`[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]



    FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2024

_______________________________________________________________________

                                 HEARINGS

                                 BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                     ONE HUNDRED EIGHTEENTH CONGRESS

                              FIRST SESSION

                    ___________________________________


        SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT

                     STEVE WOMACK, Arkansas, Chairman

  MARK E. AMODEI, Nevada	       STENY H. HOYER, Maryland
  DAVID P. JOYCE, Ohio		       MATT CARTWRIGHT, Pennsylvania
  JOHN R. MOOLENAAR, Michigan	       MARK POCAN, Wisconsin
  ASHLEY HINSON, Iowa		       SANFORD D. BISHOP, Jr., Georgia
  MICHAEL CLOUD, Texas		       NORMA J. TORRES, California
  JERRY L. CARL, Alabama
  JUAN CISCOMANI, Arizona

  
NOTE: Under committee rules, Ms. Granger, as chairwoman of the full 
committee, and Ms. DeLauro, as ranking minority member of the full 
committee, are authorized to sit as members of all subcommittees.

             Lauren Flynn, Marybeth Nassif, Kathryn Maxwell,
                      Rob Yavor, and Nick Goranites
                            Subcommittee Staff

                    ___________________________________

                                  PART 1

                                                                   Page
President Biden's Fiscal Year 2024 Budget Request
  and Economic Outlook...........................                     1
U.S. Securities and Exchange Commission Fiscal Year
  2024 Budget Request............................                    69
Federal Trade Commission Fiscal Year 2024 Budget
  Request........................................                   207







                [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]




                            ______________



          Printed for the use of the Committee on Appropriations


                 U.S. GOVERNMENT PUBLISHING OFFICE

53-669                    WASHINGTON : 2023












                      COMMITTEE ON APPROPRIATIONS

                     KAY GRANGER, Texas, Chairwoman


  HAROLD ROGERS, Kentucky                    ROSA L. DeLAURO, Connecticut
  ROBERT B. ADERHOLT, Alabama		     STENY H. HOYER, Maryland
  MICHAEL K. SIMPSON, Idaho		     MARCY KAPTUR, Ohio
  JOHN R. CARTER, Texas			     SANFORD D. BISHOP, Jr., Georgia
  KEN CALVERT, California		     BARBARA LEE, California
  TOM COLE, Oklahoma			     BETTY McCOLLUM, Minnesota
  MARIO DIAZ-BALART, Florida		     C. A. DUTCH RUPPERSBERGER, Maryland
  STEVE WOMACK, Arkansas		     DEBBIE WASSERMAN SCHULTZ, Florida
  CHARLES J. ``CHUCK'' FLEISCHMANN,	     HENRY CUELLAR, Texas
    Tennessee				     CHELLIE PINGREE, Maine
  DAVID P. JOYCE, Ohio			     MIKE QUIGLEY, Illinois
  ANDY HARRIS, Maryland			     DEREK KILMER, Washington
  MARK E. AMODEI, Nevada		     MATT CARTWRIGHT, Pennsylvania
  CHRIS STEWART, Utah			     GRACE MENG, New York
  DAVID G. VALADAO, California		     MARK POCAN, Wisconsin
  DAN NEWHOUSE, Washington		     PETE AGUILAR, California
  JOHN R. MOOLENAAR, Michigan		     LOIS FRANKEL, Florida
  JOHN H. RUTHERFORD, Florida		     BONNIE WATSON COLEMAN, New Jersey
  BEN CLINE, Virginia			     NORMA J. TORRES, California
  GUY RESCHENTHALER, Pennsylvania	     ED CASE, Hawaii
  MIKE GARCIA, California		     ADRIANO ESPAILLAT, New York
  ASHLEY HINSON, Iowa			     JOSH HARDER, California
  TONY GONZALES, Texas			     JENNIFER WEXTON, Virginia
  JULIA LETLOW, Louisiana		     DAVID J. TRONE, Maryland
  MICHAEL CLOUD, Texas			     LAUREN UNDERWOOD, Illinois
  MICHAEL GUEST, Mississippi		     SUSIE LEE, Nevada
  RYAN K. ZINKE, Montana		     JOSEPH D. MORELLE, New York
  ANDREW S. CLYDE, Georgia
  JAKE LaTURNER, Kansas
  JERRY L. CARL, Alabama
  STEPHANIE I. BICE, Oklahoma
  C. SCOTT FRANKLIN, Florida
  JAKE ELLZEY, Texas
  JUAN CISCOMANI, Arizona


              Anne Marie Chotvacs, Clerk and Staff Director

                                   (ii)

 
   FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR 2024

                              ----------                              

                                          Thursday, March 23, 2023.

            PRESIDENT BIDEN'S FISCAL YEAR 2024 BUDGET
                   REQUEST AND ECONOMIC OUTLOOK

                             WITNESSES

HON. JANET YELLEN, SECRETARY, DEPARTMENT OF THE TREASURY
HON. SHALANDA YOUNG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
    Mr. Womack. Well, the clock shows a couple of minutes after 
the appointed time, so I am going to call this subcommittee 
hearing to order.
    Since this is our first hearing, I would like to remind 
everyone that we will follow the 5-minute rule for opening 
remarks, questions, and comments.
    Members will be recognized in order of seniority based on 
who is seated at the beginning of the hearing, going back and 
forth between the parties. Latecomers will be recognized in the 
order of their arrival, going back and forth between the 
parties.
    I will keep my opening statement brief so we can get right 
into the questions. And I don't want it to look too much like 
it is us against Mark Pocan, so reinforcements are en route. 
And as they are taking their seats, the Subcommittee on 
Financial Services and General Government has come to order.
    Appearing before the subcommittee today is Treasury 
Secretary Janet Yellen and Office of Management and Budget 
Director Shalanda Young. We thank you for joining us today. We 
were looking forward to receiving testimony from the Council of 
Economic Advisers' Chief Chair Cecilia Rouse but wish her well.
    We are here today to discuss the administration's fiscal 
outlook, 2024 budget request, and our Nation's economic 
outlook.
    This hearing has not occurred in over a decade, and it 
could not be more timely than in the midst of a great economic 
turmoil. It is my opinion that the reckless spending and out-
of-control regulatory expansion unleashed by President Biden 
and Democrats has pushed us into a recession. It has been 
anything but a transitory cycle.
    Our unsustainable trajectory is one of the greatest threats 
to American prosperity, security, and future generations.
    If we are to be guided by past performance, then I have 
great concern about the administration's budget. This 
administration and its agencies have failed to help Americans 
who have seen their personal savings crippled.
    It is not only fiscally irresponsible to continue down the 
path that we have been on, but it is intellectually dishonest 
to claim that it has been working.
    The annual inflation rate is 6 percent and out of touch in 
stark contrast to the 3 percent assumed in the President's 
budget. It is disappointing that the administration not only 
proposes even higher spending but also incorporates optimistic 
economic assumptions.
    I was hoping that the fiscal 2024 budget request would 
begin to limit Federal spending, but instead, it increases the 
public debt to 110 percent of GDP by 2033.
    I have consistently advocated for solutions to chart a 
responsible way forward. We must change gears and get going in 
the right direction to help Americans get the relief they need.
    The committee does not care to hear any excuses today, so 
we want you to focus on how we can turn this economy around 
with new and different policies than those that have failed us 
since mid-2020.
    I would be remiss if I did not mention something that is 
also on Americans' minds--the current banking crisis and how 
American taxpayers are on the hook for it. Whether through fees 
passed on by the banks Americans rely on or taxpayer funded 
backstops, I ask you today to be frank with us about the real 
impact.
    In conclusion, I will not be able to support the level of 
spending included in the President's budget. Our members are 
taking a hard look at the spending request line by line and 
will determine what level of funding can be appropriated that 
puts our fiscal house on a sustainable path. I look forward to 
your testimony today and working with you on these important 
issues.
    I am also excited to welcome the participation of 
Chairwoman Granger at our hearing today, and I will now 
recognize my colleague and my friend, the ranking member from 
Maryland, Mr. Hoyer, for his opening statement.
    Mr. Hoyer. Well, thank you very much, Mr. Chairman. I won't 
go into a long exposition of how much I disagree with some of 
the points just raised by my dear friend. That is not 
surprising--or any of my colleagues to my right, I am sure.
    But I am pleased to be back on this subcommittee, on which 
I served for 23 years prior to my becoming majority leader 20 
years ago. I am glad to be back.
    This subcommittee is sometimes not looked at as a sexy 
subcommittee, with issues that galvanize people, but it deals 
with, as the chairman has just noted, some of the most 
important issues that confront our country and confront the 
administration and the Congress.
    So I am pleased to be back here, in particular, pleased to 
be back here with my friend Steve Womack, who I believe to be 
one of the most responsible and hardworking and focused Members 
of the Congress of the United States on either side of the 
aisle, and I am pleased to be his friend, and have been his 
friend, for a very long period of time, since he came to the 
Congress almost. And I am looking forward to us working 
together very, very well.
    But we are going to have very significant differences. 
There is no doubt about that. I have a chart, and I am going to 
do a Special Order if anybody wants to see it next week, which 
outlines 70 some-odd years--plus years since 1948, and it 
outlines the economic progress made under Democratic 
administrations and under Republican administrations.
    And in terms of jobs created, one of the most stunning 
numbers, Republicans had six more years during those years from 
1948 to 2022--or 1949 to 2022.
    Under Democratic presidents, 75 million jobs were created. 
Under Republican Presidents, less than 35 million jobs were 
created during those years.
    This President's economic program has created 12 million 
jobs in 2 years. Unprecedented. Now, part of that, of course, 
is because of the pandemic and the loss of--hemorrhaging of 
jobs clearly.
    But the economic program that we put in place under the 
Rescue Plan brought this economy back more quickly, frankly, 
than any other economy in the world. So I am proud of what we 
have done, and we are going to defend what we have done.
    But we are going to have legitimate differences. We are 
going to have discussions about the level of funding. There are 
significant increases in many of the programs that we will 
confront. I am not surprised that we will have a robust debate 
on that, and we are going to discuss justifications for those 
increases.
    But from investing in American workers and families to 
shoring up Medicare and other vital programs, it truly is a 
budget, in my view, for the people.
    Additionally, it advances many priorities that fall under 
our subcommittee's jurisdiction. It includes, for example, a 
5.2 percent cost-of-living adjustment for our Nation's 
hardworking Federal employees to keep pace with inflation.
    I might say as an aside, almost every nation in the world 
has experienced inflation, not a result of policies that we 
adopted but the result of the pandemic, a shortage of supplies, 
disruption of supply chains, all of those issues which make an 
impact on the economy.
    As someone who has long been an advocate for America's 
Federal workforce, I will keep working tirelessly with my 
colleagues on the committee to ensure that these public 
servants receive the fair pay and benefits they have earned.
    I was also pleased to see President Biden request 
additional funding for the IRS. I know that is going to be a 
big item of contention. Mr. Womack and I have discussed that. 
We have a very, very substantially different viewpoint.
    And, Madam Secretary, I know you are going to be speaking 
to that.
    My view is that there is nobody who wants to pay more than 
their fair share. None of us want to see our taxes increased. 
But every one of us ought to pay our fair share. That is the 
price of freedom. That is the price of our democracy. That is 
the price of our serving our people.
    We want to give them the highest quality customer service 
for American taxpayers and rein in tax evasion and fraud on 
those making more than $400,000 a year.
    Similarly, the proposed budget would strengthen the 
Treasury Department and other agencies overseeing our financial 
systems. Clearly, we have seen a very recent example of how 
important that oversight is.
    The recent turmoil surrounding Silicon Valley Bank and a 
handful of others reminds us of how crucial it is for the 
Treasury to receive the resources it needs to coordinate with 
the FDIC and the Federal Reserve to safeguard our economy.
    I might observe that no one probably in America has had 
more experience with those agencies than our Secretary of the 
Treasury.
    Our subcommittee must see to it that the Treasury is fully 
equipped to tackle these challenges quickly and effectively.
    The budget also includes robust funding for our election 
infrastructure, including Election Assistance Commission. I am 
proud to be the author of that Commission, and I am proud that 
a Republican President signed the bill, George Bush, that 
created that in the Help America Vote Act, which Bob May of 
Ohio, Republican of Ohio, was a critical partner in seeing that 
adopted.
    These HAVA programs must receive the funding they need to 
ensure that our elections remain secure, accurate, and 
accessible.
    Without evidence, many people have raised the question as 
to whether the last election was a legitimate election--
actually, the election 2 years before that. If that premise is 
adopted, that somehow the election may have been done 
incorrectly, then I would think everybody would want to support 
the Election Assistance Commission to give oversight to that 
very proposition.
    These provisions, like the rest of President Biden's 
budget, would help set our Nation up for success for 
generations to come.
    In this morning's hearing on the Labor Health Committee, I 
talked about the expenditures, that they are investments, 
investments in a stronger and better country, in a stronger 
economy, the growth in jobs.
    They stand in startling contrast to proposals, frankly, we 
have heard recently to roll back Federal appropriations to 
their fiscal year 2022 level. The senior member on our side may 
have some words to say about this.
    This extreme course of action would lead to a cut of at 
least 22 percent for essential programs--essential programs.
    These cuts would also deal a severe blow to airport and 
railway safety. Millions would lose access to healthcare 
services provided by community health centers. These are just a 
few of the plethora of adverse effects these cuts would have on 
our country.
    One more minute?
    Mr. Womack. I am going to yield the gentleman another 
minute, and I want to remind him that he does not have magic 
minutes in the committee like he is accustomed to in the 
majority. But we do need to move on.
    Mr. Hoyer. It is such a sad truth that the chairman reminds 
me of. I miss the magic minute more than I miss any other perk 
in being majority leader, and I had that for a long period of 
time, so I have just become accustomed to it, Mr. Chairman. I 
am glad that you will discipline me properly.
    It is not fair to put that immense burden on the American 
people, those cuts. Instead, we must make sure that the 
Americans have the resources, opportunities, and support they 
need to get ahead.
    I think this budget is subject to oversight, as the 
Appropriations Committee ought to do. We are not the agent of 
the administration. We are the agent of the American people, as 
you are.
    And I want to say, in closing, how proud I am, I have had 
the opportunity and pleasure of working with Janet Yellen for 
many, many years.
    Madam Secretary, you are credit to our country, you are a 
credit to this administration, and you are a credit worldwide. 
Thank you very much.
    And then Shalanda Young, all of you know Shalanda Young. 
Shalanda Young is one of the great resources of this country. 
She was a great resource to our committee. She is now a great 
resource to the Biden administration, but much more than that, 
she is a great resource to the country. Thank you very much, 
Shalanda, and I hope Charlie is doing well.
    Thank you, Mr. Chairman. I yield back the time that I did 
not have.
    Mr. Womack. The magic eight words from Steny Hoyer, I yield 
back the balance of my time.
    I would like now to take this time to recognize the 
honorable chairwoman of the full committee, of the 
Appropriations Committee, Ms. Granger, for her opening remarks.
    The Chairwoman. Thank you very much. Thank you, Chairman, 
for yielding, and I would like to give an especially warm 
welcome to Shalanda Young, who I have known since she was the 
staff director of this committee, and Ms. Yellen, who is here 
and always speaks so well. So I thank you both for being here.
    Shalanda is a very tough negotiator, but she gets what she 
asks for, and she does it really well.
    We are here today to discuss the administration's fiscal 
year 2024 budget request and our Nation's economic outlook is 
an extremely important topic, and I want to thank the 
subcommittee chair, Steve Womack, for calling us all together.
    During the State of the Union address, President Biden said 
the economy is strong. However, I think the numbers tell a very 
different story. American people are struggling to make ends 
meet because of high inflation. Everyday items, such as gas and 
groceries, still cost too much.
    I look closer at the economic situation, when I do that, 
there is a cause for alarm. The Congressional Budget Office 
recently said if current policies continue, more than $20 
trillion will be added to our debt over the next 10 years.
    This leads me to believe that something has to change. We 
can't afford to continue down this path. Instead of reining in 
spending, the President's budget proposes that more money be 
spent on unnecessary programs.
    It is not clear to me how this plan would get the high 
prices and high debt we are currently experiencing under 
control.
    Well, I have concerns about the proposal. I think it is 
important to have an honest conversation about these issues so 
we can then begin to find common ground.
    Secretary Yellen and Director Young, we look forward to 
hearing from you. Thank you.
    Mr. Womack. We are also delighted to have the distinguished 
ranking member of the full Appropriations Committee, Ms. 
DeLauro, and you are welcome to give your opening remarks, 
ma'am.
    Ms. DeLauro. Thank you. Thank you very, very much, Mr. 
Chairman, and to you and the ranking member, thank you for 
hosting this important hearing.
    Delighted to welcome our guests today, Secretary Yellen and 
Director Young, both of whom I have had the honor, as many of 
you have, of working with over the years. And thank you, Madam 
Secretary, and with regard to Shalanda, I worked with her when 
I was ranking member on Labor-H, but when I got to be the chair 
of it, she only spent a very few weeks before she was just, you 
know, snatched away by the White House.
    But on both iterations, it is a delight and a pleasure to 
work with you, and thank you for the great job you both do.
    Like the Appropriations Committee, the Office of Management 
and Budget and the Department of Treasury touch every corner of 
our Nation, and impact people at every stage of their lives--
OMB, by preparing the budget request and then distributing 
funding bills after enactment, Treasury, by paying the Nation's 
bills and collecting our revenue.
    You directly impact the government programs and services 
that our communities rely on and help us to create jobs, lower 
cost for families, improve public safety, support small 
businesses, and strengthen economic opportunity.
    This committee knows this well because over the past 2 
years, with support from you and Democrats and Republicans, in 
both the House and the Senate, we passed and we enacted 
government funding bills that reversed decades of under 
investment while lowering drug and energy costs, creating jobs, 
supporting our police, making our Nation and our communities 
safer.
    To continue this critical work, President Biden's 2024 
budget allows for vital increases in investments in the 
programs and services that hardworking people, small 
businesses, communities in need rely on.
    And with an increase in taxes on big corporations, 
President Biden is proposing a plan that rewards work, not 
wealth. I know that this budget blueprint would not be possible 
without the tireless and dedicated work of the staff in your 
agencies that adapt and respond to the economic challenges of 
the day.
    Secretary Yellen, I am glad to see a request for increased 
funding to the Department of Treasury. I look forward to 
discussing how this will ensure that wealthy and large 
corporations pay their taxes, improve taxpayer experience, 
increase equities for community development, job creation, 
combat money laundering, helping to implement a new outbound 
investment review program, and support sanctions activity 
related to the war in Ukraine.
    I look forward to discussing the requests, and to reviewing 
the President's full request in the coming weeks.
    Secretary Yellen, I just have to say a thank you, and I 
will be--for all of the work, your work and the Department's 
work on the Child Tax Credit. We would not have been able to 
implement the Child Tax Credit without the Treasury and without 
the IRS.
    You distributed $93 billion to families of approximately 61 
million children around this country in 5 months; 4 million 
children lifted out of poverty, the largest decrease in child 
poverty in history and the largest tax cut for working families 
in generations.
    I have not seen a Federal program that has such a profound 
effect in such a short period of time and has worked in such a 
short period of time. I believe it is really an essential tool 
to fight rising costs and bring people and families to 
financial stability.
    I just have to mention that, as Mr. Hoyer mentioned, I am 
worried about the House Republicans' leadership, the reported 
proposal to cut 2024 discretionary spending back to the 2022 
levels.
    I have received responses to most of my letters to Cabinet 
Secretaries and to senior leaders, outlining the dangers posed 
to the American people if the cuts were enacted. The numbers 
are really horrifying.
    Cuts cause irreparable damage to communities, gut programs 
that every single American relies on. The proposals in my view 
are unrealistic, not sustainable, and put people at risk.
    So I look forward to discussing this with our witnesses 
today. During the weeks to come, I will continue to work with 
my colleagues in both Chambers, on both sides of the aisle, to 
pass final funding bills. We did, we passed final funding 
bills. Two years in a row we did that, with help from both 
sides of the aisle and with both Houses.
    So we can't--no Member, no Senator, no party, no chamber 
can do it on its own, so thank you for being witnesses here 
today, for your testimony. It could not be more timely. And 
again, I want to say thank you to Chairman Womack and to 
Ranking Member Hoyer and yield back. Thank you.
    Mr. Womack. Thank you, Ms. DeLauro.
    It is time now to hear our testimony today. Let me remind 
both witnesses that your prepared statements will be entered 
into the record, and you will each be given 5 minutes to 
summarize your opening statements for the benefit of the 
committee.
    And with that, Madam Secretary, I invite your testimony, 
and you are now recognized. Thank you very much for being here.

                 STATEMENT OF HON. JANET YELLEN

    Secretary Yellen. Thank you, Chairman Womack and Ranking 
Member Hoyer. Thank you for inviting me to join you today, and 
I would also like to thank you for your leadership of this 
subcommittee and support of the Treasury Department.
    Two years into this administration, Treasury continues to 
serve at the forefront of our Nation's response to some of its 
most urgent challenges.
    We have advanced our country's domestic and international 
economic priorities thanks to the resources that you have 
provided us. Our top priority is to protect the health of the 
U.S. economy.
    Two weeks ago, we learned of problems at two banks that 
could have had significant impacts on the broader banking 
system and the American economy. In the days that followed, 
Treasury worked with the Federal Reserve and the FDIC to take 
decisive and forceful actions to strengthen public confidence 
in the U.S. banking system.
    We took actions to protect all depositors at the two failed 
institutions and provide additional liquidity for banks. This 
was designed to mitigate risks to the banking system.
    It is important to be clear, shareholders and debt holders 
of the failed banks are not being protected by the government, 
and no losses from the resolution of these banks are being 
borne by the taxpayer.
    Deposit protection is provided by the Deposit Insurance 
Fund, which is funded by fees on insured banks.
    As I have said, we have used important tools to act quickly 
to prevent contagion, and they are tools we could use again. 
The strong actions we have taken ensure that Americans' 
deposits are safe. Certainly, we would be prepared to take 
additional actions if warranted.
    Beyond our work on the financial system, Treasury has also 
led our administration's broader efforts to recover and 
stabilize our economy from a once-in-a-century pandemic shock.
    Our Office of Recovery programs help drive the fastest and 
most inclusive labor market recovery in history by coordinating 
the effective implementation of the American Rescue Plan 
relief.
    Today the unemployment rate is near historic lows. Our 
economy has added over 12 million jobs since the start of 2021. 
Our administration is now building on that progress by 
effectively implementing long-term investments enacted by 
Congress.
    Internationally, Treasury continues to mount a swift, bold, 
and enduring response to Russia's illegal war against Ukraine. 
In my visit to Kyiv a month ago, Ukrainian officials told me 
firsthand about the critical impact of our work.
    As part of a broad coalition, we are responsibly disbursing 
vital economic assistance to Ukraine. Since last February, 
Treasury has also implemented over 2,500 Russian-related 
sanctions.
    We have degraded the Kremlin's ability to replace more than 
9,000 pieces of heavy military equipment that it has lost on 
the battlefield, and we have also stabilized global energy 
markets and cut into the Kremlin's revenues by implementing 
innovative caps on the price of Russian oil.
    The President's fiscal year 2024 budget requests the 
necessary resources to continue advancing our Nation's 
priorities. I will highlight three imperatives.
    First, the budget requests $14 billion in discretionary 
resources for the IRS. For too long, the IRS has been woefully 
underfunded. We are changing that. Our budget request provides 
steady state operational funding that will allow taxpayers to 
receive the best service possible. It will complement the one-
time, long-term investment in the IRS from the Inflation 
Reduction Act.
    We have already seen our investments pay off. For example, 
the IRS has answered a million more phone calls during this 
filing season than at this time last year, and now is the time 
to build on this progress.
    Second, our budget request shores up our capacity to 
respond to Russia's immoral war and advance other national 
security priorities. It includes $244 million for the Office of 
Terrorism and Financial Intelligence to continue to administer, 
enforce, and modernize our sanctions regime.
    It also allows the office to expand financial intelligence 
and sanctions-related economic analysis.
    Further, the budget requests $229 million for FinCEN to 
support its efforts to address deficiencies that illicit actors 
exploit to evade scrutiny.
    Third, this request enables us to continue our work to 
bolster the long-term foundations of the American economy.
    We are requesting $332 million for Treasury's departmental 
offices which craft and implement policies to advance our 
economic priorities and coordinate government-wide efforts to 
promote financial stability and growth.
    We are also asking for an increase for the Community 
Development Financial Institutions Fund which expands credit 
and financial support to historically underserved communities.
    I want to end by thanking the men and women of the Treasury 
Department for their service. Their dedication and commitment 
inspire me every day, and I could not be prouder to call them 
my colleagues. With that, I am happy to take your questions.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Womack. Thank you, Madam Secretary.
    Madam Director, Ms. Shalanda Young, the time is yours.

                  STATEMENT OF SHALANDA YOUNG

    Ms. Young. You will be happy to know I cut back. No need to 
repeat some of the things the Treasury Secretary touched on, 
but thank you for having me here today. I don't think you see 
many witnesses who are happy to come and do this, but when one 
returns home, it is a very happy day for me to get to come and 
do this, and I still pinch myself and really because I get to 
sit next to Secretary of the Treasury, Janet Yellen. So thank 
you for having me.
    President Biden came into this office with a very clear 
plan, and you have heard him talk about this--to grow not from 
the top down, but from the middle out and the bottom up. Over 
the past 2 years, in the face of significant challenges, that 
strategy has produced historic results for the American people.
    You heard the Secretary of the Treasury talk about the 
strong labor market, and the President's economic plan promotes 
workers, has fueled a manufacturing boom--close to 800,000 jobs 
in manufacturing added back--and is strengthening parts of the 
country that have long been left behind.
    And this President has done all of that while being 
fiscally responsible. During his first 2 years in office the 
deficit fell by more than $1.7 trillion, the largest decline in 
American history. And the Inflation Reduction Act will reduce 
the deficit by hundreds of billions more over the next decade.
    The President's 2024 budget details a blueprint to build on 
this progress and finish the job. It is built around four key 
values--because budgets are values--investing in the American 
people, lowering costs for families, protecting and 
strengthening Social Security and Medicare, and reducing the 
deficit.
    And it does all of this while ensuring that no one earning 
less than $400,000 per year will pay a penny more in new taxes.
    The budget more than fully pays for its investments, 
cutting deficits by nearly $3 trillion over the next decade by 
asking the wealthy and large corporations to begin to pay their 
fair share and cutting wasteful spending to special interests.
    The budget builds on the progress made over the last 2 
years and proposes additional policies to lower costs for 
working families, including for health insurance, prescription 
drugs, childcare, utilities, housing, college, energy, and 
more.
    When working families have a little bit more breathing 
room, they can help power our economy.
    The President believes that Social Security and Medicare 
are more than just programs. They are promises we have made to 
generations of America's seniors. The budget keeps that 
promise, protecting and strengthening these programs without 
cutting benefits for our seniors that have paid into these 
programs their entire working lives.
    It also invests in America and working families by 
bolstering manufacturing, making our communities safer, 
providing paid leave, supporting research in cancer, delivering 
for our veterans, cutting taxes for families with children, and 
more.
    These investments will pay dividends for decades to come, 
and in what will be a decisive decade for America and the 
world, this budget reflects the National Security Strategy by 
including robust investments in military readiness, our 
diplomatic and development tools, and honors the sacred 
commitment to our veterans.
    I would like to end by saying a few words about OMB's 
budget, and thank you to the members of this committee for 
supporting OMB in the 2023 omnibus. Those resources have 
allowed us to fill critical career staff vacancies, investing 
in our outstanding workforce, and restoring OMB to its historic 
staffing levels, overcoming what had been the second lowest 
staffing level in 15 years, so thank you.
    And it comes at a moment when OMB continues to take on 
significant new areas of responsibility. To just list a few of 
those, we are leading the President's Made in America agenda--
that office is based at OMB--implementing the Bipartisan 
Infrastructure Law, transforming Federal customer service 
delivery, and much more. So thank you for your support.
    Our fiscal year 2024 request will allow OMB to continue 
rebuilding and maintaining our career staff, which is necessary 
for us to advance OMB's mission. Thank you for the opportunity 
to appear before the committee today, and I look forward to 
your questions.
    [The information follows:]

