Former Kansas City Fed pres. slams Biden's 'dangerous' IRS snooping proposal

want to get to the irs snooping on you the white house is looking to force banks to report personal bank transactions of at least six hundred dollars to help pay for the massive spending package treasury secretary janet yellen promoting the idea saying they do it reveal opaque income streams that disproportionately accrue to the top joining me right now is the former president of the kansas city federal reserve bank he is the former president and ceo and the ceo and president of a mercatus center distinguished senior fellow thomas honig thomas it's great to have you this morning thanks so much for being here thank you for having me i'm glad to join you so this this is an extraordinary uh debacle where you've got the president and the treasury secretary pushing this idea that banks should report transactions of 600 give us your sense and your reaction to this well i think it's a dangerous idea for several reasons but number one it is an incredible invasion of privacy it allows the basically it requires banks to forward infra information account transactions over the course of a year that's as little as six hundred dollars they talked about raising it to ten thousand which is a little consequence it's still uh be incredibly intrusive and um it it it's a massive search without a search warrant i hate to say that and um i think it will uh cause individuals and usually the the very wealthy who may be avoiding or in some instances perhaps invading taxes they will find they have uh have lawyers they have accountants that will find other ways to avoid taxes that it will be the middle class or middle class will be caught in this and they'll be uh i think uh in the collection of the data there'll be false positives so that means individuals will have their uh will be approached by the government about what they're doing they'll have to spend additional funds to try and defend themselves it's really a bad idea number one number two is extremely expensive uh it will cause the banks to have to collect this data and present it in a format that can be used by the irs that will be that will cost billions and then they will ask the banks to massage that data over time change system so they can better identify or find exceptions from the norm that will cost hundreds of millions maybe billions of dollars as well and thirdly i think it really will cause the public to have even less trust in our government institutions because very simply uh if you're if you're intruding into everything you you want to avoid that you become very cynical about the rule of law and i think it undermines confidence of the american people in uh its institutions and so i think it's a bad idea on all fronts yeah most people do thomas uh think it's a bad idea and unconstitutional but you make a number of really important points and that is that there are unintended consequences as a result of this like like there are on so many other uh issues one of those unintended consequences is that rich people will move the money and they have the resources to do so so tell me about the federal reserve considering issuing a u.s digital currency will this also move people toward moving toward digital it comes as central banks around the world are experimenting with new digital forms of money is this going to be a catalyst in that regard this would be i don't know that it would be more of a catalyst in that regard i think i think central bank digital currencies right now especially for the us and baby europe are being looked at as more of a defensive move things are going very digital and there is this concern that they may be unable to keep up with that i guess is the only way to say it and it's a defensive move number one number two it's also a reaction to china who is going forward with the digital currency and uh they are concerned about that in some ways i think and uh finally i i think it's it's another at least the federal reserve is looking at it they're going to put out requests for comment on it because it also has the effect of i think restructuring the banking system the united states because potentially you will have digital cash well that's and you'll have it in your wallet on your iphone or your whatever phone and you'll you will process it that way but also you can have accounts if depending on how they would design this that would be at the federal reserve system level and you don't need that to move funds more quickly you have real-time payments that will take care of that so this is going to move accounts from banks to the central bank and i think it will be a an effect would be to disintermediate the banking industry and that will affect regional and smaller banks more than the than the money center banks but nevertheless it will restructure this further and i think is harmful and finally if the federal reserve is taking deposits from everyone that will take care of the forwarding stuff to the treasury because it will already be in the government's hands it's it's uh pretty extraordinary actually that we're actually debating something like this particularly as low as six hundred dollars and as you say even the ten thousand dollar number captures everybody anyway if you're working for a company uh and and that ten thousand number is in place you're still capturing everybody's uh uh most people's transactions so so let me ask you about where people should be focused on this issue because we've talked a lot about this uh and and the cost that you bring up to the banking sector i'm wondering if this is also giving the irs an opportunity to become a weapon it it also gives the irs potential to get politicized having all of that access to people's