[Congressional Record Volume 163, Number 25 (Monday, February 13, 2017)]
[Senate]
[Pages S1095-S1098]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Cabinet Nominations
Mr. SCHUMER. Mr. President, candidate Trump ran a populist campaign
that promised so much to working America. Many of those themes were
actually echoed in his inaugural address, but ever since President
Trump took the oath of office, he has gone about breaking promise after
promise to the working people of this country.
A predictable pattern is beginning to emerge. This President uses
populist rhetoric to cover up a hard-right agenda. We still hear the
remnants of candidate Trump's populism in his speeches, but his actions
as President don't match up. Just an hour after he had delivered
populist words on the steps of the Capitol in his inaugural address,
the President signed an Executive order--his first, I believe--that
jacked up the price on Americans trying to afford a mortgage.
Ever since, we here in the Senate have been working through the
President's Cabinet, which is filled not with champions of the working
class, not with people who came from the working class but with a slew
of superrich nominees, Washington insiders, and corporate types who
have spent their whole careers sticking it to the working man.
A President's Cabinet provides insight into how they will govern and
what their priorities will be. The President has shown his hand by
selecting the most anti-working class Cabinet we have ever seen.
The slate of nominees we will soon consider, including Steve Mnuchin
for Treasury, Andrew Pudzer for Labor, and Rick Mulvaney for OMB, show
the yawning gap between the President's audacious promises to working
America and the practical reality of his administration, which is
steadily stacking the deck against them.
This evening we will debate the nomination of Steve Mnuchin for
Treasury, a Cabinet post that will have oversight over Wall Street.
Candidate Trump spent the campaign lambasting elites and criticizing
Wall Street. He said:
I'm not going to let Wall Street get away with murder. Wall
Street has caused tremendous problems for us.
Those are his words, but what does President Trump do? With one of
his first Executive orders, he started the process to try to roll back
Wall Street reform, undoing protections we put in place after the
financial crisis to prevent another one from occurring. He wants to
eviscerate the one agency that sticks up for consumers when they are
being ripped off by payday lenders or debt collectors--the CFPB. That
is a broken promise.
Candidate Trump said at his rallies: ``When you cast that ballot,
just picture a Wall Street board room filled with the special interests
. . . and imagine the look on their faces when you tell . . . them:
`You're fired!' ''
But President Trump told Steve Mnuchin, a Wall Street insider with
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decades of experience in that board room he described, ``You're
hired,'' as his Treasury Secretary, no less. That is a broken promise.
A President who is a true champion for working America would never
consider unwinding protections that were designed to make our financial
system more secure and protect hard-working Americans from the risky
practices too often seen on Wall Street.
For the Secretary of Labor, the President picked Andrew Puzder, a man
who once said he prefers robots to human employees because, in his
words, they are always polite, they always upsell, they never take a
vacation, they never show up late, there is never a slip and fall, or
an age, sex, or race discrimination case.
Secretary Nominee Puzder, the guy who is supposed to be protecting
laborers--working people--actually said that.
I want to read it again. It galls me that this man is nominated for
Labor Secretary. Why does he prefer robots to human employees?
Secretary Puzder: They are always polite, they always upsell, they
never take a vacation, they never show up late, there is never a slip
and fall, or an age, sex, or race discrimination case.
This is a man who has such disdain for workers that he said the
minimum wage is a big mistake, and while at CKE Restaurants, his
company, he continually outsourced American jobs.
A President who is a true champion of working America would never
even consider selecting a nominee like Andrew Puzder to run the Labor
Department. It is another broken promise to the working men and women
of America. Amazing.
What President Trump did during the campaign and said during the
campaign and in his inaugural address is almost the exact opposite of
what he is doing now. You could not find a more anti-labor nominee for
Labor Secretary than Mr. Puzder.
Now, what about OMB? The President selected Representative Mike
Mulvaney, whose congressional career is a direct rebuke to key promises
Candidate Trump made to working America. Candidate Trump promised that
he was ``not going to cut Social Security like every other Republican
and I'm not going to cut Medicare or Medicaid.''
That is a quote from Candidate Trump.
But who does he choose for OMB? A pick who has relentlessly argued to
cut both of these programs, including bill after bill that would end
both Medicare and Social Security as we know it.
Our new Health and Human Services Secretary--who, unfortunately,
passed this Chamber because our Republican colleagues are just marching
in lockstep to the President--is in exactly the same vein.
