cooperation in providing us pretty quick answers. and i'd like to ask that a providence journal article from the summer of 2011, um, which be submitted into the record, madam chairman, i ask unanimous consent for the article to be admitted into the record. >> without objection. >> thank you. it describes the suggestion that our saltwater beach days lost to contaminated waters decreased by 35% from 2010, and it credited some of the big projects that rhode island has done. we have, the narragansett bay commission has built enormous tunnels and receiving chambers underground to store storm water from our combined sewer overflow storm systems so that they don't have to bypass sewage treatment, and they can be held.

and when capacity is restored at the treatment plant, it can be pumped and treated properly. newport has built a $6 million ultraviolet treatment system for storm water that discharges on to eastman's beach. we're doing our job, and we've put a lot of money behind keeping our waters clean, so it really hits hard when this funding is cut off to rhode island, as i said, as a largely nonpollution-producing state for the country. ..

>> i do have to say that this country does not have a sufficient money to continue all our government agencies and departments at the same level of funding. they just do not have it. and the house republicans have produced a budget. it's a long-term budget. it changes the debt course of america. it will keep us, hopefully, from hitting a financial crisis. erskine bowles, the chairman, president obama's chairman of the debt commission warned that we are heading to. so i'm just looking at the numbers here, and i want you to recognize that everybody is going to have to tighten their

belt. under the proposals for the defense department, would take by far the biggest reductions. and that's not were funny. that's tasha i talk about the base defense budget. they're taking significant real reductions in spending. and others to question would be dramatic. but wouldn't you recognize that even though we are having the greatest deficits in history of the republic that your budget has been continued upward since 2008, remains considerably above that level? >> sir, i think that, i don't agree with that. we did get a bump up primarily to fund water infrastructure. that's state money, and the great lakes program, which is grant money. that does not get spent primarily by epa, by any means. we took a 16% budget cut in 2011, 3% in 2012, 1% in 2013.

and those numbers are misleading because, as in those times we've increased funding as i said in my opening remarks to try to continue to fund the state-based programs. because state budgets are such that the states need to clean air and clean water act funding so they can keep their programs. >> with regard to the state-funded i notice you seemed to react adversely to my comment, based on our looking at your budget request. if i'm wrong i would like to be corrected, but it seems to me that, in fact, on this year's budget your numbers were epa go up, and the amount of money to the states go down. maybe we have that char, i could show. that's numbers we score. you don't dispute that, do you? >> i do indeed. i don't dispute it and i'm certain that saying you're wrong. i would say i would look at those dollars differently.

i think the chart is a bit misleading. the decrease in state and tribal funding that you are showing is because the money for the state revolving fund program is being cut. that is the same money -- >> is that part of your budget? >> it is. >> and you proposed a cut while increasing yours, aren't you? >> no, sir we are now. we are proposing to cut the places where the largest increases happened in the 2010 budget, which is the srf funding. >> well, it seems to me that that's what happened. >> well, sir -- >> i'm just kind of taken aback. the numbers are the numbers, so whatever is, the revolving, the money that goes to the states, that has been reduced. and would you not, you value the state participation, and they are partners in our efforts to make our environment better.

so i'm just concerned about that. with regard to your statement about reducing spending, your base budget was 7.4 billion in 2008. it jumped to a 10-point to. it is basically now been dropped down to 8.3, which is still 15, 12% increase over where you were. after having substantial increases over a number of years. i guess my only comment to you, and to the chairman's, we'll all have to tighten our belts. we would like for you to give every focus you possibly can on containing costs. i believe it can be done better. i also think you have to consider the impact that the regulations are having on the american people. its impact on job creation, the

cost of electricity, the cost of gasoline, and those kinds of things that are placing our economy at risk. how would you respond to my constituents who are telling me that they have never seen such a surge of regulatory impact, as they are now from the environmental protection agency? they think much of it is not responsible, and unwise. >> i would say that first, whether it is the pace of regulation which i signed fewer regulations per year than my predecessors, or the fact that several of the regulations that we have done, the mercury and air toxics standards across pollution rules work or decisions that were remanded and on previous versions of those regulations illegal.

and alas i would offer is that those regular and, mercury and air toxics is a great example. it's $10 of health benefit savings for a dollar invested in our economy. it creates 46,000 short-term construction jobs, and 8000 long-term utility jobs. so the american people get health protection and savings in terms of what they have to pay to keep themselves healthy. >> administrator jackson, i don't believe that when you mandate a company to employ more people to meet a regulation, that they otherwise would not be employing, that that is really a job creator. because it reduces their wealth. it reduces their ability to hire people to do productive items. the question is whether not the regulation justifies the cost, i believe it my time is up. so that's the kind of thing, and as to your statement about the

health impact on mercury and so forth, epa's numbers with regard to health benefits are widely exaggerated, in my view. and i would be glad to see the documents that would justify that number. would you submit that to be? >> they are a part of the realtor impact analysis for the rule. happy to do so. i would also like -- >> i have examined some of them in the past and they did not back up what you're witnesses have said. >> okay. senator sessions, when you're ghana i asked the same question about, or disputed studies, and so i would like to get that transcript to the answer that administrator jackson gave me. but in addition, i would you're interested in being copied on this because the point was made that if we ever had a regiment that is clear, it's the scientific studies that look at hospital and the rest of the.

i think we ought to look out. >> the studies with some sort of polling data about whether some people pay more. it was not a real health study that they were sightings are just like to see it, maybe, i hope we do get the health benefits from improved environmental quality. >> i think it's good to go back. i have so much respect for my friend, and we worked together certain issues. on this one we are different planets, let's face facts. but i think it's good for people to see this debate. and i just don't let it go unanswered because there's no way under the clean air act you take a poll to find out how many premature deaths are being prevented. we have that all documented. so would you please send me a copy? and i would ask unanimous consent to place in the record, and october 4, 2011, very interesting op-ed written by bruce bartlett. he held senior posts roles in the reagan and h. w. bush

administrations and he served on the staff of jacking up and ron paul. so it's interesting, and i will put income but here's the opening. republicans have a problem. people are increasingly concerned about unemployment but republicans have nothing to offer them. the gop opposes additional government spending for jobs program. are likely to further layups. he concludes by saying mip regular toward uncertainty is a canard event by republicans that allows them to use economic promised to pursue an agenda supported by the business community year in and year out. in other words, simple case of political opportunism, not a serious effort to do with high unemployment. obviously, senator sessions, they would all disagree with this, but i think it's interesting. and the other is i think a very important poll that, you know, senator, i believe when you tell me people come up to you at home and tell you. and the impact on our lives from

the epa is nothing that they've ever seen before. that's basically what you said. i totally agree with you. that that happen in your state. i want to say, i have never, never heard that when i go home. i haven't had one person, to me and say please council that clean air act regulation. you know, i need more pollution, barbara. fight against it. and if you look at this, look at this -- where's the one about -- bipartisan poll broad support in the spectrum, with asked about setting stricter limits on the america ready that power plants and other facilities emit, and that's a rag that is fiercely opposed by my colleagues on the other side. 78% said of likely voters there in favor of the epa updating standards. so there such a -- do we see

