WEBVTT 00:00:00.000 --> 00:00:02.000 Welcome back to our latest deep dive into the 00:00:02.000 --> 00:00:04.980 source material. We are we're really thrilled 00:00:04.980 --> 00:00:06.860 to have you joining us today. Yeah, absolutely. 00:00:07.059 --> 00:00:09.179 Thanks for tuning in. You know, if you are prepping 00:00:09.179 --> 00:00:11.640 for a big meeting or maybe just catching up on 00:00:11.640 --> 00:00:13.779 the inner workings of government, or honestly, 00:00:13.880 --> 00:00:16.760 if you're just curious about the invisible forces 00:00:16.760 --> 00:00:20.039 that actually dictate how the world runs, you 00:00:20.039 --> 00:00:23.300 are in the exact right place. For sure. Because 00:00:23.300 --> 00:00:27.640 today we are exploring a single, incredibly dense. 00:00:28.350 --> 00:00:31.489 but absolutely vital subject. We are looking 00:00:31.489 --> 00:00:33.869 at the comprehensive history, the jurisdiction, 00:00:34.109 --> 00:00:37.350 and the modern makeup of the United States Senate 00:00:37.350 --> 00:00:40.969 Committee on Finance. That is right. And I know 00:00:40.969 --> 00:00:42.429 what you might be thinking right off the bat. 00:00:42.490 --> 00:00:44.729 Right. A detailed breakdown of a Senate committee. 00:00:44.929 --> 00:00:47.130 Yeah. It sounds exactly like the kind of dry 00:00:47.130 --> 00:00:49.649 bureaucratic entity that most people just gloss 00:00:49.649 --> 00:00:51.710 over in a high school civics class. Totally. 00:00:51.770 --> 00:00:53.950 But our mission today is to take this information 00:00:53.950 --> 00:00:56.490 from our sources and reveal it for what it truly 00:00:56.490 --> 00:00:59.299 is. Exactly. You're going to show you how this 00:00:59.299 --> 00:01:03.039 specific committee acts as the hidden engine 00:01:03.039 --> 00:01:05.739 behind almost every single aspect of your financial 00:01:05.739 --> 00:01:08.319 and physical life in America. It really is. And 00:01:08.319 --> 00:01:10.420 if you picture the history of this committee, 00:01:10.599 --> 00:01:14.060 I want you to imagine a shifting montage behind 00:01:14.060 --> 00:01:16.640 me, like transitioning from the dusty marble 00:01:16.640 --> 00:01:20.400 columns of 19th century Washington directly into 00:01:20.400 --> 00:01:23.319 the flashing high speed digital ticker tapes 00:01:23.319 --> 00:01:25.859 of today's global markets. Oh, I love that visual. 00:01:26.019 --> 00:01:27.840 Because this is considered one of the absolute 00:01:27.840 --> 00:01:30.439 most powerful committees in the entirety of Congress. 00:01:30.540 --> 00:01:33.319 The stakes here are as high as they get. I mean, 00:01:33.340 --> 00:01:36.550 we are talking about the fundamental. economic 00:01:36.550 --> 00:01:38.590 architecture of the United States. Yeah. They 00:01:38.590 --> 00:01:40.849 hold the levers to the machinery that keeps the 00:01:40.849 --> 00:01:43.590 nation running. And they have for over two centuries. 00:01:43.810 --> 00:01:46.590 OK, let's unpack this, because to truly understand 00:01:46.590 --> 00:01:48.450 the sheer stale of what this committee does, 00:01:48.629 --> 00:01:50.950 we have to look at its jurisdiction. Right. When 00:01:50.950 --> 00:01:52.769 you look at the standing rules of the Senate, 00:01:52.870 --> 00:01:56.670 specifically Rule XXV, the scope of what this 00:01:56.670 --> 00:01:59.230 single committee controls is just vast. It's 00:01:59.230 --> 00:02:02.319 massive. Yes, they handle taxation and revenue 00:02:02.319 --> 00:02:05.500 measures, but it's not just taxes. They control 00:02:05.500 --> 00:02:08.240 the national bonded debt. Right. They oversee 00:02:08.240 --> 00:02:11.199 customs, collection districts, and every single 00:02:11.199 --> 00:02:14.020 port of entry and delivery in the country. Every 00:02:14.020 --> 00:02:16.699 single one. Yeah. They manage the deposit of 00:02:16.699 --> 00:02:19.780 public monies, reciprocal trade agreements, tariffs, 00:02:19.919 --> 00:02:22.740 and import quotas. It is a massive portfolio. 