A true champion of senior citizens, of the working man and woman,
wouldn't hire someone like Representative Mulvaney or Representative
Price to take an ax to the programs they have relied on for
generations.
Just 3 weeks in, the administration is stretching the boundaries of
cognitive dissonance. The President still speaks like a populist but
governs like a hard-right conservative. He promises to stick up for
working families, but every decision he has made is rigging the system
further against them.
Every American who works hard for their paycheck, who desperately
deserves fairer overtime pay, who is counting on Social Security and
Medicare to be there when they retire should look at this Cabinet and
be very worried.
I know many working people voted for President Trump in hopes that
they would change the power structure in Washington, as he promised so
many times. His Cabinet is the first way to see if he really meant it.
His Cabinet is the first way to measure: Is President Trump measuring
up in his Presidency to what he promised in his campaign?
It turns out President Trump was using populist rhetoric to cover up
a hard-right agenda, which will be carried out by this bevy of
billionaires and bankers and hard-right idealogues--broken promise
after broken promise.
Candidate Trump said that Washington was a place where ``the hedge
fund managers, the Wall Street investors . . . and the powerful
[protect] the powerful.''
``But I'm fighting for you,'' he said to working Americans.
If these first 3 weeks are any indication, that is a broken promise.
The nominations of Steve Mnuchin, Representative Mulvaney, and Andrew
Puzder represent broken promise after broken promise after broken
promise. We Democrats, over the next several weeks, will make clear to
the American people, as we continue to debate these nominations, that
what President Trump said on the campaign trail is not what he is doing
as President. He is breaking his promises to the working people of
America.
Many working people who voted for Mr. Trump are depending on him to
do what he said in the campaign. Reading the tea leaves of the first 3
weeks, working Americans are going to be deeply, deeply disappointed
over the course of his Presidency.
Thank you. I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Mr. WYDEN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WYDEN. Mr. President, when you serve as the Secretary of
Treasury, you are charged with a variety of responsibilities, and right
at the center of your duties is to address taxes. This is an area that
the nominee to head the Treasury Department, Mr. Steven Mnuchin, waded
into very early on after his nomination became public.
News leaked on November 29 of last year that Mr. Mnuchin was the
President-elect's choice for Secretary of the Treasury. The very next
day, Mr. Mnuchin appeared on a CNBC program and confirmed his
selection. During an extended interview with CNBC, he introduced what I
have come to call the Mnuchin rule. I will quote Mr. Mnuchin directly
with respect to what he said: ``Any reductions we have in upper income
taxes would be offset by less deductions, so there would be no absolute
tax cut for the upper class.''
I will repeat that last part of the Mnuchin rule: ``no absolute tax
cut for the upper class.''
Mr. Mnuchin is the President's nominee for Treasury Secretary. This
is a position that has been held by American economic giants like
Alexander Hamilton, Albert Gallatin, Salmon Chase, Henry Morgenthau and
Lloyd Bentsen. When a nominee for Treasury Secretary makes a pledge
like Mr. Mnuchin's, it really ought to mean something. It ought to
stand for something.
Unfortunately, it already looks as though the Mnuchin rule is on the
ropes. The very first act of the 115th Congress and a unified
Republican government, repealing the Affordable Care Act, shatters the
Mnuchin rule.
The Affordable Care Act repeal scheme that Republicans kicked off
months ago, in my view, is a Trojan horse of tax breaks for the most
fortunate. Nobody outside the top 4 or 5 percent of earners would get
any of that break. Most of it would go to households in the top 1
percent of earners--even then, the top one-tenth of 1 percent--and it
is paid for by taking insurance coverage and tax cuts for health care
literally out of the hands of millions of working people.
Then it is back for another whack at the Mnuchin rule later this
year. Last week, the New York Times published a story talking about Mr.
Mnuchin, which said that ``his guarantee appears impossible to fulfill
either under the tax overhaul that the House Republicans are pushing or
similar, sketchier proposals that Mr. Trump has offered.''
Mr. President, I ask unanimous consent to have printed in the Record
the article titled ``Treasury Nominee Vows No Tax Cut for Rich. Math
Says the Opposite.''
There being no objection, the material was ordered to be printed in
the Record, as follows:
[Feb. 9, 2017]
Treasury Nominee Vows No Tax Cut for Rich. Math Says the Opposite.
