At Finance Hearing With Secretary Yellen, Portman Sets the Record Straight on Tax Reform
WASHINGTON, DC – During a Senate Finance Committee hearing this morning, Portman addressed Committee Democrats’ erroneous claims about the Tax Cuts and Jobs Act (TCJA) by highlighting the overwhelmingly positive and wide-ranging impact of the legislation.
Portman questioned Secretary of the Treasury Janet Yellen on the economic effects of the bill. And specifically, Portman noted how the TCJA bolstered the competitiveness of U.S companies, brought businesses and jobs back to America, led to historical levels of unemployment, and especially benefited minority and working class individuals.
A transcript of Senator Portman’s questioning can be found below and video can be found here.
Portman: “Thank you, Mr. Chairman, and thank you, Secretary Yellen for joining us again. I found this a fascinating dialogue this morning. I’m going to ask a couple questions I hadn’t planned to ask because it seems like everybody on the Democratic side has decided that the 2017 tax reform bill had a negative impact on our economy and on the opportunity for people to get ahead. So let me just ask you a few questions to be sure we are working from the same facts because it seems like this is kind of a fact-free zone on that particular topic.
“Do you agree that with regard to the tax bill, which was implemented in 2018, and then of course COVID-19 hit in early 2020, so let’s say in the 18 months prior to February of 2020 – which was when the COVID pandemic hit and affected our economy in such negative ways – would you agree that during that time period that we had significant improvements to the economy and to the equality that we all see, meaning that lower-income individuals have a better shot? In particular, do you agree that the poverty rate during that period was the lowest it had been in the history of our country since we began keeping track of that back in the 50s? Yes or no?”
Dr. Janet Yellen, Secretary of the Treasury: “I agree that that was a period of good economic performance in the ways you just said, but it was a continuation of trends we had seen in the prior years.”
Portman: “Let’s talk about that for a second, if I could, Madam Secretary. It was the lowest poverty rate in the history of our country. You said it continued a trend. That’s not true. With regard to wages, when you take inflation to account, wages had been going down in my home state and nationally. In the 18 months prior to February of 2020 we had 19 straight months, actually, in February 2020 of wage gains of three percent or more on an annualized basis. Isn’t that true?”
Secretary Yellen: “I agree that there were good wage gains, especially at the bottom of the income spectrum.”
Portman: “Well you just said what I was going to add, which is that the lower quartile particularly benefited, as well as a lot of middle-income Americans. And that was a huge relief for us in my home state and elsewhere. And then the unemployment numbers. Do you agree unemployment was at a 50-year-low?”
Secretary Yellen: “Absolutely…”
Portman: “For Hispanics and Blacks and other marginalized groups it was the lowest ever in history.”
Secretary Yellen: “Yes. And I think those were wonderful. Those were wonderful developments. We had a full employment economy, tight labor markets. And just as a weak economy imposes the largest losses on disadvantaged groups, on minorities, on low-income workers, a strong labor market does exactly the opposite. And we had a good, strong labor market that was conferring those benefits.
“I simply would argue that this was largely a continuation of trends that had been in place. It continued. I don’t believe that was caused by the 2017 tax act. It certainly wasn’t harmed by that act either. Those trends were very favorable.”
Portman: “Yeah, well, other economists would differ, including the Congressional Budget Office, which is a nonpartisan group up here that says that the corporate tax reform that you apparently opposed allowed for workers to gain a lot of benefits. In fact, they said 70 percent of the benefits went to workers’ salaries, wage gains we just talked about and went to workers’ benefits. Seventy percent of it. They also said that $1.6 trillion, this is a Joint Committee on Taxation number as well, came back into the U.S. economy in terms of repatriation, $1.6 trillion.
“And you made the point earlier that somehow everybody was leaving the United States during that time period. That’s not true. In fact, inversions flipped. We didn’t have any inversions, virtually, in that time period I’m talking about as compared to previously when we had a lot of them. So in terms of the trends, we were going the wrong way in terms of losing jobs and investments overseas.
“Anyway, look, I appreciate your background and experience, but I just think that we have misinformed the public as to what happened in 2017 in the interest of somehow raising taxes on the workers I represent who are going to be hit by these higher corporate taxes that you would like to put in place.
“I’m also very concerned about the budget. You said this morning, I quoted you here saying that you are proposing an ‘ambitious fiscal policy.’ It is ambitious, taking the country’s debt to historic levels as a percent of GDP, which is how we ought to measure it, and a $14 trillion increase in spending over the next 10 years. As you know, during your nomination I supported you and I said, ‘Would you commit to me to be the fiscally responsible one among the members in the cabinet?’ and you said you would. So I hope that you will begin to do that and get us back on track.”
Secretary Yellen: “I believe we’re getting back on track because over 15 years, every dollar of spending proposed in this budget is paid for. And over 20 years, there is a substantial reduction in outstanding debt. Over the next decade, the real interest cost on the debt is projected to be either negative or just barely positive. And in the interest rate environment that we are in now and had been in before the pandemic – it’s just not only a matter of the pandemic – we’ve had the opportunity to finance critical investments that will make our economy grow more quickly and be more productive and fairer and have the ability to pay for them. And we’ll end up with more tax revenue from permanent changes to the tax code that will benefit our economy into future decades when problems of aging populations will get our entitlement programs…we believe this is fiscally responsible.”