you have a lot
    of defendants who are coming through, that really stretches the
    resources of the pretrial services officers and the probation
    officers.
        Mr. LaLota. Thank you, Your Honor. Your feedback is
    valuable to us. We appreciate it.
        I yield.
        Judge St. Eve. Thank you, Congressman.
        Mr. Joyce. Thank you very much.
        The chair now recognizes the gentleman from Missouri, Mr.
    Alford, for any questions he may have.
        Mr. Alford. Well, thank you very much. I appreciate that.
        Good to have our witnesses here. I appreciate your time for
    coming here.
        Justices today face unprecedented threats to their personal
    safety. In an era of social media, mobs who disagree with a
    legal interpretation share personal identifiable information on
    social media. These online mobs encourage violence against
    judges and will dox their home addresses, familiar information,
    and anything else they can get their grubby, little hands on.
        Judge Conrad, how does the judiciary's Threat Management
    Branch help remove this information from the public domain, and
    what can Congress do to ensure the safety of folks like you?
        Judge Conrad. So, for a number of years, we have been
    active in trying to get the Daniel Anderl bill----
        Mr. Alford. Is your mic on, sir?
        Would you please start over?
        Judge Conrad. For a number of years, we have been very
    active, pursuant to the Daniel Anderl bill and other efforts,
    at getting that personally identifiable information offline.
    And we encouraged judges to sign up for DeleteMe-type
    protections, where the internet is scrubbed for personally
    identifiable information. Nearly 80 percent of our judges are
    engaged in those kind of efforts.
        Mr. Alford. What do we need to do to get all of them
    involved in those efforts?
        Judge Conrad. Well, at every Judicial Conference across the
    country, we have a component that deals with judicial security
    and encourages best practices with respect to our judges.
        Mr. Alford. Just over a month ago, a California man pleaded
    guilty to attempted murder of Justice Brett Kavanaugh three
    years ago. He was arrested outside the Justice's residence with
    a gun, a knife, zip ties, in the wake of the Supreme Court's
    Dobbs decision.
        While I understand the Supreme Court handles their own
    threats, has the rest of the judiciary met to strengthening
    security after potentially large decisions like that could sway
    action by mentally deranged people?
        Judge Conrad. Yes, we have active coordination with the
    United States Marshals Service and try to surge resources to
    areas where we can anticipate problems. We have requested
    funding for courthouse hardening projects that will provide
    security to courthouses, and we have encouraged judges and
    supported them financially in obtaining Home Intrusion
    Detection Systems. And so, we are pretty focused on the home
    and the courthouse. Sometimes the vulnerability is in between.
        Mr. Alford. How much money do you need from us to make sure
    that those programs get put in place; that we protect our
    judiciary?
        Judge St. Eve. Well, we are asking for $892 million for our
    Court Security account. That funds our Court Security Officers,
    the Vulnerability Management Program that Judge Conrad just
    mentioned, and it also funds updating security equipment in the
    courthouses. And it is really needed for that last piece
    because that account has been frozen for the last two years.
    So, we have had to take money from that account that was
    intended to update our equipment--to put new cameras in, new
    security measures in--we have had to take that money and use it
    to pay for the Court Security Officers and the Vulnerability
    Management Program.
        Mr. Alford. It is called robbing Peter to pay Paul.
        Judge St. Eve. Exactly.
        Mr. Alford. What happens if we don't get this funded?
        Judge St. Eve. That equipment will become more obsolete and
    increase security risks at courthouses around the country.
        Mr. Alford. Mr. Chair, I respectfully submit that we take a
    good, close look at this, and I know we will, because this is a
    precious part of our government and we need to protect those
    who serve us through the judiciary.
        And with that, I yield back. Thank you, sir.
        Mr. Joyce. Thank you for that observation, and the chair
    totally agrees with you.
        The chair now recognizes the gentleman from North Carolina,
    Mr. Edwards for more questions.
        Mr. Edwards. Thank you, Mr. Chair.
        Let's turn the conversation to technology, something I
    think we don't spend nearly enough time talking about. And when
    I look at your budget request and the historical spending, I
    see that the federal judiciary spends, let's call it about a
    million dollars a year, which doesn't seem like a whole lot of
    money. But I know that, often, money towards technology goes
    into a big, old, black hole.
        Can you tell me a little bit about how that million dollars
    or so is being spent? How much of that is on maintenance? How
    much is on new software development? The portion on new
    software development, how do you know we are getting our
    money's worth out of it?
        I was an appropriator for technology back in North Carolina
    when I served in the senate, and I know we invested tens of
    millions of dollars in new development. Years later, we would
    run into a roadblock and realize we have wasted all the new
    development money that we had and we had to start over again.
        I'm just curious, are you finding those type issues? When
    it comes to the JITF funding, how is that being spent? What are
    your concerns?
        Judge St. Eve. Okay. Thank you for clarifying that,
    Congressman Edwards If I understand, you are asking, in
    particular, about our money into Judiciary Information
    Technology Fund?
        Mr. Edwards. Let's start with that.
        Judge St. Eve. Okay.
        Mr. Edwards. And then, tell me if there is something else
    that I'm not looking at.
        Judge St. Eve. As opposed to some of our cybersecurity
    efforts and the five-year plan----
        Mr. Edwards. Yes, separate from cybersecurity.
        Judge St. Eve. Okay, okay. Thank you for that
    clarification.
        So, our systems are becoming obsolete. And for years, we
    did not put money into IT.
        Mr. Edwards. A common story.
        Judge St. Eve. Yes. Yes. For a long time, people thought IT
    was ``oh, I need my printer fixed.'' And it has changed
    dramatically. But for years, and because we try to be good
    stewards of the money, we put our priority elsewhere. And as a
    result of that, we lost people in IT and our systems have
    become obsolete.
        So, the money that goes to our IT account is going really
    to rebuild those systems and to modernize them. And along with
    that modernization comes security. Part of that money goes to
    bringing on and keeping IT personnel, which is, as you probably
    know, very hard to do, because a lot of IT personnel can earn a
    lot of money if they go outside of the government. And so,
    trying to keep those people is very important to us.
        But we really depleted our IT to a large extent in terms of
    personnel, and we have been trying to increase that because it
    is essential to keeping our systems secure and modern.
        Mr. Edwards. I will, Mr. Chairman, submit some written
    questions. I would like to understand more about this
    investment----
        Judge St. Eve. Of course.
        Mr. Edwards [continuing]. In IT and where you see the
    future.
        But let's shift to AI now. Where does artificial
    intelligence fall into the overall platform or plans for the
    federal judiciary?
        Judge St. Eve. So, the Director--and maybe I will let you
    answer this--has put together an AI Task Force.
        Judge Conrad. Recently, and it is directed both at the ways
    in which AI can be of benefit to the justice system and ways to
    prevent it from being destructive.
        And so, the Task Force consists of gifted people across the
    country identifying the AI issues that we deal with now, and
    hopefully, anticipating them in the future. That Task Force has
    been recently constituted and we look forward to learning a lot
    through it.
        Mr. Edwards. Will you be sharing the results of that task
    force with this committee?
        Judge Conrad. I would be glad to, yes, sir.
        Mr. Edwards. All right. That will be one of my requests in
    my written follow-up.
        Thank you, Mr. Chair.
        Mr. Joyce. Thank you, sir.
        Mr. Alford is good with his questions.
        And I appreciate your time here today. With that, I know
    this has been pretty engaging and fun for you, and our time has
    concluded. But I would like to thank you both for being here
    today.
        I know, as Mr. Edwards has indicated, there may be members
    who would like to submit questions for the record. I ask that
    they submit those records for the subcommittee staff within the
    next seven days.
        And with that, this subcommittee stands adjourned.
        [Whereupon, at 11:09 a.m., the subcommittee was adjourned.]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Written Statements From the Court of International Trade, the Federal
               Judicial Center and the U.S. Secretary Commission

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                                Thursday, May 15, 2025.

                         U.S. FEDERAL TRADE COMMISSION

                                    WITNESS

    ANDREW FERGUSON, CHAIRMAN, FEDERAL TRADE COMMISSION
        Mr. Joyce. The Subcommittee on Financial Services and
    General Government will come to order. This hearing is titled
    ``Oversight of the Federal Trade Commission.'' Members will
    have five legislative days with which to revise and extend
    their remarks and insert extraneous material into the record.
        I now recognize myself for an opening statement. I would
    like to thank Chairman Ferguson for being here today and his
    leadership over the last several months. The Federal Trade
    Commission plays an important role in promoting marketplace
    competition and protecting consumers. Ensuring robust
    competition is vital to fostering economic growth while also
    lowering costs for all Americans.
        Over the last several years under previous leadership the
    FTC routinely strayed from its core mission and stretched the
    limits of its statutory authorities. I am encouraged by the
    commission's renewed focus and direction under your leadership.
        Advances in technology and the emergence of artificial
    intelligence have presented new opportunities and challenges
    for businesses and consumers alike. American innovators are at
    the forefront of these major technological advances. While
    regulators have a responsibility to maintain common-sense guard
    rails, they should do so in a way that does not stifle
    innovation and force good paying jobs overseas.
        The FTC's spending level for fiscal year 2025 was held flat
    from fiscal year 2024 at 425.7 million. Despite that flat
    funding for the last two fiscal years the commission faces
    rising costs for expert witnesses, infrastructure, and
    technology. Furthermore, the recent passage of the TAKE IT DOWN
    Act requires the FTC to deploy additional resources to crack
    down on the publication of non-consensual intimate images
    including those generated by AI. I look forward to hearing more
    about the commission's implementation of this important piece
    of legislation and the additional resources that will be
    required.
        Chairman Ferguson, you have described the Federal Trade
    Commission's role as a cop on a beat. Like police officers the
    commission has a responsibility to enforce the law fairly
    without bias or prejudice. The American people deserve an FTC
    that sticks to its core mission of promoting competition and
    preventing fraud in the marketplace, providing regulatory
    certainty and predictability to the private sector will spur
    economic growth and benefit all Americans through affordable
    prices.
        I look forward to hearing from Chairman Ferguson about his
    vision for the commission and the resources that will be
    required to executed on the Federal Trade Commission's mission.
        I now recognize the ranking member, Mr. Hoyer, for his
    opening statement.
        Mr. Hoyer. I thank the chairman very much.
        Welcome Chairman Ferguson, to the committee. I want to
    thank you for the work that you have done and you are doing.
    You had a very extensive statement, footnoted more than any
    other statement I think I have read for an opening statement. I
    thought I was reading a law brief. But having said that, it was
    very comprehensive.
        But one of the things I noticed in it, and I say this at
    the--well, I am going to ask questions later. I am going to be
    going in and out. It has nothing to do with your testimony. It
    has to do with--we have two hearings going on at the same time.
        One of my top priorities, Mr. Chairman, as you know
    throughout my time in Congress has been making our workers, our
    businesses, and our entire economy more competitive. That is
    why as majority leader I started the agenda that I call Make It
    in America, which obviously is a double entendre. People came
    to America to make it, to succeed. But also the way we are
    going to succeed better is to make it, whatever it may be, in
    America. We are moving towards that effort. But as you point
    out in your statement, it can be a self-defeating effort, the
    larger one enterprise gets and other enterprises are left by
    the wayside.
        Many of the historic bills we passed in the 117th Congress,
    including the CHIPS and Science Act, the Bipartisan
    Infrastructure Law, and the Inflation Reduction Act, were
    designed to promote competition and to grow manufacturing and
    our science research in America. That is the objective we ought
    to all share. If you support innovation, if you support growth,
    if you support development, then you have to support
    competition.
        I tell my Democrats if you want to be pro-worker, you need
    to be pro-employer. Both need to be in equilibrium, both have a
    role to play, and both need a referee. You talked about cop on
    the beat. Referee.