(By Patricia Cohen)
The newly christened ``Mnuchin rule''--the assurance given
by the Treasury nominee Steven T. Mnuchin that ``there would
be no absolute tax cut for the upper class''--seems as if it
was made to be broken.
Mr. Mnuchin initially made the statement during an
interview on CNBC in November,
[[Page S1097]]
after President Trump chose him for the cabinet. At Mr.
Mnuchin's confirmation hearing, Senator Ron Wyden, an Oregon
Democrat, rebranded the comment as a ``rule,'' transforming a
throwaway line into a formal pledge.
Whether it will be kept may become clearer in two or three
weeks--the timing Mr. Trump mentioned Thursday for delivering
a ``phenomenal'' tax plan.
Although Mr. Mnuchin said any rate reductions at the top
would be offset by the closing of fat loopholes, his
guarantee appears impossible to fulfill either under the tax
overhaul that the House Republicans are pushing or similar,
sketchier proposals that Mr. Trump has offered.
Redesigning the tax code with an eye fixed on lower rates
has been a Republican mission for decades, and one that Mr.
Trump adopted. That prospect, combined with a promised
regulatory retreat, has pumped up the stock market and fueled
optimism among business leaders.
At the same time, the president has raised expectations
among his working-class supporters that ``the rich will pay
their fair share,'' and that ``special-interest loopholes
that have been so good for Wall Street investors, and for
people like me, but unfair to American workers'' will be
eliminated. Mr. Mnuchin, soon to be one of the
administration's top economic policy officials, promised ``a
big tax cut for the middle class.''
Yet analyses of the president's and the House Republicans'
plans consistently conclude that the wealthy will receive the
largest tax cuts by far.
Start with the House blueprint, which at the moment is the
closest thing to a working draft that exists. The nonpartisan
Tax Policy Center, a joint project of the Urban Institute and
Brookings Institution, found ``high-income taxpayers would
receive the biggest cuts, both in dollar terms and as a
percentage of income.''
How big? ``Three-quarters of the tax cuts would benefit the
top 1 percent of taxpayers,'' if the plan were put into
effect this year, it said. The highest-income households--the
top 0.1 percent--would get ``an average tax cut of about $1.3
million, 16.9 percent of after-tax income.''
Those in the middle fifth of incomes would get a tax cut of
almost $260, or 0.5 percent, while the poorest would get
about $50.
That split would worsen down the road, the Tax Policy
Center says: ``In 2025 the top 1 percent of households would
receive nearly 100 percent of the total tax reduction.''
Those wary of any potential liberal bias could turn to the
conservative-leaning Tax Foundation. Its analysis found a
smaller gap between the wealthy and everyone else, but a gap
nonetheless. The foundation concluded that four out of five
taxpayers would see only a 0.2 to 0.5 percent increase in
after-tax income, while those in the top 1 percent of the
income scale would save at least 10 times as much, or 5.3
percent. That's nearly $40,000 extra for those at the top,
compared to $67 for those smack dab in the middle of the
income scale.
``The Mnuchin rule is already being broken as Republicans
look to strip away hundreds of billions of dollars in
Affordable Care Act tax credits for working Americans to pay
for a giant tax break for the wealthy,'' Senator Wyden said.
``Bottom line is it's unfair to cut benefits that the middle
class depends on, all so the wealthy pay a lower rate.''
Mr. Mnuchin did not respond to a request for comment.
Republicans argue their plan makes everyone a winner--that
lower taxes will unleash an enormous swell of economic
growth, raising wages, incomes and tax revenue all around.
The historical record does not offer much support for the
claim that slashing taxes for the most affluent creates
growth. Yet even assuming the rosiest of forecasts, the top 1
percent, according to the Tax Foundation, would still receive
close to a $l00,000 tax cut--32 times as much as a middle-
income family.
Mr. Mnuchin has offered his own formula for adhering to the
standard he laid down, explaining that ``any reductions we
have in upper-income taxes would be offset by less
deductions.''
That would require some otherworldly mathematical magic,
however.
Consider the list of proposals that would reduce taxes on
the rich:
Cut the top income to 33 percent, from 39.6 percent.
Cut taxes on capital gains, 70 percent of which flow to the
top 1 percent.
Eliminate the estate tax, which applies to a tiny number of
people, couples that have estates bigger than $10.8 million.
