House Committee on Appropriations Subcommittee on Financial Services and General Government (FSGG): President Biden’s Fiscal Year 2025 Budget Request and Economic Outlook
House Committee on Appropriations
Subcommittee on Financial Services and General Government (FSGG)
President Biden’s Fiscal Year 2025 Budget Request and Economic Outlook
Thursday, March 21, 2024
Topline
- Republicans criticized the President’s budget and federal work from home policies.
- Democrats praised recent economic growth and the President’s budget as positive steps forward.
Witnesses
- The Honorable Janet Yellen, Secretary, Department of the Treasury
- The Honorable Shalanda Young, Director, Office of Management and Budget
- The Honorable Jared Bernstein, Chairman, Council of Economic Advisers
Opening Statements
FSGG Subcommittee Chair Steve Womack (R-Ark.)
In his opening statement, Womack said that in his opinion, the reckless spending and out of control regulatory expansion by the Administration and Democrats have pushed the US into an economic downtown. He said that families are struggling financially, and that President Biden has refused to acknowledge the hardships this irresponsible spending has unleashed on the American people. Womack said the unsustainable fiscal trajectory is one of the greatest threats to American prosperity and to America’s security and future generations. He said President Biden’s budget is absent improvements to mandatory spending, which makes up 73% of federal spending, and that without implementing common sense structural changes the number allotted to discretionary spending will shrink under the pressure. Womack noted the Biden Administration’s unnecessary regulations which range from the SEC’s Consolidated Audit Trail, whereby the SEC exceeds its statutory authority in collecting Americans’ personally identifiable information without their consent, to Treasury’s mature and unredeemed debt which remains unclaimed by millions of Americans because of Treasury’s unwillingness to turn information over to the States. He concluded by saying he would not be able to support the level of spending in the President’s budget and that he would focus on finding a spending level that prioritizes putting our fiscal house in order consistent with the Fiscal Responsibility Act.
FSGG Subcommittee Ranking Member Steny Hoyer (D-M.D.)
In his opening statement, Hoyer noted how the week of the hearing would hopefully mark the end of the appropriations period for 2024, which serves as a testament to how broken the appropriations process is. He expressed support for the bipartisan funding bill but criticized Republicans for taking so long to honor the Fiscal Responsibility Act’s provisions which 314 Representatives supported last summer. Hoyer called the President’s budget a template for how we can continue investing into America and praised provisions in the Inflation Reduction Act and other laws passed during the Biden Presidency which lower costs for Americans in a variety of spaces. He then emphasized the need for bipartisan solutions to the federal debt and noted that cutting spending and raising revenue will both need to be looked at.
Ranking Member of the House Appropriations Committee Rosa DeLauro (D-Conn.)
In her opening statement, DeLauro said that the President’s budget presents a vision for our nation and tells a story of what the Administration cares most about. She explained that most Americans live paycheck to paycheck and praised the bipartisan spending bill which prioritizes working- and middle-class families. DeLauro said the President’s budget request shows how we can continue to invest in ordinary Americans and reduce the deficit by increasing taxes on the wealthiest Americans and big corporations.
Testimony
The Honorable Janet Yellen, Secretary, Department of the Treasury
In her testimony, Yellen explained that in the past three years Treasury has helped drive a historic economic recovery including through its implementation of the American Rescue Plan and is now playing a leading role in advancing President Biden’s medium and long-term economic agenda. She said that the economy is growing, and inflation is slowing, and that Treasury is acting internationally to advance American economic priorities and national security, including by continuing to respond to Russia’s invasion of Ukraine. Yellen noted Treasury is monitoring global conflicts and is using its economic tools to sanction Russia and counter financing of Hamas and other Iranian proxies. She said that securing funding for 2024 is crucial to achieving these priorities and others including to support a fair tax system, promote access to capital in disadvantaged communities, and combat terrorism and financial crimes. Yellen listed out a series of budget requests put forward by the President, including additional funding for the IRS, funding to address emerging threats, funding for cyber security, and funding for FinCEN.
The Honorable Shalanda Young, Director, Office of Management and Budget
In her testimony, Young praised President Biden’s legislative successes and noted that the President has achieved everything he has while lowering the deficit. She explained that the deficit today is one trillion dollars lower than it was when President Biden took office, and that the President negotiated the Fiscal Responsibility Act which saves roughly one trillion dollars over the next decade. Young said the President’s budget will continue to achieve deficit reduction while investing in the American people and American industry. She emphasized the budget resists efforts to cut Medicare and Social Security and extends Medicare’s solvency indefinitely by requiring the wealthy to pay their fair share. She said that the budget would not raise taxes on anyone making less than $400,000 a year.
