Treasury Secretary Scott Bessent warned that Congress could set off a financial crisis if it fails to pass the Republican tax cuts and spending bill.

Bessent made the remarks in testimony before the House Ways and Means Committee on Wednesday. Republicans have been working to pass the One Big Beautiful Bill Act, and Bessent emphasized to lawmakers that the stakes are exceedingly high.

Recommended Stories

• Egg prices fell in May, now down 67% since peak under Trump
• Inflation ticked up slightly to 2.4% in May, better than expected
• AI provision in 'big, beautiful bill' splits Republicans

Bessent pointed out that the reconciliation legislation includes increasing the debt ceiling, which is needed to prevent financial chaos. He also said not passing the bill would be an economic “sudden stop,” which would be a “cataclysmic” event for job creation and the financial system.

“I think it could set off a financial crisis the likes of which we have not seen since ’08, ’09,” Bessent testified, referring to the global financial crisis that began in 2008.

The reconciliation legislation that Republicans have already passed in the House and is now in the Senate would extend and make many of the tax cuts from the 2017 Tax Cuts and Jobs Act permanent. It also contains new tax provisions, such as eliminating taxes on tips, and allocates funding for border and immigration enforcement.

The One Big Beautiful Bill Act was a key focus of the hearing. Throughout his appearance before the panel, Bessent defended the bill, presumably the cornerstone legislation of Trump’s second term in office.

Democrats on the committee largely attacked the legislation, which they branded as a giveaway to the wealthy. They tore into the bill’s provisions that cut spending on entitlement programs such as Medicaid and food stamps. Republicans on the tax-writing panel defended the bill, arguing it would help the working and middle class.

“Democrats have tried to obstruct this success every step of the way,” said Ways and Means Committee Chairman Jason Smith (R-MO) during the hearing. “Just last month, they voted for the largest tax hike in American history, in order to bring this progress to a screeching halt.”

Other issues, such as Internal Revenue Service funding, were also discussed during the hearing.

During the Biden administration, the 2022 Inflation Reduction Act allocated tens of billions of dollars in new IRS funding to increase enforcement and take in more uncollected revenue. The administration said at the time that the resources would target wealthy tax cheats. Since then, Republicans have been working to claw back that funding.

Bessent argued before the committee that the IRS has been successful despite cuts.

AI PROVISION IN ‘BIG, BEAUTIFUL BILL’ SPLITS REPUBLICANS

“Critics of the president’s efforts to modernize the IRS warned that the effort would result in a 10% shortfall in receipts,” Bessent said. “Instead, the opposite happened. April receipts this year were up 9.5% over the previous year. And receipts in May were up 14.7% over the previous year.”

Bessent is set to testify before the Senate Finance Committee on Thursday.