that world so deadly? i find so intriguing the way we come to this. but i am very interested in seeing the data that senator asked for. spent madam chair and? >> go ahead. >> just briefly, you took liberty and it's an important issue for us to talk about, but an article by stephen malloy, and he says the epa says air pollution kills tens of thousands of people annually. this is on par with traffic accident fatalities, while we can identify traffic accidents victims, air pollution victims are unknown, unidentified and as far as anyone can tell, statement of epa's assistance to go imagination. that's what he said. it ought not to be too much to ask epa to produce some tangible evidence that air pollution is causing the actual harm to real people. so that's what i'm asking for, i guess. i see the numbers that justify

the data that justifies the numbers, and i think the chairman and i agree on the. >> we do agree and i did ask the question on corporate i ask unanimous consent to put in the record as she put out by the american academy of pediatrics, talking about how much they support your work. so we will put that in the record senator udall, you're the last word and less other senators come, and absolutely i will call on them. >> great, thank you, madam chair. administrator jackson, the u.s.-mexico border stretches for over 2000 miles and is home to many thousands of people who need to be connected to modern water and sewer systems for the first time. i'm glad you're requesting 10 million for border environmental infrastructure, but this amount is a fraction of what this program has traditionally received. last year's appropriations act only provided 5 million. we hear a lot about water infrastructure needs, but if all

our states face what we see on the new mexico border, it would be a national emergency. will you work with us to assure that the appropriations committee includes at least 10 million requested in your fy '13 budget? >> certainly i'm happy to get you information to support what is clearly an important program, senator. these are tough choices, and we're proposing less money. we're proposing more than what was in last year's enacted, but only slightly more. so we are happy to get your information. >> but you're going to aggressively support your 10 million, which is what's in the president's budget i believe? >> i believe it is four and a half, but -- sorry. i have the information. i'm sorry. then we are absolutely in accordance. please forgive me. >> okay, thank you. the epa's border 2012 program is

coming to an end, and i understand the new border 2020 program is being developed to replace it. will you ensure that border entire middle issues received top level attention at epa headquarters going for? >> yes, sir, it is a perfect. >> and you're going to be time in terms of getting out as the one pro-expires 2012, a 2020 border? >> it is scheduled, the border 2020 program schedule launch is august 2012. >> great, thank you very much. i want to talk a little bit about the san juan generating station and epa's regional haze plan. there's an ongoing disagreement between the u.s. epa and the state of new mexico about the clean air act regional haze plan for the san juan generating station in the four corners region in new mexico. both epa and the state appeared to be dug in on opposite sides

with competing plans and cost estimates, and complex technical disagreements. i believe most new mexicans want epa and the state to follow the clean air act and preserve the visibility of our great western landscapes, and improve public health. but many are also concerned about a potential increase in electricity waste. i hope that all sides will think constructively about win-win solutions here. i realize that region success primary responsibility here, but will you ensure that epa headquarters is also engaged on this issue, and that the epa continues to work cooperatively with the state of new mexico and our local utility to work through this issue in the best possible way? >> yes, senator. >> thank you very much. and ongoing infrastructure for the state revolving funds, or what sometimes is called smart water, epa's budget request continues a 20% set aside for

green infrastructure qualifying projects within the two state revolving funds. i want to stress that when we talk about green infrastructure, we are talking about two kinds of green. reducing the amount of concrete and using the natural landscape for storm water systems, or installing energy-efficient improvements at a water treatment plant, or both. these are both good for the environment. but just as importantly, these kind of projects save green money for water, utility ratepayers i reducing construction cost and energy bills. will you continue to advocate for the set-asides and ensure that the epa provides appropriate guidance for states on how to implement them? >> yes, sir. i'm a very strong supporter of green infrastructure. and so are, by the way, mayors in local communities. win-win result. >> i know many of our mayors are

very involved in this and very supportive of it. u.s. water utilities waste an estimated 7 billion gallons of treated drinking water through leaks and ruptures. does epa plan to become more involved in promoting smart water systems that detect leaks and better manage water systems to reduce losses, energy use and contamination? >> yes. we're happy to be supportive, both to the funding wise, through the state revolving fund, but also through technical assistance, working with the industry, the practitioners and, of course, with the states and local government. there is such a need out there, as would a earlier, that we do prioritize with the states where we can be financially stable. >> thank you, administrator jackson. i know you have a very good, solid professional staff at epa, and we very much appreciate all of their hardware. thank you, and i yield back.

thank you, madam chair. >> senator udall, i thank you so much for your patience in sitting through and asking such good questions. and administrator, we really do appreciate you so much, and you just tell the truth from the heart, and your caring and responsibility to the people. and all i want to do as chairman of this committee is make sure that you keep that up, because everybody is counting on you. the little kid, you know, the kids seem to be born and our families. thank you very much. we stand adjourned. >> thank you. [inaudible conversations] this weekend on the presidency on american history tv,. >> think of the fdr memorial. it was at just three redesigns, it was three plus designs before they got to a final plan.

and so i think that we shouldn't be afraid of looking at this issue, because we are building something for the centuries, and want to get it right. >> with the ice in our memorial designed by frank gehry a post by the family, a house subcommittee discussed the planned memorial to our 34th president. watch sunday at 7:30 p.m. eastern and pacific, part of american history tv this weekend on c-span3. >> here watching c-span2 with politics and public affairs. we? feature live coverage of the u.s. senate. on weeknights watch key public policy defense and every weekend the latest nonfiction authors and books on book tv. you can see past programs and get our schedules at a website. and you can join in on the conversation on social media sites. >> with the tax filing deadline weeks away, irs commissioner douglas shulman came to capitol hill to talk about attacks enforcement agencies budget.