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    Mr. Womack. Thank you, Director Young.
    Members are advised that you have a timer in front of you, 
and if that timer is working correctly, when it gets into the 
yellow, that means you have got a minute left. In the case of 
Steny Hoyer, we are going to start in the yellow.
    I am only kidding, Steny. He is my friend.
    Mr. Hoyer. Everybody else was hoping you were accurate.
    Mr. Womack. But we will start our Q&A now with our 
witnesses, and I will lead.
    First of all, stabilizing the national debt should be a top 
priority, not just this administration, but I think there is a 
clarion call around the country for us to do something about 
this unsustainable trajectory that we are on.
    It is my belief that the President's 2024 budget falls 
short of the deficit reduction needed to put our country on a 
sustainable path.
    Director Young, when you testified here last on the 2023 
budget, we discussed the debt and the need for solutions to 
address runaway spending and the national ledger.
    So I have a couple of questions. The first one is a pretty 
simple question. Do you believe that government spending 
contributes to inflation?
    Ms. Young. I have the Secretary of Treasury here who 
probably can speak to inflation better than I can, but I will 
point out, and it was mentioned by Mr. Hoyer, we see inflation 
in most economies across the world. So what tells us is that 
coming out of the pandemic, supply chain shortages have much 
more to do with inflationary pressures we see across the globe.
    Mr. Womack. Secretary Yellen.
    Secretary Yellen. So, I would agree with that. We have now 
had 7 months in which 12-month inflation has been declining. We 
are seeing reduced pressures on supply chains, dramatic decline 
in shipping costs, for example. That was an indicator of supply 
chain problems.
    The shifts in work--means of work during the pandemic gave 
rise to big increases in housing prices and rental prices, and 
that's--we can see in current indicators, that's now 
stabilizing or coming down, and that will eventually pass 
through into lower inflation.
    So it is the first job--it is first the job of the Federal 
Reserve to take actions to bring inflation down, but these 
factors are lowering it, and the administration has taken 
actions to bring down healthcare costs, to bring down energy 
prices, and to lower the costs that burden American families.
    Mr. Womack. So it is my opinion that Federal spending, 
excessive Federal--I mean, we've got to spend money to finance 
the role of government, but excessive Federal spending, in my 
opinion, does contribute to inflation.
    So the next question is, how much inflation should we 
endure, and at what point will it be necessary for us to roll 
back Federal spending?
    Irrespective of the fact that has been suggested by the 
ranker and by the two witnesses here today that the entire 
world is suffering from inflationary spirals, so it is natural 
that we--I don't necessarily subscribe to that notion that we 
have to be like the rest of the world. We have some unique 
opportunities to control it ourselves, to include the Federal 
budget.
    So at what point in time, Ms. Young, does it become 
necessary for us to reduce Federal spending?
    Ms. Young. So I will certainly answer that. You asked a 
couple of different ways, should we keep our pressure on to 
bring down inflation. My answer to that is absolutely. We share 
that goal. We should understand what causes it.
    As the Secretary has pointed out, the Fed has tools in 
which to deal with inflation with regards to raising rates. 
This administration has also taken action through the Inflation 
Reduction Act.
    But you are right, we share your concerns that Americans 
are paying too much for household goods. But I would also point 
out some of the investments you see here, like in childcare, 
and housing, and college, is exactly to help American families 
have a little more breathing room when they are trying to do 
their budgets.
    So we agree, and I understand there will be disagreements 
on how to deal with that and bring that in, but my concern if 
we go under the axe on some of these programs, I think about 
low-income heating assistance, what happens to those families 
if those Federal programs are pulled back so far that they hurt 
the very people I think all of us want to help?
    Mr. Womack. Thank you. I am out of time.
    I will recognize now the ranking member, Mr. Hoyer.
    Mr. Hoyer. I will try to stay in my time. First of all, let 
me observe, Mr. Chairman, nobody likes inflation. Inflation 
eats away particularly at those with fixed incomes. But.
    I have served here, as all of you know, a long time, and 
inflation under Ronald Reagan going into his third year, I 
believe, was 10.7, so--as a comparison. But we need to bring 
inflation down.
    But I want to add something about a broader thing.
    Madam Secretary, if we fail to increase the national debt 
to allow headroom so that America can pay its bills, what 
impact will that have on inflation?
    Secretary Yellen. You're talking about the debt ceiling?
    Mr. Hoyer. Yes.
    Secretary Yellen. I think it is utterly imperative that we 
raise the debt ceiling. That is about allowing the government 
to pay the bills it has already incurred. It has nothing to do 
with future spending.
    And a failure by the government to pay the bills it has 
incurred is something that would be economically and 
financially catastrophic. It would have a horrendous effect on 
financial markets where the United States is seen as an utterly 
secure country in which to invest.
    U.S. Treasury securities are seen as the safest bedrock of 
our global financial system. The U.S. dollar serves as the 
world's reserve currency.
    We would be undermining that, and even coming close to the 
debt ceiling without raising it, we saw in 2011 that led to a 
downgrade of the U.S. credit rating, and this will raise 
borrowing costs for American households and businesses for a 
good long time.
    If we fail to raise the debt ceiling and had to cut 
spending to match the inflow of revenues that we had, we would 
be certain to have a recession or worse. It would be a dramatic 
cut in spending, and the financial market consequences would be 
disastrous.
    I strongly urge Congress to raise the debt ceiling, and to 
fail to do so would lead to economic and financial chaos.
    Mr. Hoyer. Madam Secretary, would it be fair to say that 
every one of your predecessors, whether they be Republicans or 
Democrats, shared that view.
    Secretary Yellen. Absolutely.
    Mr. Hoyer. Would it be fair to say that the last time we 
raised that limit, it was a bipartisan vote in which the 
Democrats joined with Republicans to avoid that irresponsible 
action?
    Secretary Yellen. There have been many occasions, 90 or 
more occasions in which Democrats and Republicans have joined 
together to raise the debt ceiling which simply allows the 
Treasury Department to pay the bills the government has 
incurred.
    Mr. Hoyer. Madam Secretary, the last question I would ask 
of you is, we passed an $80 billion--or $87 billion increase in 
the Treasury--excuse me--in the IRS budget in the Inflation 
Reduction Act. That was to get them back to a position they had 
been over a decade ago, while the population of our country has 
substantially increased and the complexity of our tax system 
has increased.
    The proposition was made that we had done so, so that there 
would be armed guards at everybody's doorstep demanding that 
they pay their taxes.
    Everybody ought to pay their fair share but no more than 
their fair share. Would you comment on what we need to do with 
IRS? You mentioned it in your statement, but elaborate on what 
the consequences of cutting that increase to get them to a 
level where they can service the American people.
    Secretary Yellen. So the IRS needs both discretionary 
appropriations that are adequate to service a base level of 
spending on an ongoing basis, and that budget for ongoing 
expenditures has fallen by 20 percent in real terms just 
between 2011 and 2019.
    The staffing levels at the IRS are at 1970 levels in spite 
of the fact that our GDP has risen enormously since that time, 
and the need for staffing has increased. The consequence of 
that has been a tax gap that, over a decade, is estimated at 
$6- or $7 trillion.
    Mr. Hoyer. Those are taxes due but not paid?
    Secretary Yellen. Due but not paid. And the money that we 
spend on the IRS, both discretionary and mandatory, contributes 
to lowering the deficit because it enables more tax 
collections.
    And importantly it is also a question of service to the 
American people, of do they get the phone calls they make 
answered.
    I promised that with this additional funding, this tax 
season, the IRS response rate would be, in customer service, 
would reach 85 percent from a level under 20 percent last year. 
And so far, IRS is meeting that.
    So Americans can see, as they have contact with the IRS, 
that the IRS is going to be servicing their needs, and the 
money that was allocated for mandatory spending over the next 
decade will serve to modernize the IRS and transform it into a 
modern agency that will work with businesses, work with 
households, make it easy for them to pay their taxes and----
    Mr. Hoyer. Thank you, Madam Secretary. My time is long 
expired.
    Secretary Yellen. Thank you.
    Mr. Womack. Thank you.
    Mr. Amodei.
    Mr. Amodei. Thank you, Mr. Chairman, and I also want to say 
that I would, like, to take up something with the ranking 
member offline, but I was told this committee was a sexy 
committee, and so we will need to straighten that out before we 
go much further in this process.
    Mr. Hoyer. Well, I am new to it, maybe I will find out 
differently.
    Mr. Amodei. We would be happy to put you through the new 
charm school. Thank you, sir.
    Madam Secretary, can you tell me how much the IRS budget 
was increased in this last budget cycle?
    Secretary Yellen. Sir, you mean between 2022 and 2023?
    Mr. Amodei. Yes, ma'am.
    Secretary Yellen. Or with the request?
    Mr. Amodei. No. Between 2022 and 2023, the budget you are 
operating now, how does it compare to the budget that you were 
operating with the year before, if you know generally? And you 
can get back to me later, but----
    Secretary Yellen. There was $100 million decrease.
    Mr. Amodei. Okay. And so can you tell me, if you have an 
opinion, on what the IRS' reputation is amongst the country? 
Have you done any polling or anything like that to see what 
generally taxpayers think, middle, wealthy people, bottom--
bottom--I mean, are they kind of like the National Park 
Service? Are they a little different? What do you think their 
impression is?
    Secretary Yellen. Well, it is extremely negative because 
the IRS has been starved for resources, and so, there are 
insufficient people----
    Mr. Amodei. I don't mean to cut you off, but I have got 
even less time than the ranking member does. So you think it is 
resource-related that they have----
    Secretary Yellen. Absolutely.
    Mr. Amodei [continuing]. Have a bad reputation? It is 
nothing to do with historical culture in the agency or anything 
like that? Is that your testimony?
    Secretary Yellen. The agency has been resource-starved, and 
it's not been able to invest in the kind of technology that 
makes it----
    Mr. Amodei. Is it your testimony that you think it is 
because of resource starvation that the IRS has an alleged 
reputation amongst taxpayers in this country? Is that your 
testimony? Is it because they were starved of resources in 
order to have a better reputation?
    Secretary Yellen. People know that if you call the IRS, the 
phone isn't answered, and you--it's difficult to do business 
with the IRS, and that reflects a shortage of resources.
    Mr. Amodei. I will accept that as your answer.
    Can you tell me the specific energy jurisdiction that is 
housed in the Department of Treasury under the United States 
Code?
    Secretary Yellen. I am sorry?
    Mr. Amodei. Can you tell me the specific energy 
jurisdiction that is housed in the Department of Treasury under 
the United States Code?
    Secretary Yellen. Energy jurisdiction?
    Mr. Amodei. Yes, ma'am.
    Secretary Yellen. I am not sure I understand what that 
means.
    Mr. Amodei. Okay. Well, then let's try this one. Can you 
tell me what the election jurisdiction is of the Department of 
Treasury as reflected in the United States Code?
    And I am just going off the statements that were made 
earlier, ma'am, about, you know, I mean, they ranged--they were 
wide-ranging, as well they could. I am just looking for 
specific jurisdiction in existing statute for energy policy 
from the Department of Treasury, from elections policy from the 
Department of Treasury?
    Secretary Yellen. Well, with respect to energy policy, for 
example, our Office of Tax Policy has responsibility for 
writing the regulations to implement all of the clean energy 
tax credits that are part of the Inflation Reduction Act and 
earlier----
    Mr. Amodei. So that is--do you collaborate with anybody, 
like the Department of Energy, or is that all Treasury's 
bailiwick, when you are writing those regulations?
    Secretary Yellen. We certainly collaborate with the 
Department of Energy and other agencies that have expertise in 
this area.
    Mr. Amodei. Okay. And I was listening and I understand how 
important programs like childcare or low-income energy 
assistance, those are all good things. Is there any analysis 
that takes place? Because unfortunately a lot of this is 
multitasking, and some of it, quite frankly, is value 
judgments.
    But when you talk about, we have got to continue the 
childcare tax credit, and we have got to continue low ener--is 
there any analysis that takes place in terms of trying to find 
a sweet spot between what that costs and what is unfunded in 
the context of the debt?
    Ms. Young. It is okay if I take it?
    Mr. Amodei. Yes, ma'am.
    Ms. Young. This is where I say, we have disagreements, but 
this President believes it is incredibly important, if we put 
proposals forward, like the Child Tax Credit, we should pay for 
those.
    Mr. Amodei. And I get that. I am just saying, we don't have 
the luxury, as the Budget Committee--not the Budget Committee 
formal, but the funding committee, to say, we are not going to 
make this competitive in any way, shape, or form with other 
Federal spending whether it be deficit spending or paid for by 
some revenue stream.
    So am I correct that the testimony is, we don't evaluate 
what that does in the context of the overall appropriations 
bill, those things are untouchable in terms of a budget 
request?
    Ms. Young. So I spent 3\1/2\ hours with your colleagues at 
House budget who you know look at both sides of the ledger, 
discretionary and mandatory revenues----
    Mr. Amodei. Yeah, but Shalanda, that is a B committee.
    Ms. Young. Don't make me do that. I really like Chairman 
Arrington. Don't do that to me.
    Mr. Amodei. I withdraw the comment.
    Ms. Young. But that is the committee, and as the former 
chairman of the Budget Committee sits there, we know 
jurisdiction in Congresses are complicated, but what Budget 
does bring to the table is, we look at spending, revenue, all 
those things in one place, and see how our fiscal house is 
doing.
    Mr. Amodei. Thank you, and because I do not want to follow 
in the esteemed ranking member of the committee's footsteps, I 
will yield back, even though I have no time to yield back.
    Mr. Womack. Thank you, Mr. Amodei.
    I was about to have his words taken down about this comment 
about Budget Committee. You know, that was unacceptable. Who is 
next?
    Ms. DeLauro. Me.
    Mr. Womack. Ms. DeLauro, you are recognized.
    Ms. DeLauro. Thank you very much, Mr. Chairman. I will just 
make one quick point. Mr. Amodei's point, there was never 
ending connection made in the past about what contributes to 
the deficit in terms of $1.7 trillion and a tax cut to the 
richest one-tenth of 1 percent of the people in this country 
and to the biggest corporations who pay no tax.
    With that, Director Young, give us an idea of the real 
impacts of the cuts that are being proposed, with regard to 
using 2022 numbers, to the 2024 budget. Describe the human 
consequences--children, families, seniors, veterans, and 
millions of people across the country.
    Ms. Young. Ms. DeLauro, you asked the administration, you 
sent letters. We responded to those, and I will highlight a few 
things we let you know in letter form in response.
    We are concerned with budget cuts that would take us back, 
that we would lose 11,000 FBI personnel, that we would lose 
400,000 local law enforcement through cutting back on State and 
local grants at the Department of Justice----
    Ms. DeLauro. So we defund the police. Go ahead.
    Ms. Young. We are concerned that 11,000 fewer rail safety 
inspections would happen, 30,000 fewer miles of track 
inspected, shut down of 125 air traffic control towers, TSA 
wait times go up because fewer people, Pell grants for 80,000 
students would be eliminated and reducing the maximum award by 
$1,000.
    Ms. DeLauro. It goes go on and on and on.
    Ms. Young. So there are a lot of examples, and we 
highlighted many of those in response to your letter.
    Ms. DeLauro. Thank you, and I thank you for helping me to 
get those response.
    Have you heard, either Director Young or Secretary Young 
(sic), my colleagues on the other side of the aisle made any 
similar requests for information about the impact of the cuts 
that they intend to try to make?
    Ms. Young. Well, I certainly don't monitor everyone who 
they call. If you are asking, have I entered into this 
dialogue, not specifically about these cuts.
    Ms. DeLauro. You haven't heard from the other side in terms 
of the implication of the cuts.
    Let me move to Director Yellen, because I want to try to 
keep to the amount of time I have, Mr. Chair.
    I appreciate your partnership on the outbound investment 
review. Pleased that you, Commerce, et cetera, requested $60 
million. This is a mechanism, through executive order, that 
review and look at the outflow of U.S. capital and what effect 
that would have on our supply chains, our economy, our economy 
overall.
    And so it is my understanding that the executive order will 
look at artificial intelligence, quantum computing, and 
semiconductors.
    As you know, I want to make this stronger. I have tried to 
look at, that we ought to include in this large-capacity 
batteries, critical minerals, active pharmaceutical 
ingredients.
    And that is why I have introduced the National Critical 
Capabilities Defense Act, which I might add is bipartisan, both 
in the House and in the Senate.
    How will the potential executive order on outbound 
investment include or add sectors outside of those that will be 
originally outlined by the administration? What is your plan to 
expand and modify the executive order going forward?
    Secretary Yellen. So we are working on this order and 
trying to determine exactly what it should cover. We have been 
focused on the most sensitive technologies and sectors that are 
critical to our national security.
    We think it is important to work with other countries to 
make these restrictions effective, and these are areas where I 
think we have the greatest chance of working collaboratively 
with our partners.
    But we are certainly open to engaging with you to discuss 
what the right coverage is. Would look forward to conversations 
there, I would say, around supply chain issues.
    There are many initiatives underway to strengthen our 
supply chains. That is a very important focus of the Inflation 
Reduction Act when it comes to batteries, clean energy, and 
reducing our dependence on China, for example, where many of 
the critical minerals--so we are taking a range of actions on 
those critical issues, in any event.
    Ms. DeLauro. I would just add, with regard to active 
pharmaceutical ingredients, let me just put it in real terms. 
We had a pandemic where we found that the active pharmaceutical 
ingredient in drugs efforts were not manufactured in the U.S. 
but manufactured in China or in India. We need to bring that 
back.
    Secretary Yellen. I think supply chain issues are 
critically important.
    Ms. DeLauro. I thank you both very, very much for your 
work.
    Thank you, Mr. Chairman.
    Mr. Womack. Mr. Joyce.
    Mr. Joyce. Thank you, Mr. Chairman.
    Secretary Yellen, I am sure you know earlier this year the 
European Union's Corporate Sustainability Reporting Directive 
went into effect. This EU law has unprecedented scope and will 
impose ESG-related requirements on many U.S. businesses, 
requiring that they gather detailed information from their 
suppliers, which include American small businesses. These rules 
go farther than even the most aggressive proposals by our own 
regulators.
    As you know, SEC Chairman Gensler's proposal would mandate 
disclosure of Scope 3 greenhouse gas emissions for American 
companies. This proposal has been widely criticized for the 
burden that it imposes on businesses of all sizes.
    And as bad as the SEC's proposal is, the EU has now imposed 
a standard that is much more burdensome in which many American 
businesses are already preparing to comply with.
    I am sure you can understand why this proposal is troubling 
to Members of Congress when foreign governments mandate--put 
their mandates on U.S. businesses.
    On this matter, what is the administration doing to protect 
U.S. businesses from burdensome foreign regulation and prevent 
efforts which undermine our sovereignty?
    Secretary Yellen. Well, different countries are moving at 
different speeds and in different ways to address climate 
change, and we are encountering conflicts with other countries 
because of differences in our approaches.
    I think as a fundamental, we agree with the European Union 
that disclosure of climate-related risks is important so that 
investors are able to make good choices about where they invest 
and understand the risks in different companies.
    So as a general matter, we believe, as the Europeans do, in 
disclosure, which is behind Chair Gensler's proposal. I know he 
has received many comments on.
    But we are engaging with the European Commission to 
understand the implications of their proposals. We want to 
avoid unnecessary market fragmentation which different 
approaches can produce.
    We want to maintain a level playing field for U.S. 
companies and make sure that they are not burdened with 
incompatible regulatory requirements around the world. So this 
is an important issue that we are focused on addressing.
    Mr. Joyce. All right. I accept that.
    Secretary, also this administration and you just claimed 
prior, that billions of dollars in additional funding, provided 
to the IRS in 2023 for increased enforcement, will somehow not 
be used to target individuals making less than $400,000 per 
year.
    I got to tell you, I am a little skeptical of that claim, 
and, you know, which specific mechanisms has your Department 
and the IRS put into place to make sure that this money is not 
used on burdensome audits for ordinary Americans?
    Secretary Yellen. I have issued a directive to the IRS that 
clearly prohibits them from using these funds to target 
individuals or small businesses making under $400,000.
    And let's be clear, the reason--the focus of this, there 
are really two focuses of this money that has been allocated. 
One is to greatly improve customer service, both for 
individuals and for businesses, modernizing the IRS.
    And the second is to address the tax gap, and the tax gap 
isn't related to individuals or small businesses making under 
$400,000 a year. It is wealthy, very high income individuals, 
complex partnerships, and corporations that are, by and large, 
underreporting and underpaying their tax.
    And the money will go to hiring trained, experienced 
accountants and techs, professionals who are able to do the 
complex audits that are necessary to recover those funds.
    So there would be no motivation to want to target taxpayers 
making under $400,000, and I have directed the IRS that they 
may not do so.
    Mr. Joyce. For 10 years now I have been on this committee, 
and money has been given year after year to automate the 
processes at the IRS. And now you are saying that they need 
more manpower versus automation?
    Secretary Yellen. They need manpower and automation. And 
there will be, for example, of the resources in the budget for 
2024, the lion's share will go toward technology and 
operations, some toward net increases and enforcement.
    That will take time, but there will be massive improvements 
over time in technology, and we will end up with a modern 
agency that people will have much better experience and 
companies interacting with.
    Mr. Joyce. I yield back.
    Mr. Womack. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman, and thanks for holding 
this hearing. I appreciate it. And thanks to our witnesses. I 
would like to try to get to two areas. So let me start first 
kind of just talking about the economy, worried about the debt 
ceiling that we are facing. So we just talked a little bit 
about interest rates and Moody's Analytics. They had economists 
who predicted that we would have global market panic in the 
scale of the 2008 financial crisis that would result in more 
than 7 million job loss, and unemployment rate of over 8 
percent, elimination of 10 trillion in household wealth and 
decline in real GDP of more than 4 percent. So that means 
people are paying more for small business loans, for cars, for 
homes.
    The second part that I would like to ask Director Young 
specifically about that a debt limit breach could disrupt 
expected payments to the military, veterans, and seniors, 
specifically, 65 million Americans who receive Social Security 
and Medicare benefits, and 18 million veterans who could lose 
access to their benefits, that is 330,000 people in my State. 
Could you just briefly address that aspect of the debt ceiling?
    Ms. Young. Many of us have experienced shutdowns where 
people don't get paid until the government reopens, and we--
this is not that. You have heard the Secretary of Treasury lay 
out the catastrophic economic fallout from a default and what 
it means if we can get close to flirting with. But it also 
means those people who have payments, like our military, like 
our veterans, like our seniors who are on Social Security and 
Medicare. We will know the revenues we have as Treasury 
processes those. So we cannot guarantee what gets paid. And it 
will be a very chaotic situation where those who are allowing 
the government for salaries and services, that is what default 
is. That means we cannot guarantee that they will receive their 
paychecks or the services in which many of them have paid into 
their entire lives.
    Mr. Pocan. Thank you. I just think back home people don't 
talk about raising the debt limit. That is very Washington-
speak. But they talk about whether or not they get their Social 
Security check, their veterans benefit, whether interest rates 
are going to rise when they buy something. And I think those 
are the real ramifications that we should be talking about more 
as we do this.
    Second area--and this is I will admit is a little bit out 
of left field--but I have a real concern where we are at right 
now with the fed and raising of interest rates. And, Secretary 
Yellen, this is specifically for you, I respect your opinion so 
much. I know you are not in charge of the Fed, but I do respect 
your opinion.
    So the normal business, the normal model, I guess, is if 
inflation is high, the Fed has kind of a singular blunt tool of 
raising interest rates until people lose jobs. I guess that is 
best way of putting it in a blunt way. But I don't feel that 
this is a normal time that interest rates go up and that works. 
I feel like--and I am a small business owner for 35 years. And 
I could tell you what I am seeing right now.
    First of all, our offices--I am guessing everyone has 
unprecedented requests for passports right now, because people 
after three years of not traveling want to get out and go 
somewhere. And that is not going to be stopping. And in our 
business, we deal business-to-business trade association 
nonprofit, that is not stopping. They haven't had some of the 
events for the last 3 years. They are doing it no matter what 
happens. So demand isn't necessarily going down at the rate you 
would expect. Yet, we are affecting the housing market. We are 
affecting banks right now. We are having a lot of negative 
effects by continuing to raise the interest rates, but we are 
not--it is not normal model. I just don't feel like it from 
everything I am seeing and experiencing from being on the 
planet for 58 years.
    So my question is, in your opinion, are we doing the right 
effort--corporate profits are way high. There is a lot of 
things that are askew as you look at the model that is 
happening. I feel like, ultimately, this could have some really 
negative recession-type ramifications and other ramifications, 
and I am worried about continuing to raise interest rates.
    Secretary Yellen. So first let me say, I don't want to 
comment on the Fed's interest rate decisions. I respect their 
independence. While I was over there myself and had to make 
these decisions, I wear a different hat now and don't want to 
comment on theirs. But I have long said, I do believe there is 
a path by which we can maintain a strong labor market by--and 
also bring down inflation. And I believe that is the path that 
the Fed would ideally like to follow. The labor market at the 
moment is extremely tight. There are roughly two vacancies for 
every person looking for a job. And that pressure is--it is 
certainly not the only factor involved in inflation, but it is 
contributing to inflation, particularly in services. So while 
some inflation is coming down because of supply chain or 
reasons and impact of Russia's war on Ukraine, the Fed is 
concerned that they need to relieve some of that pressure.
    That doesn't mean we have to have a recession. I would 
admit that it is a risk whenever monetary policy is being 
tightened. But I believe that there was a path that will bring 
it down without really damaging the labor market. And that is 
what I hope we will see.
    Mr. Pocan. I appreciate it. I yield back, Mr. Chairman.
    Mr. Womack. Thank you. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman. Secretary Yellen, 
Director Young, thanks for being here with us here today.
    Secretary Yellen, on February 17, over a month ago, I sent 
you a letter and asked you in your capacity as chair of the 
Committee on Foreign Investment in the U.S., CFIUS, to provide 
an update regarding large foreign investments in Michigan. Are 
you familiar with that letter?
    Secretary Yellen. Yes, I am familiar with the letter.
    Mr. Moolenaar. To date, I have not received a response. And 
my constituencies wanted to know that you are reviewing 
investments that could pose a possible risk to our country and 
are doing it in a timely manner. When can I expect a response 
to my letter regarding a CFIUS review?
    Secretary Yellen. I apologize that we haven't responded and 
promise that we will do so quickly. But I do want you to know 
that in the work we do in sharing CFIUS, that we are very 
focused on evaluating foreign investments in the United States 
that can impose national security risks. I can't speak to 
whether particular transactions are or are not being reviewed 
by CFIUS. That is subject to strict confidentiality. But the 
issues that you raise in your letter are ones that CFIUS takes 
very seriously and is attentive to.
    Mr. Moolenaar. Okay. So I understand you don't want to 
comment on specific situations. But can you comment on what, in 
your view, would constitute a risk? You know, if a China-based 
company has CCP members on their boards, do you believe that 
company with CCP members on its board constitutes a risk in the 
United States if it is located here?
    Secretary Yellen. I don't want to make a blanket assertion 
about that. It certainly could. But what CFIUS does is a 
thorough and detailed analysis of whether or not the investment 
is in areas or involves technologies or things that would 
involve a national security risk.
    Mr. Moolenaar. Okay. Would a company investing in the 
United States, if it has in its articles of association the 
requirement for the company to set up a CCP organization to 
carry out party activities in accordance with the Constitution 
of the CCP, would you see that as a risk to the United States?
    Secretary Yellen. Well, it certainly could be a risk. I 
think I would need to know a little bit more about what the 
activity is and what the investment is, but certainly, that is 
something that could certainly constitute.
    Mr. Moolenaar. You know, if a company was requiring 
Americans to adhere to the principles of a hostile foreign 
government, would that constitute a risk?
    Secretary Yellen. Well, I think we would need to know 
exactly what the business is of the company and how it impacts 
national security, because the focus of CFIUS is really on 
national security. So we would have to take these concerns to 
national security.
    Mr. Moolenaar. And if a foreign company requires its 
subsidiaries to promote influence and intelligence operations 
by foreign governments within the U.S., would that constitute a 
risk?
    Secretary Yellen. Well, that certainly seems to go directly 
to national security.
    Mr. Moolenaar. You know, as the committee with 
responsibility to oversight, what you are telling me is this is 
a very important matter.
    Secretary Yellen. Absolutely.
    Mr. Moolenaar. But we don't have the information on how 
many CFIUS reviews are being conducted, which, you know, 
priority projects are being looked at. When communities or 
States are looking at different projects, how do they know how 
to make their decision? You had said earlier how transparency 
is very important in making decisions, and I agree with that. 
What guidelines do you have for communication of this?
    Secretary Yellen. I can have my staff get back to you and 
give you more detail on this. And they may be able to offer 
briefings without going into details about----
    Mr. Moolenaar. Sure.
    Secretary Yellen [continuing]. Specifics that could be 
helpful.
    Mr. Moolenaar. And I think it is simply because you know, 
and I noticed and I appreciated your comments about Russia, the 
situation in Ukraine. You mentioned China recently. Obviously, 
there is a--you know, new Select Committee on China. I happen 
to be part of that, as others do. And, you know, in looking at 
that, we want to make sure we consider the threats posed by the 
CCP. And obviously, they are doing a lot of investments in the 
United States. And you are on point for this with the CFIUS 
reviews?
    Secretary Yellen. These investments get very detailed 
analysis and serious review. And it is a very thorough process 
and taken very seriously to try to identify national security 
risks. I would ask my staff to give you more details on this.
    Mr. Moolenaar. Thank you.
    Secretary Yellen. But----
    Mr. Moolenaar. Thank you, Madam Secretary. Mr. Chairman.
    Mr. Womack. Mr. Bishop.
    Mr. Bishop. Thank you very much. Let me welcome our two 
witnesses, Secretary Yellen, Director Young. The President's 
budget invests in America are lowering costs, strengthening 
Social Security, Medicare, and attacking the deficit. On the 
other hand, the proposed unprecedented cuts in fiscal year 2024 
to fiscal year 2022 levels that the Republicans have offered, 
seems to, or will have a--seems to have a tremendous effect on 
education, public safety, research, and nutrition. Would this 
have a real damaging effect on our families, communities, and 
economy and competitiveness?
    The Treasury provides some critical services that American 
people rely on every day: payments, tax refunds, taxpayer 
assistance. It appears to me that if we go back to 2022 levels, 
it would be devastating to the American people. Treasury is 
responsible for revenue collection, financial management, 
borrowing, and debt collection for the entire government, and 
promoting international economic stability.
    You protect the integrity of our financial system, and you 
combat global financial crime and corruption. And, of course, 
it would appear that going back to 2022 levels would certainly 
impair the ability to monitor risks to ensure an effective and 
unified approach to promoting financial stability as we are 
faced with right now. Our national security would appear to be 
impacted. And if either of you can comment on this.
    The Office of Terrorism and Financial Intelligence would be 
jeopardized--our national security would be jeopardized because 
you wouldn't be able to enforce sanctions, including the 
sanctions targeting Russia and the--when we are supporting 
Ukraine, this would appear to send the wrong message to Mr. 
Putin. So it seems like your ability to carry out your 
functions would be tremendously limited. And, of course, 
looking here domestically, you have the responsibility of the 
community of government financial institutions grants and 
assistance. And, of course, if you have to cut that back, if 
means that many of America's most economically disadvantaged 
communities would be hurt because there would be fewer resource 
for small business living, affordable housing, and consumer 
products and services to help with our economic development and 
job growth. It just seems as if all of this is a big, big 
problem and a step backwards.
    Can the two of you comment on what that really means for 
the American people; what the Republicans are trying to do by 
going back from the proposed increases that the President has 
offered to the 2022 levels?
    Secretary Yellen. Well, you have given an excellent list of 
ways in which Treasury programs would be impacted. The Internal 
Revenue Service, you would see, is we now are operating with an 
85 percent level of customer service. It would revert to the 
abysmal levels we had before funding was increased. And the 
money that is allocated to the Inflation Reduction Act for 
modernization of the agency would have to go for the basics of 
processing returns. As you said, cuts for the Office of 
Terrorism and Financial Intelligence would compromise our 
ability to put in place sanctions. Cuts to FINCEN would mean we 
are less able to combat corruption and money laundering 
globally; cuts to the CDFI fund would mean we are less able to 
support disadvantaged communities and financing there. And 
really, these are all important ways in which Treasury would be 
effective.
    Mr. Bishop. Would you say that to do that would really be 
to fly in the face of common sense and the protection of the 
American people?
    Secretary Yellen. Yes, absolutely. And with respect to the 
IRS, it would be deficit increasing, not deficit reducing, 
because the money that we provide to the IRS has a great impact 
on its ability to collect taxes. And so it would be a false 
economy.
    Mr. Bishop. I think my time has expired.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. Thank you, Mr. Chairman. Good afternoon, 
ladies. Secretary Yellen, thank you for coming before our 
committee today. It is nice to meet you in person and get the 
opportunity to ask you some questions. And, Shalanda, Madam 
Director, it is great to talk to you. It was great to have a 
conversation yesterday as well. I really appreciate your time 
in answering some of my questions yesterday before the 
committee hearing.
    So what I want to start with, Secretary Yellen, is I want 
to follow up a little bit on your comments that my colleague 
was kind of asking about CFIUS, specific to national security. 
Obviously, with Treasury's role in making sure we are taking a 
better look at transactions and foreign investments. 
Specifically, the foreign investments by entities like the 
Chinese Communist Party, I am also on the Select Committee on 
Competition with China. So we are working to, of course, combat 
their efforts to gain control over critical areas of our 
society. It has never been more vital in my mind to conduct 
that critical oversight of our foreign investments that do risk 
our national security.
    And so, a hot topic on the Hill today. I want to touch on 
TikTok. Because for the past several years, TikTok has been 
negotiating a national security agreement contract with CFIUS 
in response to the criticisms that the app is putting American 
data at risk. But earlier today, we learned that TikTok had 
published a video. There was a video on of a date of an Energy 
and Commerce hearing before it was publicly noticed. And this 
video--I have a clip here--but it was inciting violence against 
Members. And I seek unanimous consent to enter this reporting 
into the record, if I may, sir?
    Mr. Womack. Any objection? Without objection.
    [The information follows:]

