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Senate Confirmation Hearing for Treasury Secretary Nominee Steve Mnuchin; Trump, Pence to Lay Wreathe at Arlington National Cemetery. Aired 2:30-3p ET
Aired January 19, 2017 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[14:30:00] SEN BEN CARDIN, (D), MARYLAND: That, I don't believe, would be a partisan issue. And as we are working for major tax reform to try to make our tax code fairer and more competitive, I would urge you to work with us on retirement savings and other savings initiatives that we could make progress, I think, in a relatively short period of time.
STEVE MNUCHIN, TREASURY SECRETARY NOMINEE: Look forward to working with you. Thank you.
CARDIN: Thank you, Chairman.
CARDIN: Thank you, Mr. Chairman.
HATCH: Thank you. I -- I have to apologize to Senator Stabenow; she should have been next. So, we'll start with you now. STABENOW: Well, thank you very much, Mr. Chairman. Mr. Chairman, I want to thank you very much for allowing us to have an opportunity to fully ask questions in multiple rounds. We really appreciate it, and the way you're conducting the hearing, so.
HATCH: Well, I hope we only have two rounds.
STABENOW: Yes, but thank you, thank you for allowing that in. And Mr. Mnuchin, this really is a physical marathon, I think, of endurance in just the nomination hearing. So we -- we appreciate your hanging in there as well.
MNUCHIN: Thank you.
STABENOW: A couple of different things. First of all, following up colleagues speaking about jobs going overseas, obviously a very critical issue for Michigan. We make things, we pride ourselves on making things and manufacturing is one of the most significant parts of the economy.
I've been working for a number of years on a bill that we call Bring Jobs Home Act, that would end the ability of a company to write off the cost of moving overseas. I mean, I don't know why, if a facility is closed, the workers and the taxpayers and the community should pay for their move. And that certainly seems in line with that our incoming President has said. Would you support stopping that write- off? MNUCHIN: I -- I look forward to working with you on that. I can tell you it sounds like something the President-Elect would like. So I look forward to working with you on that.
STABENOW: Well, I think it's important that we take step one. (inaudible) all of the loopholes that are, first one is we shouldn't pay for the move. So I appreciate and hope that that's something that will be embraced.
Different subject. I know colleagues have talked about pensions, which are critically important. People -- you know throughout their lives often given -- giving up a pay raise to put money into a pension. This is very serious what's happening to pensions around the country. And certainly, whether it be a multi-employer pension or single-employer pension, deeply concerned about what's happening to people.
We know that we heard that from the GAO in 2013 that, if there was a multi-employer pension fund to become insolvent, a very large troubled plan, then we could see an estimated benefit paid by the PVGC to be reduced less than 10 percent of the guaranteed level. So, you'd be talking about somebody who worked hard all their life that would be getting $2,000 a month, and then could end up with $125. Seems to me that's a pretty basic promise that we need to keep.
And rather than ask you to comment at this point, I'm going to go on to the other -- the other piece of keeping our promises, but -- and ask you to respond to both. One is the pension and the other is Social Security. And as Treasury Secretary you will be a trustee, a very important position. And I -- I think it's important to know if you're committed to upholding the new President's promise in May of 2015 that he would not support cuts to Social Security.
MNUCHIN: I absolutely support the President's promise, that's why I'm here.
STABENOW: And, secondly, what's a cut? I mean we -- we have heard increases in the retirement age. Is that something that you would support?
MNUCHIN: Again, I've heard the President's promise, and I would sit down and discuss it with him. And I'm happy to work with you on the specifics. But I -- I haven't discussed the specifics with him, but I know from a high level how he feels.
And just going back to the pension fund issue, it is a -- I acknowledge it's a very significant issue and something I look forward to working with you and your office on.
STABENOW: This is very real for people, and just as the financial crisis created a serious situation for people and homes, and for financial institutions, we all know pension funds were involved in that as well, and somehow didn't make it to the top in terms of being able to be made whole. And so I think that's an unfulfilled promise and obligation that our country still needs to keep.
On Social Security, though, there are a lot of way. I mean, what's a cut? A lot of different ways to look at this. And whether it's raising retirement age, change CPI, progressive price indexing, privatization, cuts in the amount of benefits, I mean all of these things would reduce a retiree's or worker's lifetime benefits as they become a retiree. And all of them are extremely significant.