the agency is seeking an 8% budget increase for 2013. last year, iris caught $14 billion in fraudulent refunds. were also hear about the difficulties same-sex couples face in filing their taxes due to differing state and federal laws. is house ways and means subcommittee hearing is an hour and 10 minutes. >> hearing on the internal revenue services fiscal year 2013 budget request, and the 2012 tax filing season. hard-working american taxpayers have faced and credible challenges over the last several years. many have struggled with unemployment, sluggish economic growth and doubt about our country's economic future, because of out of control spending and looming public debt. and then tax season comes around. the tax code which has tripled in size since 1975, continue to burden american families and small businesses with too many taxes, to me loopholes and too

many pages. it's estimated that the average taxpayer spends 21 hours and over $250 complying with the tax code each year. they must 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 course has the unenviable job of administering and enforcing our convoluted tax code. as we meet today, we are in the middle of the 2012 tax return filing season, and millions of taxpayers and employers are willing to meet their tax filing obligations. some have reported experiencing delays in receiving tax refunds, and programming errors at iris have delayed some 6 million returns, which we will discuss at today's hearing. we will also talk about the frustrating issue of tax fraud and improper payments, taxpayers are exasperated because while they work so hard to comply with

tax code, they see press reports as these are robbing the treasury of billions of dollars each year. one and press report detailed how and identity theft ring in florida committed $130 million in fraud through stolen social security numbers. on top of this fraud, tens of billions of dollars of taxpayer money is lost every year to improper payments as refundable tax credits, including 17 billion a year or 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 the administration has requested nearly $13 billion in appropriations for the agency, an increase of 8% from fiscal year 2012, included in this requests are over 360 million nearly 900 new employees to

implement portions of the affordable care act, including the new insurance subsidy and the controversial individual mandate penalty. we look forward to discussing this and the other new initiatives that the irs plans for fiscal year 2013. with that i would like to welcome commissioner douglas shulman here today, and i look forward to a fruitful discussion that is agency, mission and ongoing tax return filing season. season. before i yield to the ranking member, mr. lewis, i ask unanimous consent from all members written statements be included in the record. without objection, so ordered. i will also ask unanimous consent that gao's report on the 2011 tax filing season and fiscal year 20 oh budget request be included in the record. without objection, so ordered. mr. lewis. >> thank you very much, madam chair. for holding this hearing on the internal revenue service.

i am pleased that we have the commissioner before us today. i have serious concerns about the facts of the recent budget cuts on taxpayers, tax collection and agency operations. in the most recent report to congress, the national taxpayer advocate stated that the most serious problems faced taxpayers is that the irs is not adequately funded to serve taxpayers and collect taxes. i fully agree with the statement. this year the agency budget was cut by over $300 million. this cut harms taxpayers and telephone service. telephone calls have increased by 34%, but the hours answered have decreased by 20% to over 65% of taxpayers seeking telephone assistance are able to speak to an irs employee, and

must wait an average of 17 minutes. taxpayers seeking in person assistance have also been harmed. this is clear from the very long wait time at taxpayers assistance clinics. the budget cut also harmed agency operations. the cut force agency to lay off thousands of employees. the majority of these employees work in enforcing. if a tax collecting revenue, -- or reduce deficit it makes no sense. i look forward to discussing these issues in the agency proposed budget for next year. madam chair, finally i would like to take a moment to thank floyd williams for his service and dedication to the agency, and to this congress. as many of you know, floyd is the legislative affairs director of the irs, he plans to retire

this summer. floyd began his government service as a congressional page under senator fulbright of arkansas many years ago. i thank the senator from arkansas properly violate the child labor law. you're not that old. i have worked with floyd minerals on this committee, and i know that he would be missed. i wish him the best as he retires. thank you for your great service. and with that, madam chair, i yield back. >> thank you mr. lewis. i would like to welcome back the commissioner of the internal revenue service, mr. douglas h. shulman who has served as commissioner in march 2008. commissioner shulman, thank you again for your time today. the committee has received a written statement and it will be made part of the formal hearing record.

you will be recognized for five minutes for your oral remarks, and you may begin when you are ready. >> thank you very much, all the names of the subcommittee, for giving me the opportunity to testify today. i want to talk about, all about filing season and our strategic initiative, and the president's 2013 budget which would give us a much needed increase over the 2012 enacted levels. a significant portion of the president 2013 budget would restore congressional reductions in irs funding made over the last two years. i want to start by saying that i believe it's incumbent on all of us in the government to be as efficient as possible and to spend taxpayer dollars wisely. for the irs, that means finding savings where we can and continuing 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. the savings and efficiencies reflect and 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 billion to hard-working american taxpayers. our compliance activity brought in a direct reference of

$55 billion, and we blocked another $14 billion from going out the door to taxpayers few 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 and integrity cap adjustment. at me just say that this proposal makes sense and is a reflection of the president and this 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 reducing initiatives in 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 have moved the agency forward to position it for the future and do a better job serving taxpayers and making sure they comply with the tax code. let me just start with filing season. e-file continues to grow. this year we issued about 59 million refunds, for a total of $174 billion. that's about the same number as last year. and we employed several new large technology systems, and i'll be happy to talk about those as we get further into filing season. 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 k2.

k2 delivers on the promise of irs modernization going back to decades, and we have are a proud of this achievement. a couple years ago i told this committee would restructure our technology program, we were going to deliver our major technology initiatives, and this year we have delivered those initiatives. we also had the highest score ever last year on the american customer satisfaction index rating. which is the overall score we track for taxpayer satisfaction with her interactions with the irs. we scored 73 on this index, and we are very proud of this achievement in constrained budget environments. our return preparer program is now up and running. to date more than 840,000 pay prepares have registered with the irs, in both the testing and education requirements are well underway. there's going to be one of the most important initiatives in the tax system in several

decades. we have also made significant progress in our battle against offshore tax evasion. we have collected more than $4.4 billion to date to our offshore voluntary disclosure program. we're getting people back in the system through this and other offshore initiatives. and i think we've made significant progress, as i said, we have got $1 billion out of our core operating budget through the 2013 budget statement, or budget proposal that we have given. let me conclude my opening statement with one concern that i want to emphasize for this subcommittee, and i think it's quite important for the ways and means committee as a whole. in recent years it seems taxpayers increasingly face uncertainty. about what the tax law would 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 decide to take on amt and extenders, that this action happens by the end of the year which we stipulate from an operational perspective, but not longer than that in order to prevent even more widespread disruption of next years tax filing season. >> thank you, commissioner shulman. i think we'll turn to questioning now. we will alternate between sites with five minutes being given to every member. last year you testified to the

committee that enforcement and customer service are not an either or proposition, providing quality taxpayer service, especially during the filing season is important to taxpayers avoid unintentional errors, inadvertent noncompliance, and reduce other burdensome post-filing interactions with the irs. so far this filing season, access to live on areas assistance is down to 65% and taxpayers are waiting an average of 18 minutes to talk with the irs assisted. the rate of taxpayers getting busy signal or that are disconnected from the irs have roughly doubled. yet, this is not a new problem that weather seems to be just a bad trend. since before the percentage of answered calls has dropped from 87% to 70% in 2011. last year, the average wait time

was 12 minute. in '07 it was five minutes or less. personally i have heard from kansas cpas that is not uncommon to be on hold for 30 minutes. according to gao, this decline in customer service has occurred despite the number of full-time equivalents dedicated to answering the phones, having increased from 8000 in fiscal year 2007, to 8800 in 2011. and despite greater use of automated answers and self-service website options, it seems to me that the irs has placed greater emphasis on enforcement at the expense of service. yet, as you told us last year the lack of service for those who have questions will only lead to greater noncompliance than if those questions have been answered. so, can you help me better understand a few things. first, what actions are being taken to ensure that taxpayers

