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66–289—PDF 2009

S. HRG. 111–988 

NOMINATIONS OF MICHAEL PUNKE, 

ISLAM SIDDIQUI, AND MICHAEL MUNDACA 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

ON THE

NOMINATIONS OF 

MICHAEL PUNKE, TO BE DEPUTY U.S. TRADE REPRESENTATIVE, WITH 

THE RANK OF AMBASSADOR; ISLAM SIDDIQUI, TO BE CHIEF AGRICULTURAL NEGOTIATOR, OFFICE OF THE U.S. TRADE REPRESENTATIVE, WITH THE RANK OF AMBASSADOR; AND MICHAEL MUNDACA, 

TO BE ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY 

NOVEMBER 4, 2009 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

Enzi, Hon. Mike, a U.S. Senator from Wyoming .................................................. 5 

WITNESSES 

Punke, Michael, nominated to be Deputy U.S. Trade Representative, with 

the rank of Ambassador, Executive Office of the President, Washington, 

DC .......................................................................................................................... 7 

Siddiqui, Dr. Islam, nominated to be Chief Agricultural Negotiator, Office 

of the U.S. Trade Representative, with the rank of Ambassador, Executive 

Office of the President, Washington, DC ........................................................... 8 

Mundaca, Michael, nominated to be Assistant Secretary of the Treasury for 

Tax Policy, Department of the Treasury, Washington, DC .............................. 10 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 35 

Enzi, Hon. Mike: 

Opening statement ........................................................................................... 5 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 38 

Lincoln, Hon. Blanche L.: 

Letter from Dan Glickman to Senators Baucus and Grassley, dated October 30, 2009 ................................................................................................... 40 

Letter from American Cotton Shippers Association et al. to Senators 

Baucus and Grassley, dated October 21, 2009 ........................................... 42 

Mundaca, Michael: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 45 

Biographical information ................................................................................. 48 

Responses to questions from committee members ......................................... 57 

Punke, Michael: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 109 

Biographical information ................................................................................. 111 

Responses to questions from committee members ......................................... 121 

Siddiqui, Dr. Islam: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 135 

Biographical information ................................................................................. 137 

Responses to questions from committee members ......................................... 152 

COMMUNICATION

Remple, Timothy K. ................................................................................................. 173 

(III) 

(1) 

NOMINATIONS OF MICHAEL PUNKE, TO BE 

DEPUTY U.S. TRADE REPRESENTATIVE, 

WITH THE RANK OF AMBASSADOR; ISLAM 

SIDDIQUI, TO BE CHIEF AGRICULTURAL 

NEGOTIATOR, OFFICE OF THE U.S. TRADE 

REPRESENTATIVE, WITH THE RANK OF 

AMBASSADOR; AND MICHAEL MUNDACA, 

TO BE ASSISTANT SECRETARY OF THE 

TREASURY FOR TAX POLICY 

WEDNESDAY, NOVEMBER 4, 2009 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 10:14 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Conrad, Lincoln, Wyden, Grassley, Hatch, Roberts, and Enzi. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Amber Cottle, Chief International Trade 

Counsel; Ayesha Khanna, International Trade Counsel; Cathy 

Koch, Chief Tax Counsel; Russ Sullivan, Staff Director; and Mary 

Baker, Detailee. Republican Staff: Mark Prater, Deputy Chief of 

Staff and Chief Tax Counsel; Stephen Schaefer, Chief International 

Trade Counsel; David Johanson, International Trade Counsel; and 

Nick Wyatt, Tax and Nomination Professional Staff Member. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

The French poet Jean de la Fontaine said: ‘‘No path of flowers 

leads to glory.’’ 

To our witnesses today, President Obama has nominated the 

three of you to travel important paths, guiding America’s trade and 

tax policies. Each of you must travel a path littered, not with flowers, but with stones, but you must navigate these paths with sure 

feet and find success at the end of the road. 

Mr. Punke, President Obama has nominated you to be Deputy 

U.S. Trade Representative in Geneva. Your path will twist and 

turn through the complex World Trade Organization Doha negotiaVerDate Nov 24 2008 17:42 Jun 01, 2011 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 R:\DOCS\66289.000 TIMD
2 

tions. I am confident that you have the experience to navigate this 

path successfully. 

You have more than 20 years of international trade law and policy experience, in both the public and the private sectors, you 

served as White House Director for International Economic Affairs 

during the Clinton administration, and you spent several years 

practicing international trade law at a top firm. You also very ably 

served this committee as my International Trade Counsel. 

You unquestionably have the requisite tools for this position. But 

yours is not an easy road. The path that you must travel is marked 

with past failures to conclude the Doha negotiations, and, as you 

round each curve, you must keep the needs of American exporters 

first and foremost in your mind. 

A successful conclusion to the Doha negotiations must provide 

real, meaningful market access for American producers. Our ranchers, our farmers, our manufacturers, and service providers can 

compete with the world’s finest. We must make sure that our trade 

agreements give them the opportunity to do so. 

Mr. Punke, I know from personal experience that you have the 

ability to successfully navigate your path, and you have my full 

confidence. 

Dr. Siddiqui, President Obama has nominated you to be Chief 

Agricultural Negotiator at USTR. Your path must lead to new and 

additional market access for American agricultural exports, while 

ensuring that current markets remain open. 

Your experience makes you uniquely qualified for this role. During the Clinton administration, you held several high-level positions at the Department of Agriculture. You were a Senior Trade 

Advisor to then-Secretary Dan Glickman, and you were Under Secretary for Marketing and Regulatory Programs. You currently work 

at CropLife America, where you have focused on international 

trade and regulatory matters. 

You also have the requisite tools for this position, but yours is 

also not an easy road. The path you must travel is marked with 

previous attempts to reduce tariff and non-tariff barriers to American agricultural exports. 

As you travel your path, you must continue this valiant effort. 

Beef, wheat, and other exporters in my State, Montana, and 

throughout our country, produce some of the world’s finest agricultural products, absolutely the finest. I have no doubt that they can 

compete with the rest of the world. But in Doha and other negotiations, you will have to work hard to break down the walls to American exports. Dr. Siddiqui, your experience tells me that you have 

the ability to successfully navigate this path. 

Mr. Mundaca, President Obama has nominated you to be the Assistant Secretary for Tax Policy at the Treasury Department. Your 

path will lead you through the halls of Treasury and the halls of 

Congress as you develop significant tax policies, and Congress begins to consider tax reform. 

Your experience has readied you for this important task. You 

were previously the Deputy Assistant Secretary of Treasury for 

International Tax Affairs, and you were a partner at a top accounting firm. Before that, you were an attorney at the Office of the 

International Tax Counsel at Treasury. 

3 

You have the requisite tools for this important position, but 

yours is also not an easy path, to say the least. The path that you 

must travel is marked with past efforts to improve the administration of U.S. tax policy. As you travel this path, you must keep in 

mind the unique challenges of this economic environment. 

Significant tax reform must be considered carefully and thoughtfully. It will probably be one of the main efforts we undertake next 

year in this Congress. 

Our fiscal situation demands that we make every effort to close 

the tax gap. We must close that tax gap now. We do not have to 

do it immediately, but over a reasonable period of time, we must 

close it. It is unconscionable that the roughly $300 billion annually 

that is owed and not collected remains uncollected. That could go 

a long way to reducing our annual deficits. And health care reform 

will create new challenges in tax administration. 

Mr. Mundaca, I urge you to bring your years of experience to 

these tasks, and I am confident that you, too, will successfully 

navigate your path. 

I encourage each of you to undertake your new responsibilities 

with utmost vigilance. American exporters and taxpayers are depending on you. I encourage each of you to navigate the twists and 

turns that you face, and to find the paths that lead to success on 

behalf of the American people. 

Senator Grassley? 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Mr. Chairman, thank you. I welcome our 

nominees and congratulate you on your nominations. 

I will start with Michael Punke, nominated to be our Trade Ambassador to Geneva, a very, very important position. I am concerned, not for you, Mr. Punke, but just generally concerned, about 

our trading partners not fully understanding the prevailing sentiment on trade in the United States. We are dealing with a stronger 

protectionist sentiment, I am sorry to say. And we know that protectionism only hurts our collective well-being; however, it is a political reality that we have to contend with. 

On the other hand, there is a bipartisan consensus that we need 

to see meaningful market access opportunities from our major trading partners, and that would be accomplished if the Doha negotiations are concluded successfully, and, of course, we have not seen 

that yet. Our Trade Ambassador to Geneva needs to accurately and 

constructively convey these sentiments, and I think, Mr. Punke, 

that you are up to that job. 

Dr. Siddiqui is nominated to be our Chief Agricultural Negotiator 

in the Office of the U.S. Trade Representative. You have enjoyed 

a lengthy career, assuming a variety of responsibilities involving 

agriculture and agricultural trade. You seem to understand the 

vital roles that technological advances can play in helping to feed 

a growing global population, and that is very, very necessary. We 

do, in fact, need a very strong voice for U.S. agricultural interests 

at the negotiating table, and I believe this nominee can fill that 

role. 

4 

Michael Mundaca, I thank you for coming to my office to visit 

with me about some issues. You spent a good amount of time there 

with me discussing your nomination to be Assistant Secretary for 

Tax Policy. 

Right now is a critical time for tax policy. We still have the challenge of dealing with tax provisions that expire every year or two, 

called extenders. One of these is the monster that we have to deal 

with almost every year called the Alternative Minimum Tax. The 

current short-term fix restraining the AMT expires at the end of 

this year. 

Additionally, many of the bipartisan tax cuts enacted in 2001 

and 2003 expire at the end of 2010, so you are going to have a lot 

of work in your portfolio to deal with, and those are major problems for us to tackle. 

These issues are significant, but they represent, of course, only 

a fraction of tax issues facing this nominee, as well as those of us 

in the Congress. The administration has many large-scale priorities, and many of them would be implemented and enforced 

through the tax code. 

To give you an example, under legislation being advanced in both 

the House and the Senate, the Internal Revenue Service plays a 

major role in implementing and enforcing health care policies. 

There are many new complicated taxes to fund health reform, and 

many new and complex credits. The IRS would also be tasked with 

penalizing individuals who do not buy insurance and employers 

who do not provide affordable insurance. 

Aside from these health care issues, a cap-and-trade scheme 

might also work its way through the tax code. The Congressional 

Budget Office made very clear that emission allowances hold value 

and, therefore, represent Federal revenues, which seems to obviously have implications for the tax code. 

Independent of specific policy questions inherent in health care 

reform and energy reform, we must consider larger questions as to 

the fundamental purpose of our Internal Revenue Code and what 

limits, if any, ought to be enforced against it. Policies under consideration right now could significantly alter how we as a Nation use 

the tax code and how average Americans interact with it. These are 

questions this committee, and you in your position as Assistant 

Secretary for Tax Policy, will not be able to avoid. 