00:02:23.099 --> 00:02:25.120 And to bring this directly to you, the listener, 00:02:25.259 --> 00:02:28.400 we need to explain why those specific bureaucratic 00:02:28.400 --> 00:02:31.060 terms actually matter to your daily routine exactly 00:02:31.060 --> 00:02:33.840 why should anyone care right because of that 00:02:33.840 --> 00:02:36.840 jurisdiction this committee oversees the major 00:02:36.840 --> 00:02:39.659 social safety nets that touch nearly everyone's 00:02:39.659 --> 00:02:42.340 lives at some point we are talking about national 00:02:42.340 --> 00:02:44.060 Social Security we're talking about Medicare 00:02:44.060 --> 00:02:46.699 and Medicaid yeah they oversee the Children's 00:02:46.699 --> 00:02:50.180 Health Insurance Program or CHIP and temporary 00:02:50.180 --> 00:02:52.699 assistance for needy families. Which is huge. 00:02:52.919 --> 00:02:55.199 It is. These are the foundational programs that 00:02:55.199 --> 00:02:57.419 dictate health care finance and economic survival 00:02:57.419 --> 00:03:00.759 for millions of Americans. And there is a really 00:03:00.759 --> 00:03:03.719 nuanced rivalry here when it comes to the congressional 00:03:03.719 --> 00:03:07.099 balance of power, specifically between the Senate 00:03:07.099 --> 00:03:09.659 Finance Committee and its counterpart over in 00:03:09.659 --> 00:03:12.520 the House of Representatives. Ah, the House Committee 00:03:12.520 --> 00:03:15.699 on Ways and Means. Right. Now, by constitutional 00:03:15.699 --> 00:03:19.460 design, All revenue raising measures must originate 00:03:19.460 --> 00:03:21.539 in the House. Right. The House has the power 00:03:21.539 --> 00:03:24.580 of the purse initially. Exactly. That gives the 00:03:24.580 --> 00:03:27.159 Ways and Means Committee a slight edge when it 00:03:27.159 --> 00:03:29.900 comes to initiating tax policy. But the Senate 00:03:29.900 --> 00:03:32.360 Finance Committee has a broader jurisdiction 00:03:32.360 --> 00:03:36.259 in another massive area, which is health. What's 00:03:36.259 --> 00:03:38.500 fascinating here is how that jurisdiction is 00:03:38.500 --> 00:03:41.099 actually split. Yeah. Break that down for us. 00:03:41.280 --> 00:03:43.699 You see, the House Ways and Means Committee only 00:03:43.699 --> 00:03:46.810 has jurisdiction over Medicare. OK. If you want 00:03:46.810 --> 00:03:48.449 to talk about Medicaid in the House, you have 00:03:48.449 --> 00:03:50.009 to go to a completely different group, the House 00:03:50.009 --> 00:03:52.349 Energy and Commerce Committee. Oh, wow. Right. 00:03:52.729 --> 00:03:55.689 But the Senate Finance Committee, they have jurisdiction 00:03:55.689 --> 00:03:58.569 over both Medicare and Medicaid. That is a lot 00:03:58.569 --> 00:04:01.250 of concentrated power. It gives them an unbelievable 00:04:01.250 --> 00:04:03.810 amount of concentrated leverage over health care 00:04:03.810 --> 00:04:08.069 in America. Which means any major reform to how 00:04:08.069 --> 00:04:10.409 Americans get their health care essentially has 00:04:10.409 --> 00:04:13.050 to pass through their doors. Precisely. And on 00:04:13.050 --> 00:04:15.569 top of that legislative power, they have massive 00:04:15.569 --> 00:04:17.990 oversight authority. Right. They don't just write 00:04:17.990 --> 00:04:20.910 the laws. No, they continually review and evaluate 00:04:20.910 --> 00:04:23.889 the agencies that implement those laws. Like 00:04:23.889 --> 00:04:25.949 who? That includes the IRS, the Department of 00:04:25.949 --> 00:04:28.329 the Treasury, and United States Customs and Border 00:04:28.329 --> 00:04:31.259 Protection. So they're the ones holding the hearings 00:04:31.259 --> 00:04:34.120 and demanding answers when those agencies falter. 00:04:34.199 --> 00:04:37.279 It is basically the ultimate power of the purse. 00:04:37.740 --> 00:04:40.000 But, you know, they didn't just stumble into 00:04:40.000 --> 00:04:42.560 this level of authority overnight. No, definitely 00:04:42.560 --> 00:04:44.819 not. To understand how they built this empire, 00:04:45.060 --> 00:04:47.180 we have to travel back to the post -war inception 00:04:47.180 --> 00:04:49.300 of the committee. And we are talking about the 00:04:49.300 --> 00:04:52.079 aftermath of the War of 1812 here. Right. The 00:04:52.079 --> 00:04:54.519 committee was originally formed on December 11th, 00:04:54.519 --> 00:04:56.779 1815. It was a select committee initially, right? 