are able to reach a live irs assister? secondly given your belief that the irs must deliver both enforcement and customer service, do you think that this budget request focuses too much on enforcement, while sacrificing customer service? and then finally does the irs consider this to be an acceptable level of service? >> thanks for bringing up, you know, a set of important issues. first but me repeat what i told you last year and what i talk about a lot with our employees and members of congress, and everyone 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 work. 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 have to absorb for rents and other kinds of increase, about $200 million of inflation. and 66 million was put into our technology accounts which we are very appreciative of your so if you take 300, 200, 66, we had a $566 million reduction in our core services and enforcement account. and what we are trying to do is do the best we can with the resources we were given. last year, our phone level service was about 70%. this year, it's running at about 66%, even though we had predicted about 61%. and the reason for that is we really squeezed efficiency, we have routed calls, more people

are using automated answering systems and people are using our website. as you said, the wait is longer because at a certain point we can squeeze efficiencies as we can but it comes to hound people do we have answering phones. volume is up so the numbers you gave that said with more people, we also have much more volume to quit more taxpayers, more capitated tax code right now. another number that is interesting to look at is how many people hang out in the first couple of minutes? because we added a feature that tells them how long it will way. we save you want to either use the web, use the automated phone or call back when this last time, then our phone level of service is 77% but if you look out, if you take we the people who hung up in the first couple of minutes. and 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 live service.

that i'm pretty proud that while service is down, it hasn't degraded, you know, to a point where it could have gone given the cuts, and the answer to your last question, which is do we think it's accessible? i want anyone 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 i think we're doing a pretty good job, given the resources we were given. >> okay, thank you, commissioner. i'm just looking at data, and the budget cuts compared to the level of service are not always, they don't always follow given this information from the gao. so we would just encourage you to continue to work on that, and we would be delighted to with you anyway we can. and with that i would recognize mr. lewis for five minutes. >> thank you very much, madam chair. mr. commissioner, the gao knows

there's been a 34% increase in a number of calls this filing season, and about a 50% increase in calls answered by the automated phone service. could you tell us what the taxpayers are calling about, other than daschle what are the natures of the calls? >> you know, calls can be anything from people want to set up a payment plan to people are curious, i'm filling up my return and i'm going to take this deduction, how does that work? just general tax law questions, to questions about where's my refund i filed last friday, am i prepared told i would get a refund on wednesday and i haven't gotten it. so calls very. so we can get you a specific breakdown of what the calls are. >> thank you very much. we understand we are requesting a cap adjustment of about

$700 million in next year's budget to fund enforcement programs. what is your plan, if any, if the agency does not receive these resources? >> we are still early in the congressional budget and appropriations cycle, and so, you know, we are quite helpful. and in the past we've had broad bipartisan support for cap adjustment. the most recent cap adjustment was 2006, 2007 with a republican president, antidemocratic controlled congress. so we actually think that 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 there should be cap adjustment for our budget. and that investments run 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. that people should agree with it. we've had good productive conversations in both the house and senate about it. >> mr. commissioner, could you tell members of the subcommittee how has the $300 million budget cut impact of taxpayers service this year, and what taxpayers service has been reduced? >> yeah, so, you know, i walked through the notion of verse 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 walking centers, but we have had a corresponding increase in number of taxpayers served in volunteer

sides were we encouraged 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. so there's been, i guess the way i characterized it, there's been a predictable effect because of less resources. with that said i am quite proud that we've been able to mitigate some of that effect by making sure we work smart and we really drive efficiencies as hard as we can. >> into very much mr. commissioner. i yield back, madam chair. >> think you, mr. lewis. thank you, mr. lewis. and now we will get five minutes to the representative from minnesota, mr. paulson. >> thank you, madam chair. thank you, commissioner for being here today. i just want to follow-up on a

letter i sent to you not too long ago. you been talking a lot our great deal about this concept of a real-time tax system. and that a number of actually public meetings on the issue as well. i know that there are benefits to receiving real-time verification and have information on hand but i am concerned that the cost could outweigh the benefits, particularly in the sense that having this filing system could lead to a burden that is very similar to the 1099 provision that was being rolled out as a part of the president's new health care law which would've been a nightmare for america's employers, small and large. so if the irs is going to make his real-time system work, i'm sure you want to have all the data earlier than is required but you'll probably want more 1099 data as well. just look at what's been discussed today commit seems to compress is reporting timeline is going to 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 work with existing stakeholders with the business community,

kind of, to get the feedback, thereby in, there's a part of this because no doubt increased regulatory and compliance costs are a big deal now for employers. is one of the reason why the level of uncertainty, a&e and extended issues but i know this is a fact as well. have you conducted any studies of the increased costs to businesses of changing deadlines for reporting information returns or increasing reporting requirements or would you agree to an independent study as a part of that process, would that make since? >> ranks. great questions. and important set of issues. so let me give you the perspective on it. id one of my jobs as commissioner to make sure i am helping prod the tax system for it so it works better for the american people 10 years, 20 years from now than it does today. and the combination of consumer expectations of us working better and quicker and more

timely with taxpayers with the advances in technology, clearly there's room for us to think about a future that works better for people. and what really struck me is the average taxpayer, if they haven't interaction with us beyond just filing, that interaction, they have the economic activity one year, they file the return to nature, and it can take us a year to two years to reach out to them. and so by the time we go back to them, they have either spent a refund or their records and all the memory is gone, whether it's a small business or an individual, and i think the current system actually adds a lot of burden to people, and we further. so i laid out his vision that said what it would clear everything up rather than coming back to them on the backend at the time they filed? which is the simplest way to think about this. but i also recognize all the things that you said, which is this is something that would

affect all the stakeholders in the tax system, from taxpayers to tax prepares to information return filers. and so the way we went about this is the way that i think a public agency should go about this, which is we held a series of public meetings which i hosted with stakeholders, the broad range of stakeholders, to get their input. and what we heard universally is basically makes sense, we would 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 add burden in the process. and so what we are doing now is taking the next step and really developing detailed vision about what this would mean. and i think there's been some misunderstanding, so we have never suggested speeding up or adding more information reporting. we have asked questions about what you people have now, when

is it ready and when could they get it to us. not is there more or would have to start doing what they already do faster. and we've asked ourselves internally, how to our systems work, and when could we do this kind of matching. >> let me just ask you this before time is kind of running out here. how much will an upgraded system cost, to sort of encapsulate all this that would be needed to run this type of system, how many years would take? you are here justifying the budget in terms of the request that congress would give to the president or the administration to run your operations. >> way too early. this is a vision where having conversation with stakeholders. the first step is laying out exactly what it would mean. there's a bunch of things we could do right away which is just processing for our system quicker so we can have quicker engagement. and so i can't tell you, you know, there's no blueprint right now. we have laid out a vision. we've had a broad set of