In addition, you will serve as the primary political liaison to the 

U.S. Customs and Border Protection in the Department of Homeland Security when it comes to Customs regulations. This is a critically important aspect of your job. We have seen breakdowns in relationships between Customs, Treasury, and the Office of the U.S. 

Trade Representative with regard to Customs regulations. 

As a result, the chairman and I included a provision addressing 

this issue in the Customs Reauthorization Bill that we recently introduced. So, I underscore to you as a nominee the importance that 

I place on active management of the interdepartmental relationships regarding Customs issues. 

I am hopeful that the nominee will serve as a down-to-earth architect of tax policy, able to tell the difference between high-minded 

fantasy and practical reality. In your written testimony, you recognize the need for a simple tax system that promotes growth, while 

5 

collecting needed revenue. I am glad that you agree that our current system falls short, but I hope, soon, that you will be able to 

say that the situation has improved. I was glad to read in the 

nominee’s written testimony how his parents taught him the value 

of hard work, because this position requires a lot of that. 

Thank you. 

The CHAIRMAN. Thank you, Senator Grassley. 

I would like now to introduce our panel of witnesses. First, it is 

a real honor to introduce Michael Punke. Michael, we have worked 

together. You were sitting on this side of the dais on lots of trade 

matters, and now you’re sitting on the other side in a different capacity. 

It is just a real honor for me and a privilege, frankly, to be working with you in your new position as Deputy U.S. Trade Representative. And I think, not only do you hail from our State of Montana, 

but you also hail from another State, and I think Senator Enzi 

would like to introduce you. 

OPENING STATEMENT OF HON. MIKE ENZI, 

A U.S. SENATOR FROM WYOMING 

Senator ENZI. Thank you, Mr. Chairman. I am really pleased 

that this famous author from out our way has been selected for this 

nomination, and I would not only like to recognize Michael Punke 

who currently resides in Montana, but as a native of Wyoming. I 

believe his parents, Butch and Marilyn, have already braved the 

snow this weekend to make their way here from Torrington, WY, 

and I want to thank them for attending. 

I am pleased that the President made your nomination, and I 

know that your western know-how and extensive trade experience 

will help in Geneva. I hope that it does not completely eliminate 

your writing, though. There are some fascinating things over there 

that need to be explored a little bit, too. But I appreciate your 

books that deal with the west. The one that I am wading through 

now, and really enjoying, is, ‘‘Last Stand,’’ about the saving of the 

North American bison, the buffalo. It is very well done, what I 

have gotten through so far. Very interesting. 

So, thank you for your writing talent, and now, thank you for 

your willingness to go to Switzerland with your family and solve 

the problems there for us. 

The CHAIRMAN. Thank you, Senator. 

I might say that the books also, I think, are an insight into the 

grit of Mr. Punke. One of his first books, called ‘‘The Revenent,’’ is 

about a fellow who seeks revenge for a fellow who tried to kill him. 

I know that is a quality, I think, that we are going to need, to 

some degree. [Laughter.] 

We are not going to let anybody kill us, but we sure are not 

going to let anybody take advantage of us. ‘‘The Revenent’’ is about 

a fellow who did not let anybody take advantage of him. 

One more book is called ‘‘Fire and Brimstone.’’ It is about the grit 

of people of the biggest underground mining catastrophe in our 

country in Butte, MT. It is just about people who face adversity 

and the community is bound together to fight adversity and reach 

a common goal, surviving and so forth. It is a wonderful subject, 

6 

so I think it gives insights into the quality of the man and how 

hard he is going to fight for us. 

Senator Roberts? 

Senator ROBERTS. Mr. Chairman, I just want to point out that 

his parents have lived in Kansas for a considerable amount of time. 

And I am not as well read as you or the distinguished Senator 

from Wyoming, as to his works, but I am going to have to start. 

How do you justify revenge with a ‘‘path of flowers’’ that you described? 

The CHAIRMAN. No, no. The quote is: ‘‘Glory is no path of flowers.’’ That is the quote. 

Senator ROBERTS. No child left with a dime. Something like that. 

[Laughter.] 

The CHAIRMAN. It takes hard work and grit, and his path is littered with stones. 

Senator ROBERTS. It will be better than that, really. [Laughter.] 

And that is from the minority. 

The CHAIRMAN. All right. 

Next on our panel is Dr. Siddiqui. We are very honored to have 

you, Dr. Siddiqui. 

The third panelist is Michael Mundaca. I regret I have not read 

your books, or I would have mentioned them this morning. [Laughter.] 

Michael Mundaca is nominated to be Assistant Secretary of the 

Treasury for Tax Policy. 

Thank you all for coming. As is our usual practice, your full 

statements will be included in the record. I encourage each of you 

to speak about 5 minutes. 

Before we begin now, Mr. Punke, do you have any family here? 

I think you do, I see your family behind you. Why don’t you introduction your family? 

Mr. PUNKE. Thank you for the opportunity. Thanks, also, for the 

endorsements on the books. I would just say that, if everyone on 

the panel would read my books, I believe I could double my sales, 

so I appreciate that. [Laughter.] 

I am very pleased, Senator Baucus, Senator Grassley, and distinguished members of the committee, to introduce my family today. 

I have with me my parents, Butch and Marilyn Punke, Kansas natives, but long-time Wyoming residents. I have my brother, Tim 

Punke, of Seattle, WA. My wife, Traci, is here, and my children, 

Sophie and Bo. I am very grateful for the opportunity to introduce 

them, and I am obviously very grateful for their support. 

The CHAIRMAN. Could you have them all stand so we can recognize them? 

Mr. PUNKE. Absolutely. 

The CHAIRMAN. Everybody. 

[Applause.] 

The CHAIRMAN. I might say this is apropos of, I don’t know what, 

but Traci and Michael met when they both were working in my office. 

Mr. PUNKE. I do not have to talk about that today, though, now 

do I, Senator? [Laughter.] 

7 

STATEMENT OF MICHAEL PUNKE, NOMINATED TO BE DEPUTY 

U.S. TRADE REPRESENTATIVE, WITH THE RANK OF AMBASSADOR, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC 

Mr. PUNKE. Senator, I am honored and humbled to be sitting 

here today, and I am grateful to President Obama and to Ambassador Kirk for the confidence that they have placed in me. I am 

grateful to you, Senator Baucus, and I want to say this as a personal matter, for giving me my first government job in trade, now 

almost 18 years ago. 

If confirmed, I will work every day to vindicate the trust that has 

been placed in me. 

Whoever serves as U.S. Ambassador to the World Trade Organization builds on 60 years of bipartisan American leadership to create a rules-based, multilateral system of international trade. That 

system, born in the long shadow of world war, has made an enormous contribution to worldwide economic growth and stability. 

But the question we face today is this: Can the WTO evolve 

along with the dramatic changes of our dynamic global economy? 

President Obama and Ambassador Kirk have called for an outcome in the ongoing Doha Round of WTO negotiations that is both 

balanced and ambitious, with meaningful new market access for all 

involved. As members of this committee are well aware, we have 

not yet achieved that goal. 

From my meetings and conversations with members, with your 

staffs, and with various stakeholder groups, I understand very 

clearly, no deal is better than a bad deal. The potential of trade in 

the abstract is easy to describe. But the challenge lies in making 

that potential tangible for America’s workers, farmers, ranchers, 

and businesses. If I am confirmed, I will approach this challenge 

with an orientation that is neither naı ̈ve nor despondent. I believe 

a good deal is doable, but we will not do a deal at any cost. 

Having worked on the Hill, I understand intuitively that it is impossible to achieve success in trade without the joint efforts of the 

legislative and executive branches. And from studying history, I 

know that all of our most important trade agreements have been 

the product of bipartisan support. 

I hope and believe that the experiences of my career have 

equipped me to succeed in this job. I have seen trade issues from 

the perspective of two branches of government, from three Federal 

agencies, as an attorney in the private sector, and as the owner of 

a small business. 

But none of my professional experiences has been more important than the perspective I have gained during the past 6 years living in Montana, watching the impact of trade in the lives of everyday Americans. I have watched Montana goods by the trainload 

roll toward overseas markets. I am friends with the farmers, ranchers, miners, and entrepreneurs whose jobs depend on those exports. 

But I have also watched lumber mills close, and I have seen the 

impact of those job losses ripple through the heart of my community. 

The job of the Office of the United States Trade Representative 

is to advocate every day, for every one of those people, for every 

American. As members of this committee know, there is no agency 

8 

in government that fields a more talented, more dedicated staff. If 

confirmed, I will work tirelessly and proudly as a member of that 

team. 

I thank the members of the committee for your consideration. 

The CHAIRMAN. All right. Thank you, Mr. Punke. 

[The prepared statement of Mr. Punke appears in the appendix.] 

The CHAIRMAN. Dr. Siddiqui? Do you have family here you would 

like to introduce? 

STATEMENT OF DR. ISLAM SIDDIQUI, NOMINATED TO BE 

CHIEF AGRICULTURAL NEGOTIATOR, OFFICE OF THE U.S. 

TRADE REPRESENTATIVE, WITH THE RANK OF AMBASSADOR, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON, DC 

Dr. SIDDIQUI. Yes, of course, Mr. Chairman. I have my wife, 

Tabassum Siddiqui, here with me this morning, and my daughter, 

Arshi Siddiqui, who works here on the Hill with Speaker Pelosi, 

the senior—— 

The CHAIRMAN. I thought I recognized you. Why don’t you stand 

up? Are there others of your family here? 

Dr. SIDDIQUI. And my other two children: my middle daughter, 

Sophia Siddiqui, who is also an attorney, she had some commitments this morning in Wilmington, DE. She lives there. She could 

not be here. My youngest son, Sami Siddiqui, is in New York. So 

again, due to his work commitments, he could not be here this 

morning. 

The CHAIRMAN. Could you have your wife and daughter stand 

please? 

[Applause.] 

The CHAIRMAN. Thank you. We are honored to have you here. 

Dr. SIDDIQUI. Mr. Chairman, Senator Grassley, and members of 

the committee, I am honored and humbled to sit before you to consider my nomination to be the Chief Agricultural Negotiator in the 

Office of the U.S. Trade Representative. 

I thank President Obama for nominating me for this position and 

for the confidence Ambassador Kirk has placed in my abilities. This 

opportunity is particularly challenging given the current economic 

climate, and the need to make real progress toward opening new 

markets and creating jobs. 

During the past 40 years I have spent my career, both in government and the private sector, witnessing first-hand the critical role 

the agricultural sector plays in our national and rural economy. 

More than one-third of our agricultural products are exported to 

countries around the world. According to a recent USDA report, in 

2008 our agricultural exports stood at $115 billion, whereas imports were about $80 billion. Our farmers and ranchers are the 

most productive in the world, and, as a result, they are able to 

compete successfully in the global marketplace. In large part, 

America’s competitive edge in agriculture has been the result of 

adoption of new technologies and state-of-the-art farm management 

tools. 

