The House Ways and Means Committee June 11 held a hearing with Treasury Secretary Scott Bessent that largely focused on the potential economic effects of the House-passed One Big, Beautiful Bill Act (OBBBA, H.R. 1) and the bill's proposed new IRC Section 899 retaliatory tax proposal.

In an opening statement, Chairman Jason Smith (R-MO) called on the Senate to quickly pass the OBBBA. "The renewal of pro-growth tax policies will attract more investment, new plants and facilities, save 1.1 million manufacturing jobs and help boost America's GDP by over 3.5%," he said. Ranking Member Richard Neal (D-MA) criticized Republicans for expressing doubts about the validity of estimates for the bill by the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), "who just call balls and strikes and rely instead on fantasy math to defend a bill that I believe you know clearly explodes the deficit."

In testimony, Sec. Bessent said of the OBBBA, "It will increase wages between $6,100 to $11,600 for the average worker. And it will cement no tax on tips, no tax on overtime, and tax cuts for seniors. The One Big Beautiful Bill will also incentivize unprecedented investment in US manufacturing. The legislation will provide 100% expensing for new factories, as well as existing factories that expand operations and support Made-in-America."

During Q&A, Chairman Smith said the OBBBA provides the President specific, targeted authorities to fight back against discriminatory taxes like the undertaxed profits rule (UTPR) and asked about the provision's importance to the Administration. Sec. Bessent said the previous Administration "chose to outsource American sovereignty on tax matters" and the OBBBA provisions will prevent corporate revenues from being drained into foreign treasuries.

"Many other countries would seek to pull in revenues from US multinational corporations into their treasury, and rest assured that the provisions in the One Big Beautiful Bill to combat this are a staking out of our fiscal sovereignty," the Secretary said. "The US tax system will stand next to what is called pillar two and other countries are welcome to relinquish their fiscal and tax sovereignty to other nations, the United States will not."

The House bill's new IRC Section 899 would increase income tax and withholding tax rates and expand the application of the BEAT rules on foreign-parented groups, applicable to residents of countries with certain "unfair foreign taxes," including the UTPR and digital services taxes (DSTs).

Also on IRC Section 899, Rep. Ron Estes (R-KS) said doing nothing would equal ceding tax authority to other countries. He said the Committee could have acted with more severity but took a measured approach. Estes asked about concerns from Wall Street and elsewhere. Sec. Bessent replied there is quite a bit of misinformation on 899 and much of the pushback is coming from overseas companies.

Rep. Kevin Hern (R-OK) said the tax sovereignty of the US is under attack and the global tax deal puts a target on those countries that don't comply. He asked whether Treasury would work to put a "nail in the coffin" of the deal. Sec. Bessent said, "My staff met with the OECD in Paris just last week and we are pushing back and working toward a solution as soon as possible."

Rep. Brad Schneider (D-IL) said IRC Section 899 would impact our allies and threatens to reduce foreign direct investment, which we should instead welcome. He noted that the JCT revenue estimate of the bill shows the provision losing money toward the end of the budget window. Bessent said we should not allow foreign countries to take US companies' tax revenue for their own treasuries.

Much of the debate focused on the deficit impacts of the OBBBA. Rep. John Larson (D-CT) raised concerns about the interest payments that would be required and the "denial" among Republicans that tax cuts add to the national debt. Secretary Bessent said the Biden administration's tax legislation caused "rampant inflation," while the OBBBA will incentivize private sector growth.

Under questioning from Rep. Terri Sewell (D-AL), Sec. Bessent said "it remains to be seen" whether the OBBBA will add to the debt. He said the "X date" for the debt limit, when extraordinary measures will be exhausted, will occur sometime in middle to late summer. Rep. Tom Suozzi (D-NY) said the potential increase in the deficit from the OBBBA, tariffs, and labor shortages from immigration crackdowns could result in inflation.

Sec. Bessent's testimony is available here.