August 01,2018

Wyden Statement on Capital Gains Taxation & Treasury, IRS Nominees

As Prepared for Delivery

The Finance Committee meets this morning to vote on the nominations of Justin Muzinich to be deputy secretary of the Treasury and Michael Desmond to be chief counsel at IRS. And colleagues, particularly on the Muzinich nomination, the debate changed completely with the breaking news from Treasury on Monday night.

According to Treasury sources, the Trump administration is considering flouting the law to cut taxes on capital gains -- permanently. It’s a $100 billion handout to the super-wealthy. Just in case anybody forgot, it was only a few months ago the administration and their Republican allies in Congress forced through a $1.5 trillion tax bill that overwhelmingly benefited corporations and the most fortunate. It might be easy to get lost in the news cycles these days, but that one is hard to forget. Now the administration is back prospecting for Tax Handout 2.0. It’s like this administration offered up a buy-one-get-one deal on handouts for the super-rich.

And let me quote directly from a Congressional Research Service analysis of indexing capital gains: “It is unlikely … that a significant, or any, effect on economic growth would occur from a stand-alone indexing proposal.” So a $100 billion giveaway to the wealthy that produces NO economic benefit has obviously caused some controversy. The White House yesterday tried to quiet the outrage, but they walked Treasury’s position back only by about an inch and a half. According to Bloomberg, “White House Chief of Staff John Kelly wasn’t actively seeking the change as of Monday.”

When I saw this breaking news on the possibility of more handouts for the fortunate few, my first thought was, weren’t the $1.5 trillion cash handout and the new dark money corruption rule enough? I gather not. Indexing capital gains would be another massive policy change that’s had no public debate. A change plucked from the wish list of the extreme right. A change that working Americans overwhelmingly oppose.

There is awfully compelling evidence that what the Treasury is considering is illegal. The first Bush administration even decided it didn’t have the legal authority to make this change without Congressional action. There’s no question that following through on it now would bring on a legal firestorm.

So colleagues, it sure seems like the administration feels they have no obligation even to try to make a straightforward case to the public for why these changes should become law. When Mr. Muzinich came before this committee last week, it was a struggle to get straight answers to questions that ought to have been low-hanging fruit. For example, I asked if the Treasury has a role preventing foreign actors from interfering in our elections. A simple yes-or-no would have sufficed. He gave a vague answer about looking at Treasury-specific statutes.

Senator Grassley said he and his fellow Republicans often saw Mr. Muzinich up here last year during the tax debate. I’m not sure about other Democratic committee members, but he certainly didn’t come meet with me to discuss taxes in a bipartisan way. When he DID come in for a courtesy meeting not long ago, he told me he’d just be a “building manager,” as if he’d be looking after the windows and office supplies.

In response to a question from Senator Bennet, he even repeated the old Mnuchin fabrication that the $1.5 trillion Trump tax handout is going to pay for itself. Not even the administration’s own economic numbers stick by that one. For Mr. Muzinich to sit in this well and repeat that absurd, debunked claim that isn’t even backed up by his own department’s numbers certainly takes what the Jewish people call chutzpah, but it doesn’t pass the smell test.

I have an extremely difficult time believing that Mr. Muzinich -- who was profiled glowingly as a Treasury power-player by the New York Times and Reuters -- hasn’t been involved in these controversial deliberations. As I said before, his stonewalling would fit right in if he stood next to the Alexander Hamilton statue outside the Treasury building.

In my view, Treasury appointees must exhibit a basic level of candor, a respect for both sides of this committee, and a recognition that the department is NOT above the law. Those qualities are lacking at the moment among those heading up the Trump Treasury Department. And for the reasons I’ve discussed this morning, I will be unable to support Mr. Muzinich’s nomination.

As I’ve also made clear to this committee, I plan to hold all Treasury nominees until the Department quits stonewalling our oversight requests. For that reason, if Mr. Muzinich’s nomination is reported out of committee, I will place a hold on its debate on the floor.

Mr. Desmond’s nomination, however, I will plan to support today.