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Hinson. But I see this as directly threatening, and 
this is something that this platform enabled by the Chinese 
Communist Party has enabled. So believe the time to act frankly 
was yesterday here. And, additionally, the Treasury Department 
issued a statement just today that CFIUS will not clear any 
transaction unless it determines that there are no unresolved 
national security concerns.
    So will you commit to us today that if CFIUS is aware of 
any, any outstanding unresolved national security concerns, 
that a TikTok transaction will not be cleared?
    Secretary Yellen. So I regret that I cannot talk about an 
individual transaction, even to indicate whether or not CFIUS 
is looking at it. There are strict confidentiality obligations. 
But on the more general point, absolutely, CFIUS looks very 
carefully at these transactions, and will not clear a 
transaction if there are national security concerns. And when 
it comes to data, we are seeing an increasing number of cases 
that do present risks around this issue of the type that have 
been mentioned in connection with TikTok.
    Mrs. Hinson. Well, obviously, time is of the essence here, 
right? We talked about this post that lived online for over 40 
days. It has taken years to get to a place where we would have 
a decision. So why is it taking so long? We are at 3 years now.
    Secretary Yellen. There is ongoing litigation over TikTok 
that is not yet resolved.
    Mrs. Hinson. So if that litigation is playing out, and if 
you have legitimate concerns about national security, is there 
any tool that you can use to put a stop to this? Is there any 
tool that you have in your toolbox?
    Secretary Yellen. I mean, yes, there are tools that are in 
the toolbox.
    Mrs. Hinson. What would you use then? I mean, while this 
litigation is ongoing, what mechanisms could you turn to to 
help protect the American people in this case against the 
Communists--Chinese Communist Party-enabled platform?
    Secretary Yellen. So I am sorry, I really can't talk about 
the details of this case. But there can be----
    Mrs. Hinson. Can you talk about it in generalities in terms 
of the tools that you might use. Maybe let's take TikTok's name 
off of it. If it is, in general, a threatening entity, what 
would be the tools that you would use?
    Secretary Yellen. Requirements that the business of the 
company be structured in the United States in a way that 
protects national security.
    Mrs. Hinson. Okay. While we are on the subject of national 
security, I will move on, but what is the Department doing to 
make sure that its core services are protected from cyber 
attacks. Cyber hygiene is obviously a very crucial part of 
protecting Americans' information. What is the agency doing to 
make sure that you are hardened?
    Secretary Yellen. So we are greatly enhancing our 
cybersecurity investments. We have requested increases to be 
able to do that, especially given the role that the Department 
plays in imposing sanctions. We are a target of a serious 
number of cyber attacks, and we are investing very heavily in 
cybersecurity to meet very high standards.
    Mrs. Hinson. All right. Thank you, Madam Secretary. I yield 
back.
    Mr. Womack. Mr. Cartwright.
    Mr. Cartwright. Chairman Womack, Ranking Member Hoyer, 
thank you for holding this very important hearing. And, 
Secretary Yellen, thank you for coming, and Director Young, you 
as well.
    Director Young, my question is for you. It was January 1, 
2006, that Medicare part D came into play. And that is when it 
started to be used in this country. And it meant that the 
pharmaceuticals were provided to seniors on Medicare. But it 
came with a gimmick. And the gimmick was that Medicare was not 
able to use its purchasing power. Medicare was not able to talk 
price. Medicare was not able to negotiate with drug companies 
as it bought its supply for the seniors who depended on it. You 
tell people that, Well, wait a minute, why couldn't Medicare 
negotiate with drug companies? And the answer is it was part of 
American law. We made that part of American law here before 
2006. And people have a hard time believing that that happened. 
But with the Inflation Reduction Act, Congress has begun to 
break that logjam. And, certainly, it is a limited formulary. 
Formulary being the $50 word, which means a list of 
medications. It is a limited formulary to start with. But 
Medicare has now been authorized to negotiate prices for some 
of these drugs. And we have seen the effects. We have seen the 
effect of insulin prices calming, crashing down. And all of 
those people who depended on insulin, you know that they 
appreciate that.
    My question for you, Director Young, is what next steps do 
you think are necessary? And what more can we do to lower drug 
prices for seniors in this country?
    Ms. Young. You have laid out what the Inflation Reduction 
Act does. I don't need to repeat that. But you are absolutely 
right, that law began to change the government's ability to 
negotiate drug prices. I don't need to tell all of you what 
this country pays for drugs. It is vastly higher than other 
economies around the world. You just have to ask yourself why 
that is. In this budget, we go further in the Inflation 
Reduction Act where more drugs will be brought into 
negotiation. The timeframe will be brought forward. It not only 
reduces money for seniors; the government would save $160 
billion by doing more drugs in negotiation and bringing that 
forward.
    In addition, 40 more billion dollars would be saved for 
taxpayers by instituting the inflation rebate. Meaning, drug 
company, if you are raising your drug more than inflation, you 
have to pay the American taxpayer back. And it is really using 
the purchasing power of Medicare to do two things: Bring down 
costs for seniors and taxpayers, and extend the life of 
Medicare. That is part of our proposal to help the insolvency 
issue for Medicare.
    Mr. Cartwright. Thank you for that. Of course, we had a 
State of the Union address not too long ago, and the President 
could not have made it clearer his commitment to ensuring the 
benefits provided by Social Security and Medicare. There have 
been voices, not everyone's voice, but there have been voices 
that are calling for cuts to those programs, for those 
insurance programs.
    And my question for you is how can Congress work to reject 
any efforts to cut Medicare and Social Security benefits that 
people paid into their whole work lives and that people depend 
on in their seniority and in times of disability?
    Ms. Young. Look, I work for the President of the United 
States who has made clear that he will oppose any reductions to 
benefits in both the Social Security and Medicare programs. He 
believes, as I mention in my opening statements, these aren't 
just programs, they are promises to generations of America's 
seniors, like my 94\1/2\-year-old grandmother, all of the money 
they have put into the system should be available to them, and 
their government promised that to them, and this President will 
keep that promise.
    Mr. Cartwright. Well, I thank you both for appearing this 
afternoon. And I yield back, Mr. Chairman.
    Mr. Womack. Mr. Carl.
    Mr. Carl. Oh, thank you, Secretary Yellen and Director 
Young. Thank you for being here and being able to speak in 
front of the committee. I would like to make a quick statement 
here, though. I have not heard one single member in the 
Republican Party say anything about cutting Medicare and social 
benefits here. So I think that is a falsehood that is being 
brought up and spun for political purposes.
    With that said, Secretary, in regards to the bailout of the 
Silicon Valley Bank and Signature Bank, I want to ask you a 
couple of questions. I talked to local bankers. I try to stay 
in tune with them. And they tell me that the problem of this 
bank being upside down, for lack of better words, should have 
been caught by the board review on the call report 12/31 was 
it? Was it flagged?
    Secretary Yellen. Well, I am not responsible for 
supervision of these banks. So that is a question that should 
be addressed to the appropriate banking----
    Mr. Carl. But how about the government overseeing of these 
committees, did anyone catch it, did anyone review it.
    Secretary Yellen. Well, this is not the job of Treasury to 
be overseeing the regulatory agencies, either the Federal 
Reserve or the FDIC.
    Mr. Carl. Okay. All right.
    Secretary Yellen. They have supervisory authority here.
    Mr. Carl. Okay. So I watched quite a few videos on you last 
night and read a lot. So very impressive, thank you. I watched 
your question from Senator Lankford from last week, I believe 
it was. And, again, it seems the administration is putting 
itself in a position to depict the winners and the losers in 
our business community, and that bothers me. I have been in 
business for myself for close to 40 years, various businesses. 
And the biggest problem I always had, especially in the 
healthcare field, was the government itself getting in the way. 
So I am always very sensitive to that.
    I developed my opinion about this from a statement that you 
made, and it said that the board would have to have a super 
majority vote to cover 100 percent of the investors in other 
banks in the future, like you are doing in the Silicon Valley 
Bank.
    Secretary Yellen. Well, let me be clear in what I said.
    Mr. Carl. Okay.
    Secretary Yellen. In the case of the two banks that were 
put into resolution, Silicon Valley Bank and Signature Bank, we 
invoked a so-called systemic risk exception. And we did that 
because we determined--and when I say ``we,'' I mean super 
majorities of the FDIC--actually the vote was unanimous--the 
FDIC Board, the Federal Reserve Board, and myself after 
consulting with the President, we felt that the failure to 
protect uninsured depositors would create contagion, and that 
there was a risk of runs on many banks that would not only 
undermine the security of the depositors, but also compromise 
the ability of the American banking system to meet the credit 
needs of our country, of households, and businesses. So we took 
this step. The Federal Reserve also took a step to create a 
facility that would improve access to liquidity for banks that 
are faced with deposit runs. I believe our tools worked. And 
what I have said is that these are tools we could use again for 
an institution of any size if we judge that its failure would 
pose contagion that----
    Mr. Carl. With all due respect, I am running out of time. 
And I have got six more questions here I know I won't get to, 
so I apologize for this. But, you know, my question is simple 
with this short time I have got left. I am glad to see that you 
brought the community banks to the small banks into the 
conversation, because they were really feeling like they were 
being fed to the wolves, for lack of better terms, and the big 
banks were taking over the conversation. So the small bank--and 
I appreciate you doing that. And that was something I pulled 
from that conversation last night.
    But let me ask you a question. If a small rural community 
bank in Alabama that invests into the rich coal mine 
communities and/or our oil drilling in the Gulf of Mexico 
investments or doesn't adhere to the policies of the ESG, the 
political left-wing policies that are pushed on, do you think 
they would get 100 percent bailout, too?
    Secretary Yellen. Really, this has nothing to do with the 
particular business of the bank in question. It really is a 
judgment about whether or not the failure of the bank and the 
losses imposed on uninsured depositors threaten contagion that 
could undermine the broader banking system.
    Mr. Carl. And I am out of time. Thank you, ma'am. I 
disagree with you. I think a lot of the voters disagree with 
you too. But thank you for your time, and I yield back.
    Mr. Womack. Mr. Ciscomani.
    Mr. Ciscomani. Thank you. Thank you, Mr. Chair. And 
Secretary Yellen, thank you for being here. And Director Young, 
nice to meet you, both. I appreciate your time. And thank you 
for coming before the committee to testify today. The state of 
our economy is one of the most important challenges that we are 
facing, here in Congress and everywhere it goes, especially in 
District Six that I know well. I am worried about the rampant 
inflation, unchecked government spending, and our national debt 
as well. And as we have seen in the past few weeks, information 
is spreading at a very quicker pace than ever before. A much 
quicker pace than ever before. And stability is needed in that.
    Now, Secretary Yellen, I would like to follow up on some of 
the questions here by my colleagues regarding the recent bank 
failures. So I have just a series of short questions. And maybe 
you can just help me answer as many of them as we can get to in 
this short period of time. Have you determined whether a 
special assessment will be needed to replenish the FDIC's 
deposit insurance fund?
    Secretary Yellen. If there are losses, then a special 
assessment would be needed. It is not clear yet, I believe the 
FDIC, as a preliminary matter, assessed that there would be a 
$2.5 billion loss in the case of Signature, but that is not--
that is not a final determination.
    Mr. Ciscomani. And also to follow up in the question 
regarding--thank you for that--on the regional banks and 
community banks, for example, in Arizona, will Arizona 
community banks be on the hook for this special assessment?
    Secretary Yellen. It would be determined by the FDIC's 
formulas and decisions.
    Mr. Ciscomani. I am sorry, is that a yes or a no?
    Secretary Yellen. I think it is a yes.
    Mr. Ciscomani. It is a yes. Okay. And you stated the 
Treasury Exchange--that the Treasury's Exchange Civilization 
Fund may serve as a backstop. How much money is there currently 
in the fund?
    Secretary Yellen. Including SDR, I believe there is about 
$200 billion in the fund.
    Mr. Ciscomani. And the funding as depleted in that fund, 
would taxpayers be on the hook to replenish it?
    Secretary Yellen. No.
    Mr. Ciscomani. And do you believe that the Fed's decision 
to raise interest rates will result in additional bank runs?
    Secretary Yellen. I am not going to discuss the Fed's 
decisions on interest rates.
    Mr. Ciscomani. How do you think that would impact this 
subject and the conversation, the raising of the interest 
rates?
    Secretary Yellen. The Fed is addressing a significant 
inflation problem. Making decisions that in its independent 
judgment are best. Also, I know taking account of financial 
stability concerns. And I am not going to comment on their 
decisions.
    Mr. Ciscomani. Thank you, Madam Secretary. Mr. Chairman, I 
yield back.
    Mr. Womack. I think Mr. Cloud is on his way back, and we 
will get to Mr. Cloud when he returns. So we are going to move 
into round two of our Q&A with the witnesses. And I will lead.
    I am going to, Director Young, put my budget hat back on. I 
can't help but do that. And I want to talk about improper 
payments. And, frankly, it is a subject that causes me to 
scratch my head. It is reported by the GAO that federal 
agencies disburse an estimated $281 billion in improper 
payments in fiscal year 2021 with cumulative improper payments 
totaling $2.2 trillion over the past 20 years. Let's repeat 
that. $2.2 trillion in improper payments. Now, what has always 
kind of been a mystery to me is if we know we have paid it, and 
we know it is improper, how do we continue to live with that 
reality?
    So, Director Young, help me understand how OMB is focused 
on reducing improper payments? And I have just given you some 
numbers, so if I am off base, if I am out of bounds on the 
subject, let me know. But I remember when we were doing, as 
budget chair, when we were doing the fiscal year 2019 budget, 
obviously, reducing improper payments was a critical component 
of us getting to achievable balance. So help me understand this 
improper payment phenomenon.
    Ms. Young. Look, I think this is the place we can find 
commonality in wanting to find solutions. You know, not to--
with the Secretary here not to speak in her stead here, but one 
thing--and I have talked to Senator Kennedy from Louisiana 
about this, who is interested in making sure that Treasury has 
access to the Social Security death data to make sure that we 
are paying living human beings. That seems common sense to us, 
and we have taken steps to make sure that that happens. 
Unemployment insurance is, I believe, especially during the 
pandemic, the poster child for having this conversation. The 
budget has a proposal that would give us more tools to go 
after--look we saw criminal syndicates taking advantage of 
programs that American citizens needed during the pandemic. We 
should lock arms, in my opinion, and come together and make 
sure they cannot take advantage. Part of the problem in 
unemployment insurance is it is 50 different systems. Each 
State runs their own system which means it is hard to stabilize 
those systems from a Federal level because each State are in 
different places. We have got to do something about that. And I 
hope we can work together on going after fraud, especially in 
the unemployment system. And we have proposals to do this. And 
I am happy to work with anyone to go after this, because these 
programs need to be there for hardworking Americans who need 
the stopgap between jobs and should not be taken advantage by 
fraudsters, and, frankly, big criminal organizations who have 
just gotten very good at gaming the system.
    Mr. Womack. Do we not have the proper controls in place to 
prevent it?
    Ms. Young. Not currently. And part of the problem, as I 
said, is this very bifurcated State-led system. It is a 
federal-funded program run by the States. And we have got to do 
a better job of just getting in the weeds with each State, 
meeting them where they are, but it has got to improve.
    Mr. Womack. Yeah, well, people have testified in this 
hearing today, including my friend, Steny, have indicated--and 
I agree that we all want people to pay their fair share. And 
nobody should be asked to pay really more than their fair 
share. But I think the American public would be just as 
concerned, if not more concerned, with the alarming rate of 
improper payments coming out of the Federal Treasury and going 
to people who should not be collecting that money. Would you 
not agree with that?
    Ms. Young. Yeah, and this is exactly----
    Mr. Womack. I mean, it is outrageous.
    Ms. Young. That is exactly why we ever posed the--look, it 
shows that an investment in doing away with the fraud that you 
talked about has a return on investment of 10-to-one. Why 
wouldn't we do that? And I think that is a place for 
commonality as we work through these--what is going to be a 
very complex budget and appropriations season. So I look 
forward to working with you on that.
    Mr. Womack. Last question is regarding the Federal 
workforce, and maybe we can just take this for the record and 
get back to me on it. But the increase in Federal workforce by 
82,000 people, 3.6 percent, a lot of these people are working 
from home. I will submit a question for the record on this, 
because I am curious as to what--how we are justifying the 
work-from-home piece and not reducing our footprint, if you 
will, from a facilities point of view. But we will submit that 
for the record later. And I will yield my six seconds to the 
distinguished ranking member, Mr. Hoyer.
    Mr. Hoyer. Thank you for your generosity. Let me ask a 
question to follow up on the chairman's question. A, we all 
agree fraud on the Federal Government that undermines the 
ability of the Federal Government to help people who are in 
need, legitimately, ought to be ferreted out and prosecuted, 
period.
    Madam Secretary, I want to ask you a question, and I have 
talked to the chair about it, and it bugs us both. I hear 
advertisements all the time on TV about people who, for 
whatever reason, didn't pay their taxes. And this company is 
going to make sure that they cut their taxes in half or a third 
or a quarter. Now, if I am listening to that ad, and I haven't 
paid my taxes, or am about to pay them, and I don't have the--
whatever, that encourages me not to pay them and get a better 
deal. It is not really a question. But you ought to look at 
that. I am going to ask the IRS Commissioner the same question 
because it is--as if you really don't have to pay your taxes, 
and we will get you a deal. Whether you are making $4 or $4 
billion, we will make you a deal. And I think that undermines 
the voluntary compliance, which the U.S. has been very high on. 
Let me go back--and you don't need to answer that question, but 
it is a concern.
    Madam Director, you mentioned a figure in terms of getting 
rid of fraud and what the return is on enforcement. What is the 
return on money in enforcement on IRS?
    Ms. Young. I think the Secretary has spoken to this. What 
the Inflation Reduction Act did, if that is rescinded, the CBO 
has made clear that that will add to the deficit to the tune of 
about $100 billion, because they will estimate as much as all 
budget scorekeepers will, that that will bring in less to close 
this tax gap. So we will lose money for the Treasury.
    Mr. Hoyer. The figure I recall from my previous life was 
about seven-, eight-, nine-to-one return on the investment in 
enforcement. You get $7 or $8 or $9 in return. If that is the 
case, then cutting that has that $100 billion consequence that 
you just referred to.
    Let me close with this: We won't have a third round, and 
this is not a question. But we talked about debt. And I am very 
concerned about debt. And I would like to think that we are 
fiscally responsible. We need to be fiscally responsible. In 
the last Congress, we spent a lot of money as a result of the 
pandemic. Excuse me, the Congress before that, the 116th with 
the signature of Donald Trump, and the agreement of the 
Secretary of Treasury. Why? Because we had an extraordinary 
challenge if it was not resolved would have cost much more than 
the money we actually spent. Notwithstanding the fact it was a 
large number. And so, I think we need to work together as we 
worked together on the debt limit in the Trump administration, 
as we worked together on meeting the pandemic in the Trump 
administration, we need to work together to get our country on 
sound, fiscal footing, while at the same time, investing in 
making sure that our economy grows as vibrant, which will also 
reduce the deficit.
    Now, lastly, this is not a question. None of these are 
questions. I am pontificating. As it will come as a great shock 
to everybody in this committee, I have a passing interest in 
where the FBI is going to be located in the future.
    Mr. Womack. No.
    Mr. Hoyer. I knew that would shock the chairman.
    A consolidated FBI headquarters remains among my top 
priorities. I remain concerned about the low waiting of the 
cost criteria as only 10 percent. If we are concerned about 
deficit, we have got to be concerned about costs for what we 
buy. Ten percent being ascribed--this is not a question--is, in 
my opinion, not justifiable. The chairman can speak for 
himself, but we have had conversations about that.
    In 2016, the House resolution authorizing this project, 
Congress made it clear that GSA should consider the total cost 
of the government relocation site preparation and site 
acquisition. Congress has made clear that whatever pocket of 
money comes out of it should be counted as part of the cost of 
this site, whatever pocket it comes out of. I just made that 
observation. I don't want a response at this point in time, but 
I will continue to express my concern on that case. And, Mr. 
Chairman, you and I have discussed that, and we will continue 
to discuss it.
    Ms. Young. Mr. Chairman, if I could thank the ranking 
member for his passion on this. I appreciate it, and I will 
take it back.
    Mr. Womack. I look forward to the conversation. Welcome 
back, Mr. Cloud. Your turn.
    Mr. Cloud. Thank you, Chairman. And thank you, Secretary 
and Director, for being here today. I wanted to ask the 
Secretary some questions. First of all--and I know you will 
probably give us a 3-hour lecture on this and still have more 
to say about it, but if you can give us the 30- to 60-second 
version on how important is it that the U.S. remain the world 
reserve currency?
    Secretary Yellen. Well, I believe we derive significant 
benefit from the dollars serving as the reserve currency. It is 
an important way in which we lower the costs, the borrowing 
costs that the Federal Government pays on its outstanding debt. 
And I would say that in imposing sanctions and trying to 
address global problems like Russia's invasion of Ukraine, the 
fact that the U.S. dollar is used so widely in transactions, 
is--facilitates our ability to impose those sanctions.
    Mr. Cloud. Now, this week, Russia and China got together, 
and Russia has said they are going to start using the yuan to 
settle trade deals. Does this concern you? They also said that 
this would help accelerate the process of establishing a 
multipolar world order, which, of course, would mean weakened 
U.S. on the net, on the global stage.
    Secretary Yellen. Well, I certainly want to see the dollar 
remain as the world's reserve currency. And there is a 
motivation that Russia and China have to try to develop another 
system that avoids the use of the dollar. But this is something 
that is tremendously difficult to accomplish. And I have 
confidence that the dollar will remain the world's reserve 
currency for a long time to come in spite of there being 
various efforts to create systems to get around it.
    Mr. Cloud. Now, in 2008, the U.S. National Intelligence 
Council said in a report they produced that there is an 
unprecedented shift in relative wealth and economic power from 
the West to the East now underway, and they expected it to 
continue; that our relative strength will decline. And they 
said it was because of this--they said the transfer of global 
wealth and economic power is now underway. It is unprecedented 
in modern history. And they said it comes from two sources: We 
are sending oil and gas revenues overseas, and we are sending 
manufacturing overseas. Yet, a number of the policies that this 
administration continues to embrace, support ESG, which we have 
seen. You know, China is not following that. Russia is not 
following that. They continue with the coal plants. China and 
Russia are talking about building another pipeline. And yet, we 
seem to just be hamstringing Western countries on the front 
when we were producing energy, oil, and gas petroleum products 
more responsibly to be cleaner than anyone else.
    One of the things I am concerned about is this. We talked 
about to a number of banks. I realize most of this is the SEC 
pushing this. But from your standpoint, we had European 
countries trying to impose these regulations on U.S. banks that 
work in their market. And, therefore, the U.S. businesses that 
do companies in that, from a diplomatic perspective, it would 
seem that regardless of where you are on the ESG front or again 
from a diplomatic perspective, you would be standing up for 
U.S. banks and U.S. businesses against what other--any other 
country's regulators would be trying to enforce on that. Do you 
have diplomatic efforts underway, or what could be done to 
combat that?
    Secretary Yellen. Well, we do have frictions with various 
countries, including the European Union when we have 
differences in our regulations. When it comes to things like 
disclosure of climate-related risks, ideally, we would have a 
common system globally. I think that would level the playing 
field and reduce the burdens on businesses of what they are 
forced to disclose. But countries are making significant 
efforts to address climate change now, which I regard as a good 
thing. And tensions arise when we go about doing that in 
different ways. But we do have conversations----
    Mr. Cloud. I am sorry. I only have 20 seconds left. I 
wanted to ask you one more question. You mentioned leveling the 
playing field. I would think we want the U.S. to be more 
competitive than other countries. Biden has stated policy--he 
has said himself that he is trying to create a multipolar 
world. It is an objective he shares with Putin and Xi. Do you 
also share the goal of a multipolar world?
    Secretary Yellen. I am not sure exactly what it is you are 
driving at here, but----
    Mr. Cloud. Well, monetary policy affects global dynamics. 
And if the President's agenda is to help create a multipolar 
world, I am wondering how our financial policies would affect 
that and certainly the diplomatic efforts that you were 
incorporating with other countries?
    Secretary Yellen. Well, I am not going to comment on 
multipolar world. Cause I am not sure exactly what you are 
driving at there. But certainly, we work with other countries 
in order to make sure that American businesses are treated 
fairly in international commerce.
    Mr. Cloud. Okay. Thank you. I yield back.
    Mr. Womack. Mr. Pocan.
    Mr. Pocan. I am going to yield 20 seconds to the ranking 
member.
    Mr. Womack. Just 20 seconds?
    Mr. Pocan. Twenty-two.
    Mr. Hoyer. Let me make a comment. The entire effort of the 
117th Congress to make sure that the American economy and the 
American democracy was transcended democracy and economy in the 
world. That was our whole objective, and I think if we confirm 
it, it will be achieved. Thank you.
    Mr. Pocan. Okay. Thank you. Thank you, Mr. Chairman. So, 
Secretary Yellen, I understand you are not going to speak for 
the Fed, but I am going to ask the question in another way, 
that you as an economist, could it be that there is an 
economic--the economic conditions right now are substantially 
different than in the past, given we just came out of 100-year 
pandemic, where the Nation was largely disrupted for about 30 
full years, before we are getting to, where demand is 
incredibly resilient. And after nine interest rate hikes, 
demand has not moved a whole lot, that as an economist, could 
that sort of set of conditions, once-in-a-year pandemic be 
different enough that we should be looking, perhaps, at some 
other measures to reduce demand?
    Secretary Yellen. Look, I am just going to say, of course, 
the pandemic was a very unique event. And in terms of its 
economic impact, we have really never seen anything like it 
before. It led to enormous shifts from services, goods and 
services, away from services toward goods, and then back again 
away from goods towards services.
    We saw enormous supply-chain issues developed that 
contributed to inflation. Because of this shift toward goods, 
those are receding now, lowering inflation, but we have a shift 
back in the direction of services. Services are having a hard 
time reemploying a workforce in tight labor markets. This is 
extremely unique. And consumer spending has proven to be 
robust. But GDP growth has slowed. We had a very rapid 
recovery. It has slowed. And we are back at full employment 
again. And I think there is a chance here that what the Fed is 
doing will serve to bring down inflation while maintaining a 
strong labor market.
    Mr. Pocan. I appreciate it. Thank you. I just think 
sometimes, you know, I know that is their only tool they have. 
Sometimes when your only tool is a hammer, everything looks 
like a nail. And I kind of feel like at this point we need some 
other approaches, whether it be a windfall profits tax, because 
corporate profits are still soaring. Some kind of limited price 
control. But something else. But thank you very much for that 
answer.
    Director Young, so here is the question. Before it was 
inferred that no one has ever, ever in the life of Republicans 
talked about cutting Medicare or Social Security, even though 
my Senator, Ron Johnson, has recommended we put it on the 
chopping block every single year. At least that is one 
Republican. I have heard several Republicans this year said 
that we should raise the retirement age perhaps to 70.
    Now, to me, I think I would call that a cut. If it is not a 
direct cut, it is at least a bait-and-switch. But could you 
talk just a little bit about if we actually raised the 
retirement age to 70 how that would impact people who have paid 
into it, and whether or not it is fair to call that a cut or 
whatever we would exactly call that?
    Ms. Young. Look, and I will be very simple. That is a cut 
to benefits in our estimation. I know there is some 
disagreement with that, but that is fewer years, receiving 
benefits from Social Security after people, what, for 20 years 
of their career, paid into a system and expected to start 
collecting Social Security at a certain age, and then the goal 
post is moved, that is a benefit cut.
    Mr. Pocan. Yeah. Thank you. There is a lot of people who 
work in the trades, in particular, in my district who I know 
quite well who, you know, at some point, even if we are living 
younger, your body isn't necessarily allowing you still to lay 
brick or be an iron worker. And just to raise that age would be 
certainly a bait-and-switch to those folks and have a negative 
effect. And I would call that a cut. So that is the only reason 
I wanted to put that out for clarification. I yield back, Mr. 
Chairman.
    Mr. Womack. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman. Secretary Yellen, 
first of all, thank you for being willing to brief me at my 
office on the CFIUS review process and where things are. I 
appreciate that very much.
    Director Young, I wanted to ask you a couple of questions. 
The Government Accountability Office reported that as of 
January 31, 2023, there was $90 billion in the American Rescue 
Plan funding remaining that is unobligated. That is a huge sum 
of money. Unfortunately, we haven't received timely updates 
about available balances from this recent legislation. Can you 
confirm that number?
    Ms. Young. Sir, I am sorry to hear you have not. We have 
sent up to Congress--I will make sure this committee has the 
balances. I have it here. We will put it in the record and make 
sure your office has it. I will say for COVID funding, writ 
large, the bills in total, 98 percent is obligated. Of ARP, 
specifically, 95 percent is obligated.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Moolenaar. But is $90 billion the amount----
    Ms. Young. I will make sure that is the amount, but it 
sounds in the range. I want to be exact with you and provide 
that information.
    Mr. Moolenaar. No, I appreciate that. But the fact--would 
you agree that we are no longer in an emergency.
    Ms. Young. If I can, I will let you know where the majority 
of those funds are. And you are right, the public health 
emergency--the administration, the President is lifting that 
order May 11.
    Mr. Moolenaar. So we no longer have a need for a rescue 
plan, would you agree with that? I mean, the emergency is over. 
I mean, that is what those funds were intended for, right?
    Ms. Young. Mr. Moolenaar, I just want to make sure you know 
where the majority of funds remain unobligated. And, of course, 
it is Congress' discretion, if they want to go pull those funds 
back. The majority of those funds remain in pensions, which, as 
you know, it has a long outlay, and it remains in veterans' 
benefits. And there is some money in HHS that after not 
receiving more money, we plan on using for next-generation 
vaccines.
    Mr. Moolenaar. So what you are saying is you have already 
figured out how you want to spend it next time, rather than 
saying we have an opportunity to pay down the debt? I mean, $90 
billion would go a long ways to paying down some debt?
    Ms. Young. No, I said it is Congress' decision. I am, as 
you know, very attuned to the Appropriations Committee's 
constitutional role here. But I am saying that as you make 
those decisions, no, that most of the money remains from 
pensions.
    Mr. Moolenaar. But unobligated based on an emergency that 
is no longer there, right?
    Ms. Young. Well, pension funding in ARP was always intended 
to spend out over a longer period of time. So you would be 
taking funding back that a lot of pensioners would depend on. 
Veterans care----
    Mr. Moolenaar. Well, let me ask you this.
    Ms. Young. Sure.
    Mr. Moolenaar. Through the appropriations process--you are 
the expert--couldn't we fund those pensions as part of the 
appropriations process like we normally do, rather than using 
emergency funding that is no longer for an emergency?
    Ms. Young. I will say, typically, multiemployer pensions is 
not done by this committee, but I am sure you all will weigh 
in. Look, we will provide the data, and we will have a robust 
back-and-forth to see what makes sense here. I am just simply 
pointing out that the majority of the money that remains was 
always intended to have a tail. And the question on resources 
for HHS is do we want next-generation vaccines for COVID.
    Mr. Moolenaar. Well--and I approve of the idea of going 
through the appropriations process. I am in the Labor-H 
Subcommittee, and we can certainly look at that.
    But why would we tell the American people we need to spend 
$6 trillion of emergency funding in this last Congress, and 
then find out we are no longer in an emergency and we still are 
going to spend that money? That, to me, seems like fraud 
itself.
    Ms. Young. Well, Mr. Moolenaar, I will be just very candid. 
We asked Congress multiple times for additional funding for 
next-generation vaccines and therapeutics. A lot of, as you 
know, immunocompromised people, current therapeutics do not 
work. We were told no by Congress.
    So what we are doing now is looking at the unobligated 
balances at HHS and going to focus on those things. Now, what 
won't happen are things like long-term research in long COVID, 
which we don't know a lot about. So we will have to relook at 
our priorities here.
    Mr. Moolenaar. Well, I trust you are very capable in this 
process, and that when you come and talk to our Appropriations 
Committee, you are someone who has tremendous credibility.
    Ms. Young. They told me no.
    Mr. Moolenaar. Well, you know, I think it is a matter of, 
let's figure out what the top priority is. There is a lot that 
we spend that wouldn't be maybe as top a priority, and you 
might have to agree to cut back on some of that. But I just 
think taking the people's money that was based on an emergency 
when there is no longer an emergency and spending $90 billion 
seems irresponsible to me.
    Thank you. I yield back.
    Mr. Womack. Mr. Cartwright.
    Mr. Cartwright. Thank you, Mr. Chairman.
    Well, Director Young, it was--we are coming up on the 87th 
anniversary of the Rural Electrification Act. 1936, it was. It 
was a time in our country when we had electricity. We had 
electricity in most places. But we didn't have electricity in 
some places, in the back roads, in the hollows. In the places 
off the beaten path, we did not have electricity, and these 
places were being left behind.
    We are kind of coming up on a similar thing right now. We 
have broadband internet access in most places in this country 
right now, but there are places being left behind. And in the 
IIJA, we legislated $45 billion to make sure this doesn't 
happen, that we follow the pattern of the Rural Electrification 
Act, and that rural places get broadband internet.
    And, of course, the President requested an additional $400 
million for the ReConnect Program--you are familiar with--which 
provides grants and loans to deploy broadband to unserved 
areas, especially Tribal areas.
    What do you see as the most important things to be 
accomplished so that we can accelerate access to broadband 
internet in rural places?
    Ms. Young. Well, the Bipartisan Infrastructure Law was a 
game changer, so thank you for that. We believe the--in 
shorthand, the ACP program at FCC will bring broadband to 15 
million homes in this country.
    You are looking at a caution light girl. I grew up in a 
town with less than 2,000 with a caution light. So I am very 
aware of those communities who often don't have adequate 
attention from their Federal Government or State government. 
This is meant to change that.
    And you have my commitment. We have just started to 
implement this. If more needs to be done, we will be right here 
making the case, working with Congress, because, you know, this 
is not a luxury. We saw children sitting in the parking lot of 
McDonald's during the pandemic. That should not happen in this 
country. It is a necessity for kids, teachers, parents, to have 
high-functioning internet. And it is no longer--it is like 20 
years ago saying having a cell phone was a luxury. Now, most 
people consider it something they can't do without in life. I 
would suggest that internet is the same way.
    Mr. Cartwright. Thank you for that.
    And now, there was a comment or question made in this room 
that seemed to imply that this administration is not doing 
everything that it could do to outcompete China, to counter 
China. And my question to you is, is that a correct narrative?
    Ms. Young. Well, look, I am going to be very clear. This 
President says it over and over again. His Made in America 
agenda, his manufacturing boom, bringing 800,000 jobs back, 
that is directly about making sure that the United States of 
America remains the world leader, not China.
    And this budget has several proposals I hope we can work 
with on a bipartisan basis. I know Mrs. Hinson has an interest 
in this, and Mr. Moolenaar is on the China subcommittee. We 
have a proposal that would put vast resources, $6 billion, into 
efforts like infrastructure across the globe.
    Look, China goes into these places, like the continent of 
Africa, throws a little here, a little there, has vast access 
to their resources. Where are we? And we have to make sure that 
the United States remains the beacon I know we are and that we 
have presence in those places and make sure we are investing 
responsibly through our Development Finance Corporation, 
through our Millennium Challenge Corporation. Because if we 
aren't there, China will be there. So I certainly hope we can 
work together to implement these proposals.
    Mr. Cartwright. Thank you, Madam Director.
    And I yield back, Mr. Chair.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. All right. Thank you, Mr. Chair.
    Some sobering statistics, numbers. $31.6 trillion in debt. 
That is about $94,000 per citizen. $246,000 per taxpayer. So I 
want to talk a little bit about what that cost looks like for 
Iowans.
    And so, Director Young, can you speak a little bit today to 
the rising interest costs, how that fits into these numbers as 
we are seeing the debt balloon? What are some of the tangible 
impacts to working families as a result of those rising 
interest costs?
    Ms. Young. Thank you for that. And we like to use--publicly 
held debt is about $24 trillion. I believe you are using both 
debt points together. But either way, this is why this 
President put forward proposals that bring down the deficit, 
because we do also believe that our investment should be paid 
for.
    And if we don't go about investing tax cuts in a fiscally 
responsible way and pay for them, our deficit and debt problem 
will be worse, Congresswoman. And I know there is disagreement 
on how you do that, but this President has put forward a tax 
reform that would save $3 trillion and nearly $3 trillion over 
10 years.
    Mrs. Hinson. I see this as a complete tax shift. But if you 
talk about rising costs and the impact that has, I think one of 
the quickest ways we could address that is energy, and I think 
we have different perspectives as well on lowering energy 
costs. But I have been advocating for that, and I would 
encourage you to continue to look at Iowa's biofuels as an 
answer, and please take that feedback back to the President. We 
need an answer on E15, if you can.
    I would also like to ask and follow up on the CCP 
challenges that we are facing, since you referenced that again. 
And it is very clear that this committee has a very unified 
interest in that. Since you do have kind of an all-of-
government look through OMB, do you have any recommendations on 
how we can better leverage our spending? You referenced that $6 
billion number, but ways where we can truly counter the CCP's 
aggression through government.
    Ms. Young. So I mentioned two agencies in particular whose 
money can be used. The budget authority, the funding amount, 
but also, they have the ability to finance projects. So their 
money goes a little further.
    So I would love to have you talk to us about the 
Development Finance Corporation. They have some innovative ways 
of financing projects across the globe. Again, I mentioned the 
Millennium Challenge Corporation. They go and sign compacts and 
really try to leverage private dollars. So it is not just what 
we are investing here. What programs do we have that are 
leverage points that would attract private sector interest? And 
those two in particular are quite interesting in that way.
    Mrs. Hinson. Are there any agencies engaged in related work 
to counter the CCP that you think could be doing a better job 
of collaborating and finding that--either that outreach within 
the private sector or better outreach within government?
    Ms. Young. So those are two agencies, certainly. They will 
tell you they are resource constrained, which is one reason we 
put it here. And we have to--in order to attract private 
interest, they need to know the Federal Government is serious 
and is going to show up with resources. So that is what we are 
trying to do, have those programs be much more aggressive. And 
to do that, this is--I look at this as capital, especially for 
DFC, to make sure that their finance tools can be put to use.
    You and I also talked about COFA, Compact for Free 
Associations. Those tiny little places like Palau in the South 
Pacific. We need a presence there. We often talk about COFA in 
the Department of Interior. We put it under the Department of 
State because we think it is a strong diplomatic tool to 
counter China and make sure we have a presence where we know 
they want to be.
    Mrs. Hinson. Finally, I just want to talk a little bit 
about the regulatory burden and cost on farmers, small 
businesses, and families. What plans do you have in place to 
more appropriately account for the cost of regulations on 
people before they are actually implemented?
    Ms. Young. Yeah. So you know a part of OMB is the Office of 
Regulatory Affairs. And it is part of our duty, our executive 
order that governs us. 12866 says we have to look at cost-
benefit analysis for regulations. We are committed to continue 
that. We are not going to change that. What we are doing is 
looking to modernize.
    Far too many rules come into OR that the amount of 
economically significant has not changed in, I believe, about 
30 years. And we need to raise that so that fewer things come 
in for review. So we are modernizing. But what we are is 
committed to making sure we keep a robust cost-benefit analysis 
in the regulatory system.
    Mrs. Hinson. Director Young, this is one of the number one 
issues I hear about from my constituents, is the cost of the 
regulation on doing business, and we can truly unleash this 
economy if we take that into consideration and reduce that 
burden on our businesses and our taxpayers.
    Thank you. I yield back.
    Mr. Womack. Mr. Cloud.
    Mr. Cloud. Thank you, Chair.
    I wasn't going to bring this up, but since it was 
mentioned, I wanted to go back to it. It is then Vice President 
Biden's own words. He said, ``We are trying to build a 
multipolar world.'' Those aren't my words. That is not my 
interpretation. That is an exact quote.
    So is it your understanding that now he has joined the 
America First movement or does this maintain that continues to 
be his policies, and do you endorse that?
    Ms. Young. If that is directed at me, I am with Secretary 
Yellen. I tend not to answer things I don't fully understand. 
And multipolar world--I will leave it at that.
    What I do know, and what I have heard this President say, 
is that we have to regain footing in several ways. We have to, 
of course, maintain a strong defense. We have to do things in a 
diplomatic front, like the programs I talked about. But we 
also--what are we spending in research?
    China is growing their footprint in manufacturing of things 
we are far behind in. That is part of what the Inflation 
Reduction Act will change. We will build more of that clean 
energy here and bring jobs back here.
    So this President has been crystal clear that he believes 
America's role is to be first in those places including in 
research.
    Mr. Cloud. America was already leading in producing clean 
energy. We were the best at producing oil and gas. We are the 
best in what you would call green energy. We are leading the 
world in that. And so the Inflation Reduction Act was not 
necessary in reaching that goal. We were already leading the 
world in that.
    You said, let's not hold the debt ceiling hostage to really 
draconian cuts that all help the wealthiest in this country.
    And then, Secretary Yellen, you said, I don't think that we 
should--you said--in speaking of prioritization in relation to 
the debt ceiling, you said that prioritization is simply not 
paying all the government's bills when they come due. That is 
something we have never done. It is really just default by 
another name.
    And I was kind of puzzled by that because, you know, our 
job in Congress is to prioritize what the spending should be. 
The President submits a budget, and then we weigh it, and then 
we send it in. And I am a little puzzled to see some of the 
things we are spending money on. We are spending money on 
watching hamsters fight on steroids, turning mice into binge 
drinking alcohol, drag shows in Ecuador. The Biden 
administration is filtering tax dollars to Colombian LGBT 
groups that back prostitution. We have 77,000 empty Federal 
buildings. One of the big things going on at the border is no-
bid contracting. That is under investigation now.
    So there is a lot of areas, it seems, that we could cut 
that wouldn't be considered a default. Would you agree?
    Secretary Yellen. No, I wouldn't agree, because it is 
certainly up to Congress and this committee to decide about the 
budget for 2024 and years after that, what future commitments 
Congress chooses to make about spending levels. But the debt 
ceiling is about paying bills for programs Congress already 
approved----
    Mr. Cloud. No. But there are some. There are some, for 
example, the COVID funding that was mentioned, it was $90 
billion, I think, of funding----
    Secretary Yellen. Well, the bills that come to Treasury to 
pay cover expenses that Congress has authorized. And they have 
gotten to the point of services have been provided, whether it 
is by the Federal Government's own workforce or contractors who 
have bills to pay for workers that they have hired to provide 
government services. And it is about paying those bills when 
they come due. And if you don't pay bills that come due for 
services that you have ordered and authorized, that is default.
    Mr. Cloud. I think I get what you are saying, and I am kind 
of running out of time here. If I can move on.
    As someone new on this committee, one of the things that I 
have been doing is I have been trying to go through numbers, me 
and my team and everything. That has been difficult. The things 
that I mentioned, one of the reasons I mentioned them is 
because most of them are not line items in a budget. They have 
to do with the grants and contracting, which is kind of opaque 
to us even as--it is very difficult to find--we send a top line 
in a budget. You know, we will appropriate dollars toward a 
budget. But then the grant is--it is really opaque to what is 
going on. And that is where a lot of the policy initiatives 
are, and really a lot of the nefarious action is going on.
    And I would wonder if you would work with us and help come 
up with some transparency mechanism to where--not just us, but 
the American people can see not only what we are attempting to 
spend money on, but what the actual grants are going to, how 
they are being approved, where they are going.
    Because, as you know, one of the things I mentioned was 
training mice to binge drink. That is an NIH thing. You know, 
while they were doing gain-of-function and everything else that 
we are looking into, if we could have had transparency on where 
these grants are going, it would have helped.
    Is that something that we could work with you on? Kind of a 
technicality of how to----
    Ms. Young. This subcommittee in particular certainly knows 
how to mandate transparency. OMB currently puts every single 
action that authorizes agencies to go out and execute on their 
appropriation. So you have heard a lot about apportion, as I am 
sure, in the last administration. This committee in particular 
directed OMB to put every single last apportionment, which is 
transparency we have never seen the level of. So this committee 
has certainly led in transparency.
    I will also point to USA spending, which has obligation 
data. There is a lag. So people complained you don't see it 
real time. But the goal was--and in past Congresses and 
administrations, it made sense to put those obligations online, 
and usaspending.gov does that.
    And I will point out, just at NIH, you know, peer-review 
panels do pick those research grants. So I am not sure about 
the ones you have mentioned, but I am happy to go back and look 
at those. But, you know, we just have to be very careful that 
we don't do anything to insert politics into a peer-review 
process as we select research grants.
    Mr. Cloud. I can appreciate that. But peer review is what 
gave us a lot of faulty information during COVID too. So we 
probably need to look at that as well. But thank you.
    I yield back.
    Mr. Womack. Mr. Ciscomani, bring us home.
    Ms. Young. What a tall order.
    Mr. Ciscomani. Yeah. Put the freshman to that task. That is 
great.
    Well, let me just actually close with a bit of a different 
topic. And let me touch on Iran real quick. Sanctions in Iran 
are a key component of the U.S. strategy to increase the 
pressure on the Iranian regime to abandon its ambitions for 
nuclear weapons and its support for terrorism and cease other 
illicit activities.
    Now, with nuclear negotiations not currently on the agenda 
and Iran's nuclear program continuing to expand, increasing the 
economic pressure on Iran is essential. Given nuclear 
negotiations seem to be at a standstill, is it fair to say that 
the administration views maximum enforcement of sanctions as a 
key component of our Iran strategy?
    Secretary Yellen. The Treasury Department has leveled 
extremely tough--the toughest possible sanctions on Iran and is 
enforcing those sanctions and constantly trying to identify 
ways in which they may be violated and taking further 
enforcement actions. So Iran is subject to exceptionally tough 
sanctions, and we look to strengthen them and continue to take 
actions to do so.
    Mr. Ciscomani. Now, on that, with all due respect on that, 
do you really think that Iran does feel the type of economic 
pressure that would be necessary to force the regime to change 
their policies? I don't get that sense, to be very honest with 
you, that they feel that pressure at the level that it would 
actually change their behavior significantly.
    So what do you think--or some examples that that is 
happening in your opinion? And if we could be doing better, 
what are ways that we could increase the enforcement of our 
sanctions?
    Secretary Yellen. So my sense is that our sanctions on Iran 
have created a real economic crisis in the country. And Iran is 
greatly suffering economically because of the sanctions. I 
would say the same thing is true of North Korea. On the other 
hand, if you ask, has that forced change in behavior, the 
answer is much less than we would ideally like.
    Mr. Ciscomani. Okay. So let's close with that. What do you 
think would be the way to increase that--the enforcement on 
that or be more forceful to get the result that we would want?
    Secretary Yellen. You know, we are constantly looking for 
ways to broaden the sanctions to enable them to better 
accomplish our objectives. But sometimes a regime is so 
committed to a program that even when the population of that 
country is suffering immensely because of sanctions we have 
imposed, they continue to prioritize activities that are ones 
that we are trying to stop. And so my sense is that we need a 
broader toolkit and do have a broader toolkit to use. You know, 
sanctions can play a role in changing behavior, but they may 
not be sufficient in----
    Mr. Ciscomani. I agree with you on that. And I think it is 
troublesome that that is a reality that we are seeing here. So 
I do encourage Treasury to continue to look for the broader 
opportunities, as you mentioned, and be forceful on those 
approaches. Thank you.
    Mr. Womack. Steny, closing word?
    Mr. Hoyer. I think all of us believe that we want to see 
America grow, be successful, and be preeminent. The bipolar 
world or the multipolar world is a reality. We used to have the 
Soviets and ourselves, and that was a bipolar world. It is now 
obvious that a number of nations have increased their economic 
opportunity--abilities, particularly China.
    So the issue is, in my opinion, Mr. Chairman, whether we 
are going to continue to invest in America, in basic research, 
in manufacturing. I have had a make-it-in-America agenda for 13 
years. This is all about making it in America. Not only in 
terms of making it physically, but making it in success terms.
    So I am hopeful, Mr. Chairman, that we can work together, 
as I said at the beginning, to achieve the objective that I 
think we all share, and that America continues to be the 
greatest and best Nation on Earth and plays a significant role 
in keeping a world, if not at peace, at least at bay.
    Mr. Womack. Yeah. Well stated. And I think that would get 
universal agreement around the table.
    To our witnesses, we promised we would get you out of here 
in 2.5 hours and in one piece, and we met the objective. So 
thank you, Madam Secretary, Director Young. Thank you for your 
testimony here this morning. Well received.
    To my colleagues, thank you. If you have questions for the 
record, you have 7 days to get those to the relevant 
subcommittee staff so that we can get those to the relevant 
agencies.
    And if there are no further comments, then this 
subcommittee hearing is adjourned. Thank you.