00:04:56.839 --> 00:04:59.379 Yeah. Yeah. It was called the Committee on Finance 00:04:59.379 --> 00:05:02.639 and Uniform National Currency. Their entire job 00:05:02.639 --> 00:05:05.279 was to just clean up the economic mess left by 00:05:05.279 --> 00:05:07.519 the war. And then they officially became a standing 00:05:07.519 --> 00:05:10.339 committee on December 10th, 1816. And in those 00:05:10.339 --> 00:05:14.160 early days, they had power over tariffs, taxation, 00:05:14.579 --> 00:05:17.220 banking, currency issues, and appropriations. 00:05:17.600 --> 00:05:19.959 They were the financial problem solvers for a 00:05:19.959 --> 00:05:22.779 very young, very financially unstable nation. 00:05:22.920 --> 00:05:24.939 Yeah, they were heavily involved in the most 00:05:24.939 --> 00:05:27.720 heated topics of the era, including the bank 00:05:27.720 --> 00:05:30.720 war. Oh, the bank war. That was the fierce, defining 00:05:30.720 --> 00:05:34.439 political battle of the 1830s, right? Over whether 00:05:34.439 --> 00:05:36.720 the United States should operate a central national 00:05:36.720 --> 00:05:40.160 bank to regulate the economy. Exactly. But wait, 00:05:40.220 --> 00:05:42.180 if they were primarily focused on things like 00:05:42.180 --> 00:05:44.930 central banking and tariffs. How did they end 00:05:44.930 --> 00:05:46.790 up influencing the creation of the Department 00:05:46.790 --> 00:05:50.139 of the Interior in 1849? Yeah, that does sound 00:05:50.139 --> 00:05:51.639 weird. That sounds like a completely different 00:05:51.639 --> 00:05:53.839 wheelhouse. It does sound like a pivot, but it 00:05:53.839 --> 00:05:55.620 makes perfect sense when you consider the mechanics 00:05:55.620 --> 00:05:58.079 of government. How so? When you control the money, 00:05:58.240 --> 00:06:00.939 you get a say in how the government expands its 00:06:00.939 --> 00:06:03.160 footprint and manages its domestic resources. 00:06:03.740 --> 00:06:06.120 Oh, okay. The creation of the Department of the 00:06:06.120 --> 00:06:09.100 Interior required significant financial restructuring 00:06:09.100 --> 00:06:12.439 to manage public lands and native affairs. And 00:06:12.439 --> 00:06:15.180 the Finance Committee was the bottleneck for 00:06:15.180 --> 00:06:17.379 those funds. Here's where it gets really interesting. 00:06:18.219 --> 00:06:21.600 Because the committee's true trial by fire came 00:06:21.600 --> 00:06:24.180 during the Civil War. Oh, absolutely. During 00:06:24.180 --> 00:06:26.779 this era, the committee was under the leadership 00:06:26.779 --> 00:06:29.579 of Chairman William Pitt Fessenden. Right. Under 00:06:29.579 --> 00:06:32.259 his watch, this committee essentially became 00:06:32.259 --> 00:06:35.120 the financial war room for the Union. Yeah, they 00:06:35.120 --> 00:06:37.579 really did. They appropriated all the funds for 00:06:37.579 --> 00:06:40.040 the war effort and had to figure out how to actually 00:06:40.040 --> 00:06:42.600 conjure that money out of thin air to keep the 00:06:42.600 --> 00:06:45.120 military afloat. The sheer scale of that crisis 00:06:45.120 --> 00:06:47.740 forced incredible financial innovations out of 00:06:47.740 --> 00:06:49.319 this committee. Because they couldn't just rely 00:06:49.319 --> 00:06:51.300 on the old ways of doing things. Not at all. 00:06:51.560 --> 00:06:54.160 To finance the war, they raised funds through 00:06:54.160 --> 00:06:56.899 tariffs, but they also created the nation's very 00:06:56.899 --> 00:07:00.259 first income tax. And, perhaps most fundamentally, 00:07:00.660 --> 00:07:04.180 through the Legal Tender Act of 1862, they introduced 00:07:04.180 --> 00:07:06.660 the nation's first reliance on paper currency. 00:07:07.579 --> 00:07:10.060 So you're telling me the paper money in my wallet 00:07:10.060 --> 00:07:13.519 right now only exists because... A Senate committee 00:07:13.519 --> 00:07:16.220 was scrambling to fund the Union Army. Exactly. 