Throughout my public service in the California Department of 

Agriculture and USDA, I have found that scientific evidence can be 

a powerful tool in addressing trade issues and resolving them. And 

9 

without going into detail, I would like to just mention that I have 

been involved in numerous sanitary and phytosanitary issues in 

my time, 13 years with the California Department of Agriculture 

and 4 years in USDA. These experiences also proved to be really 

instructing in terms of opening and breaking down the SPS-related 

barriers we faced and our farmers and ranchers faced. 

My time in Washington, DC has taught me the importance of 

dialogue, consultation, and coordination with all the stakeholders 

in forging consensus on agricultural trade issues. As a Senior 

Trade Advisor to Secretary Dan Glickman, I was responsible for coordination of inter-agency efforts within USDA and also served as 

a liaison to USTR and other Cabinet-level agencies. I also represented the U.S. Government on a number of agricultural trade 

issues with our trading partners in Asia, Latin America, and the 

European Union. 

My approach in dealing with our trading partners has always 

been based on consultation and diplomacy as a starting point and 

a more vigorous approach in exercising WTO rights when necessary. Monitoring and enforcement of trade agreements is a cornerstone of a strong trade agenda. 

As such, I applaud USTR’s recent decision to request a dispute 

settlement panel within the WTO regarding the EU’s ban on the 

importation of U.S. poultry meat and meat products related to 

process pathogen reduction treatments, which are considered to be 

safe by both U.S. as well as European food safety agencies. 

If confirmed, I plan to work closely with USDA Secretary Tom 

Vilsack and his team in efforts to remove many of the non-tariff 

barriers our farmers and ranchers face around the world. 

Pursuing trade deals that benefit our farmers and ranchers, in 

particular in the Doha Round, will be another one of my key priorities. Based on the briefings I have received, it is my understanding 

that the Doha negotiations have made progress on a number of 

issues, but the larger stumbling blocks still remained unresolved. 

If confirmed, I commit to devote my best efforts to achieve an 

ambitious and balanced outcome in agriculture, something that has 

eluded us for the last 8 years. It is evident that we are being asked 

to make significant concessions in the first two pillars of the agricultural negotiations, namely domestic support and export competition. Therefore, a final agreement on agriculture must provide commercially meaningful access to U.S. agricultural products into the 

marketplace of both developed and emerging economies. 

If confirmed, I look forward to working under the leadership of 

Ambassador Kirk and working with all of the outstanding staff of 

USTR. I also look forward to working closely with members of this 

committee, as well as the Senate and House Committees on Agriculture, in addressing many of the challenges we face through open 

markets around the world, especially related to trade arrangements we face, as well as in the Doha Round. 

Thank you. 

The CHAIRMAN. Thank you, Dr. Siddiqui. 

[The prepared statement of Dr. Siddiqui appears in the appendix.] 

The CHAIRMAN. Mr. Mundaca? Do you have family here? 

10 

STATEMENT OF MICHAEL MUNDACA, NOMINATED TO BE ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY, 

DEPARTMENT OF THE TREASURY, WASHINGTON, DC 

Mr. MUNDACA. I do. Thank you, Senator. 

I would like to introduce my wife, Gina, and my daughter, Ana, 

who are here today. My son, Alexander, is only 4 years old, is a 

little bit too rambunctious to bring before this august body, but he 

is with us in spirit. 

The CHAIRMAN. Why don’t you both stand? We would like to 

honor your presence. 

[Applause.] 

The CHAIRMAN. All right. 

Mr. MUNDACA. Thank you, Chairman Baucus, Senator Grassley, 

and members of the Senate Finance Committee, for the opportunity 

to appear before you today. I am honored to have been nominated 

by President Obama to serve as Treasury Assistant Secretary for 

Tax Policy, and I am grateful to Secretary Geithner for recommending me to the President. And I want to thank you and your 

staffs for meeting with me over the last weeks to discuss important 

tax policy issues and my qualifications for the position to which I 

have been nominated. 

If confirmed, I would be honored to begin my third phase of Federal public service. I first worked at the Treasury Department from 

1997 to 2002, starting as an Attorney Advisor in the Office of the 

International Tax Counsel on Tax Policy and leaving after 5 years’ 

service as Deputy International Tax Counsel, returning to the private sector as a partner in the accounting firm, Ernst and Young. 

I was honored to be asked to return to the Department in 2007 as 

Deputy Assistant Secretary for International Tax Affairs and have 

served at the Department since that time. 

My commitment to public service was instilled in me by my parents. My father, Fred Mundaca, was born in the country of Chile, 

came to this country as a teenager with his parents. He met my 

mother, Irene, in Staten Island, NY, where his family settled and 

where my mother lived. 

When I was born, my parents and my sister Marie and I lived 

in the West Brighton housing projects on Staten Island. My father 

went to Staten Island Community College and worked nights at 

the U.S. Postal Service. After getting his degree, he was hired by 

IBM, where he worked for the next 25 years, until retiring. 

Through saving and borrowing, my mother and father raised 

enough money to move us out of the projects and into the house 

my parents still live in today on Staten Island. 

They also helped put my sister and me through college and graduate school, with the additional help of student loans and scholarships. My parents’ experience taught me to work hard, play by the 

rules, and help others whenever you can. I hope my children can 

learn these lessons from me. I also hope that my children will have 

all the opportunities that I had. 

I do not need to tell this committee that both the United States 

and the world economy have faced unprecedented turmoil. However, I am convinced we can meet these serious challenges with the 

right mix of economic and tax policies that address near-term conditions in a manner that promotes long-term growth. Tax policy 

11 

will play an important role as we move ahead. We need a tax system that is simple, fair, and promotes growth, while providing necessary revenue. Our current system falls short. 

If confirmed, I look forward to working with this committee and 

Congress to address the necessary changes to our tax system. 

But in addition to changing our current system, we must also 

work together to improve compliance with our current rules. Noncompliance undermines confidence in the fairness of our tax system 

and fosters further non-compliance. It also results in a de facto tax 

increase on compliant taxpayers, who must pay more because others failed to pay what they owe. It is incumbent upon the Treasury 

Department to issue guidance necessary to provide taxpayers the 

information they need to meet their obligations. Taxpayer service 

is also an important element. 

But we must do more. The Obama administration has already 

proposed and already taken a number of significant steps to increase compliance. We are currently moving to implement the recent important changes that Congress enacted to increase reporting 

with respect to credit card and securities transactions. 

In addition, the administration’s budget includes a number of 

proposals to improve both domestic and cross-border compliance. 

And we welcome the recent introduction by the chairman and others of a significant offshore tax evasion bill that incorporates the 

approach of the administration’s offshore proposals. We appreciate 

the leadership this committee as a whole has shown on the important issue of improving tax compliance, and, if confirmed, I look 

forward to working with the committee and Congress to move forward on this important issue. 

Treasury has sought to improve compliance additionally by increasing our access to information held by our trading partners 

that is necessary to enforce our laws. We have recently signed a 

number of important agreements to exchange tax information, including agreements with Switzerland, Luxembourg, Monaco, and 

Gibraltar. 

In addition, through greater cooperation through the G–20 and 

the OECD, we have been able to increase the number of countries 

that have committed to full tax information exchange and to establish a process to assess implementation of those commitments. 

In closing, I would like to thank the lawyers, economists, accountants, and others within the Office of Tax Policy at Treasury. 

I have never worked with such a talented group of individuals, and 

it has been an honor to lead the office during these challenging 

times. 

I am humbled and honored to have the possibility of serving the 

Nation in this new capacity during these extraordinary times. If 

you and your colleagues in the Senate give me the opportunity to 

serve as Assistant Secretary for Tax Policy, I pledge to you diligent 

and dedicated service. I promise to apply myself fully, to the best 

of my ability, to justify your trust and confidence. 

Again, thank you for allowing me to appear before you today. I 

would be pleased to answer any questions. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Mundaca. 

12 

[The prepared statement of Mr. Mundaca appears in the appendix.] 

The CHAIRMAN. Actually, I will begin with you. I mentioned in 

my statement—but actually before I do that, I have standard questions that I have to ask each of the nominees. I will just go down 

the list here, frankly. 

Is there anything that you are aware of in your background that 

might present a conflict of interest for the duties of the office to 

which you have been nominated? 

Mr. Punke? 

Mr. PUNKE. No. 

The CHAIRMAN. Dr. Siddiqui? 

Dr. SIDDIQUI. No. 

Mr. MUNDACA. No. 

The CHAIRMAN. Thank you. 

Do you know of any reason, personal or otherwise, that would in 

any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? 

Mr. PUNKE. No. 

Dr. SIDDIQUI. No. 

Mr. MUNDACA. No, Senator. 

The CHAIRMAN. Thank you. 

Do you agree, without reservation, to respond to any reasonable 

summons to appear and testify before any duly constituted committee of Congress, if you are confirmed? 

Mr. PUNKE. Yes. 

Dr. SIDDIQUI. Yes, sir. 

Mr. MUNDACA. Yes, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Mundaca, I mentioned in my statement about the tax gap. 

How do we close it, and how quickly can we? 

Mr. MUNDACA. Thank you, Mr. Chairman. 

Obviously, this is an important issue. As we both know, there are 

significant amounts of money that are owed by taxpayers that are 

not collected. This committee and the administration are very focused on this issue. The offshore evasion bill that you introduced 

is an important first step in addressing the tax gap on cross-border 

transactions, those taxpayers who hide money overseas in order to 

evade their U.S. tax obligations. 

The IRS has done some significant research on elements of the 

tax gap and, in general, ways to close it. Information reporting is 

one way to improve compliance. The findings of the IRS indicate, 

where they have good information about income flows, the compliance rate rises above 90 percent. We have taken some steps to implement the important changes that Congress enacted with respect 

to credit card reporting, as well as securities transactions reporting. 

But, again, we must do more. I look forward to working with this 

committee on identifying the ways that U.S. citizens evade their 

tax obligations and seek ways to stop them, balancing the burdens 

on taxpayers with the money we do need to raise from noncompliance. 

The CHAIRMAN. This is a serious problem. We have been talking 

about this for a long time, but not very much has been done about 

13 

it, frankly. I was very disappointed, in fact, by the last administration. In fact, I held up a nominee, the Assistant Secretary, to try 

to get some assurance that the Treasury was going to address the 

tax gap. They promised they would. To be honest, they did not, and 

they are going to try again. If it is $345 billion—some people think that is a low number; it 

is probably a higher number of tax dollars that is owed to Uncle 

Sam but not collected—we have to do something about that. 

I am going to ask you for something more specific, like, by what 

date to you think we could lower the tax gap, by what percent? 

Mr. MUNDACA. Thank you, Senator. 

It is difficult to make specific predictions about lowering the rate 

by a certain amount, by a certain date. We will see—— 

The CHAIRMAN. I know it is difficult, but we have to try. 

Mr. MUNDACA. Yes, sir. Yes, sir. 

The CHAIRMAN. We have to do something about this. 

