Grassley Questions Treasury Secretary on Benefits of Working Families Tax Cuts Act, Importance of Bringing Down Budget Deficits

WASHINGTON – Sen. Chuck Grassley (R-Iowa), a senior member and former chairman of the Senate Finance Committee, questioned Secretary of the Treasury Scott Bessent about the benefits of the Working Families Tax Cuts Act and the need to reduce deficits and the national debt. “[ The Working Families Tax Cuts Ac t] has been essential to the success that we have seen for the past four quarters ... On the household side, as I said, almost 50% of the tax returns we received had one of the president's four signature policies ... It is the certainty that allows both big and small businesses to be able to plan for the future, for hiring, for capital expenditures, and it is this capital stock and investment that generates high after-tax returns,” Bessent said . In his remarks, Bessent emphasized the need to reduce spending and bring down the budget deficit to 3% of Gross Domestic Product (GDP). Grassley also praised the Treasury Department’s effort to crack down on tax cheats who abuse the conservation-easement deduction and encouraged Bessent to continue faithfully enforcing a recent Internal Revenue Service (IRS) settlement . VIDEO On the conservation-easement deduction: I’m going to start first with a commendation to the department in regard to a program that Senator Wyden and I have been involved in. And, I think the department is doing the right thing, but I think you’re getting pressure to change. So, I want to commend you and the IRS for protecting the integrity of the conservation easement deduction by holding those engaged in abusive syndicated conservation easements, hold them accountable. These abusive transactions generally rely on highly inflated appraisals that result in taxpayer-investors saving two dollars in taxes for every one dollar spent. So, to be perfectly clear, these arrangements perverted a charitable deduction to turn a significant profit. In 2020, the Finance Committee [released a] report that details Senator Wyden’s and my investigation of these arrangements clearly shows that both the promoters and the taxpayer-investors understood them to be tax shelters. So, I encourage you and the IRS to stand by recent settlement offers – and ignore those who I think are lobbying you to water it down. On the benefits of the Working Families Tax Cut law: In 1981, at the time of growing deficits and elevated inflation, [Federal Reserve] Chairman Paul Volcker advised Congress to cut spending and to pursue pro-growth policies. He urged Congress to focus on reforms that would incentivize Americans, in his words, “to invest, to save and to work.” The Working Families Tax Cut law adhered to the Volcker approach. It reduced spending by over $1 trillion while making provisions of the 2017 tax law focused on spurring domestic investment permanent, like full expensing for new factories and factory improvements. How important has the Working Families Tax Law been in terms of promoting economic growth, job creation and wage growth? On the need to cut the budget deficit and address the national debt: You’ve been a proponent of targeting annual deficits of 3% of [Gross Domestic Product (GDP)], which roughly aligns with the post-World War II average. During the last two years of the Biden administration, we saw deficits of 6.2% and 6.3%. In 2025, President Trump’s first year in office, the deficit came in at 5.8% of GDP. How does President Trump’s budget and deregulatory agenda ensure the annual deficit stays on a downward trend toward that 3% that you advocate? -30-