        If you recognize the importance of the free market as I do,
    then you have to recognize how crucial it is to keep it free
    and keep it on market. The FTC is essential to that mission to
    promote fair competition and protect American consumers. It
    breaks up monopolies that inflate the price of everything from
    groceries to gas to health care. It protects Americans from
    scam calls, fraud, and unfair business practices. It stands up
    for Americans' privacy rights, going after businesses that
    misuse or fail to secure their personal data.
        One thing I may just--it ticks me when I get advertisements
    that I don't ask for on this device which I own. I don't know
    whether there is a solution to that, because obviously they got
    to pay for the product they ``give me,'' in quotes. But that is
    a particular concern I have that you may pay attention to. The
    FTC needs to maintain public trust and credibility to do this
    vital, non-partisan work.
        Now I mentioned non-partisan work. What I was starting to
    say--let me say I noticed at least three times in the opening
    sort of synopsis of your statement that you use the term the
    ``Trump-Vance FTC.'' I was caught by that because I don't see
    that very often in statements that are made. Actually it is
    America's FTC. Now you are appointed. You are a Republican--I
    am a Democrat, so we have different points of view. But we need
    to make sure the agenda of the administration really needs to
    be, in this case from your perspective, the agenda of what the
    FTC is intended to do. Now we may have differences on that, but
    I would urge you to do it in as non-partisan a way and very
    frankly I urged your predecessor to do the same thing. There
    would be different views to whether that was accomplished.
        The FTC needs to maintain public trust and credibility, as
    I said, and that will help I think. That is why the agency has
    always been independent. I am deeply concerned by this
    administration's efforts, frankly, to undermine not only the
    independence that that--naming it the Trump-Vance FTC would
    imply, but it also will creep--it seems to be creeping into
    almost everything we do, where so-called non-loyalists are
    being fired. They need to be loyal to the country and to the
    oath that we all take to the Constitution and the laws thereof,
    not to any individual or group of individuals.
        In March Donald Trump violated 90 years of Supreme Court
    precedent when he fired two Democratic FTC commissioners
    without any legal cause, which under the law is required. Those
    two commissioners are challenging that action in court. I hope
    they win. And if it is anything like the dozens of other cases
    we have seen in the past four months, I believe the courts will
    likely rule against the administration.
        One more minute?
        Nevertheless, he Trump's attempt to politicize the FTC
    ought to concern us all. So should the reports that Elon Musk
    and his DOGE agents may be able to access sensitive financial
    data the FTC compiles on American businesses including Musk's
    competitors. That is the opposite of the FTC's purpose and we
    must not let it happen. Democrats and Republicans need to come
    together to protect this vital institution and ensure that it
    has the resources it needs to keep serving the American people.
        I thank FTC's Chair Ferguson for joining us today and I
    hope that he can address some of these concerns that speak to
    the importance of this funding. The American people are
    counting on the FTC and the FTC is counting on this committee.
        Thank you very much, Mr. Chairman.
        Mr. Joyce. Thank you, Mr. Hoyer.
        Today we welcome the testimony of the Honorable Andrew
    Ferguson, Chairman of the Federal Trade Commission.
        Chairman Ferguson, without objection, your full written
    testimony will be entered into the record.
        [The information follows:]
        Mr. Joyce. With that in mind, we ask you to please
    summarize your opening statements in five minutes.

                      STATEMENT OF ANDREW FERGUSON

        Mr. Ferguson. Thank you, Mr. Chairman, Ranking Member
    Hoyer, members of the subcommittee. I am Andrew Ferguson,
    Chairman of the Federal Trade Commission and I am pleased to
    appear before you today to testify about the FTC, its
    competition and consumer protection priorities, and how we are
    restoring the agency's financial health and public credibility.
    I am also pleased to be joined by our newest commissioner, Mr.
    Mark Meador.
        I was profoundly honored when President Donald J. Trump
    appointed me to lead the agency in January. President Trump's
    resounding victory in the 2024 election has given him a broad
    mandate to restore our economy. Restoring our economy requires
    a dynamic business environment characterized by increasing
    innovation, wages, productivity, and growth. The fruits of such
    an economy must be enjoyed by all Americans particularly the
    backbone of our economy, our workers.
        Vigorous and effective consumer protection and competition
    law enforcement is key to facilitating a dynamic pro-worker
    economy and I am honored to be the chairman of the FTC under
    President Trump and to help drive this pro-growth, pro-worker
    agenda.
        I am also honored to run an agency that is filled with
    lawyers, economists, investigators, and professional staff who
    are tirelessly dedicated to the rule of law, to promoting
    competition, and to protecting consumers. They are the life
    blood of the FTC and we owe our success to them.
        We also confront challenges. Poor management decisions made
    by the previous administration have spread our resources thin.
    Thankfully the measures we have taken to restore fiscal health
    to the FTC align with the President's directives to ensure that
    the agency is operating as efficiently and effectively as
    possible in the fulfillment of its mission to protect the
    American people from monopolies and frauds.
        I resolutely believe in the mission of the FTC. No economic
    system in history has promoted the common good more than the
    American free enterprise system. No economic system has
    contributed more to human flourishing, but our free enterprise
    system promotes the common good of all Americans only if we
    protect it from anti-competitive business practices, anti-
    competitive consolidation, and fraud.
        Without vigorous enforcement of our competition and
    consumer protection laws our free enterprise system would
    benefit only the wealthy and the corrupt. For that reason the
    Trump-Vance FTC has gone back to the agency's roots. Vigorous
    enforcement of the law is our focus.
        Congress established the FTC to be a cop on the beat for
    our markets, not to make the rules. We enforce the laws that
    the people through their representatives in Congress have
    decided best promote competition and fairness. We investigate
    wrongdoing and if we believe violations of the law are taking
    place, we bring lawsuits. If we don't, we get out of the way
    and let markets promote innovation and growth.
        We seek to protect competition and combat fraud through
    vigilant, fair, and thorough investigations and litigation
    where necessary. The FTC is here to defend our free enterprise
    system and make it work for everyone. We want to protect
    Americans when they shop for groceries, when they go to the
    hospital, and when they speak online.
        My written testimony discusses in more detail the FTC's
    important work to protect U.S. consumers and competition as
    well as a brief overview of the FTC's budget, resources, and
    cost saving endeavors. Today I will briefly highlight some of
    the agency's major recent activities and initiatives.
        We are focused on protecting Americans in the markets that
    affect them the most. That is why we have focused substantial
    resources on protecting Americans online. We have ongoing
    competition litigation against major big tech platforms under
    both the consumer protection and competition laws. This
    continues to be a major priority.
        For the same reason we are intently focused on health care
    markets. The first major competition action undertaken by the
    Trump-Vance FTC was to enjoin a merger of medical device
    manufacturers that the commission alleges would have increased
    the prices of medical devices used by millions of Americans. I
    am deeply concerned by the increasing prices across all of our
    health care markets. The FTC will do everything that it can to
    ensure that prices in health care markets are the product of
    vigorous competition and that our health care markets are free
    of deception and unfairness.
        We are also going beyond our law enforcement efforts in the
    health care space by using our Section 6(b) authority to
    examine the operations of the nation's pharmacy benefits
    managers, an industry that manages nearly 95 percent of all
    prescriptions filled in the United States.
        As part of that probe the FTC issued interim reports in
    July 2024 and January 2025 on PBM markups of specialty generic
    drugs. There is still much work to be done on this report and I
    have made completing this report quickly and thoroughly one of
    the FTC's highest priorities. I look forward to presenting it
    to Congress when it is completed.
        We continue to focus on protecting vulnerable Americans
    from scams and frauds. The FTC has a long and proud history of
    protecting elderly Americans, veterans and their families from
    scams and frauds through both education outreach and vigorous
    law enforcement. We are not taking our foot off the gas on that
    front.
        Similarly, protecting the vulnerable requires us to protect
    our children and teens as well. We are implementing an updated
    rule on the Children's Online Privacy Protection Act and will
    be hosting a workshop entitled, ``The Attention Economy: How
    Big Tech Firms Exploit Children and Hurt Families.'' This event
    will bring together parents, child safety experts, and leaders
    from across the Federal Government to discuss how big tech
    companies impose addictive design features, erode parental
    authority, and fail to protect children from exposure to
    harmful conduct. I look forward to hosting that in less than a
    month.
        Again, thank you for the opportunity to testify about the
    priorities of the FTC. We look forward to continuing to work
    with this subcommittee and with all of Congress. I am happy to
    answer your questions.
        [The information follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Joyce. Thank you, Mr. Chairman.
        I now recognize myself for an initial question.
        Chairman, under the Biden administration the FTC took an
    aggressive and unprecedented approach to enforcement and
    rulemaking. The commission stretched its statutory authorities
    and at times looked like it took a hostile view towards mergers
    and acquisitions.
        Under your leadership how will the FTC make a different
    approach going forward, or will you take a different one? And
    if yes, how?
        Mr. Ferguson. Mr. Chairman, I agree with you. I think that
    the FTC under the previous administration had a bit of an
    ideological bent against mergers and acquisitions. And my view
    is that mergers and acquisitions are a very critical part of
    how the economy grows and how we get innovation. Founders/
    innovators need access to capital and people will not invest in
    new ideas if they can't get their investments back. And mergers
    and acquisitions is part of how capital flows to innovators and
    innovators get their new ideas to us in the marketplace. So M&A
    is very important.
        At the same time protecting Americans from monopolies and
    from anti-competitive conduct is very important, and that is
    our job. I see it as the FTC's mission to serve as a cop on the
    beat in the M&A space. If we think that a deal is anti-
    competitive and we think we can win in court, we are going to
    go to court. And if we can't, we are going to get out of the
    way and we are going to get out of the way quickly. Congress
    set timelines by which we are supposed to examine M&A activity
    and we are going to stick by those timelines. That is on the
    front end.
        On the back end the big change is that we are open to
    merger remedies at the FTC. My colleague Gail Slater at the
    Department of Justice has said the same thing. The previous
    administration prohibited remedies as a way to address anti-
    competitive conduct that didn't require blocking a whole
    merger. We are open to remedies negotiations with parties. The
    remedies have to be real, they have to be enforceable, and we
    have a strong preference for structural remedies over
    behavioral remedies.
        But in order to make sure that we are preventing as much
    anti-competitive conduct as we can we have to recognize that
    sometimes we can eliminate anti-competitive features of mergers
    without blocking the whole thing, and we have to be open to
    doing that. So on the M&A front those are the biggest
    differences between the previous administration and the current
    one.
        Mr. Joyce. Are there any specific enforcement actions or
    rulemakings that you are looking to reverse?
        Mr. Ferguson. We tend not to discuss the deliberations on
    that stuff. I wrote lots of dissents in the previous
    administration on both rulemakings and enforcement actions. And
    one of the things that we did when President Trump was sworn in
    is that we did not accept on faith the lawfulness,
    reasonableness, or the prudence of any ongoing enforcement
    matter or investigation and are conducting our own review top
    to bottom of everything that we inherited.
        If we think it is unlawful, if we think it is a poor use of
    agency resources, if we think it is inconsistent with
    administration priorities, then we will take steps to eliminate
    it, to change it, to align it with the law. If we don't, we
    will continue it. But particularly given that the FTC at the
    end of the Biden administration raced a huge amount of material
    out the door, we are conducting a thorough review. And as we
    find things that we think are either unlawful or inconsistent
    with administration priorities, we will be changing them.
        Mr. Joyce. Complex antitrust cases such as the proposed
    Kroger-Albertsons merger have required the FTC to spend
    millions of dollars on expert witnesses and data storage and
    analytics. How much does the FTC spend on expert witnesses and
    data analytics each year and are these growing costs inhibiting
    the commission's ability to be--to bring and successfully try
    antitrust cases?
