Yukon, OK – Today, Congressman Frank Lucas (OK-03) participated in a House Committee on Financial Services hearing entitled, “ Holding Megabanks Accountable: An Update on Banking Practices, Programs and Policies.” Lucas questioned Goldman Sachs’ and Morgan Stanley’s Chairman & CEO David Soloman and James Gorman about the impact of rising commodity prices.
Lucas also questioned JPMorgan Chase’s and Citi’s CEOs on the Biden Administration’s tax policy, including the feasibility of a global minimum corporate tax rate and its impact on the United States’ global competitiveness.
Click here to watch Lucas’ Q&A
On surge in commodity prices
Lucas: (Questions as prepared) Over the last few months, we have experienced a surge in commodity prices: crude oil, natural gas, corn, soybeans, wheat, and materials like lumber and copper. What has been driving this rise in prices, and do you expect this to be sustained for some time to come?
Solomon: I think there are a number of factors that have been affecting commodity prices, and I think as you stand back and look, the shutdown of the pandemic and the dramatic contraction of the economy had a profound contracting effect and now we’re opening up very quickly. So, we have the combination of demand picking up very quickly and supply production and availability and supply chains and distribution chains not being as full as they normally would be. That’s obviously leading to inflation in prices. I think what’s hard to see at this point is whether or not it’s going to be transitory or whether or not it will continue or being more sustained. I do think it’s something to watch very carefully. The speed of recovery, the recovery combined with other fiscal actions or monetary actions we take obviously will have an impact on this. Hopefully the Fed can manage appropriately as we move forward and what’s obviously going to be a strong economic pick up from a demand perspective.
Gorman: Coming from a long line of farmers from the Outback in Australia where wheat and sheep were the family product, I have a lot of sympathy for this space. Commodity prices are simply a function of supply and demand. We’ve had interrupted supply, we’ve had a global recession, and now we are getting extraordinary demand. We’ve never had this kind of global synchronized growth that we are going through now. You’re going to see surges in prices but as more capacity is brought online, whether it’s oil rigs or more mining around the world, these things rebalance. But right now, we’re just in a surge.
Impact of Biden Administration’s global minimum corporate tax rate
Lucas: (Questions as prepared) The Biden Administration has proposed more than four trillion dollars in spending for the American Jobs Plan and the American Families Plan, of which the Administration plans to finance with a hike in corporate and individual tax rates. The Administration has also proposed a global minimum corporate tax rate. While we should try to level the playing field for U.S. businesses, some argue a global minimum corporate tax rate could disadvantage U.S. companies. Could you give us your thoughts?
Dimon: America would be the only country in the world that would have what you called a global tax rate. I pointed out earlier that going from 21 to 28 isn’t the issue, because people say halfway back to the tax cuts were but the tax increase because of something like that is actually 4 times the tax cut of 2017. There’s no question in my mind, at the margin, that will drive capital, brains, R&D, and investment overseas and that will be a mistake for America.
Fraser: I think it is very hard to get other countries to sign onto an equivalent program. And despite some optimism of doing so, that will be extremely difficult. And therefore, it could put the U.S. in a position of being less competitive around the world.