Mr. MUNDACA. Yes, Mr. Chairman, we do. I know your committee has a number of ideas how to address it. We have a number 

of ideas. I pledge to work with you to address the issue. Again, I 

think as a first step, information reporting is something we need 

to consider. There is a good deal of leakage through cash transactions. We need to address a way to try to get better information 

about such transactions to improve compliance. 

Again, these are difficult issues, in part because of the compliance burden that may be placed on other taxpayers who are meeting their obligations as we seek to close the tax gap. But, again, 

I do pledge to work with you and your staff, and the staff of this 

committee to try to move something. 

The CHAIRMAN. I appreciate that. You cannot say anything at 

this point, probably more specific, because you are not confirmed. 

But in the near future, this committee is going to suggest to you 

and to the administration ways to finally get at this and to close 

it. So I would like for you, in the meantime, when you will be confirmed, to be thinking about it, because you are going to hear from 

us. You are going to hear from us pretty soon, because we have to 

address this. 

Mr. MUNDACA. All right. Thank you, Mr. Chairman. 

The CHAIRMAN. You bet. 

Mr. Punke, I liked it when you said ‘‘no deal is better than a bad 

deal,’’ and I believe that. And I just urge you to remember that 

when you are negotiating with other countries. 

I think, to some degree, other countries are, if not tougher trade 

negotiators than we, but certainly tend to drive a harder bargain 

sometimes than we. Because in a certain respect, although this is 

changing, trade is more important to a lot of these countries than 

it has been in the United States as a percentage of GDP. That is 

changing now. Trade is much more important in the United States 

as a percentage of GDP, but other countries are very aggressive, 

and I urge you to remember that ‘‘no deal is better than a bad 

deal,’’ because these other countries are tough. 

Mr. PUNKE. I appreciate that, Senator Baucus. I would say that 

one of the things that has been remarkably consistent in all of the 

meetings that I have done with members and their staffs, is this 

mantra of ‘‘no deal is better than a bad deal.’’ I have certainly 

14 

taken that to heart and will pledge to be extremely tough on that 

front. From my standpoint, the worst possible outcome we could 

imagine in Doha would be to accept something in Geneva, bring it 

back to Congress, and have Congress reject it. And that is an outcome that I will be working very hard to avoid. 

The CHAIRMAN. Right. Especially while we are going through a 

recession, or coming out of a recession, because the American people, I think, are rightfully concerned about their jobs, their incomes. 

Mr. PUNKE. I have taken that message to heart. 

The CHAIRMAN. Thank you. My time has expired. 

Senator Grassley? 

Senator GRASSLEY. Yes. I would like to ask each of you to give 

a short answer to my first question, and I ask this of almost all 

nominees who come before this committee. 

It is in regard to our oversight work as a Congress, because that 

institutes the checks and balances of our system, and we want to 

make sure that the American people have a fair, honest, and transparent government. 

In addition to what we as members of the committee do here, we 

often ask the Government Accountability Office to evaluate government programs and the activities in a variety of agencies, and then 

oftentimes, we ask the Inspector General to do that as well. 

So, my question to each of you: Would you commit to working 

with Congress, the Government Accountability Office, and any Inspector General, where applicable, in a timely and constructive 

manner to address the oversight and other needs of Congress, and 

would you encourage others to do so? 

Mr. PUNKE. Yes, Senator. 

Dr. SIDDIQUI. Senator, I will commit to work with the Government Accountability Office. 

Mr. MUNDACA. Yes, Senator. 

Senator GRASSLEY. And then, pretty much along the same line, 

because sometimes delay is inaction, so I would ask you to do it 

in a timely and substantive manner. 

Mr. PUNKE. I will commit to that Senator. 

Dr. SIDDIQUI. Yes, sir. 

Mr. MUNDACA. Yes, Senator. 

Senator GRASSLEY. Thank you. 

Mr. Punke, I strongly support U.S. participation in the TransPacific Partnership negotiations. There are some opponents of 

those negotiations who say that they are a distraction from Doha. 

My opinion is to disagree with that position. I think U.S. negotiators can, in effect, walk and chew gum at the same time. So, 

what is your view about those being in conflict? Not necessarily in 

conflict, but that they cannot both be going on at the same time? 

Mr. PUNKE. Senator, I am aware of your strong support of TPP. 

I think that TPP is one of the things that we have to consider as 

we look at ways of expanding our trade relationship with the vital 

region of Asia, and I certainly agree with you that it is important 

for the administration to be able to walk and chew gum at the 

same time. We have extremely broad trade interests around the 

globe, and we need to pursue those interests using all of the tools 

that are at our disposal. 

15 

Senator GRASSLEY. Dr. Siddiqui, the European Union’s policy regarding agricultural biotechnology is harming American farmers. 

The European Union is not making meaningful progress in approving new biotech varieties. While EU officials can point to some recent approvals, the list of unapproved varieties is even higher than 

it was last year. And of particular concern to my State of Iowa is 

that the Union’s policies, in effect, block U.S. corn and corn gluten 

feed from entering the EU market. 

If confirmed, will you make it a priority to attempt to remove the 

European Union’s barriers to the import of U.S. biotech commodities? 

Dr. SIDDIQUI. Senator Grassley, I share your concern about the 

EU’s refusal to accept the WTO decision which was ruled in U.S. 

favor to use science-based risk assessment to allow those biotech 

varieties of different crops into the EU. I understand the USTR 

continues to work with them. We have made some progress, but I 

will commit to you and the committee that, if I am confirmed, I will 

work with you and other members of the committee on two fronts: 

one is to engage the EU negotiators from the Directorate-General 

for Trade on this issue to open this and approve those varieties 

which are in the pipeline and should be approved on a sciencebased approval process, and also push them in terms of honoring 

their WTO commitments. 

Senator GRASSLEY. All right. 

A little more specific in this area, Dr. Siddiqui, Turkey issued a 

new regulation, just last week, concerning importation of biotech 

commodities. According to industry, this regulation would shut 

down the Turkish markets for imports of U.S. corn and soybeans. 

Turkey failed to consult with the United States or to notify the 

WTO before it announced this regulation, which went into effect 

immediately. 

If confirmed, I encourage you to act quickly to work with Turkey’s officials to see that they adopt biotech policies that are based 

on science and do not discriminate against imports of U.S. biotech 

commodities. I would like to ask you for your response. 

Dr. SIDDIQUI. Senator, this development is of concern to USTR, 

according to my discussions with them, and to me, personally, because Turkey has failed to live by its commitments to the WTO in 

terms of WTO notification. And also, to my knowledge, I do not believe they have done a scientific risk assessment before they took 

these actions. If I am confirmed, Senator, I will work very closely 

with you and other members of the committee in looking into this 

issue and also take appropriate actions, whatever is needed. 

Senator GRASSLEY. Thank you. 

The CHAIRMAN. Thank you, Senator. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Mr. Mundaca, I recently had a meeting with several small business owners who have been assessed penalties by the IRS in the 

hundreds of thousands of dollars each. These penalties were for 

failing to disclose certain information in connection with listed 

transactions in which they unwittingly entered. 

One of them was a contractor who was trying to get pensions for 

his people and found himself in a tremendous mess afterwards. All 

16 

of us here are concerned about abusive tax shelters and the need 

to crack down on those who peddle them. But I am very concerned 

about this particular issue. We are also very concerned about those 

who knowingly attempt to cheat our government. 

But I suspect that every member of the committee believes that 

these peculiar penalties go way beyond reason and need to be 

modified to avoid them sending small businesses and their owners 

into bankruptcy when the tax due from the original transaction is 

relatively modest. I am grateful that our chairman and ranking 

member have already engaged IRS about this issue and have received temporary assurances that the Service will suspend the collection of these penalties until the end of the year in order to allow 

us to pass a change in the law. I hope we will have a legislative 

vehicle before then that allows us to make this happen. 

Now, is it correct to assume that the Treasury Department 

shares our concern that these penalties under 6707(a) are far too 

harsh and need to be rationalized and will support legislation to do 

so? 

Mr. MUNDACA. Thank you, Senator. You raise an important 

issue. You correctly identified the issue as the lack of discretion 

given to the IRS and the legislation to abate the penalties that may 

apply with respect to failure to report certain listed transactions. 

I do support adding that discretion to the code in order to give 

IRS, again, the ability in extraordinary cases where the penalties 

far outweigh the tax due, or other circumstances point to a reason, 

to have those penalties abated. We have been working with IRS on 

this issue. Again, I commit to working with you and this committee, if I am confirmed. 

Senator HATCH. That is great. We appreciate it. 

But a lot of these were not extraordinary issues. These were people who just found themselves on the bad end of government, losing their businesses, going into bankruptcy, taking their savings 

and a whole raft of things that really are highly improper, as far 

as I am concerned. So, I hope you will really look into this and help 

us to get this resolved. 

Mr. MUNDACA. Yes, Senator, I will. 

Senator HATCH. All right. Now, I get many complaints from Utah 

business people and others all over the country that our corporate 

tax rate and other international tax rules place American firms at 

a disadvantage when it comes to competing globally. As you know, 

our corporate tax rate is among the highest in the world. We now 

stand nearly alone among developed nations in taxing home-based 

entities on their income, regardless of where such income was 

earned, while most other countries employ a system that taxes only 

that income earned within their borders. 

Do you think that moving towards territorial taxation will make 

it easier for our companies to compete, and also simplify the corporate tax system? 

Mr. MUNDACA. Thank you, Senator. You raise an important 

issue. The administration is very focused on competitiveness of 

U.S. multi-nationals, as well as competitiveness of U.S. workers. 

You are correct. Our statutory corporate tax rate is among the 

highest in the world, perhaps only second to Japan at this point. 

17 

This is an issue we do need to address. I think it needs to be addressed in the context of fundamental corporate tax reform, and 

more likely, tax reform including individual tax reform as well. The 

administration’s budget put forward a number of proposals changing our international tax rules, trying to rationalize the rules that 

we have now in order not to incentivize the shifting of income and 

investment overseas. But we do recognize competitiveness needs to 

be considered in all of these proposals, what our trading partners 

are doing needs to be an element of all this as we move ahead. If 

I am lucky enough to be confirmed, I look forward to working with 

you on this issue. 

Senator HATCH. I hope you will, because we think it is very important. 

Now, let me ask just one last question. I will submit the rest of 

my questions to you, Mr. Mundaca, in writing. 

[The questions appear in the appendix.] 

Senator HATCH. Now, Mr. Punke, let me just ask you this. The 

WTO’s Director Pascal Lamy recently stated that member nations 

‘‘now need to engage in text-based negotiations,’’ particularly in agriculture. What are your thoughts on that statement? It appears 

that some nations are attempting to blame the United States with 

the lack of progress in the WTO agricultural negotiations. Now, 

what are your plans for countering this incorrect information? And 

you could answer that as well. I would be happy to hear from both 

of you. 

Mr. PUNKE. Senator, I appreciate the question. 

I think the significant thing, in terms of making progress in the 

Doha Round of negotiations in which we are engaged, is number 

one, getting greater clarity from our trading partners as to what 

concessions they are willing to make; and number two, closing the 

gaps between the concessions that have been made by the United 

States and the concessions made by our trading partners. 