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                                         Wednesday, March 29, 2023.

                U.S. SECURITIES AND EXCHANGE COMMISSION

                                WITNESS

HON. GARY GENSLER, CHAIR, U.S. SECURITIES AND EXCHANGE COMMISSION
    Mr. Womack. The Subcommittee on Financial Services and 
General Government will come to order.
    Good afternoon, everyone.
    And, Chair Gensler, welcome back to the subcommittee. My 
colleagues and I are looking forward to today's conversation 
with you.
    The Nation's economy remains in a precarious position. The 
banking sector is in a state of unrest. Prices continue to be 
inflated due to excessive spending, and the country's debt is 
on an unsustainable trajectory, yet this administration is 
proposing a budget that is more of the same. Unfortunately, the 
Securities and Exchange Commission is following suit.
    The fiscal year 2024 budget request for the SEC is $265 
million above fiscal year 2023 enacted levels, which is a 
double-digit percentage increase. Now, some will say the SEC's 
budget is fully offset by transaction fees. I get that. But 
that is only part of the story. And it completely ignores how 
bloated our government has become.
    Simply put, the sheer size and magnitude of our government 
is too large, and the SEC's budget is a prime example. After 
years of funding increases, we have an SEC that is heavy-handed 
with enforcement and examinations, and one that doesn't think 
twice about proposing new regulations to completely rethink our 
markets.
    The blistering pace of the SEC rulemaking is a cause for 
concern. We will talk about that today. And this isn't just 
coming from Members of Congress. The SEC's own Office of 
Inspector General in the fall outlined that SEC division 
offices raise concerns about increased risks and difficulties 
managing resources and other mission-related work because of 
the increase in the SEC's rulemaking activities. Again, this is 
your own Office of Inspector General.
    This is critically important, especially when the SEC is 
wading into areas that are not within their expertise and 
constitutionally questionable, such as requiring public 
companies to report on greenhouse gas emissions while claiming 
private enterprises wouldn't be impacted.
    Unfortunately, the steps taken by the SEC are more examples 
of their attempt to shift shareholder and board member 
responsibilities to others that deter from the betterment of 
these companies. The trend is diminishing the authority of 
boards, continues to expand outward at the agency, and can be 
truly disruptive.
    Let's be clear: The SEC's mission is to protect investors, 
ensure fair markets, and to support capital formation. However, 
conspicuously absent from all actions taken by the SEC is that 
of capital formation. Why does this continue to be the case? 
Private markets flourish while public markets stagnate. 
Examinations, enforcements, and regulations are top of mind for 
many at the SEC, but serious and practical capital formation 
conversations seem to be missing. The SEC must concentrate on 
all three tenants of their mission, not some over the other.
    Additionally, I have mentioned in past hearings, data 
security as it pertains to the Consolidated Audit Trail, also 
known as CAT, remains a top concern. And I am hopeful that, 
too, can be explored thoroughly in today's hearing.
    Chair Gensler, I look forward to discussing these issues 
and others with you today. And, with that, I will now recognize 
my good friend and colleague, the ranking member from Maryland, 
Mr. Hoyer, for his opening statement.
    Mr. Hoyer. I thank the chairman very much.
    I will turn this on.
    I thank the chairman very much for his comments and for his 
friendship. And, while we will disagree from time to time, we 
hope we are going to work towards what all of us believe to be 
in the best interest of the United States of America and its 
people.
    As we discussed in last week's hearing, the unrest 
surrounding Silicon Valley Bank and others ought to remind us 
how important it is that our Federal agencies receive the 
resources they need to safeguard and strengthen our economy.
    The recent bank failures were not simply a product of 
inflation. They came on the heels of a previous 
administration's effort to roll back many of the regulations we 
adopted after the 2008 financial crisis. That reckless course 
of action left our economy vulnerable to these types of 
failures. We need to ensure that critical safeguards and high 
standards are in place in order to protect consumers and 
prevent the type of instability that led to the financial 
crisis in 2008.
    Last week, Secretary Yellen made it clear that Congress 
must provide funding necessary for the Treasury Department and 
other agencies to work together to prevent this economic 
unease. The SEC plays a critical role in that mission.
    We oversee a number of regulatory commissions: the IRS, to 
make sure people pay their taxes that are fairly due; the 
Consumer Product Safety Commission, to make sure the consumers 
are protected from corporations that they couldn't possibly 
oversee themselves; the SEC, which tries to keep the market a 
fair, open, and transparent growth factor in our economy; and 
the Election Assistance Commission, which tries to make sure 
that we have fair and transparent elections.
    From supporting cryptocurrency enforcement to promoting 
climate change disclosures, the SEC is also working to address 
other emerging challenges facing our economy. As a firm 
believer in the public's right to petition their government, I 
want to ensure that the SEC is also providing robust 
opportunity for public input into its proposals.
    Now more than ever, Mr. Chairman, we must maintain the 
integrity of our markets, protect investors and consumers, and 
promote greater accountability in the financial sector. We 
cannot let new shocks derail the economic momentum we built in 
the last 2 years, especially at a time when Americans are 
facing rising costs.
    As an aside, this economy has created 12 million jobs in 
the last 24 months, more than any other administration in the 
history of our country. Is inflation too high? It is. Is 
inflation being high all over the world a reality? It is. But 
this economy is one of the more robust economies, if not the 
most robust economy, in the world today. We cannot do that. We 
cannot achieve those ends without a fully funded, fully 
equipped SEC.
    We have a hundred-trillion-dollar market, and we cannot 
oversee that market and make sure it is fair and that 
confidence remains in the market's fairness if we do not have 
the sufficient number of people. That is why I believe we ought 
to execute on the President's budget proposal, which requests 
$2.436 billion for SEC. Approximately, as you indicated, more 
than $200 million additional. It is paid for, of course, out of 
fees. But the people necessary to do that are absolutely 
essential.
    Like the rest of his budget, the funding is investment in 
America's economic future. Conversely, making cuts to the SEC 
and other agencies like it would only leave our economy more 
vulnerable to turmoil like what transpired in the Silicon 
Valley Bank.
    I think I am over time, and I apologize for that. But I am 
pleased to welcome Gary Gensler. For full disclosure, I have 
known Gary Gensler for probably 40 years, maybe more than that. 
His father was a good friend of mine. So I am not totally 
objective when it comes to Mr. Gensler himself. I hope I am 
totally objective as it relates to the SEC.
    I yield back.
    Mr. Womack. Let the record reflect that he yielded back 
with 30 seconds remaining. Only kidding.
    Chair Gensler, it is--you have a very important job, and it 
is truly important for you to be here today. And for that, we 
thank you.
    And, with that, I am going to recognize you for your 
opening statement. Your prepared remarks will be entered into 
the record.