Eliminate the 3.8 percent surtax on high earners'
investment income that has been used to subsidize health care
for poorer Americans.
End the alternative minimum tax, which currently limits
deductions for high earners.
Lower taxes on cash flow and income that passes from small
businesses to their owners, which also primarily benefits
wealthier Americans.
Now, what deductions could be eliminated that would offset
all those cuts at the top? There aren't many, said Alan
Viard, an economist at the conservative American Enterprise
Institute. If Republicans insist on lowering taxes on top
wages, capital gains, estates and cash-flow and pass-through
income as advertised, ``there's not a lot of latitude to
limit itemized deductions further,'' Mr. Viard said.
Any plan to curb itemized deductions would be partly offset
by Mr. Trump's plan to increase the standard deduction.
Curtailing mortgage deductions for the most expensive homes
is probably a good idea, Mr. Viard said, but that isn't going
to do much to raise revenue from those at the top of the
income pyramid, and the deduction is already roughly limited
to the interest paid on $1 million in mortgage debt.
Such alternative ideas, however, assume that the Mnuchin
rule will have a meaningful impact on what the White House
will propose or Congress will debate. Not everyone is
convinced that it will. As Mr. Viard said, ``I don't know how
much interest there is in fulfilling that statement by
Mnuchin, however it's interpreted.''
Mr. WYDEN. After breaking the Mnuchin rule once, the majority is now
planning to fast-track a second tax break for the wealthy. This one
will be even larger; in fact, it could be 10 times bigger or more. My
guess is that a lot of Americans are wondering what has happened to all
the campaign talk about fixing the Tax Code and really going out there
and standing up for the working people. As the Republican nominee, the
President said he was the guy to repair the country's broken tax
system. The particulars of the Trump plan were buried deep in the
business pages and on his Web site, but the broad strokes of the
message were pitched in rallies across the Nation: Donald Trump alone
knew how to do the job because he had taken advantage of the rules
himself, and he was ready to crack down on those who weren't paying
their fair share.
One of the few specifics Donald Trump offered on the stump was that
he would close the carried interest loophole. That, of course, has been
a favorite of investment fund managers. It would be great if it were
actually true. In reality, the promise turned out to be pretty much
just a head fake. Rather than closing the loophole and asking
investment fund managers to pay their fair share, the Trump plan
actually gives them a 25-percent tax cut. In fact, the Trump plan
slashes tax rates for corporations and the wealthy across the board at
a cost of trillions of dollars.
The President and Mr. Mnuchin might defend this plan by claiming it
is a tax cut for the middle class, so I want to spend just a few
minutes checking in with that part of the plan. If we read the fine
print, we will notice that one of the Trump tax plan's big casualties
is something called head of household status. That is a particularly
important benefit for a lot of middle-income taxpayers because it
reduces their bills. What would it mean for head of household status to
go away? Millions of working Americans, mostly single parents, would
get hit with tax increases.
Furthermore, the Trump plan eliminates key personal exemptions for
millions of other middle-income families. It pushes a lot of families
into higher tax brackets than they are in today. The administration
touts its proposals for a larger standard deduction and a new child
care tax credit as the cure-all for its tax increases on the middle
class and on working people, but the math just doesn't add up. Families
who are struggling to get ahead today are going to pay higher taxes
tomorrow.
So let's recap the Trump tax plan: a multitrillion-dollar tax break
for the wealthy and corporations and a gut punch of higher taxes for
working families.
At this point, it would be generous to say that the Mnuchin rule is
now on life support. If we wanted to design a tax plan to push more
Americans out of the economic winners circle, the Trump plan is what
you would come up with. When I look at the Trump tax plan that Mr.
Mnuchin would be in charge of spearheading, it looks to me as though
the administration has zero interest in cleaning out the rot that is
right at the heart of America's tax system.
Here is what it is all about, in my view. The Tax Code today is a
tale of two systems. If you are a wage earner--a welder in Portland or
a nurse in Louisiana--your taxes come straight out of your paycheck.
They are compulsory--no special deals. You can even see the numbers
right on your pay stub. Once or twice a month, out it comes. There are
no special tax-dodging strategies or loopholes to winnow down the tax
bill for the welder in Portland or the nurse in Louisiana. You can't
set up a John Doe, Inc., in a Cayman Islands P.O. box to shield your
income from taxes.