I think that will be what will determine whether or not the 

round is successful. One of the difficult things about where we 

stand in the round currently is, the concessions that have been 

placed on the table by the United States are very clear. What is 

unclear is what we are going to receive in return. And one of the 

central efforts at the Office of the U.S. Trade Representative right 

now is to close those gaps and to gain greater clarity so that we 

can eventually come back to Congress and give you a much clearer 

sense of what we are getting in return for the concessions that 

have been contemplated. 

Senator HATCH. Dr. Siddiqui, do you have any comment? 

Dr. SIDDIQUI. Senator, if I may just add to what Mr. Punke said. 

I believe that multi-lateral negotiations, and also text-based negotiations, are fine, but in addition to that, we need to have bilateral 

engagement, especially key emerging countries so that we can narrow the gap, and also understand what we are going to get in return for the concessions we are either making already on record or 

we will be asked to. So I think there is a lack of clarity on that. 

Senator HATCH. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Roberts, you are next. 

Senator ROBERTS. Chairman Baucus, Ranking Member Grassley, 

thank you for holding these very important nominations that will 

18 

help further our trade agenda and fill a critical role in the Treasury. 

Mr. Chairman, I have some questions in regards to tax policy, 

but then I have some additional questions regarding trade policy. 

Are you anticipating a second round that might work? 

The CHAIRMAN. Yes. 

Senator ROBERTS. All right. Thank you, sir. 

As we learn more about Mr. Punke and Dr. Siddiqui’s many 

qualifications, it is my hope their nominations will serve as a long 

overdue jump-start to what I would call a lagging trade agenda. 

I am also pleased that we are considering Mr. Mundaca’s nomination for Assistant Secretary for Tax Policy. This is a very important position to fill. I think it will become even more important, especially as Congress considers health care legislation with significant tax policy implications. 

So, Mr. Mundaca, thank you for your willingness to serve. As 

Acting Secretary, you already know that one of your primary responsibilities is to advise the Secretary on tax policy and issues 

that reach into the lives and pocketbooks of every American. 

Now, under the Health Care Bill that recently passed out of this 

committee and is now being considered, is trying to be evolved, or 

it is trying to be just like a jigsaw puzzle, we are trying to put it 

together. I say ‘‘we.’’ They are trying to put it together. But that 

is the way things are. 

I just want to make sure that everybody watching this hearing 

understands that there are not just $500 billion or more in new 

taxes called for in this bill. 

It also calls for an unprecedented expansion of the IRS’s role in 

collecting and sharing information about Americans and their 

health care choices. That makes a lot of folks who pay taxes, and 

a lot of citizens, and a lot of people in the small business community, really sit up and take notice on the edge of their chair. They 

might get a little bit in the weeds, and their eyes glaze over if you 

get into tax policy and talk about insurance companies all the time, 

but, when you say that the IRS is going to be involved, you know 

you get their attention. 

Seventeen provisions have been identified in the Finance Committee Health Care Bill that the IRS will be responsible for implementing, administering, and enforcing. They include the individual 

mandate penalty and the employer penalty. For the life of me, I am 

not quite sure how you are going to administer this, how you are 

going to get the kind of information that you need, but we want 

to be of help to you. 

Senator Grassley has raised this issue with the IRS Commissioner and on the Senate floor, and I have several questions about 

these provisions—I understand there are 17 of them—especially 

the expanded reach of the IRS and how it will collect, verify, and 

share information from individuals and families in order to implement the health care taxes, fines, or fees called for in this bill. 

I will submit those questions for the record so we do not have 

to get into that right now, but they are terribly important. 

The CHAIRMAN. Without objection, they will be included. 

[The questions appear in the appendix.] 

19 

Senator ROBERTS. I would like your thoughts on a related issue 

Senator Grassley has raised about the cost of this expanded IRS 

activity. The bill that was reported out of this committee does not 

acknowledge any additional costs for implementing and enforcing 

these new provisions. 

The first question: will there be additional costs, and more importantly, was the IRS even consulted about whether the Service 

would need additional funding, not to mention personnel to implement this bill? 

Mr. MUNDACA. Thank you, Senator. There have been, and will 

continue to be, discussions as the bill evolves, about the way that 

the IRS will be asked to administer the new law. And at the time 

that the bills settle and we are clear on what is going to be asked, 

the IRS will be able to better assess the additional resources that 

may be necessary. I believe Commissioner Shulman responded to 

a letter from Senator Grassley on that point. 

Senator ROBERTS. I am very much aware of the letter back to 

Senator Grassley by Commissioner Shulman. It is like the letter 

that many Senators write back to constituents when they ask a 

question about a particular bill, and say this particular bill is now 

pending in X-Y-Z committee, and rest assured we will keep your 

thoughts in mind. I think we need to get into this a little bit more. 

But at any rate, have any cost estimates been requested or provided? 

Mr. MUNDACA. Other than the letter from Senator Grassley, I do 

not know of any specific requests. 

The CHAIRMAN. Well, I might say, we have been consulting, 

frankly, with IRS in drafting this bill and during markup. But you 

are correct at least—Mr. Mundaca is correct—there is nothing specific going back. But there have been discussions between the Finance Committee staff and the administration. 

Senator ROBERTS. Mr. Chairman, you know that we have the individual mandate. Whether it is the employer or whether it is the 

individual, it will be up to the IRS to determine how to do this. I 

am not quite sure how we do it. I do not know how the employer 

gives the information, I do not know how the individual gets the 

information, and I do not know how the IRS really polices it. I 

know that is a pejorative, perhaps, if I say police, but somebody 

has to enforce this, as I say, the fines, fees, and the taxes. 

I am very glad that our very capable staff, hopefully on both 

sides, is doing this. Is there somebody down there in the basement 

that internally knows pretty much what these three bills are 

doing? Well, we do not know what the conference report will be, 

but we do know what the House bill sort of is going to do. We have 

the Assistant to the Speaker here. Perhaps she could shine some 

light. I am just mentioning that. I am not going to call on you. 

If you are discussing this, what is the status of these estimates, 

or do you have estimates? 

Mr. MUNDACA. We have not been working on estimates, but we 

have been working on figuring out how it is, if the various bills do 

pass, they would be administered by the IRS, that there is a good 

exchange back and forth to make sure that the provisions that are 

being considered can be administered; obviously, a bill that does 

not work would be to no one’s benefit. 

20 

Senator ROBERTS. Well, I am glad to hear that. Instead of a bed 

of flowers, there is a lot of cactus in the world. You do not have 

to sit on every one of them. You are going to open the door and 

find out you will be in that situation. 

So, you are saying that would not be completed and the funding 

request would not be made to Congress, of course, until the final 

passage. But you are making some substantial efforts to figure out, 

if this does pass, these are our responsibilities. 

Well, thank you for your willingness to serve. I am very concerned about the ability of Treasury and IRS to implement the new 

and far-reaching provisions in the bill, and I know we have your 

commitment to work with the committee. 

I am already over time, but on the second round, I will get into 

the trade. 

Thank you, Mr. Chairman. I appreciate that. 

The CHAIRMAN. Thank you, Senator. I do not mean to get into 

an argument here, but the Joint Committee on Taxation, which advises this committee, and the Ways and Means Committee of the 

Congress, and to some degree, the world, it has concluded, Americans will get an average tax cut under the proposed Health Care 

Bill—I think this is the Finance Committee bill—of 1.3 percent 

over 10 years. Actually, the Joint Committee on Tax estimates that 

the bill’s tax credits will reduce taxes for more than 42 million 

Americans by the year 2017. And I might say that the Congressional Budget Office has also concluded that, not only is the proposal deficit-neutral over 10 years, but actually, I have forgotten 

the exact amount, is $40 to $81 billion in the last year, and to the 

good. It puts the country in the black, with a surplus of $81 billion. 

I might also add that the Joint Committee on Taxation said that 

the role of government will actually decline in the second 10 years 

under the proposed legislation, that is, less government over the 

next 10 years. That is less government involvement in health care 

over the next 10 years than would be currently. Basically, the tax 

cuts are the form of tax credits. A lot of Americans will get tax 

credits, and that, of course, means a tax reduction. 

Senator ROBERTS. The testimony we had before the HELP Committee yesterday indicated that, for our 60,000 small businesses, 

their tax credit is only going to apply up to about 11 percent. So 

we do have some problems here. I am very much aware of the 

chairman’s position in regards to the Health Care Bill overall and 

the tax implications, and that we have had many, many hearings. 

And I hope you are right. I will just say that, basically, that really, 

with all due respect, sir, I do not think it has too much to do with 

what I was talking about with Mr. Mundaca in terms of the ability 

of the IRS to implement and police their responsibilities. 

The CHAIRMAN. There is no doubt the Senator made good points. 

In this administration, it is something that we will address vigorously to make sure that it is done as fairly and responsibly and 

reasonably as it possibly can. 

Senator ROBERTS. As always, the chairman is an eternal optimist. You would never put the seed in the ground if you did not 

think you would have a crop. [Laughter.] 

The CHAIRMAN. We are going to find a solution, here. 

21 

Senator ROBERTS. I think there is a hailstorm coming, but you 

will think it is good weather. 

The CHAIRMAN. But I also have good health insurance in this 

bill. 

All right. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Mundaca, to begin with you: The Volcker Commission is 

going to be coming in fairly shortly with their proposals for tax reform, and I have thought for a long time that the 1986 model, 

where, in effect, you clean out a lot of the clutter that has been accumulated over the years, simplify the code, and keep progressivity, that that model from 1986 continues conceptually to be a 

pretty good model for tax reform. 

I would like to hear your thoughts. And again, this is not on any 

specific piece of legislation, just conceptually where the principles 

of 1986 are a pretty good model still. 

Mr. MUNDACA. Thank you, Senator. I do agree with that. When 

we talk about the general principles that should apply to tax reform—fairness, simplicity, and administrability—one of the easiest 

ways to achieve that is to simplify the special rules that are in the 

tax code, the special exemptions, deductions, et cetera, get rid of 

those. In essence, broaden the base, have a pure income tax. You 

can lower the rates then and keep the same amount of revenue collected and then, also, get the gains from simplification. So, I do 

think it is a good model going forward. 

Senator WYDEN. I will have some other questions for you in a 

minute. 

Mr. Punke, we are very interested, particularly in exports, and 

exports of environmentally friendly goods. This is an area I have 

talked about with the chairman and a lot of our colleagues. This 

is a chance for us to really promote a sector where there is going 

to be good-paying jobs. And as you know, around the world, we are 

hit with some pretty significant tariffs and pretty significant obstacles to getting our environmentally friendly goods into these countries. 

What do you think about the idea of moving quickly to conclude 

and implement some early agreements on environmentally friendly 

goods, and would it be possible to do that without, for example, undermining Doha? 