00:07:16.660 --> 00:07:19.639 The concept of federal income tax, the greenbacks 00:07:19.639 --> 00:07:22.160 we use to buy our groceries. Yeah. These were 00:07:22.160 --> 00:07:25.040 born out of wartime necessity. They were engineered 00:07:25.040 --> 00:07:27.920 by this specific committee to keep the country 00:07:27.920 --> 00:07:30.040 from fracturing permanently. They literally had 00:07:30.040 --> 00:07:32.899 to invent modern American monetary policy on 00:07:32.899 --> 00:07:34.870 the fly. That puts an entirely new perspective 00:07:34.870 --> 00:07:37.350 on the cash in our pockets, doesn't it? It really 00:07:37.350 --> 00:07:39.629 does. But right after the war, they actually 00:07:39.629 --> 00:07:42.810 took a major structural blow. Right. In 1865, 00:07:42.970 --> 00:07:45.129 the House created an Appropriations Committee 00:07:45.129 --> 00:07:47.430 to take some of the burden off of ways and means. 00:07:47.750 --> 00:07:50.310 And the Senate followed suit shortly after in 00:07:50.310 --> 00:07:53.560 1867. They formed the Senate Appropriations Committee, 00:07:53.740 --> 00:07:55.879 which officially stripped the Finance Committee 00:07:55.879 --> 00:07:58.339 of its appropriations power. So they could raise 00:07:58.339 --> 00:08:01.060 the money, but they were no longer the sole group 00:08:01.060 --> 00:08:04.199 deciding exactly how every penny was spent. True. 00:08:04.279 --> 00:08:07.279 They lost the power to spend. But even with the 00:08:07.279 --> 00:08:10.240 loss of that signature duty, they remained central 00:08:10.240 --> 00:08:13.160 to the nation's biggest debates. Right. Throughout 00:08:13.160 --> 00:08:15.779 the late 19th century, the committee was at the 00:08:15.779 --> 00:08:19.920 absolute center of the silver question. Ah, yes. 00:08:20.519 --> 00:08:22.620 The silver question. Right. The debate over whether 00:08:22.620 --> 00:08:25.319 to back American currency with silver to cause 00:08:25.319 --> 00:08:28.040 inflation, which was meant to help farmers and 00:08:28.040 --> 00:08:31.699 debtors pay off their loans. Spot on. The committee 00:08:31.699 --> 00:08:34.139 had to manage that massive economic pressure 00:08:34.139 --> 00:08:37.059 through legislation like the Bland -Allison Act 00:08:37.059 --> 00:08:39.679 and the Sherman Silver Purchase Act. Which essentially 00:08:39.679 --> 00:08:42.179 forced the government to buy millions of ounces 00:08:42.179 --> 00:08:44.779 of silver every month. Exactly. The silver cause 00:08:44.779 --> 00:08:46.899 would eventually fail by the end of the century, 00:08:47.059 --> 00:08:49.480 returning the country firmly to the gold standard. 00:08:49.620 --> 00:08:52.360 Right. But it proves that all rows of economic 00:08:52.360 --> 00:08:55.279 panic still led right through the Finance Committee's 00:08:55.279 --> 00:08:57.960 doors. Which brings us to one of the most chaotic 00:08:57.960 --> 00:09:00.379 legislative battles in American history. Oh, 00:09:00.440 --> 00:09:02.519 this is a good one. The fight for the permanent 00:09:02.519 --> 00:09:05.460 income tax. So the original Civil War income 00:09:05.460 --> 00:09:07.860 tax we just talked about, that was repealed in 00:09:07.860 --> 00:09:10.240 the 1870s once the crisis passed. Right. They 00:09:10.240 --> 00:09:12.500 didn't need it anymore. Fast forward to 1894 00:09:12.500 --> 00:09:15.639 and the committee passes a new income tax law 00:09:15.639 --> 00:09:18.500 to make up for revenue lost by lowering tariffs. 00:09:18.860 --> 00:09:23.200 OK. But then the Supreme Court steps in. In the 00:09:23.200 --> 00:09:26.240 1895 case of Pollack v. Farmers Loan and Trust 00:09:26.240 --> 00:09:28.840 Cope, the court strikes down the income tax. 00:09:29.100 --> 00:09:31.879 And the reasoning here is crucial. They ruled 00:09:31.879 --> 00:09:34.179 it unconstitutional because it wasn't based on 00:09:34.179 --> 00:09:36.679 apportionment. Meaning the tax wasn't proportionally 00:09:36.679 --> 00:09:39.000 tied to the population of each state. Exactly. 