so i thank you all very much. let us thank are real people who are here today. [applause] thank you all very much. .. [inaudible conversations]

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with the tax filing deadline with the way, iris commissioner douglas shulman came to talk about the budget. the agency is seeking an 8% increase for 2013. last year, iris cut $14 billion in fraudulent refunds. we also hear about the difficulties same-sex couples face and filing taxes due to differing state and federal laws. this house ways and means committee said committee hearing is an hour and 10 minutes. >> hearing on the internal revenue services fiscal year 2013 budget request in the 2012 tax filing season. hard-working american taxpayers have faced incredible challenges over the past several years, many struggled with unemployment, sluggish economic

growth and doubt about our country's economic future because of out-of-control spending and libyan public data. and then tax season comes around. the tax code which has tripled in size since 1975 continues to break american enemies of all businesses are too many taxes, too many loopholes in too many pages. it is estimated that the average tax payer spends 21 hours over $250 combined attacks could each year. to keep track with an increasingly complex and difficult to understand tax code or at least hire someone else who does. the internal revenue service of coors has the unenviable job of ensuring and enforcing our convoluted tax code. as we meet today, we're in the middle of the 2012 tax return and millions of taxpayers and employers unwilling to meet their tax filing obligations.

some have reported experiencing delays in receiving tax refunds and programming errors that have delayed 6 million returns, which we will discuss at today's hearing. we have no tax fraud and improper payments. taxpayers are exasperated because while they work so hard to comply with tax code, d.c. press reports of thieves rob the treasury billions of dollars each year. one recent report detailed how an identity theft ring in florida committed $130 million in fraud with prison social security numbers. on top of this fraud, tens of billions of dollars per money as floods every year through improper payments are refundable tax credits, including $17 billion a year for the earned income tax credit alone. finally we'll talk about the administration's fiscal year 2013 budget request for the irs

for fiscal year 2013 has requested nearly $13 billion in appropriations for the agency in a 30% from fiscal year 2012, included in this request server 360 million nearly 900 new employees to implement portions of the affordable care act, including the new insurance debate in the controversial individual mandate penalty. we look forward to discussing this on the other new initiatives the irs plans for fiscal year 2013. for that like to welcome commissioner douglas shulman today i look forward to a fruitful discussion of this asian economies mission in the ongoing tax return filing season. before i yield to the ranking member, mr. lewis, i ask unanimous consent from all members have written statement be included in the record. without objections awarded. i will also ask unanimous

consent to gao's report on the 2011 tax filing season and fiscal year 20 total budget request be included in the record. without objections awarded. mr. lewis. >> thank you very much, madam chair for holding this hearing on the internal revenue service and i am pleased that we have the commissioner before us today. i have serious concerns about the effect of the recent tax collection agency operation. in the most recent report to congress, the national taxpayer advocate stated that the most serious problem facing taxpayers is that the irs is not adequately funded to serve taxpayers and collect taxes. i fully agree with the statements. this year the agency budget was cut by over $300 million.

this cut harm taxpayers and telephone service, telephone calls have increased by 34%, but the hours had decreased by 20%. over 65% of taxpayers seeking telephone assistance are able to speak to an rs employee and they must wait an average of 17 minutes. and they must wait an average of 17 minutes. at taxpayers assistance clinics. the budget cut also harmed agency operation. the cut force agencies to the thousands of employees. the majority of these employees work in enforcement. they put type and collect revenue. the reduction does not help tax collection reduce the deficit.

it makes sense. i look forward to discussing these issues in the agency proposed budget for next year. not in chair, finally he would like to take a moment to thank william for his dedication and service to the agency into this congress. as many of you know, floyd is the legislative affairs there any plans to retire this summer. floyd began his government service as a congressional page under some under fulbright of arkansas many years ago. for floyd, the sender of arkansas properly violated child labor laws. you're not that old. i have worked with floyd on this committee and i know that she will be masked. i wish him the best as he retires. thank you for your great service to and with that, madam

chairman, i yield back. >> thank you, mr. lewis. i would like to welcome back the commissioner of the internal revenue service, mr. douglas h. schulman who has served as commissioner since march 2008. thank you again for your time today. the committee has received a written statement and i will be made part of the formal hearing record. you will recognize her five minutes for your oral remarks and you beat in what you are ready. >> thank you very much to other members of the subcommittee for giving me the opportunity to testify today. i want to talk about filing season our strategic initiative and the president's 2013 budget, which would give us much needed increase over the 2012 enacted levels. a significant portion of the president's 2013 budget would restore congressional reductions

in irs funding made over the last two years. i will start by saying i believe it is incumbent on all of us in the government to be as efficient as possible to spend taxpayers dollars wisely. for the irs that means finding savings where we can and continue to invest in strategic priority that allow us to improve service in voluntary compliance. from fiscal year 2009 through the 2013 proposed budget, we will have achieved nearly $1 billion in budget savings and efficiencies in core irs operations. these savings and efficiencies reflect an across-the-board commitment at the irs to find better and more efficient ways to administer the tax system. at the same time, we collect $200 in revenue for every dollar spent on our budget. we also collect $2.4 trillion

last year. we issued 110 million refunds for $345 to hard-working american taxpayers. our compliance activities brought in a direct revenue of $55 billion they block to another $14 billion from going off the door to taxpayers who are trying to commit fraud on the government. in this regard, i want to point out that the administration's proposal for irs funding includes critically important enforcement initiatives that would be funded through a program integrity cap adjustment. let me just say that this proposal makes sense and is a reflection of the president and his administration's belief that irs funding actually helps reduce the deficit.

congress is literally leaving money on the table if it does not enact this proposal, which would allow for deficit reduce the initiatives and tax compliance, while leaving specific funding decisions to the normal, annual appropriations process. let me just talk about a couple of things that we've done over the last few years that has moved the agency for word to position it for the future into a better job serving taxpayers and making sure they comply with the tax code. let me just share with filing season. keyfile continues to grow. this year, we have issued about 59 million refunds. for a total of $174 billion. that is about the same number as last year. and we deployed several new barge technology systems.

i'd be happy to talk about those as we get further into silence even. in strategic areas, this year for the first time in history, we have moved from a weekly batch cycle to daily processing of tax returns through case you. k2 delivers on the promise of irs modernization going back two decades and we are very proud of this achievement. a couple years ago i told the committee restructured our technology program and were going to deliver a major technology initiatives we have delivered this initiatives. we also had the highest score out of her last year on the american customer satisfaction index rating, which is the overall score we track for taxpayer satisfaction with the interactions with the irs. we scored 73 on this index that we are very proud of this achievement and constrained

budget environments. return preparer programs is up and running today for the 840,000 paper pairs have registered with the irs in both the testing and education requirements are well underway. this is one of the most important initiatives in the tax system in several decades. we have also made significant progress and tax evasion. we have collected more than $4.4 billion to date through our offshore voluntary disclosure program. we are getting people back an assistant to this and other offshore initiatives. and i think we've made significant progress as they've said. we've got a billion dollars out of our core operating budget through the 2013 budget statement -- budget proposal that we've get in. let me conclude my opening statement with one concern that

i want to emphasize the subcommittee and i think it is quite important for the way of the means committee as a whole. in recent years, it seems taxpayers increasingly face uncertainty about what the tax law will be for the next filing season. this year, we at the irs are very concerned with the status of the amt and so-called extenders. if the amt and extenders are not dealt with in a timely fashion, we may have to delay the start of filing season for many millions of taxpayers as we have done in prior years. and i have written to this committee before that it is imperative that whatever action congress decides to take on amt and extenders, that this action have been by the end of the

year, which would still be laid from an operational good, but not longer than not in order to prevent even more widespread disruption of next year's tax filing season. >> thank you, commissioner shulman. we will alternate between sides of five-minute period last year you testify to the committee that enforcement of customer service are not in either order proposition , providing quality taxpayer service, especially during the season is important to help taxpayers provide unintentional errors in a burden on compliance and reduce other burdensome posts railing interactions at the irs. so far this filing season access to that irs a sisters' top 255% and taxpayers are waiting an average of 18 minutes to talk with and irs assisted. the rate of taxpayers getting

busy signals or that are disconnected from the irs have roughly doubled. yet this is not a new problem, the rather seems to be just a bad trend. since 04, the percentage of answer calls for strong crude 87% to 70% in 2011. last year the average wait time was 12 minutes. in a seven is five minutes or less. personally, i have heard from cpas that it is not uncommon to be on hold for 30 minutes. according to gao, and this declining customer service has declined despite the number of full-time equivalents dedicated to answering the phone, having increased from 8000 in fiscal year 2,072,882,011 and despite greater use of automated answers and self service website options. it seems to me the irs has placed greater emphasis on

enforcement at the expense of surveys had yet as he told a/or the lack of service for those who have questions will only lead to greater noncompliance than if those questions had been answered. so can you help me better understand a few things. first, what actions they been taken to ensure that taxpayers are able to reach a live irs a sister? second, giving your belief that the iris must deliver both enforcement and customer service, do you think this budget request focuses too much on enforcement while sacrificing customer service? and finally, does the irs consider this to be an acceptable level of service? >> yeah, thanks for bringing up a set of important issues. first, let me repeat what i told you last year when i talk about a love with our employees and

members of congress and have one involved in the tax system, which is that it is not an either/or proposition . we need to run service operations and compliance operations to make the nation's tax system worked. let me put in context the resources that we have this year to put towards both enforcement and customer service. we had a $300 million budget cut, which was $1.2 billion less than the president had requested for service and enforcement last year. we also had to absorb for rent and other kinds of increased about $200 million of inflation. and 66 million was put into it elegy accounts, which we're very appreciative of. if you take 300, 200 comes 66, with a $566 million reduction in our core services and enforcement accounts. what we are trained to do is do

the best we can with the resources we were given. last year, or the book service is about 70%. this year it is running at about 66% even though we predicted about 61%. the reason for that is we really squeezed deficiency can arata calls. more people are using automated answering systems and people are using our website. as you said, the wait is longer because it is certain point we can squeeze as many efficiencies out of technology and other efficiencies as he can, but it comes to how many people we have answering phones. volume is set to the numbers you gave us that we have more people come at us with much more volume and taxpayers and complicated tax code right now. another number that is interesting to look at is how many people have been the first couple of minutes because we've added a feature that tells them how overweight. if you want to use the web,

automated phone or callback when there's less time, that our phone level of service this year is 77% if you look at -- take away the people who hung up in the first couple of minutes. so i guess my view of this is we've taken a whole bunch of actions. at a certain point we need money to invest because you need people to answer phones for life surveys. i am pretty proud that while service is down, it has integrated to a point where it could have gone given because any answer to your last question, which is to rethink it is accessible? i want everyone who contacts the irs to get what they need from the irs. this year, everyone is not getting what they need from the irs, but we are doing a pretty good job given the resources we were given. >> thank you, commissioner. just i cannot data and budget

cuts compared to the level of service aren't always -- they don't always follow given this information from the gao. so we just encourage you to continue to work on that we would be delighted to work with you anywhere you can. but that i'd recognize mr. lewis for five minutes. >> thank you ramage, madam chair. mr. commissioner, the gao knows that a 34% increase in the number of calls for this filing season and about a 50% increase in calls answered by the automated form service. could you tell us why it is that taxpayers calling about? the nature of the calls? >> you know, calls can be anything from people want to set up a payment plan two people are curious -- i'm filling up my return going to take this deduction. how does that work, just general tax law questions.

two questions about where's my refund i felt last friday and my preparer told me to get a refund on wednesday and i haven't gotten it. so-called theory. so we can get to a specific breakdown of what the calls are. >> thank you very much. we understand the request in a cap adjustment of $700 million for next year's budget to fund enforcement programs. what are your plans, if any, if the agents have not received these resources? >> we are still early and the congressional budget and appropriations cycle. and so, we are quite hopeful. and in the past we had broad bipartisan support for cap adjustment. the most recent cap adjustment was 2006 and 2007, with a republican president and the democratic controlled congress. and so, we actually think this

is a bipartisan proposal. it reflects the administration's belief that prudent investments in the irs are good for deficit reduction and so that they should be cap adjustment for our budget. and investments for us is good for the long-term for the tax system. and so right now i think our position is that this budget program integrity cap adjustment are good for the system, people should agree we've had good productive conversations about the house and the senate about it. >> mr. commissioner, could you tell members of the subcommittee, at the $300 million budget cut impact of taxpayer budget service this year and what taxpayers service has reduced? >> yeah, so ms. jenkins i walked to the notion that the 300 million at the top, but the impact is greater given where

the resources were put in our budget. you know, i think we have a slight dip in the number of taxpayers served in walk-in centers, we have eight corresponding increase in number of taxpayers served and volunteered vita sites, where we encourage them to go because we work in partnership with community organizations. our phone level of service is down by about 4% compared to last year, although automated calls are up and the wait times are longer. and so there's been -- the way i characterized it is there's been a pretty bold a fact because less resources. with that said, i am quite proud we've been able to mitigate some of that effect by making sure we work smart and drive efficiencies as hard as we can here at