Just out of curiosity, do you know the average Social Security benefit per month?
MNUCHIN: I do not, I apologize.
STABENOW: One thousand, two hundred, and twenty-eight dollars and 12 cents. Not a lot to live on.
MNUCHIN: No, it's not.
STABENOW: And for a third of the seniors in the country, that's 90 percent or more of their income. So, thank you very much.
MNUCHIN: It's a very significant issue, and I appreciate that. And, if I'm confirmed, I look forward to working with the President- Elect on this important issue.
STABENOW: Thank you.
HATCH: Thank you, Senator. Senator Brown.
BROWN: I've been, please -- Mr. Mnuchin, thank you, and I'm sorry you had to hurry through lunch.
MNUCHIN: That's OK.
BROWN: I saw you sitting in the back room, eating a -- a lunch probably that you've eaten faster than any time lately. So, thank you for that and your patience.
I've been pleased the President-Elect's been committed to helping manufacturers. He wants to buy American, hire American. I'm sending him a letter today -- this a letter that I will hold up -- to let him know I'll be introducing legislation to extend buy American to all federal infrastructure construction and public works projects. If taxpayers pay for it, whether it's a water and sewer system or a bridge, or whether in steel or iron, or whether it's cloth for an American flag in Akron, Ohio, over the post office, if taxpayers pay for it, our companies and our workers should build it. So, I just wanted to let you know that.
Now I want to talk to you about China. I've never met a Goldman -- Goldman Sachs banker who wanted to get tough on China. Based on your Wall Street background and financial dealings, I'm concerned about just what I've seen in the past with bankers and -- and what I would say is soft on China.
Let me lay out a couple things. Relatively -- Relativity Media is a Beverly Hills company invested in movies, as you know, among other things. When you were co-chair there during 2014 and '15, the company received investment from Chinese investors in the company's films and partnered with the government of the People's Republic of China to promote and distribute Chinese films.
China readily admits it wants to become more powerful by increasing its cultural influence in this country and expanding its financial stake in the U.S. film industry. You were a board member of a company that partnered directly with the Chines government, that increased their influence in Hollywood. Were you -- were you helping China expand its global power?
MNUCHIN: So, let me just first comment.
BROWN: And try to make the answer really short.
MNUCHIN: I -- I -- I know, but I apologize. First of all, I left Goldman Sachs 15 years ago. (This is) just going back to trade. I think of myself as a regional banker, not Goldman Sachs.
As it relates from my -- my experience at Relativity, I don't -- the Chinese never invested in Relativity, and I don't recall them ever having invested in Relativity films. They did have a small joint venture in China that was not particularly successful, for what it's worth.
Now in regards to my view on China, I 100 percent support the President's view, and that we need to look at China overall from a trade standpoint, and an economic standpoint, and a security standpoint. And I look forward to working with him on that. BROWN: I -- I -- that's not -- what you said is not from the reports we get. We will follow up by mail. Or we will follow up the letter to you to talk about that.
MNUCHIN: Happy to.
BROWN: I -- I -- let me shift to China. China, you know, China has great capacity in production of steel. Their distortion of the global steel market puts American workers out of jobs. You and the President- Elect talked about that in places like Youngstown, Ohio. Will you commit to make public a comprehensive plan to address global over capacity in the steel industry within the first month you're on the job?
MNUCHIN: I don't want to make that commitment, but I'm happy to work with your office on this issue.
BROWN: You don't want to make a commit will it be the first month, or you don't want to make a commitment that you put a substantive comprehensive plan to address global over capacity?
MNUCHIN: I will make a commitment to sit down with your office, and work on this issue, and then figure out the time frame and whether we should be making it public. But I understand the issue. The President- Elect is concerned about these issues, and we'll work with you on this.
BROWN: Thank you. I want to follow up on you said you were -- you left Goldman 15 years ago, correct?
MNUCHIN: I did, 2002.
BROWN: You're aware, I think, that during part of the time you were at Goldman, one of you or one of the two firms -- I'm not saying you worked on this personally -- but I'm saying that Goldman is one of the two firms that managed the portfolio of the Central States Teamsters' pension fund, and I think you're aware that, while Goldman was a manager of the funds of Central States, the plan lost 40 percent of its value, more than double the average losses for a defined pension benefit plan during that period.