stakeholders engagement and we are now moving into having the next round of state called engagement. >> would be safe to say you have a proposal to congress to feedback at some point as a part of your vision? >> i think, you know, for sure we will have public proposal. will have plenty of time for interaction. >> thank you. >> thank you. we will recognize representative for five minutes. >> thank you, madam chair. commissioner, always good to see. by the way, thank you for the work that you are doing, given the real budgetary constraints that you are facing. and if you'll pass along to each and every one of your employees you are doing yeoman's work, i can't imagine the stress that they are under, given that you've got thousands of americans waiting to connect with them on the phone, who are waiting 10, 20 minutes, and many of them very unhappy that they have to wait that long. i think after two or three minutes most americans tend to hang up on any phone call where

they're having to be put on hold. so i just, i hope we will get this done in a smart way. and they don't believe that the last, the first thing we want to do is shortchange the agency which are has a tough task. and is asking americans to voluntarily pay their taxes. and will have american response was to do so, to watch as others don't, it's very frustrating. if we don't want to undermine the voluntary compliance rate that we have in this country by americans who pay their taxes. so please share with all the folks that you work with that we thank them very much. and also tell that jump right over there, mr. williams, that we thank floyd weighs all his years of service. we will miss them because you've been a tremendous asset to not just the congress, to the american people a cousin of the services provided to the irs and to us as a go between, between your agency and the congress. we will miss him, and we want to say floyd, thank you for all the service you provided over the

years. one more thanks. your initiative on tax prepares, that universe of people out there who are representing themselves as competent, qualified prepares, and get paid to do it. and we know there's some great ones, but we know there have been some that have just ripped off the american public. it's hard to believe that you need a license to cut someone's hair but in america you don't need a license to prepare somewhat, perhaps most important tax or financial document. so i thank you for the initiative to try to bird dogged and issued two major competent folks are the ones that are preparing our taxes. i am distressed as i sit and listen to what you're saying, you've lost 5000 employees. your budget was cut $300 million. we know that when you do tax compliance enforcement, that dollar you spend to have that

investigator and as folks who follow through to make sure people are complying with the payment of the taxes they owe, that you returned $6 for every dollar we invest in you to do that. and for us to be cutting $300 million from your budget, it's distressing. because the last thing we want is stories is how some overzealous tax agent goes and bust someone's door down to try to collect taxes. the truth is, for the most part you have employees who choose duty yeoman's work to try to help their fellow americans repair the taxes. i hope that you will sound the alarm on the ability for us to pay our taxes the right way voluntarily. my understanding is, and correct me if i'm wrong that we now estimate that some $385 billion annually is not paid in taxes that are either avoided or intentionally not paid in this

country. is that, 385 billion, is that the estimate now? >> that is the tax gap estimate for tax year 2006. >> and so that is more money, that is more money than we would fund you for how many years? >> a lot. >> it is just incredible. we have americans who are volunteering to pay their taxes. you're of a whole bunch of other americans who unfortunately are not doing what they should, and so the responsible taxpayers in this country are having to cover for those who aren't. and you can go and 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, simple erika and i think most of those americans are ready to pay their fair share. others are the others are trying to send their money overseas and do things that they shouldn't. and we should make them pay their fair share. i just hope that we go out there

and do this the right way. is there any hope that with the funding you're getting that you can fulfill everything that we are asking you to do? >> well, look, one is it's very much the prerogative of congress to fund us and whatever congress gives us we will do the best that we can. i'm quite proud of this agency delivering on multiple fronts, over the last several years, and especially this year in a decrease budget environment and really trying to balance compliance and service. and i think we're doing a good job. >> thank you. the time has expired. ms. black is recognized for five minutes. >> thank you, madam chair, and thank you, mr. shulman, for being here. we are all talking about limited dollars, and we need to spend our dollars the best way we possibly can. i was reading a report just

recently from the treasury inspector general attacks administrations have done billions of dollars in federal education credits that were issued in error. and what i'm really time to get to hear is number one, to say, nature we're giving them into people that really deserve the money so that we can use it in the budgetary process to fund those places, such as yourself, that can continue to do a good job. but it's very disturbing when i see here how much money this represents that was potentially given to those who don't deserve it. and i just want to read a couple things out of that report. 1.7 million taxpayers we cede 2.6 billion in education credits for students for whom there was no supporting documentation in the irs files. that they even attended an educational institution. almost 380,000 of these individuals claimed the students

were not eligible because they did not attend the required amount of time, or where postgraduate students resulting in an essay 559 and erroneous education credits, 64,000 of those taxpayers received $88 million in education credits for students claim as a dip or spouse will on the other ones return. so is a double payment. 250 prisoners the erroneous they received over 255,000, and then it says here that it was identified that a valid social security number is required for federal student aid, but not for these education credits. now, that just blows me away. i know when we were talking about the child tax credit at one of the other hearings that was told to us that there wasn't a requirement that they have a social security number. so i'm 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 people, what we can do, what kind of tools we can do and give you so you can have the authority to say we are not going to process this return, it doesn't have the proper information on there. and social security number just seems like an easy thing for me. not sending it to a prison would seem like an easy thing. as well as making sure that they intended pashtun attended the classes or at least attended a college, and perhaps made a valid school pim number would also help to make sure that when the credits are being processed batch of all the information to verify that truly they qualify for this. so can you help me out with that? >> sure. no, thanks for bring it up, and i appreciate the offer of help. we can always use help. a couple of things.

one is we have significant step up our efforts to crack down on fraud last year we stopped $14 billion in potentially either fraudulent or mistaken credits from going out the door. the specific report that you reference, i just want to point out a couple of things. there was an inspector general report a couple years earlier that showed that there was a huge error rates on the 1099, or 1098. ..

>> which is resource intensive, and it comes to people. because we won't -- even if we see an issue, if we don't have people who will follow up, answer the phone, engage with the taxpayer, we can't block it, because we can't change their return. if we have math error authority, then we can block it and change the return without going through a full-fledged audit. so we requested in this budget math error recovery for a couple of things. the second thing is you mentioned prisoners. authorization for us to share information with prisons so there can be a real punishment for a prisoner like losing privileges or put in solitary confinement if they try to defraud the system, our authorization in congress is to actually share information back with prisons so we can have that kind of dialogue expired at the end of last year, so reuping that authorization is another thing that you all could do to help. >> so this math errors

authority, you need to be given that, is that by law? >> yes. >> so we do have to change law. and do you already have the authority to require that there be a social security number on that form? >> so that's a whole different issue because certain tax credits you have to have a social security number, certain tax credits you don't. the ones you're mentioning you don't, so it's not a requirement. >> well -- >> so people bring it up, so in congress decides only people with social security numbers can get that credit, then that would have to be up to congress. we can't stop it because it's not a requirement at this point. >> okay. i know some ways we can help you. thank you. >> thank you. >> commissioner shulman, good to see you. i apologize for arriving very late to this hearing. and before i recognize mr. reed for his questions -- no, no, 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, and i think it's a total of, what, 35 years of government