        Mr. Ferguson. It is not inhibiting our ability to do it,
    but it is a serious challenge that we are confronting. We have
    a Bureau of Economics at the commission with some of the
    country's most talented economists. They do unbelievable work,
    both at the investigative stage and at the litigation stage. We
    could not do our enforcement work without the Bureau of
    Economics.
        But a lot of our cases, not just big tech cases--a lot of
    our enforcement matters require us to onboard massive amounts
    of data in order to investigate potential wrongdoing and
    proceed to litigation where appropriate. And we don't currently
    have the infrastructure to house, maintain, and access those
    data in a meaningful way so we end up paying vendors a lot of
    money to do that for us.
        We ran a pilot program at the end of the previous
    administration on ways to reduce those costs by bringing some
    of that infrastructure internally. It was very successful. We
    have been working with other parts of the government to expand
    that pilot and make it programmatic at the FTC.
        On the expert front, you are right, expert witnesses are
    expensive. Even with our very talented economists in the Bureau
    of Economics we often have to hire industry specialists,
    experts from outside the agency. We are imposing budgeting
    requirements within the agency for the first time as far as I
    know in the agency's history to make sure that at the outset of
    litigation everyone knows what the agency is willing to spend
    and we constrain the agency to spend only those resources on
    litigation. That is going to help save us a lot of money by
    avoiding the ballooning problem at the end of litigation we
    have had in the past.
        Mr. Joyce. Thank you. The chair now recognizes the lady--
    gentlelady from Washington, Ms. Gluesenkamp Perez, for five
    minutes for any questions she may have.
        Ms. Gluesenkamp Perez. Thank you, Mr. Chair.
        And thank you, Chair Ferguson, for being here. I appreciate
    the work you are doing. Before becoming a congresswoman I ran
    an auto repair and a machine shop and care deeply about a level
    playing field for small businesses. That is how we build wealth
    in this country is a diversity and a level playing field. I
    think it is a lens of being pro-business and antitrust.
        And one of the things that I have heard in your testimony
    is about the expert witness testimony, but I have also had
    questions about how many people on staff in your department
    that don't have a college degree because--and even mechanics I
    know could point to a headlight assembly and tell you that
    there is an issue going on when you can no longer replace a
    single light bulb and you have to do the entire assembly for
    $700 where we used to do it for 3. And it is these kinds of
    things in the lens of I think experience of like what is
    important to people? There are big arguments and then there are
    the kind of--the things that make or break a household budget.
    And those things I think are often best informed by having a
    plurality and diversity of experience. And so I am wondering
    how you are choosing to balance the credentialing of your team.
        Mr. Ferguson. So I agree with you that having diverse
    experiences and viewpoints is super important for the FTC to do
    its work. I think for all government agencies there is an
    unfortunate bureaucratic impulse to sort of look only inside
    the Beltway, interact only with the interests that have inside-
    the-Beltway presences, and that generally small and medium-
    sized businesses will suffer as a result because they are the
    ones that can't go to the lobby shops in Washington and
    inundate Congress and the Executive Branch with lobbyists. So I
    certainly agree with you.
        We are a law enforcement agency and almost all of our work
    winds up in court, which means we end up being very lawyer-
    heavy. We hire from law schools all across the country. Even on
    the commission itself we have two commissioners who graduated
    from state schools. The previous administration had focused a
    little heavy on the Ivy Leagues for commissioners. I went to a
    state school. One of my colleagues went to a state school. We
    are from all over the country. That lends itself to diversity
    of experience and makes sure that we don't get tunnel vision
    from within the Beltway.
        So I agree with you. It would be very easy to lose focus on
    the things that matter to Americans on the ground around the
    kitchen table without a diversity of experience. And that is
    important to me at the FTC.
        Ms. Gluesenkamp Perez. Yes, I think there have been
    arguments about needing a larger budget to be able to expand
    the staff, but I think it is about the prioritization of how
    respect--who deserves a seat at the table and identifying and
    prioritizing the experiences.
        One of the things that I have been looking at--if you--I
    don't know, my washing machine is from 1997, but a lot of the
    newer ones, it is like they are playing Tchaikovsky. And they
    don't last more than six years and there is very clear design
    issues why that is happening. Having more information as a
    consumer about what the expected life--what the life
    expectancy, what the annual maintenance costs, those kinds of
    ways to get at--not building more agency, more bureaucracy, but
    saying let's--people just deserve the right to have more
    clarity of information and would certainly appreciate your
    support in identifying some planned obsolescence strategies as
    well as obfuscation of the durability of a given product might
    be. Your thoughts on that?
        Mr. Ferguson. I would love to work with you on it. Look,
    the FTC's most important consumer protection mission is
    preventing deception. And deception under Section 5 is not just
    straight out lies. It is also omitting things that would be
    important and material to consider before he or she decides to
    purchase something. And misrepresenting either intentionally or
    through omission the life span of a product is potentially a
    problem. So I am more than happy to work with you on that in
    industries where you think that is a particular problem and
    requires our focus.
        Ms. Gluesenkamp Perez. You go to McDonald's?
        Mr. Ferguson. Not often, but sometimes yes.
        Ms. Gluesenkamp Perez. Yes, you know about the issue with
    the ice cream machines?
        Mr. Ferguson. I am aware that it is sometimes difficult to
    get a McFlurry when you want it. [Laughter.]
        Ms. Gluesenkamp Perez. Well, I have appreciated the work
    that has happened to ensure that people who are buying
    equipment have the right to fix it. Whether we are talking
    about a car, an ice cream machine I think there are some very
    embedded paternalistic attitudes towards who has the right and
    the agency and what a material environmentalism and applied
    environmentalism is in making things that last longer and
    having clarity for the owners. This tort law goes back to the
    1400s. You bought it; you have the right to fix it and maintain
    it. And I am hoping that we are seeing a continuation of that
    and a seriousness of building wealth and economic self-
    determination in America.
        Mr. Ferguson. My grandfather had a Ford tractor from the
    1950s with which he tinkered up until his death. And I grew up
    in a farming community, so I understand particularly to farmers
    the importance of being able to repair your equipment without
    having to go back to the manufacturer.
        We have an ongoing case against John Deere on this issue.
    This is also an issue that the states have started to address
    legislatively. I know that there has been legislation Congress
    has passed on this front, and other legislation considered.
        Insofar as preventing someone from repairing violates
    Section 5, we are prepared to enforce it. We also want to
    recognize that generally the best approach to problems is to
    let the people's representatives, both in the state
    legislatures and in Congress, to address it first. And so we
    don't want to interfere with those efforts. But this issue is
    important to me. I grew up around this issue. I hear you loud
    and clear.
        Ms. Gluesenkamp Perez. Thank you. I yield back. Thank you.
        Mr. Joyce. Thank you.
        The chair now recognizes the distinguished gentleman from
    Arkansas, Mr. Womack.
        Mr. Womack. Thank you, Mr. Chairman.
        And, Mr. Chairman, welcome. You are a breath of fresh air.
    I got to say that. My words, in my strong opinion in--the last
    administration was more agenda-driven. And in listening to your
    testimony this morning and then in our private conversation you
    seem to have the view that your job is like that of an umpire,
    of a referee to make sure that you are holding the people and
    the institutions that are subject to your purview accountable.
    And again my words; certainly not yours. And so it is from that
    standpoint that I think you are on the right course of getting
    the FTC back to the nuts and bolts, the blocking and tackling,
    if you will, of what the commission was set up for.
        I do have a question about budget though. When we had our
    conversation--and these are appropriators up here. So it is our
    job to fund the discretionary side of the government. And yours
    is part of that. We don't have clarity right now. And we need
    clarity. My assumption is, and I want to be clear that it is
    just an assumption, that there will be many agencies that will
    be facing some budget adjustments, some cuts, if you will. And
    where is the FTC right now with regard to the prospect of
    having to settle for less and be able to continue to function
    as a reputable institution within the government?
        Mr. Ferguson. The agency that I inherited, even at current
    funding levels, was in a very difficult position. The previous
    administration had hired employees at levels far beyond what we
    could afford.
        Mr. Womack. Would you call it bloated?
        Mr. Ferguson. It was bloated. There was a two-year hiring
    spree that got us to levels that we couldn't sustain. It was
    important to me coming in as chairman to make the difficult
    decisions necessary to restore fiscal health to the agency.
        And so as the President has, with what he ran on in the
    2024 election, oriented the government towards efficiency and
    being no larger than necessary to carry out its critical
    missions for the American people. We were already well underway
    on getting the agency down to a size consistent with what this
    body had appropriated us. We were sort of ready to go on that
    front.
        Consistent with the President's agenda as well, we have
    been conducting a thorough review of our contracting. We have
    already reduced contracts spend for this fiscal year by more
    than $6 million. We also, as I discussed earlier, are
    undertaking steps that we are very optimistic about that will
    over the course of the next several years shrink the amount of
    money we have to pay outside vendors to house our data in some
    of our big and important investigations and litigations.
        So we are well on our way to being prepared for whatever
    budget this committee decides to appropriate for the FTC.
        Mr. Womack. In other words, counter to what a lot of agency
    heads would suggest. They need more money. They need more
    people. They need more resources. It sounds to me like that you
    feel like you can--the FTC can do its job on----
        Mr. Ferguson. And that is a testament to the FTC staff. I
    would put the FTC staff up against the staff of any agency,
    civilian or Federal, in the Federal Government. And whatever
    this committee decides to appropriate to the commission, the
    American consumers will be protected by our staff.
        Mr. Womack. In the President's executive order agency
    heads, in consultation with the FTC chair and the U.S. Attorney
    General, complete a review of all agency regulations under
    their rulemaking authority and determine which rules create
    anti-competitive barriers. How do you plan to execute antitrust
    enforcement in recognition of this particular executive order?
        Mr. Ferguson. President Trump has put out a bunch of
    amazing executive orders. I am not sure I am as excited about
    any of them as I am on this one. So when we talk about
    competition in America we generally think about monopolies and
    consolidation and price fixing, which is appropriate.
        But one of the biggest obstacles to competition,
    particularly to small and medium-sized businesses, is
    regulation. And I worked on the Hill. I have seen it in action.
    I have worked in state government. I have seen it in action.
    Big businesses will often come in to the government and propose
    regulations that they can comply with quite easily but that
    make it very difficult for competitors to rise and challenge
    them. And the President's executive order tells us look through
    the entire Code of Federal Regulations. Find regulations that
    are barriers to entry, that raise rivals' costs, and get them
    out of there.
        So we put out an RFI to the public. We said if you--
    especially small businesses--if you are aware of regulations
    that benefit your competitors but make it harder for you to
    compete, tell us. We will review them. We will make
    recommendations to the President.
        We also sent letters to every agency head in the Federal
    Government asking them to do the same thing. We will have
    economists and lawyers at both the Department of Justice and
    the FTC reviewing these regulations as they are identified to
    us. And I am very excited when we eventually send the list to
    OMB and the President on our recommendations for de-scoping and
    deletion.
        Mr. Womack. Yes, one final comment because I may not be
    around for--if we have a second round of questions and I want
    to be able to say this in regard to what you just discussed.
    And that is I am sure hopeful that among those things that are
    considered in this context is Section 1071 of the Dodd-Frank
    Act because that is--and Ms. Gluesenkamp Perez and I both agree
    that this small business side of the equation is where the jobs
    are created and where we need to be creating emphasis as far as
    the FTC goes. But that is one that is very punitive to our
    banking community.
        So I applaud you for the work that you are doing. Keep it
    up. And we look forward to getting to your budget. Thank you.
        Mr. Joyce. Thank you, sir.
        The chair now recognizes the gentleman from Maryland, Mr.
    Ivey, for five minutes of questions.
        Mr. Ivey. Thank you, Mr. Chairman.