Due in part to those losses, in part due to Goldman Sachs I would call mismanagement of that plan, the Central States Teamsters' pension fund, as Senators Stabenow, Nelson, and McCaskill said, is in distress and at risk of becoming insolvent.
There's a certain irony that, if you're confirmed, you'll be a member of the board of the PGVC, as I think you know, and responsible in many ways for protecting the pension of more than 400,000 working families.
You, I assume don't know who Butch and Rita Lewis are, they are constituents of mine and Senator Portman's. He worked as a trucker for 40 years, he was a teamster, he led the (inaudible) Retirement Pension Committees fight against cuts to their earned benefits.
He passed away on New Year's Eve due to a stroke, which doctors have attributed at least in part, due to the stress he faced over proposed pension cuts. His wife lives in Southwest Ohio, she's taking up his fight. She will lose almost her entire pension, so I know you said you aren't for finding a way to make these pensions whole, but understand that this Congress bailed out Wall Street banks including Goldman and I hope that you'll change your mind on helping make these pensions whole.
MNUCHIN: I appreciate the significance of the pension issue and I can assure you I had nothing to do with that issue when I was at Goldman Sachs.
BROWN: I know that, but I also - - - that doesn't make Rita Lewis feel any better.
MNUCHIN: I completely understand that Senator. I appreciate that.
BROWN: I just know there's an ideological antipathy in this body from its more conservative members to help the Wall Street banks, but not to help workers like Rita Lewis' husband.
HATCH: That's going a little far, I don't know anybody that wants to do that.
BROWN: Okay, Mr. Chairman, I'll finish my comments. One more point that I wanted to make. Last year I worked with some manufacturers concerned at a metals warehouse owned by your former employer. Goldman was driving up aluminum costs, the Fed proposed rules to reign in merchant banking authority that allows banks like Goldman to own these metal warehouses.
We've done some hearings on that, will you make it a priority to help the Fed finish it's merchant banking rules? And use Treasury's authority to address these unfair practices?
MNUCHIN: Absolutely. I'd be happy to look into that and work on that.
BROWN: Okay, thank you. I understand Treasury has joint rule making authority in merchant banking so they have a role, you have a role and I hope that you exercise it.
MNUCHIN: Thank you.
BROWN: Thank you, Mr. Mnuchin.
HATCH: Thank you Senator. I guess Senator Warner, or excuse me, Senator Heller.
HELLER: Mr. Chairman, thank you. Mr. Mnuchin, thanks for your patience. It's a long day, but I hope it's only one day. I want to talk, I don't question the President-elect's desire to replace Obamacare. He said it and I don't doubt it. What I do question is what his positions are on all the taxes. As you know there were a dozen or more taxes in Obamacare, trillion dollars, new taxes on middle class America.
Can you clarify to me the President-elect's position on the taxes that went along with it? Does he want to keep them? Does he want to repeal them? Give me your best thoughts.
MNUCHIN: So first of all, again, I just want to again apologize that we didn't get back to you on that information. I assure you I've read my staff the riot act that this will be our top priority when we (inaudible).
HELLER: Thank you.
MNUCHIN: In regards to Obamacare, I haven't been as involved in the specifics of the repeal and replace or replace. As it relates to the taxes, my understanding is to get rid of the surcharge on that.
HELLER: Obviously there's a number of controversial taxes in there, the medical device tax of course, Cadillac Tax being another. I want to kind of hone in a little bit on this Caddilac Tax because you're well aware of it's a 45 percent excise tax on what they consider or deem to be Caddilac taxes. Most people that have what would qualify as a CadillacTax, doesn't come anywhere close to high end healthcare programs.
This would affect 1.3 million Nevads, 120 million Americans, we're talking seniors, unions, public employees. Go down the list that are getting hit by this by this 40 percent excise tax. Give me your feelings on this and your desire to repeal a tax of this nature?
MNUCHIN: I agree with you and I said I'm not as close to the whole Obamacare discussions right now, but I will definitely follow up with you on that. I agree with your view.
HELLER: It was postponed two years to 2020 from the work of Senator Heinrich from New Mexico and myself. We're working hard, what I just want is a commitment from you as we go forward on this and hopefully we can repeal what I consider to be a very erroneous tax.
MNUCHIN: Sounds like what you're saying makes absolute sense and you have my commitment to work with you on that.