>> thank you ramesh, mr. commissioner. i yield back my man in chair. >> thank you, mr. lewis. >> thank you, mr. lewis. now we will give five minutes to the representatives from minnesota, mr. paulson. >> thank you, madam chair. thank you, commissioner for being here. but to follow up on a letter he sent to you not to let it go. you've been talking a lot or a great about the concept of a real-time tax system and added a number of public meeting on the issue as well. i know there are benefits to receiving real-time verification and having the information offhand. but i am concerned that the cost could outweigh benefits particularly in the sense have in the filing system could lead to a person that is similar to the 1099 provisions been ruled out as a part of the new health care love which would've been a nightmare for night there for employers.

if he'll make taxes to work in sure you want to have all the data earlier. you want to have more 1099 data as well. just look at what has been discussed today, it seems compressing the reporting timelines will make it more challenging for reporting requirements for pretty much a very onerous and burdensome process right now. so let me ask you this. what are you doing right now to do it with existing straight stakeholders to kind of get their feet at, they're buying us a part of this? there is no doubt that compliance costs are a big deal for employers. it's one of the reasons why the level of uncertainty and antiemetic sanders issues and this is a factor as well. can you talk about that? have you conducted studies of the increased cost to businesses of changing deadlines, for instance for reporting informational returns are increasing reporting requirements or would you agree to an independent study is a part of that process? would that make sense? >> think, mr. paulson that's an important set of issues. let me give you the perspective on it.

i do my job as commissioner to make sure i am hoping process the tax system for so works better tenuous than 20 years now than it does today. the combination of consumer expectation of us working better and quicker and more timely with taxpayers with the advances in technology clearly has room for us to think about a future that works better for people. what really struck me is the average taxpayer, if they have interaction with us beyond just filing, then interaction is they have their economic activity one year. the father returned the next year and it can take a year to two years to reach out to them. for by the time to go back to that debuted there spent their refund or their records and all the memory is gone, whether it's a small business or individual.

the current system actually has a lot of burn it burn it to people and we've heard that. so in a deposition that said what if we could clear everything up rather than coming back on the backend at the time they filed, which is the simplest way to think about this. but he also recognized all the things you said, which is this is something that would affect all the stakeholders in the tax system from taxpayers to tax pictures to information return filers. subway went about this is the way i think a public agency should go about this, which is we hold a series of public meetings, which i hosted who stakeholders, the broad range of stakeholders to get there in that. and what we heard universally is basically makes sense. we'd all love to have everything work faster in the tax system. but we need to make sure we work through the details together in a constructive fashion so that we don't at her again in the

process. so what we are doing now is taking the next step in really developing detailed vision about what this would mean. and i think there is an misunderstanding. we never suggested speeding up or added more information reporting. we've asked questions about what you people have now? when is it ready and when could they get it to us? not, is there more of what they have to start doing what they are ready to faster? we've asked ourselves internally, hardware systems for? and when could we do this kind of matching? >> let me ask you before time is running out. how would join upgraded system cost to the council dais and will be needed to run the system? how many years will take to build any task waits are here justifying the budget in terms of the request to congress would give her the administration to

render operations. >> way too early. this is a vision that conversation vishay coders. the first step is plain out exactly what it would mean. there's a bunch of things we can do right away which is processing a sewer system quicker so we can have quicker engagement. and so i can't tell you. you know, there's no blueprint right now. we later vision. we've had a broad set of stakeholder engagement and we are now moving into the next round of stakeholder engagements. >> would it be safe to say that part of your vision? >> i think for sure we will have public or postals so we'll have plenty of time for inaction. >> thank you. we've all recognized representative becerra for five minutes. >> thank you and then in chair. by the way, thank you to the work you are doing given the budgetary constraint you are facing. and it'll pass on to each and every one of your employees who are doing yeoman's work, i can

imagine the distress that they are under given the fact that you have got thousands of americans waiting to connect with them on the phone, waiting 10, 20 minutes and many very unhappy to have to wait that long. i think after two or three minutes most americans tend to hang up on and a phone call where they have to be put on hold. so i hope we get this done in a smart way. i don't believe that the first thing we want to shortchange the agency, which has a tough tax which is asking americans to voluntarily pay their taxes would have responsible americans to do so to watch as others don't, it is very frustrating and we don't want to undermine the voluntary compliance rates that we have in this country by americans who pay their taxes. so please share with all the folks that you work with but we think them very much until the gentleman right over there,

mr. williams but we pink floyd williams for his years of service. we thank him because he's been a terminus asset matches to congress, to the american people because of the service is provided to the irs sent to us as the go-between between your agency and the congress. we are going to miss an we want to say thank you for officer visio provided provided over the years. your initiative untaxed repairers, that universe of people out there who are representing themselves as competent, qualified to prepare american tax returns and get paid to do it. we know there's some great ones, but we know their son who had to protest the american public. it's hard to believe that you need a license to cut some of their, but in america you don't need a license to prepare someone's perhaps most important financial documents.

i thank you for the initiative to train for it.that industry and make sure competent folks are the ones preparing our taxes. i am distressed. as they sit and listen to what you're saying, you classified as employees. your budget was cut $300 million. we don't need to tax compliance enforcement, the dollar you spend to have that investigator in the spokes of follow-through to make sure people are complying with the payment for taxes they have which are returned $6 for every dollar we invest in you to do that. for us to be cutting $300 million from your budget, it is distressing because the last thing we want is stories of how some overzealous taxation goes in by someone stored on to try to collect taxes. the truth is for the most part you have employees who do just yeoman's work to help their fellow americans prepare taxes. so i hope that you will sound the alarms if there are alarms on the ability for us to pay our

taxes the right way voluntarily. my understanding and correct me if i'm wrong that we now estimate that $385 billion annually is now paid in taxes that are either avoided or intentionally not paid in this country. is that the estimate now? >> that is the top tax -- tax gap estimate. >> so that is more money -- that is more money that would fund you for how many years? >> alive. >> is just incredible. we have americans for voluntarily pay my taxes. you have a whole bunch of other americans who unfortunately are doing what they should and so the responsible taxpayers in this country are having to cover for those who aren't.

and you could go figure out who they are if you just had the compliance money, the enforcement money to go out there and find them. many of them make errors and most of those americans are ready to pay their fair share. others are. others are trying to send money overseas and do things they shouldn't. we should make them pay their fair share. i just hope we go out there and do this the right way. is there any hope that with the funding you a kidney and that you can fulfill everything we are asking you to do? >> well, vote, one is very much the prerogative of congress to fund us in whatever congress ends up giving us will do the best that we can. i am quite proud of this agency delivering on multiple fronts over the last several years and especially this year and he decreased budget environment and really try to balance compliance

and service. i think we're doing a good job. >> thank you. the time is expired. ms. black is recognized for five minutes. >> thank you, mr. chairman. for being here. we are talking about limited dollars and we need to spend our dollars the best we possibly can. i was reading a report just recently from the treasury inspector general for tax administration has done billions of dollars in federal education credits that were issued in error. and what i'm really trying to get to here is number one to make sure we are giving the money to the people who really deserve the money so that we can use that in the budgetary process defined goals places such as yourself that can continue to do a good job. but it is very disturbing when ac how much money this represents potentially giving to those who don't deserve it. and i just want to read a couple of things out of every pore.

1.7 million taxpayers received 2.6 billion in education credits for students for whom there was no supporting documentation in the irs files. but they even attended an education institution. almost 380,000 of these individuals claimed the students were not eligible because they did not attend the required amount of time or postgraduate students read acquiring 550 million erroneous education credits. 64,000 of those taxpayers received $88 million for students claimed as a dependent or a spouse on the otherwise return, so is a double payment. 250 prisoners erroneously received over two and 55,000 then it says here was identified that a valid social security number is required for federal

student aid, but not for these educational credits. now that just me away. i know of are talking about the child tax credit at one of the other hearings, dallas at one of the other hearings, dallas but there was any requirement that they have a social security number. so i'm not sure but there was any requirement that they have a social security number. so i am not sure how you track that when you don't have a social security number being used. but i want to go to trying to find ways to help you. but kind of tools we can do is give you so you can have the authority to say we're not going to process this return. it doesn't have the proper information on air. and this seems like an easy thing for me. not for me to a would see like an easy thing. and making sure they attend class or at least attended a college. and perhaps maybe even the salads school vin number would

also help to make sure that when the credits are processed that you have all the information to verify they truly qualify for those periods of communal ballot that? >> sure. thanks for bringing it up and i appreciate the offer. we can only see his hope. a couple of things. one is we significantly have stepped up efforts to crack down on fraud. last week we sent $14 billion in potentially either fraudulent or mistaking credit from going out the door. the specific report to chew reference -- i just want to point out a couple of things. there is inspector general report a couple years earlier that showed that there was huge error rate on the 1099 -- on the 1098 come which are the education reports we get. and so what they said that reports said there could've been

that level of fraud, there is also a recognition that the documents they were using too much might not have been accurate documents, meaning the education institutions often absent in the right information so it's not as clear the student wasn't there, even though it came up. with that said, the answer to what we can get to help, if we want to block a credit because we think there's not the right documentation, if we don't have that authority we have to go through full-fledged audit come which is resource contention and it comes to people because even if we see an issue, if we don't have people who will follow, answer the phone and engage with the taxpayer, we can't block it is we can't change their return. if we have not authority type two provisions, then we can block it and change the return without going through full-fledged audit. and so we requested this budget matter authority for a couple of things. the second as you mentioned prisoners. authorization for us to share information with present so there can be a real punishment

like losing privileges were putting in solitary confinement if they try to defraud the system. our authorization in congress to actually share information back with prisons so they can have that kind of dialogue expired at the end of last year. so we have been cannot authorization is another thing you all could do to help. through mexico matter authority need to be given out by law? so we do have to change the law. >> you are to have the authority to require that there be a social security number on that form? >> that as a whole different issue because certain tax credits you have to have a certain social security number to a certain tax credits you don't. the ones you mention you don't. it is not a requirement. the people bring it up here so if congress decides on the people as social security numbers can get that credit, do not have to be up to congress. we cannot stop it because it is not a requirement at this point. >> okay. i know some ways we can help

you. thank you. >> commissioner shulman, thank you. i apologize for arriving very late. before i recognize mr. reid for his questions -- i'm going to recognize you, but i also want to take a moment to recognize floyd williams for his 15 years of service at the irs has a total of 25 years of service and i went to thank you as you move onto what i i hope is a good retirement. thank you for your service. but that, mr. redirected mr. five minutes. >> thank you very much for being here with us today. commissioner, i would like to explore -- i really try to rely on data when we make decisions here in congress. one thing that i have a concern with is on the enforcement initiatives you have certain projections on investment for those enforcement initiatives. i am sure you are familiar with the issue of talk about here.

i believe 2013 you proposed enforcement initiative for return on investment will be 1.921. 2015 the project, to spend her sanders turn return on the investment will be 4.3 to half one historically, i read some reports that projected by 2012 who is supposed to be 7.8 return on investment to a dollar. so, does -- do you confirm those numbers, those estimates commend those projections with actual data aquatics and if you do, how do you do that? if you don't, why did she do that? >> great question. let me give you how i think about return on investment and exactly what acts it out. first of all, we are very conservative in the numbers they give you.