00:09:39.100 --> 00:09:41.559 Under the strict constitutional rules at the 00:09:41.559 --> 00:09:44.259 time, any direct tax had to be divided among 00:09:44.259 --> 00:09:47.179 the states according to their population. Which 00:09:47.179 --> 00:09:49.600 makes sense on paper, but in practice. In practice, 00:09:49.639 --> 00:09:51.879 a federal wealth or income tax is mathematically 00:09:51.879 --> 00:09:54.960 unworkable under those rules because a smaller, 00:09:55.019 --> 00:09:57.059 wealthier state would pay disproportionately 00:09:57.059 --> 00:10:00.720 less per capita than a larger, poorer state. 00:10:00.960 --> 00:10:03.100 Wow. Basically, the court told the committee 00:10:03.100 --> 00:10:05.340 they couldn't tax individual income under the 00:10:05.340 --> 00:10:07.580 current framework of the Constitution. Which 00:10:07.580 --> 00:10:09.419 sets up one of the most incredible legislative 00:10:09.419 --> 00:10:12.539 maneuvers in history. Yeah, it really does. The 00:10:12.539 --> 00:10:14.659 fight finally culminated with the Payne -Aldrich 00:10:14.659 --> 00:10:18.070 Tariff Act of 1909. The chairman of the Finance 00:10:18.070 --> 00:10:20.830 Committee at the time was Nelson Aldrich. He 00:10:20.830 --> 00:10:23.090 was deeply conservative and actually opposed 00:10:23.090 --> 00:10:26.190 an income tax, but he really wanted to pass his 00:10:26.190 --> 00:10:29.529 protective tariff. So he made a deal. A massive 00:10:29.529 --> 00:10:32.309 political tradeoff. He allowed for a constitutional 00:10:32.309 --> 00:10:35.330 amendment for an income tax to be passed by Congress 00:10:35.330 --> 00:10:37.690 and sent to the states. Fully expecting the states 00:10:37.690 --> 00:10:39.789 to reject it, right? Exactly. He thought it would 00:10:39.789 --> 00:10:42.509 die in the states. But his gamble failed. Big 00:10:42.509 --> 00:10:45.279 time. Four years later, that tradeoff changed 00:10:45.279 --> 00:10:48.299 the country forever. The 16th Amendment was officially 00:10:48.299 --> 00:10:51.440 ratified by the states, removing that apportionment 00:10:51.440 --> 00:10:54.299 requirement. And in 1913, the nation's first 00:10:54.299 --> 00:10:57.120 peacetime income tax was instituted. A completely 00:10:57.120 --> 00:10:59.720 permanent alteration to the United States Constitution, 00:11:00.039 --> 00:11:03.039 all born out of a strategic compromise over a 00:11:03.039 --> 00:11:05.899 tariff bill in the Finance Committee. It's wild. 00:11:06.080 --> 00:11:08.340 And around that same time, the committee's portfolio 00:11:08.340 --> 00:11:11.000 shifted again. Right. They lost jurisdiction 00:11:11.000 --> 00:11:13.860 over banking and currency to the newly created 00:11:13.860 --> 00:11:16.460 Banking and Currency Committee. But they pivoted 00:11:16.460 --> 00:11:19.139 to an area of massive social importance, which 00:11:19.139 --> 00:11:22.600 was veterans. They passed the War Risk Insurance 00:11:22.600 --> 00:11:26.139 Act of 1917, which fundamentally shifted how 00:11:26.139 --> 00:11:28.279 the government treated its soldiers. How so? 00:11:28.480 --> 00:11:31.220 It moved pensions away from being seen as mere 00:11:31.220 --> 00:11:34.259 gratuities or gifts and established them as actual 00:11:34.259 --> 00:11:36.940 earned benefits. That's a huge distinction. It 00:11:36.940 --> 00:11:39.559 was. It also served as one of the first life 00:11:39.559 --> 00:11:41.360 insurance programs created under the federal 00:11:41.360 --> 00:11:44.059 government. Wow. Later, they helped consolidate 00:11:44.059 --> 00:11:46.500 the scattered bureaucracy into what would eventually 00:11:46.500 --> 00:11:49.220 become the Veterans Administration, and they 00:11:49.220 --> 00:11:52.539 passed the 1924 bonus bill to compensate World 00:11:52.539 --> 00:11:55.460 War I veterans. All of this effort reached an 00:11:55.460 --> 00:11:59.080 absolute crescendo in 1944. Senator Bennett Champ 00:11:59.080 --> 00:12:01.200 Clark, who was the chair of the Subcommittee 00:12:01.200 --> 00:12:03.799 on Veterans, assured the smooth sailing of a 00:12:03.799 --> 00:12:06.000 monumental piece of legislation. The Servicemen's 00:12:06.000 --> 00:12:08.000 Readjustment Act. Exactly. We all know it today 00:12:08.000 --> 00:12:11.649 as the GI Bill. And it is hard to overstate the 00:12:11.649 --> 00:12:14.950 impact of the GI Bill. Before this, returning 00:12:14.950 --> 00:12:17.889 veterans often had to march on Washington just 00:12:17.889 --> 00:12:20.289 to demand basic compensation for their service. 