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But the rules are different for the powerful and the well connected.
At their disposal are huge armies of lawyers and accountants who
specialize in tax games. They specialize in tax tricks. With the right
advice, the most fortunate individuals and corporations in the country
can decide how much tax to pay and when to pay it. If anybody wonders
why people in America feel the tax system is rigged and the rules are
stacked against them, this is a big part of the answer. I intend to
talk more about that, but I want to come back to highlight the
difference between the welder in Portland and the nurse in Louisiana.
When those hard-working Americans are out there working for a wage
and once or twice a month have their taxes taken right out of their
paycheck, they know they aren't getting anything special. It is
compulsory. It is mandatory. They see it on their paychecks. Yet they
get lots of news coverage and articles and the like, and they will see
that for those who are fortunate, instead of paying taxes in a
mandatory and compulsory way, they pretty much get to decide what they
are going to pay, when they are going to pay it, and maybe nothing at
all. It seems to me that as we look at the nominee for Treasury
Secretary, we get a pretty good example of how it does play out in
terms of taxes for those fortunate few and how his taxes stand in sharp
contrast to that welder in Portland or that nurse in Louisiana.
Not long after ending a 17-year run at Goldman Sachs, Mr. Mnuchin
opened a hedge fund called Dune Capital in 2004. He set up an outpost
in Anguilla and the Cayman Islands. That is not a move you make for the
infrastructure or the ease of the commute. It is about a zero-percent
tax rate.
During Mr. Mnuchin's hearing, he claimed that having those overseas
funds benefited American nonprofits. When he testified in front of the
Finance Committee, he said: You know, the main thing we are doing with
these overseas funds is we are helping churches and pension funds. But
documents from the Securities and Exchange Commission show something
quite different. In some cases, 100 percent of his investors were from
outside of the United States, and setting up overseas allowed Mr.
Mnuchin to help them avoid paying taxes. What was the end effect? Dune
Capital was heavily invested in movies. So millions of dollars in
profits from Hollywood exports, like the movie ``Avatar,'' were
funneled to an offshore web of entities and investors, giving him the
chance to skirt a U.S. tax bill.
At a more recent point in his career, Mr. Mnuchin's bank was up for a
merger. The deal had the potential to be a personal windfall for him
and a small circle of others. A foundation Mr. Mnuchin chaired
reportedly used tax-exempt dollars to fund a write-in campaign pushing
for the deal's approval. During the public comment period on a
potential merger, this is pretty much the equivalent of stuffing the
ballot box.
Now, as a nominee for a Cabinet position, Mr. Mnuchin could be in
line for a special elective Federal tax deferral on money made by
selling stocks and bonds. That is the very definition of getting to pay
what you want, when you want. We hear a frequent and common defense
when these kinds of tax tricks are brought into public view. It is true
that the people who use them are following the laws on the books, but
the outrage in our tax system, as I have said on this Senate floor, is
what is legal. That is the real outrage with the American tax system,
and it is outrageous that the Senate has allowed obvious gamesmanship
to stay legal. It is outrageous that the administration and its chosen
nominee for Treasury have shown no interest in changing it.
When you are the Treasury Secretary, one of your paramount
obligations is overseeing taxes. The last time the United States
overhauled its Tax Code--this was in 1986--the Reagan Treasury
Department played a huge role in that effort, and one of the core
principles of that reform was treating wages and wealth the same way.
Democrats and Republicans came together to pass a tax reform bill based
on fairness. It said that the wage earner--that nurse in Louisiana or
welder in Portland--their income and the income of those who made their
money in finance and on Wall Street and the like would be treated the
same. I see no indication that this administration is prepared to
repeat that formula.
The campaign promise to fix the broken, dysfunctional Tax Code--
Donald Trump's campaign promise--lured in a lot of voters. When I heard
that Mnuchin rule the first time, I said that sounds pretty good--no
net tax break for those who are the most fortunate. That sounds pretty
appealing. The tax plans that the administration and Republicans in
Congress have on offer now will not undo the disgusting unfairness that
is right at the heart of the American Tax Code. In fact, it is only
going to get worse.
This issue has to be at the center of the debate on Mr. Mnuchin's
nomination. I am particularly troubled by the fact that the evidence
shows that the Mnuchin rule is already on the ropes.
I intend to oppose this nominee. I urge my colleagues to do the same.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Ms. COLLINS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.