Mr. PUNKE. Senator, I appreciate the question. As you know, 

Senator—and I agree with your analysis—environmental goods are 

one of the very important sectors where we have the potential to 

make progress in Doha. That particular sector has been one of our 

areas of focus in the negotiations over non-agricultural market access. I would add to that that the environmental services sector has 

been an area in which we intend to, and have focused intently in 

the context of the services negotiations. 

I am not sure that any of the fruits in Doha are low-hanging, but 

I would certainly expect, and hope to consult with you, about the 

best timing in terms of bringing back any concessions that we are 

able to win in the context of the Doha negotiations. 

Senator WYDEN. Let us prosecute this case as vigorously as we 

can. I know colleagues on this committee have a great interest in 

22 

this. This is an economic winner for our country to get these goods 

into these markets overseas, and I want to follow that up with you. 

Mr. PUNKE. I appreciate that. 

Senator WYDEN. Dr. Siddiqui, I want to ask you about pesticides. 

As you know, there has been a lot of debate about this issue. I am 

someone who believes that we ought to be doing everything we can 

to support sustainable American agriculture. I think it is clear that 

there is a role for pesticides. And certainly, almost as a backup, I 

would like to do as much as possible, in terms of public policy, to 

support sustainable American agriculture. 

If you are confirmed, what would you do in your position specifically to promote that? We have a great interest, for example, in organic farming in my home State, elsewhere in this country. What 

would you do in this position to support sustainable American agriculture? 

Dr. SIDDIQUI. Senator, I am glad you asked this question. Number one, I truly believe that the U.S. has the most abundant, affordable, and safe food supply in the world, whether the food is 

grown conventionally or using organic practices, number one. 

Number two, if I am confirmed, I will commit to work with you 

and all the stakeholders. My public service of 32 years in California, as well as the U.S. Government, has been to work with all 

the stakeholders. If I am confirmed, I will work with all the stakeholders, farmers and ranchers who grow their food products, to promote the exports, whether they are grown conventionally or 

through organic sustainable means. 

Senator WYDEN. So, with respect to the concerns that have been 

raised—and there are many groups that have sent letters to the 

committee—I want to give you a chance to respond to those concerns, people who have criticized your positions in the past. How 

would you respond to those who have been sending these letters 

here to the Finance Committee? 

Dr. SIDDIQUI. The best way and the shortest way I can answer, 

Senator, is that all of these allegations I have read there in the 

text which I’ve seen are directed toward the trade association I 

worked for for 8 years. There is no evidence in my public service 

of 32 years where I have made any disparaging remarks against 

organic or sustainable practices. I truly believe—I grew up in India 

as a child, saw the agriculture, the way it was. I saw the Green 

Revolution when I was going to university which was opened with 

U.S. assistance, in the Bill 480 Program, and I came here as a student. I am a true believer in all the processor systems, whether 

they are using conventional means or organic. And I will do my 

best in terms of representing all these interests in promoting agricultural exports abroad, organic as well as conventionally grown 

products. 

Senator WYDEN. My time is up, Mr. Chairman. I am just going 

to submit some additional questions in writing. 

[The questions appear in the appendix.] 

The CHAIRMAN. Thank you. 

Next is Senator Lincoln. 

Senator LINCOLN. Thank you, Mr. Chairman. Good morning and 

welcome to all of the nominees before the committee today. We are 

so pleased that you are here. 

23 

Obviously—I think it is obvious to most all of us—it is critical 

that we fill the vacancies that exist at both USTR and the Treasury. 

Mr. Mundaca, the role that you must now fill at Treasury is an 

extremely important one, and I am pleased we have you here today 

and are moving your nomination forward, hopefully, in an expeditious way. 

In your testimony, you alluded to the economic challenges our 

Nation is currently facing and the role that tax policy is going to 

play in getting us back on track. Without a doubt, the number-one 

concern on Arkansans’ minds right now is, indeed, the economy 

and the impact it is having on all of our family pocketbooks, but 

particularly those families in Arkansas. 

And I do believe that we have taken steps to implement policies 

that are helping our businesses and families, such as our Home 

Buyer Tax Credits and the NOL carryback expansion, two provisions that we are working to improve even further on the floor this 

week. 

There is, however, more to be done, and in the weeks and 

months ahead I look forward to working with you to ensure our 

focus remains on crafting policies that are going to create jobs. I 

think that is the biggest issue on the minds of Americans right 

now. We need to encourage economic development, provide tax relief to families and small businesses. Across this country, our small 

businesses are our largest employers, in Arkansas, and I think in 

most States as well. So I appreciate your willingness to work with 

us on that, and I look forward to doing so. 

I would also like to bring up the importance of the nominations 

of Mr. Punke and Dr. Siddiqui to agriculture. As the chairman of 

the Senate Agriculture, Nutrition, and Forestry Committee, I have 

a long record in support of farmers and ranchers in this country 

and the benefit trade can provide them. 

Mr. Punke, having been a staffer for Chairman Baucus, I am 

sure you are very familiar with the challenges facing agriculture in 

the current negotiations. I am also sure that you will rely very 

heavily on Dr. Siddiqui in the Doha negotiations, where agriculture 

always plays a key role in that debate. We look forward to working 

with you, again, with that history, knowing that you are going to 

be a hard worker, and particularly responsive, at least to our concerns about agriculture, as they are negotiated. 

Dr. Siddiqui, should you be confirmed, you will be involved with 

facets of any trade negotiations involving agriculture and, personally, I think the administration’s choice for Chief Agricultural Negotiator at USTR is a very wise one. 

You have had a long and distinguished record of service, beginning in California, serving in multiple positions at USDA during 

the Clinton administration, and finally under the Secretary for 

Marketing and Regulatory Programs, and in this capacity, you 

worked closely with President Clinton and Secretary of State Madeleine Albright on several trade delegation trips abroad. You have 

had the respect of former colleagues and many in the farm and 

food community. 

And on that note, I would really like to submit for the record two 

letters in support of Dr. Siddiqui’s nomination, Mr. Chairman, one, 

24 

from former Agriculture Secretary Dan Glickman and another from 

46 groups representing producers, workers, exporters, and others 

involved in the farm and food sector. 

The CHAIRMAN. Without objection, they will be included. 

[The letters appear in the appendix on p. 40.] 

Senator LINCOLN. Thank you, Mr. Chairman. 

I respect Dr. Siddiqui because he has very effectively advocated 

a responsible position on food and agriculture policies that are embraced by the vast majority of people in America and around the 

world. His views are shared by other respected and dedicated 

Americans whose commitment to eradicating hunger is well-known. 

And I will quote from one of them who recently addressed the 

technological advances in the agriculture sectors, as you and Senator Wyden were discussing. This is what Bill Gates recently had 

to say on the subject: ‘‘On one side is a technological approach that 

increases productivity, on the other side is an environmental approach that promotes sustainability. Productivity or sustainability, 

they say we have to choose. It is a false choice, and it is dangerous 

to fall for. The fact is, we need both productivity and sustainability, 

and there is no reason that we cannot have both.’’ Bill Gates is absolutely correct: there is not a choice between sustainability and 

productivity. We can do both, and we need to in order to feed the 

world. 

No one provided more proof of this than the late Dr. Norman 

Borlaug, the recipient of the 1970 Nobel Peace Prize, the 1977 

Presidential Medal of Freedom, and the Congressional Gold Medal 

of 2007, among others. 

I think it is important that Dr. Borlaug was credited with saving 

in excess of 1 billion lives over the course of his lifetime due to his 

groundbreaking work in developing and implementing technologies. 

I have no doubt that Dr. Siddiqui understands this, which makes 

him uniquely qualified for this position. I intend to vote in favor 

of Dr. Siddiqui, and urge my colleagues on the committee to join 

me in that support of his nomination. 

Dr. Siddiqui, I look forward to working closely with you once you 

are confirmed as our Chief Agricultural Negotiator. 

Just a couple of questions I will throw out, and then, as Senator 

Wyden did, I will submit the remainder of my questions for the 

record. 

[The questions appear in the appendix.] 

Senator LINCOLN. The problem is especially clear for agriculture, 

where steep and unsustainable cuts in U.S. domestic farm supports 

have been demanded. Meanwhile, our trading partners balk at 

meaningful changes in the existing text and refuse U.S. requests 

for bilateral commitment. 

Under these circumstances—and these are most appropriate, obviously, for Mr. Punke and Dr. Siddiqui—what, if anything, might 

be done to break the stalemate, and how do we plan to rebalance 

the negotiation? And, as such, from the last administration’s offer 

to reduce farm supports conditioned on major gains in market access, does it make much sense to withdraw the U.S. offer so we can 

negotiate on a level playing field? 

Mr. PUNKE. Senator, I appreciate the question. I think what is 

most important in terms of addressing that question is that we not 

25 

simply continue down a path that we have been on for 8 years that 

has not yet led us to a successful conclusion in the Doha negotiations. 

One of the things that I think that USTR and the administration 

have done successfully over the course of the past 6 months is to 

advocate for and to create a system of bilateral consultations in 

parallel with the multilateral discussions that are going on in 

Doha. 

The express purpose of those bilateral discussions is to seek gap 

filling between what the United States has offered in terms of concessions, and what we are receiving in exchange, and to achieve 

clarity over what has been offered by our trading partners. 

Those discussions, bilaterally, give us an opportunity to really 

drill down and hopefully obtain that clarity and hopefully close 

those gaps. We will not know if we are successful in that effort for 

a while, but I am convinced that, absent that bilateral effort, that 

we will not achieve the success and the clarity that we need. 

Senator LINCOLN. Dr. Siddiqui? 

Dr. SIDDIQUI. Senator, in addition to what Mr. Punke said, and 

specifically to agricultural negotiations, I know it is going to be a 

challenge to bring these agricultural negotiations to conclusion. But 

we need to make sure, as I said in my opening remarks, that we 

have some meaningful market access in agricultural products, U.S. 

products, to especially those emerging economies. 

I hope to work with you and members of Congress, as well as 

other parts of the administration, to bring a balance and also get 

this—I think we have failed overall in terms of, out of 153 member 

countries of WTO, about 130 countries are not being asked to make 

any significant concessions. So, we have to engage, for the lack of 

a better word, OECD member countries and some of the emerging 

economies which are not members of OECD, and make sure that 

we, in return for what we are giving, do gain meaningful market 

access for agriculture. 

Senator LINCOLN. Well, I appreciate that. I do think, as we look 

at ourselves in a part of this global community, you are exactly 

right engaging other traders and certainly making sure that that 

market access is open. And I would just plead with you all that we 

do stick to the mantra of ‘‘no deal is better than a bad deal.’’ 

The CHAIRMAN. Thank you very much, Senator. 

I might say, I regrettably have to leave to another engagement, 

but Senator Conrad has kindly agreed to continue chairing the rest 

of the hearing. [Laughter.] 

Senator CONRAD. And there is Senator Roberts’s waiver rule that 

will be in effect, which does not actually permit him to ask any additional questions. [Laughter.] 

Senator ROBERTS. Precisely what kind of waiver are you talking 

about? I am a little concerned. 