HELLER: Thank you. I want to talk a little bit more about housing. 17 percent of the houses in Nevada are currently still under water, 17 percent. I want to talk about the mortgage debt tax real quick.
The IRS deems it a gift, today, that if you bought your house for $250,000 today it's worth $200,000. You sell it for $200,000, they deem that $50,000 as a gift and want to tax you on that. Now Senator Stabenow, Isaacs and Menendez, we have worked closely on this and it expired as of January first.
We have reintroduced that legislation to try to eliminate this burden on the taxpayer. I'd like to get your understanding of this, your feelings on it, where your support would be on this particular piece of legislation.
MNUCHIN: You have my commitment to work with you. If it's not bad enough that the person lost their home, but then we got to send them a tax bill. I agree with you on that.
HELLER: I appreciate your support.
Mr. Chairman that's all I have.
HATCH: Senator Warner.
WARNER: Thank you, Mr. Chairman. I just want the record to reflect, I would differ with my colleague, the Senator from Nevada in terms of characterization of most of the funding that went in for Obamacare. (inaudible) in terms of Capital Gains surcharge for folks like you and me and the higher income surcharge for folks like you and me.
I know this has not been your focus yet, but any world in any form of hocus pocus dynamic scoring scheme, the ability to say as the President-elect just said, maintain the prohibition against preexisting conditions. Keep kids on their parent's policies until they're 26 years old, make sure there is insurance for everybody and pay for it all would be a curious act.
Let me come to my questions though. I appreciate very much your earlier comments to me and Senator Kraybill about GSE reform, but I want to clear up one thing. As you're aware there have been a number of hedge funds that at the absolute demise of those Fannie and Freddie in the public markets.
They went in bottom cheap, that's what hedge funds do. They have been launched, a remarkable campaign both public and private, of lobbying that is in certain ways in terms of even character assassinations of Senators. In certain ways it's almost unprecedented.
The President-elect and you invested in one of those funds. President- elect has divested himself, I imagine you will divest yourself as well, but again in light of your firm commitment earlier not to go with some kind of recap and release scheme that would greatly enhance those hedge funds profits, I believe then leave the taxpayer holding the bag if another housing crisis took place.
I just thought you'd want to comment on that and reaffirm that commitment that you'll be looking out for the interest of the taxpayers and not some of the folks you might have invested in in the past.
MNUCHIN: I mean first of all let me just comment, I have divested my interest in that fund as well already. As I said my job is to look out what's for the best interest for the taxpayers.
Balancing on this issue, the need for housing reform and making sure that we maintain housing liquidity, making sure the taxpayers are not on the hook for that.
Whatever the legal issues are associated with, again as it relates to the entities I have tremendous expertise on the entities as it related to the legal case of various holders of different securities. I haven't studied that at all...
WARNER: Those of us who have been part of the reform realize that legal proceeding will continue.
One of the things you were complimentary on my business background, obviously you've had great deal of success in business as well. One of the things that business people often times bring to the political process is willing to look at things fresh.
You as a businessperson realizes, there is two sides of a balance sheet. There's revenue and there's spending.
WARNER: Many people come to the political process and get hired into this process by taking absolutist pledges on things like revenues. As we discussed in my office if you look and share with you the data of the 34 Industrial Nations in the world, much to the surprise of many, America actually ranks 31st out of 34 Nations in terms of total revenues as a percentage of GDP.
It affects our tax rate compared to everyone else. I know you're not probably going to fully answer this, but my hope would be, that you would not in your moving forward in this position, take one of those absolutist pledges that in an effort to try to drive down our $19 trillion deficit, going much higher with some of these tax reform plans being put forward, that you're not going to arbitrarily take one whole half of the balance sheet off from being considered the whole question around revenues.
MNUCHIN: No, my only pledge is I'm working for the American people and will be open minded when looking at different things. The good news is not only do I have a hopefully, a new view. But we got a president who is willing to look at...
WARNER: Well, I'm gonna hold you to that because the absolutist approach which never looks at revenues is the only -- leads us to the place where we are right now, where we're spending frankly the lowest level in modern American history on education, infrastructure and R&D. And that's not a good business plan.
Lemme go to two other questions, really quickly. Earlier comment and I was a little surprised at your response, having gone through the FDIC process with a relatively midsize institution.