        Good morning, Mr. Chairman. I want to thank you for
    appearing here today. I appreciate your opening comments. I
    look forward to the report you are going to come back with with
    respect to PBMs. I think it is a very important issue. It is
    also a very complicated issue. So adding your insight, your
    agency's insight will be especially helpful.
        I didn't follow the medical device merger issue in detail,
    but I was pleased to see that you are open to enjoining a
    merger. Your opening comments I think reflect the fact that you
    are trying to call the balls and strikes, that you are not
    trying to be ideological about it. I appreciate that.
    Continuing the ongoing litigation with big tech I thought was
    interesting as well.
        And I believe you--well, the FTC upheld the junk fees, I
    will call it, determination, which I think is important. I
    think it is really one of those things that is tremendously
    helpful to people across the board.
        And I do want to join with my colleague from Washington
    State on the right to repair issue. I think that is one that is
    very important. Business-to-business conflicts, that is one
    thing, but a lot of these scenarios we have individuals. You
    talked about a farmer owning a tractor with respect to John
    Deere. And I know that is ongoing. But that is the kind of
    scenario we--I think we really need you to step up and make
    sure that people are protected so that they can just take care
    of basic things to run their business or take care of their
    appliances. McDonald's, I am not a big McFlurry guy, but if
    they get a break along the way, that is fine.
        Click to Cancel is another one that I think is--could
    really be helpful to a lot of people across the board. I know
    every time I try and cancel something that frequently one of my
    kids signed up for, it takes forever to do it. You can sign up
    in a minute, but getting out of it can take half a lifetime. So
    I appreciate anything you can do on that front as well.
        I do want to say this with respect to the noncompete issue.
    And you opened by talking about the importance of workers and
    how they are the backbone of the economy and you want to take a
    pro-worker approach. The noncompete piece--in my experience
    when I was practicing corporation-to-corporation, no poaching,
    that kind of stuff, I get it. But there is a lot of times when
    have workers, individuals who really don't have negotiating
    capability with respect to larger corporations and they want to
    try and move to do another job or find other types of
    employment might have some situation where--beyond their
    control. And these clauses can really get in the way and
    hamstring them.
        And I took a look at your dissent on that issue and I
    appreciate your views on it. I know a lot of that is procedural
    and I don't mean to belittle that, but this is a very important
    restriction on what regular people can do from an employment
    standpoint. And I hope that you will be able to find a way to
    address that with respect to people who don't have that kind of
    power. They can't hire the big lobbyists, as you mentioned.
        And I want to close with this, and I know this is ongoing
    litigation as well, the termination of Commissioners Slaughter
    and Bedoya. As you know, caught a lot of people's attention.
    That would include me. And I know it is still kind of in court,
    just getting underway, but one of the things that concerned me
    about that was it didn't appear that there were any grounds for
    the termination.
        Now, I note that you issued a statement with respect to it
    I think on the day they were terminated. And in the statement
    you issued you didn't reference the standard for termination:
    inefficiency, neglect of duty, or malfeasance in office. And
    you supported the termination, but not on statutory grounds,
    not on legal grounds. And I think that is pretty significant,
    especially given your background. I took a look at your 40-page
    dissent. A Supreme Court clerk. You mentioned being from a
    state school. You didn't mention it was UVA, which is a little
    more than a regular state school. [Laughter.]
        Mr. Ferguson. They will appreciate you saying that.
        Mr. Ivey. Well, my brother will, too. But my larger point
    though is you didn't hit on the law in the statement that you
    gave. You are a defendant in the case, so I know you will have
    a chance to explain your position at length, but I think it is
    important for us to make sure we understand that independent
    commissions are supposed to be independent. The President
    certainly has the authority to make appointments. And as you
    pointed out, he just did. But there is supposed to be a
    partisan balance to these and those terminations upset that
    balance from a statutory standpoint.
        So you are in the middle of the case. I want to commend you
    overall in general for a lot of the positions you have taken
    and I look forward to working with you going forward.
        Mr. Joyce. Thank you. The chair now recognizes the
    gentlelady from Iowa, Ms. Hinson, for any questions she may
    have.
        Ms. Hinson. Thank you, Mr. Chairman.
        Good morning, Mr. Chairman. Thank you so much for coming
    before our committee to testify and for the great work that you
    and--you mentioned the incredible staff that you have at the
    FTC who are keeping American consumers protected. I really
    appreciate that great work that you are doing. Obviously
    holding the bad actors accountable and ensuring that we have a
    system that doesn't burden our small businesses with excessive
    regulations remains a priority. I am really excited to hear
    that we share that priority.
        One area that I think is a raging example of that is the
    pharmacy benefit managers. And I know there has already been
    discussion about that report this morning, but I think people
    are getting fed up of seeing people profit off of sick
    Americans and pushing many of these independent pharmacies in
    small rural communities like many in my district out of
    business.
        And just this week we actually had a fellow Iowan and
    president of the American Pharmacists Association, Dr. Randy
    McDonough. He testified in front of Senate Judiciary Committee
    this week that in Iowa alone 200 pharmacies have closed since
    2014. A record 31 pharmacies closed in 2024. I mean those
    numbers are staggering to me. When we think about access to
    health care, access to those live-saving drugs, really, really
    important that we find a solution here.
        The FTC obviously released the interim report in January
    revealing that the big three PBMs impose markups of hundreds of
    thousands of percentages on numerous specialty generic drugs
    dispensed at their affiliated pharmacies. So I think we are all
    trying to wrap our heads around how they have been able to get
    away with this for this long. Can you talk a little bit about
    the FTC's plans to not only continue but ultimately complete
    this study and release that final report?
        Mr. Ferguson. Absolutely. The commission has gotten huge
    quantities of data from the PBMs and the GPOs, and we are going
    through it. I think it is very--in my view as I said in my
    concurrence to the first interim report, it was a bit rushed.
    The work was not the FTC's best. There were substantial
    improvement in the second interim report.
        My view is that whatever we next produce needs to be a
    very, very thorough accounting of all the data we have and of
    all the issues it presents so that legislators here in Congress
    and in the states and policy makers throughout the Federal
    Government and the state governments have our full
    understanding of what is going on in these incredibly
    complicated markets.
        We are devoting a ton of resources to getting this done. I
    want it done as quickly as possible, but I do not want speed to
    be the enemy of thoroughness. So we are trying to sort of
    thread the needle to make it as thorough, comprehensive as
    possible, which includes interacting with PBMs to hear their
    side of the story while also making sure that we have a full
    understanding of what's actually going on in these markets and
    that you all have it as soon as possible.
        We have other PBM matters ongoing. This is all public, but
    we took Caremark to court in the District of Columbia just a
    couple months ago because they were refusing to comply with
    some of our orders in a law enforcement investigation, and we
    won. They were ordered to comply. That was a significant win,
    not just for our PBM investigation, for our investigative
    authority across the board. And we have an ongoing
    administrative adjudication involving PBMs and insulin. It is
    difficult for me to talk about that one because I sit as a
    judge in the course of that proceeding. But this is one of our
    critical priorities at the FTC because health care is one of
    our critical priorities.
        Everyone participates in health care markets and the prices
    in health care are going up across the board. And the rate at
    which people have to use the health care markets is also going
    up across the board. And I don't think competition is a panacea
    to the health care cost crisis in this country, but at least
    the FTC can make sure that everyone is competing within the
    bounds of the laws that Congress has passed. And that is what
    we are focused on.
        Ms. Hinson. Yes, this is about a level playing field and--
    --
        Mr. Ferguson. That is right.
        Ms. Hinson [continuing]. Protecting consumers at the same
    time. And I think that my--I think all of us policy makers are
    trying to get to a point where we figure out how did we get
    here in the first place, right? So I don't know if you have any
    insight in that when you think about the FTC's job to protect
    consumers and here we are decades into this experiment with
    PBMs and we have kind of opened Pandora's box I think.
        And to your point about trying to be thorough here, time is
    of the essence because we are seeing states take action. My own
    home state of Iowa just passed--they just ended their
    legislative session I think at like 6:30 this morning, but they
    just passed Senate File 383. It is one of the most
    comprehensive state-level PBM reforms in the country. And so I
    mean do you have any insight on just overall observations on
    how we got here and why these steps were not being taken along
    the way?
        Mr. Ferguson. So I have my suspicions, but I don't want to
    get ahead of the report. I want the FTC's work, having analyzed
    all the data, to be our definitive statement on this. So if you
    will permit me, I will let the report when it is ready for
    release to Congress speak on this.
        I also think it is important--I think state and federal
    legislative action to address the problems that may be posed by
    PBMs are good. It is always better for the people's
    representatives to confront the people's problems rather than
    deferring to the bureaucrats.
        I think the report will be very helpful as Congress and the
    state legislatures are trying to figure out what to do. But I
    think we should all welcome legislative action on this because
    you all understand the needs of your constituents better than
    anybody else, including their relationships with the PBMs.
        Ms. Hinson. Yes. And the need for lower-cost prescription
    drugs, for sure. Thank you so much, Mr. Chair, for coming.
    Appreciate it.
        Mr. Ferguson. Thank you.
        Ms. Hinson. I yield back.
        Mr. Joyce. Thank you.
        The chair now recognizes the gentleman from Wisconsin, Mr.
    Pocan, for five minutes.
        Mr. Pocan. Thank you, Mr. Chairman.
        And thank you for being here today. Sorry I missed the
    opening testimony. We have, you will see Steny here in a second
    here, battling hearings going on.
        One of the things that I think that I really appreciated
    about Former Chair Lina Khan was keeping the FTC independent.
    And you have mentioned that a number of times.
        In 2023 you testified to the Senate during your
    confirmation process that if confirmed as an FTC commissioner
    ``I will abide by binding Supreme Court precedent,'' and then
    you went on to cite Humphrey's Executor v. United States as the
    precedent that you would support. As you know that case upheld
    the independence of the FTC and specifically limited the
    President's ability to remove a commissioner.
        While the President has illegally fired two of your fellow
    commissioners and you went on to publicly support his actions
    on March 18 you said that, quote, ``President Trump is vested
    with all of the executive power in our government. I have no
    doubts about his constitutional authority to remove
    commissioners.'' So that is in direct conflict with what you
    said when you testified before the Senate in 2023.
        So what is accurate? What you said when you were under oath
    in front of the Senate or what you said most recently when
    Donald Trump broke the law?
        Mr. Ferguson. I am a defendant in that litigation, but I
    can tell you what the brief said because the brief is filed in
    my name.
        Mr. Pocan. Yes, and I would like to get to three subjects
    during my time, so----
        Mr. Ferguson. Sure.
        Mr. Pocan. Yes, thank you.
        Mr. Ferguson. Sure. Humphrey's Executor is good law. It
    governs the removal protections for the 1935 FTC. As I am sure
    you know as well as I do, the 2025 FTC has orders of magnitude
    more authority than the 1935 FTC. And what the Supreme Court
    said in 2020 in Seila Law is that the Humphrey's Executor
    exception does not apply to federal agencies that wield
    substantial executive power.
        Mr. Pocan. So the question I had is which was the accurate
    statement?
        Mr. Ferguson. Both of them are accurate.
        Mr. Pocan. Okay.
        Mr. Ferguson. What I said in 2023 is Humphrey's Executor is
    good law, which is true, as is Seila Law. The Supreme Court's
    definitive----
        Mr. Pocan. Mr. Chairman, I would like to enter into the
    record just the comments from that Senate hearing just so I can
    have it entered as well.
        [The information follows:]
        [GRAPHIC] [TIFF OMITTED] T2243.089

        [GRAPHIC] [TIFF OMITTED] T2243.090

        Mr. Joyce. Without objection.
        Mr. Pocan. Thank you very much.
        Okay. So hopefully we can get two more subjects--two--I am
    going to do it fast as I can. I apologize.
