Janet Yellen’s confirmation hearing to be the first female Treasury secretary took an unusual turn Tuesday showing that lawmakers are girding for fights over whether to reverse the Republican tax cuts passed in 2017.
Yellen got a warm bipartisan reception from the Senate Finance Committee. A vote on her nomination by the full Senate was tentatively set for Thursday.
While Yellen came ready to defend President-elect Joe Biden’s $1.9 trillion coronavirus relief package, Republicans on the Senate panel seemed to be girding for a battle over tax hikes.
The coronavirus relief package proposed by Biden last week doesn’t include tax increases.
However, the president-elect has signaled that he will quickly follow the relief package with an infrastructure bill that would be paid for, in part, by higher taxes on the wealthy and corporations.
Republicans already don’t like the sound of that.
Sen. Rob Portman, Republican of Ohio, said that the 2017 Republican tax bill resulted in “dramatic” economic improvements for the country and a surge in business investment that was only upended by the coronavirus pandemic.
“You may not approve all of the tax cuts and tax reforms that were in there, but certainly, on the business side, this created an incentive to invest in America,” Porter said.
Noting that Biden has talked about raising the corporate tax rate and also raising the amount of taxes on global income, Portman said these proposals simply amounted to less future investment in the U.S.
Yellen seemed caught off guard that tax hikes would be the focus on Republican lawmakers, especially after Sen. Todd Young, a Republican of Indiana, asked if she would consider changing the proposal, which hasn’t even been written down.
“I’m not sure what you have in mind,” Yellen said.
Yellen reminded Young that a full infrastructure plan hasn’t been completed. She said the president-elect has generally supported increasing corporate taxes and reducing the incentive for companies to offshore jobs.
“I certainly believe in a fair and progressive tax code where wealthy individuals and corporations pay their fair share,” Yellen said, at another point in the hearing.
Sen. Ron Wyden, Democrat of Oregon who will become the chairman of the tax-writing Finance Committee, said he will press “to fix America’s broken down, dysfunctional tax code.”
“To me, it has to start with the proposition that billionaires, corporations have to pay their fair share,” Wyden said.
Wyden said he was putting the finishing touches on a new capital gains tax that would only hit “the top three-tenths of one percent of taxpayers.”
Republicans countered that any tax on the wealthy would hurt small businesses already reeling from the pandemic.
During Yellen’s hearing, GOP lawmakers expressed skepticism with Biden’s multi-trillion-dollar package economic relief package. But there were no fireworks. Yellen stuck to her guns that the best economic policy is to help Americans struggling during the pandemic.
Wyden vowed to move quickly on the relief plan. He said his “top economic priority” will be to “avoid the mistake” lawmakers made after the 2008 financial crisis when Congress took “its foot off the gas pedal before a recovery took hold.”
“The good news is Chair Yellen knows that going small on economic relief would be a big mistake,” Wyden said.
Republicans got Yellen to agree that the long-run trend of the federal debt is a concern. She said that the federal deficit would have to be put on a “sustainable path” but only after the economy has fully recovered from the pandemic.