At FSGG Hearing, Reed Criticizes Trump’s Irresponsible Budget & Urges Congress to Make America More Affordable

WASHINGTON, DC - U.S. Senator Jack Reed (D-RI) says the Trump Administration's reckless budget amounts to thoughtless, willful neglect, not fiscal prudence. Reed is urging Congress to reject Trump's fiscally irresponsible budget that would weaken America and replace it with an approach that prioritizes the needs of working Americans. Senator Reed says Congress must wisely allocate tax dollars effectively and efficiently to ensure a strong return for taxpayers that expands opportunity, strengthens our nation, and makes America more affordable.

On April 3, 2026, President Donald Trump submitted his annual budget request to Congress, calling for steep cuts to domestic funding that would rob taxpayers of crucial services and shift money away from education, housing, health, public safety, and other priorities in order to increase funding for the so-called Department of War.

"President Trump promised to jump start America's economic engine, but instead he's thrown sand in the gears and made everyday goods more expensive due to his trade wars and war of choice with Iran. This Administration is driving the economy into the ground by raising prices, stoking inflation, eroding wages, and slashing jobs. Americans can't afford Trump's reckless, regressive Robin Hood-in-reverse agenda that takes from the working-class and gives to the wealthy. Democrats are working to fix the economy and deliver commonsense solutions that lower costs and improve people's lives. Republicans need to join us in making America more prosperous and affordable and they can start by rejecting this reckless budget," said Senator Reed.

Today, the Senate Appropriations Subcommittee on Financial Services and General Government (FSGG), led by Chairman Bill Haggerty (R-TN) and Ranking Member Reed, held a hearing with U.S. Treasury Secretary Scott Bessent on the agency's fiscal year 27 budget request.

The FSGG Subcommittee oversees annual funding for financial-related agencies including the U.S. Department of Treasury; the Securities and Exchange Commission (SEC); and the Internal Revenue Service (IRS). It is also responsible for funding the Executive Office of the President, the federal judiciary, and federal election security initiatives. The panel also has jurisdiction over two dozen key agencies and programs that have a direct impact on Rhode Island, including the U.S. Small Business Administration (SBA), which supports local entrepreneurs and small businesses with outreach and loans and also provides emergency capital following federally-declared disasters. FSGG is charged with making needed investments to protect American consumers, safeguard our democracy, support the agencies that work on behalf of the American people, and bolster our economy national security.

During today's hearing, Senator Reed (D-RI) honed in on several key economic issues and grilled Secretary Bessent about the budget, taxes, and gas prices.

Noting that the Trump Administration is proposing a $9.8 billion budget for the IRS -- a $1.4 billion cut from current spending levels, including an 18 percent cut to enforcement -- Reed took the Trump Administration to task for weakening tax enforcement and intentionally making it easier for the wealthiest Americans to avoid paying their fair share.

According to the Yale Budget Lab: the federal tax gap-the difference between taxes legally owed and those paid on time- currently totals about $700 billion annually. This massive shortfall, often driven by underreporting from high-income earners and complex business structures, represents a major, persistent loss of federal revenue. The Budget Lab states: "The IRS reductions from funding and layoffs have likely resulted in about $861 billion in decreased revenue. The layoffs from actions like DOGE alone have likely resulted in $597.8 billion in decreased revenue over the 2026-2035, and the clawback in IRS funding of $20 billion has likely resulted in $262.8 billion in decreased revenue over the same period."

President Trump is also imposing higher costs on Main Street businesses through his reckless trade wars and war of choice with Iran. The President's 2027 budget seeks to slash funding for the Small Business Administration's budget from $1 billion to $329 million. This 67 percent decrease would undercut SBA's ability to serve the country's 36 million small businesses. It would also do away with critical business support programs that benefit Rhode Islanders and impose costly new fees. In 2025, the SBA approved 376 loans to Rhode Island small businesses totaling over $138.7 million through its 7(a) and 504 loan programs, which support refinancing buildings and real estate, purchasing new machinery and equipment, and other investments. Trump's SBA budget cuts would eliminate 15 of the 16 entrepreneurial development programs that annually provide essential services to nearly 1 million small businesses nationwide, including historically underserved entrepreneurs such as women and minorities.