        Last year the FTC uncovered in the proposed merger between
    ExxonMobil and Pioneer Natural Resources Pioneer's CEO Scott
    Sheffield conspired with a foreign entity, OPEC, to raise gas
    prices for Americans. This price fixing likely cost consumers 2
    to $4,000, it has been estimated, in 2021. After learning of
    this illegal scheme the FTC allowed the Exxon Pioneer merger
    but prohibited Sheffield from serving on the board or advising
    the new company in any way, rightfully so.
        In March after donating massive amounts to President
    Trump's election campaign Mr. Sheffield asked the FTC under
    your leadership to reopen and alter, modify, or set aside the
    orders against him. Unfortunately it seems that that has been
    reopened at this point obliging to his request. I know that the
    commission just wrapped up a public comment period on this
    which I had submitted a letter of opposition to that.
        Could you please let us know how allowing an alleged price
    fixer who actively colluded with a foreign entity, OPEC, should
    be put on the board of Exxon and how that aligns with the FTC's
    mission of protecting consumers and promoting competition?
        Mr. Ferguson. I dissented from both of those orders dating
    back to May 2024. We did not--first of all, we did not proceed
    on the basis of evidence of price fixing. We accused him of
    making comments, and that was it, number one.
        And number two, I don't care if Mr. Sheffield ever serves
    on that board. I do care that the FTC rigidly follows the law,
    including Section 7. We had never articulated a Section 7
    theory of that kind before. We had never issued an order of
    that kind before. And my concern remains that it was done in
    response to dozens of letters from Democratic legislators filed
    with the commission while we were considering that merger and
    that it was politically motivated. I want the FTC to follow the
    law.
        And to be clear, I didn't reopen the proceeding. The APA
    requires that I reopen the proceeding if I am asked to do that.
        Mr. Pocan. And again, I think it would run counter to what
    both you said and what Donald Trump has said about lowering
    costs. So hopefully we won't allow this guy who has colluded
    with hundreds of messages to a foreign entity to get on a board
    and rip off consumers ever again.
        Lastly, in 30 seconds, really quick, in an area I don't
    know if you have ever covered, but checking in. Medicare
    Advantage Plans. Four companies represent something like 75,
    80-percent of the market out there. One of the complaints I
    think we all get from constituents are people have to get
    permission to have medical care. And you don't have to do that
    with Medicare. They get turned down. When those are appealed,
    only 1 to 3 percent appeal, the appeal rate gets overturned as
    85 percent. That is clearly--like they are turning down so many
    cases that need coverage.
        Is that something that potentially you guys could look at?
    Because again, a few companies seem to be--there is
    consolidation of the market. And when that rate is so high, 85
    percent, I would love to know what your thoughts are on that.
        Mr. Ferguson. I am not familiar with the issue, but I would
    be more than happy----
        Mr. Pocan. Okay.
        Mr. Ferguson [continuing]. To work with you on it. Your
    staff should reach out to my staff. And we are happy to talk
    with you about this.
        Mr. Pocan. Appreciate that. Thank you very much.
        Mr. Ferguson. Absolutely. Thank you.
        Mr. Joyce. Thank you. The chair now recognizes the
    gentleman from North Carolina, Mr. Edwards, for questions he
    may have.
        Mr. Edwards. Thank you, Mr. Chair.
        Chairman Ferguson, in 2019 the HCA Healthcare, the
    country's largest investor-owned for-profit hospital chain
    acquired western North Carolina's Mission Health for $1.5
    billion. My constituents in western North Carolina were
    promised that this acquisition would result in lower patient
    costs, but after the merger prices rose higher than the average
    list prices of the 11 neighboring hospitals and annual markup
    prices nearly doubled to an average of 33 percentage points a
    year.
        Patients have also experienced a lower quality of health
    care with a Centers for Medicare and Medicaid Services report
    finding that at least three patients died and more were
    endangered at the merged hospital in 2022 and 2023 due to
    significant wait times, delays, negligence, and lapse of care.
    Despite this significant decline in quality of care, Mission's
    patient care profits were almost 100 million in 2022, 3 times
    higher than its profits the year before the acquisition.
        Chairman Ferguson, in our previous meeting you expressed
    similar concerns regarding the increasing prices of health care
    in rural areas as a result of private entity roll-ups and
    mergers. During your tenure as FTC chairman what actions can
    and will you take to protect competition within the health care
    industry?
        Mr. Ferguson. I enjoyed our discussion, Congressman
    Edwards.
        As we discussed, and as I discussed going back to my
    confirmation hearing, rural health care, in particular, is
    super important to me. I grew up rural and saw a company come
    in and buy up a lot of physician practices. And so, I have seen
    the effects of it.
        The Commission has a pretty remarkable track record of
    policing hospital mergers. We don't get them all right, but it
    is one of the things the Commission is better at than almost
    anybody, anything else that it does.
        I know you have asked for a briefing on the HCA merger. I
    think we have set it up with you.
        In terms of what we can do, the Commission's first
    antitrust enforcement action since I became chair was in the
    health care industry. It was to block a merger of two medical
    device manufacturers that we allege would have increased
    prices.
        We have ongoing litigation involving PBMs. We have the PBM
    report. And I think continuing to make sure--we have also
    advocated against Certificates of Public Advantage in states
    that allow hospital----
        Mr. Edwards. So, in the interest of time, respectfully----
        Mr. Ferguson. Sure.
        Mr. Edwards [continuing]. He is only going to give me five
    minutes. But what can you do going forward to ensure that rural
    health care in America is protected?
        Mr. Ferguson. We will continue to police hospital mergers
    as effectively as we have done for the last two decades.
        Mr. Edwards. All right. How can you use your role as a
    federal regulator now to review the HCA and Mission health care
    merger and to take the necessary actions to reverse it, if you
    determine that it has inhibited competition within the health
    care industry in western North Carolina?
        Mr. Ferguson. The Commission doesn't approve mergers. If
    the Commission declines an enforcement action, it isn't
    approval. So, the Commission always continues to monitor
    competitive effects in markets, even after there are mergers
    that are not blocked.
        But I'm happy to work with you and your staff, and my staff
    are as well, to understand the effects that the mergers had on
    rural North Carolina.
        Mr. Edwards. Again, thank you. I appreciate that.
        And in the interest of time, I'm going to accept that offer
    and let's work together.
        Now, I would like to ask--I'm informed that you may intend
    to file an amicus brief in a Texas attorney general's case that
    would, if successful, cause asset managers to divest from the
    coal industry. Can you speak to that real quick? Is that true?
        Mr. Ferguson. So, the State of Texas, along with a
    coalition of Republican attorneys general, brought a lawsuit
    against asset managers and accused them of having driven up the
    price of energy by driving down output in coal and oil, which,
    if true, is sort of a shocking, horrible thing that has been
    inflicted on all of us by driving up our energy prices.
        We have monitored--us and the Department of Justice have
    monitored this case closely. I think this was an important and
    groundbreaking case brought by Attorney General Paxton, and if
    true, could potentially remedy increasing energy prices by
    making sure that asset managers can't collude to drive down
    output and increase prices.
        Mr. Edwards. And so, real quick--because I'm running out of
    time--how does that support President Trump's energy policy?
        Mr. Ferguson. President Trump has made it one of his chief
    priorities to unleash American energy, so that prices for
    energy go down, which promotes growth, makes it easier for all
    of us to put gas in our cars.
        The accusation in that case is that asset managers were
    colluding in secret to drive up our energy prices. That is
    exactly the sort of thing the antitrust laws are designed to
    protect all Americans from. And we have monitored this case
    very closely.
        Mr. Edwards. Thank you.
        Mr. Chair, I must yield. I'm out of time.
        Mr. Joyce. Thank you, Mr. Edwards.
        The chair now recognizes the ranking member for any
    questions he may have in five minutes.
        Mr. Hoyer. Thank you very much, Chair. Mr. Pocan and I are
    playing tag team here.
        Chair Ferguson, I'm concerned in this committee's ability
    to fund the departments and agencies in our bill, including the
    FTC. But I want to ask you about the staffing levels.
        The FTC is already down, as I understand it, 1,221 FTEs. Is
    that accurate?
        Mr. Ferguson. I do believe that is our current number, yes,
    sir.
        Mr. Hoyer. Okay. And there's a goal to go even lower. Is
    that accurate?
        Mr. Ferguson. We are trying----
        Mr. Hoyer. In other words, you are still trying to reduce--
    --
        Mr. Ferguson. We are trying to get our employee levels down
    to a level we can actually afford, given our current
    appropriation, yes.
        Mr. Hoyer. And what level is that?
        Mr. Ferguson. Because this is largely being driven by
    attrition, rather than layoffs, it is difficult to predict
    exactly where it is going, but we are trying to get down around
    the 1100 range.
        Mr.  Hoyer. When you say, ``attrition,'' are you calling
    the Fork in the Road and voluntary retirements ``attrition''?
        Mr. Ferguson. Yes. When I inherited the agency, it was very
    clear that we had more employees than we could possibly afford.
    We were using carryover funds to pay our employees. That is not
    sustainable. That is not responsible.
        But I wanted to get the agency to healthy employee levels
    without having to do layoffs. And so, we have offered the
    deferred resignation program again. We have offered VERA and
    VSIP across the entire agency to try to get us to a healthy
    full-time employee level without having to do layoffs.
        Mr. Hoyer. Now, has there been a study done on what the
    appropriate level--when you say, ``healthy level,''
    presumably--and as I said at the beginning--I don't know that I
    have read a more detailed opening statement, and as I said,
    fully noted at the bottom of almost every page.
        So, you have done a lot of studies. But is there a study
    that you could provide for the committee which says what the
    appropriate level of funding is to meet the very numerous
    objectives that you have outlined in your statement that you
    want to achieve?
        Mr. Ferguson. I can't identify a study, but what I can say
    is that the levels that this committee chooses to fund us, we
    will maximize the American taxpayers' return on investment. We
    consistently send back to the Treasury and to consumers
    billions of dollars, either in the form of lower prices or
    recovered unjust enrichment from fraud. And no matter what this
    committee funds us at, we will keep doing that, which is just a
    testament to the fact that the FTC has, in my view, the best
    civilian staff in the federal government.
        The appropriate healthy funding or level of employees is
    driven by funding decisions this committee makes, but whatever
    funding decisions this committee makes, we will maximize your
    return on investment.
        Mr. Hoyer. Well, we made a decision. We made a decision for
    fiscal year 2024. We reaffirmed that in fiscal year 2025 in the
    CR. And now, you are--every one of them was offered early out
    and to be paid through September 30th, every one of your
    employees, which you have just said are outstanding. And you
    said that in your statement, which I appreciate.
        I represent, by the way, 77,000 federal employees. So, I
    appreciate that statement, which I think is accurate. Why did
    we send every one of those people--because, clearly, some of
    them must be necessary to accomplishment the objectives you set
    forth in your statement--a notice you can leave and get paid
    through September 30th?
        Mr. Ferguson. Because we could not afford to pay all of our
    employees at the levels Congress had appropriated us. The
    previous administration hired radically more people than we
    could afford to pay, and we were eating into carryover funds
    just to cover payroll, which is a deeply irresponsible way to
    run an agency. My goal was--and it remains--to get the agency
    to healthy employee levels, in light of the money that Congress
    appropriated the agency.
        Mr. Hoyer. Let me repeat my question: what is the healthy
    level?
        Mr. Ferguson. The healthy level is what we are aiming for,
    which is in the----
        Mr. Hoyer. No, no, no, no, no. I know that is what you are
    aiming for. So, that is your objective. What is a healthy
    level? Given the very important work that you outlined in your
    statement, what is the level that you recommend you should
    have?
        Mr. Ferguson. The----
        Mr. Hoyer. Comport with your dollars available to you and
    the work that you have.
        Mr. Ferguson. So, in light of the dollars available to me,
    the number we have been discussing, around 1,100, is the
    healthy level, because that is the affordable level.