service? sir, we want to thank you as you move on to what i hope is a good retirement? thank you for your service. and with that, mr. reed, you're recognized for five minutes. >> thank you very much, mr. chairman. thank you, commissioner, for being here with us today. um, commissioner, i'd like to explore, i really try to rely on data when we make decisions here in congress, and one thing that i have a concern with is on the enforcement initiatives you have certain projections on return of investment for those enforcement initiatives. i'm sure you're familiar with the issue that we're going to talk about here. i believe 2013 you to -- your proposed investment will be 1.9 to 1. 2015 you project, it's my understanding, the return on the investment for those enforcement initiatives will be 4.3 to 1. historically, i read some

reports that projected that by 2012 it was supposed to be a 7.8 return on investment to a dollar. so does -- do you confirm those numbers, those estimates, those projections with actual data, and if you do, how do you do that? if you don't, why don't you do that? >> yeah, no, it's a great question. let me, let me give you how i think about return on investment and exactly what backs it up. first of all, we're very conservative in the numbers we give you. those are, um, the people that we know do those jobs, a rolling ten-year average on the exact enforcement initiative. so if we're going to hire, you know, 20 grade 13 examiners for an excise tax, we hook at the ten-year rolling average about how much revenue comes in directly from those people making adjustments that actually comes into the treasury. so it's a lookback ten-year

rolling average of those numbers. i actually think those way understate the impact because the real game of running the tax system and the real objective is the $2.4 trillion that comes in every year which most of those people we don't engage with in that kind of activity. and so our job's to run good service so when people call, they can answer our questions, compliance coverage where there's the most risk so that if you get an audit, your neighbors know you get an audit around peck issues, and it drives voluntary compliance. so another way to look at our numbers is $12 billion budget give or take, $2.4 trillion in revenue. every dollar invested brings you 200. or a smaller way to look at it is we have what we call our turk numbers which are real dollars in the door every year. last year it was about 55 billion, the year before it was

57, the year before it was 49. and that's literally, you know, people go out, make an adjustment. people go through the adjudicatory process and bring money in to us. so you could also -- that's a 5 to 1 return. but the numbers you gave us are based on very specific activities in a granular way based on the kind of people who do those activities looking back ten years, how does that tie to those turk numbers. >> so is it fair to say your testimony is also that they're based on actual data when you go back and confirm the numbers? i mean, are you looking at actual data, when you project the 1.9 to 1 for 2013 return on investment, you'll be able to show us at the end of 2013 the actual data that confirmed whether or not you hit 1.9 to 3 return on investment? >> i think we'll be able to -- you know, what i said was i think it's very good numbers. it's ten-year rolling averages. i think things spike, and can

they move, so this is an estimate. 2013 might not be exactly that. but over a ten-year period, i think you're going to see it average out to be that amount. >> i guess that's my question. because in 2012 it was projected to be a 7.8 to 1 return on investment. was it 7.8, or what was the number for 2012 on our enforcement initiative return on investment? >> again, i don't think you want to look at these things, um, as, you know, year point in time, and you don't want to encourage us to do that. what you want to encourage us is to get the right resources that over time are going to drive the right taxpayer behavior. these numbers are ones we certainly consult with gao, um, omb on. i think we're very comfortable with these numbers, and we have ongoing dialogue -- >> and you bring up a great point when you bring in gao to the conversation because my understanding is that they're very concerned that you're not using actual data to confirm those projected return on investment numbers that you're

giving to us. >> yeah. i wouldn't characterize it as very concerned. i think they've said we can together work on methodology, and we're actually having those staff conversations on a regular basis. >> okay. so you're working with gao to come to some sort of -- >> yeah, absolutely. but again, i feel very comfortable in our numbers, and i think if anything, they understate the return. >> i appreciate the work you do, commissioner, and i appreciate all the work you do over there, because it's a tough job. >> yeah, no, these are great questions because we need to be accountable for results. >> thank you. with that, chairman, i yield back. >> thank you. commissioner shulman, again, welcome. does the irs have available resources with the current budget to tackle new enforcement responsibilities? >> um -- >> new enforcement responsibilities, do you have the resources available to take on new enforcement responsibilities? >> um, so, um, earlier i was saying, you know, we try to do the best we can with the budget that congress gives us.

um, obviously, we have a big job to do, and we try to balance, um, across the board all of the things that, um, we do. um, we've requested in the 2013 budget some new resources for some of the new legislation that's come through, and we're quite hopeful that we'll get that. >> because in reviewing the president's 2013 budget proposal, this proposes saddling the irs with additional enforcement responsibilities by shifting alcohol, tobacco tax and trade bureau duties of enforcing tax provisions related to alcohol and tobacco to the irs with no funding allocated in this budget to pursue those kinds of violations. um, 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? >> yeah -- >> i don't think there's a major shift in the budget.

>> well, i think the 2013 budget proposes giving you additional enforcement responsibilities by shifting alcohol and tobacco tax and trade bureau duties to the irs. >> i'm, i should get back to you on this because i don't think -- >> okay. that's fair enough. >> -- there's a full shift proposed n. the past, we've been reimbursed to have some of our criminal investigators help them with informations, and that's what i'm aware of. >> yeah. if you could just get me some clarification on that, i would appreciate it. >> sure. >> and one other question. it's come to my attention, i've gotten a number of letters just recently, we've seen some recent press allegations that the irs is targeting certain tea party groups across the country requesting what have been described as onerous document requests, delaying approval for tax-exempt status and that kind of thing. can you, can you elaborate on what's going on with that? i mean, is -- can you give us assurances that the irs is not

targeting particular groups based on political leanings? >> yeah. um, no, thanks for bringing this up because i think there's been, um, a lot of press about this and a lot of moving information, so i appreciate the opportunity to clarify. um, first, let me start by saying, yes, i can give you assurances. as you know, we pride ourselves on being a nonpolitical, nonpartisan organization. i'm the only -- me and our chief counsel are the only presidential appointees, and i have a five-year term that goes beyond, you know, runs through presidential elections just so we will have none of that kind of, um, political, you know, intervention in things that we do. um, for 501c4 organizations which is what's been in the press, organizations do not need to apply for tax exemption. organizations can actually hold themselves out as 501c4

organizations and then file a 990 with us. um, the organizations that have been in the press, um, are all ones that are in the application process. so, first of all, i think it's very important to emphasize that all of these organizations came in voluntarily. they did not need to engage the irs in a back and forth. they could have held themselves out, filed a 990, and if we would have seen an issue, we would have engaged, but otherwise we wouldn't. um, the basic rules around 501c4 organizations are that they need to be primarily engaged in promoting the common good and general welfare of their community. they can be involved in political and campaign activity, but it can't be their primary purpose. when people apply for 501c4 status, what 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's been happening has been the normal back and forth that happens with the irs. um, none of the alleged taxpayers and, obviously, i can't talk about individual taxpayers, and i'm not involved in these, are in an examination process, they're in an application process which they moved into voluntarily. and so there's absolutely no targeting. this is the kind of back and forth that happens when people apply for 501c4 status. >> and finally, is it fair to say there's been no change in irs practice with regard to what triggers audits and so forth with regard to tax-exempt organizations as a whole in. >> so, um, we -- well, as a whole we have audits, um, based on risk criteria, coverage requirements, etc. but 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 aren't based in washington, d.c. that anytime an audit will be triggered because of potential political activity or if there's 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. so no single individual can launch an audit. there's a, you know, it has to be agreement amongst three. then the decision would be made for an audit based on resources, risk, allegations, facts, etc. and it would be shipped out to an auditor to do that audit. that's been the practice for many years for, um, anything to do with political activity, and that's the practice now. >> i thank you for your answer. does, dr. mcdermott, do you want to inquire? you may inquire.