besides the people that we know do those jobs, a rolling ten-year average on the exact enforcement initiatives. so if we are going to hire 2013 examiners for an excise tax related ten-year rolling average about how much revenue comes indirectly from most people making adjustments actually comes into the treasury. so it is a look back ten-year rolling average of those numbers. i actually think this way understate the impact because the real game of running the tax system and they will object to is the $2.4 trillion that comes than every year come which most of those people who don't engage but in that kind of activity. so our job is to run good service so when people call they can answer questions. compliance coverage weather is the most risk, so that if you couldn't audit your neighbors know that she didn't audit around specific issues and drive

voluntary compliance. so another way to look at numbers is $12 billion budget, give or take, $2.4 trillion in revenue. every $1 invested brings you 200. for smaller ways to have what we call our church members, which are real dollars in the door every year. last year was about 55 billion. the year before was 57. the year before was 49 and that is literally people go out, make an adjustment to your people go through the adjudicatory process and bring money into us. so that is aside to one return. but the numbers you gave us are based on very specific at dvds in a granular way based on the kind of people that do this type cavities, looking back 10 years, how does that tie to those numbers? >> is it fair to say your testimony that if they are based on actual data when you go back and confirm the numbers? are you looking at actual data?

for the project 1.9 for 2013 return on investment you'll be able to show us at the end of 2013 the actual data that confirm whether or not you had 1.9 to one return on investment? >> i think we will be able to -- what i said is i think it is very good numbers. it is ten-year rolling averages. i think a big stake in a move, so this is an estimate. as a 2013 might not be exactly that. you may be higher or lower but every tenure. you'll will see average out to be that amount. >> i guess it is my question because in 2012 is projected to be a 7.8 to one return on investment. was it 7.8? what was the number for 2012 on enforcement initiative return on investment? >> again, i do not think you want to look on these things as your point in time and encourage us to do that. you want to encourage us to get the right resources at overtime

will drive the right taxpayer behavior. these are ones we can certainly consult with gao, all empty, we are very cultural at these numbers and has ongoing dialogue. >> you bring up the great point because my understanding that they are very concerned they are not using actual data to confirm those projected return on investment numbers that you're giving to us. >> yeah, i would characterize it is very concerned. we can together work on methodology and we are having the staff conversations on a regular basis. >> so you're working with gao to come to some sort of -- >> yeah, absolutely. i still can't do the numbers and if anything they stay to return. >> i appreciate the work you do. they appreciate other work you do over there because it's a tough job. >> these are great questions because we need to be accountable for delivering results. without i yield back.

>> thank you. commissioner shulman, welcome. this is the irs has new enforcement responsibilities? to enforce responsibilities? do you have the resources available to take on new enforcement responsibilities? >> earlier i was saying we try to do the best we can with a budget that congress gives us. obviously we have a big job to do and we try to balance across the board all of the things that we do. we have requested in the 2013 budget semi-resources for some of the new legislation that it's come through and we are quite hopeful we'll get that. >> and murdering the president's 2013 budget proposal, this proposal is saddling but the enforcement responsibilities by shifting alcohol tobacco tax and trade bureau duties of enforcing

tax provisions relate to alcohol, tobacco to dirs of the funding allocated in this budget. to pursue those kinds of violations. is that something that you've had internal discussions with others in the administration about? >> i'm sorry, mr. chairman. what are you referring to in the budget? i do not think there's a major shift in the budget. >> i think the 2013 budget enforces enforcement responsibilities by shifting alcohol and tobacco tax and trade bureau duties to the irs. >> i should get back to you on this. i don't think there's enough shift. proposed in the past we have been reimbursed overcurrent investigators hope that the investigations and that is what i am aware of happened in the past. >> be to just any clarification i would appreciate it. >> one other question. it's come to my attention it got a number of letters recently we

have seen press allegations that the irs is targeting certain tea party groups across the country, request it would've been described as onerous document request, delaying approval for tax exempt status in that kind of thing. can you elaborate on what is going on? can you give us assurances that the irs is not targeting particular groups based on political leanings? >> now, thanks for bringing this up because i think there's been a lot of press about this and a lot of moving information, so i appreciate the opportunity to clarify. first, let us start by saying yes they i can give you assurances. as you know, we pride ourselves on being a nonpolitical and nonpartisan organization. i am the only -- me and our chief counsel are the only presidential appointees in a five-year beyond presidential elections just so we will have

none of that kind of political intervention and things that we do. for five o. one c. four organization switches than in the press. they do not need to apply for tax organizations. the organizations have been filing 990 with us. the organizations are all in the application process. so first of all it is very important to emphasize that these organizations came involuntarily. they did not need to engage the irs in the past import. and if we would've if we would've seen an issue would have engaged, but otherwise we

wouldn't. they said they can be involved in political and campaign act of the day, but it can't be their primary purpose. when people apply for a 501c4 status, but we do is engage them in a number of questions about making sure that we understand their primary purpose around this and other sorts of engagement. and so, what has been happening has been the normal back-and-forth that happens at the irs. none of the alleged taxpayers and obviously i cannot talk about individual taxpayers and i'm not involved in these are in the examination process. they are in an application process, which they move into voluntarily. and so there is absolutely no targeting. this is the back-and-forth that happens when people apply for

501c4 status. >> finally, is it fair to say there's been no change in irs practice with regard to what triggers audit and so forth with regard to tax exempt organizations as a whole? >> so, as a whole, we have audits based on brisk criteria coverage requirements, et cetera. in the area of political activities, just to make extra sure that folks are very insulated, we actually have a committee of three career professionals who are based in washington d.c., that any time and not it will be triggered because of potential political at david e. or if there is a referral from a member of congress and other kinds of things that could be viewed as political, that group of three actually first looks at it to no single individual can launch a knotted that there is -- it has to be an agreement among three, then the decision would be made for an audit based upon

resources, risk, allegations, faqs, et cetera and it would be shipped out to an auditor to do that audit. that has been the practice for many years for anything to do with political at davidian that is the practice now. >> i thank you for your answer. dr. mcdermott, do you want to inquire? >> thank you, mr. chairman. i want to shift the question just a little bit or the issues you're dealing with here. i have a lot of algae bt claims her constituents and they have been approaching me about the problems of dealing with the irs and how to file their income taxes and are having the experience of having more than one source give them a different answer. so they are not quite sure it --

they are spending, some of them twice as much as a married couple would spend to get their income tax done. they've got married under the law, but suddenly the irs has got -- a mass questions about certain things, it is just not clear what the answer is. so i am wondering, is there any single place or perhaps should there be a single place where they could call and find out the answer to a question or someplace where someone takes this issue and begins to give definitive answers quick >> yeah, great question. i'm aware of the issue. i would try to do a bunch. first of all there is a very complex issue for these taxpayers because under state law, these taxpayers have a different legal status and under law because of they often split

the income that under federal law they have to file separately because of federal laws. we recognize there is a lot of confusion and so we actually consolidated and put a group together who worked to put out a whole set of frequently asked questions that answer a lot of these questions. and so we realize a closet changed around the country this has been an issue. we have been engaging with the community around this. and i think we've clarified a lot of questions. let me just say so until you have state laws and federal laws recognizing couples the same way, this is going to remain difficult for people because some of the same things people have asked us to do we cannot do under the law. >> when they are finally doing contacts that early, do they --

i suppose if they -- if you have different things at the state level, the federally, they can't do it together, >> it all depends. different states have different domestic partnership laws. you know, or state returns often piggyback on federal returns. but recognizing couples couples is different depending on whether you are in the state for depending which state and also federal laws are different. >> so that piggybacking off the federal tax return sort of works in reverse at the state level. they'll have to change some state laws to actually make this rational? >> adds complexity to the taxpayer filing. but we have tried very hard to make sure we do our job like we do with all taxpayers, which is we've got to sit taxpayers a specific issues and team together.

>> two weeks ago i sat down with my tax preparer and went over my taxes in preparation to file. you have been doing this forever, he is licensed like all the rest.

he said to me, i was supportive of what you all were doing with regard to the tax payers, trying to get us to be more defined of a group. he gets folks to come in to correct taxes that have been filed improperly by folks who have a prepared these things wrong way. he asked me this question. it seems to me like a lot of us who have done this a long time are being asked to go through the process to certify that we are competent. i said to him, my sense is that everyone is going to be at some out there representing themselves as qualified preparers of tax prepares for money. he was gracious enough to indulge me. i was wondering what you were

telling us what the oversight would be -- the oversight of what tax would be. the response to the question of who is being contacted out of the tax preparer world for follow-up? he said that he had to go through courses and programs to test his qualifications. if you can give us a quick rundown of where things stand. >> of course. the real-time initiative is a big initiative. we have had multiple public hearings around the country, without regulations with lots of public comment. we have had a lot of engagement with the preparer community about this. the status is we have about 840,000 people apply and receive

preparer tax identification numbers. about 60% of those were not already an end rolled agent, cpa, or a lawyer. enrolled agents, your preparer, and cpas and lawyers who already had higher levels of qualifications and have gone through their own sad of competency testing, they are jihad on going into doing education requirements. they are not required to take the test because they have artie taken it. your preparer should not have had to take a test if he was already an enrolled agent. we have about 840,000 people who have signed up. last fall, we started administering the competency examination, and we have a number of people through that. one of our promises to the

american people was that we were not going to cut out preparers services. we wanted to make sure they could still get service. a lot of preparers have been preparing for 20 or 30 years. they haven't taken a test and a wild. we gave them three years to take the test. people are now starting to pass. you don't actually become a preparer until you pass the test. now, people are starting to move through the test and passed it. we have several thousand people who have passed and we expected to grow. we started approving continuing education providers. this year, cec requirements kick in. the last thing i would say is this filing season we are actually -- we are processing everything faster. we have a lot better data analytics. we were able to look at

preparers with egregious problems of their returns. we were able to go out to them immediately in late january with business letters and phone calls and start to engage the preparer community to make sure that they are treating taxpayers well. we are very pleased with the initiative. >> thank you mr. chairman, thank you very much. >> you may inquire. >> thank you, mr. chairman. commissioner, thank you for the work you are doing. i've had a chance to review the national taxpayer applicant report. i am sure that you all pay attention to that of as well. some of the disturbing trends facing the report is the inadequacy of funding. in particular, they were concerned about funding cuts and inadequacy of resources. what that means to the irs and their ability to address the

noncompliance issue. the concern is only going to grow wider if there is a lack of confidence or belief in the irs when it comes to compliance measures. it is only going to exasperate the situation. do you agree with that -- the report in regards to the enforcement of noncompliance? >> look, we had budget cuts and we tried to do the best we could with this budget cut. we talked before about service. we have not talked a lot about compliance. clearly, we are doing less exams this year, in triage and other places. it is going to result in less money coming in and otherwise would have come in. the big trend i am worried about is that if we don't stem the tide in the 2013 and 14 budget, if you get to a point where there is enough news about compliance rates being so low, a

lot of people are going to pay their taxes because they are honest, hard-working americans and they want to pay into the society that they feel benefits them. if people want to push the envelope, which some do, and want to cut foreigners, if they think we are not on the job, then they will do so. i think the general comments about -- you can't have a long-term trend of degrading compliance resources, because that starts to hit voluntary compliance, a is accurate, the specific is just -- less funding means less dollars in the door. that is a simple map the. >> we are approaching the second anniversary of the affordable care act. one of the issues has been tax credits to small businesses who provide coverage for their workers. it is supposed to go to 50% in 2014. back home and some small-business owners complain about the complexity of that tax

credit and having to fill them out. what is your opinion on that, and is at an item where the irs or working with you can try to simplify that process to make it easier for small businesses to qualify for that tax credit? >> yes. one, it is honestly an important credit for small businesses to help them afford paying for health coverage for their workers. that is a key component of affordable care act. i think it is a very complex credit. we have heard from a lot of practitioners and small businesses that the phase out around that and other issues have made it hard for people to understand if they can hit the sweet spot where you get the credit, and sometimes it discourages people from actually taking advantage of the credit. the president's budget actually has a simpler proposal in it, which works on the phaseout and other issues to make it, hopefully, more attractive to

small businesses and congress taking up and passing that would be beneficial -- >> that makes a lot of sense with the ministration what they are proposing. what about in 2014, there are going to be a lot of credits going for the individuals within the exchange market. our is the iris making preparations to deal back ?-we mac are you on track? >> yes, we are making reparations. we are on track. the majority of the work we are doing and the people we have had to hire is to build technology systems to interact with the state exchanges and the federal exchange so that an estimated 30 million people can get over a ten-year period $400 billion of tax credit. i touched on this yesterday but for our appropriations committee, and what i said to them is, i understand that there is heartfelt policy debate about

the portal care act. for some members of congress, they don't like it. there are members who do like it. the bottom line is from 2014, there is going to be a lot of constituents in every district who are going to expect a tax credit when they showed that show up at the exchange. we need to get appropriate funding to prepare for that. we are on track. we are spending money now based on authorization and came through the bill. but we are going to need to get financial support because we have a big job to do. again, we are not a malt in health policy. >> thank you, and commissioner. >> there is a broader question about the complicity of the tax codes, which give impetus. the chairman has said that as a goal, and i think it is something we should do in a bipartisan way. mr. chairman, thank you for peering before us today. as is customary, please be advised that members may have

additional questions or they will submit in writing. those questions and responses will be made part of the official record. with that, we will conclude the subcommittee hearing. [inaudible conversations] [inaudible conversations] >> up next on c-span two, members of congress talk about the federal health-care law on the second anniversary. denver naki teaches a business school class on the law of the banks.