accounts well it almost certainly will be abused as we've learned in other other examples of going in and grabbing information uh legally or illegally uh out of the irs so it and and it will be used as a political weapon against uh parties that are not in agreement with you look at their data see what you can find sort of thing and yes there'll be there'll be legal protections but those are often breached and that's unfortunate i think it's just a bad idea to put that much access into our personal lives at will uh by the treasury and the irs it's it's very yeah i think destabilizing thomas the other thing is that the the money raised they are betting that they can raise 400 billion dollars by this surveillance move that they think they're going to catch cheats but to to identify 600 transactions you're pretty much surveilling and targeting lots of people including low-income earners and they're doing this to actually pay for the salt deduction that's what's so incredibly hypocritical because they're telling us that they want to help the low income and yet they're surveilling all of us in our bank accounts to raise 400 billion dollars to be able to put the salt deduction back in the spending plan for the new yorkers and new jerseyans who are complaining that they lost their salt deduction so surveil the poor and the rest of us uh the moderate everybody and do so to raise money for the rich well i first of all i don't know where this 400 billion came from i don't know the details of how they got it i think that's a good point may be offset by the cost both to the banking industry and to the irs or to the taxpayer in terms of increased costs to collect is 400 billion so i i think it's it's probably a a exaggerated figure number one number two to uh pretend that this is going to raise enough money to violate the individual's rights to privacy in a means to catch i think of the total population a relatively small number of individuals and the wealthy of those wealthiest of those will be the ones who are able to avoid it continue to avoid it i think is very um it's it's hypocritical to important but also i think mostly it's just dangerous it it is dangerous and that's what we're hearing from a number of republicans who are fighting against it but of course you know that what is in the bill that they're debating right now is 80 billion dollars being earmarked toward the irs so that the irs can hire 80 000 new tax auditors so whether or not this component the surveillance makes it into the bill you have to believe that it's in it if you've got 80 000 additional tax auditors looking for looking for money wherever they can to raise money to pay for the climate deal well that's yeah that's correct you have a lot of auditors will have to have something to do so we can all expect what i'll call more intrusive questions on your tax returns would be the outcome of this i don't and let's agree i mean people who owe taxes should pay their taxes but i think this is a rather dramatic in both of collecting data and foreign into the treasury and hiring this many additional auditors to collect what i think will be far less than 400 billion over time yeah i'm really glad that you're pointing out all of those important issues around this proposal thomas what do you make of what we're talking about now the conversation around an additional three and a half trillion dollar spending plan the infrastructure plans obviously uh taking a back seat now because the the administration wants to get both plans through but you've got inflation out there uh partly a result of all of this money being thrown at the economy you've got an economy that is likely uh having seen the the peak growth what do you think about when you see all of this policy being debated uh as it as it re uh as it impacts the economy well i think you're right about the three and a half trillion it will be a huge increase in demand government demand going into the economy which will put continued upward pressure on prices i think also uh it will depend on how many taxes are in that bill because that will be the offsetting slowdown of the economy as you move funds from the private sector to the public sector uh and i think those are very serious questions that would uh i think bring into some concern future growth in the economy and we need to be aware of that finally i think if you're going to fund three and a half trillion dollars and i doubt seriously if taxes are going to cover that even close you'll have to issue a whole new level of fiscal debt it's gone from 10 trillion 15 years ago to 30 trillion it will go much higher than that in the future and i think what you're going to find is enormous pressure on the central bank to buy that debt uh over time to put it on its account which also has further implications for the future and inflation so it's a very i think they better think it through carefully as they proceed both democrats and republicans because the effects are long-term and they are going to be significant thomas real quick before you go should we be eliminating the debt ceiling altogether absolutely not i think these debates are important it brings it to the attention of the american people that just how much debt we're taking on

Channel: Fox Business

Views: 183,128

Keywords: Biden, Biden administration, Democrats, FOX Business, Federal Reserve, Former Kansas City Fed President, IRS, Internal Revenue Service, Joe Biden, Maria Bartiromo, Mornings with Maria, President Biden, Secretary Janet Yellen, Thomas Hoenig, Treasury, White House, Yelle Biden, business, news, politics, IRS 600 dollars, IRS $600 reporting, Janet Yellen, Tax reform, middle class

Id: ngvMubMyu_I

Length: 12min 18sec (738 seconds)

Published: Tue Oct 05 2021