                 STATEMENT OF HON. GARY GENSLER

    Mr. Gensler. I thank you so much, Chair Womack, Ranking 
Member Hoyer.
    A point of personal privilege, it is remarkable to be in 
front of Representative Hoyer, who was a good friend of my 
father's, I guess. When I was a little kid, I would hear about 
Steny this and Steny that. That is where I am going to end. But 
I thank you. It is really good to be in front of you and 
testify the first time before you.
    And, members of this subcommittee, thank you for inviting 
me to testify on behalf--on the SEC's fiscal year 2024 budget. 
I always have to say--this is customary--these are my own 
views, and I am not speaking on behalf of my fellow 
Commissioners or SEC staff. That is just standard language.
    The SEC. What are we? Who are we? We are critical to the 
American public. For 90 years, the Federal securities laws and 
our work to oversee them have played a crucial role in good 
times and in times of stress, and these laws benefit, as the 
chair said, investors on one side of the market, issuers, 
capital formation on the other, and then the markets in the 
middle. That is our three-part mission. But it is about those 
investors and the issuers on the other side, and then trying to 
ensure that the middle of the market is efficient, competitive, 
transparent, and, yes, as these times of stress remind us, 
resilient.
    The agency's clients are 330 million Americans, your 
constituents, who invest in their 401(k)s, IRAs, trade through 
brokerage apps, take out mortgages, auto loans, and alike. They 
are Americans accessing the capital markets to fund their 
businesses from small to large, their new ideas, their 
innovations, and the like. It is for the investing public and 
issuers that our staff must continue to drive efficiencies and 
protect for financial stability in what the ranking member said 
is a hundred-trillion-dollar capital market.
    We have seen tremendous growth in this market. More people 
than ever participating. Just two quick statistics. Just in the 
last 5 years, since 2017, the number of clients of investment 
advisers has grown 60 percent to 53 million from just about 36 
or -7 million.
    Another statistic. The actual transactions in our stock 
markets, equity markets, has doubled in the last number of 
years. Technology also rapidly transforming our markets from 
electronic trading to cloud to artificial intelligence to 
predictive data analytics. Just the dynamism of our markets is 
a great thing. It is sort of, like, important to our capital 
markets, and it shows the innovation itself of America.
    Further, we have seen the Wild West of the cryptomarkets 
rife with noncompliance, where investors have put hard-earned 
assets at risk in a highly speculative asset class. Such growth 
and rapid change also means more possibility for wrongdoing. As 
a cop on the beat--and about a quarter of our workforce is 
enforcement, another quarter is examination, so fully half of 
our staff--is also--we have to be funded enough to meet the 
match of bad actors. Thus, it makes sense that the SEC grow 
along with expansion of these markets.
    So, just to put some context on the funding to meet the 
scale of our mission, what we have had is--I am pleased to 
support the 2024 request for $2.4 billion. We actually shrank 
in the years from 2016 to 2021 about 4 percent or so. And with 
this committee's help and the full Congress' help, just in 
2023, we have gotten back to about 2 or 3 percent more in head 
count than we were 7 years ago.
    You authorized in your appropriations 400 new positions in 
2023. But those positions come on in the latter part of this 
year because we have to go out and recruit and hire all those 
folks. So, for year 2024, part of that is to fund those people 
for the full time.
    We are asking for 170 more positions. That is about a 3-
percent growth on where we are. As this committee considers the 
request, of course, we are deficit neutral. Appropriations are 
offset by a transaction fee. It is tiny. It is $8 per million 
dollars of trading. So it is very tiny.
    Nearly 2 years into this role, I am grateful to work 
alongside the remarkable staff and fellow Commissioners to help 
maintain America's capital markets. I truly think the best in 
the world, but we want to keep it that way. I thank you. I 
yield back 22 seconds.
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    Mr. Womack. I thank the chairman.
    And we will begin our round of questions. And let me remind 
everyone, we are on the 5-minute rule. You guys have got a 
timer in front of you. You know what you have. And we will 
acknowledge people--call on people in the order they were 
seated at the time the hearing started. We may have some other 
folks show up a little bit later.
    Mr. Chairman, at the SEC, enforcement actions, 
examinations, and regulations are at the forefront supported by 
weekly, if not daily, actions by your agency. Unfortunately, 
one of the SEC's core tenants, capital formation, continues to 
be an afterthought or an outlier as I said in my opening 
remarks.
    Chair Gensler, how do we ensure that public markets are 
thriving and that capital formation continues to be a priority 
at your organization?
    Mr. Gensler. It is very much a priority. It is a priority 
of the staff. As I said in my opening remarks, investors on one 
side, capital formation on the other side. Whether it is small 
or large corporations, whether it is somebody tapping into the 
mortgage markets to get capital so they can buy a home or 
borrow for the auto markets, every rule that we put out for 
public comment has an economic analysis and, as Congress has 
mandated, around efficiency, competition, and capital 
formations. So we benefit from the public's feedback and this 
committee's feedback on efficiency, competition, capital 
formation. So it is at the heart of what we do every day.
    Mr. Womack. Would your Republican Commissioners--would they 
be in agreement on that?
    Mr. Gensler. I think that they would agree that it is core 
to our three-part mission. I think they would agree that it is 
a congressional mandate. And I think that--based upon public 
comment, we get feedback as to how we best promote investors on 
one hand, capital formation, and, as I say, the markets in the 
middle.
    Mr. Womack. Would they agree that it is an appropriate 
priority with the agency?
    Mr. Gensler. Again, I don't want to speak for them because 
I am only allowed to speak for myself. I agree it is an 
appropriate priority.
    Mr. Womack. Would you be willing to testify alongside them 
and commit to doing that in the future?
    Mr. Gensler. I testify whenever Congress calls me.
    Mr. Womack. Okay. I will take that as a yes.
    The SEC budget requests $265 million in new funding, which 
is a double-digit percentage increase. However, over the last 
few years, regulations have been on the rise. If the SEC 
receives this increase, should we expect more of the same? 
Because how does burdensome reporting requirements and other 
disclosures, especially those related to the climate, possibly 
enhance capital formation and increase American taxpayer 
wealth?
    Mr. Gensler. We have put out to the public not only each of 
the rules but also our unified agenda, these 50 or 55 projects 
that we have, that are very public. We are not planning to add 
to that based upon this appropriation. This appropriation 
request is really about making sure we have the examiners, the 
cops on the beat. Over half of our staff is examination and 
enforcement, and the increase of the 400 positions this current 
year and the 170 next year--the vast majority of those are in 
really four areas: examination, enforcement, the Division of 
Corporate Finance to review filings, and in our technology 
area.
    Mr. Womack. Finally, I want to ask about what you are doing 
with the money that Congress already has provided. And this is 
more of a people question. The SEC is relying almost 
exclusively on an academic fellowship program for the leaders 
of some of your critical divisions.
    Is it true that at least four of the SEC's top six 
divisions are headed by directors that have long been in 
academics? And, if so, why is that the case?
    Mr. Gensler. Yes, it is true. Four of our divisions are run 
by extremely talented individuals that are willing to serve 
their country and partake in this great experiment called 
democracy and to actually help us. The Division of Economic 
Risk and Analysis has an economist, a world-class economist, 
from the University of Pennsylvania, and the other three 
divisions are run by really strong individuals that are 
committed to the same three-part mission that the Congress has 
laid out.
    Mr. Womack. I understand that. But would it not be 
important for there to be an experience factor? Folks running 
these key divisions that have experience.
    And let me just quote from the inspector general's report 
that I highlighted in my opening statement. It reads, and I 
quote: Some reported an overall increase in attrition and 
difficulties hiring individuals with rulemaking experience. 
Managers reported relying on detailees, in some cases with 
little or no experience in rulemaking.
    So--and that is in your own IG report. So help me 
understand why this is the case and why we should not be 
expecting and demanding more experience.
    Mr. Gensler. One, the leadership are terrific. These 
individuals of all six divisions are really quite talented 
individuals and lending their time and experience to the 
American public.
    Two, in terms of your question about attrition, we run 
about 6 percent attrition right now, which is consistent with 
many of the other agencies that you will be reviewing in the 
Federal workforce. And we have consistently also ranked as one 
of the best small- to mid-size agencies to work at by outside 
ranking services and surveys.
    So I am really proud of the SEC staff. I am proud to say 
that I am part of it, these remarkable 4,600 people, and their 
leadership of these divisions.
    Mr. Womack. Thank you.
    And I have gone over my time. I am going to yield to the 
ranking member.
    Mr. Hoyer. Thank you.
    So we can complete the answer to that question, he asked 
about relying on detailees as opposed to--as I understand it, 
relying on the expertise of the principals involved as opposed 
to detailees who had been sent over and getting their advice. 
Did you want to comment on that before I ask my question?
    Mr. Gensler. All right. Thank you.
    The individuals in our divisions, whether it is economists, 
whether it is lawyers in these various divisions, work for the 
SEC. And there are rule-writing shops in each of these groups, 
talented individuals. And we don't have detailees from outside 
the SEC. They are people in the SEC.
    What we do do is, each of those units internally find the 
best people to work on these projects. And they form teams 
between the Office of General Counsel, the economists, and they 
look at the legal authorities. They look at the market data. 
They look at the economics, and they make their best staff 
recommendations. And, of course, ultimately, it is the five 
Commissioners, and we form a consensus and put things out to 
public comment.
    Mr. Hoyer. Thank you. Let me ask you generally because the 
chairman has made a point of the increase that has been 
requested. And you indicated that you have some 40-percent 
growth in the market that you are looking at. Congress provided 
400 additional slots. You have not expanded to that, and you 
are still in that process.
    Can you discuss what limiting SEC funding would do for the 
fairness of markets and what the real-world impact would be to 
investors, including individual retirement accounts?
    Mr. Gensler. Thank you. I think the real world nature is 
that it comes back to human nature. Human nature is such that 
most people in the markets are good faith and do things well, 
but there are still some bad actors.
    And so we examine nearly 40,000 different registrants on a 
basis, and we do about 3,000 examinations a year. So you can 
see the math. We are not examining all of the registrants on a 
regular basis. We bring 700 or 800 enforcement actions a year, 
but the markets are so vast.
    So, in terms of real people's lives, it is protecting them 
against fraud. It is protecting them against Ponzi schemes and 
the like. And so that is really the bread and butter of this 
agency, and reviewing filings, whether it is a mutual fund 
filing or other filings.
    Mr. Hoyer. So, given the expansion of the market and the 
expansion of the participants--which is, I would say, analogous 
to the IRS, who has a lot more taxpayers and a lot more complex 
tax questions to resolve--if you do not get the personnel that 
you want, there will be a lack of oversight and a lack of 
enforcement?
    Mr. Gensler. Yes. Let me give you another statistic. We get 
between 2,000 and 4,000 tips, complaints, and referrals a 
month. 25,000 to 40,000 a year. And so our dedicated staff has 
to sort of sort through that, be responsive to the public, see 
what is there, and then, where appropriate, follow the facts 
and the law and try to get money back to the public, you know, 
through disgorgements and penalties and the like if the facts 
and law deem that to be appropriate.
    And so less dedicated lawyers and investigators and 
economists in an agency like ours means less protection for the 
public.
    Mr. Hoyer. And, if there is less protection for the public, 
would it be reasonable to conclude that the public would have 
less confidence in participating in growing the capital 
markets?
    Mr. Gensler. I think it is. And I think, to the chair's 
question, it is about capital formation and investors because 
investor protection means more people are confident in a 
market. It means people raising money and have a--in essence, 
can raise money cheaper because there is less of a premium for, 
you know, misdeeds in a market.
    Mr. Hoyer. Thank you.
    I yield back.
    Mr. Womack. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    Mr. Gensler, thank you for being with us today.
    The Office of Inspector General October 22 report, you are 
very familiar with that, I understand.
    Mr. Gensler. Yes. I am. And the chair and I just chatted 
about it.
    Mr. Moolenaar. Okay. And the concerns raised by managers 
from the SEC's various divisions about the increased risks and 
difficulties managing resources due to the aggressive 
rulemaking agenda at the SEC. Are you familiar with that?
    Mr. Gensler. I have read it. Yes, sir.
    Mr. Moolenaar. Okay. And you have had 11 Commission 
rulemaking--you had to reopen public comment periods for 11 
proposed rules. Is that true?
    Mr. Gensler. I think we have actually reopened more. What 
we do, from time to time, is we reopen if new items come up. 
Sometimes if new economic information comes up, we might 
reopen. Sometimes we reopen for other reasons. And I think it 
is actually more than 11 that we have reopened.
    Mr. Moolenaar. Okay. But, anyway, you have had a pretty 
aggressive rulemaking----
    Mr. Gensler. Well, actually, let me just put this in 
context. My predecessor, Chair Clayton, during his 4-year 
tenure, did 64 final rules. We have put out publicly that we 
are looking at this 50 to 55 projects. I could go back to my 
fellow Chair Mary Jo White, Chair. Schapiro. Chair Schapiro 
probably set the record. She had way more than either Chair 
Clayton or what we are looking at.
    Mr. Moolenaar. Well, in the report, it talks about the 
significant attrition rate with senior officers and attorneys 
being the highest percentage lost. It talks about data entry 
issues in 91 percent of the job postings reviewed; the 
inability to hire individuals with rulemaking experience, what 
the chairman had mentioned; dependency on detailees with little 
or no experience with rulemaking, potentially leading to more 
errors in decisionmaking; limited time available to research 
and analyze these rules and their effect on other rules; 
increased odds of litigation against the Federal Government and 
taxpayers; the inability to complete other core mission-related 
work due to rulemaking teams borrowing staff from other areas.
    And these appear to be things that have really bled into 
the entirety of the day-to-day life at the SEC. And it seems to 
highlight the need for effective resource management and 
prioritization in achieving organizational goals.
    And, when you think about your mission--and I know you 
think about that every day--accurate data entry is essential to 
ensure that the decisions are made. And, in fact, U.S. 
financial markets are based on reliable and accurate 
information.
    And it just appears, from this review by the Office of 
Inspector General, that there is a lot lacking there. And it 
really brings to--you know, questions. When you increase 
rulemaking activities, you don't have the staff capable of 
doing these things. The explosion of data entry errors. It 
really raises questions and confidence in your ability to lead 
the organization.
    And I am just asking, if this aggressive rulemaking agenda 
has placed a strain on your staff, are you concerned that the 
quality of the work proposed in final rules is slipping?
    Mr. Gensler. Sir, I am quite confident in the staff. We are 
in a very tight labor market. You all know this. We are in a 
very tight labor market. And the attorneys and the economists 
and the other folks at the SEC are sought after. They are 
deeply sought after by law firms and outside folks. But our 
turnover is consistent with what other agencies have been.
    And I also would say that our rulemaking agenda is actually 
consistent with what Chair Clayton was doing and other chairs 
were doing earlier. But do we look at each of the data entry 
pieces that you said and each of the parts of the inspector 
general's report? You betcha. We look at that. And we benefit 
from having a robust inspector general and tell us--give us 
good advice.
    Mr. Moolenaar. Well, it seems like it is more of a review 
in talking about areas that are really lacking. And I am just 
wondering, do other SEC divisions rely on data entry in their 
cost-benefit analysis?
    Mr. Gensler. We look at data, and we absolutely do. We do 
cost-benefit analysis or what is technically called efficiency, 
competition, and capital formation analysis in each one of our 
rules.
    Mr. Moolenaar. Well, I just wonder, if you have that many 
data entry issues in the job posting, you know, review those. 
It just creates a question of kind of the capabilities and how 
solid the efforts are.
    Mr. Gensler. If I might just say, we spend about $380 
million, $390 million a year on technology. And that is part of 
being in front of this committee. It is, like--we spend, in a 
year, what some large banks or investment banks or investment 
advisers spend in a month. So we are trying diligently to make 
resources for cloud, for data security, for data analytics work 
within that part of our budget. And that is an important part 
as well. We could do better if we had more dollars for 
technology.
    Mr. Moolenaar. Thank you, Mr. Chairman. I yield back.
    Mr. Womack. Mr. Cartwright.
    Mr. Cartwright. Thank you, Mr. Chairman.
    Chair Gensler, I was listening to Ranking Member Hoyer's 
questioning of you. And forgive us. There was some whispering 
up here.
    It is not true that he is actually your Godfather, is it?
    Mr. Gensler. We are going to keep that one a little quiet.
    Mr. Cartwright. But, seriously, I was listening to his 
questioning, and he was making some important points about 
confidence in the capital markets and how that flows from 
protection of the investors. Is that basically what you said?
    Mr. Gensler. Absolutely. And I think it helps capital 
formation as well as investors because confidence and trust 
underlies any financial system.
    Mr. Cartwright. Part of protecting investors starts at the 
point of sale with the broker-dealers. Am I correct in that?
    Mr. Gensler. Yes.
    Mr. Cartwright. So what we have is the Financial Industry 
Regulatory Authority, FINRA, that is charged with that. And 
people go to arbitration put together by FINRA. The SEC is 
tasked with conducting oversight of FINRA. Am I correct in 
that?
    Mr. Gensler. That is correct, sir.
    Mr. Cartwright. And certainly ensuring that it acts in the 
public interest for the protection of investors and in 
furtherance of the purposes of the securities laws. That is 
obviously in the Code.
    And, if the SEC finds that FINRA has failed to protect 
investors, the SEC may add to or amend FINRA's rule book or 
compel changes. And you are aware of that, Chair Gensler?
    Mr. Gensler. Yes. We got those authorities way back in the 
1930s.
    Mr. Cartwright. Okay. FINRA has the problem of uncollected 
awards. You are familiar with that problem, I take it?
    Mr. Gensler. In a general manner, I am familiar with it.
    Mr. Cartwright. Right. It does. And in fact, the problem is 
that--well, it started in a 2000 report from a nonpartisan GAO.
    And I do request unanimous consent to enter this report 
into the record, Mr. Chairman.
    Mr. Womack. Without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Cartwright. Okay. In 2000, the GAO found that a large 
percent of arbitration awards from 1998 went entirely unpaid by 
broker-dealers, and that an additional amount were only 
partially paid. GAO, at that time, in 2000, recommended that 
the self-regulatory organizations, quote, develop procedures 
addressing the problem of unpaid awards caused by failed 
broker-dealers.
    But a generation later, up to now, FINRA has not 
established any such procedures. In fact, FINRA's data show 
that nearly $200 million in awards went uncollected between 
2012 and 2016. And, even now, the latest information shows 
that, between 2017 and 2021, $94 million in arbitration awards 
went uncollected.
    And so the question is, will the SEC become more active in 
investigating this problem and laying down the law with FINRA 
to make them actually make changes so that--by definition, 
these are meritorious claims brought by investors who were in 
some fashion fleeced by broker-dealers and didn't get their 
awards paid.
    Will you undertake to put the hammer down on FINRA, as you 
are charged to do in the statute, so that they change their 
procedures and end this injustice?
    Mr. Gensler. So our oversight of the FINRA, as you said, is 
a really important part of our capital markets. It is a self-
regulatory organization that oversees and investigates and 
registers broker-dealers. And part of that is, of course, this 
matter that you just raised through our examination function 
and our division of trading and markets.
    And I know that they have already had discussions and will 
continue to highlight the importance of this, the importance 
that--whether it is through arbitration or through the courts, 
that, when somebody is awarded a disgorgement in penalties and 
so forth, that they are paid. I would note that sometimes those 
broker-dealers are out of business. So there is some of that 
that goes on, too.
    But I couldn't concur with you more that it is important 
for the confidence of investors that they are duly awarded 
something because of their claim.
    Mr. Cartwright. Right. Well, good. We agree, then, Chair 
Gensler.
    And will you undertake to make that more of a priority with 
the SEC?
    Mr. Gensler. I think it already is a priority. But I will 
commit to you that I will check with the staff and make sure 
that they understand the importance of this issue.
    Mr. Cartwright. Perfect. Thank you.
    I yield back, Mr. Chairman.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. Thank you, Mr. Chairman and Mr. Ranking Member 
Hoyer.
    And thank you, Chair Gensler, for appearing before our 
committee today.
    Iowans care about accountability. They care about focus on 
mission, jurisdiction. And you already mentioned the 
congressional mandate for the SEC in an earlier answer. And so, 
I think, to put it bluntly, we have seen you sprint outside of 
your congressional jurisdiction, specifically when it comes to 
the climate disclosure rule. I see it as a true weaponization 
of the department, and Iowa farmers, Iowa businesses, and Iowa 
workers see it that way, too. And I think it is high time that 
you reel it in. That is what I am here to tell you today on 
behalf of my constituents.
    And I dug into the place where you say in statutory 
authority--that you are citing 10 different sections of the 
Exchange or Securities Act in your proposal. And so my first 
question to you today is, where in here specifically did 
Congress give you the statutory authority, the jurisdiction, to 
enact this climate rule?
    Mr. Gensler. I thank you for asking. So our agreement, all 
the way back from the 1930s, is to ensure that investors get to 
decide based on full, fair, and truthful disclosure.
    Mrs. Hinson. I am asking you specifically about where your 
statutory authority is in sections 7, 10, 19(a), 28 of the 
Securities Act, sections 3(b), 12, 13, 15, 23(a), and 36 of the 
Exchange Act.
    Can you cite where it gives you the actual authority? 
Because I went through all these sections, and nowhere does it 
say ``climate,'' ``emissions,'' or ``greenhouse gas.''
    Mr. Gensler. But what it does say is that a company, when 
it is offering securities and offering sale of security to the 
public, that the public gets the description of the business, 
the material information, and that they can't mislead the 
public.
    And what is happening now is there is hundreds, if not well 
over a thousand, companies today in the markets that are 
putting out disclosures about climate risk. And there are 
investors that are relying on those disclosures. And all we are 
doing--we are not--with all respect, we are merit neutral. And 
that is an important part of our capital markets. We are merit 
neutral----
    Mrs. Hinson [continuing]. I think there needs----
    Mr. Gensler. We are trying to bring consistency and 
comparability to those disclosures.
    Mrs. Hinson. Well, it is very clear that--in these 
sections, it is not explicit as far as your lane is concerned 
there. And that is when I say it is time to reel it in. You 
need to be explicit about where your authority is. And I don't 
see that in these sections of Code that you reference.
    And I am also very concerned by the expansive reporting 
requirements for scope 3 greenhouse gas emissions, the 
devastating impact that that would have for Iowa farmers. 
Because under this rule--you know, you look at large 
corporations, they have teams of attorneys that can help them 
comply. Iowa farmers don't have that. So I am very concerned 
about the precedent that is being set here with these policies 
and what you are asking for here.
    So can you give me some examples of where the Commission 
has asked for this type of nonfinancial information to be 
disclosed in the past?
    Mr. Gensler. So our agreement is just over the public 
companies, the 7,000 or 8,000 companies. It is not the farmers 
that you are referencing. So that is probably--we share that 
view.
    And what this is about is the disclosures that the public 
companies are making. And we put out a proposal about trying to 
bring consistency to that. We heard a lot of comments back. So-
called scope 3 disclosures that you referenced is one of the 
handful--but important handful--of areas where people--public 
comment--we got 15,000 comments--came to us; 49 different farm 
bureaus came to us. And so I think that----
    Mrs. Hinson. Well, I understand----
    Mr. Gensler. And so I think----
    Mrs. Hinson [continuing]. Precedent for this. That is what 
I am asking.
    Is there any point in time where you can cite anything 
precedentwise where you have required this amount of 
disclosure?
    Mr. Gensler. It is just to bring consistency to the 
disclosure they are already making as it relates to this issue 
about--there is no intent or focus of the Securities and 
Exchange Commission to ask for disclosures from private-sector 
farmers in Iowa or in any of your States.
    Mrs. Hinson. Well, what I am hearing here is that this is 
unprecedented in your answer because you are not mentioning 
anything precedent. And I do believe that the focus of your 
agency should be on fraud, detecting Ponzi schemes, not on 
enacting a climate agenda, which, again, I believe exceeds your 
statutory authority here.
    Thank you, sir. I yield back.
    Mr. Womack. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman, Mr. Ranking Member.
    Thank you, Mr. Chair, for being with us.
    First off, just a budget question. Do you, right now with 
your current budget, have adequate resources to investigate 
emerging cryptocurrency issues?
    Mr. Gensler. We are stretched thin, sir. This is a field--
it is small compared to our vast hundred-trillion-dollar 
capital markets, but it is a field that has a significant 
amount of noncompliance in it, without prejudging any one token 
or one platform. We have increased our resources there, but we 
could always use more.
    Mr. Pocan. Yeah. Just with the volatility--I mean, we 
talked about confidence in markets. I think this is one area--I 
am concerned when some in the Republican leadership have talked 
about a cut. Going back to 2022 levels. Or this morning, Mr. 
Harris actually said pre-COVID levels. Going back even more 
years. You know, what impact that could have when there are 
emerging issues that you are going to need resources for. So 
thank you for that answer.
    Also, we have been reminded recently very clearly why 
Congress passed strong banking regulations like the Dodd-Frank 
law and why it was a mistake in 2018 to roll back some of those 
protections. We can likely agree that mismanagement and greed 
on the part of the executives at the Silicon Valley Bank led 
them to make some risky decisions that endangered their 
customers.
    I am particularly concerned about section 956 of Dodd-
Frank, which required a number of financial regulators, 
including the SEC, to set guidelines around responsible 
compensation incentives for bank executives and even prohibit 
compensation structures that drive executives to engage in 
risky behavior that may gain their shareholders bigger profits 
but also endanger the broader economy.
    So, to you and the Commission's credit, the SEC is the only 
regulator that has even attempted to fulfill this requirement 
that was passed into law a dozen years ago, but the rulemaking 
was never finished.
    Chair Gensler, do you plan on tackling these reckless and 
greedy incentives by having the SEC pursue a rulemaking process 
on this long overdue requirement?
    Mr. Gensler. Yes.
    Mr. Pocan. Great. Glad to hear that. I think, in talking 
about confidence in markets, this is clearly something front of 
mind for a lot of people.
    Let me talk to you a little bit about congressional insider 
trading. I know that New York Times recently said 18 percent of 
lawmakers or their family members bought or sold financial 
assets over a 3-year span.
    And, you know, again, for confidence in Congress--this 
isn't even in the markets. I know we have the 2012 STOCK Act 
that allows Members to buy and sell individual stocks, provided 
that they don't trade on inside information and disclose 
transactions over $1,000 within 45 days. There has been bills 
introduced to change that, to make it so we can't buy 
individual stock.
    And I will tell you, I am not one of the millionaires 
around here, so I don't have to buy a lot of individual stock, 
anyway. But I do get a lot of insider information almost on a 
weekly basis from companies and people that come in because of 
the access to people that talk to Members of Congress.
    How does the SEC conduct oversight on congressional 
trading? And how is a determination made if they believe a 
Member is violating the STOCK Act? And how would you define 
insider information?
    Mr. Gensler. A lot of questions there. But we follow the 
facts and the law. And so insider information--material 
nonpublic information that a company has that the public 
doesn't have. It is not yet disclosed in their press releases, 
their filings, and the like--is not meant to be traded upon by 
those insiders or people they share that information with, 
whether it is the broad public or a Member of Congress.
    And so we just follow the facts and the law. And we keep it 
confidential if we have an investigation, as we would whether 
it is somebody in the broad public or, of course, a Member of 
Congress.
    Mr. Pocan. In the minute I have left, just a quick 
question. I think a lot of us are concerned whether or not we 
are going to lift the debt ceiling and what could happen to 
markets.
    As someone who is watching markets and concerned about the 
faith in markets, are you concerned? And, if you are concerned, 
why? In case we don't lift the debt ceiling, what type of 
impact that could have?
    Mr. Gensler. Well, it would be historic, of course. And it 
would be--I mean, in terms of trust--we were talking about 
trust and confidence in capital markets. The capital markets 
themselves would take a real hit. I mean, we have the gold 
standard of capital markets around the globe. And part of that, 
at the base, is the U.S. Treasury market. There is 24 trillion, 
about a quarter of our capital markets. It is called risk-free, 
but you would add a great deal of uncertainty, and it would be 
frankly one heck of a shock to the capital markets.
    Mr. Pocan. Great. Thank you, Mr. Chair.
    I yield back.
    Mr. Womack. Mr. Cloud.
    Mr. Cloud. Thank you, Chair, Ranking Member.
    And thank you, Chair, for being here today. I wanted to 
continue on with the line of questioning Mrs. Hinson and other 
colleagues have had.
    The Securities Act of 1933 and the Securities Exchange Act 
of 1934--I am sure you are aware--defines what is your role and 
what the Commission's role is. You would agree?
    Mr. Gensler. Yes. Very important, it is also the 1940 acts 
on investment advisers--investment companies.
    Mr. Cloud. Right. And, of course, the job of the Executive 
Branch is to execute the laws, not create the laws. And we also 
have the Antideficiency Act that ensures that Federal employees 
don't use Federal resources to do things that they are not 
authorized and appropriated to do.
    I brought them with me today, the Securities Exchange Act 
of 1933, and, of course, we have 1934 right here. Are you aware 
of how many times--of course, we want good governance. We are 
all concerned right now. When I talk to banks, they are really 
concerned about the ESG initiatives that are being enforced. We 
want good governance.
    But do you want to guess how many times ``climate'' appears 
in these documents?
    Mr. Gensler. I understand the question. It is about full, 
fair, and truthful disclosure about the business----
    Mr. Cloud. It is zero. It is zero.
    Do you know how many times the word ``social'' appears? It 
is also zero.
    Right now, the SEC is currently working a rule that would 
require companies to report on the cost of climate change for 
their businesses above a certain threshold. It has been talked 
about scope 3, and you are saying that that is not going to 
hurt farmers. But the thing is, when a business is trying to 
get a loan, but they can't get a loan until they report on the 
next person in the supply chain who has to report on the next 
person in the supply chain, it does get down to the farmers.
    And so, you know, I am really concerned about mission 
creep. And, you know, it is really hard to see where the SEC 
and certainly you, as chair, would have any sort of authority 
to be enacting these things.
    And I would just keep in light of that, that the 
Democratic-led House last term passed H.R. 1187 to try to 
require the collection of this kind of information. It passed 
by one vote with a lot of wrangling from Democratic leadership. 
Speaker Pelosi, at the time, had to actually come down and vote 
herself to give them that one vote to pass. And it would 
mandate public companies disclose climate information.
    My point is, is it didn't pass. It wasn't taken up in the 
Senate. And, therefore, it is not law. And, therefore, there is 
no authority to collect this kind of information.
    Are you aware of West Virginia v. EPA?
    Mr. Gensler. It is a Supreme Court case of last year. Yes, 
very so.
    Mr. Cloud. Right. There are a number of findings in that. 
But, in one of them, the Court held that an administrative 
agency has no power to make decisions on major questions unless 
Congress clearly gave it such authority. And, as Mrs. Hinson 
pointed out, you don't have clear authority. You may be trying 
to skew authority or find authorities in law somewhere to do 
it, but you do not have clear authority to implement climate-
related data gathering on people participating in our markets. 
And it is very concerning.
    And I would just point out, we have watched bank failures 
happen, and a lot of it happened because regulators were asleep 
at the wheel. At the same time, we see unauthorized rulemaking 
going on. And it is very concerning.
    And I would point out to the chair's comments. You are 
asking for more employees to do your job, but then it seems 
like some are tasked to doing something that you do not have 
the authority to do.
    And so, you know, we are trying to provide efficient 
government. We want you to do your core functions. You are 
needed. No one is debating that. You need to have funding to do 
your core functions. But I am concerned about the argument for 
plussing up employees when you have employees tasked doing 
stuff they have no authority to do. And it is placing a burden 
on the American people. And it is trying to enforce policy that 
has not passed Congress.
    And so could you speak to your--can you--will you retask 
your employees--if you are asking for more employees, will you 
retask the ones you have working on these sorts of things to do 
what is their actually authorized core functions?
    Mr. Gensler. So let me speak to the climate rule and to the 
employees. On the employees, most of the staff we are asking 
for in the funding is about our core, and the growth is in 
exams, enforcement, technology, and disclosure review is the 
bulk.
    But in terms of the climate rule, if I could--if you wish--
it really is authorized by our statutes. And what we are doing 
is we are hearing from the public about where we potentially 
should look at economics, look at authority. We are aware of 
the Supreme Court case that you referenced. And we do 
everything we do within the authorities as interpreted by the 
courts. And that is important.
    Mr. Cloud. I want to remind you----
    Mr. Gensler. That is an important----
    Mr. Cloud. Public opinion flows through the Representatives 
of Congress, and then we tell you what the public are thinking, 
and then you go and do it.
    And I am out of time, so I will yield back to the chair.
    Mr. Gensler. Thank you.
    Mr. Womack. Mr. Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman.
    And welcome, Mr. Gensler. And I would like to follow up on 
that line of questioning. The environmental, social, and 
governance data that is up for disclosure and up for discussion 
today, is that consistent--isn't that consistent with your 
mission to protect investors, to maintain fair, orderly, and 
efficient markets, and to facilitate capital markets? Is that 
data--would that data be beneficial to investors to have? Or 
would it be harmful to investors not to have it, in your 
capacity as a regulator?
    Mr. Gensler. To answer your question and the other--
Representative Cloud's question, right now today, hundreds, if 
not over a thousand, companies are making such disclosures 
about climate risk. And so our role is not only to help bring 
consistency but to make sure that folks aren't misleading the 
public about these disclosures because investors--and we heard 
from 15,000 comments--thousands of investors wrote in and said: 
We currently use this information. We would benefit to ensure 
that it is at least consistent and not misleading. That helps 
capital formation. That helps investors. And it helps 
regardless of whether you are pro-green or pro---you know, you 
want to invest----
    Mr. Bishop. Is this consistent with your obligation?
    Mr. Gensler. It is consistent with what Congress 
authorities and mission that we have.
    Mr. Bishop. Thank you. Chair Gensler, for purposes of 
cryptocurrency, you have the unique experience of chairing both 
the Commodities Futures Trading Commission and the Securities 
and Exchange Commission. It is my understanding that 
cryptocurrency and the underlying blockchain technology 
typically defy categorization as either a security or a 
commodity because, quite frankly, they are neither.
    You understand more than most people the interplay between 
both Commissions and the extent of their jurisdictions. With 
that in mind, I would like to hear your thoughts on the 
regulation of the cryptocurrency market and, in particular, how 
you ensure that consumers are protected from fraudulent and 
predatory activity.
    Can you elaborate on what you think the SEC's role is when 
it comes to regulating the cryptomarket? And can you also 
follow that up by saying whether the SEC has any plans to issue 
a rule clarifying how securities law applies to digital assets?
    Mr. Gensler. At its core, when Congress set up the SEC, it 
was about protecting the investing public and thus the capital 
formation on the other side with this disclosure. And it was 
about--if somebody is raising money and the public is giving 
them money based on their efforts--the Supreme Court in 1946 
actually defined it, and then Thurgood Marshall wrote it so 
beautifully a few decades later. It was--Congress painted with 
a broad brush to protect the investing public when the 
investing public is basically investing or betting on a group 
of entrepreneurs.
    Now, cryptotokens. Without prejudging any one of them, you 
can look almost on nearly most of them--I am not going to say a 
number--and you can find a group of entrepreneurs with a 
Twitter site, with a website, with individuals. And I bet that 
most of you are not visited by decentralized, nonexistent 
management. If you are going to get a meeting with somebody 
from cryptotokens. There is a human. There is a group of 
entrepreneurs, or they are paying a lobbyist, or they are 
paying a lawyer to meet with you. There is some--and the public 
is basically giving up their hard-earned dollars to invest in 
that token. And that token entrepreneur should give them full, 
fair, and truthful disclosure.
    That is the core. So, frankly, of the 10,000 or 12,000 
tokens. There are very few that don't have a group of 
entrepreneurs in the middle that the public is counting on.
    So those are securities, sir, under the securities law.
    Mr. Bishop. So are you going to issue regulations?
    Mr. Gensler. The regulations actually already exist, sir. 
They are called the securities regulation. And so they are 
disclosure regulations for when somebody tries to raise money 
from the public. They are exchanged. The storefronts in this 
business--the storefronts call themselves either crypto-
exchanges or crypto-lending platforms. But those storefronts 
should come into compliance.
    And our goal is the investor protection and capital 
formation we have talked about earlier. But, even in the crypto 
space, they should come into compliance, and they should 
disaggregate. Right now, they are commingling with--it is rife 
with conflicts, that they are taking investors' funds and 
trading against the investors. And they are saying: Catch us if 
you can.
    That is the nature of this field right now. Or: Excuse me, 
we are offshore. Try to find us if we are offshore.
    And I have been around finance for 40-plus years. And there 
is--by and large, most folks are trying to comply with the laws 
as Congress writes them and so forth. But this is a field that, 
at its core, is sort of--it has got a lot of noncompliance and 
a lot--and it is with the anti-money-laundering laws and not 
just the securities laws.
    Mr. Bishop. Mr. Chairman, would you indulge me one quick 
question?
    Mr. Womack. The chair will indulge you, Mr. Bishop, only 
because your office is right across the street from mine.
    Mr. Bishop. Thank you, sir.
    We were approached--Members of Congress were approached 
with the proposition that we needed to regulate it by people 
who are in that offshore area. I am trying to understand how 
the regulation would have helped those people in that offshore 
area who now seem to be accused with wrongdoing.
    Mr. Gensler. Well, whether it is the Commodity Futures 
Trading Commission--which I was honored to chair, and I love 
that agency--or the Securities and Exchange Commission, both of 
us oversee parts of the market. And it is--if you are touching 
U.S. investors, selling these tokens to U.S. investors, then 
you come under either the securities laws or the laws that are 
of the Commodity Futures Trading Commission.
    Mr. Womack. Mr. Carl.
    Mr. Carl. Welcome, sir.
    Mr. Gensler. Thank you. Good to see you, sir.
    Mr. Carl. You are doing a great job so far. You are staying 
above water.
    Let me read this to you, though, because I am a little 
confused. Congresswoman Hinson and Cloud almost took all my 
thunder, and I almost didn't have anything to ask you. So I am 
scratching around here.
    But the primary purpose of the SEC is to enforce the law 
against market manipulation. Easy for you to say. Its three-
part mission is to protect investors; maintain fair, orderly, 
and efficient markets; and facilitate capital formation. What 
in the world has that got to do with emissions?
    Before you answer that, I am a little confused. Let me be a 
little sarcastic. I have got a friend of mine in the coffee 
business. If I want to know how all these 7,000 companies--what 
kind of coffee they use, can I get a question put on there to 
ask what kind of coffee they use so I can give it back to my 
coffee producer? Doesn't sound fair to me.
    So why is SEC getting involved in emissions with this 
climate change? And I am not a fan of it. I have not hidden 
that. For the last 3 days, I have been preaching from the 
highest rock. We can't afford the direction we are going. We 
cannot afford everything we are doing in this.
    Now, you have brought your very important group into this 
mission asking questions for whom? 10,000 people that wrote in, 
maybe? You said 10,000. How many people do you represent? 354 
million, you said? So can I find out what kind of coffee they 
are making?
    Mr. Gensler. It really comes down to this. And it is a good 
question. And Representative Cloud and Hinson asked really good 
questions, too.
    Mr. Carl. Yeah.
    Mr. Gensler. It is a much narrower remit. We are not merit-
based. It is not about what type of coffee you--was it drink?
    Mr. Carl. Yeah.
    Mr. Gensler. It is that investors today around the globe, 
thinking about the value of those investments that they make, 
are taking into consideration climate risk. And companies today 
are already making disclosures.
    Now, you could say, well, we shouldn't be involved. But 
there are already hundreds of companies making disclosures 