00:12:20.529 --> 00:12:23.529 Right. The GI Bill ended those traditional demands 00:12:23.529 --> 00:12:27.659 by providing unprecedented systemic. benefits. 00:12:27.879 --> 00:12:30.779 It wasn't just a cash handout. Right. It was 00:12:30.779 --> 00:12:33.139 way more than that. It provided massive funds 00:12:33.139 --> 00:12:35.799 for continuing education, meaning a whole generation 00:12:35.799 --> 00:12:38.059 of soldiers went to college who otherwise never 00:12:38.059 --> 00:12:40.120 could have afforded it. Incredible. It offered 00:12:40.120 --> 00:12:42.299 low cost mortgages and provided unemployment 00:12:42.299 --> 00:12:45.379 insurance. It fundamentally reengineered American 00:12:45.379 --> 00:12:48.320 society. I mean, it practically built the modern 00:12:48.320 --> 00:12:51.100 American middle class, moving millions of families 00:12:51.100 --> 00:12:53.320 into homeownership and higher education. If we 00:12:53.320 --> 00:12:56.240 connect this to the bigger picture. We have to 00:12:56.240 --> 00:12:58.100 look at their massive impact during the Great 00:12:58.100 --> 00:13:00.259 Depression. Right. Because as much as they built 00:13:00.259 --> 00:13:03.000 the middle class, a committee's actions can also 00:13:03.000 --> 00:13:05.860 make a crisis significantly worse. Yeah, we have 00:13:05.860 --> 00:13:07.700 to talk about the Smoot -Hawley Tariff Act. We 00:13:07.700 --> 00:13:09.600 do. At the beginning of the Great Depression, 00:13:09.799 --> 00:13:13.840 the committee under Chair Reed Smoot pushed this 00:13:13.840 --> 00:13:16.970 act through. Following the traditional economic 00:13:16.970 --> 00:13:19.929 practices of the time, they felt they needed 00:13:19.929 --> 00:13:22.590 to protect domestic American businesses from 00:13:22.590 --> 00:13:25.350 foreign competition. Right. By slapping massive 00:13:25.350 --> 00:13:29.889 tariffs on imported goods. Exactly. But it backfired 00:13:29.889 --> 00:13:32.809 spectacularly. It really did. It greatly increased 00:13:32.809 --> 00:13:35.590 tariffs, which prompted immediate retaliation 00:13:35.590 --> 00:13:37.809 from other countries. It choked off international 00:13:37.809 --> 00:13:40.350 trade just when the global economy desperately 00:13:40.350 --> 00:13:42.590 needed liquidity. And the economic situation 00:13:42.590 --> 00:13:45.009 of the Great Depression worsened. significantly. 00:13:45.309 --> 00:13:48.289 It is widely considered a disastrous legislative 00:13:48.289 --> 00:13:51.350 blunder. But the way they fixed it is just as 00:13:51.350 --> 00:13:54.590 important as the mistake itself. Right. In 1934, 00:13:54.730 --> 00:13:57.029 they passed the Reciprocal Tariff Act, which 00:13:57.029 --> 00:13:59.669 essentially replaced Smoot -Hawley. But it didn't 00:13:59.669 --> 00:14:01.909 just lower tariffs, did it? No, it did something 00:14:01.909 --> 00:14:04.690 structurally radical. It authorized the president 00:14:04.690 --> 00:14:06.809 to directly negotiate trade agreements with other 00:14:06.809 --> 00:14:09.190 nations. This effectively transferred the day 00:14:09.190 --> 00:14:12.710 -to -day granular trade -making policy from Congress 00:14:12.710 --> 00:14:15.409 directly to the executive branch. They handed 00:14:15.409 --> 00:14:18.009 away a piece of their own constitutional power 00:14:18.009 --> 00:14:21.629 to bypass congressional gridlock, setting up 00:14:21.629 --> 00:14:25.149 the entire global trade policy system exactly 00:14:25.149 --> 00:14:28.259 as it exists today. And while they were rewiring 00:14:28.259 --> 00:14:31.139 global trade, they were also serving as the legislative 00:14:31.139 --> 00:14:34.159 foundation for Franklin D. Roosevelt's New Deal. 00:14:34.179 --> 00:14:37.200 Right. They received jurisdiction over the National 00:14:37.200 --> 00:14:39.740 Industrial Recovery Act because it involved tax 00:14:39.740 --> 00:14:42.200 code changes. Now, that specific act ultimately 00:14:42.200 --> 00:14:45.779 failed and