later, the irs testifies about the era's budget on capitol hill. >> the obama administration has proposed cutting funding in half for programs that arms and trains airline flight crews. that program was impermanent after 9/11. tomorrow, the heritage foundation looks at the program and the white houses are posed to us. you can watch it live at 10:00 a.m. eastern or on c-span.org. >> understanding that these two categories that allows you to think, okay, what is the

practice to keep this moving, and what can we do to keep this moving? with the legislation. mr. president, two years ago tomorrow president obama signed a patient protection and affordable care act into law. it was the greatest single step in generations toward insuring access toward affordable quality health care for every american regardless of where they lived make.less of where they lived >> health care for every american, regardless of how much they make. millions of americans havehi already reaped the benefit of this law. seniors are saving money,f millions of dollars, on their prescriptions and free checkups.

your limit was $10,000 or $50,000, and they stopped paying benefits. under this legislation that can no longer be done. that's why the president signed the bill. under this legislation that is now law, children can no longer be denied insurance because they have preexisting conditions, a protection that will soon extend to all americans. and in two short years, in fact, less time than that, every man, woman khaoeupbld in america will -- child in america will have access to the health care

insurance they can afford. mr. president, they will have the same kind of insurance you and i have. basically the same insurance. and for people to rail against this plan of president obama's they call it, i haven't seen a single one of the republicans rail against this law, saying we don't want our insurance because it's government insurance. every member of the united states senate has the same insurance that we by law are giving to everyone in america. my republican colleagues who berate this bill, let them drop their government insurance. they hate this so much that we're trying to give the american people, have them drop what they have because it's the same thing basically. no longer will hundreds of millions of americans live in fear of losing their insurance because they lose their job. and no longer will tens of millions rely on the only care

they know exists: an emergency room. the most expensive care in america is an emergency room. some people go without care because they have no insurance at all. mr. president, this is not just a story i've heard from other people. there are people who today have no insurance just like my family had no insurance when i was growing up. mr. president, we didn't go to the doctor. we didn't go to the doctor. no insurance. the only time that i can remember going to the doctor was when i was deathly ill. literally deathly ill. we had no -- my parents had no car, and i had something wrong. i had been sick for a long time. and my brother had somebody visit him.

my mother asked if they would be good enough to take us over to the hospital, which was 50 miles away. they did, and i had a growth on one of my intestines or something. i was very, very sick. mr. president, there are many people today just like i was as a little boy. they have no insurance. and they may be looking the same as me, with no transportation, to have a visitor take them to the nearest emergency room. what happened to me. the problem was our emergency room was 50 miles away. unfortunately, republicans continue to stop rights under that law. if republicans have their way, insurance companies would once again be allowed to deny care to sick children because that child has asthma or diabetes or some of the other situations that young people get.

in nevada, thousands of children with preexisting conditions would once again be at the whim of insurance companies who care more about making money than about making people better. if republicans have their way, young adults just out of college would be kicked off their parents' insurance plans. mr. president, also that's something that i know exists today. in the little town of searchlight, where i have my home, a young man named jeff wanted to go to school. he started community college, doing pretty well. and he got pain in his groin. first it started out as a little ache and then it got to where he couldn't take it anymore. but because he was at an age where he was no longer able to stay in his parents insurance policy, he didn't know where to

go. so he went to the so-called county hospital, indigent hospital. he was diagnosed as having testicular cancer. he had been on his dad's insurance policy, but he arrived at an age where tpho*efs longer eligible -- where he was no longer eligible. his parents had certainly not much. his mother worked part time at a post office. his dad worked at a steam generating plant 50 miles away from searchlight. so they begged -- that's stretching a little bit. but they borrowed and borrowed and borrowed to take care of his two surgeries, a number of hospital visitations, chemotherapy. they paid for that. thousands and thousands of dollars that they had to find a way to pay for their boy. under the law that's now in existence, they can stay on

their parents' insurance policy for three or four years more, allowing many young boys and girls to go to college, go find a job. they can stay on their parents' insurance policy. in nevada, thousands of children with preexisting conditions would once again, as i indicated would be without the ability to be taken care of when they're sick. almost 23,000 young adults in nevada would once again have to defer their dreams to take a job, or as i just indicated, go to college. or risk going without any care. if republicans have their way, seniors will pay more for prescriptions and checkups. we've had about a quarter of a million nevada seniors who now get wellness visits, cancer screenings and other preventive services. this bill goes away, it won't happen anymore. tens of thousands of seniors

will save millions and millions of dollars in nevada alone on prescription drugs last year, once again will be forced to choose between buying food and buying medicine. if republicans have their way, taxes will increase for small businesses, and so will the deficit. repealing health care reform would add almost $1.5 trillion to the federal debt. not billion. trillion. when democrats undertook health care reform, it wasn't just about saving money. it was about saving lives. and we did that. while the numbers i just discussed are very important, there is one number that matters more than all the others. 45,000. mr. president, in the year 2011, 45,000 americans died because they lacked health insurance. that's almost a thousand a week. that doesn't include the tens of thousands more who are sick or

dying because they have health insurance but still can't afford the care they need. after the rest of the affordable care act has taken effect over the next year and a half or two years, no american will have to bear what president lyndon johnson called, and i quote -- "the unjustice which denies the miracle of healing to the old and the poor." end of quote. president johnson living in a country with the best medical care in the world doesn't matter if you can't access that care. that's why almost 47 years ago he signed medicare into law. on that day in july, president johnson celebrated an american tradition that -- quote -- "calls upon us never to be indifferent to our despair. it commands us never to turn away from helplessness. directs us never to ignore those and spurn those that suffer in a land that is burning with abundance." close quote. so, mr. president, we save $500 billion in wasteful

programs and other things. in medicare, we extended the life of it for a dozen years and gave seniors the things that i have talked about today. filling the doughnut hole, prescription drugs, wellness checks and all the other things that are so important to them. the affordable care act continues the tradition that president johnson celebrated because it calls upon us never to be indifferent to our despair, commands us to never turn away from helplessness and directs us to never ignore or spurn those who suffer unintended in a land -- unattended in a land that's bursting with abundance. the law mix certain that the richest in the nation, this great world of ours, never again turns its back on spare helplessness and many times hopelessness and suffering of the least among us. it guarantees that no insurance company will ever again be putting a price it into

law. now, on another matter, mr. president, yesterday i outlined a number of the broken promises we have seen in connection with the new obamacare law. from the promise of being able to keep the plan you have and like to the promise of protecting medicare to the promise of lowering premiums to the promise of lowering health care costs. democrats also said that taxes wouldn't go up and existing conscience protections would be respected. looking back, it seems like there wasn't anything our democratic friends, including the president, weren't willing to promise in order to get the bill across the finish line. but there is another category of disappointments, too, and that's all the aspects of this bill democrats didn't even talk about before it passed. we all remember when speaker pelosi famously said we have to pass this bill so we can find out what's in it, and one of the things americans found out about

was something called ipab, the independent payment advisory board. this is an unelected, unaccountable board of bureaucrats empowered by this law to make additional cuts to medicare based on arbitrary cost control targets. as a result of this new board, 15 bureaucrats would now have the power without any accountability whatsoever to make changes to medicare. what's more, there is no judicial or administrative review of ipab personnel or recommendations. in other words, they are accountable to no one. ipab isn't answerable to voters, and it can't be challenged in the courts. its main role, as "the wall street journal" editorial board put it, will be the inevitable dirty work of denying care. the inevitable dirty work of denying care. in an effort to control

spending, ipab will limit patient access to medical care. it's that simple, and frankly it's totally unacceptable. republicans recognize the problem of medicare spending and the need for reform. we also recognize that ipab isn't the answer. this is just one more reason obamacare needs to be repealed and replaced. that's why even democrats are cosponsoring a bill to repeal it over in the house, calling it a flawed policy that will risk beneficiary access to care. so this isn't just a republican issue. there is strong bipartisan opposition to this new law. look, if the president himself doesn't even want to talk about this law anymore and even democrats are sponsoring repeal of parts of their own law in the house, it should be pretty obvious there is a fundamental problem here. we need to reform health care, but this reform made things

worse. the evidence and broken promises are all around us. it's time the president acknowledged it, and it's time the two parties came together and did something about it. it's time to repeal obamacare and replace it with the kind of commonsense reforms americans really want, reforms that actually lower costs and which put health care back in the hands of individuals and their doctors rather than bureaucrats here in washington.ov and nicole granted floor privileges for the duration of today's proceedings. the presiding officer: without objection. mr. harkin: again, tomorrow, we celebrate the second anniversary of the signing of the affordable care act into law. our democratic leader, senator reid, in his opening remarks today i think outlined the tremendous progress that we have made in this bill. listened to the comments made by our distinguished republican leader, and all i heard was repeal obamacare, repeal obamacare, but i never heard what they want to replace it with.

they just want to go back to the old system where the insurance companies ran everything before, where people were thrown off their policies because they had an illness, where because of preexisting conditions you couldn't get health care coverage, where we had this big doughnut hole that we're now closing for the elderly, but the one thing i want to focus on this morning in my brief time, mr. president, is to focus on an extraordinary element of the affordable care act that's not being talked about a lot, but which members of my committee that i now am privileged to chair, the health committee, worked so hard to include in the affordable care act. that is the away of provisions that promote wellness, disease prevention and public health. taken together, these provisions have begun to jump-start america's transformation into a genuine wellness society. they are transforming our

current sick care system into a true health care system. i have said this many times. we don't have a health care system in america. we have a sick care system. if you get sick, you get care, one way or the other. but there is very little out there to help you keep healthy and to maintain wellness and to keep you from going to the hospital in the first place. now, that would be a true health care system, and that's what we have begun to establish with the affordable care act. by preventing chronic diseases, enabling people to stay healthy, stay out of the hospital in the first place. right now, the united states spends about 75% of all our health care spending. 75% of the nation's health care spending is spent on chronic diseases. only 4% for prevention. so during the last year that we have the data for, 2005, the u.s. spent about $2 trillion on

health care. of every $1 spent, 75 cents went toward treating patients with chronic diseases, many of which are preventable. only four cents went toward prevention. now, that had to tell you something right there. that's the old system. that's the system that republicans want us to go back to, is this system. spending more and more to treat people after they get sick rather than trying to put something up forward to keep people healthy. well, in the affordable care act, we have tremendous opportunities to again move us to more prevention and wellness. we have made historic new investments in this area of prevention and public health. now, here is one example of that right here. on this chart, before our health reform bill, our law was passed, just take the issue of

colorectal cancer screening, which we know if you get it early and detect it early, your chances of survival are tremendous. if you get it too late, then you're going to be in the hospital and you're going to have cancer and you are probably -- you're not going to live. but we know by getting it early, we can prevent a lot of unnecessary deaths and illness and treatments later on. cholesterol screening. we know if people get good cholesterol screening, they get on a drug or good diet or exercise program, reducing the prevalence of heart disease. and tobacco cessation. do we need to keep repeating around here how much it costs our society from the plague of tobacco use in this country? well, here is where we were before health reform. about 68% covered by colorectal cancer screening.