Senator CONRAD. And you should be. [Laughter.] 

The CHAIRMAN. Before I leave, I would like to ask one question 

of Mr. Mundaca. When will the credit card reporting regulations be 

issued? That was part of the semi-tax gap legislation passed. The 

industry needs it for timely guidance so it can get ready. I hear 

conflicting reports of when it might be issued. I would like you to 

shake it up. We need to get those reporting regulations issued. 

26 

Mr. MUNDACA. Yes, Senator. We understand the priority of getting the guidance out so that credit card companies can adjust 

their systems, get us comments in. They should be out within the 

month. 

The CHAIRMAN. Thank you. 

Senator CONRAD. Thank you, Mr. Chairman. Thank you for holding this hearing, and thanks to all of you for your willingness to 

serve in this administration and be in public service. 

Mr. Punke, we remember your previous service. My staff tells me 

you were especially responsive on issues critically important to my 

State in terms of enforcing previous trade agreements, and so I 

want to acknowledge that here, publicly, and say how much I appreciate the assistance that you provided my office and the people 

of my State in your previous position. I think you demonstrated 

sensitivity to production agriculture that is very much appreciated 

by this member, and I think other members on this committee. 

I also see Gus Schumacher here in the audience. Gus, who has 

served in the previous administration in the Department of Agriculture, was also very responsive, traveled to my State on a number of occasions. It is good to see you, Gus. I am delighted that you 

remain active. 

Mr. Punke, I would like to ask you and Dr. Siddiqui a question 

that relates to negotiating strategy. A previous Trade Ambassador 

told us in testimony before this committee that she thought it was 

smart negotiating strategy to make substantial concessions on the 

front end to set a good example for our negotiating partners. I do 

not want to play hide-the-ball here, so I would just tell you, I 

thought it was one of the most unusual negotiating strategies I had 

ever heard of. 

I was taught to negotiate by my uncle. My uncle taught me how 

to negotiate in buying a car, and he told me you have to walk away 

at least twice if you are going to get any kind of a deal. 

I am just interested in your basic philosophy of negotiating. Do 

you think it makes sense to make significant concessions on the 

front end that are not reciprocated on the notion that somehow 

that is going to set a good example for those with whom we negotiate? 

Mr. Punke? 

Mr. PUNKE. No, Senator. I do not. 

I can tell you this—and my father who is sitting behind me can 

confirm this—his philosophy is you have to walk away 3 or 4 times 

before you buy a car and wear them down, and he has been very 

successful in this negotiating style over the years. 

Senator, I think it is extremely important to emphasize that the 

negotiations we are in obviously have been going on for 8 years, 

and there is a context to them, but I think it is also important to 

emphasize that nothing has been agreed to yet, and that nothing 

will be agreed to until everything is agreed to. 

And, certainly, my focus, if I am confirmed, will be to gain those 

concessions from our trading partners to gain that clarity so that 

we can bring a good deal back to Congress and so that you can see 

very clearly what concessions we have won on behalf of the American people. 

27 

Senator CONRAD. Well, I appreciate that. I would just say to you, 

if it is not a good deal, it is going to be dead on arrival here. 

The previous agreements that were in train, that were tentatively put on the table, I think would have been an extremely serious blow to American agriculture, certainly the State that I represent, and I would have done everything in my power to stop 

them. So, I hope very much that you take to heart how critically 

important it is that we negotiate aggressively. The days are gone 

when the United States could just give things away because we 

were so strong, so prosperous, it did not much matter. Those days 

are gone. 

Dr. Siddiqui, I hope I am pronouncing your name correctly. 

Dr. SIDDIQUI. Siddiqui. Absolutely correct. Siddiqui. 

Senator CONRAD. Thank you, sir. 

Can you tell us a little about your negotiating philosophy? 

Dr. SIDDIQUI. Senator, I would say for the record here that my 

experience in negotiating, especially what I mentioned in terms of 

dealing with both WTO member countries and some that are not 

WTO member countries, has always been to know the issue, have 

your facts, and understand what is on the table. But I would not 

want to telegraph my strategy to the other side and extract concessions. 

I think we have to look for openings where we can exploit those 

openings in terms of what we can bring from the situation in the 

WTO Doha Round. But, if I am confirmed, I will assure this committee, and I will commit to work not only with Congress but also 

the stakeholders, because there are different stakeholders, U.S. exporters, and others, they have a stake in this and they are the ones 

who are going to pay the price for this. So we will not bring back 

an agreement to you which does not provide meaningful market access, and is a balanced and ambitious one. 

So my strategy in terms of negotiation has always been to study 

up on the issues, understand the opposition, where their weakness 

is, and then also work with the stakeholders so that we have a balanced agreement. 

Senator CONRAD. Well, I appreciate that. I had a former head of 

negotiations for the Europeans tell me that their idea was always, 

on agriculture negotiations, to insist on equal percentage reductions from both sides. Of course, they have much higher levels than 

we do, so equal percentage reductions always benefit them. They 

said we will always be able to claim it is fair, but we will always 

have the advantage. I hope we remember that they do have a strategy, and they do have a plan, and their plan is to win. And I hope 

we go into it with a plan to win. 

My time has expired. 

Senator Roberts? 

Senator ROBERTS. Yes. Thank you, Mr. Acting Chairman. I have 

this classified note that I will return with your staff member with 

the yellow tie over there that just sat down, if you could hand that 

to the distinguished Senator. 

All right. I think it is obvious by the comments that everybody 

made—and Senator Lincoln is no longer present, but I certainly 

want to endorse her statement—about sustainable agriculture and 

commercial agriculture. It is not an either/or thing. I think we can 

28 

do both, and I think she made that very clear, and it was a very 

good statement. 

My State depends, just like the State that Senator Conrad represents, on access to foreign markets. I am concerned that we are 

letting some opportunities pass us by. We are trying to climb out 

of these very troubled economic times, and I do not think we can 

further ignore the possibility, what used to be the probability, of 

trade agreements with Colombia, Panama, and Korea. They have 

been languishing now more than 7 years. 

In the case of Colombia, it makes little sense to deny our exporters the same access to their market that the Colombian exporters 

now currently have to ours. But, beyond the shelved trade agreements, there is little indication that international trade is a top 

priority, and I think, hopefully, all of you can help change that. We 

have had 11 months in. The United States remains on the sidelines 

while our competitors, like the EU and Korea, negotiate trade 

agreements. When we have to export one-third to one-half of our 

crops and our livestock, that is just not acceptable. 

So, Dr. Siddiqui—and thank you by the way, for all of your service with Secretary Glickman, Secretary Veneman, with CropLife, 

all of the years of experience. I cannot think of anybody with better 

qualifications. 

I want to talk about beef trade, especially in Asian countries, and 

the priority of same. We have had a problem, at least, as I have 

talked with industry—or a challenge really—of a lack of clear communication, not only with the stakeholders in the beef industry, 

but within the executive branch. I am concerned about a lack of effective communication—that is my definition, but that is what I am 

hearing from the participants—between the White House, the 

USTR, and the USDA, meaning several opportunities for having 

some real conversations with our Asian trading partners may have 

been lost. 

What will you do at USTR to ensure that all channels—all channels—are communicating with each other and with industry to reenergize the beef trade? 

Dr. SIDDIQUI. Well, Senator, I share your concern about the beef 

trade and how much is sitting on the table which we are not able 

to export because of the scientifically unsound bans we have because of the BSE. 

If I am confirmed, I commit to you that I will work with the 

USDA and other agencies within the government in terms of improving that communication you just alluded to just a while ago. 

Also, I will work very closely with the stakeholders in the beef industry. Having worked at the USDA between 1997 and 2001, I 

have this advantage of knowing folks in the Agriculture Marketing 

Service. That was one of the agencies I oversaw when I was a Deputy and a Secretary and Under Secretary of Marketing and Regulatory Programs. And second, I also understand our beef industry 

and some of the problems they face. So I commit to you to work 

with Congress, as well as the stakeholders who have a stake in 

this, in improving market access not only in Asia, but also we have 

some issues with Mexico as well. 

Senator ROBERTS. I know that our livestock associations are very 

eager to work with you directly to make sure they have input to 

29 

all of the administration’s actions to restore trade and open new 

markets to U.S. beef, so I am not even going to ask that question 

because I know you are going to be there. 

As I said, you can visit Dodge City, and we will make you an 

honorary marshal. 

Dr. SIDDIQUI. Thank you. I will do that, sir. 

Senator ROBERTS. And make you an honorary member of the 

Dodge City Coffee Klatch, and you will be in fine shape. 

The trade agreements with Panama, Colombia, South Korea, appear to me to be—and this is my definition, and I hope nobody 

takes it in a wrong way—but it seems to me we have the environmental and labor benchmarks that put these trade agreements in 

purgatory. In regard to Colombia, much has been made about 

benchmarks. Why have benchmarks, when Colombia has been the 

benchmark for cooperation and about the only real ally we have in 

Latin America? 

So, what is the status of this assessment? Are there any actions 

that you can take to move this process forward more quickly? And 

I think this has national security implications as well in regards 

to the government of Colombia and all that they have gone through 

with the expectation that we would follow through with the trade 

agreement, or more especially with the situation in Honduras, 

which I am worried about as well. So, I think there are a lot of 

issues at stake. 

Mr. PUNKE. I appreciate that question, Senator. 

I think it is important, and I think what the administration has 

said about the three pending trade agreements is, that each one of 

them has the potential to be a very good agreement for the United 

States, but each one has areas of concern, including labor issues. 

This is not an area of direct oversight for me, but my understanding is that this is an area where USTR is working very hard 

every day, both with our trading partners, but also with Congress, 

and I would certainly commit to you, Senator, to take your views 

back, and to be part of that process of working toward resolution 

of those issues on those pending bilaterals. 

Senator ROBERTS. I appreciate that. We have done that on repeated occasions. 

Senator Conrad, I share your view in regards to—and I think 

most of us in the agriculture community—with regards to the Doha 

Round and these ever-ongoing trade agreements. Were you in Seattle for the tear gas round? [Laughter.] 

You cannot hold a trade conference meeting/trade negotiation 

without all of the various people who are opposed to trade showing 

up in various shapes, sizes, costumes, gosh knows what else. 

And I remember Secretary Glickman at that particular time, and 

then Senator Harkin, saying what are we going to tell our farmers 

if we cannot reach an agreement on the basic things that we all 

agree to? And then, of course, came the tear gas. You could not 

even get a hamburger in Seattle because they were very worried 

about certain things. I cannot remember the chain where all of that 

started, where somebody ate beef that was not cooked. But, at any 

rate, I am worried that we cannot get there from here, and we certainly should not be in a position of saying, well, we are going to 

take whatever protection we have in the current farm bill and use 

30 

that as a leverage, if you will, to try to make some concessions 

prior to any agreement. So, I agree with you on that. 

Did you really walk away 3 times when you bought your car? 

Was that a Cash for Clunkers, or what? 