about their greenhouse gas emissions.
    Mr. Carl. And that is their personal choice to do that. I 
am not arguing. I am talking about your rules and your 
regulations that you are enforcing.
    Mr. Gensler. So our role is to ensure that those 
disclosures, to the extent--there is this concept of 
materiality as well--but those disclosures that investors are 
getting are not misleading those investors and that those 
investors are getting full, fair, and truthful disclosures.
    Mr. Carl. Yeah. I really question your motive there. I am 
sorry. I am going to have to push back on that one.
    Let me ask you this, then. Recently, you said the scope 3 
emissions regulations aren't well developed. I believe you then 
said you didn't want to get ahead of the process when you were 
asked about getting rid of these regulations. Can you quickly 
tell me if they are planning to get rid of these scope 3 
regulations?
    Mr. Gensler. Again, I don't want to prejudge. I am a member 
of a five-member Commission. It is how we all deliberate and 
what staff recommendations come up.
    Mr. Carl. So what is your personal opinion?
    Mr. Gensler. But, in terms of the comments that we have 
received, there is a handful of areas that are well known; all 
these comments are public. But this area of greenhouse gas 
emissions of a company--scope 1 and scope 2 is their 
electricity purchases--there is much more support in the 
comment file, both from investors and issuers, than there was 
for so-called scope 3, which relates to the supply chain.
    And it is not as well developed. We said this. I said this 
a year and a half ago. We took a layered approach. Even in 
their proposal, we said that that would only be done by fewer 
companies and have a big--sort of a safe harbor. But we are 
considering what to do there----
    Mr. Carl. I----
    Mr. Gensler. Because we really did get a lot of comments 
about this----
    Mr. Carl. I am sorry. I am running out of time.
    When are you going to have an answer on that? Yes or no?
    Mr. Gensler. I don't want to prejudge. Staff is working 
through----
    Mr. Carl. All right.
    Mr. Gensler. We have never had a comment file as big as 
this. On average, it takes us 12 to 15 months from a proposal 
to when we finish the rule.
    Mr. Carl. Yeah. You know, the idea of forcing these 
companies to figure out how much they calculated in their 
disclosure--carbon emissions produced by themselves as well as 
all their vendors, partners, and suppliers--is about as 
antibusiness as I have heard in a long time.
    And, given your background, you would think you would be a 
little more business friendly. Quite honestly, it goes against 
everything that--your bio that I actually read. Because this is 
very un-business-friendly. And we are in the business to help 
and assist companies to produce jobs, to produce a product, to 
stimulate this environment, so it creates taxes, so it pays 
bills to keep the air conditioner on in this room.
    So do we want to just--and I am out of time, but I will 
make this last statement. Why would we want to just keep 
sticking it to the businesses to just keep on piling on 
regulations, when all we need to do is leave them alone? There 
is enough people checking their emissions. We don't need the 
SEC doing the same thing.
    Mr. Gensler. I concur with you. That is not our role. Our 
role is to help----
    Mr. Carl. Then why do we do it?
    Mr. Gensler. So it is those raising money from the public, 
those companies raising money from the public, are currently 
making disclosures. And it is trying to make consistency. It is 
also trying to sort of tamp down greenwashing, if you have 
heard that phrase as well. It is trying to bring some 
consistency to those disclosures. And, also, based upon the 
comments that are coming in, to sort through, but we literally 
have hundreds of public companies that are supportive of pieces 
of this rule. And they say, you know, over here----
    Mr. Carl. They are supportive, sir, because they know they 
are getting pressure on them to do this. That is the reason 
they are doing it. They don't want any more regulations either.
    So, Mr. Chairman, I retire my time. Thank you.
    Mr. Womack. Mrs. Torres.
    Mr. Hoyer. Mr. Chairman, could I have one second?
    Mr. Womack. Mrs. Torres, if you would pause for just a 
moment.
    I will yield to the ranking member.
    Mr. Hoyer. I thank you.
    I want to get this straight. What the SEC is to do is to 
make sure the representations being made by those sellers of 
assets or companies trying to raise capital are accurate. That 
is your role?
    Mr. Gensler. Absolutely. Full, fair, and truthful.
    Mr. Hoyer. What you are saying is that 800, 900, a thousand 
companies have chosen to make a representation based upon 
climate or other factors, that you have not required that?
    Now, there was statute, as Mr. Clyde, I believe, pointed 
out, that failed, but you have not required that. But what I 
understand you are saying is, once the company makes a 
representation, it is your responsibility to make sure that 
that representation is accurate and true.
    Is that what you are saying?
    Mr. Gensler. That it is accurate, but it goes further than 
that because we put out a proposal that would--and many of the 
disclosures are exactly what you say. But we did put out 
something that, if it was, for instance, the scope 3 that we 
were talking about, our proposal--we don't know where we will 
end up, but, if it was material to the--in essence, to the 
business, if it was material to the investors, that you had 
some mandatory disclosure. And I think that is probably part of 
this----
    Mr. Hoyer. I understand.
    Mr. Gensler [continuing]. Discussion.
    Mr. Hoyer. Okay. Thank you, Mr. Chairman.
    Mr. Womack. Mrs. Torres.
    Mrs. Torres. Thank you, Chairman, and thank you for 
allowing this flow of information to continue----
    Mr. Womack. Absolutely.
    Mrs. Torres [continuing]. Even though we are literally 
under the clock.
    Thank you for coming to our subcommittee, Chair Gensler.
    You know, I understand that my colleagues disagree with 
your work on climate disclosures. My region, the State that I 
come from, is home to 40 million people. We know that climate 
change is leading to an increase in devastating fires, major 
floods with this rainstorms that we have had, tornado warnings. 
We have--don't know what a tornado is in California. We know 
all about earthquakes, but not about tornados.
    In most cases--well, in all cases, as property owners are 
trying to renew their fire insurance to fulfill the commitment 
that they have made to their--to the bank when they apply for a 
mortgage loan, in the last 5 years, our mortgages--our fire 
insurance has doubled in some years, and it has gone up at 
least 10 to 20 percent in other years. It is incredible what is 
happening.
    If--my point is that corporate America knows that climate 
change is real. Contrary to what some of us may want to 
believe, they are making real business decisions that impact 
the people that I represent. We must ensure that communities 
like mine are getting the information that they need in order 
to make financial decisions in light of climate change.
    So I urge you to continue to provide this information, 
because it is critical, at the very least, for the 40 million 
people in my home State of California.
    I want to go back to the issues with Silicon Valley Bank. 
Can you update us on--I know that you are in the midst of an 
investigation, but will there be an, you know, after-action 
report to find any lessons learned and implement them moving 
forward as to what you can do? What more can you do to ensure 
that we try to avoid another chaotic event?
    Mr. Gensler. Though I can't speak to any particular 
investigation or any----
    Mrs. Torres. I am not asking that.
    Mr. Gensler [continuing]. Enforcement.
    Mrs. Torres. Yeah.
    Mr. Gensler. But, when market events occur, sort of the 
playbook, if you wish, what we look at is where they are--what 
are the disclosures companies have made? We have had a lot of 
discussion about disclosures, but were they truthful? Were they 
accurate and full and fair?
    We look at were any--we look at, to the extent we can, was 
there any inside training, material, nonpublic information? We 
look at whether there was any market manipulation. These are 
the things that we look at in our enforcement regime.
    And we also look at, more broadly, how to--are there 
lessons learned to help make the system more resilient? There 
is always risk in capital markets. We are not--that is part of 
the dynamism of capitalism. But it is also ensuring that those 
risks don't spill out to, you know, regular folks.
    And let's just not forget that, in 2008, 8 million to 10 
million people lost their jobs. So part of an agency like ours 
is to try to look at lessons learned; is there resiliency in 
the capital markets around broker-dealers and asset managers 
and the like?
    Mrs. Torres. In 2009, you know, that many more people lost 
their homes to foreclosure because of, you know, terrible bank 
investments. They were investing against, you know, the people 
that they were mortgaging.
    So, with the cuts--I know that you oversee so many 
programs. You have had--what is that--numerous comments online, 
more than you have ever had over the 5--the last 5 years. What 
will a 30-percent cut across the board do to you?
    Mr. Gensler. I hope we are not talking about that, 
Congresswoman.
    Mrs. Torres. We have to talk about that because it is on 
the table as it relates to the majority's proposal.
    Mr. Gensler. Okay. I think the investing public would be 
shortchanged, and the capital formation--the companies that 
want to do right by their investors and raise money, that the 
investing public wouldn't have as much trust in those capital 
markets.
    I think that what we do as an agency on a day-to-day basis 
is really--is responsive to, you know, the world's gold 
standard of capital markets.
    Mrs. Torres. Thank you, and I yield back.
    Mr. Womack. Mr. Ciscomani.
    Mr. Ciscomani. Thank you, Mr. Chairman.
    And thank you, Chair Gensler, for coming before the 
committee today.
    You know, as the new guy on this table, I am going to, 
after listening to my colleagues here discuss really the scope 
and the depth of the SEC's rulemaking authority, I am going to 
start a little broader just to get a better understanding of 
some questions that I have.
    Would you mind outlining for the subcommittee how much 
funding goes towards the activities related to each individual 
part of the SEC's core mission of protecting investors, free 
markets, and capital formation?
    And, additionally, how many FTEs are associated with each 
one of those missions?
    Mr. Gensler. It is a good question. They are so 
intertwined. I mean, we promote capital formation by also 
protecting investors. We promote both by having the markets in 
the middle more competitive, more transparent.
    So we don't--we don't keep our books and records and 
separate out the three missions because they complement each 
other, especially the--I think of the first two, the capital 
formation, investors, or investors and capital formation, 
those--and so we don't--we don't--I like your question, but we 
don't keep our books that way because they are so intertwined 
really.
    Mr. Ciscomani. So I will follow up on that, on the 
spending, then. So how much of the budget for the SEC on the 
request--on the increase requested is dedicated to enforcement 
and examinations?
    Mr. Gensler. So a little over half our staff is enforcement 
and examination, and well in excess of half of the growth--I am 
just thinking--of the 170 more folks, I think about a hundred 
come from exams enforcement technology to support that.
    But, if I am off, we should come back to you.
    Mr. Ciscomani. Yeah. I would love to get some details on 
that. And, even if it can get a little muddy on my first 
question regarding a range of, you know, where the resources 
are being put. When I look at those three core missions, it 
would help me get an idea of where the majority of the efforts 
are going. So especially if half the staff or more is going 
towards the enforcement side and the examinations.
    In your fiscal year 2024 budget request, the SEC is asking 
for elevated FTE levels seemingly across the board, and can you 
please outline again, in the same vein of my questioning, which 
divisions will see the largest growth of FTEs and why?
    Mr. Gensler. Okay. The largest growth, which I think was 
actually in the--I--we put a little chart in the document, but 
let me just reference it so I am not mistaken.
    But the largest growth was, like--again, it is in 
enforcement and in exams. But third would probably be--I just 
want to make sure. It is actually the Division of Economic Risk 
Analysis is probably third.
    Mr. Ciscomani. Uh-huh.
    Mr. Gensler. No. I apologize. Our Division of Corporate 
Finance that reviews the filings of public companies is third, 
and then the Division of Economic Risk Analysis.
    Mr. Ciscomani. Thank you. I have about a minute and a half 
left. I will ask you one more question.
    We had Secretary Yellen here before the subcommittee last 
week, and I asked about how the system of--as a whole is 
reacting to Silicon Valley Bank.
    And so, Chair Gensler, as a voting member of the Financial 
Stability Oversight Council, did the SEC identify warning signs 
regarding the banks that recently experienced trouble when it 
came to rising interest rates, and why or why not?
    Mr. Gensler. So the Financial Stability Oversight Council, 
in its 2022 annual report, so late last year, identified 
interest rate risk as an important risk in the financial system 
and within banks. There was a whole section in the report. And, 
when interest rates rise, the value of securities and loans can 
fall, and so that puts pressure on the people holding those 
debt securities. And so it was identified, as I say, late in 
2022 in our annual report.
    Mr. Ciscomani. Mr. Chairman, I yield back. Thank you.
    Mr. Womack. Mr. Joyce.
    Mr. Joyce. Thank you, Chair.
    Chair Gensler, it is nice to see you again.
    Mr. Gensler. Good to see you, sir.
    Mr. Joyce. It--I can tell from the questions of my 
colleagues that this ESG question is still out there and 
remains ready to ripen.
    But I want to ask you: Do you support the double 
materiality standard which has been adopted by the Europeans in 
their corporate sustainability reporting directive?
    Mr. Gensler. Congress' mandate to us is about investors, 
and it is really about just what is material to an investor 
making an investment decision, and those decisions are buying 
or selling or voting a proxy. And that is--that is our remit, 
and it doesn't go further, and that is all we are looking at. 
So that is what some people would call single materiality.
    Mr. Joyce. Well, the Europeans now believe that not only 
material risk should be disclosed by public firms, but also 
risk posed by the firm's operations to society and the 
environment should be disclosed.
    What kind of information, if any, that progressive ESG 
advocates demand from public companies do you believe may not 
fit within the materiality standard or constitute a real risk?
    Mr. Gensler. Well, it is really about what investors--and 
we have heard from a remarkable number of investors about they 
are looking as client--as climate risk in terms of their 
investment decision, and that is the extent of our remit, which 
is different, as you said, than in Europe. And it is really 
about what climate risk might mean to their revenues, their 
profits, their suppliers, their competitors, what legislative 
bodies around the world, not just here in the U.S., might do to 
change their business and requirements.
    So that is what investors have told us. It is really about 
what is going to be the effect on the future financials and 
operations and competitive landscape and supply side of these 
businesses.
    Mr. Joyce. Well, the Appropriation Committee is serious 
about ensuring funds provided the SEC will be used to carry out 
the agency's mission as directed by Congress.
    Last year, we had some discussion on the request for 
funding that you had with cryptocurrency. I guess that didn't 
go so well, but I am concerned that the high volume of new 
rulemaking has prevented the SEC from fulfilling its basic due 
diligence obligations.
    For example, the agency's proposed rule requiring increased 
cybersecurity disclosures does not consider existing 
requirements established by Congress and agencies that 
specialize in cybersecurity, like CISA. As the chairman of the 
Homeland Security Appropriations Subcommittee, I am concerned 
that public reporting and cyber practice provide a roadmap for 
bad actors. Investors won't be protected by this rule if the 
firms they invest in are harmed.
    Are you working with CISA to make sure the SEC's required 
disclosures don't reveal sensitive information to 
cybercriminals?
    Mr. Gensler. We have had a good dialogue with Jen Easterly 
and her team. She is the head of CISA.
    Mr. Joyce. Oh, I know. She was in before our committee just 
this week. So that is why--
    Mr. Gensler. Yeah. And our remit, again--and it--we had 
this discussion about climate. It is really just investors 
making investment decisions. So, if a cyber incident happened 
at a company and hypothetically tens of millions of client 
files have been stolen or hacked or something, is that material 
to the company, sort of, in a sense, like a factory were to 
burn down, but, instead, a hundred million files are taken or 
something, is that material and then investors getting that 
information?
    We did put a proposal out, but it is a proposal about 
summary information. It is the information that would be 
material to investors, not the details of how the breach 
happened or so forth.
    Mr. Joyce. But, in order to accumulate that, they are going 
to have to create the document that somehow a bad actor may 
find, correct?
    Mr. Gensler. Well, they also have to sort of accumulate it 
for their board of directors--
    Mr. Joyce. Right.
    Mr. Gensler [continuing]. And discuss it with their board 
of directors. And, if they are discussing it with their senior 
leadership and their board, then to let their owners--the 
owners of the company, the investors, understand if--and our 
proposal was about material incidents.
    Mr. Joyce. I understand. And I understand I only have 40 
seconds left, or now--and decreasing, but I just want to follow 
up, too, on what they were talking about, the small business. 
You and I had this exchange last year, and you said it was only 
the publicly held companies.
    Yet in some of the comments that were received from NFIB 
indicate that they are still concerned that somehow this is 
going to affect the small businesses, or, as my colleague, 
about the farmers and other ones.
    Have you worked on trying to make sure they are excluded 
from that requirement because, obviously, they are not--they 
don't have the law firms and the people necessary to report 
this on a daily basis?
    Mr. Gensler. Right. Again, without prejudging what staff 
recommendations would be or my fellow Commissioners, I think 
that this has been an important exchange here today, but also 
with--the American public has weighed in as to we oversee the 
disclosures of these 7,000 or so public companies, not other 
companies that are not. And so sorting through some of these 
comments is part of what the staff is thinking through.
    Mr. Joyce. But, again, that would eliminate the mom and 
pops who are doing business with those publicly held companies 
because they fall in that same chain.
    But I am out of time, and I will give you 30 seconds extra 
that I took out. Thank you.
    Mr. Womack. Thank the gentleman.
    We are going to do a quick round two. I know Steny's group, 
for the most part, has left, but we have got several of our 
members remaining.
    Let me go back--I am going to close out my last question on 
the academics. And I got your answer, and I understand that. 
But, you know, academics that want to serve, that is a noble 
thing. And I am grateful for that, but I certainly would think 
that we should be incorporating academics that have some real-
world experience. That would be my ultimate goal were I sitting 
in your seat.
    I want to follow up on what Mr. Joyce was just talking 
about, scope 3, notwithstanding the SEC does an evaluation--an 
economic analysis of rulemaking procedures.
    Do the down-the-chain costs--are they considered? I mean, 
they are--particularly as it relates to the climate rule, this 
has a potential significant effect on small- and medium-sized 
businesses that are part of that whole supply chain, and, in my 
opinion, these costs are large, and may not have had the 
opportunity to comment.
    So your response to that?
    Mr. Gensler. If I can, with your permission, the heads of 
our Divisions of Investment Management, Trading and Markets, 
and Corporate Finance have served their public well but also 
have real-world experience. The heads of Investment Management 
and Corporate Finance are leading lawyers. Yes, they were at 
academia, but they were also--one of them was at a big law firm 
before he was in academia. I mean, they really are true experts 
on investment law and on corporate finance disclosure law.
    Our head of Trading and Markets is one of the leading 
people on what is called micromarket structure, but thinking 
about and really understanding how the details of a market 
work, and what we are trying to do on our Treasury market 
reforms and equity market reforms and the like are so incumbent 
to, again, promote capital formation and investors by trying to 
get more efficiency in the middle for the investing public.
    So, again, sir, I think they have very real-world economic 
experience. We are often told at the SEC to do our economics 
right. To have a world-class economist heading our Division of 
Economic Risk Analysis and Trading and Markets----
    Mr. Womack. All right. Let's move to----
    Mr. Gensler [continuing]. I like going into battle with 
these----
    Mr. Womack. Let's move to the impact on small business.
    Mr. Gensler. So, on small business, again, in the 
discussion, we look at the impact on small business across all 
our rule writing. But, in terms of this climate disclosure, 
again, we are looking at that because it is really about--our 
remit is just about those companies that are publicly filing, 
publicly raising money, and their climate risk disclosures.
    Mr. Womack. On the--we have got a very diversified economy. 
We have got a $20-trillion-plus economy.
    These disclosures--and you mentioned the consistent, you 
know, across this diversified economy. These disclosures are 
different from company to company. Are they not?
    Mr. Gensler. They can be, because some companies are in 
different sectors and so forth.
    Mr. Womack. Well, I guess my question, then, would be: 
Don't the companies know a lot more about their risks than a 
government agency like the SEC? I mean, would that not be the 
case?
    Mr. Gensler. What we lay out is rules--and we have for 
decades--like on material risk, we laid a rule out in the 1970s 
to disclose your material risks. We also, in the 1970s, laid 
out rules about environmental disclosures.
    What has come along is investors now are getting a lot of 
disclosures about climate risk. And, as we were chatting with 
Representative Hoyer, that they are already making these 
disclosures, and trying to bring consistency to that helps 
investors make their decisions. And it also helps the companies 
as well to have some consistency.
    Mr. Womack. I just guess my point is that, in your search 
for consistency, that the SEC is becoming judge and jury over 
which risks are important and which risks are not. And that is 
the basis of my argument.
    And I am going to--if my team will indulge me here for a 
minute, I wanted to--well, let me just do my data security and 
CAT question, I will submit for the record because I am out of 
time, and I want to be fair to all of the other members.
    I want to be fair to you, too, with your time. Thank you so 
much.
    And I yield back to the ranking member.
    Mr. Hoyer. I continue to struggle about the chick and the 
egg here, but I will pursue that later because I am not sure I 
have as deep an understanding, because it could well be a 
problem.
    On the other hand, the persons who determine whether or not 
there is a risk or--that they are willing to take are the 
investors, based upon the information that is disclosed, which 
you have the responsibility to make sure is accurate 
information.
    Now, I understand there is a process underway in which 
there would be a more active, positive, or some would say not 
positive, step that the SEC would be taking to require certain 
disclosures on energy or climate or actions.
    Am I accurate so far?
    Mr. Gensler. That is correct. And, also, there was a part 
of it that we proposed that it be put in the annual reports 
rather than just on your websites and other reports.
    Mr. Hoyer. Okay. So the concern is that we are making that 
a requirement. And as I understand the concerns being raised by 
some of my colleagues is that is beyond the scope of your 
authority to do?
    Mr. Gensler. Well, we think it is----
    Mr. Hoyer [continuing]. It is their premise.
    Mr. Gensler. And let me say we think it is within our 
authority. We have had mandatory disclosures about material 
risks to the business since the 1970s. We have had mandatory 
disclosures about management discussion and analysis since--
going back, again, 50 to 60 years. We have had mandatory 
disclosures about other environmental issues going for about 50 
years.
    So we do think that it is within our authority. But, in 
this space, in this climate risk disclosure, most of what we 
have done--not all of it--is about, if you make a disclosure, 
for instance, about your scenario plan or if you make a 
disclosure about your targets--make it accurate.
    Mr. Hoyer. Let me stop you there.
    The implication of ``if you make'' is, if the company makes 
a determination whether or not they want to make such a 
disclosure, clearly with the interest of encouraging greater 
investment, your role at that point in time is ensuring that 
that is accurate information that is being put forward?
    Mr. Gensler. Yes, or not material misleading, in the words 
of the statute.
    Mr. Hoyer. Oh, okay.
    Mr. Gensler. But there are parts of it that we proposed 
were mandatory, particularly around what was called scope 1 and 
scope 2 greenhouse gas. And then, in scope 3, we took a 
narrower remit and just said it was if material.
    Mr. Hoyer. All right. I am going to look into that further 
because I want to understand my colleagues' real concern to see 
whether I share their view that may have an effect on small 
enterprises which do not have the ability to respond to that or 
may not be--may be implicated by association, if you will.
    Mr. Gensler. If I could help the member out, most of those 
comments of--by your colleagues and the investing public is 
around what is called--so-called scope 3, the suppliers and 
customers of a business and what are their greenhouse gas 
emissions. And that discussion is an ongoing one by the staff 
and the Commissioners at the SEC because we did get a lot of 
feedback on that.
    Mr. Hoyer. So that is not a resolved question at this point 
in time?
    Mr. Gensler. It was proposed, but you are right. Nothing is 
resolved really in proposal adoptions or, you know, when that 
happens.
    Mr. Hoyer. Okay. Last question, which I know is not your 
direct responsibility, but I am interested in your thoughts on 
it. To what extent did the reduction in the level of capital 
reserves that was passed under the last administration, in your 
opinion, did it have on the failure of the SVB Bank--SVB?
    Mr. Gensler. I am sorry, sir. Are you talking about the law 
that was passed in 2018?
    Mr. Hoyer. 2018, yes. To--what effect, if any, do you think 
that had on the failure?
    Mr. Gensler. I think it would be better for me to leave 
some of those questions to the banking regulators that I know 
that are going to be reporting come May on that. It is probably 
a matter of public record that I was not supportive of that 
legislative initiative back in 2018.
    Mr. Hoyer. Why?
    Mr. Gensler. I thought at the time--and I have to remember 
the letter I wrote, but I thought at the time that there was a 
risk of correlation, that even these banks that are in this--I 
think it was raising the limit from 50 billion to a higher 
number, but that these banks--that there could be a correlation 
in the market.
    There was also some provisions about custodial banks and 
foreign banks, as I recall, that I raised some questions about.
    Mr. Hoyer. I will pursue that further.
    Thank you, Mr. Chairman.
    Mr. Womack. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    And thank you for your time. You have been very generous 
with your time.
    I am trying to get a better understanding of kind of how 
you view this role. The way I hear you, it is almost like you 
feel that you are providing a service to the businesses, the 
public companies--service to the investors, I should say, by 
vetting whether the companies' statements on climate are 
accurate, and you view that as a key role for the agency?
    Mr. Gensler. I think Congress set us up that that key role 
is that disclosures are there about the financials, the 
description of the business, as I say, over the decades, key 
risk.
    Mr. Moolenaar. Right.
    Mr. Gensler. And investors really get to decide what they 
think is material.
    Mr. Moolenaar. Right.
    Mr. Gensler. And, over the last 10 years, investors more 
and more have been looking for and companies are making these 
disclosures.
    Mr. Moolenaar. Well, I--no, I get it. There are activist 
investors with a political agenda. I mean, that is clear. And 
they want certain types of information.
    But what I hear you saying is this Federal agency really is 
in the--has the job of vetting to see whether those agendas are 
being carried out is really what I hear you saying. Almost--and 
I will contrast it because when I hear of a billionaire flying 
a private jet to Davos to talk about climate risks and then 
going off to the Super Bowl and Hollywood parties and saying 
they have been able to offset their credits doing some other 
project that they are involved in, I think that person is being 
hypocritical, but I don't think they are breaking any laws.
    And what I view a Federal agency like the SEC would be, you 
would be responsible for making sure people aren't breaking 
laws, not the fact that they are being hypocrites.
    And so that is where I want to understand really what your 
philosophy is when it comes to evaluating climate as part of 
your role of an agency.
    Mr. Gensler. It is far narrower than the word that you 
chose. It is not about vetting. It is about two things. We had 
this discussion. It is ensuring that those disclosures being 
made, particularly the material disclosures, are not misleading 
the public; they are full, fair and accurate.
    And there is also a part of our responsibility that, on 
certain disclosures, that they be made, they be required, like 
the financials, like the executive----
    Mr. Moolenaar. Right.
    Mr. Gensler [continuing]. Compensation, things like that.
    Mr. Moolenaar. Right. But, in the case of sort of the 
disclosures, why not have a private entity, like Standard & 
Poor's or Moody's or someone who can look at all the stuff 
these companies are saying to appeal to a certain agenda and 
let them do that, and you stay in the business of the 
regulation and, you know, preventing fraud, which, in my mind, 
when you say, you know, the SEC has been involved with--when it 
comes to environmental liabilities, you know, let's say there 
is a major clean-up that a company has to have or a consent 
decree that they are part of with the EPA that is going to 
cause them financial risk--I get why you would evaluate that.
    But, when it comes to them putting stuff on their website 
and saying they are following all these sort of social norms, 
why in the world would you want to expend valuable resources 
for your agency being in that role?
    Mr. Gensler. It is really to protect the public that there 
is not materially misleading disclosures, and it is also to 
promote the capital formation that investors get something 
consistent and they can make a comparative--there is a 
comparison between these investment choices.
    Mr. Moolenaar. But, if I am an investor in a company like 
that, can't I hire someone to give me advice on, okay, this 
company is doing what they say they are going to do, this 
company isn't? Why is it the SEC's role?
    Mr. Gensler. I think Congress decided many decades ago that 
it is our role because it is a role to help promote capital 
formation in this country and promoting it by having a Federal 
agency like ours to help bring some consistency. And some of 
that consistency is well established, of course, like generally 
accepted accounting principles and how you book revenues, and 
some is more emerging in these last dozen years that there is a 
lot of disclosures around climate risk and how to help bring 
some consistency. But it is merit neutral.
    Mr. Moolenaar. Well, I do feel like you are--you know, when 
the administration wanted to create this disinformation 
governance board--do you remember when the administration 
wanted to do that through Homeland Security? It feels very much 
like this, like you are putting yourself in this role of 
evaluating the claims of these businesses and really outside of 
your jurisdiction.
    Mr. Gensler. It is really up to the investors to evaluate. 
It is our role just to help bring some, as I say, truthfulness 
in advertising, if you wish, and, yes, some requirements on 
material disclosures.
    Mr. Moolenaar. Thank you.
    Thank you, Mr. Chairman.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. Thank you, Mr. Chairman.
    And, just to follow up on that briefly, I think it is very 
clear that, with Mr. Cloud's comments that Congress felt the 
need to pass something in the last--in the 117th Congress to 
clarify the position, that it wanted to give you the authority, 
which, again, I would argue you don't have. And we can disagree 
on that, but I think that congressional intent could not be 
clearer there.
    I do want to go back to something, though, that, since we 
have had such a conversation today about the rulemaking 
process, you know, under Democrat and Republican 
administrations, we have seen the public comment periods be 
historically 90 to 120 days, 3 to 4 months, for those public 
comment periods. But all of yours--almost all of yours--I 
should say almost all have been dropped to 30 days.
    Why?
    Mr. Gensler. Our--actually, on average, from the time we 
vote on our proposals and put them on our websites, we have 
averaged 78 days for----
    Mrs. Hinson. But for public comment, that narrow time when 
you are accepting those, 30 days, correct?
    Mr. Gensler. No. We accept comments throughout a period of 
time when it goes in the Federal Register--it takes some time 
to get in the Federal Register, but----
    Mrs. Hinson. Right, but you are saying average, right? 
Average is 78 days, but that includes the ones that are longer, 
so when I am looking at the intent of dropping most of them to 
30 days, to me, that is a transparency problem. It--to me, it 
says that you want to limit the number of viewpoints that are 
coming in by limiting it to 30 days.
    So that is highly concerning. I am hearing a lot about that 
from a lot of folks, let's say, about how much time they have 
to actually formulate and get their opinions in.
    We talk about that climate rule. Making sure that there is 
enough time for feedback on both sides of an issue, I think, is 
very, very important.
    I want to also go back to the inspector general's report 
for just a moment. Have any SEC managers expressed any concerns 
to you that, with the reduced comment time in some of these 
cases, that they are having trouble getting data from all 
stakeholders?
    Mr. Gensler. We--I want to assure the members, too. We get 
comments even after the comment period. We take meetings. Even 
this discussion today is part of our administrative record on a 
number of rules like the climate rule. And we consider that, a 
five-member Commission.
    So that is just the nature of these things. We have an end 
of a comment period, but we also often receive and consider 
comments well beyond this----
    Mrs. Hinson. So, even though the deadline may have passed, 
you are still actively considering the feedback that you are 
getting in?
    Mr. Gensler. Yes.
    Mrs. Hinson. Is that fair to say?
    I think it is concerning, though, when, in the report, it 
shows that staff do have concerns, here on page 3, that they 
have not received as much feedback during the rulemaking 
processes or--either as a result of shortened timelines during 
the drafting process or because of shortened public comment 
periods.
    So I think that is concerning when we are seeing that in 
the IG's report directly. There is a direct line there between 
a shortened comment period and this feedback in the report. 
Would you agree?
    Mr. Gensler. Well, I think there is a sentence in the 
document that says that.
    Mrs. Hinson. So, yeah, directly connected. So that is where 
my concern is specifically with the timing there.
    As far as recommendations from the IG, how many of them are 
withstanding? How many have been resolved?
    Mr. Gensler. We--we work with the Inspector General's 
Office to resolve comments. Most of--if I recall, were about 
human resources and hiring, and we go through that process with 
them. We would have to get back to you to tell you----
    Mrs. Hinson. Yeah. I would appreciate----
    Mr. Gensler [continuing]. That answer.
    Mrs. Hinson [continuing]. Within--I think we are asking for 
about 15 business days. If you would get those back to me 
within the next couple of weeks, I would certainly appreciate 
that.
    Mr. Gensler. You got that?
    Mrs. Hinson. Thank you. I yield back.
    Mr. Womack. Mr. Cloud.
    Mr. Cloud. Thank you.
    Chair, you continue to kind of say over and over that, 
okay, these businesses, they are already producing these 
reports and, therefore--but there is a difference between a 
company who voluntarily is doing something of their own 
initiative because they want to and the strong arm of the 
Federal Government coming in and requiring it for every 
business because there is a few businesses that want it.
    Can you not acknowledge that there is a big difference in 
that?
    Mr. Gensler. As we have discussed, there is attributes of 
our disclosure regime for decades that are mandatory and we 
require. There are some that are----
    Mr. Cloud. Your proposed rule requires businesses to do 
this, not only requires businesses to report it; requires them 
to report on their entire supply chain and their supply chain's 
supply chain in a sense. And it really--to anyone looking at 
this, really seems as--I think it as Mr. Moolenaar was saying, 
you know, really cognizant of a lot of the things we are 
seeing. And you said that your main job is basically to see if 
they are accurate and true. Is that right?
    Mr. Gensler. It is to bring efficiency--as Congress' words, 
it is also to bring efficiency, competition in capital 
formation, and so investors----
    Mr. Cloud. If your job is to make sure that these climate 
reports are true, are you planning to hire a bunch of 
scientists, or how do you plan to go about that?
    Mr. Gensler. The same way we do on other disclosures. It is 
really to set in place a set of rules, if we were to adopt 
this, but to set in place a set of rules. And then issuers 
follow the rules, and investors get to make their investment 
choices.
    Mr. Cloud. The other regulations that you talk about, that 
you require reporting on, things like executive salary or 
capital that is available, and those kind of things, those are 
all internal metrics that have to do with the financial 
stability of a company.
    To have climate regulations is something--it is a whole 
different thing, and you are comparing apples and oranges here 
and pretending they are the same thing, but they are not at 
all. It is kind of a bizarre approach.
    There has been values-based investing for a long time, I 
mean, people can look at companies and decide whether or not--
but, for the Federal Government to come in and decide that 
these are the particular values that we want to force reporting 
on, I think is very, very troubling.
    I mean, I am very concerned about human trafficking and 
slavery, and a number of the Green New Deal energy sources are 
mined with child labor in countries throughout Africa--the 
Congo, for example--and solar panels, a lot of them are built 
with slave labor in China.
    Are you planning on requiring reporting on that as well?
    Mr. Gensler. Again, this is driven by investors currently 
are making investment decisions based upon climate risk for 
the----
    Mr. Cloud. But that doesn't change your mandate at all. If 
every business in the country came to you and said, ``We want 
this,'' it doesn't change your mandate at all, does it, until 
Congress acts?
    Mr. Gensler. No----
    Mr. Cloud. You don't have any new authorities because a 
hundred businesses, as you said, want this--want new 
regulations?
    Mr. Gensler. I believe and our lawyers believe it is within 
the mandate Congress has already granted us.
    Mr. Cloud. Have you considered that a number of businesses 
actually like regulation because it creates an uncompetitive 
environment, particularly large companies that can afford 
lawyers and the likes to create these reports and--they are 
much more able to compete in that environment, and it squashes 
the competition of--it helps create the wealth gap. Have you 
considered that into your consideration on whether to promote 
these rules or not?
    Mr. Gensler. We do consider promoting competition for small 
business as well as competition among all the issuers as well.
    Mr. Cloud. And I only have a minute left, so I wanted to 
touch on this while we can. It is a different topic. And that 
is there was a mention about people in Congress stock trading. 
It is certainly a concern that is worth looking into.
    One thing that is completely overlooked that there is no 
transparency on--I have an act to--it is called the DIVEST 
Act--is to look into agency heads at a certain level and up who 
are investing in stocks in areas that they are regulating as 
well. Are you familiar with The Wall Street Journal report that 
came out in--I think it was August of last year, August of 
2022, that touched on this?
    Mr. Gensler. I am--I am generally familiar that there was 
some reporting--I don't recall which paper--about investing----
    Mr. Cloud. It highlights 25 percent of Federal officials 
who file public financial disclosures at the SEC were investing 
in stocks of firms that were lobbying that very agency. And so 
is that a concern that you are looking into, and would you work 
with me and maybe even perhaps support legislation like the 
DIVEST Act that would make sure that regulators are not 
investing in the areas that they are overseeing and regulating?
    Mr. Gensler. So, yes, we would work with you on technical 
assistance on any--and this is true of any Member, but we would 
work with you on it.
    In terms of the SEC--just in terms of the SEC, we have some 
of the highest level of restrictions on any trading, partly 
because of the nature of who we are and so forth. And we work 
with the Office of Government Ethics.
    For instance, none of our employees can invest in the--sort 
of the individual--the broker-dealers, investment advisers that 
we oversee and so forth, or any of the companies that we might 
be investigating or and so forth.
    There is a lot of--a lot of restrictions. At my level, it 
is not even allowed to--you know, the Commissioners, we don't 
even invest in any individual stocks. It is just the broad-
based indexes.
    Mr. Cloud. I apologize.
    Mr. Womack. Mr. Joyce.
    Mr. Joyce. Thank you, Chair.
    Chair Gensler, how has the huge number of proposed 
rulemakings at your agency impacted the quality of these rules 
and your ability to effectively consider comments submitted?
    Mr. Gensler. I think that the quality is quite strong. And, 
again, the--what we are doing is fairly consistent with what my 
predecessors have done.
    Mr. Joyce. Do you think this has affected your attrition 
rates?
    Mr. Gensler. I think that the attrition rate is driven by a 
tight labor market, really talented staff that are taken, but 
it is also consistent with other Federal agencies at this 
roughly 6 percent level.
    Mr. Joyce. As you know, the markets certainly don't like 
uncertainty. Are you concerned that so many transformative new 
rules, likely to be litigated for years, and massive swings in 
policy at the SEC would create uncertainty for many years to 
come?
    Mr. Gensler. I think of our agenda as helping the American 
public, whether they be issuers or investors, for many years to 
come.
    Mr. Joyce. Okay. Well, I mean, a new collective-bargaining 
agreement with the SEC Employee Union, I understand most 
employees will only be required to be in the office 4 days per 
month.
    How do you expect to effectively consider comments and 
perform adequate analysis on over 50 proposed rules with a 
workforce that barely comes into the office?
    Mr. Gensler. The workforce is fully engaged, and it is--I 
think we have all learned something over these 3 years. We 
brought--we did 3,000 examinations in fiscal year 2022. We did 
760 enforcement actions. We reviewed thousands of companies' 
filings, and largely through telework.
    It is--I am old enough to think, you know--this just--this 
is new technologies, adapting, and people find different work-
life balances.
    Mr. Joyce. Well, I think the best work that we do is when 
we are actually together on the floor and have the, you know, 
ability to interact with each other. But I will take your word 
for it.
    I am--give you back the remainder of my time, sir.
    Mr. Womack. For the good of the order, Mr. Hoyer?
    Mr. Hoyer. I think, for the good of the order, I will say I 
think we are about at an end, Mr. Chairman.
    Mr. Womack. We are, indeed.
    And, with that, I want to thank the members, both my 
friend's side and on our side. Very good hearing.
    I want to remind our members that they have 7 days to 
submit questions for the record with the appropriate 
subcommittee staff.
    Chair Gensler, as I said in my opening, it is a very 
important conversation we are having today. You have got a very 
important job in this country. We thank you for the time that 
you have given us today. We look forward to working with you as 
we complete the fiscal year 2024 FSGG Appropriations process.
    Mr. Gensler. And I look forward to working with you, and 
the conversation was helpful for me as well.
    Thank you.
    Mr. Womack. Thank you.
    And, with that, this subcommittee stands adjourned.