about 57% were covered by cholesterol screening. and only 4% from tobacco cessation. after health reform, now 100%, 100% coverage for colorectal screening, with no co-pays and deductibles, i might add. 100% coverage for cholesterol screening. 100% coverage for tobacco cessation. that's prevention. that's wellness, keeping people healthy in the first place. what do the republicans want? they want to go back to this. they want to go back to this. we've made too much progress in prevention and wellness to go back to the, back to the old ways of just treating people after they get sick. again, we've been able to promote a lot of activities around the country to promote health and wellness. for example, in illinois, the state made improvements to its

sidewalks and marked crossings to increase student activity levels. you might say well, big deal. well, it is a big deal. because of these improvements, the number of students who are walking to school has doubled. doubled. and it's expected to save the school system about $67,000 a year just on bus costs. kids are healthier. you save money. in alabama, mobile county is using funds from this prevention fund to support tobacco quit lines, to help residents live tobacco-free. again, under the tobacco ses ation program. -- cessation program. officials enacted a comprehensive smoke-free policy expected to protect 13,000 of their residents. this is in mobile county, alabama. from being exposed to secondhand smoke. so, all across america more and more is being invested in prevention. we know that, for example, a 5% reduction in obesity rate --

just 5% reduction in obesity rate will yield more than $600 billion in savings on health care costs over 20 years. again, in our prevention fund. out there again getting people the necessary supports and information they need to reduce obesity. so the misguided toefrts repeal the -- efforts to repeal the health reform law, again, most americans know what's at stake. they're going to lose a lot of these prevention activities that enable us to take care of our own health care, to make sure we get our colonoscopies on time, our mammogram screenings. every woman over 40 gets a free mammogram screenings, no co-pays, no deductibles. the republicans want to take that away from the women in this country. colonoscopies without co-pays and deductibles. republicans want to take that away.

annual physicals. we know a lot of people didn't get annual physicals because it costs money. now you can get an annual physical free. no co-pays, no deductibles. republicans want to take that away. so, again, i think we have to ask the question every time i hear the republicans talking about doing away with obamacare or the affordable care act, we have to ask are we going to cut short this transformation into a wellness society in preventing diseases, keeping people healthy in the first place? well, i think the answer is clear. americans are not going to allow all of these hard-earned protections and benefits in the affordable care act to be taken away. we're not going to be dragged backward. we're going to continue our march forward to make ourselves more healthy. we're not going to go back to the old system where a little over half of the people in this country got cholesterol screening. *68% got colorectal cancer

screening. we want people tpo get early screening, early support services for preventive care so they stay healthy. not only is it going to help our family budgets, it's going to help our federal budget if we have people healthier and not going to the hospital in the first place. so this is one of the big aspects of the affordable care act that's not talked about a lot, but to me it's one of the most important aspects of moving us, again, to a society where we're not just relying upon people going to the hospital and paying high hospital bills and things like that in the future. so, mr. president, i'm going to yield the floor. i just wanted to make those comments about one aspect of the affordable care act. of course we do know that there's many other things in the affordable care act that people don't want to lose. right now we ban lifetime limits, helps more than 100 million people. they want to take that away.

republicans want to take that away. we cover vital preventive services, which i just went over. young people remaining on their parents' coverage up to age 26. more than 2.5 million helped so far. republicans want to take that away. they want to end all that. well, i don't think the american people want to end it. i think the american people want to move forward with this health care reform bill because we've made too much progress. too much progress in making sure that health insurance is affordable, available. and, you know, i just have one more thing to say if my friend from rhode island would just let me. everyone here in this senate body belongs to the federal employees health benefit program. you know what? we have coverage for preexisting conditions. we have no lifetime bans on our policies.

and yet, that's what we did. remember the debate, twaoeptd say to the american people -- we wanted to say to the american people whatever we have we want you to have too? we put that in the affordable care act. republicans say we're going to take that away from the american people but keep it for ourselves. i don't think so. i don't think the american people want to say, well, you senators and you congressmen, you can keep all that but you can take it away from us. we're not going to do it. we're not going to go backwards. with that, i'm going to yield the floor to my distinguished friend from rhode island who played such a pivotal role in getting the affordable care act through on our committee and has been one of our more eloquent spokes persons on this health care bill in the last couple of years. so i yield the floor to my friend from rhode island. mr. whitehouse: thank you. mr. president? the presiding officer: the senator from rhode island. mr. whitehouse: may i ask unanimous consent to speak for, say, 15 minutes? the presiding officer: without objection. mr. whitehouse: thank you. let me first congratulate

senator harkin for his remarks today, but more than that the work that has preceded today on the health care bill. he was an ardent advocate for the prevention programs that save lives and money. it was a real pleasure to work with him at that time. today is the second anniversary of the passage of the affordable care act. i want to describe how the law is already making a difference for families in rhode island and across the country. by drastically improving access to higher-quality care, by addressing rising health care costs and by protecting consumers. look at the changes. children with preexisting conditions were denied coverage. no longer. lifetime limits on insurance policies left many american families struggling to pay medical care bills on their own. no longer.

and insurers could cancel coverage for individuals who became sick. no longer. in addition, the law helps kids just out of school who all too often can't get that first job with health insurance. it helps them to stay on their parents' insurance policies until age 26. for seniors, prescription drug costs are down, as the medicare doughnut hole begins to close. this is real change, and it hits home in my home state of rhode island. i hear from rhode islanders, and i listen. i heard from greg, a father in providence who told me about his 16-year-old son, will. will spends two hours every day undergoing treatment to keep his cystic fibrosis in check. in addition to this daily treatment and prescriptions,

will sees a specialist four times a year to monitor the disease. greg said that he often thinks about his son will's future and whether his son will be able to maintain health insurance coverage and receive the treatment that he needs. thanks to the affordable care act, will does not have to worry about insurance companies denying him coverage because he has a preexisting condition or fear that he'll have to go without treatment because his medical bills will have pushed him over some ash -- arbitrary lifetime limit. as many as 374,000 rhode islanders including 84,000 children like will can receive the treatment they need free from lifetime limits on coverage. people who want to repeal obamacare should be ready to look greg in the eye and tell him why they want to take that away from him and his son.

olive, a senior from win socket, shared with me that her husband takes several medications to help treat his alzheimer's disease. a three-month supply for two of his medications costs close to $1,000. as olive said, those months go by quickly. last year olive and her husband fell into the prescription drug doughnut hole in july. without the affordable care act, they would have been responsible for paying the full cost of his medications out of pocket. but because of health care reform, olive and her husband received a discount on their prescription drugs and saved $2,400 last year. olive and her husband are two of the over 14,800 rhode islanders who received a 50% discount on brand name prescription drugs when they hit the doughnut hole.

this discount resulted in an average savings of over $550 per person, for a total savings of more than $8.2 million for seniors in rhode island alone. people who want to repeal obamacare should be ready to look olive in the eye and tell her why that $8.2 million should go back into the drug companies' pockets, why she and her husband should have to cough up an extra $2,400 for the drug companies. briane, a 22-year-old graduate of the university of rhode island currently works part time as a physical therapy aide in providence. her job does not offer health insurance. brianne suffers from the senatos and makes frequent trips to her a letter gist. because of the affordable care

act she can stay on her mother's health insurance so she can continue to tkpwept the treatment she needs. -- get the treatment she needs. without this coverage, brianne said she would be hard pressed to get the treatments needed for her allergies. as of june last year brianne was over one of 7,500 adults in rhode island who gained insurance coverage as a result of the reform law. people who want to repeal obamacare need to explain to brianne why she and those other 7,500 rhode island kids should be kicked off their parents' policy. the affordable care act has also brought needed relief to employers who are still the leading source of health coverage in the united states. jeff is a small business owner in providence. he provides health care insurance for his employees because, as he said, it's the right thing to do. but the rising cost of his

employees health insurance has placed increase pressure on his business. jeff's business qualified for the health care law's small business health care tax credit, which covers up to 35% of premiums paid by a small business owner for its employees' coverage. these credits are a lifeline for small businesses that are struggling in today's difficult economy and for the people those small businesses employ. people who want to repeal obamacare need to look jeff in the eye and tell him why they want to take away that tax credit lifeline that helps him provide coverage for his employees. the affordable care act also provided support for community health centers. in rhode island, like elsewhere in the country, community health centers fill a critical gap in our health care system, delivering comprehensive, preventive and primary care to patients regardless of their ability to pay.

dennis roy is the c.e.o. of east bay community action program in rhode island. he tells me that the affordable care act has provided critical support for his community health center's mission. east bay has received $3 million through this law to construct a new community health center in newport which despite its reputation is one of rhode island's poorer cities. the new community health center will triple the available patient care space for needy newport county residents. to date, rhode island community health centers have received $14.8 million to create new health center sites in medically underserved areas. this is important american infrastructure, and we should not tear it down to make a political point or to assuage a political ideology. these stories are just a few of many that show how the affordable care act is working for rhode island families,

seniors and small businesses. and although we've made great progress, the work continues. over the last two years a tremendous effort has been made by the health care industry, by state and local leaders, and by the obama administration to develop a better model of health care delivery. to shift from a system that is disorganized and fragmented to one that is coordinated, is efficient and delivers the high quality care that americans deserve. private health care providers like guizinger, intermountain and the marsh field clinic are already focusing on quality rather than quantity, efficiency rather than volume, to better serve their patients and their bottom line. because of the affordable care act, the federal government now has the opportunity to support and encourage their focus and to deliver much-needed savings in the most patient-centered way -- by improving the quality of care

and health outcomes. there is tremendous potential for improved care and cost savings in five key areas -- payment reform, primary and preventative care, measuring and reporting quality, administrative simplification and health information technology. savings from a range of responsibility viewpoints run from $700 billion to a trillion dollars a year, all without compromising the quality of care americans have come to expect, indeed likely improving the quality of care. i will shortly release a report to chairman harkin and the "help" committee on the obama administration's implementation of the delivery system reform provisions of the affordable care act, and when i say

delivery system reform, i'm meaning those provisions that improve the quality of care, that avoid medical errors, that coordinate care better, that reward prevention and primary care, that reduce administrative overhead, that reward who gets the best health outcomes, not who orders the most treatment procedures. i worked with senator mikulski on this project. she authored the key delivery provisions of the law and has great expertise in this area. these changes will make a real difference for millions of americans, and i look forward to sharing the report and its findings with my colleagues next week. before i close, i want to acknowledge rhode island's work on a state health insurance exchange provided for by the affordable care act. rhode island is leading the way as the first state to receive a level two grant funding to set

up the exchange. the exchanges are commonsense local competitive marketplaces where individuals and small businesses will be able to purchase health insurance with the prices and benefits out there on display. when insurance companies compete for your business on a transparent level playing field, it will drive down costs. exchanges will let individuals and small businesses use their purchasing power to drive down costs, much like big businesses are able to do. the progress made by state leaders like our lieutenant governor elizabeth roberts who is leading this effort to get to this point, they are remarkable, and i urge them to keep up the good work. so whether it's changing the lives of greg and will or olive

or brianne or jeff and his employees, whether it's building out our community health center infrastructure, whether it's supporting the private sector leaders who are pivoting to a new and better and more efficient delivery system or whether it's something as simple as a marketplace or health insurance that's open, fair and on the level, the affordable care act has made a real difference for hard-working families in rhode island. i will continue to work hard alongside these leading health care providers, alongside the obama administration and alongside my colleagues here in congress to see the full promise of the affordable care act realized for objection. mr. enzi: thank you. we're actually going to be talking about medicare today and the way that the patient protection and affordable care act cuts into medicare, destroys

medicare. two years ago, the president wanted a health care bill in the worst way, and that's exactly what he got. that's exactly what america got. anybody that's out there that's on medicare or about to be on medicare or young enough that someday you will be on medicare should be really concerned about what's happened under this act. all of you, i'm sure, are aware of somebody that is on medicare that's already been denied a doctor, denied a doctor because they are not being paid what they ought to be paid. to call it the patient protection and affordable care act is a major, major mistake. it neither protects medicare patients nor makes it more affordable. in fact, one of the things we'll bring out today is that there has been a theft of $500 billion from medicare to fund other parts of the program. there is some fraud in it because it was spent but it still shows up in the account. that's how they showed that this

really doesn't add to the debt. and to solve the whole thing, they have got a whole new board of unelected bureaucrats to make additional cuts to medicare to make it look like it's okay. and then there is the accounting sleight of hand. i'm one of the two accountants in the united states senate now, and you've got to pay attention to see it, but it goes back to the -- the fraud because if this same sort of thing were being done in the private sector, people would go to jail. there are a number of ways that we will bring out how that is not just budget gimmicks and not just sleight of hand but actually taking advantage of seniors. the chief medicare actuary said that medicare will go broke in 2024. that's five years earlier than last year's report by the chief medicare actuary. that's the guy that works for