>> thank you, mr. chairman. i, um, want to shift the question just a little bit or the issues that you've been dealing with here. i have a lot of lgbt clients or 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're not quite sure, and they're spending some of them twice as much as a married couple would spend to get their income tax done. they've gotten married under the law, but suddenly the irs has got things -- when they ask questions about certain things, it's just not clear what the answer is. so i'm wondering, is there any single place or perhaps should

there be a single place where they can call and find out the answer to a question or someplace in the irs where somebody takes this issue and begins to give definitive answers? >> yeah. so, great question, i'm aware of the issue, and we've actually tried to do a bunch. first of all, this is a very complex issue for these taxpayers because, um, under state law these taxpayers have a different legal status than under federal law because of some of our federal laws. um, so under state law they often split the income, but under federal law they have to actually file separately because of the federal laws. um, we recognize that there was a lot of confusion, um, and so we actually consolidated and put a group together who worked and put out a whole set of frequently-asked questions that

answered a lot of these questions. and so we realize that as laws have changed around the country, um, this has been an issue. we've been engaging with the community around this, and i think we've clarified a lot of questions. let me just say, though, um, 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 things people have asked us to do we can't do under the law. >> is there, when they're filing their income tax federally, do they -- i suppose if they've, if you have different thing at the state level, but federally if they are doing it together, they can't do it together, is that what you're saying? >> it all depends. different states have different domestic partnership laws, um, but, you know, there's state returns often piggyback on federal returns. but, um, recognizing couples as couples is different depending on whether you're in the

state -- depending which state and, also, federal laws are different. >> so that the piggybacking off the federal tax return sort of works in reverse at state level. they're going to have to change some state laws to actually make this rational? >> it adds complexity to these taxpayers' filing. but we've tried very hard to make sure, you know, we do our job like we do with all taxpayers which is we've got a set of taxpayers with specific issues, we got a team together, we did outreach and engagement, and we tried to really clarify what we could clarify. >> if i had a question, what number would i call to get the answer? >> you'd dial our 800 number. >> and that number should get you to somebody who will give you the same answer day after day after day, you won't get two different answers? >> that's our hope. we track accuracy and consistency, and they're always in the high 90s. >> okay, all right. well, i appreciate that. it's an issue i hear from the

district a lot, and i want to know what it is that you have tried to do, and then we'll see if there's problems or we need to do something about it, we can look at it. thank you. >> thank you. >> with your indulgence, commissioner shulman, mr. becerra has one follow-up question. >> mr. chairman, thank you for generously allowing me to ask one last question. commissioner, two weeks ago i sat down with my tax preparer and went over my taxes in preparation to file, and he's been doing this forever, he's an enrolled agent, he's license r licensed and all the rest. and he said to me, you know, i was always supportive of what you all were doing in trying to get us to be a more defined group so that way -- because he sees, he gets folks that come in to correct taxes that have been filed improperly by folks who prepare these things, charged people and did it the wrong way. but he asked me a question, he

said, seems to me like a lot of us who have done this for a long time are the ones that are being asked to go through the process to certify that we're competent and all the rest. and i said to him my sense is that everyone's going to be at some point touched by the irs as it's moving towards the effort of trying to certify that folks are competent to be out there representing themselves as qualified preparers of tax returns for money. the chairman was gracious enough to indulge me, so i'm wondering if you can tell us what the status is of the initiative at the irs to try to help do the bird dogging, the oversight of tax preparers and maybe respond to the question of who's being contacted out in the tax preparer world by the irs to follow up, he said he had to go through some courses or programs to test his qualifications and

so forth. so if you can just give us a quick sense of where things stand. >> sure. um, first, similar to what i talked about with the realtime system, this is a big initiative. we had multiple public hearings around the country, vetted it with a report, put out regulations with lots of public comment, and so we've had a lot of engagement with the preparer community around this because this is really about partnering with the preparer community to make sure taxpayers are served, um, well. status is we've had about 840,000 people apply and receive prepare taxpayer identification number. about 60% of those were not already an enrolled agent, a cpa or a lawyer. >> wow. >> um, now, enrolled agents, your preparer, um, and cpas and lawyers who already had

higher level qualifications, had already gone through their own set of competency testing, already had ongoing continuing education requirements we're not requiring to take the test because they have already taken a test or have continuing education. and so your preparer should not have, um, had to take a test if he was already an enrolled agent. >> and he didn't. >> and so we have about 840,000 people who have signed up. last fall we started administering the competency examination, um, and we have a number of people through thatment one of our promises was to the american people is we weren't going to, um, cut out prepare services. we wanted to make sure people still could get service, and there's a lot of very competent preparers who have been preparing returns for 20, 30 years who haven't taken a test in a while. so we gave them three years to pass the test. so people are now starting to pass the test. you don't actually become a

registered tax return preparer until you pass the test. so all you do is have a ptin right now. so now people are starting to move through the task, and we have had several thousand who have taken the test, and we expect that number to grow. and we've started approving continuing education providers because this year continuing education requirements kick in. and so we're well on our way to move there. the last thing i would say is this filing season we're actually, um, we had the ptin, we had cave processing faster, so we were able to look at preparers who had really egregious problems with their returns, go out to them immediately in late january with visits, letters, phone calls, um, and really start to engage the prepare community to make sure they're treating taxpayers well. so very pleased with the status of the initiative, and that's a broad overview. >> thanks very much. mr. chairman, thank you very much.