        In terms of accomplishing our mission, we can accomplish
    the mission with 1,100 employees; I have no doubt about it,
    because our people are really, really good. We have shifted our
    priorities, especially, away from rulemaking, which is time-
    and resource-intensive, back toward law enforcement, and are
    moving resources in that way. And that is the priority of this
    administration. It is my priority and we have the employees to
    do that.
        Mr. Hoyer. Okay. And your request is an FTE level of 1,100,
    to be funded to 1,100? Is that your request?
        Mr. Ferguson. So, given the current status----
        Mr. Hoyer. I know we have a ``skinny budget'' at this point
    in time.
        Mr. Ferguson. Yes.
        Mr. Hoyer. So, you may or may not be able to----
        Mr. Ferguson. So, I am not in a position to discuss the
    specifics, but what I am saying is 1,100 is healthy, given the
    current CR funding level, and we will get the job done, period.
        Mr. Hoyer. Okay. Well, I'm a little over time. I'm not sure
    what you mean ``given the current funding level.'' What I
    really want to know--and maybe you can do it for the record--
    is, what level do you think you need to accomplish the
    objectives you set forth in your statement?
        Thank you, Mr. Chairman.
        Mr. Joyce. You will have another round, too.
        Mr. Hoyer. Oh, good.
        Mr. Joyce. The chair now recognizes the gentleman from
    Georgia, Mr. Bishop, for five minutes of his questions.
        Mr. Bishop. Thank you very much, Mr. Chairman.
        Welcome, Chairman Ferguson.
        I have been hearing from my constituents numerous
    complaints about the practices of the Pharmacy Benefit
    Managers, which they say are driving up the prices of drugs,
    making it harder for small, independent farmers to just stay
    open, particularly in rural areas where pharmacies are fewer
    and farther between.
        Over the past couple of decades, the FTC has allowed
    vertical integrations within health care, leaving only a few
    companies that not only own PBMs, but also own pharmacies and
    other health care facilities. These big companies have become
    powerful and they often threaten small independents with
    contract termination if they don't conform to reinvestment
    models and rules. So, I'm very pleased that the FTC has taken
    action to enforce the law on it and to address the PBM
    excesses.
        Does the FTC, in your judgment, have sufficient resources
    and will this budget give you sufficient resources to address
    what appears to be a large issue for the affordability of
    prescription drugs?
        Mr. Ferguson. I agree with you, especially on the concern
    about PBMs in rural communities. Just a couple of months ago, I
    went and visited a decades-old independent pharmacy in rural
    central Virginia very near where I grew up, and sat with the
    owner for about an hour and just listened to him explain the
    situation in which he finds himself.
        And independent pharmacies are super important to small
    towns. If you drive down the main street of a small town, post
    office, church, a restaurant or two, and the pharmacy. And
    independent pharmacies, in particular, for rural communities,
    that is often the gateway to health care. The pharmacist often
    participates in an individual citizen's health care decisions.
    So, protecting independent pharmacies is critically important.
        Mr. Bishop. Yes.
        Mr. Ferguson. As I discussed earlier, we have the ongoing
    6(b) study, to which I'm devoting substantial resources, as
    well as law enforcement. We have the resources to complete the
    6(b) study. We have the resources to carry on law enforcement.
    Part of that has to do with shifting resources away from
    rulemaking, which I don't think the FTC should generally be
    focusing----
        Mr. Bishop. But you also engaged in litigation.
        Mr. Ferguson. That's right.
        Mr. Bishop. And, of course, I know you can't discuss the
    specifics of the litigation, but are you actively pursuing that
    litigation to make sure that----
        Mr. Ferguson. Absolutely, Congressman.
        Mr. Bishop. Okay. Thank you very much on that.
        Let me try to reclaim my time and talk about our grocers
    and our pharmacies. Under the helm of Chairman Khan, the FTC
    filed the first Robinson-Patman Act enforcement action in
    decades. And I have heard from independent grocers in my
    district that have had a hard time competing in rural
    environments because of the spending power of their bigger
    competition. In far too many cases, the grocery stores have had
    to close because of a lack of profitability, leaving behind
    broad swaths of food deserts in rural America. And 50 percent
    of my district is rural.
        Can you give me an update on the FTC's enforcement of the
    Robinson-Patman Act and what future plans you have for
    enforcement of this federal law, and whether or not within the
    sphere of what you are asking for resources you will have
    those?
        Mr. Ferguson. So, we have two ongoing litigations, and I
    can't, obviously, discuss the specifics of the litigation. I
    have written pretty extensively on the Robinson-Patman Act as a
    minority commissioner. I think that the decision that the
    government made in the 1970s to quit enforcing it was bad. It
    is a law. It is a law passed by Congress. The executive
    branch's job is to enforce the laws passed by Congress, even if
    there isn't full agreement on the policy underlying those laws.
        I do think, however, it is very important that, when the
    FTC brings Robinson-Patman Act enforcement actions, that it
    doesn't do it in a way that could elevate the cost that
    consumers have to pay for goods, which is a risk when you bring
    Robinson-Patman enforcement cases.
        And so, my view is that the Commission should not bring
    Robinson-Patman Act cases unless we know that the beneficiaries
    of the discrimination have market power that they can use to
    hurt consumers. I think that is the time that the Commission
    should bring Robinson-Patman Act cases.
        So, because my job is to enforce laws that this body has
    passed, I am open to bringing Robinson-Patman Act cases. But,
    like I said in a previous dissent, we have to do it only in
    circumstances where we are very confident we will not be
    raising prices for consumers.
        Mr. Bishop. So, you are that confident that that is the
    case now?
        Mr. Ferguson. Well, I think it depends on particular
    markets and particular market participants. I'm open to
    bringing these cases. I'm open to using resources. But I am not
    going to bring cases unless I am very confident that that case
    will not increase the prices that consumers have to pay in the
    marketplace.
        Mr. Bishop. Now, there are some pending cases.
        Mr. Ferguson. Yes. We have got two going right now.
        Mr. Bishop. Okay.
        Mr. Joyce. Thank you, Mr. Bishop.
        The chair will now recognize himself for the second round
    of that.
        Congress recently passed the bipartisan TAKE IT DOWN Act,
    which I was proud to support, requiring online platforms to
    remove non-consensual intimate images within 48 hours of a
    victim's request. The legislation tasks the FTC with ensuring
    that platforms comply with the law.
        What additional resources will be required by the
    Commission to enforce the TAKE IT DOWN Act?
        Mr. Ferguson. We are really excited by the TAKE IT DOWN
    Act. This is one of President Trump's priorities. We think it
    is going to do a lot of good for vulnerable Americans.
        This is a new fount of enforcement authority for the FTC.
    It involves dealing with some oftentimes really horrible
    material in order to conduct the investigation. So, I think we,
    basically, need three things.
        The first is I'm going to need a segregated technology
    system to house this material when we are conducting
    investigations. We are not going to want that intermingled with
    the other bread-and-butter data that the Commission brings on
    to conduct investigations.
        And second, I'm going to need to hire some specialist
    investigators that deal with this stuff. Dealing with this
    stuff takes a real psychological toll on investigators, but
    there are investigators and lawyers that have training dealing
    with this stuff, as prosecutors or as civil investigators in
    other contexts. And we would want to bring some of those folks
    on to maximize our enforcement efforts.
        So, those are the two buckets--three--specialist
    investigators and specialist lawyers to help enforce these
    things. Those are the three buckets: segregated IT, specialist
    investigators, specialist lawyers.
        And I would love to work with you on making sure that we
    will have the resources to carry out this super important
    priority.
        Mr. Joyce. As a recovering prosecutor, I understand how
    important it is to also maintain that as evidence----
        Mr. Ferguson. Yes, exactly.
        Mr. Joyce [continuing]. In these cases.
        Mr. Ferguson. That's right.
        Mr. Joyce. And certainly, one of the most shocking things
    you saw was in, say, the middle school, junior high school
    setting, or high school, where images get shot around and kids
    send them to each other. The next thing you know, you have 800
    counts on 800 separate people for that type of juvenile
    photography.
        So, I think it is very important that they have the
    ability, you have the ability to make sure that stops
    immediately.
        Mr. Ferguson. I totally agree. And because some of this
    material will potentially be CSAM, it is really important that
    it is segregated from everything else that we do and that we
    have specialists that know how to deal with it.
        Mr. Joyce. Advances in artificial intelligence have
    increased the ability of scammers, unfortunately, to deceive
    and defraud customers. How have you seen the fraudulent schemes
    become more sophisticated and what are you doing to protect
    consumers from it?
        Mr. Ferguson. Yes. So, I think AI can be used,
    particularly, for certain types of schemes to sort of
    supercharge the fraud. AI makes it easier to impersonate
    someone else. It is actually, frankly, quite terrifying. I
    don't know if anyone on this committee has ever gotten a call,
    like an impersonated loved one, but I have friends that have
    gotten calls from impersonated family members. It is a truly
    terrifying experience.
        So, we have the Impersonation Rule that we are bringing
    enforcement actions on to recover civil penalties for
    violations of this.
        We had a competition that we ran last year to encourage
    people to develop voice-cloning technology that will allow law
    enforcers to detect when AI is being used to perform
    impersonations.
        This is going to require a whole-of-government approach,
    because we have to both stop it before it gets to the consumer
    through their phone, but we also have to work because a lot of
    this is criminal activity. You need prosecutors to assist. A
    lot of this comes from outside of the United States. These are
    people who are not going to be super responsive to the civil
    law enforcement component of the FTC, since they are already
    taking tremendous criminal risks outside of the United States
    to do this.
        But this is one of our top priorities, particularly given
    that this is often aimed at some of our most vulnerable
    populations.
        Mr. Joyce. Like there are not enough schemes targeted at
    these elderly individuals.
        Mr. Ferguson. That is exactly right.
        Mr. Joyce. One of the things that I'm interested in as well
    is I know it was used in the form of manipulating President
    Biden's voice to tell voters in a state not to come in the next
    day for the primary. In my time in Homeland, I attended a lot
    of cybersecurity ones, and they said that that was the start.
    In 2028, you could produce the whole candidate and somebody
    would never have to leave their house. Yet, there would be
    images of them all around.
        So, what I also have a concern with, competition and
    consolidation in this industry, so you don't end up with just
    one sole source of this stuff. Do you have any thoughts on how
    you would prevent that from happening?
        Mr. Ferguson. Yes. I agree. I mean, the United States is
    the AI leader right now. And part of that is because we have a
    competitive, dynamic economy, and competition breeds
    innovation, and innovation is what gives us AI. And it is what
    gives us our advantage over China, for example, because we are
    competitive, and competition breeds innovation.
        It is very important that the FTC be particularly vigilant
    to make sure competition problems don't seep into AI. At the
    same time, the other advantage that the United States has is
    that we don't reflexively regulate new technologies. We let
    them develop. We encourage innovation. We encourage
    experimentation. We see how things go, and then, we address
    problems as they arise.
        I think that is equally important. Protecting competition
    in this space is important. Equally important is making sure
    that government regulators don't intervene too early,
    particularly with a technology that is transforming constantly,
    faster than even its engineers can predict.
        We don't want regulators coming in heavy-handed. By the
    time they even figure out what is going on, it will have
    changed. I think it is very important that that American
    entrepreneurial spirit be protected, both from anticompetitive
    consolidation and from government overregulation.
        Mr. Joyce. Thank you.
        The chair will now recognize the ranking member for
    additional questions.
        Mr. Hoyer. Thank you very much.
        Mr. Chairman, you were appointed a year ago?
        Mr. Ferguson. A little over, yes.
        Mr. Hoyer. A little over a year ago.
        Do you believe that the commissioners are at-will
    commissioners?
        Mr. Ferguson. I believe that Article II of the Constitution
    gives the President the authority to remove commissioners at
    will, yes--at the FTC in 2025.