medicare. he doesn't work for us. and he has to figure out each year how much in the hole it is and what needs to be done to fix it, and my contention, of course, is that you can't steal $500 billion out of a program that's already going broke and expect it to be fine. and we warned about that as we were going through the passage of this patient protection and affordable care act, which everybody has mentioned was passed two years ago tomorrow. it could have been fixed. there were three plans on the republican side that would have done what is claimed to be done by this act. those ideas were largely rejected. there were few places that they fit in the same as what was placed there, but they were largely regeneral debated. today we'll talk about some thefts, some frauds, some unelected bureaucrats and some sleight of hands. i have some people that want to

respond to some of the things said. i think senator coburn listened to some of the previous comments made on the other side celebrating this great day. the presiding officer: the senator from oklahoma. mr. coburn: i ask that we have unanimous consent to have a colloquy among us. the presiding officer: without objection. mr. coburn: i listened very intently to the first two speakers this morning, and i have -- as somebody who has now been a physician for almost 30 years, practiced full time for over 25 years, i heard the senator from iowa in what his desire would be in the chart that he showed. he showed 100% screening occurring now in three areas. i want to tell you, that isn't true. we're not screening. we hope to screen and we hope to screen 100%, but the facts are on screening that was available is only used 5% by medicare patients on the screening that was already available with no cost to medicare patients. so we have to distinguish between what we desire and

what's actually going to happen. but let's just take the example of colon screening. i'm a colon cancer survivor. i was diagnosed through colonoscopy with colon cancer. but let's take that example and then let's take the example of the other aspect of the affordable care act which is called the independent payment advisory board. now, what's the purpose of the independent payment advisory board? it is to cut the costs of medicare through decreasing of reimbursements, first for the first eight years physicians and outside providers, and then starting in 2019, hospitals. well, what do you think is the first thing that's going to get cut? the first thing that is going to get cut is the reimbursement rate for a colonoscopy. so when the reimbursement rate for a colonoscopy goes bow the

costs -- and it's very close right now, by the way. the cost to actually perform a colonoscopy versus what medicare reimburses -- when that is cut, what do you think is going to happen on screening? the goal of changing health care is an admirable goal. we know that one in three dollars doesn't help anybody get well and doesn't prevent them from getting sick today, but what the american people need to understand is what is coming about is a group of 15 unelected bureaucrats who cannot be challenged in court, who cannot be challenged on the floor of the senate or house, mandating price reductions to control the cost of medicare. what does that ultimately mean? they will do their job. we won't be able to do anything about it, but what it means is they will reimburse at levels

less than is the cost to do services, and so consequently what will happen is the service won't be there. they also are going to do what is called comparative effectiveness research. we know about comparative effectiveness research. if you're a practicing physician today you have to do continuing medical education. part of that medical education is knowing the latest comparative effectiveness research. it's like they're reinventing something that already exists. the point is they're going to use that to deny or change payments for procedures that patients need. what's wrong with all this? what's wrong with all this is we are inserting a government board and government bureaucrat between the patient and the doctor. think about that for a minute. when i go to my doctor, i don't want him concentrating about

anything except me. and if he's looking over his shoulder about whether or not he met the ipab's comparative effectiveness study on what he's doing for me when in fact the art of medicine as well as the science may say they're wrong, and he's going to do what the government says rather than what he thinks is best for me, what am i getting for that? i'll be on medicare next year. much to my regret, because my choices will now be limited in terms of of who i can see. the greatest threat to the quality of care -- it wasn't intended to be that way. it was intended to be helpful. i don't doubt the motives of anybody that set this board up. the greatest threat to the quality of care for seniors in this country is the independent payment advisory board and their noncaring position, because they're going to be looking at

numbers and words, and they're never going to lay their hand on a patient. they're never going to impact a patient directly. they're never going to listen to a patient. but they're going to make the ultimate decisions based on what that patient's going to get. with that, i yield back to my colleague. mr. enzi: decisions that were made in the health care bill, in the health care bill we took $500 billion, half a trillion dollars, that should have stayed with medicare to solve medicare problems. the doc fix is one of the big problems we need to solve. it's up to about, i think, $230 billion we need to do that. that would be a pretty big chunk out of this. unless that's done, people won't be able to see a doctor. i keep saying if you can't see a doctor you really don't have health insurance. that's what we're going to be doing to our seniors. we cut $135 billion from hospitals. we cut $120 billion from the 11 million seniors that are on

medicare advantage. we took $15 billion from nursing homes and took $7 billion from hospices. and we spent it on programs that have nothing to do with medicare or those things. that's fraud. and it shouldn't have happened. the c.b.o. actuary and the chief medicare actuary have acknowledged this reality. incidentally, the chief medicare actuary says the program is going to go broke in 2024. the c.b.o. says it's going to happen in 2016. 2016 is pretty short term. pretty short term to be fixed. i think that 2024 is short term. whichever estimate you want to take, medicare is in trouble. and $500 billion should not have been taken out of it. that $500 billion should have been dedicated to fixing medicare. we still have to fix medicare, and the only solution we've come up with is the one that the senator from oklahoma, senator coburn, mentioned which is to

form this new board with surprising powers that are going to be able to cut some more in medicaid -- medicare, so that it doesn't look like we stole $500 billion from medicare. senator burr is on the committee. he sat through a lot of the hearings and a lot of amendments that were never passed from our side that would have fixed this, and i'm sure he has some comments. mr. burr: i thank the senator from wyoming and my colleague from oklahoma. we have worked on this. we spent tireless hours trying to save not just medicare, but health care as we know it in america today. and i think what you've already understhaod we put -- understood is that we put in place mechanisms and all that will dismantle health care that the american people feel comfortable with, that has served them well and that we agree is way too expensive. but if you just look at the examples that dr. coburn has talked about, ipab, an independent board that will make coverage decisions and

reimbursement decisions, when you cut reimbursement, you're going to chase doctors out of the system. as you cut reimbursements, you're going to defund the hospitals' ability to keep the door open in rural america. but let's look at the things that aren't obvious. what does that effort by ipab do to innovation in health care? what companies are going to go out and put $1 billion on the line for development after new drug or a device given that they don't think they can recover enough through the reimbursement system to could have their research and development, much less the approval process of the products? it would be a vastly different america if in fact all these drugs that are breakthroughs and the devices that are so effective at keeping us living longer are sold in europe and south america and asia, but not in the united states, because we've now developed a health care system that doesn't allow them the ability to recover that

money. match that with the lack of choice. today in this country we have choice. as a matter of fact, as a federal employee, i can pick from probably 30 different health care plans, the same one that every federal employee can choose from. now all of a sudden in a health care bill, we've said to seniors, you know that medicare advantage which allowed you choice, you could choose a provider other than the federal government, we're going to take that away from you. we didn't really take it away. we just said we're not going to reimburse them to the degree that lets them offer the plans. but let's look at what medicare advantage provided for seniors. it provided a wider array of benefits than does traditional medicare. it's good for some. they've chosen it. it won't be good for them in the future if this health care bill is not reversed. because through the actions of ipab and through the explicit language of the bill, medicare advantage will not be an

advantage anymore. and everybody will have to default to the government plan that probably won't be as expansive with preventive care. i know that the senator from wyoming knows in north carolina we sort of lead the country as the model of medical homes. we're on the verge there of trying to put seniors into medical homes. we've already done it with a medicaid population. now, we've saved money. but my state of north carolina this year has a gap of about $500 million in medicaid. the people we're responsible for and the money we've allocated for, even though over the last three years we have saved almost $1 billion by being creative at how we designed our medicaid program. this health care initiative, with no input from any state, will double the population of medicaid beneficiaries in north carolina, and what have we done? we've shifted the responsibility down to the state at the state

taxpayer level. we didn't magically change anything in health care. we're just reallocating where we're collecting the money from. and every state's the same. they underpay for reimbursements under medicaid. doctors limit the number of patients that they see that are medicaid patients. imagine what happens when we double the size of the medicaid population in america. hospitals don't have the ability to limit. they're under federal law that says when you show up, you've got to see them. what we're going to do is probably attempt to bankrupt the infrastructure that we've got for health care in this country, for the simple reason that rather than fix health care, we just came up with creative ways to pay for it. or in the case of ipab, the independent advisory panel, we figured out an external way from congress to cut the reimbursements to doctors and to hospitals and to limit the

coverage of all plans where it doesn't have to go through the legislative process in washington. we're not always the finest example of legislation becoming laws. but, you know, this is the mechanism our founding fathers set up to make sure bad things didn't happen. i've got to say this is one that slipped through. now we've got the responsibility to go back and fix the pieces of it that would be devastating to the future of health care in this country. i thank the senator from wyoming for letting me share some time. mr. enzi: i think you'd be interested too and really involved with some of the accounting sleight of hand that happened with prescription part-d. we put prescription part-d in so people would have a better chance of being able to pay for their prescriptions. a very difficult program. it was very expensive. i know in my state, we were looking at only two people that were selling pharmaceuticals to seniors. and i thought when this program goes in, there probably won't be

any. when it was opened up to wide choice, i found out there were 46 companies that wanted the business in wyoming. it turned out to be a very successful program at helping people out. now, in this affordable care act, of course, they do some things with the doughnut hole which are a little bit of sleight of hand because some of the companies that sell brand name prescription drugs agreed that they would reimburse people for a part or up to all of their medications while they went through that doughnut hole knowing that when they got out of the doughnut hole they would still stay with that brand name and cost the program a lot more. an area where we were saving money and could have fixed it so the seniors have a better chance at it but not giving an advantage to the brand name drug users would have actually saved some money in the program. but that didn't happen. i know since you are involved a lot in the pharmaceutical area and have done a tremendous job at making sure that we're safe

from terrorist attacks and pandemic flus and worked at vaccinations, probably the foremost person at both ends of the building at knowing thousand do that, maybe you'd have comments on this prescription part-d. mr. burr: i thank you for that acknowledgement. that's why the thought that innovation would leave the american health care system terrifies me. innovation is the answer to the threats both natural and intentional that could come to this country and everywhere in the world. and we never know what's around the corner. but our ability to innovate in this country has always kept us one step ahead. and i believe we're on the cusp of a new era of innovation that can only be thwarted if in fact this health care bill is fully implemented. because the incentive will now be gone for entrepreneurs to take risks. there's no longer going to be an incentive that says take a risk, and there's an opportunity at a

reward. and i think the senator from wyoming pointed out very well, we've created medicare part-d. what a novel approach to actually take a health care benefit that didn't exist in the 1960's when we created medicare, and match it up with the coverage of the rest of the delivery system. what was the result of creating a market-based coverage? today medicare part-d is 50% less than the estimate we made years ago when we created it, of what the annual premium cost was going to be. why? it's because we created private-sector competition. we didn't create government plans. it probably would have been much easier just to say, okay, we're going to supply a benefit for every senior in the country. i can assure you had we done that, we would have been well over what we projected the annual cost to be. but we're 50% under because we have private-sector entrepreneur companies that are out there competing for the business, that

are smart enough to look at the type of coverage and they're custom designing it to meet the needs of seniors in this country. i dare say that the current health care plan that's going to be implemented and fully executed by 2014 was not personalized for anybody in this country. it looks at a 17-year-old the same way as it does a 77-year-old. yet, the health challenges, the income are different for both ends of the spectrum. and that's because government can't look at us as individuals. they can't group us and design something that addresses not just the coverage needs, but the cost long term and the solvency. so, we only have one choice, and that's to fix the things that are broken. and it's amazing how there's great agreement on those things that would be damaging long term

and those things that are actually positive and move the ball in the right direction. mr. enzi: that prescription part-d actually drove down the cost of medication and now we're ending up in a situation where part of that will be in trouble because of what's happened to medicare with $500 billion being stolen. i see that we've been joined by the senator from utah, senator lee. utah has had a health care system there that's been a model for other states and now is possibly in jeopardy. i don't know if you'd care to comment on medicare or on that. we appreciate your comments. mr. lee: utah does indeed have a health care system that functions well. it functions well not withstanding the fact that it's not managed. it's not governed by the federal government. this is one of the great wonders of our federal system. you know, when we became a country about 200-plus years ago, we did so against the