Senator CONRAD. Sometimes I have walked away more than 3 

times. My Uncle Jim was a very wise man. 

Senator ROBERTS. Would he have been for Cash for Clunkers, do 

you think? [Laughter.] 

Senator CONRAD. I rather doubt it. 

Senator ROBERTS. I am way over time. I apologize. 

Senator CONRAD. Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Mundaca, our country has an enormous need for investment 

in roads, and bridges, and transportation systems. For 6 or 7 years 

now, I have worked closely with a number of colleagues on the 

other side of the aisle, starting originally with former Senator Talent, most recently with Senator Thune, and we have advocated a 

proposal to issue Build America Bonds, where in effect the bond 

holder not only gets the interest on the bond, but would get a Federal tax credit. And we worked very closely with Chairman Baucus 

and Senator Grassley, and we were able to get our proposal included in the stimulus legislation. 

At the time, we thought that this was a very promising idea that 

runs through 2010. And our kind of seat-of-the-pants assessment— 

because this was a departure in Federal policy for the Federal Government to get into the business of issuing these bonds—we 

thought perhaps $3 billion might get issued. We thought it was 

going to go well, and we would have a chance to come back and 

have it extended. 

The last time I looked, almost $40 billion of these Build America 

Bonds had been issued, more than 10 times what we had expected. 

So the evidence indicates that there is great interest in this in 

terms of State and local issuers. 

My question to you is, Build America Bonds are authorized—essentially the period wraps up in 2010—do you believe this will be 

an area you will be asked about, if confirmed? I hope you are confirmed—I am certainly planning to support you. If confirmed, do 

you believe that a version of the Build America Bonds program 

should be extended beyond 2010? 

Mr. MUNDACA. Thank you, Senator, for that question. Thank you 

for your leadership on this issue. 

You mentioned the approximately $40-billion figure. We got new 

numbers yesterday. It is over $47 billion now. It has been an extraordinarily successful program. As you mentioned, it was an innovative program. We were not sure how it would work. It has 

worked beyond all of our expectations. It has opened up markets 

for States and localities to place their bonds beyond where other 

State and local bonds could be placed. 

As you mentioned in the Recovery Act, it is a 2009 to 2010 program. But I do think we need to seriously consider whether, and 

how, to extend this. It is too successful to simply allow it to expire. 

There are issues, obviously, with cost, with the level of the subsidy 

provided, but it is certainly something we have to look at. It has 

been too successful to allow it simply to go away. 

31 

Senator WYDEN. I appreciate your answer. You always ought to 

quit while you are ahead. 

My sense is that, for a program that has produced 15 times, I 

think—did you just say it was at $47 billion? So your number is 

higher than what we had most recently, and it seems to be growing 

in popularity in terms of State and local issuers who are really in 

a crunch in terms of generating investment for infrastructure and 

transportation. 

We ought to be looking at creative ways to pursue this. I am 

open to a variety, after we have a chance to review this, of additional considerations that we would factor into what to do next. 

But it is going to be a big transportation bill. This Congress is 

going to have a number of opportunities to look at investment in 

infrastructure, and I hope what we have done has at least shown 

that there is a new and politically acceptable way to generate funds 

for infrastructure. 

Obviously, if you raise the gas tax into the stratosphere, you are 

going to have Americans marching on every Congressperson’s office 

in a tough economy, if you go that route. In something like this, 

you have a way that is targeted, it has been effective. Now we have 

had a very good test, proving to be much more successful than anybody anticipated. 

I look forward to voting for you when you come up for confirmation in the committee, on the floor, and particularly to have a 

chance to work with you on this additional area would be very 

helpful. 

Thank you, Mr. Chairman. 

Senator CONRAD. Thank you, Senator Wyden. You will not find 

any member of the Senate who digs in more on an issue than Senator Wyden, whether it is health care or tax reform. I do not think 

there is any other member who devotes himself to doing the homework necessary to be effective on an issue. So, you would be well 

advised to work with him, if you are confirmed. 

Mr. Mundaca, have I pronounced your name correctly? 

Mr. MUNDACA. Yes you have, Senator. Thank you. 

Senator CONRAD. Mr. Mundaca, I am of the view that the tax 

system that we have is increasingly ineffective to meet the challenges we confront as a country. If we look ahead, we have had the 

debt of the United States double over the last 8 years, we are on 

a track to have it double again, and the gross debt of the United 

States to reach a level well over 100 percent of Gross Domestic 

Product. 

Virtually every expert who has come before the Budget Committee, including the head of the Congressional Budget Office when 

it was Dr. Orszag, the head of GAO when it was David Walker, the 

head of the Federal Reserve when it was Mr. Bernanke—and still 

is Mr. Bernanke—has said to us we are on an utterly unsustainable course. 

And, if you look at the contributing factors, it is the entitlement 

programs and it is the revenue system. And the revenue system, 

as I look at it, is woefully ineffective, and inefficient, and unfair, 

and is not enhancing the competitive position of American business. And, when this tax code was written, we did not have to 

32 

worry so much about the competitive position of the country; now 

we do. 

If I look at the tax gap, well over $300 billion a year, money we are hemorrhaging in these offshore tax havens, well over $100 billion a year according to the Permanent Committee on Investigations, abusive tax shelters well over $50 billion a year, you add 

that up, and I believe you are at well over $500 billion of leakage 

out of the tax system. 

After discussing with my colleagues, reading, and listening to experts come before this committee and others, I am convinced that 

just re-jiggering the current tax code is inadequate, insufficient, 

and unwise. What we need to do is go back and really rewrite the 

tax code, have fundamental tax reform. 

So I would be interested in your assessment. Do you agree with 

the notion that we need thorough-going tax reform with the purpose of being more fair, helping this country be more competitive, 

and have a system of collection that is more efficient so we do not 

have this hemorrhaging and the spectacle of those of us, the vast 

majority of us, who file and pay what we owe, being, in effect, 

chumped by those who do not file and pay what they owe? I would 

be interested in your assessment. 

Mr. MUNDACA. Thank you, Senator. Those are all important 

issues and important points. 

Yes, our current tax system is falling short right now, both in the 

scope and complexity of our current rules, the fact they have not 

been significantly updated in a significant period of time, while the 

economy has altered and changed. Our current tax rules do affect 

the competitiveness of U.S. businesses and workers. All of this has 

to be taken into account with the overlays you mention of our current fiscal situation. 

These are extraordinary issues we do need to start working on, 

I think very quickly, collaboratively, so that we can get something 

that we all can agree on, get passed, and get implemented. It is 

going to be a heavy lift. 

If confirmed, I look forward to working with you, with this committee, with Congress as a whole, on something that we all are 

going to have to agree on how it gets done, because again, a 

thorough-going rewrite of the tax code hits so many different areas, 

we are going to need input, expertise, and buy-in from just about 

everybody. 

Senator CONRAD. Let me ask you this. 

Next week, in the Budget Committee we are holding a hearing 

on measures to deal with our long-term debt, and the notion is that 

there will be a necessity for some kind of special process, whether 

it is a commission or a summit, some means of everybody coming 

to the table with everything on the table, on both the spending and 

the revenue side of the equation. 

Will you be prepared if that process is put in place for next year, 

however, it is done? Will you be prepared? Do you have the manpower? Do you have the resources to consider a fundamental reform of the tax revenue system of the country? 

Mr. MUNDACA. Yes, Senator, we do. We have a large and able 

staff in Tax Policy. If the budget request we put in is approved, we 

will get additional resources next year, and I do think we can effecVerDate Nov 24 2008 17:42 Jun 01, 2011 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 R:\DOCS\66289.000 TIMD
33 

tively turn to fundamental tax reform. Obviously, there are a lot 

of different priorities this year, implementing the Stimulus Act and 

other crisis measures, dealing with health care, as well. There will 

not be much excess capacity, but we do have the capacity to turn 

to that issue. 

Senator CONRAD. All right. I think that is going to be critically 

important. 

With that, we have about reached the end of our time. I want 

to give each of you an opportunity to make a final statement if 

there is anything that you would want to make certain the committee is aware of, any question you were not able to answer, or 

any statement that you would want to make before we close the 

hearing. 

Mr. Punke? 

Mr. PUNKE. Senator, I appreciate the opportunity. I do not have 

any type of closing statement, except to say that, going back to 

what Senator Baucus opened this hearing with in terms of the 

large amount of hard work ahead, I think he is right about that, 

and I look forward, if confirmed, to digging in on that work and 

working with this committee in doing that. 

Senator CONRAD. Well, Mr. Punke, you certainly have credibility 

with this member, and I believe before this committee, based on 

your previous service. We appreciate it and look forward to working 

with you in the future. 

Mr. PUNKE. Thank you very much. 

Senator CONRAD. Dr. Siddiqui, any final comments, thoughts 

that you would want to bring to the attention of the committee? 

Dr. SIDDIQUI. Senator, just a short, closing comment. All my career, 32 years with the State of California and USDA, I have been 

in public service. I am open to suggestions and will work with all 

the stakeholders. I will continue to do so, if I am confirmed. I truly 

believe—and this issue came up earlier—in coexistence of sustainable, organic agriculture and conventional agriculture. 

I will definitely, if I am confirmed, work with all of the stakeholders to hear their concerns, and if there are any trade issues 

having to with organic, as well as conventional agriculture, I will 

do my best in terms of resolving those issues. In terms of bilateral 

trade negotiations, there are some WTO issues. Likewise, I will 

work diligently in terms of trying to bring back a balanced and ambitious outcome with significant new market opportunities for 

American agriculture. 

Senator CONRAD. Well, we appreciate that. And you, too, enjoy 

a very good reputation before this committee. We appreciate your 

previous service and look forward to working with you as well. 

Mr. Mundaca, any final thoughts you want to make certain the 

committee is aware of before we close the hearing? 

Mr. MUNDACA. Thank you, Senator, very briefly. 

I just want to follow up on your last points. We are going to face 

a number of very significant challenges in the very short term. I 

think the only way to effectively address them is collaboratively, 

and we need to move together on this. I look forward, if confirmed, 

to being a part of that process. 

Senator CONRAD. Well, Mr. Mundaca, my tax counsel tells me 

that you are well-known in international and domestic tax circles, 

34 

that you are well-respected, well-regarded, and we look forward to 

your confirmation. I think you are going to have an extraordinary 

challenge, as are we all, as we seek to pivot and address our longterm debt circumstance. 

We are on a course that is completely unsustainable, and we 

have to face up to it. We understand you do not take those steps 

in the middle of an economic downturn. That would be extremely 

unwise from an economic standpoint, but we have put a great deal 

of the liquidity into the system, to prevent and avert a collapse. I 

think we were successful in that. 

Those policies were not perfect. The work of people is rarely perfect, but now we have to begin to think of when we pivot and take 

on this burgeoning debt, because that, too, threatens the fundamental economic security of the country. 

Thank you all, and we will close the hearing. 

[Whereupon, at 12 p.m., the hearing was concluded.] 

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A P P E N D I X 

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