        Mr. Hoyer. So, you believe all the commissioners are at-
    will?
        Mr. Ferguson. I believe that the commissioners at the 2025
    FTC are removable by the President, yes.
        Mr. Hoyer. Okay. Well, we disagree on your conclusion,
    which is usual for lawyers. If in one of your dissents Mr.
    Biden had sent you a note saying, ``We find your continued
    service on the FTC to be inconsistent with my administration
    priorities,'' wouldn't that compromise the independence?
    Wouldn't that compromise your decision-making? Wouldn't you be
    thinking, is the President going to like my decision here, if
    I'm in the minority and I can just be fired? Doesn't that
    compromise the independence and independent judgment of each
    and every one of the commissioners?
        Mr. Ferguson. When I took the oath of office as a minority
    commissioner in 2024, that oath obliged me to enforce the law
    without fear or favor. If the President of the United States
    concludes that my law enforcement decision is incorrect and
    orders me removed, that is what democratic accountability looks
    like.
        No one voted for me. No one elected me. And they did elect
    the President and they put the President in charge of the
    entire executive branch. And I think in a democracy it is
    critically important that everyone who wields substantial power
    over the lives of members of that democracy is accountable back
    to the people. And the only way we are accountable to the
    people is through their elected President. So, I think that
    that chain of accountability is critical for making democracy
    work.
        Mr. Hoyer. I think that is very critical in undermining the
    independence and independent judgment of agencies created by
    the Congress to be independent. In fact, you are quoted as
    saying you thought the best thing to do was to reach consensus,
    and that is why the Congress created bipartisan bodies, as
    opposed to three Republicans or three Democrats.
        Your opinion, of course, mirrors Mr. Vought's opinion and
    the President's opinion, who believe that almost every employee
    in the federal government ought to be at-will employees, which
    would compromise the civil service system very substantially
    and create a political service, not a civil service.
        I want to ask you about the cases that are pending. Let me
    say something on your comment on China. China is now
    outcompeting us in a number of ways and that is of great
    concern to all of us, I think, where China has become No. 1 in
    a number of different economic categories.
        I share the President's view and I share the view that we
    pursued by investing in competitive ability in the 117th
    Congress with a number of pieces of legislation that I
    mentioned in my opening statement.
        So, I would hope that, again, on that 1,100 that you talked
    about, that that is a number consistent not with Mr. Musk,
    ``I'm going to cut $2 trillion,'' which was, of course, an
    absurd statement within the context of getting to an objective
    and keeping competitive with the rest of the world, and keeping
    our country safe and keeping our people safe.
        Let me close by calling to your attention a statement that
    was made totally inconsistent with the statement you made, with
    which I agree. This statement is, ``We want the bureaucrats to
    be traumatically affected. When they wake up in the morning, we
    want them not to go to work because they are increasingly
    viewed as villains. We want to put them in trauma.''
        Do you know who said that statement?
        Mr. Ferguson. I don't.
        Mr. Hoyer. Russell Vought, the Director of OMB.
        Do you share that view?
        Mr. Ferguson. My view is that the FTC has an important
    mission to do; that it has to conduct that mission consistently
    with the President's priorities and with the budget that this
    Congress has given it. And that is what I wake up every day
    trying to do. I know it is what my staff wakes up every day
    trying to do. I know it is what my colleagues, Mr. Meador, or
    Commissioner Meador and Commissioner Holyoak wake up every day
    trying to do. And that is what I am focused on.
        Mr. Hoyer. Can I correctly interpret that as a no?
        Mr. Ferguson. I'm focused on protecting the American
    consumer from monopoly and fraud. You can interpret it that
    way.
        Mr. Hoyer. So, yes, I can interpret it as a no?
        Mr. Ferguson. You can interpret--I am focused on protecting
    Americans from monopolies and fraud.
        Mr. Hoyer. You don't want to say that you disagree with
    Vought. I understand.
        Mr. Ferguson. I have not heard this statement before, so
    have no position on it. All I know is what I am focused on.
        Mr. Hoyer. Okay. Well, forgetting that, who it is for, you
    disagree with that statement?
        Mr. Ferguson. I have no position on the statement. I am
    focused on the FTC's mission of protecting Americans from
    monopolies and fraud.
        Mr. Joyce. The chair now recognizes----
        Mr. Hoyer. I might as well yield.
        Mr. Joyce. The chair now recognizes the gentlelady from
    Iowa, Mrs. Hinson, for further questions.
        Mrs. Hinson. Thank you, Mr. Chairman.
        And, Chairman Ferguson, again, I want to reiterate I
    appreciate the agency's focus on accountability.
        Again coming back into the focus here, you mentioned in
    your opening statement, you know, the two-year hiring spree
    that was, quote, ``taking the FTC to levels that they couldn't
    sustain.'' We have to right that ship. Many agencies saw
    increases over the last several years of more than 30 percent.
    That is unsustainable. So, I appreciate the work you are doing
    to right-size the agency while still executing on the
    priorities at FTC.
        You talk about the contract spending reductions, $6
    million. I'm sure that is just kind of scratching the surface,
    right? In all of these hearings, I think there is one common
    theme. It is that we are peeling back the layers of this onion
    and finally getting a look at all of the waste, the duplicative
    nature of some of these agencies and their budgets. And we, as
    appropriators, need to do our job. So, I appreciate you coming
    before us today to answer some of these questions.
        And under the previous FTC chair, obviously, we saw this
    hiring spree happen. We saw Chair Khan aggressively work to
    regulate American businesses while claiming that she was
    protecting competition and consumers.
        So again, you talk about your refocus away from rulemaking
    and back on protection. Can you share with the committee some
    of the lessons you really learned from the previous
    administration and the impacts of those regulatory burdens on
    small businesses, farmers, working families like those you
    visited in rural Virginia recently.
        Mr. Ferguson. Yes. My experience over the course of my
    whole career is that even well-intentioned regulation tends to
    have unanticipated effects, and those effects are normally
    visited on the least powerful participants in an industry,
    which is normally small and medium-sized businesses.
        Big businesses can afford to lobby regulators and lawmakers
    to get the outcomes that they want in a way that small and
    medium-sized businesses cannot. And there is always a risk with
    regulation that regulation will be used to insulate monopolies
    or to create monopolies, but it is hard to predict, when a
    well-intentioned regulation is going to do that.
        I think that the benefit of the way that the antitrust laws
    work is that the principal motivation is don't harm consumers
    and workers in the marketplace. Free markets are good. They
    work. Don't, within the free market structure, harm consumers
    to gain an advantage.
        And our job is to make sure that isn't happening. We are
    not central planners. We don't do industrial policy. Our job is
    to let the markets work by making sure that people within them
    aren't cheating by harming consumers to get a leg up.
        And I think that that sort of flexible, general approach,
    backed by rigorous investigation and law enforcement, rather
    than trying to pick winners and losers through regulation, is
    the way that we keep America competitive. It is the way we keep
    our dynamic and it is the way that we achieve growth that
    benefits everyone, especially workers.
        Mrs. Hinson. You mentioned earlier in this hearing that you
    had a mechanism for people to kind of self-report. And one of
    the frequent things that I try to talk to our small businesses
    about is, ``Give me a list.'' Right? ``Give me a list of the
    regulations.'' Everybody says, ``I need regulatory relief.''
    ``Give me a list of what's holding you back.''
        What is that mechanism? And obviously, it is designed to
    make sure that we can deregulate as much as possible. And then,
    can you, again, give me kind of a scope of what the next steps
    that you are taking in terms of presenting that information to
    the administration?
        Mr. Ferguson. Yes. There is a place on our website that you
    can go. You just fill out a form; identify what you think the
    regulation that is anticompetitive is. Give a brief explanation
    why. And then, it shows up in our team's inbox and they are
    ready to go on it.
        I encourage Congress to do this, too. Again, you all
    interact with your constituents in a close, personal way. You
    hear from your individual small businesses about what is
    holding them back.
        I have had similar conversations where I have had people
    come in and say, ``You really need to go after anticompetitive
    regulations.'' And I will say, ``I agree. Can you give me the
    list?'' And they will go, ``Oh, well, no, the list is''----
        Mrs. Hinson. Yes, be specific, right?
        Mr. Ferguson. Yes, exactly.
        Mrs. Hinson. Yes, yes. Yes.
        Mr. Ferguson. Yes. So, I encourage Congress, if you all
    hear from your constituents, let us know what they are, too. We
    have asked the agency heads, consistent with the President's
    Executive Order, to do the same thing.
        Once the Request for Information, which is the one the
    public can use on our website, and the agency responses are in,
    we will be going through them proposed-reg-by-proposed-reg and
    determining if they are anticompetitive, and if they are,
    either proposing shrinking them down to size, so that they are
    protecting whatever they are supposed to protect without
    damaging competition, or recommending that they be deleted
    entirely because there is no way to save them while still
    promoting competition.
        Mrs. Hinson. Is there a certain timeframe that you are
    looking at? And I'm almost out of time. A certain timeframe you
    are looking at getting some of these feedback in, so that you
    can, No. 1, work through the process, because I know it will
    take some time to figure out what is actually anticompetitive
    versus what people just don't want to comply with. Right?
        Mr. Ferguson. Yes.
        Mrs. Hinson. I mean, I think there is probably a balance--
    --
        Mr. Ferguson. That's right.
        Mrs. Hinson. There is definitely a balance to be had there.
    But is there any kind of timeline that you are looking at?
        Mr. Ferguson. The RFI closes in a couple of months, and
    agency response are due to us on a rolling basis. So, once we
    have those in--we are building the team with the Department of
    Justice, who has a lot of resources, that will work alongside
    us on this, just like the President ordered.
        You know, I don't know exactly when the outcome or when our
    product will be made available, because at this point I don't
    know how many regulations we are going to be asked to review.
    But we will have an army of economists and lawyers ready to go,
    to dig int to these things; to find the ones that are
    anticompetitive, and go back to OMB and the President and say,
    ``Here's the list we recommend getting rid of.''
        Mrs. Hinson. I'm sure Iowa business owners have some
    glaring examples they will be happy to submit. So, thank you so
    much.
        Mr. Ferguson. I look forward to hearing about them. Thank
    you.
        Mrs. Hinson. Thank you so much, Chairman. I yield back.
        Mr. Joyce. The chair now recognizes the gentleman from
    Maryland for any further questions he may have for five
    minutes.
        Mr. Ivey. Thank you, Mr. Chairman. I did want to follow up
    on the ranking member's questions about the at-will issue.
        So, I mentioned in my initial round your statement, the
    March 18th statement, and that it didn't contain the language
    with respect to ``inefficiency, neglect of duty, or malfeasance
    in office,'' which comes from 15 U.S.C. Section 41 of--I guess
    that is the Federal Trade Commission Act.
        But I think, if I am hearing what your answer was, the
    reason you didn't include it is because you think the language
    is superseded. In other words, that Article II makes it
    unnecessary. So that the President can fire without regard to
    that statute?
        Mr. Ferguson. That's right, Congressman Ivey. After the
    Supreme Court's decision in Seila Law in 2020, that said that
    Humphrey's Executor does not apply to agencies that wield
    substantial executive authority, whatever was true of the FTC
    in 1935 is just not true of the 2025 FTC. We are one of the
    most powerful agencies in the federal government. We have
    rulemaking authority, law enforcement authority, investigative
    power. After Seila Law in 2020, Article II requires that the
    President be authorized to remove them at will.
        Mr. Ivey. Okay. And that is going to be, I guess, a central
    issue in the litigation that you are a defendant in?
        Mr. Ferguson. That's right, Congressman.
        Mr. Ivey. All right. And would it be also your view, beyond
    this particular with respect to the FTC, that that is true for
    all independent commissions at the federal level?