backdrop that's informative for us still today. we became a country in part because we discovered through trial and error, through our experience as british colonies that local self-rule works best. people govern themselves much better than a large distant government can govern them. that's exactly why we became a country is because we learned that local self-rule works, and we learned also that there is great change to our individual liberty with any government, because whenever any government acts, whenever it does anything to regulate our lives, it does so at the expense of our individual liberty. we become less free by degrees whenever government does just about anything. but the risk to our liberty is especially great, it's at its highest when the government acting is a large one, when it's a national government. national governments, as we

learned in our experience with our national government before we became a country, our national government that was then based in london, national governments tend to tax us too much, they tend to regulate us too heavily, they tend to be inefficient, they tend to be slow to respond to our needs in part because they are operating so distantly from where many of the people reside. and so when we became a country, we left most of the powers at the state and the local level. we eventually came up with this document, this almost 225-year-old document that has fostered the development of the greatest civilization the world has ever known, and in that document, we came up with a list of powers that a national government must have in order to survive. and we kept that list fairly limited. we said the national government needs to have the power to provide for our national defense, to regulate commerce or trade between the states and with foreign nations and with the indian tribes, to protect

trademarks, copyrights and patents to establish a uniformed system of weights and measures, to come up with a system of bankruptcy laws, laws governing immigration and naturalization, and a few other powers, but, you know, that's basically it. there is no power in this document that gives our national government, that gives us, congress, as a national legislature the power to regulate anything and everything. there is nothing in this document that gives congress what jurists and political scientists refer to as general police powers. that is, just the power to come up with any law that congress might deem just and good and appropriate and advisable at any moment. and that, again, was because of the calculated assessment made by the founding generation that we needed a government possessing only limited, enumerated powers, protecting individual liberty and to ensure that we in america could

continue to live as free individuals. over time, we have drifted somewhat in our understanding of what those powers mean. over the last 75 years, the supreme court has been applying a really deferential standard toward congress in reviewing laws enacted under the commerce clause, clause 3 of article 1, section 8. the supreme court has since about 1937, at least since 1942, said that congress may regulate without interference from the courts under the commerce clause, activities that when measured in the aggregate, when replicated across every state could be said substantially to affect interstate commerce. that's more or less the guideline that the court has given us. they are not necessarily saying that anything and everything that fits within that is necessarily within the letter and the expired of the constitution, but that at least insofar as the courts are concerned, insofar as the courts

have been willing to step in and validate or invalidate, that will be what guides the courts in making that assessment. beyond that, the debate has to be hammered out within the halls of congress. now, the affordable care act, also known as obamacare, contains an individual health insurance mandate that takes congress' powers to a whole new level. for the first time in american history, our national legislature has required every american in every part of this country to purchase a particular product. not just any product, but health insurance. not just any health insurance, but that specific kind of health insurance that congress in its wisdom deemed appropriate and necessary for every american to buy. this is absolutely without precedent. it is also, i believe, not defensible.

even under the broad deferential standard that has been applied by the united states supreme court since the late 1930's and early 1940's. among other things, the limits that have been maintained by the supreme court, notwithstanding its deference to congress dunder the commerce clause, have been limbed by a few principles. first, the supreme court has continued to insist that although some intrastate activities will be regulated by congress under the commerce clause, some activities occurring entirely in one state, activities that historically would have been regarded as the exclusive domain of states, activities like labor, manufacturing, agriculture, mining, although some activities might be covered by congress, those activities at a minimum have to be activities that impose a substantial burden or obstruction on interstate commerce or on congress' regulation of interstate commerce.

the supreme court has also continued to insist that the activity in question that's being regulated needs to be activity, first of all, and not inactivity, but it also needs to involve economic activity in most circumstances, unless, of course, it is the kind of activity that while ostensibly noneconomic, by its very nature undercuts a larger comprehensive regulation of activity that is itself economic. finally, the supreme court has continued to insist time and time and time again that congress cannot in the name of regulating interstate commerce effectively obliterate the distinction between what is national and what is local. now, the afford care act through

its individual mandate effectively blows past each and every one of these restrictions, restrictions that even under the broad deferential approach that the supreme court has taken toward the regulation of commerce by congress over the last 75 years or so, even the supreme court, even under these broad standards isn't willing to go this far. there are very good reasons for that, and those reasons have to do with our individual liberty. they have to do with the fact that americans were always intended to live free, and they understood that they are more likely to be free when decisions of great importance need to be hammered out at the state and at the local level. that is, unless those decisions have been specifically delegated to congress. specifically designated as national responsibilities. this one is not. decisions about where you go to the doctor and how you're going to pay for it are not decisions that are national in nature,

according to the text and spirit and letter and history and understanding of the constitution. they are not and they cannot be. if in this instance we say well, this is just important so we need to allow congress to act, if we do that, we do so at our own peril. we stand to lose a great deal if all of a sudden we allow congress to regulate something that is not economic activity. in fact, it's not activity at all. it's inaction. it's a decision by an individual person whether to purchase anything, whether to purchase health insurance, or if so, what kind of health insurance to purchase. our very liberties are at stake, and that's why i find this concerning. the presiding officer: the senator's time is expired. mr. enzi: i would ask unanimous consent that we get another two minutes. the presiding officer: without objection.

mr. enzi: thank you, mr. chairman. i thought i had two more minutes. i appreciate the comments. this is the anniversary, the two years of passing what is the so-called affordable patient care act. the court, the supreme court has chosen next week to begin the deliberations on it. they are going to take three times as long as they do on any case so that they can divide this up into pieces, and that mandate piece will be the second one. one that they probably won't be going into is this medicare problem. we're going to have seniors that are going to be without care because we have taken $500 billion out of medicare when it needed a doc fix, a whole bunch of other things. particularly in rural areas, rural health clinics. can any reasonable person believe that you can cut a half a trillion dollars from a program and not -- and not affect its impact on patient care? i'd like to have more time. i would ask that all my remarks be -- i have a prepared statement that be a part of the

record to show there is this left, there is fraud involved, left, there is fraud involved, >> and includes stories from several people affect to buy them a lot. we will hear first from house minority leader, nancy pelosi. this is 45 minutes. it's

>> good afternoon, everyone. thank you for being with us today. as you know, two years ago the congress that the united states made history. after 100 years of trying, finally we passed health care for all americans as a right for all, not just a privilege for a few. this has honored the vows of our founders of life, liberty, freedom to pursue our own happiness. today we have people with those who have already benefited by will benefit from the health care bill. i am pleased to be here with my colleagues, democratic whip steny hoyer, assistant leader jim clyburn and we will join together and presenting our guests to you.

is that it? calling you from the ibm, but that is what it's all about. i would like to thank our friend, bob meeks, felicia bond, elizabeth arden steamed and carmen morales for being with us. imagine -- and this is not hard to do, being a parent who has a child with three kids with medical conditions like asthma or diabetes, driving medical bills through the roof and forcing you to choose between paying the mortgage and paying the next doctor's appointment. imagine being a college senior, getting ready for graduation and looking forward to a successful career but you cannot expect your dream job because they don't offer health insurance. imagine being a senior who relies on medicare through your health and economic security

that faces rising costs each year for preventive care and prescription drugs are a woman charged higher premiums of a billion dollars more a pioneer preamps demand for higher coverage. for a worker locked in a dead-end job unable to pursue your professional passion for fear of looting your insurance. for too long these are not simply a matter of imagination. they are a matter of realities faced by millions of americans. but that all changed for the better with health insurance reform, the passage of the affordable care act that made history passing the bill for congress. we make progress to the american people. imagine republicans want to turn that clock and take away the progress from the american people and they will be voting next week to do so over and over again. they keep ringing up one way or

another to unravel it. in their budget, they will be voting on this too and the medicare guarantee, making seniors pay more for benefits. already, the american people are seeing enormous benefits. 86 million americans have received key preventive health benefit. for the first time in american history, millions of american women have access to free preventive health care. today no child in america is denied health coverage because of a preexisting medical condition. more than 5 million seniors have saved over $3.2 billion in prescription drugs benefits. imagine 86 million americans have already benefited from this and the full bill has yet to go into effect. i'm not pleased to introduce my colleague, a leader on this issue on the affordable health

care to increase the access and to lower the cost for health care for all americans and for a country, our distinguished whip, mr. hoyer of maryland. [applause] >> thank you thank you area match. >> thank you very much. you know, we usually have our caucus meetings and with meetings in this room. and what a wonderfully diverse, wonderful crowd we have here and working americans, senior americans and their young americans. his name is lucas. very proud grandfather standing here. i want to tell you, i happened to be a great grandfather. [inaudible] [laughter] [inaudible]

>> as i was saying, since it was signed into law two years ago to celebrate the signing come health reform has made it possible for a first 32 million seniors on medicare as preventive services. the leaders said there is repeating people need to understand the consequences of what this bill is doing for america and americans. it is reduce the cost of prescription drugs under medicare part d and it will eliminate the doughnut hole at the end of this decade. the cost content provisions in the affordable care are already slowing the growth of medicare spending with many beneficiaries, premiums ended up with many beneficiaries, premiums ended up with many beneficiaries, premiums ended up already going down for growing at the lowest rate in years. republicans on the other hand want to have medicare guarantee

in turn medicare into a voucher program would ask seniors to pay more than 6000 a year out-of-pocket. americans who are age 54 have to save an additional -- listen to this, an additional $182,000 just to cover their health care costs and retirement. the doughnut hole would reopen if we repealed the health care bills following it national $44 billion in extra drug costs for seniors in 2020. these are the kinds of features we are talking about. some of you in this room are seniors and you understand the consequences of that increase. you are now going to hear from an american who is falling into the.all every year. i want to thank you for being here.

thanks to the affordable care act, this medicare prescription drug costs are much lower and as i said the doughnut hole is closing. so i want to welcome bob meeks here and we want to hear from someone who has real experience, real knowledge and real conviction. meeks? [applause] >> good afternoon. i am 75 years old and is one of my grandsons pointed out, is three quarters of a century. he didn't have to say that. as in brandon, florida near tampa. i am here on behalf of the alliance for retired americans and for every senior citizen that is in this country covered by the aca. during my working career as a free truck driver and a car hauler. two years ago, this week, people

like representative pelosi, hoyer and clyburn have the courage to stand up and enact affordable care act. which is helping millions of seniors like me better afford to see a doctor fill a prescription i have been in medicare don't hauler for since the beginning of 2006. when you're in a doughnut hole you must continue to pay a full monthly medicare premiums to the insurance company, that you receive no prescription drug benefits. to me, being in a doughnut hole is like going to a restaurant in paying full price for a meal and the waiter brings you a plate empty. [laughter] i'm not in the best of health. i must take seven daily medication for nearly all are brand names. i suffer from copd, severe arthritis and high blood

pressure. the affordable care act i would fall and a doughnut hole every year around may. my prescription for cost me $1200 a month and i had to pay at all. thanks to the affordable care to receive a $250 check in 2010. that helped. and in 2011 and monthly drug costs of 1200 a month point between $60,800 a month depending on the health woes in the doughnut hole. this has been a huge help for me and my wife. i know many seniors are confused and skeptical about the new, but here's what i it is i say to my fellow seniors and everyone here in capitol hill. the affordable care is good. it works. it is saving seniors lots of money. don't be put by politicians and their friends who try to scare you. the members of congress here

today, thank you for helping me and millions of other seniors. and please, i implore you, don't give up the fight. i am living proof the affordable it care act works. a little side note to those in d.c. that opposed the aca. don't remove it, improve it. thank you. [applause] >> very good, bob. and i think hopefully to the folks in d.c. and i present a mean more particularly on this so take your vice. improve it, don't remove it. i want to thank you for that contribution.

any real experience. not just somebody debated on the floor of the house of representatives thing doesn't do this, doesn't do that. this an example of exactly what it does do and it makes a difference. passing the affordable care act was especially important at a time when our economy has forced many families in mall businesses to make difficult choices about spending. so many americans about what happened to them. that is why one of the key parts of the affordable care act is about bringing costs down for small businesses so they can afford insurance for themselves and for those who work with them. 360,000 small businesses have our declaimed part of the $40 billion in tax credits created by the affordable care act to help them provide affordable coverage to over 2 million workers. talk about the positive effects of health reform is having on the small businesses.