lost public support. But it birthed 00:14:45.779 --> 00:14:47.960 the Wagner Act and the National Labor Board, 00:14:48.139 --> 00:14:51.200 which fundamentally changed labor rights. And 00:14:51.200 --> 00:14:54.500 crucially, they handled the 1935 Social Security 00:14:54.500 --> 00:14:56.360 Act. Which again comes down to a fascinating 00:14:56.360 --> 00:14:58.639 jurisdictional quirk. It really does. You only 00:14:58.639 --> 00:15:00.620 got jurisdiction over Social Security because 00:15:00.620 --> 00:15:03.019 a new program required a payroll tax to fund 00:15:03.019 --> 00:15:05.500 it. Exactly. Because it involved a tax, it fell 00:15:05.500 --> 00:15:07.240 right into the lap of the Finance Committee. 00:15:07.419 --> 00:15:09.279 Wow. And because of that quirk, the committee 00:15:09.279 --> 00:15:11.840 became the architect of the first massive effort 00:15:11.840 --> 00:15:14.200 by the federal government to provide sustained 00:15:14.200 --> 00:15:17.399 benefits to the elderly and the unemployed. They 00:15:17.399 --> 00:15:20.000 literally designed the modern social safety net 00:15:20.000 --> 00:15:22.450 from the ground up. The sheer weight of that 00:15:22.450 --> 00:15:25.330 history is immense. It is. But we need to bring 00:15:25.330 --> 00:15:27.190 this all the way back to the present day. Yes. 00:15:27.389 --> 00:15:31.389 Today is Wednesday, March 4, 2026. We are currently 00:15:31.389 --> 00:15:35.149 in the 119th Congress. Okay. And the structural 00:15:35.149 --> 00:15:37.649 makeup of the committee right now is just as 00:15:37.649 --> 00:15:41.259 critical to understand as its history. Currently, 00:15:41.340 --> 00:15:44.460 the committee consists of 27 members. The majority 00:15:44.460 --> 00:15:47.419 is held by the Republicans with 14 seats, and 00:15:47.419 --> 00:15:50.440 a minority consists of 13 seats held by 12 Democrats 00:15:50.440 --> 00:15:53.139 and one Independent. The committee is currently 00:15:53.139 --> 00:15:55.919 chaired by Republican Mike Crapo of Idaho, who 00:15:55.919 --> 00:15:59.620 took the gavel on January 3, 2025. And the ranking 00:15:59.620 --> 00:16:02.379 member is Democrat Ron Wyden of Oregon. And just 00:16:02.379 --> 00:16:05.039 as a quick aside for you listening, as we talk 00:16:05.039 --> 00:16:07.139 about who holds the gavel, like Republican Mike 00:16:07.139 --> 00:16:09.919 Crapo or Democrat Ron Wyden, we are just laying 00:16:09.919 --> 00:16:11.820 out the architectural blueprint of the committee 00:16:11.820 --> 00:16:13.919 today. Exactly. We are totally neutral here. 00:16:14.019 --> 00:16:16.240 We aren't endorsing any left -wing or right -wing 00:16:16.240 --> 00:16:18.620 policies, nor are we validating any political 00:16:18.620 --> 00:16:20.909 viewpoints. Definitely not. We are just taking 00:16:20.909 --> 00:16:23.389 an objective look at who is steering the ship 00:16:23.389 --> 00:16:27.009 and managing this massive workload in the 119th 00:16:27.009 --> 00:16:29.649 Congress based on the facts in our source material. 00:16:29.909 --> 00:16:32.350 Right. And speaking of that workload, let's look 00:16:32.350 --> 00:16:34.929 at how these 27 senators actually manage it today, 00:16:35.070 --> 00:16:37.710 because they don't just sit in one big room and 00:16:37.710 --> 00:16:40.330 debate all day. No, the jurisdiction is far too 00:16:40.330 --> 00:16:42.909 complex for that. The workload is highly specialized. 00:16:43.440 --> 00:16:46.179 They break down into six specific subcommittees 00:16:46.179 --> 00:16:48.679 to handle the sheer volume. Right. For instance, 00:16:48.860 --> 00:16:51.440 you have the subcommittee on energy. natural 00:16:51.440 --> 00:16:53.960 resources, and infrastructure, which handles 00:16:53.960 --> 00:16:56.440 the financial incentives and tax structures for 00:16:56.440 --> 00:16:59.360 massive physical projects. Then completely separately, 00:16:59.399 --> 00:17:02.240 you have international trade, customs, and global 00:17:02.240 --> 00:17:04.460 competitiveness. Which is entirely different 00:17:04.460 --> 00:17:06.700 from the subcommittee on health care, which obviously 00:17:06.700 --> 00:17:09.339 handles that massive Medicare and Medicaid portfolio 00:17:09.339 --> 00:17:11.839 we discussed earlier. Precisely. Then there is 00:17:11.839 --> 00:17:14.599 the subcommittee for social security, pensions, 00:17:14.599 --> 00:17:17.779 and family policy. Okay. You have taxation and 00:17:17.779 --> 00:17:20.730 IRS oversight, which is constantly audited. how 00:17:20.730 --> 00:17:22.589 the government actually collects its revenue. 