        Mr. Ferguson. The only one I have a position on, because it
    is the only one that I have studied myself, as a defendant in
    the litigation and as the agency head, is the FTC. Different
    agencies are different. They have different historical
    patterns.
        Mr. Ivey. And there is nothing Congress could do about it,
    I guess, based on the statement you are making. Because any
    statute we pass along the lines of 15 U.S.C. 41 would only be a
    statute, and you are saying there is a constitutional ability
    for the President to fire any one of these commissioners at
    will, at any time, regardless of what Congress says?
        Mr. Ferguson. So, not quite. And I don't mean to quibble,
    but what the Supreme Court said in 2020 in Seila Law is
    Congress cannot insulate from removal agency heads at agencies
    that, quote, ``wield substantial executive power''----
        Mr. Ivey. I got you. I got you. But given your conclusion
    that this agency wields that kind of authority, short of us
    stripping the FTC of certain levels of authority, there's
    nothing Congress could do to protect commissioners from at-will
    or even arbitrary termination?
        Mr. Ferguson. At the FTC, yes. And I do want to be clear.
    My former colleagues in their brief have said that, if they
    agree with the President's and my position on Seila Law, they
    have asked the Court to hold unconstitutional statutes that
    this body passed after 1935----
        Mr. Ivey. Okay. Fair enough.
        Mr. Ferguson [continuing]. Which is a shocking thing to
    say.
        Mr. Ivey. Fair enough.
        I want to go quickly to the chairman's question with
    respect to the TAKE IT DOWN Act and, well, your comments about
    that, and AI fraud and impersonation issues, which are of deep
    concern to me.
        But I wanted to see if I could get you to talk about that
    in the context of another statement you made, which was that
    you want to shift from rulemaking to enforcement. And I want to
    make sure I understand what you mean by that, because sort of
    two points.
        One is, with new statutes or new areas, in my view,
    rulemaking could be very important in trying to get ahead of
    the curve on these things, especially since technology evolves
    so quickly. You know, to the extent we are trying to legislate
    to address every sort of technological change, that is going to
    be impossible.
        And then, the other part with respect to the rulemaking
    piece, I have heard from business owners that they actually
    are--they get concerned about the enforcement component.
    Because in order for them to find out what is permissible and
    what is not, they have to get rapped on the nose through a
    litigation process; whereas, if there is a rulemaking process
    that gives them guidance, even if they don't necessarily like
    the outcome of what the rulemaking process is, at least they
    don't have to litigate it. And as we know, the litigation piece
    can take years, potentially, in some of these circumstances.
        So, real quick--I only have 36 seconds left--if you could
    walk through some of that for me, with the rulemaking piece, in
    particular? Are you moving away entirely from rulemaking or
    just trying to hedge it back to some extent?
        Mr. Ferguson. When Congress directly instructs the
    Commission to adopt a rule, like it did, for example, in the
    Children's Online Privacy Protection Act, the Commission will
    adopt rules where we are expressly ordered to.
        A lot of the rulemaking over the last four years were rules
    on Section 5, just general--our general antifraud, anti-
    unfairness statute. My position is that we protect consumers
    most when we take bad actors to court and win judgments--more
    than spending several years writing a rule, preparing it for
    release, and then, defending that rule in court.
        For example, the Non-Compete Rule has literally never gone
    into effect because it was enjoined after its adoption. We
    could have been using those resources to bring non-compete
    cases rather than the rule. My view is, rather than the----
        Mr. Ivey. I'm over time. But, real quick, so with respect
    to the TAKE IT DOWN Act and the AI fraud impersonation
    legislation, you are onboard for aggressive rulemaking with
    respect to those two, so that they can be enforced and protect
    the public?
        Mr. Ferguson. So, the TAKE IT DOWN Act would not require a
    rule. The second it becomes effective, we can start enforcing
    the requirement to abide by takedown notices. That would
    require a rule and we will--assuming that we have the resources
    available, that will be one of my top priorities.
        And that is what I mean by enforcement. When Congress
    passes a law that says to people in the marketplace, ``Don't do
    X,'' if someone does X, I would rather spend resources taking
    those people to court than writing a rule about it.
        Mr. Ivey. Thank you.
        Mr. Joyce. Thank you.
        The chair now recognizes the gentleman from Missouri, Mr.
    Alford, for any questions he may have.
        Mr. Alford. Thank you, Chairman Joyce, and thank you to my
    friend, Ranking Member Hoyer, for holding this important
    hearing today.
        Good to see you again. You were in our office, I think,
    last week, Chairman Ferguson. I am excited that you are leading
    the FTC.
        In your opening remarks, you mentioned how the Trump-Vance
    FTC has gone back to the agency roots; namely, enforcement of
    the law, which is a good thing.
        While I commend you for your realization that the power to
    write laws is and should remain right here in Congress, there
    are still actions that the previous chairman or chairwoman took
    to go beyond the agency's authority.
        I have serious concerns about the so-called independent
    agencies usurping lawmaking authority from Congress. Chair
    Ferguson, can you comment on the CARS Rule, please?
        Mr. Ferguson. The CARS Rule was adopted. It was vacated,
    and the period to seek cert has long since run. So, it is not
    effective, and at least as of the day that we are sitting here,
    I currently have no plans to take up the rulemaking again.
        Mr. Alford. Very good. I was a proud supporter of the TAKE
    IT DOWN Act, which passed Congress last month. In a follow-up
    to my friend Mr. Ivey's question with you regarding that, this
    Act would require the FTC to enforce notice and removal
    requirements for non-consensual intimate visual depictions.
        So, you talked about resources. Going forward, you are
    going to enforce this. You don't need a rule to do this. What
    resources do you have to make sure that this happens?
        Mr. Ferguson. So, what we need are--we need segregated IT
    systems. A lot of this material is truly disgusting stuff. Some
    of it will be CSAM. We don't want that intermingled with the
    rest of our data infrastructure.
        And then, we will need specialist investigators and lawyers
    who can deal with this often truly horrifying material.
        Mr. Alford. Is that going to be an investment from the
    taxpayers?
        Mr. Ferguson. So, given the current status of the budget
    and the skinny budget, I'm not in a position to discuss
    specific numbers, although I am happy to have my staff discuss
    that with you directly offline.
        Mr. Alford. When you get those numbers, we would like--this
    is very important, I think, for----
        Mr. Ferguson. I agree.
        Mr. Alford [continuing]. The future of our country. And if
    it is going to be done the right way, not through rulemaking,
    but through enforcement from you and the Federal Trade
    Commission, we have got to make sure you have the resources you
    need to do the job to take care of this issue.
        Mr. Ferguson. I look forward to working with you on getting
    those.
        Mr. Alford. President Trump recently issued an Executive
    Order to reduce anticompetitive regulatory barriers. How is the
    FTC implementing the Executive Order and has the Commission
    already identified specific regulations that are inhibiting
    market competition?
        Mr. Ferguson. So, consistent with the President's Executive
    Order, which I think is one of the most important things that
    the President has done in a series of amazing Executive Orders,
    we issued a Request for Information to the public, asking
    especially small business owners, ``If you are aware of
    regulations that are making it harder for you to compete, tell
    us what they are.''
        We wrote letters to all of the agency heads in the federal
    government last week and said, ``Send us a list of regulations
    that you think are anticompetitive that you enforce, and if you
    think that they should not be deleted, an explanation about why
    they should not be deleted.'' Because, presumptively, we think
    anticompetitive regulations should be deleted.
        That RFI, that request for public assistance, is still
    open. It closes in the next couple of months. The agency heads
    are supposed to produce the stuff to us and to the Department
    of Justice on a rolling basis.
        We are waiting for stuff to come in before we start
    identifying specific ones, but we will have an army of lawyers
    and economists ready to go on this with the Department of
    Justice. And once we have identified them, we are sending them
    to the President and OMB with recommendations for deletion.
        Mr. Alford. You said they are coming in on a rolling basis.
    You have already received some----
        Mr. Ferguson. Not yet. They are supposed to respond on a
    rolling basis.
        Mr. Alford. Okay. Got you.
        Hey, listen, I just appreciate you and your passion for our
    country and for the Federal Trade Commission, and really
    setting us on a new course. This Golden Age of America is going
    to include regulation and not rulemaking, and that is why we
    are here. And we are here to fund you to make sure you can do
    that job.
        And, Mr. Chair, I yield back. Thank you.
        Mr. Ferguson. Thank you, Congressman.
        Mr. Joyce. Thank you very much, sir.
        The chair now recognizes the gentleman from Georgia, Mr.
    Bishop, for any questions he may have.
        Mr. Bishop. Thank you, Mr. Chairman.
        Chairman Ferguson, it has been reported in news that FTC is
    working with DOGE to make cuts to the agency. Can you tell us
    what the role of DOGE is at FTC and what data have they
    accessed and what data have they copied? And can you assure the
    public that DOGE and its affiliates are not accessing
    confidential business data or sharing the data with potential
    competitors of the businesses, not limited to, but including
    the Musk network of businesses?
        Congress first established the FTC as an independent
    agency. Tell us how this is still the case when the White House
    and private individuals of temporary federal positions have
    such unprecedented access and control of the agency's
    operations.
        Mr. Ferguson. I can definitely tell you that no FTC
    employee, including those that are detailed over from United
    States DOGE Service, are given access to anything they don't
    have a need for. The two employees that originated from USDS
    that have been onboarded as full-time employees of the
    Commission received the same ethics vetting, background check,
    and data security training that every other employee, including
    me, has received. Their access is governed by the exact same
    rules that govern the access of every other employee, including
    me, which is that no one gets access to any particular part of
    our IT infrastructure without having a need, demonstrated need,
    to access it. We have rigidly enforced those rules for every
    employee at the FTC.
        Mr. Bishop. Okay. So, you actually--your agency enforces
    those rules?
        Mr. Ferguson. Absolutely. There is a statute forbidding the
    disclosure of confidential Commission information. It makes it
    a misdemeanor to do so. We take that extremely seriously, both
    because Congress has said it is a misdemeanor to do so, but
    also because our ability to work with companies in
    investigations depends on them knowing we will not leak out
    information.
        We had a real leak problem in the previous administration
    that caused tremendous embarrassment to the Commission. The
    Commission, under President Trump, has taken this issue
    incredibly seriously for all employees, including the ones from
    USDS.
        Mr. Bishop. So, your FTC people are not worried at all
    about intimidation from the administration or from DOGE if they
    fail to comply or if they question a need that is suggested
    that they may not believe is necessarily so?
        Mr. Ferguson. No. We have had--USDS employees that have
    been onboard at the FTC have been incredibly helpful. They
    helped us find contracts that we could descope or eliminate,
    while still fulfilling our mission to the American people. We
    have had a great working relationship with the USDS folks and I
    unequivocally support the President's agenda on efficiency.
        Mr. Bishop. Are there any instances where they have asked
    for information and been denied it?
        Mr. Ferguson. Not to my knowledge, no.
        Mr. Bishop. Okay. I didn't think so.
        Mr. Joyce. All right. The gentleman yielded back.
        With that, our time is concluded.
        I know this has been a lot of fun for you, sir. But I would
    like to thank you for being here today, Chairman Ferguson.
        There may be some members who were not here who would like
    to submit questions for the record. Please submit any question
    for the record to the subcommittee staff within seven days.
        And, with that, this subcommittee stands adjourned.
        [Whereupon, at 11:41 a.m., the subcommittee was adjourned.]
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    Bessent, Scott...................................................     3
        Prepared Statement...........................................     5
        Answers to submitted questions...............................    30
    St. Eve, Amy.....................................................    51
        Prepared Statement...........................................    54
    Conrad, Robert...................................................    69
        Prepared Statement...........................................    71
    Ferguson, Andrew.................................................   115
        Prepared Statement...........................................   118
        Answers to submitted questions...............................   176

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