he and his wife own in maryland that they invite lucas' grandfather, brain tingling at to the podium. [applause] >> come right up to the podium. >> taught like it is, luke is. last night >> welcome to thank you for the opportunity to come here today. as you can see, we are a family business. we are committed to offering health insurance to our employees. but over the past 10 years, and it's become a real struggle. we have been accustomed to rates going up anywhere from 10% to 20% has been very difficult to find different ways to deal with that. we've got a great agent who work hard to give us different options, but is still in the yet to pay the bill. then -- next page.

we renew our insurance in august, so it's hard thinking about this in may. and well, standing up year is really nerve-racking. well, that is what it is like they fear because we've heard previous year the cassette 10%, 30%, offers a scary thing to happen. when my wife and i sat down, we are pretty nervous about it because we paid 70,000 a year for health insurance employees. so we got 30%. this $20,000. that's the same amount of money as the prices. so that's a lot of money. where is it going to come from? so we sat down it was totally disbelief when you said it was going to go down 6%. 6% down. so he may know much or changes to occur. it's the same insurance company, same average age. everything was the same going down. so was unbelievable.

on top of it, there was going to be a new package and not insurance that allowed all of our employees on the plan to get preventive care with no co-pays. so that was a real boom. the first thing i asked, why? i could not make it. they explained it was the medical ratio. the thought of my chinese to me. i didn't know what that's about. i did research at enemies that 80% of my premiums are going to go to medical care. that's what it's about. so i rates went down. as a small business owner and committed to providing to our customers. so much. they they should provide us with good value. you can see how nervous i am. >> you're doing fine. >> thank you rematch. >> were so glad something has

done about health care. we want to thank peter pelosi. >> i saw what happened and i really appreciate. this is so important. i know it hasn't been easy, but the health care is working for my business. it works in our community because of the local improvement part is working for individuals to trade for american right for the future generation. it passes this technician inspection test with flying colors. thank you very much. [applause] >> i am jim clyburn and i represent south carolina six congressional districts in practice service assistant democratic leader. too often in this town, the conversation gets bogged around the arcane process and the

policies and political calculations. you have heard the terms. bending the cost curve, motions to proceed. who wins, who loses. all of that really missed the point of the landmark legislation. it is not about this town. it is about real people and their families and their health care. it is about saving lives, saving money and saving medicare. i am pleased to be here today. there are two real people with some very powerful stories. the first one i am going to introduce i can really identify with as the grandfather of a preemie who came here in 90 days before he expected, who weighed

three pounds in four ounces, had three operations before he turned 20 pounds. so i can relate to alicia morales story. alicia is from raleigh, north carolina and she is going to tell you about her son, ethan. [applause] >> good afternoon. like you said, my name is felicia willems msn ethan was up with me a moment ago. i want to especially thank leader pelosi for giving me the opportunity to come out today and share our story with you and let you know how the affordable care act has helped our family. in 2006, my husband and i were very excited parents to be. he was a law student and as a

manager for a major department store. we were newlyweds. we had just bought first home on the phone like we were prepared to start a family. i was going to continue working while my husband continued law school, but all of our plans changed when our son was born. ethan was born with a vascular tumor that required chemotherapy. at just six weeks old, he was put on oral steroids and tylenol with codeine. because he was so small, the doctors had to do surgery to insert an external cord into his heart to administer the chemo. the court had to be monitored constantly to avoid infection. ethan had three surgeries in multiple rounds of chemotherapy before he was one years old. he said needed around-the-clock care and i had no other choice other than to quit my job so i could provide that care. we were incredibly fortunate

that even qualified for medicaid. without it, you most likely would've lost his leg and possibly his life. not having employer-based life insurance proves to be quite expensive. we have no income and now we have to care for a sick child while balancing a mortgage, but the bills and expensive insurance premiums because of my own personal health issues. thankfully he thinks tumor began to heal around the time he turned one and we spent the next year just catching him up to a normal level of development. my husband and i managed to hold their head above water financially for two and a half years. we lived for billy, stretching the savings we have as much as possible and taking out student loans. but in the end, we still have to sell her home and move our family. he and his third was fantastic. he graduated from all of this therapy is started preschool. he was not just walking out, the

running, jumping and hopping with no pain whatsoever. as for tier, the affordable care act was signed into law. even though ethan hunt proven he had overcome his illness and unproven more than most people will ever have to that he is strong and will fight to be healthy, without the affordable care, he would face a lifetime of struggling to get health insurance because of his medical history. the affordable care act prohibits insurers from limiting or denying benefits or coverage for children because of a preexisting condition. in october of 2010, ethan's oncologist gave him a clean bill of health for the first time his entire life. and now that insurance companies can no longer consider his preexisting condition or fact or, we have been able to officially close that chapter in our lives. our family's health care

struggle may be over, but there are millions of other families out there who're dealing with serious medical problems and still need help. we cannot pull the rug out from under these families were finally beginning to feel some relief as a result of the affordable care act. rising numbers know how important is for families to get and maintain affordable insurance. that is why we have worked so hard to get the law passed in why we will keep fighting to keep it from being repealed or reversed. we worked hard to move our country forward on health care. and we're not going back to the days when health insurers could deny coverage to her children because of a preexisting condition or drop us when we get sick. we will keep fighting to make quality affordable health care a reality. to ensure that we are not just a country who pays lipservice to family values, but who truly values families and understands the struggles we face. [applause]

>> thank you, very much, alicia. in the middle of the health care debate, i found myself doing a regular talk show that allowed collins. and gentleman called and me and president obama and hope to reform and he said that he had his insurance, he liked his insurance and he did want anybody fooling with it. a few minutes later a lady called in. and she says congressman, i don't have a question, but i would like to see some data that gentleman who called him a few minutes ago. maybe he likes what he has because he's never tried to use it.

[laughter] he said i like what i had until i tried to use it. and he told the story. a contracting cancer, breast cancer at 48 years old after being on her assurance since the age of 23. and after a second visit to the doctor, she got a new insurance company that she was being dropped. i'm going to introduce you now, elizabeth bartenstein. she will tell you her story is why her health is too important to lead to decisions up to the injunction. [applause] >> good afternoon, everyone. my name is elizabeth bartenstein and i want to thank leader pelosi and with hoyer and

congressman clyburn for the opportunity to tell my story today. i know how important is to have the opportunity to join my parents health insurance plan. in october of 2009 i just got back to my hometown, richmond virginia for a job at a small nonprofit. i didn't qualify yet to be covered by my new employer and i couldn't turn my parents plan in the interim because i was too old. my parents wanted to help. there is all they could do. my mom works for a church in my town had lost his job during the recession. and then, the impossible happen. i had a horrible accident at my apartment involving my gas stove, where he received second and third degree burns on my chest, arm and hand. with the help of a neighbor, i was able to walk next door. luckily there is a hospital within walking distance and she took me to the hospital. after being admitted, they decided to transfer me to the

mcd burn unit downtown. i was kept there overnight and my family and i were more scared about what was to constantly worry about the accident that just happened as we all understood how expensive just one night in a hospital can be. so as scary as this was to me and my family, the pain truly after that was the bills. there is lots of them. at the time all is said and done, i owe tens of thousands of dollars for a one night stay in the hunt until and i was completely uninsured. not only will i forever remember that april morning, but i'm still paying a medical debt and likely will be for many years to come. i've definitely made health coverage a top priority ever since and after leaving the first nonprofit job, i've gained

individual coverage until i was sure the next. over the insurance they had a page i was inadequate and so in the meantime was in the health care reform since i was in a today was able to add domain others plans, which we did as a backup, but it turned out that was a necessary backup because now i am in an interim job that does not offer health insurance and i don't have to worry about what that means for my health. and i would like to thank leader pelosi for her tremendous leadership on this issue and i would like to think the i'm invincible for giving voice to the challenger generation faces and quality affordable care. i wish the affordable care act had been passed in her, but i'm glad it is now the plot of the land. i do not have to worry anymore that an unexpected accident could lead meowing medical bills for years to come. and i don't have to worry about

insurance coverage and making a career move. thank you. [applause] >> thank you, very much bob meeks, garrett england, elizabeth bartenstein and i have the privilege of introducing carmen morales. this is a pretty exciting for me because the issue of how still affects women is something quite remarkable because up until the passage of this bill, being a woman was considered having a preexisting medical condition. no more. in recent weeks as we all know, the issue of women's health has taken center stage and the affordable care act with the women at the center, ensuring women are in charge of their own health decisions and providing

access to savings preventive care. consider just a few benefits for women in the affordable care act. it can't insurance companies from dropping women when they get sick sort become pregnant. advance insurance companies from women to obtain preauthorization referral for access to ob/gyn care. beginning this summer, and ensures free comprehensive women's preventive care services, including contraception and new plans. [applause] it ends the comment cracked as a gender rating, charging women substantially higher premiums than men for the same coverage beginning in 2014. as i said earlier, and ensures that being a woman is no longer

a preexisting medical condition. i am now pleased to introduce carmen morales who will share her powerful story about the personal benefit of health care reform. thank you. [applause] >> good afternoon. i would like to thank leader pelosi, with hoyer and assistant peter clyburn for this opportunity. on the second anniversary of the affordable care act. i am a nurse practitioner and a certified diabetes educator in bakersfield, california at kern medical center, a public hospital. let me tell you about how the affordable care act is making an impact in the community. recently we had a 25-year-old previously uninsured are now covered through another's insurance plan come to us because she found a suspicious

lump. 25 years old is awfully young to be finding these kinds of things. but as it turned out she is a strong family history of breast she was able to get the necessary tests and treatments and have it turned out, it was cancerous. we got her into surgery quick and we are able to move the lump. and thankfully we got it all. her access to our clinic probably saved her life. because we caught it early, we were able to avoid a disfigured and costly surgery. now she'll be able to have follow-up care to make sure the disease doesn't return or come to another part of her body. she will be able to get the necessary testing she needs for other family members are children, her daughters. and should be able to take care

of her family. i am going to continue to advocate for the affordable care act. because i have seen how it works, how it saves lives. i want my patients to remain healthy and i want them to go to leap lives. right now in bakersfield, there is a team of nurses who are out on the floors educating patients about the affordable care act. and i am asking you to please make sure that this work does not end. it is so important. thank you. [applause] >> are very special guest way will yield to his mom. islam is rising to tell us what is going to happen now for a moment. >> we just have a couple stories from all across the country will share their stories with us to tell us how the affordable care act has helped them in their own

families lives. it also includes our stories. [inaudible] [applause] [inaudible conversations] >> thank you all very much. adhere for new stories, this is deliberation. this is what our founders had nine, understanding opportunities for people. you want to be a photographer or a writer or a musician,

whatever. and artists. you want to be self-employed, start a business to me what you change jobs, you no longer are prohibited from doing that because of -- you can't have access to health care. especially because you do not want to pitch your family at risk. how many people in america do you think of a preexisting medical condition? that is they made them sick when they were little or they've had cancer and are now cancer free and isn't that a celebration? but you always carry the preexisting condition and the discrimination which you until now. until now. and we cannot let that be rolled back. that affects tens of millions of americans directly and their families as well. so our whole country. with that, would be pleased to take just a few questions hopefully on this subject.

[inaudible] >> -- and what is your reaction to the gop budget in addition to not only repealing the affordable health care act, but also lowering the levels from the dca and cutting funding for other parts as well? >> pajamas question is about the budget in general and does have an impact on our conversation here in terms of care. right from the start, the republicans have tried to make an assault on the affordable care act. it is hard to understand why they would be again ending a preexisting condition -- keeping people from getting health insurance and getting preventive care and children and getting access to care they need. but for whatever reason, they do. and bless their hearts, they act upon what they believed. they do not believe in this film and they are trying to roll it

back. we cannot let that happen. at the same time in their distorted priorities and budget, i'm a little hyped up about this today because the bill is in the process of being the, the budget bill before it comes to the floor. will have the alternatives i hope. but the fact is that in the bill daybreak to guarantee, the medicare guarantee for seniors. at the nearest pay more, over $6000 more. i think stan he mentioned that figure. over $6000 more. and all the money you have to save in advance. $182,000. what could they possibly be thinking? i'll tell you what i think they are thinking i may don't question their motivation. they don't believe in medicare. and bless their heart. again, they are acting upon their beliefs. they believe is that medicare should wither on h