The Honorable Jared Bernstein, Chairman, Council of Economic Advisers
In his testimony, Bernstein highlighted various economic achievements of the Biden Administration including the US’s quick recovery from the pandemic and the persistently tight labor market. He noted that US GDP has continued to grow above trend and even beyond the predictions of the Administration. Bernstein concluded by explaining that the Administration’s predictions for GDP growth are higher than other forecasters because they take into account the effects of the Biden Administration’s policies.
Question & Answer
Budget Process
Womack voiced concerns with the annual appropriations process and said he felt that recommendations from the previous Joint Select Committee on Budget Process Reform including bi-annual budgeting and yearly reconciliation should be enacted by Congress. He then asked if those reforms would solve some of the mess Congress finds itself in. Young said that there are clearly process issues, but said she believes there is inherent value to Congress looking at a part of the budget every year. She said that she believes there are ways to get that process on time and that she would love to sit down and find solutions.
Hoyer said that Young and Yellen should attempt to calculate the lost money and productivity in the federal government from running the appropriations process the way Congress did this year.
The President’s 2025 Budget
Rep. Matt Cartwright (D-Penn.) asked how long the provisions in the FY2025 budget would extend the solvency of social security. Young said that the President’s priorities are to continue solvency while not cutting benefits and that having high-income earners pay more into the system extends solvency for years.
Rep. Michael Cloud (R-Tex.) said that he was concerned that the budget requested additional money for the IRS when the IRS is only having employees come into the office 50 percent of the time and said that he felt telework was decreasing the productivity of federal workers. Yellen said that Treasury is ensuring that all agencies under it meet the standards that have been set for the federal government which is at least 50% of the time in person. She also noted many employees have to be in every day.
Rep. Jerry Carl (R-Ala.) said the President’s budget does little to obtain savings from building consolidation in DC or throughout the country. He then asked why we are continuing to spend billions on building while federal employees are allowed to work remotely or work hybrid schedules. Young said that this is about return to the office and noted that many federal employees were never allowed to work from home.
Rep. Chuck Edwards (R-N.C.) said the tax increases on corporations in the President’s budget would likely fall on workers and lower-class Americans in the form of lower wages and higher prices and asked who these tax hikes would be good for. Yellen said the tax increase would not harm the competitiveness of business and said cutting the corporate rate deprived the US of tax revenue that could’ve been used to decrease the deficit.
The Economy
Hoyer said he felt additional private sector investment was spurred by some of Joe Biden’s legislative accomplishments and asked when the last time the economy had $650 billion in private sector investments. Yellen said she can’t think of a time when the economy has had such a response and that she believes the new investment was driven by the trifecta of legislation: the bipartisan infrastructure law, the IRA, and the Chips and Science Act.
China
Rep. John Moolenaar (R-Mich.) expressed concerns that some tax credits are refundable which means Treasury would be sending a check to the subsidiaries of Chinese companies for the value of those tax credits. He then asked if Yellen believed American tax credits should be in the hands of Chinese companies or their US subsidiaries. Yellen said that it is Treasury’s job to implement the laws passed by Congress and that the advanced production tax credit Moolenaar is referring to is intended to onshore important energy supply chains and it can only be sent when there is significant production of components in the US. She said the legislation does not preclude Chinese firms but that clean vehicle credits do exclude Chinese firms.
Moolenaar then said that in China, US firms that want to send money back to the US must obtain pre-approval from Chinese tax authorities before doing so and asked Yellen if she would support language like that in the US tax code. Yellen said she would not take a stance on that.
FinCEN
Rep. Ashley Hinson (R-Iowa) said that FinCEN’s beneficial ownership reporting requirements went into effect earlier this year, requiring millions of small businesses to report information to a new federal database. She asked Yellen how Treasury is ensuring small businesses have the necessary resources to comply. Yellen said that FinCEN has a well thought out and expansive education and outreach program to make sure that businesses learn what their reporting responsibilities are.
Carl expressed concern that FinCEN was tracking Americans financial transactions that included key search terms like “MAGA.” He then asked what actions Yellen was taking to ensure FinCEN was not targeting conservative Americans for their political beliefs. Yellen said that this is an activity that took place before she took office and ended in February 2021. She said it was a response to the attack on the Capitol on January 6th, 2021.
For more information on this meeting, please click here.
For an archive of past SIFMA hearing coverage, please click here.