Even programs with strong bipartisan support like Treasury's Community Development Financial Institutions (CDFI) Fund is not spared from drastic cuts. The Trump budget seeks to cut $204.5 million in discretionary awards for the CDFI Fund, a major reduction from last year's level of $324 million for the program. CDFIs are designed to ensure capital flows to hard to reach places, delivering financial lifelines to small businesses, working families, and overlooked and too often ignored neighborhoods across the country. Through effective partnerships with community-based banks, credit unions, and loan funds, CDFI serves as a catalyst that helps small business owners secure capital, supports affordable housing, and finances essential infrastructure. Since 2009, the CDFI Fund has supported more than $298 billion in loans and investments.

Near the outset of the hearing, Senator Reed asked Secretary Bessent several key questions about IRS enforcement, affordability, tariffs, and gas prices. Video of Reed's opening statement can be viewed here and Reed's questions for Sec. Bessent can be viewed here. Text of their Q&A follows:

Sen. Reed: Thank you, Mr. Secretary. As I mentioned in my opening statement, your budget once again cuts IRS enforcement activities. Your own congressional justification states that every dollar spent on enforcement provides an $11 return for the American taxpayer. So, given that your own request shows an extraordinary return on investment, why does the budget cut enforcement by nearly $900 million?

Sec. Bessent: Sir, the data does not support that, because we cut the budget, and enforcement recoveries were up 12% last year.

Sen. Reed: Well, if you increase the budget you would presumably have even more. I mean, the obvious point, which I stress in my testimony, is that you are basically scheduling fewer and fewer enforcement actions, particularly against those who are very well endowed and may have either directly or indirectly made mistakes on their tax form. So, it seems to me obvious that more effort would produce more resources.

Sec. Bessent: Well, I think that may be one school of thought, but we have not seen that in educational outcomes. We have not seen that in health care outcomes. That more money equals better outcomes. At the IRS thus far we believe in outcomes. We recovered that an enforcement, the top-five enforcements recovered $2 billion. As I said, the enforcements last year were up to almost $41 billion. So, I think during the Biden years in the IRA there was a scoring gimmick that was used and brought in a lot of enforcement officers and, again, the facts on the ground to get to be a senior enforcement officer takes 10 or 12 years and to bring in new officers at one year, two years have almost no expertise and don't result in better outcomes. What we have found is meeting the taxpayers where they are and using technology we have pushed back their tax returns and say, we believe there is an error here, and you will be audited. Why don't you fix it in advance?

Sen. Reed: Well, Mr. Secretary, I think it is not efficiency or more revenue you're seeking. You are seeking to disable the ability for the federal government to reach all who are not being completely honest with their tax returns. Particularly those that have the most to pay - the wealthiest in the country. As I mentioned in my testimony, or my statement I should say, gas prices are up more than 30% and are above four dollars a gallon. And the nonpartisan Tax Foundation estimates that President Trump's tariffs were essentially a $1,000 tax on American households. That is a nonpartisan organization. So, you have a situation in which health care also is hugely expensive for people. About 17 million Americans are seeing increases because of the "Big, Beautiful Bill." Consumer sentiment is at a record low. You recently claimed that in their "heart of hearts" they - consumers - "feel good." But that is not supported by polling. That is inaccurate. The idea that consumer spending is up does not recognize, I think, that the top 10% of the richest families account for 50% of consumer spending. So, how does all of this help families solve the key price of affordability in the United States today?

Sec. Bessent: Senator, I agree. After the Biden years and the 21.5% CPI level increase, Americans were reeling. I can tell you that it is my belief that when we talk about gasoline that the crude market is currently in what is known in the energy business as a very steep backwardation, which means that future prices are much lower than we are at present. I think the conflict will end. I think gasoline prices will come back to where they were or even perhaps lower. As they did, President Trump has shown he is good at getting energy prices down and that our energy dominance agenda has lowered prices.

Sen. Reed: How fast will the price of gasoline come down?

Sec. Bessent: Again, that is path-dependent on when the war and conflict end.

Sen. Reed: Well, from the perspective of the Armed Services Committee, it is not likely to end soon. Thank you.

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