As I'm sure you're aware, Lehman (ph) much smaller than most of the SIFI (ph) institutions, took five years in the bankruptcy proceeding (ph). And in Title II of Dodd-Frank, a bipartisan component of the bill that actually had 80 senators support, there was an acknowledgement that while we need to prepare for bankruptcy proceedings and those are the liquidation plans that these institutions have to prepare.
That if that proceeding doesn't take -- couldn't take place where a bankruptcy wouldn't work, you had as a fall back, provision Title II. It would concern me greatly, if you agreed with some of the other comments that that Title II reserve that most of the large institutions actually believe (ph) strengthens the system, you'd be in favor of appealing.
MNUCHIN: Well, again, it's -- it's a complicated issue.
WARNER: Absolutely. That's why I'm concerned...
MNUCHIN: So -- again, I'm -- I'm not suggesting that we remove Title II tomorrow without having the appropriate bankruptcy solution. And again, it depends on what -- what's in bankruptcy.
So it depends about whether we're talking about a holding company that just has a bunch of sub debt and equity. Or if you know, we're talking about the bank. So again, we've had a process to resolve banks. What again, I think that we need to look at is the holding company issues.
[14:52:25] SEN. MARK WARNER, (D), VIRGINIA: What I would simply point out, the National Bankruptcy Conference, which is composed of bankruptcy judges, lawyers, believes, quote, "Orderly liquidation authority under Title II should continue to be available even if the bankruptcy code is amended."
Thank you, Mr. Chairman.
ORRIN HATCH, (R-UT), CHAIRMAN, SENATE FINANCE COMMITTEE: Claire McCaskill?
WOLF BLITZER, CNN ANCHOR: All right. We're going to take another quick break from this hearing, the Senate Finance Committee, the confirmation hearings of the treasury secretary nominee, Steve Mnuchin.
We're also waiting -- the President-elect Donald Trump, he's at Blair House right now. You see live pictures. The official guest house for visitors of the White House. He will be leaving shortly with his entourage, his family, heading over to Arlington National Cemetery, across the Potomac River, for a wreath-laying ceremony at the Tomb of Unknowns. That's his first official inauguration event as the president-elect.
We'll take a quick break. Much more of our special coverage right after this.
[14:57:48] BLITZER: Good afternoon, from Washington. I'm Wolf Blitzer. We want to welcome our viewers in the United States and around the world.
You have been watching CNN special coverage of hearings on Capitol Hill for a couple of Donald Trump's top cabinet picks, including a very tense few hours for the treasury secretary nominee, Steve Mnuchin, facing tough questions about his history with the foreclosure crisis.
But there are other major events going on surrounding the inauguration. Donald Trump is officially kicking off his inauguration events. In moments, he'll be taking part in a wreath-laying ceremony over at Arlington National Ceremony at the Tomb to have Unknowns. The day will be capped off a little bit later with the "Make America Great Again Welcome Celebration," a concert at the Lincoln Memorial.
That's where we find our Jake Tapper and Dana Bash.
Jake, it's going to be a lively two hours there.
JAKE TAPPER, CNN ANCHOR: That's right, Wolf. Crowds are beginning to fill the National Mall area here at the Lincoln Memorial and all the way down to the Washington Monument. The excitement is building. The inaugural committee chairman, Tom Barrack, says these events will serve as something of a tribute to one of America's greatest attributes, and that's the peaceful transition of power. Toda's concert will feature country star, Toby Keith, Lee Greenwood, of "God Bless the USA" fame, actor John Voight will be here, the rock band 3 Doors Down, a fireworks celebration and an appearance, of course, by President-elect Donald Trump.
Dana, right now, there are all these citizen performers going on at other stages nearby, high schools and the like.
DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: That's right. They're trying to make this sort of as accessible to people as they can, particularly by local Washingtonians. But this going to be the event of the evening. And you know, there are, as you said, Lee Greenwood and those types, but they are also the staples of this concert, which tends to happen at inaugurations, the Mormon Tabernacle Choir and the Marine Corps Band. And also, I notice -- in looking through the research, I notice several of the acts are Guinness Book of World Records holders. And that, to me, sounds just kind of perfect for Donald Trump, that he would want the best of the best.
BASH: You know, there's a 16-year-old who is going to sing. She was made in "America's Got Talent" --