00:17:22.730 --> 00:17:25.470 And finally, fiscal responsibility and economic 00:17:25.470 --> 00:17:28.549 growth. Each of these subcommittees has its own 00:17:28.549 --> 00:17:31.250 chair and ranking member, allowing them to drill 00:17:31.250 --> 00:17:34.250 down into the minutia of these massive national 00:17:34.250 --> 00:17:37.150 issues simultaneously. So what does this all 00:17:37.150 --> 00:17:39.470 mean? Yeah, let's zoom out. When you step back 00:17:39.470 --> 00:17:41.910 and look at the entire journey outlined in this 00:17:41.910 --> 00:17:45.539 deep drive. We are talking about a single evolving 00:17:45.539 --> 00:17:48.839 group of people that started out trying to clean 00:17:48.839 --> 00:17:52.099 up the financial ruin of the War of 1812. Yeah. 00:17:52.279 --> 00:17:54.400 They figured out how to pay for the Civil War. 00:17:54.539 --> 00:17:57.569 They created paper money. They fought an epic 00:17:57.569 --> 00:18:00.069 decades -long battle over the income tax that 00:18:00.069 --> 00:18:02.250 resulted in a permanent change to the Constitution. 00:18:02.670 --> 00:18:05.589 They built the GI Bill and, by extension, the 00:18:05.589 --> 00:18:07.569 modern middle class. They caused an international 00:18:07.569 --> 00:18:10.390 trade disaster, fixed it by rewriting how the 00:18:10.390 --> 00:18:12.849 government functions, and then designed the Social 00:18:12.849 --> 00:18:15.309 Security safety net that millions of people rely 00:18:15.309 --> 00:18:17.589 on today. This raises an important question, 00:18:17.690 --> 00:18:19.990 and it is something I want you, the listener, 00:18:20.190 --> 00:18:22.529 to mull over as we wrap up today. Let's hear 00:18:22.529 --> 00:18:24.769 it. Think back to that specific detail from the 00:18:24.769 --> 00:18:27.779 1930s. When the committee passed the Reciprocal 00:18:27.779 --> 00:18:30.500 Tariff Act of 1934 to fix the Smoot -Hawley disaster, 00:18:30.880 --> 00:18:33.460 it authorized the president to negotiate trade 00:18:33.460 --> 00:18:36.099 agreements. I want you to really think about 00:18:36.099 --> 00:18:39.880 how a single committee's reaction to a dire economic 00:18:39.880 --> 00:18:43.920 emergency permanently handed away a massive piece 00:18:43.920 --> 00:18:46.680 of congressional power to the executive branch. 00:18:46.900 --> 00:18:49.400 It is wild to think about. That split -second 00:18:49.400 --> 00:18:52.230 historical pivot. born out of economic desperation, 00:18:52.670 --> 00:18:56.289 still dictates the balance of global power and 00:18:56.289 --> 00:18:58.670 American trade policy to this very day. Yeah. 00:18:58.809 --> 00:19:01.710 How often do emergency fixes become permanent 00:19:01.710 --> 00:19:04.440 shifts in power? That is a phenomenal question 00:19:04.440 --> 00:19:07.039 to end on. It really puts the weight of history 00:19:07.039 --> 00:19:09.099 into perspective and shows how decisions made 00:19:09.099 --> 00:19:11.859 in a panic can govern us a century later. So 00:19:11.859 --> 00:19:13.660 the next time you look at the taxes taken out 00:19:13.660 --> 00:19:15.619 of your paycheck, or the next time you read the 00:19:15.619 --> 00:19:18.180 news about global trade tariffs or Medicare funding, 00:19:18.460 --> 00:19:20.740 we hope you have a brand new appreciation for 00:19:20.740 --> 00:19:23.039 where those decisions actually originate. They 00:19:23.039 --> 00:19:25.579 come right from the 27 senators sitting in room 00:19:25.579 --> 00:19:28.559 215 of the Dirksen Senate office building. Thank 00:19:28.559 --> 00:19:30.380 you so much for joining us for this deep dive 00:19:30.380 --> 00:19:32.460 into the source material. We will see you next 00:19:32.460 --> 00:19:32.680 time.