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                                          Thursday, April 27, 2023.

       FISCAL YEAR 2024 REQUEST FOR THE FEDERAL TRADE COMMISSION

                                WITNESS

HON. LINA KHAN, CHAIR, FEDERAL TRADE COMMISSION
    Mr. Womack. The subcommittee will come to order. I would 
like to remind everybody as a reminder, we will follow the 5-
minute rule for opening remarks, questions, and comments.
    Members will be recognized in order of seniority based on 
who is seated at the beginning of the hearing, rotating between 
the parties. Members that arrive after the gavel will be 
recognized in the order of arrival. So let us begin.
    I would like to welcome everybody to the Subcommittee on 
Financial Services and General Government, and I would like to 
welcome back to the subcommittee chair of the Federal Trade 
Commission, Lina Khan.
    As we all know, Congress is locked in a fierce debate 
regarding the fiscal trajectory of our Nation. One path, the 
path that we have been on, leads to the $31 trillion-plus debt 
mountain that skyrocketed inflation to 40-year highs and has 
most recently resulted in a rising interest rate environment.
    Excessive spending has consequences.
    The other path, which will require constraint, control, and 
cooperation has the makings of fiscal responsibility.
    Now during this debate, my colleagues on the other side 
have said that our plans to examine and potentially limit our 
reckless spending to fiscal year 2022 levels is Draconian, 
drastic.
    I would like to just point out to my friends that the 
fiscal year 2023 spending bill was settled just a few months 
ago. That means that we just started to operate at 2023 levels. 
The sky didn't fall for Federal agencies during fiscal year 
2022.
    Given this debate, it is appropriate for the subcommittee 
to carefully examine the budget for all of the agencies that 
fall under our jurisdiction.
    Today, we will explore the FTC's budget request that is 
asking for $160 million more over last year's enacted levels.
    This is, once again, a significant funding level for an 
independent agency that has received yearly increases. Requests 
of this magnitude must be explained and justified thoroughly. 
Questions of whether the FTC is performing its critical mission 
of protecting consumers and promoting competition appropriately 
need to be asked.
    Unfortunately, a once-bipartisan Commission has been 
reduced to one-party rule, and we are witnessing the effects of 
this change.
    The FTC, with a cavalier attitude, is weighing in on areas 
that are outside of its authority and deciding on issues 
through subjective means.
    We all agree that the work conducted to protect our seniors 
and our military through the FTC's consumer protections is 
critically important, but expanding the scope and following a 
philosophy of ``big is bad'' for its antitrust work is 
dangerous.
    Competition has always been measured through pricing and 
product availability, as well as the dynamic nature of business 
innovation. Moving beyond the objective to the subjective is 
discouraging to all kinds of business activity.
    Chair Khan, these are important topics, and I look forward 
to today's discussion, but to be clear, to no surprise, I can't 
support a massive increase for the FTC's budget, especially 
given the Commission's recent track record and given the 
Nation's current fiscal outlook.
    With that, I now recognize my colleague, and sitting in for 
the ranking member from Maryland, Mr. Hoyer, Mr. Pocan, for his 
opening statement.
    Mr. Pocan. Thank you, Chairman Womack. I would like to 
welcome Lina Khan, the Chair of the Federal Trade Commission, 
to today's hearing. I look forward to discussing what the FTC 
has accomplished and the direction it is going, as well as how 
the fiscal year 2024 budget request will provide the resources 
they need.
    The FTC protects consumers across vast swaths of the 
economy. They set rules and expectations for corporate 
behavior, ensure Americans have the information they need to 
make prudent decisions and investigate allegations of 
wrongdoing.
    The FTC assesses mergers and acquisitions and other 
competition issues for much of the U.S. economy, including 
technology, healthcare, energy, and pharmaceuticals.
    It also investigates unfair and deceptive practices related 
to privacy, cybersecurity, security, credit reporting, 
misleading advertising, and numerous other areas.
    The FTC has some of the brightest and hardest working 
employees in government, but these broad responsibilities mean 
that the agency must make hard decisions about what 
investigations to pursue.
    We have heard reports that when you go to court, FTC is 
often out-staffed dramatically by corporations in high profile 
litigation.
    I appreciate that you have requested substantial funding 
increases in the fiscal year 2024 to support the FTC's 
enforcement, rulemaking, and research priorities.
    The FTC is requesting a significant funding increase of 
$160 million, or 37 percent above the fiscal year 2023 enacted 
level for a total of $590 million. This funding would go 
towards additional staffing in the areas of competition and 
consumer protection, as well as support IT needs and expert 
witness testimony.
    This increase in resources will further empower the FTC to 
improve fairness in the marketplace and lower costs for 
American taxpayers.
    Additionally, because of the continuing surge in merger and 
acquisition activity, as well as changes to the FTC's fee 
structure, we anticipate the FTC will also increase its revenue 
by collecting more filing fees, which will offset a portion of 
the requested funding increase.
    Needless to say, the FTC is one of only a handful of 
agencies whose own fee structure helps to offset taxpayer 
funding.
    We look forward to discussing how the FTC will use these 
funds effectively to support its consumer protection and 
competition work.
    Before I yield back, I would like to note that this week my 
colleagues from the other side of the aisle have advanced a 
debt ceiling bill that would impose drastic cuts to Federal 
agencies.
    For the FSGG bill, that means cuts to agencies like the 
FTC, which protects Americans from fraudsters and scammers.
    The Consumer Product Safety Commission, which keeps unsafe 
products off the market, and the Securities and Exchange 
Commission, which protects the financial interest for investors 
and the IRS, which just received a much-needed increase in 
funding for enforcement efforts to crack down on wealthy tax 
cheats.
    I hope that my colleagues reject these ill-advised cuts and 
we can work together to protect Americans from those who seek 
to commit fraud and cheat the system.
    Chair Khan, I look forward to your statement and our 
discussion this morning.
    Thank you, Mr. Womack, and I will yield back the balance of 
my time.
    Mr. Womack. I thank the gentleman.
    I now recognize Chair Lina Khan. Your full written 
testimony will be placed in the record, and the floor is yours, 
ma'am.

                  STATEMENT OF HON. LINDA KHAN

    Ms. Khan. Chairman Womack, Ranking Member Hoyer, and 
members of the subcommittee, thank you for inviting me to 
testify today. It is an honor to be here. In my remarks, I will 
share with you some of the tremendous accomplishments by FTC 
staff over the last year and discuss the Commission's budget 
request for fiscal year 2024.
    We are grateful for the increased funding Congress has 
provided in recent years, particularly in this current fiscal 
year.
    We put the resources that Congress gives us to take on some 
of the pressing challenges that Americans face in our economy.
    As the Commission's written testimony lays out, the FTC has 
accomplished an enormous amount over the last year, despite 
significant hurdles. These accomplishments are a testament to 
the hard work and creativity of the FTC staff who, day after 
day, are fighting to protect American consumers, workers, and 
honest businesses, even when it means taking on some of the 
most powerful corporations in our economy.
    The FTC is small but mighty. During fiscal year 2022, the 
FTC returned $497 million to consumers and to the U.S. Treasury 
General Fund.
    To continue to fight for consumers and fair competition, 
the Commission is requesting $590 million for this upcoming 
fiscal year. This would increase our budget by $160 million and 
fund an additional 310 FTEs over our planned fiscal year 2023 
level.
    For fiscal year 2022, every dollar of the FTC's costs 
returned an estimated $30 in FTC-provided benefits to the 
American public. We expect that a larger budget would position 
us to further grow on this return on investment.
    We are making this request because Congress has given the 
FTC a critical job, but our resources have not kept up. Despite 
some of the recent increases in our budget, the agency today 
remains smaller than we were in 1980, even as the Nation's 
economy has grown six-fold since then.
    Demands on the FTC continue to grow as we review 
multibillion dollar corporate mergers, tackle major litigations 
against unfair or deceptive practices, review millions of 
consumer complaints a year, and respond to a steady stream of 
requests from Congress for research and investigation of 
various economic sectors.
    Additional resources would allow us to expand the critical 
work that the FTC staff is doing. On the consumer protection 
side, we have been redoubling our efforts in traditional areas 
of enforcement, like protecting Americans' privacy, and 
combating fraud, while also activating additional authorities 
that Congress has given us.
    In the last year alone, we have used, for the first time, a 
number of authorities that Congress has given us, including to 
tackle health privacy breaches and ``Made in U.S.A.'' fraud.
    We have also been racking up record monetary judgments, 
including the largest ever judgment to protect children's 
privacy, the largest monetary judgment in a fair lending case, 
and the largest administrative judgment ever.
    The Commission is also using all of its authorities 
provided by Congress to tackle illegal mergers and 
anticompetitive practices. Over the past 16 months, the FTC has 
moved to challenge major transactions in critical sectors of 
the economy, including semiconductors, defense, energy, 
healthcare, and digital markets.
    This includes filing suit to block eight mergers outright, 
as well as 11 other anticompetitive deals that the parties 
abandoned after the FTC indicated concerns.
    We have also been partnering up with the States to tackle 
anticompetitive practices, including a lawsuit that we filed 
last year against two large pesticide manufacturers, Syngenta 
and Corteva, whose pay-to-block schemes have been inflating the 
prices that farmers have to pay for pesticides.
    The Commission is also using its authorities to engage in 
marketwide inquiries, including studies that are taking a close 
look at the practices of pharmacy benefit managers, the 
middlemen that sit in between the pharmaceutical supply chain.
    We have also launched a study looking closely at the 
factors that contributed to the supply chain disruptions and 
trying to understand whether potential unlawful practices 
exacerbated the impact of those disruptions.
    We are also continuing to invest in our expertise. We 
recently launched an Office of Technology so that we can keep 
pace with an increasingly digitized economy.
    This new office is hiring data scientists and engineers, AI 
experts and technologists with expertise across a range of 
additional specialties. These talented individuals would 
partner up with our attorneys and economists to strengthen our 
enforcement work.
    In short, the FTC is on the front lines of some of the most 
pressing challenges that Americans face. Ensuring that we can 
fully execute on the mandate that Congress has given us 
requires a greater commitment of resources.
    Thank you for the opportunity to appear before you today. I 
look forward to your questions.
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    Mr. Womack. Thank you, Chair Khan. We will move now to our 
questions and answers, and I will lead. My first question, I am 
going to cut to the chase here, and I am going to use a 
military term in so doing.
    We continue to hear that there is a command-and-control 
issue at the FTC, from anecdotal conversations, to abysmal 
employee survey results, to an Inspector General audit that 
cited the Commission's limited controls in place for 
consultants, to news reports of a mass exodus of senior staff 
over the last 2 years, as well as the resignation of the only 
Republican on the Commission this year.
    I have to ask, Chair Khan, what is going on at the agency? 
While I am interested in the steps that you will take to 
correct it, I am more interested in frankly how we got to this 
place. To ensure this never happens again, please detail for us 
how we got here. Your turn.
    Ms. Khan. Thanks for the question, Congressman. Look, I am 
incredibly proud of the work that the FTC staff is doing day 
in, day out. We are on the front lines of some of the most 
critical challenges that Americans face.
    There is no question that there are things early in my 
tenure that we could have done better, and since then, we have 
been closely trying to understand some of the source of the 
decline in morale and identifying ways to improve that.
    Since then, we have been working closely with the staff to 
improve on those fronts, and are already seeing significant 
payoffs.
    As for the Commission, look, it is my firm belief that the 
Commission is at its best when we have five commissioners, and 
I am really looking forward to additional colleagues as soon as 
the President nominates them and the Senate confirms them.
    Mr. Womack. Do you encourage collaboration? Do you have an 
open-door policy? Do people use your--do you have one?
    Ms. Khan. Absolutely.
    Mr. Womack. Is it stated? Is it published? I mean, people 
know they can come talk to you?
    Ms. Khan. Absolutely. In fact, one of the things we have 
introduced under my tenure is open Commission meetings. So for 
the first time the Commission is conducting some of its 
business in public.
    Each Commission meeting, people can sign up. You know, 
regular members of the public can sign up and come speak 
directly to the Commission. And so in addition to this, we have 
also been regularly opening public dockets.
    And so on many fronts, the FTC is increasingly hearing from 
the public at greater levels than we ever have before, and we 
really benefit from hearing directly from the public and 
learning firsthand what are some of the key issues that 
Americans are facing.
    Mr. Womack. Do you encourage candor?
    Ms. Khan. Absolutely.
    Mr. Womack. I want to turn attention now to the FTC's 
productivity levels over the last few years. Specifically, how 
much time are you spending on consumer protection enforcement 
actions as compared to antitrust actions?
    Your budget reflects a larger request for the competition 
side when compared to your mission for protecting consumers. 
Please walk the subcommittee through your levels of 
productivity, and should we anticipate that this trend of more 
dollars being used on mergers and antitrust will continue?
    Ms. Khan. It is an important question, and currently, our 
efforts are organized by a Bureau of Consumer Protection that 
is bigger than the Bureau of Competition. What we have seen in 
practice is that bringing antitrust cases is more resource-
intensive than bringing consumer protection cases.
    So on average, we can bring a consumer protection case 
with, say, around 8 to 10 FTEs. On the antitrust side, bringing 
a single case requires at least 15 people, oftentimes 20 or 25. 
So we see just a significant resource asymmetry in terms of the 
number of people needed to bring these law enforcement actions.
    We have also seen an asymmetry in the level of expert 
costs. So expert costs, on the consumer protection side, can 
sometimes be in the tens-of-thousands or hundreds-of thousands-
of-dollar range, whereas expert costs on the antitrust side are 
routinely in the millions-of-dollar range.
    And so we just see, at a basic level, an asymmetry of what 
is needed to even bring antitrust cases in the first place, and 
that is what accounts for some of the discrepancy in the 
request.
    Mr. Womack. Yeah. Finally, Chair Khan, the $160 million 
increase, as I state in my opening, it is on top of significant 
increases in previous years.
    As we know, part of your budget is offset by merger filing 
fees. Walk the subcommittee through your take on the level of 
merger activity taking place in the country.
    Ms. Khan. So the merger activity that we saw over the last 
few years was off the charts. We saw about a 70 percent 
increase year on year, and that was as our staff levels 
remained the same. And so, our staff were under enormous strain 
to be investigating a dramatic expansion in number of merger 
filings that have been coming in.
    We have more recently seen some of these merger filing 
numbers decline, but they are still somewhat higher than year-
on-year averages historically.
    It is true that our budget is partly offset by money we are 
collecting through the merger filing fees, as well as fees 
collected through our Do Not Call Registry. And so, the amount 
that we are dependent on the General Fund is quite a bit 
smaller.
    Mr. Womack. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman.
    First, let me just ask about the conversation that there is 
going to be 22 percent cuts to the budget coming forward. For 
your agency in particular--and I would argue antitrust is 
consumer protection by the way--what would that type of budget 
cut mean?
    And even though your agency is a little different, that you 
get some funding from fees, what would that have as an impact 
on consumers?
    Ms. Khan. In short, it would be devastating. You know, we 
are on the front lines of hearing about fraud and scams day in 
after day out. This includes crypto fraud. It includes fraud 
and scams that are targeted at elderly Americans, at veterans.
    We have, you know, significant resources devoted to 
protecting Americans from these types of behaviors, and if we 
were to ultimately see the types of cuts that have been 
proposed, it would require potentially us to--you know, at the 
very least, would lead to a hiring freeze, and ultimately could 
even see a reduction in somewhere from 140 to 180 FTEs.
    Again, we are already at a stage where we can barely keep 
up with the work that is coming in, and so any further cuts 
would be quite devastating.
    Mr. Pocan. Thank you. Chair Khan, many of my colleagues 
are, I guess the word I would use is, obsessed with cracking 
down on an apparently pressing issue of our time, the social 
media platform, TikTok.
    While I think there is a target out there about data 
privacy in social media platforms that is broader than just 
TikTok, it does come as no surprise to my colleagues that the 
largest FTC penalty ever levied happened not too long ago on 
this broader issue of data privacy.
    In fact, just last year the FTC found that Twitter deceived 
users and sold data that was meant to protect their accounts.
    In 2019, the FTC slapped Facebook, now Meta, with a record 
$5 billion penalty and required them to modify their practices. 
We now know that 87 million Americans were affected by this 
rampant selling of user data.
    These companies aren't owned by the CCP. These are American 
social media companies. With regard to these platforms, what 
privacy concerns do you think exist for consumers, and what is 
a fair--and is it fair to say this is a widespread issue?
    Ms. Khan. I think it is absolutely fair to say that this is 
a widespread issue. As you have mentioned, there have been 
several major social media companies that have received FTC 
scrutiny and that the FTC had determined had potentially 
violated the law.
    I think if you step back, we see that some of this stems 
potentially from business models that are incentivizing endless 
vacuuming up of user data.
    I think especially when you have business models that are 
based on behavioral ads, the businesses can be incentivized to 
endlessly collect, and that can clearly come into tension with 
consumer privacy.
    Mr. Pocan. Great. Thank you. And Chair Khan, numerous 
reports indicate that health data collected by mobile apps is 
available for sale widely and at very affordable prices.
    I am concerned that this type of sensitive data collected 
and sold by the apps, that is meant to help consumers find 
cheaper prescription drug prices, or get access to behavioral 
of mental health services, is being sold en masse to data 
brokers.
    What actions has the FTC taken to reduce the amount of 
highly personal data that is being collected and resold by 
mobile apps, especially behavioral and mental health-related, 
often without a user's knowledge, and often this data is sold 
on a aggregated basis. But researchers have found that it is 
often not difficult to identify a specific person within that.
    How does the FTC factor the risk that personally 
identifiable information could be easily revealed through its 
enforcement work?
    Ms. Khan. This is a huge area of concern for us. We have 
recently brought several enforcement actions focused on the 
abuse of sensitive health information, including two cases that 
we brought against GoodRx and BetterHelp.
    In both of these instances we saw that companies had 
collected sensitive health information and then made it 
available for targeted advertising.
    And it is fair to say, I think, consumers are not expecting 
that when they are handing over this sensitive data, it is 
going to be made available for those purposes.
    So we brought an enforcement action, made it clear that 
these types of practices can be unlawful.
    We also, last summer, sued a major data broker, Kochava, 
for making available very sensitive geolocation information 
that could be easily purchased and used to identify whether 
people were going to sensitive locations, be it places of 
worship, addiction facilities, or other health services.
    And so, that litigation is ongoing, but needless to say, I 
think the explosion in user data that is available for sale, 
oftentimes very sensitive data, is a top area of concern for 
us.
    Mr. Pocan. Great. Thank you, Chairman.
    In my remaining seconds, the fact that they recently have 
an office to advise to technology, Congress had that prior to 
1995, and, you know, given our workshop yesterday on AI, all 
these other technology issues, this might be interesting to 
revisit when we actually have the full Appropriations Committee 
meet.
    Thank you. I yield back.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. Thank you, Mr. Chair, for holding this hearing 
today.
    Chair Khan, thank you so much for coming before us today 
and answering our questions. Obviously, the FTC serves a very 
important role in making sure that competitive practices can 
continue to exist in this country in the marketplace while 
still protecting consumers.
    But I am going to focus today on just some of my concerns 
surrounding what I perceive to be maybe going a little bit far 
outside of your jurisdiction on some of the rules and the 
process that when it comes to regulations is driving up the 
cost of doing business in this country.
    And when we talked yesterday, we talked about big business 
and small business and making sure we can protect our small 
businesses, and so one rule that I am concerned about and is 
moving forward, is the Commission's proposed Motor Vehicle 
Dealers Trade Regulation Rule.
    Obviously, the rule's intent is to help consumers, but many 
of the new paperwork provisions associated with the rule really 
haven't been tested, and from my count, there is at least four 
new disclosures that car buyers will have to both read and 
sign.
    And, you know, I have bought a vehicle myself. I know how 
complicated it can be, and we are adding a layer of 
complication here, so I just want to know why. Why are you 
enacting this new rule that really puts that onus on the 
consumer?
    Ms. Khan. Thanks, Congresswoman, and I really enjoyed our 
conversation yesterday about the importance of small business.
    So the FTC's work in this area and the proposed rule really 
follows years and years of enforcement activity. We all know 
that buying a car is one of the most significant and expensive 
purchases that an American makes, and unfortunately, we have 
seen certain practices persist.
    This can include certain bait-and-switch practices so that 
companies may be representing one set of commitments, but then 
ultimately switching what consumers are ultimately on the hook 
for.
    Mrs. Hinson. But aren't those things already illegal? I 
mean, where do you not feel that you don't already have the 
enforcement--that the enforcement capability doesn't already 
exist?
    I mean, when you look at the amount of time and effort that 
this is going to take on the consumer side, I just see this as 
an incredible burden, not only to our dealers who are now going 
to have to dedicate more additional staff time there, but to 
the consumer.
    I have been in and bought a car, right? I understand how 
many papers you already have to sign, and now we are putting 
that onus on the consumer.
    Do you not feel that you already have that enforcement 
capability, that things are already illegal that you are 
describing?
    Ms. Khan. So it is true that under section 5 of the FTC 
Act, we are able to reach some of those practices. I think in 
practice, what we have seen is that this case-by-case approach 
is not effectively deterring these illegal business practices. 
And so, codifying the illegality of these practices through a 
rule, we think, will both provide businesses much clearer 
notice about what is unlawful, make it crystal clear, and then 
also, give us more remedial authority so that if companies 
violate these rules and engage in these illegal practices, we 
can actually get money back to consumers. And so that is----
    Mrs. Hinson. With all due respect, I believe that is 
Congress' job to decide what needs to be in code here, not--
this shouldn't be happening through the rulemaking process.
    And another question I have in this regard, what is the 
cost to consumers? Have you actually accounted for that cost of 
additional time with this mandated rule and the paperwork here?
    Ms. Khan. So our proposed rule lays out some preliminary 
analysis, but it is just a proposed rule. We put out the 
proposal for comment. We received somewhere between 10- to 
11,000 comments, including commenting on some of these issues, 
and so our staff is currently looking closely at some of the 
input and will determine how to move forward.
    I will say, the rulemaking is pursuant to the authority 
Congress gave us in Dodd-Frank where they authorized us to 
issue a rule addressing practices by auto dealers.
    Mrs. Hinson. Have you done any qualitative research in this 
case?
    Ms. Khan. Our economists have been doing quantitative 
research, which is in the rule. I believe some of the input we 
are getting is more on the qualitative side.
    Mrs. Hinson. Yeah, I would say it is prudent to consumer-
test when you look at the paperwork requirements before you 
propose them to see if they are working as intended. So I would 
ask you to seriously consider that before any further movement 
on this rule.
    And since we don't know if they will actually work, and 
they haven't been tested in practical application, if you wind 
up confusing customers and this doesn't work going forward, 
what action are you prepared to take at the FTC to reverse 
course on this if it is a damaging rule?
    Ms. Khan. Yeah, look, we all share the goal of making sure 
that this is improving the process for consumers, not adding 
any type of confusion. And so if ultimately we ended up getting 
data or input or research that suggested it wasn't working as 
intended, of course we would revisit that.
    Mrs. Hinson. Well, I would like to submit, Mr. Chair, for 
the record, a letter that I, along with many other Members, 
bipartisan Members, wrote to the chair and the FTC to ask her 
to back off this rule.
    And I believe it is going to be damaging to consumers in 
the long run, and really will hurt our small businesses, right? 
Many of our auto dealers are small businesses. From my 
district, I have many who employ dozens and dozens of people 
from techs to sales people. So, they are supporting a lot of 
families, and this will create a more challenging process on 
the consumer side.
    So without objection, Mr. Chair, I would ask that this be 
submitted for the record.
    Mr. Womack. Without objection.
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    Mrs. Hinson. Thank you, Mr. Chair. I yield back.
    Mr. Womack. Mrs. Torres.
    Mrs. Torres. Hello, good afternoon, Chair Khan. It is 
really good to see you, and thank you for responding to my most 
recent letter about reducing gasoline prices. As you know, 
Californians in my district have been hit hard by high gas 
prices this last winter, and I look forward to continuing to 
work with you to address this issue.
    I also want to follow up on an important issue of companies 
profiting off of people's sensitive location data. As you know, 
I remain concerned that companies' unfair data practices can 
allow opportunists and extremists to hunt down women seeking 
abortion.
    It is why a sent a letter last year, joined by 71 of my 
colleagues, urging you to do everything in your power to 
protect women from extremists.
    In State after State in this country, conservative 
activists have gone after women, trying to stop them from 
receiving safe abortions and threatening to punish them with 
prison if they do so.
    If these conservative operatives have access to a woman's 
data, they could track her, know if she Googled ``abortion,'' 
know if she went to an abortion clinic, know if she missed her 
period in the app.
    This is the world that we live in, where a woman told by 
her doctor that her fetus won't live outside of the womb, 
someone who needs an abortion now has to worry about being 
hunted down as a criminal. No one should be hunted down and 
persecuted for seeking an abortion.
    The FTC must continue doing everything in its power to 
protect Americans from unfair data practices, and stealing 
sensitive data also has real-world consequences for people 
visiting a church, a temple, an addiction center, or trying to 
evade a stalker, such as a victim of domestic violence.
    Can you talk about the actions the FTC has taken to reduce 
the amount of highly personal data being collected and resold 
by mobile apps, especially geolocation data often without the 
users' knowledge.
    Ms. Khan. Yeah. Cracking down on the abuse and misuse of 
sensitive personal information is a top priority for us. Last 
year, we brought a lawsuit against a major data broker that was 
making some of this very sensitive information, including 
geolocation information, available for sale quite easily.
    And that data could actually be used to precisely identify 
where specific individuals were traveling.
    So as you noted, that could reveal whether they were going 
to church or temple, whether they were seeking healthcare. And 
so we have a lawsuit----
    Mrs. Torres. Or if they are a targeted Member of Congress, 
where they are going.
    Ms. Khan. Exactly. We have also brought cases addressing 
stalkerware, instances in which this data is being abused to, 
you know, perpetuate stalking. So this is a top priority.
    We also currently have a rulemaking ongoing that would 
consider whether we need marketwide rules to address some of 
these practices head on.
    Mrs. Torres. Thank you, I appreciate your response.
    I also believe that the FTC plays a tremendously important 
role protecting people from scams. I hear a lot from my 
constituents how they invested, you know, hard-earned money, 
what they thought was in a safe way, and later lost all of it 
because it was a scam.
    These scam artists target vulnerable people. They find an 
elderly veteran, a very young person, status family, and they 
lie to steal their money.
    If I use a credit card for one of these scams, most likely 
I am able to get the money back, but if I use an ATM card, I 
will not be able to get any of that money back.
    We know that both scams and hate crimes are underreported 
often because the victim is afraid or ashamed that--or doesn't 
believe that there is anyone out there, you know, who cares to 
protect them.
    The FTC actually, you know, doesn't cost taxpayers 
anything. The work that you do saves our taxpayers money. In 
looking at the cuts proposed by the Republican Congress 
majority, can you talk a little bit about how that will impact 
day-to-day consumers that are often targets of scams?
    Ms. Khan. So it is absolutely true, we receive huge amounts 
of complaints about ongoing fraud and scams. We receive around 
6 million complaints a year. Around 4 million of those 
oftentimes relate to fraud in particular.
    We have also seen particularly that fraud targeting elders 
or people of color may be underreported, and so even the data 
may understate the degree to which these practices are ongoing.
    It is absolutely true that the types of cuts that are being 
proposed would come at a serious expense of our being able to 
fight hard to go after those practices, and also to critically 
get back money for consumers.
    We have current rulemakings in place that would go after 
things like imposter scams, or fake earnings claims that 
exaggerate the amount of money people can make, that make it 
easier for us to get that money back, but some of these cuts 
would certainly come at the expense of that work.
    Mrs. Torres. Thank you. I appreciate it and I yield back.
    Mr. Womack. Mr. Cloud.
    Mr. Cloud. Thanks for being here today. I wanted to talk to 
you about a proposed rule about noncompetes. And I know it was 
mentioned in the State of the Union about noncompetes with 
burger chains.
    I am not sure that is a huge deal, but some small 
businesses are very concerned about the proposed rule in the 
sense of, you know, they want to be able to bring on new 
workers, they want to bring on and be able to train people into 
a new career or profession, but also do have the need to be 
able to protect their intellectual property, their business 
practices, and especially non-solicitation in the sense of 
having someone come in, study the business, learn the business 
for 5 years and then, you know, go off start their own and call 
on their customers immediately.
    You know, we are all for fair competition in the 
marketplace and if they want to build their own business and do 
whatever, but in the sense of using a business simply to abuse 
the privileges and everything you learn at that business to 
undermine the very business that taught you those things.
    So could you speak to that and address those concerns and 
how you will take them into account?
    Ms. Khan. Yeah, we absolutely are interested in hearing 
from small businesses. Our comment period on this proposed rule 
actually closed just last week, and we received around 26,000 
comments, including from small businesses, and so, we are keen 
to look closely at those comments and determine where to land.
    Interestingly, we have also heard from small businesses 
about the ways that noncompetes can impede their ability to get 
talent and expand.
    So one thing that we have heard is that businesses that 
have been able to secure financing, that have been able to 
build factories and are looking to enter markets that are quite 
concentrated, have ultimately realized that they are not able 
to access the necessary workers because those workers are all 
locked up in noncompete----
    Mr. Cloud. But isn't that a solution of the marketplace 
to--you know, if a business is having a problem finding 
workers, then it is behooves them to adjust their practices and 
how they address their own noncompetes.
    It doesn't require a top-down approach to manipulate the 
market if that is the concern you are trying to address.
    Ms. Khan. So in instances where it is new businesses 
entering that don't currently have the workers with the 
relevant skill set, it is really in their competitors' interest 
to keep those workers locked up. And so I don't think we have 
seen the type of market response we would.
    One thing that our proposed rule asked was whether 
alternatives----
    Mr. Cloud. Businesses will generally respond to their 
competitive interests. It doesn't need the government 
intervening to help a business find its competitive edge.
    Ms. Khan. So one thing that we asked in the proposed rule 
is whether alternatives to noncompetes, like tailored 
nondisclosure agreements or trade secrets laws, can help 
account for some of the concerns that you mentioned, and so 
that will be one area where we will be looking closely in the 
comment record.
    Mr. Cloud. Okay. Well, I would urge you to be very careful. 
A lot of States also regulate this on their own, and as we 
know, in a Federal system, you know it is best left to States 
to manage what they can manage and then us to take on the rest.
    One other issue I wanted to talk about is the concern, 
broad concern, bipartisan, on data collection, specifically, 
you know, I was really concerned with COVID and the data 
collection on kids.
    And, you know, many of the--I remember trying to log on, 
and I had data protection on my kids' computers and all those 
kind of privacy protections on my kids' computers and 
everything. And literally to log on to one of the educational 
apps, I had to type in a password 50 times just to get them 
into what they needed to do for the couple weeks, you know, 
they were distance learning.
    I am curious as to what you are doing to look into these 
companies--a lot of these parental applications seemed designed 
by lawyers, not really for the benefit of the kid or the 
parent--and what we can do to protect those kids.
    And also, I think one of the things, when we talk about 
data privacy, is, we kind of assume that the data is owned by 
the collector as opposed to the person who is creating the 
data, and whether or not this should be addressed as almost a 
property rights issue to where if you are creating the data, it 
is your data, it is your information, as to whether or not we 
should even not accept the premise of the question, and whether 
or not we should look at this as more the individual has more 
rights in this space.
    Ms. Khan. Yeah, it is a really interesting question, and I 
think some of the proposals that Congress is considering to 
further loose protections in this area would hopefully address 
that. For us at the FTC, we are working hard to protect 
children's data, including in the EdTech context that you 
mentioned.
    Early in my tenure, we put out a policy statement, putting 
EdTech providers on notice, that they are not permitted, even 
under existing children's privacy law, to require that kids, or 
their parents, surrender to endless data collection in order to 
use these critical technologies because I saw----
    Mr. Cloud. And it is also just the pragmatics of, you know, 
as a parent, they almost get in the choice of, I get to try to 
sign on to this Byzantine process that protects the company and 
the lawyers, and the Big Tech company or software company can 
say, Look, we have these protections.
    But they are so impractical to use that the parent is 
actually sitting there with their kid and like, Okay, I either 
have to open this up so they can actually use this, or I can't 
really practically use this tool. And that is kind of the 
choice sometimes parents seem to have.
    Ms. Khan. That is exactly what we have seen, and that is 
what we put EdTech providers on notice that even under existing 
law, they can't require parents to just surrender to endless 
data collection because we saw, absolutely, especially during 
the pandemic, when overnight, kids were having to use these 
apps to do their homework, those privacy concerns really went 
off the charts.
    We also recently brought an enforcement action against Epic 
Games for engaging these practices that were really putting 
kids' data--exposing kids' data and leading to all sorts of 
very troubling practices. So this is a big area of focus for 
us.
    Mr. Cloud. Thank you.
    Mr. Womack. Mr. Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman, and welcome, 
Ms. Khan. Thank you for the courtesy call we had earlier in the 
week.
    The FTC is an independent agency with two major 
responsibility areas, of course one of which is the promoting 
competition authority which administers the pre-merger 
notification program, reviews proposed mergers and 
acquisitions, and enforces the antitrust laws along with the 
DOJ.
    You also have the responsibility of protecting consumers, 
investigating unfair and deceptive acts or practices that 
affect commerce.
    In December of last year, the FTC issued an administrative 
complaint to block the merger of Microsoft and Activision 
Blizzard, two of the large U.S. video game companies.
    And I understand that FTC has opposed the Microsoft 
acquisition of Activision, which the U.K.'s competition 
regulator announced yesterday they would block.
    Microsoft and Activision have said that they will appeal 
it. Of course, the European Union Commission has not yet ruled. 
I wonder if this whole process is losing sight of a more 
important issue, which is U.S. competitiveness in the global 
marketplace.
    American jobs depend on American global competitiveness, 
and as I understand it, Sony dominates gaming, and blocking 
this deal seems virtually certain to ensure that Sony will 
dominate for years to come.
    Surely there has to be some room for a more pragmatic 
approach that allows the benefits of the deal while 
simultaneously protecting competition.
    I understand that you can't discuss the details of the 
Microsoft-Activision merger, but I am interested to understand 
how you direct your staff to approach merger remedies.
    Am I correct that the FTC takes into account a 
transaction's potential to promote or to restrict competition 
against foreign rivals and to foster fair and equitable 
economic opportunity for Americans?
    Ms. Khan. It is an important question, and I think 
historically what we have seen, is that strong, robust 
competition domestically has been what has best positioned 
America on the international front.
    Historically, we saw that, you know, when other companies 
were doubling down on protecting their national champions, the 
U.S. instead took a different route, be it with AT&T or IBM. 
And actually taking strong antitrust enforcement in those 
contexts was critical for unleashing innovation, including the 
multi trillion-dollar software industry that we have.
    So stepping back, we have seen how strong competition 
domestically is best positioning us for competition 
internationally and really key to promoting innovation.
    Mr. Bishop. Well, that merger would probably limit 
competition domestically if you block it.
    Let me move on to another area, and that is the pharmacy 
benefit managers. I have been hearing from my constituents 
numerous complaints about the practices of pharmacy benefit 
managers which they say drive up the prices of drugs, are 
making it harder for the small, independent pharmacists to stay 
open, particularly in rural areas where pharmacies are few and 
far between.
    Last year, FTC announced it would look into the industry 
and the impact of the vertically integrated pharmacy benefit 
managers on the access and affordability of prescriptions 
drugs.
    Can you let us know the status of this inquiry, and does 
FTC have sufficient resources to address what appears to be a 
large issue of affordability of prescriptions drugs? And can 
we, in Congress, help you with those resources?
    Ms. Khan. Yeah, this is a key initiative for us. Early in 
my tenure, we opened a public docket to hear about potentially 
unfair contract terms, and we heard an enormous amount from 
pharmacies, as well as patients who suspect that the practices 
by the big PBMs are depriving them of access to critical 
medicines.
    So this study is underway. Candidly, additional resources 
would be a big boon to us here. This is definitely one of the 
projects that, if we were to ultimately get a cut in funding, 
could potentially be compromised.
    Mr. Bishop. Thank you. My final question has to do with 
competitiveness in the grocery and pharmacy business. You have 
promoted revival of the Robinson-Patman Act as a means of 
restoring competitiveness in independent grocers and 
pharmacies.
    And you know that it is an antitrust law preventing large 
franchises and chains from engaging in price discrimination 
against small businesses.
    If a wholesale supplier sells products to a franchise at a 
discounted price not available to the smaller business, such as 
a volume price, well, they could in violation of the Robinson-
Patman Act.
    Can you discuss how this tool might help our rural 
communities, which often rely on family-owned groceries and 
pharmacies forhousehold necessities? What kinds of challenges 
does FTC face in managing a law that hasn't been enforced for 
more than two decades?
    Ms. Khan. It is a great question, and one of my top 
priorities when I came into this job was making sure that the 
FTC is fully enforcing all of the laws that Congress has 
charged us with administering. Robinson-Patman is one of these 
laws, it is on the books, and so we take enforcing it very 
seriously.
    We have certainly heard concerns from independent grocers 
in particular, including those in rural areas, about how price 
discrimination, particularly by the big wholesalers or big 
retailers, could be coming at the expense of independents, and 
really leading to food deserts and exacerbating supply 
shortages that we are seeing especially in rural areas.
    So we take that very seriously. We have a terrific staff 
that are looking closely at what it would take to reactivate 
the Robinson-Patman muscle, and we are hoping that we will be 
able to share some of that publicly in the coming months.
    Mr. Bishop. Thank you very much. My time is expired.
    I thank you, Mr. Chairman.
    Mr. Womack. Mr. Carl.
    Mr. Carl. Thank you very much, Mr. Chairman.
    Chair Khan, the proposed Motor Vehicle Dealers Trade 
Regulation Rule--that is a mouthful--is expected to cost over 
$1 billion by the FTC's own estimates, and these extra costs 
will likely end up being paid for by the car buyers, as we all 
are fully aware of.
    Any time a government rules and regulations makes products 
more expensive for the consumers, there are fewer people who 
can afford them. That is common sense, right?
    I am also concerned with how this rule will affect the 
industry as a whole, including the distributors who play a 
unique role in that difference from manufacturers and dealers.
    The question is, with all that said, have you taken all 
those factors into consideration, and can you tell me how much 
this proposed rule will increase the price of a new car for 
consumers?
    Ms. Khan. So that is certainly something that we take into 
account when we are proposing these rules. We have to do a 
cost-benefit analysis, and the proposal we put out offers some 
of those numbers.
    Stepping back, you know, this rule would really address 
bait-and-switch tactics, and also hidden fees that ultimately 
end up inflating the cost that consumers are paying for cars. 
So in our view, making sure the companies are not able to 
engage in these hidden fees and surprises fees would ultimately 
help consumers, including by reducing the cost of the cars that 
they are paying.
    As I said, this has been an ongoing proposal. We received 
10,000 comments, and so we are looking closely at them to 
determine next steps.
    Mr. Carl. But the buyer does have a responsibility. They 
can say no and walk away. I mean, you are talking about the 
hidden fees, I mean, that come out at some point, place, and 
time. We can walk away from the deal.
    I don't see where the government getting involved in trying 
to enforce this, and more regulations on top of regulations, 
costing the consumer more money on the other end, is any better 
than what we have got now, I guess is what I am trying to get 
at.
    Speaking of the price of vehicles, I am concerned about the 
EPA's proposed rule that would increase the average, up-front 
cost of an electric vehicle by $1,400 in just a few years.
    I am not at all against electric vehicles. In fact, I would 
like to buy one if it was more dependable for use in rural 
areas. It is a little tough where I am at to have electric 
vehicles.
    Although I have a huge problem with this administration 
trying to force ``go electric'' on everybody, despite the fact 
the average price of an EV is already about $59,000 per 
vehicle.
    These cars are already expensive enough, and now the Biden 
administration wants to make them even less affordable with 
these more fees on top.
    Is anyone at the administration looking at the bigger 
picture here regarding how these rules and regulations impact 
the Americans when buying a new car?
    Ms. Khan. So I can't speak directly to some of the 
initiatives being taken by other agencies. I will say for the 
FTC, anytime we propose a rule or initiative, we are thinking 
about the potential benefits as well as the cost. So that is 
kind of baked into our processes.
    Mr. Carl. Well, I understand you are taking the same 
mentality as most engineers I have had to work with. They want 
to build it just as tough as it possibly can, but when they get 
through with it, nobody can afford it.
    And I think that is where the Federal Government is going. 
We just keep compiling all these rules and regulations on the 
premises of taking care of the consumer. In reality, we are 
just creating a nightmare here with our independent car 
companies.
    I live in a small town. I know--I knew, before I got in 
politics, the owners of these companies. So it is my 
responsibility, when I go car shopping, to know their 
reputation.
    So I think the Federal Government getting more and more 
involved is wrong. I am just--I am being quite honest with you.
    And I appreciate your phone call yesterday, by the way, 
thank you. I can't get some of your other colleagues to even 
return a phone call, much less take the initiative to make one.
    But I think we have got some real problems here. I don't 
think this has been thought through. I think the car dealers 
are going to take the brunt of it, because they are going to be 
responsible for that $1,400 price increase.
    In reality, it is your department, not the car dealers 
themselves. And with that said, Chairman, I think my time is 
up. Thank you.
    Mr. Womack. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    Chair Khan, thank you for being with us today, appreciate 
your testimony.
    I received a copy of an article, Perspectives. It is an 
article by George S. Ford, who is a Ph.D. It is called, ``An 
Agency in Crisis, Employee Satisfaction At the FTC Continues to 
Decline.'' I think it was recently released. Are you familiar 
with this article at all?
    Ms. Khan. Not specifically with that one, no.
    Mr. Moolenaar. Okay. What it does is, it looks at the 
beginning of your chairmanship. It says the FTC was the highest 
rated Federal agency on employee satisfaction.
    It says, largely due to Chair Khan's mismanagement and 
politicization of the once highly respected agency, surveys 
conducted by both the Office of Management and Budget and best 
places to work in the Federal Government rankings revealed that 
employee satisfaction at the agency sharply declined in the 
year following her confirmation.
    Are you familiar with those surveys at all?
    Ms. Khan. Yes, I am.
    Mr. Moolenaar. Okay. I would just like to, with unanimous 
consent, ask that this could be read into the record.
    Mr. Womack. Without objection.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Moolenaar. Thank you.
    Do you have any comments on that? Early on, you had 
mentioned maybe there were some rough steps at the initial part 
of your chairmanship and that has been corrected, or how do you 
address these concerns?
    Ms. Khan. Yeah, absolutely. I take those concerns 
seriously. The staff of the FTC is our greatest asset. We 
can't, without them, do any of this really important work. So 
since then, we have been working closely to hear directly from 
staff about what we can do to make it easier for them to do 
their jobs.
    We have put in practice certain processes to be better at 
sharing information with them more regularly, streamlining 
processes, so decisions can be made more quickly, and so all of 
that is now underway, and I think it is having results inside.
    Mr. Moolenaar. Okay. Thank you.
    I wanted to follow up on Representative Bishop's question 
about the Microsoft-Activision merger. What strikes me is, you 
have got multiple jurisdictions involved. I wonder if you or 
your staff consult or have consulted with the U.K. Competition 
and Markets Authority in something like this. Is that something 
you communicate with them on?
    Ms. Khan. So as a general matter, we have information-
sharing and cooperation in place with authorities around the 
world.
    Actually, a lot of this work was initiated under my 
predecessor, Republican Chair Debbie Majoras, who launched our 
Office of International Affairs, and has enabled the FTC to be 
a world leader, both on the competition and consumer protection 
fronts.
    Mr. Moolenaar. So I would take that to mean you have 
consulted with the British agency on that?
    Ms. Khan. As a general matter, we are in touch about 
concurrent investigations where our authorities allow for us to 
do so.
    Mr. Moolenaar. Okay. So that is a yes, right?
    Ms. Khan. Yes. As a general matter, yes.
    Mr. Moolenaar. Okay. All right. Thank you.
    Do you get concerned that, you know, those jurisdictions 
might get clouded, and that their authority might supersede, 
and you are almost delegating authority to them?
    Ms. Khan. I am not worried about that, because at the end 
of the day, every enforcer is making its own independent 
judgment about how the laws of that jurisdiction apply to the 
facts before them.
    The facts can vary, based on how a particular merger is 
affecting one country versus another. As you noted, our laws 
and authorities differ as well. And so, while we have 
information-sharing in place, that is not coming at the expense 
of any enforcer making their own independent judgment and 
determination.
    Mr. Moolenaar. Okay. Thank you. In July of 2022, you were 
asked by a bipartisan couple of Senators regarding TikTok. You 
had mentioned protecting children's privacy is an important 
part of your mandate. Since that request in July, what has the 
FTC--what have you done relative to TikTok?
    Ms. Khan. So as you know, I can't entirely share non-public 
information but would be happy to see what we can provide you 
on a non-public basis. As a general matter I will note that 
TikTok is already under FTC order.
    The FTC, before I even arrived, found that TikTok had 
engaged in potentially unlawful practices, and so now, if they 
further violate that order, that could lead to even more relief 
and remedies.
    Mr. Moolenaar. Okay.
    Ms. Khan. And so obviously we follow some of the news 
reports very closely, and, again, happy to see what more we can 
provide on a non-public basis.
    Mr. Moolenaar. Okay. And then just quickly, one of the 
concerns, protecting older consumers, it seems that there is a 
significant increase in investment scams, imposter scams, 
consumers losing a lot of money.
    Shouldn't your resources be devoted more to that front as 
opposed to some of the other areas you are involved?
    Ms. Khan. We absolutely have resources devoted to that, 
and, in fact, what we have been doing is looking to make our 
enforcement on the fraud front more efficient. So by codifying 
some of these rules against, say, imposter scams, it means that 
we will be able to expedite how we can bring these enforcement 
actions and actually return money back to the elder Americans 
that are being defrauded.
    Mr. Moolenaar. Just one of the concerns raised was the 
amount of fraud was more than double the amount report lost in 
2021. The amount in 2022, $3.8 billion was double the amount 
reported lost in 2021. Are you familiar with that statistic?
    Ms. Khan. Not specifically. I will say, we did see a surge, 
both in crypto fraud, as well as COVID-related fraud, over the 
last few years.
    Mr. Moolenaar. Thank you, Mr. Chairman. I yield back.
    Thank you.
    Mr. Womack. Mr. Joyce.
    Mr. Joyce. Thank you, Chair. Madam Chair, your budget 
request includes a $90 million increase for actions relating to 
promoting competition. However, I have concerns how the 
Commission would deploy these resources.
    For example, the FTC has undertaken a multiyear effort to 
block the Illumina-Grail acquisition, even after its chief 
administration law judge issued an opinion that this 
acquisition would not hurt competition, following an extensive 
trial on the merits.
    FTC's actions to block this merger are delaying technology 
that could save lives in pursuit of a speculative antitrust 
theory that lack legal support.
    What assurance do we have that the Commission will properly 
balance the need to promote competition with the need to 
protect innovative companies from speculative antitrust 
litigation that delays important technologies from reaching the 
public?
    Ms. Khan. So, look, we enforce the laws that Congress has 
given us. Congress has noted that competition is critical to a 
thriving economy and best promotes innovation. And so whenever 
there is a deal before us, we just see how a law applies in 
that context.
    I think historically we have seen that innovation is best 
promoted by actually allowing more robust competition, and that 
being assertive on the merger front and merger enforcement 
front can best enable new technologies and new innovations to 
come to the market.
    Mr. Joyce. If no one else is in the space and it is saving 
lives, and it is 5 to 7 years before you are actually going to 
get anybody else to be in competition with it, how is that 
anticompetitive?
    Ms. Khan. Yeah, this proceeding is ongoing, so I am not 
able to speak publicly on it, but I will say that the 
Commission issued an opinion a few weeks ago that lays out in 
full our reasoning, including on some of these innovation 
topics.
    Mr. Joyce. Your request includes an increase of 300 full-
time equivalents for fiscal year 2024. Part of the 
justification for this increase is the need for additional 
staff to further your regulatory agenda.
    I believe it is critically important for every Federal 
regulatory agency to develop regulations that are clear and 
durable. It is harmful to our economy and the American people 
when regulations are poorly developed and their impacts are not 
accurately evaluated ahead of time.
    The FTC is pursuing an extremely active regulatory agenda. 
Do you believe the regulations that the Commission is 
developing are thoughtful in design?
    Ms. Khan. Yes.
    Mr. Joyce. And durable?
    Ms. Khan. Yes.
    Mr. Joyce. If the Commission's goal is to create lasting--
one FTC regulation I have heard from many of my constituents is 
the Motor Vehicle Dealers Trade Regulation Rule, also called 
vehicle shopping law.
    Concerns have been raised to me regarding the substance of 
the regulation, but also process by which it was developed. If 
the Commission's goal is to create lasting and impactful 
regulation, why did the Commission deny the request to extend 
the comment period for this rule, especially because there was 
no opportunity to receive feedback from stakeholders through an 
Advanced Notice of Proposed Rulemaking or Request for 
Information process?
    Ms. Khan. So we closely followed the process that is 
required under the Administrative Procedure Act. That includes 
putting out a proposed rule and leaving an open comment period 
where people can give us input.
    We have now received somewhere between 10,000 and 11,000 
comments. So I have full confidence that this is a robust 
process, and we are really getting all the input that we need 
here.
    Mr. Joyce. Have there been any instances under your tenure 
the Commission has extended a comment period?
    Ms. Khan. Yes.
    Mr. Joyce. I have also heard from constituents that there 
is a lack of clarity regarding the assumption that, as a result 
of this regulation, customers will spend 3 fewer hours shopping 
for their new vehicle.
    Could you provide us with additional background and 
analysis on how the Commission developed this 3-hour figure 
used in this rule to help assess its cost and benefits?
    Ms. Khan. Yeah. So the proposed rules lays out that 
analysis by in-house economists who do fantastic work. Because 
this is a proposal, we actually include in some of our 
questions requests for feedback on some of the assumptions that 
are made, including on that topic. So I am hopeful that some of 
the comments we have received will give us more insight on 
that.
    Mr. Joyce. I appreciate the work that the FTC is doing to 
strengthen the ``right to repair'' policies. Unfortunately, 
reports have indicated the price of auto repairs have increased 
more than 14 percent since January of 2023. What more can 
Congress do to help strengthen these protections for consumers?
    Ms. Khan. I am so glad you mentioned this because ``right 
to repair'' is a big priority for us. Shortly after I joined, 
the Commission unanimously issued a policy statement 
recommitting our resources to fight unlawful restrictions on 
repair. We brought a whole series of enforcement actions in 
this area, and more work is underway.
    Clearly, any time that Congress is legislating to provide 
even clearer instruction and clearer direction about how these 
repair restrictions may be unlawful, that will always boost our 
ability to go after them.
    We do existingly have authority that allows us to address 
these practices, but any clarity from Congress would be useful.
    Mr. Joyce. Thank you.
    I yield back, Mr. Chairman.
    Mr. Womack. Mr. Amodei.
    Mr. Amodei. Thanks, Mr. Chairman.
    Hi, Madam Chair. Thank you for reaching out the other day. 
I appreciate that.
    You know, this kind of came up in a little bit of what Mr. 
Moolenaar said, and we spoke the other day about follow-up on 
some requests from committee members on, you know, that were 
related to actions that your agency has taken.
    And so, I kind of like, when I am listening to your 
discussion with Mr. Moolenaar, and you talk about, Hey, we 
would like to see what we can provide you in response to him, 
public versus private.
    When you say to a member of any committee exercising an 
oversight function, we would like to see and get back to you, 
can you put some more meat on those bones? What exactly does 
that mean, or, for instance, what are you going to do in 
response to Mr. Moolenaar to see what you can provide for the 
information he asked you?
    Like, I am going to talk to this person, we are going to 
whatever, let me give you a time frame. Can we put some 
specificity on that?
    Ms. Khan. Yeah, happy to. So whenever that type of exchange 
happens, our terrific staff then make contact with either 
committee staff or the staff of the Member and engage in a 
discussion.
    Oftentimes we are able to, at minimum, offer a non-public 
briefing to bring members up to speed about what we are doing 
in House. If we are also then able to share some paper, we do 
that as well, but, absolutely, there is always follow-up.
    Mr. Amodei. Okay. And then the last part of that is, 
generally speaking, what parameters do you put on that? Like, 
is that next week, is that next month, is that 90 days?
    I know it depends on the request, but since Mr. Moolenaar 
is our guinea pig, when do you expect to get back to Mr. 
Moolenaar?
    Ms. Khan. We will endeavor to do it as quickly as we can.
    Mr. Amodei. So----
    Ms. Khan. At the very least, our staff will make sure they 
reach out to you in the next couple of days and see what more 
we can provide you.
    Mr. Amodei. Thank you.
    Now I would like to go back to our conversation where you 
were asked by Mr. Duncan, I believe it is about a letter that 
your organization sent to the U.S. Trade Commission about an 
issue or whatever.
    And so, I had checked back with him today and said, Hey, 
have you heard anything? And he had indicated to me--we 
happened to be in the same location yesterday about 4:30, you 
know, voting on birthday card salutations and stuff like that--
and I said, Hey, have you heard back from those guys yet? And 
he had indicated that he hadn't.
    And so--and I took the liberty of getting the transcript of 
that exchange or whatever, and your response was, Happy to 
engage with your staff to see what we can share with you. Have 
you engaged with his staff to see what you can share with him?
    Ms. Khan. My understanding is that, yes, our staff has been 
in touch with them about the request that they made and----
    Mr. Amodei. And who would that be on your staff, when I 
report back to Mr. Duncan, that he is unaware of what is going 
on in his office--which doesn't make him unique--me included--
who should I tell him--it is, like, Well, according to our 
hearing today, the chair said that John Smith has been in 
contact with somebody who answers the phone in your 
neighborhood?
    Ms. Khan. Yeah. It is the Office of Congressional Relations 
at the FTC which is headed up by Jeanne Bumpus.
    Mr. Amodei. Okay. Great. And then one last thing is, I had 
some independent insurance agents in my office recently. They 
were talking about the anti-competition rule and so--or the----
    Mrs. Hinson. Noncompete.
    Mr. Amodei. Yeah, thanks for that help.
    And can you get me some blogs on who is calling who, too, 
so we can keep track of that?
    And so my concern is this. There are instances when 
noncompete agreements are appropriate. It starts to sound, 
though, like, if we take a broad brush on that and just say 
they are nasty things from top to bottom, in between, 
everything else, that we are going to have some unintended 
consequences.
    And so I would like somebody from your Office of 
Congressional Relations to get a hold of us to give a briefing 
on, Hey, are we looking at where the problem areas are, instead 
of one-size-fits-all?
    I am concerned about, so it is real clear, I don't want to 
get into one-size-fits-all if there is not a problem that needs 
fixing, if there aren't victims in certain areas where actually 
these may be a tool, and by the way, if they are not, then 
there is also nothing wrong with, you know, your training and 
other folks in this room. It is, like, Hey, sometimes you got 
to go see somebody in that third branch, which is the judicial 
branch to see what is appropriate.
    We don't want to encourage that any more than we need to, 
but I want to make sure that we don't start out on the premise 
that they are all bad.
    Who would be the person that we would like to hear from in 
terms of the scope of what that is all about?
    Ms. Khan. Yeah. We are happy to have our Office of 
Congressional Relations follow up. I will say, our proposed 
rule lays out a very comprehensive review of the available 
empirical literature to understand what the effects of these 
noncompetes have been, which are now affecting not just high-
wage workers, but also low-wage workers.
    We have also seen that over the last couple of decades, 
different States have gone into different directions with this, 
and as a result, we now have effectively a natural experiment 
on the national scale, which has allowed researchers to study 
and isolate what are the effects of noncompetes.
    What they have found is that even when these noncompetes 
are applied in, say, States that have prohibited them or 
limited them, they are still being applied at a very high 
rate--companies are not abiding by that--and that there can 
also be significant effects on innovation and new business 
formation. So that is why we thought that at this stage it was 
important for us to address those practices across the board.
    Mr. Amodei. Well, then let me help you. My time is expired. 
I want to hear specifically about problems in the insurance 
industry where books of business and things like that, I want 
to know about victims, and I want to know about why this area 
needs some help in that area.
    Thank you, Mr. Chairman.
    Mr. Womack. Mr. Ciscomani.
    Mr. Ciscomani. Thank you, Mr. Chairman, and thank you also, 
Chair Khan, for coming before the committee to testify.
    From my fresh perspective here on the committee and in 
Congress, it seems clear to me that the FTC has two distinct 
but related missions; first, to protect consumers, and 
secondly, to promote competition as well.
    One of the most important constituencies in my district 
that needs protection is that of our more than 200,000 seniors 
that I have in my district. And many of my constituents have 
complained of signing up for the Do Not Call Registry, but 
still receiving phone calls.
    I understand this is likely because scammers don't care who 
is on this registry or not. So my question is going to be 
around this area and actually following up to one of my 
colleague's comments on this.
    Can you speak to the efficiency of the registry, 
specifically in stopping criminals and scammers?
    Ms. Khan. Yeah, it is a great question. And one of the top 
sources of consumer complaints that we get are about robocalls 
and unwanted calls. As you noted, there is a Do Not Call 
Registry, but what we have seen is that companies engage in 
spoofing, that basically conceals where they are calling from, 
and they are able to evade some of those processes that we have 
in place.
    Nonetheless, we have been bringing enforcement actions, 
including, recently, enforcement actions against VoIP service 
providers, which are the upstream providers that can, in some 
instances, enable millions and millions of robocalls.
    So what we have seen is that rather than just go after 
these fly-by-night scammers and fraudsters that are doing the 
calls, going after the providers that are enabling this 
activity to continue is more effective, and so that is what we 
have been doing.
    Mr. Ciscomani. Can you speak to that, how effective it has 
been? Have you seen data of this getting better or not? I keep 
hearing about this issue from my constituents, so I would like 
to see if this trending in the right direction, or are we 
seeing any results from those actions yet?
    Ms. Khan. Yeah. Based on the data that we have, we have 
seen around a 19 percent reduction in the complaints that are 
coming in. So that, to us, suggests that there is some impact 
here, but, of course, it is possible that data isn't fully 
reflecting what is happening, but that is what we are seeing in 
the numbers.
    Mr. Ciscomani. Okay. And how long did you start applying 
that? How long of a process has that been in place, of that 
action?
    Ms. Khan. Of these enforcement actions?
    Mr. Ciscomani. Uh-huh, those enforcement actions.
    Ms. Khan. I mean, the FTC has been active in this space for 
at least the last two decades. You know, the Do Not Call 
Registry was put in place in the early 2000s.
    Mr. Ciscomani. No, but I mean the registry is there, but 
then we are finding problems with it. And what I am trying to 
get to is, what more can we be doing if this 19 percent 
decrease--how long has that action been happening, because, 
again, I keep hearing about it from my constituents. So I am 
not sure if it is really moving the needle in this sense.
    And if that is all that is being done, has done for a year 
or 10 years, I am trying to get a sense of when that 
intervention has happened.
    The registry itself, on its own, doesn't do the job 
completely--I think we can agree on that--because scammers 
don't care, they are just going to continue to call.
    So what I was asking is, what else, on top of the registry, 
or what other methods of enforcing the registry--and your 
answer was what it was. So my question following up to that is, 
how long have you been doing that part of it, to see the 19 
percent decrease? Because I am just not seeing, anecdotally at 
least, I am not getting that feedback.
    Ms. Khan. Yeah, so the efforts to go after some of the VoIP 
service providers have been in place for the last few years, 
and I believe that is the same period over which we have seen 
some of the decrease.
    I will note this is also an area where we share 
jurisdiction with the Federal Communications Commission that is 
also able to reach some of these practices that are outside of 
our jurisdiction.
    Mr. Ciscomani. You know, it seems, in several areas but 
this definitely being one of them, that we are kind of playing 
catch-up with the criminals and the people committing fraud on 
these, and they seem to have a leg up on us, and specifically 
in the robocalls area.
    Consumer protection should continue to be an important 
priority and one that is not pushed aside while the FTC goes 
after the ``big is bad'' antitrust work.
    You know, the fiscal year 2023 funding for protecting 
consumers was above promoting competition, but in your fiscal 
year 2024 request, this is reversed. Is there a trend that we 
should continue to expect on this?
    Ms. Khan. So the main motivation here is to make sure that 
our competition mandate is better resourced because the 
competition enforcement actions require more people, and they 
require more money because the experts are more expensive.
    So that is really what is motivating some of that 
unevenness, but currently, our Bureau of Consumer Protection is 
already bigger than our Bureau of Competition, and even the 
increases that we would be making would fully equip us to be 
active in this area.
    Mr. Ciscomani. Well, thank you. My time is up, but I want 
to just strongly encourage you to please continue to keep the 
protection side of it, specifically for seniors, as a top 
priority and continue to look into ways to make the registry 
more effective.
    Thank you. I yield back, sir.
    Mr. Womack. Thank you, Mr. Ciscomani.
    We have--I want to be respectful of the chairwoman's time, 
but we have time maybe for another question per member. I am 
not going to put the timer on it, but just let everybody know 
that we are going to go back around on round 2 and give 
everybody an opportunity to ask another question, and I will 
lead.
    I mentioned earlier the concerns about the independent 
bipartisan Commission operating under one party right now, and 
you have already indicated that you are ready and willing and 
able to welcome a couple of new members when nominated.
    Can you help me understand, have there been any lessons 
learned when you are operating specifically with one-party 
rule? Are there lessons that can be taken that will help you, 
help the Commission, help our country, when you do get new 
participation to the Commission?
    Ms. Khan. Well, I will say as a general matter, you know, 
the Commission is governed by what is known as the Sunshine Act 
which can limit, especially when you just have three members, 
the ability for commissioners to talk directly to one another. 
So that is just day-to-day a handicap that we are facing right 
now.
    More generally, I think we have seen, including from this 
committee, strong bipartisan concern about some of the 
monopolistic practices in our economy, some of the unfair 
practices, especially as it relates to data privacy and 
protection.
    So I am hopeful that once we get new members, we will be 
able to continue our strong work in both of these areas.
    Mr. Womack. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman.
    Just a follow-up from a question I believe I asked you last 
year around defense contractors. We know in 1990, Department of 
Defense could turn to 13 different contractors for tactical 
missiles; eight to make fixed-wing aircraft, another eight to 
build ships. Today, there is three missile and three aircraft 
makers and only two surface shipbuilders.
    Similarly, there were eight satellite manufacturers in 
1990. Today there is four. I know that we have talked about 
this issue in trying to bring sense to it. So I am just 
wondering if you can just give us an update on this particular 
area, and specifically has the DOD continued to supply all the 
relevant information that the Commission has needed to work on 
this?
    Ms. Khan. Yeah, it is a great question, and I think we have 
seen public statements from DOD indicating that the degree of 
consolidation that we have seen, that you just mentioned, is 
actually risking impairing and undermining our national 
security.
    We have seen also reporting more recently suggesting that 
the consolidation is impairing the war effort in Ukraine.
    Just this morning there was actually an article in The Wall 
Street Journal also noting how the consolidation has meant that 
in some cases, DOD is just dependent on a single factory, and 
so if you have one outage, the effects can be devastating.
    More generally, you know, we were able to sue to block 
Lockheed's attempted acquisition of Aerojet last year. We were 
pleased that the parties ended up walking away. DOD was a 
terrific partner in that instance.
    I know you have raised concern about some of the prior 
consolidation more generally. I will just say as a general 
matter, in order for us to be able to unwind some of those 
acquisitions, we would end up being very dependent on any 
representations from DOD since they are the main customer in 
those cases.
    Mr. Pocan. Great.
    Thank you, Mr. Chair.
    Mr. Womack. Mrs. Hinson.
    Mrs. Hinson. Thank you, Mr. Chair.
    I want to quick, Madam Chair, point to something in the 
Inspector General's report that was brought up specifically 
about the Commission's use of unpaid consultants and outside 
experts.
    According to the Inspector General's report, there are many 
cases where this approaches the proximity of policy function 
that is supposed to be reserved for Federal employees only.
    So my concern is over scope. So what guidance is in place 
at FTC to make sure that that scope of work done by 
nongovernment consultants is there, and what guardrails are in 
place to ensure that they are not conducting work that should 
be done by government employees?
    Ms. Khan. Yeah. So the IG report was helpful in 
underscoring some of the process improvements that we could 
have in place to be better guarding for that.
    Since that IG report came out, we have taken steps to make 
sure that, you know, when the experts are coming on board, the 
paperwork that we are putting in place is clearly identifying 
what they are able to work on, who they will be reporting to. 
And so, all the recommendations that the IG made in that report 
have been followed.
    Mrs. Hinson. Right. If you would give us some examples of 
how you have done that in practical application, I would 
certainly appreciate that.
    Ms. Khan. Sure. Happy to.
    Mrs. Hinson. Thank you.
    Mr. Womack. Mr. Carl.
    Mr. Carl. Thank you. I was going to say----
    Mr. Cloud. Go, go.
    Mr. Womack. I was under the----
    Mr. Cloud. Yeah, no, I know.
    Mr. Womack. I was under the impression Mr. Cloud did not 
have a second question.
    Mr. Cloud. I do now.
    Mr. Womack. You do. Well, Mr. Cloud, you are recognized.
    Mr. Cloud. I wanted to touch on something that the 
commissioner had--you talked about us wanting to protect 
monopolistic practices in the economy. We are also concerned 
about that in the FTC at the moment under one-party rule, and 
especially if you are not able to work or talk with other 
commissioners, then it really comes down to you on a lot of 
these matters.
    In 2020, there was a Federal employee viewpoint survey 
where FTC employees are asked basically in the integrity, if 
they support the integrity and operations, if they think that 
their high-level officials are working with integrity. And it 
was at 87 percent in 2020, and right now, it is at 49 percent.
    Now, you mentioned some early mistakes coming in. I am not 
on the inside to know what it is. I would certainly like to 
know why you think that drop has happened, what lessons have 
you learned from it, what changes you are making, and what we 
can do to restore the trust in the FTC.
    Ms. Khan. Yeah. As I said, you know, I am enormously proud 
of our staff. Day in, day out, they are going up against some 
of the most powerful companies in our economy. They are 
significantly out-resourced by the other side.
    After looking at those results and working closely to 
understand from our staff, you know, what was driving it, we 
have been able to put in place better processes to share 
information more widely across the agency, streamline processes 
for decision making, and identify some other ways in which we 
can make it easier for the FTC staff to do their jobs.
    Mr. Cloud. And they had an issue with integrity as well. 
That sounded like a nice, well-worded answer, but it didn't 
provide any details. Can you provide some details of lessons 
learned and what you are doing to change the culture?
    Ms. Khan. Yeah. As I mentioned, you know, one of the issues 
that came up was just making sure that we were sharing 
information more widely across the agency. We have been doing 
that. We now have regular meetings with the senior staff, make 
sure that information is being shared broadly.
    There were also concerns about delays in decision making, 
so we put in place more streamlined processes that are 
expediting that.
    Mr. Cloud. Thank you.
    Mr. Womack. Mr. Carl.
    Mr. Carl. Thank you, Chairman.
    The FTC has clearly taken an interest in franchising and 
this unique American business model. In Alabama alone, we have 
12,000 franchisees, and it is very important to our local 
economy.
    I understand FTC is reviewing the franchise rules. That is 
why last fall, we sent a letter, 67 of us and our colleagues, 
sent a letter asking the Commission to do no harm to extend the 
FTC franchise rules.
    Recently, the Commission stated it has growing concern 
around unfair and despicable practices in franchise industry. 
Can you give me evidence of that?
    Ms. Khan. So we recently launched a request for information 
that was responding to the fact that at our open public 
Commission meetings which I mentioned earlier, month after 
month, we have been hearing from franchisees, this includes 
owners of hotels, owners of fast-food franchises, and they have 
raised a set of concerns that are quite troubling.
    So we launched this effort to make sure that we were not 
just hearing anecdotally but actually were able to systemically 
study, are there issues in this industry that really should be 
on our radar.
    Mr. Carl. Can you provide me with those facts and that 
information?
    Ms. Khan. Sure. Some of what we have heard about, for 
example, are instances----
    Mr. Carl. In writing. In writing.
    Ms. Khan. Sure. Happy to.
    Mr. Carl. I understand you are trying to explain it, but I 
would love to see those numbers in writing, because if it is 10 
or 12, I mean, it is a big country. You know, if it is 12 into 
1,500, we would really have a problem.
    I just have a feeling that it is a very small issue that we 
are trying to get involved in, and I promise you, I have 
started 10-plus different companies, and the government has 
never helped me start a company. I have always had to work 
against the government.
    So the Federal Government saying we are trying to help you, 
not the truth. It is not the truth.
    Thank you for your time.
    Thank you, Mr. Chairman.
    Mr. Womack. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman. I want to thank 
also Chair Khan for your prompt response based on Mr. Amodei's 
kind efforts.
    So one area that I want to ask you for a prompt response, 
the Select Committee on the Weaponization of the Federal 
Government, and previous FTC Commissioner Wilson, and countless 
other sources have said the FTC has abused its statutory and 
enforcement authorities.
    Chairman Jordan issued a subpoena to the FTC. My question 
is, what is your timeline for complying with that subpoena, or 
do you not intend to comply?
    Ms. Khan. So we have been in touch with the House Judiciary 
Committee about their various requests. In some cases, we have 
already handed over significant documents to them. I believe we 
also, in response to their subpoena, just sent over a letter 
yesterday morning. So the back-and-forth between our staff and 
the committee staff are ongoing.
    Mr. Moolenaar. Is there a time that you feel you will be 
fully compliant with their request?
    Ms. Khan. Their request is quite extensive, so I wouldn't 
want to prejudge that ahead of time, but, you know, I think 
congressional oversight is important, and our staff is fully 
committed to complying and engaging with the committee where we 
can.
    Mr. Moolenaar. So just in line, like Mr. Amodei said, do 
you have, like, how soon are we talking here?
    Ms. Khan. So I know that we have already repeatedly offered 
the committee non-public briefings to get them up to speed. The 
committee has not taken us up on that, so we are still waiting 
for them to actually get back to us on that.
    Mr. Moolenaar. And could you update us with that? When you 
have complied, will you let us know?
    Ms. Khan. Sure. Happy to. As I said, we have made certain 
information available to the committee that they have not yet 
taken us up on. So if and when they do, we are happy to let you 
know about that as well.
    Mr. Moolenaar. Okay. Thank you.
    Ms. Khan. Great.
    Mr. Womack. Mr. Ciscomani, bring us home.
    Mr. Ciscomani. I will do that with just a quick simple 
question here.
    Can you walk the subcommittee through the coordination that 
takes place between the FTC and the Department of Justice when 
it comes to the antitrust actions, please?
    Ms. Khan. Happy to. So we share, with the Justice 
Department, oversight of certain antitrust laws. That includes 
the Sherman Act and the Clayton Act. In those areas, we 
basically divide and conquer.
    So there are some industries where the FTC has historical 
expertise, like the defense industries or hospitals. There are 
some instances where DOJ has expertise, like airlines. And so 
in those areas we really divide and conquer.
    There are additional authorities that the FTC has that the 
DOJ doesn't. So our statute prohibits unfair methods of 
competition under section 5 of the FTC Act, so we enforce that, 
DOJ doesn't.
    DOJ, unlike the FTC, also has criminal antitrust 
authorities, so they are able to use those in ways that we are 
not.
    Mr. Ciscomani. Thank you.
    Yield back, sir.
    Mr. Womack. Very good.
    Mr. Pocan, any final thoughts?
    Mr. Pocan. Just it was nice to fill in for Mr. Hoyer, so 
thank you very much.
    Mr. Womack. Give him our regards.
    That is going to conclude our subcommittee hearing today.
    Chair Khan, I speak on behalf of this entire subcommittee, 
both the members on both sides of the aisle, in thanking you 
and acknowledging the fact that you are very accessible and 
responsive.
    Now, there may be some questions about timelines on some of 
the Requests for Information, but in terms of being able to 
have interaction with the chairwoman on matters of importance 
to the FTC, I want to thank you for your willingness to engage 
each of the members that are up here today.
    I think I would also be remiss if I didn't congratulate you 
publicly on the birth of that bouncing baby boy. I take it he 
is still bouncing around and getting a--giving you a good 8 
hours of sleep every night, but that said, we won't press on 
that particular issue.
    It goes without saying that the appropriations process is 
underway. There will be some fits and starts as we go. I think 
everybody pretty well understands that, and we do look forward 
to working with you and your team as we complete the process 
for fiscal year 2024. And prayerfully, hopefully, we can get 
this done on a timely basis, but thank you today for your time.
    Ms. Khan. Thanks so much, and as always really keen to 
engage with you all, so please don't hesitate to be in touch if 
we can help in any way.
    Mr. Womack. With that, this subcommittee hearing stands 
adjourned.

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                           W I T N E S S E S

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Gensler, Hon. Gary, Chair, U.S. Securities and Exchange 
  Commission.....................................................    
    Prepared statement...........................................    
    Answers to submitted questions...............................   

Khan, Hon. Lina, Chair, Federal Trade Commission.................   
    Prepared statement...........................................   
    Answers to submitted questions...............................   

Yellen, Hon. Janet, Secretary, Department of the Treasury........     
    Prepared statement...........................................    
    Answers to submitted questions...............................    

Young, Hon. Shalanda, Director, Office of Management and Budget..    
    Prepared statement...........................................    
    Answers to submitted questions...............................`