mr. coupling, you -- cumming, you may inquire. >> thank you, chairman. we really appreciate it. obviously, a lot of issues are pending. i had a chance to review the -- [inaudible] obviously some of the disturbing trends they see in that report is mainly the inadequacy of funding for the irs in order to do your job adequately, serve the citizens of our country. and in particular they were concerned about because of funding cuts and the inadequacy of resources what that means to the irs' ability to address the noncompliance issue. we've got a tax gap out there that everyone realizes. the concern is it's only going to grow wider. if there's a lack of confidence or belief in the irs when it comes to compliance measures, it's only going to exacerbate the situation, i'm concerned. but do you agree with what the report was stating in regards to enforcement of noncompliance? >> well, look, we had budget

cuts, and we try to do the best we can, we talked a while before about service, we haven't really talked about compliance. um, you know, clearly, we're doing less exams this year, and we have to triage and find places. we're doing less collection activities. um, and it's going to result in less money coming in than otherwise would have come in. um, the big trend i'm worried about is if we don't stem the tide in the 2013 and 2014 budget, um, is you get to a point where there's enough news about compliance rates being so low that still a lot of people are going to pay their taxes because they're honest, hard-working americans, and they want to pay into the society that they feel benefits them. but if people want to push the envelope which some do and want to cut corners if they they we're not on the job, then they'll do so. so i think the general comments about you can't have a long-term

trend of degrading compliance resources because that really starts to hit voluntary compliance is accurate, and i think the specific of just less funding means less dollars in the door. that's simple math. >> well, let me ask you a couple questions. we're approaching the second anniversary of passage of the affordable care act, and one of the provisions allows access to credit for small businesses who provide health care for their employees. there are moments back home and some small business owners come to me and complain about the complexity of that tax credit and having to fill that out. what's your opinion on that, and is that an item where the irs or us working with you can try to simplify that process to make it easier for small businesses to qualify for that tax credit? >> yeah. i mean, one, is it's, obviously, an important tax credit for small businesses, um, to help them afford paying for health coverage for their workers which

is, you know, a key component of the affordable care act. i think it's a very complex credit. um, we've heard from a lot of practitioners and small businesses that the phaseouts around that and other issues have made it very hard for people to, a, understand if they can hit the sweet spot where you get the credit and, b, um, has sometimes discouraged people from actually taking advantage of the credit. the president's budget actually has a simplification proposal in it which, um, works on the phaseouts, um, and other issues to make it, hopefully, much more attractive to small businesses. and congress taking up and passing that, i think, would be beneficial, and i think -- >> you think that makes a lot of sense with what the administration is proposing? >> yes. >> now, what about in 2014, obviously, with the exchanges there's going to be a lot of credits going for the individuals within the exchange market and that. is the irs making preparations in order to deal with that, and are you on track?

>> yeah. so we are making preparations. we are on track. you know, we, the majority of the work we're doing and the people we've had to hire is to build technology systems to interact with the state exchanges and the federal exchange so that, you know, an estimated 30 million people can get over a ten-year period $400 billion of tax credits. i think i testified yesterday before, um, our appropriations committee and, um, what i said to them is i understand that there's heart-felt policy debate about the affordable care act, and that there are some members of congress who don't like it, there's members who like it. but the bottom line is come 2014 there's going to be a lot of constituents in every district who are going to expect a tax credit when they show up at the exchange, and we need to get funded appropriately in the 2013 budget to prepare for that. and so we're on track, we're spending must be now base --

money now based on authorization that came through the bill, but we're going to need to get financial support because we have a big job to do. again, we're not involved in health policy, we're involved in moving the money to help make the law work. >> right. thank you, commissioner. thank you, mr. chairman. >> you know, this broader question of the complexity of the tax code should give impetus to all of us to look at fundamental tax reform. i know the chairman has set this as a goal. commissioner shulman, thank you for appearing before us today. as is customary, please, be advised that members may have additional questions they may submit to you in writing and those questions and your responses will be made part of the official record. and with that, we'll conclude the subcommittee hearing. ..

[inaudible conversations] [inaudible conversations]

[inaudible conversations] live pictures from the senate gallery we're standing by for remarks from senate republican leader mitch mcconnell. he will be speaking with reporters on capitol hill about the second anniversary of the health care law. president obama signed the affordable care act into law two years ago today and senator mcconnell will speak about the anniversary this morning. we will have it live when it gets started here on c-span2. while we wait for senator mcconnell, remarks now from

senator dick durbin. he talked about televising the health care debate that's about to take place in the supremerelr court next week. by this time next week theet supreme court will finishl hearing arguments in the case oa challenging the constitutionality of the patieni protection and affordablety car. act.how importa reform? well, health care is such an important issue that congress spent one year drafting and debating a bill that the court is going to consider next week. health care has been a critical issue for so long in our country that in the last century, nine different presidents have spent time, energy and political capital fighting for reform. it's so important the supreme court reserves six hours for oral argument over the course of three days to consider the act's constitutionality. the last time the court dedicated that kind of time to any one case was in 1966 -- if i'm not mistaken, that's 46 years ago -- when it considered

miranda versus arizona. nevertheless, not even the health care case is important enough for the supreme court to justify breaking its antiquated tradition and allowing cameras to televise the proceedings. so the american people are not going to have a chance to see and hear these historic arguments for themselves as they take place. i can't predict the outcome of the case, but i can tell you what to expect just outside the doors of the supreme court. it's a scene that we have seen over and over again for decades. thousands will gather outside the court. many are going to camp overnight, sleeping on the sidewalks in the hopes of getting one of about 200 seats available to the public. the vast majority of those wanting to see the supreme court argument on one of the most important cases of our time will be told no, you're not allowed to come inside the court, we don't have room for you. in a democratic society that values transparency and participation, there can't be

any valid justification for such a powerful element of government to operate outside the view of the american people. for too long, the american people have been prevented from observing open sections of the supreme court -- open sessions of the supreme court. except for the privileged few, the v.i.p.'s, members of the supreme court bar or the press, the most powerful court in our land, some might argue in the world, is inaccessible to the public and shrouded in mystery. i'm pleased to stand in the committee, judiciary committee with senator grassley, the ranking member of the judiciary committee, asking that the senate pass our bipartisan bill that would require televising open supreme court proceedings. with the benefit of modern technology, the supreme court proceedings can be televised using unobtrusive cameras and the court's existing audio recording capability. our bill respects the constitutional rights of the parties before the court and

respects the discretion of the justices. the court can decline to televise any proceeding where the justices determine by a majority vote that doing so would violate due process of one or more parties. in our view, senator grassley and myself, this is a reasonable approach that balances the public need for information and transparency, the constitutional rights of those before the court, and the discretion of the judges. it's no secret that senator grassley and i have strong disagreements about the actual law that's going to be considered by the court. we have taken to the floor many times to explain our positions. despite our disagreement on substance, senator grassley and i agree on a bipartisan basis to stand united in support of s. 1945 to finally bring transparency and openness to our supreme court. we're not the only members of this body who believe that these proceedings would produce greater accountability. in past years, the cameras in the courtroom act enjoyed

bipartisan support. the last sponsor of the act before he left the senate was senator arlen specter of pennsylvania. this version of the bill, very similar to his own, has the support of senators cornyn, klobuchar, schumer, blumenthal, gillibrand, harkin and begich. as senator grassley would note, democrats and republicans from both chambers have written to the supreme court asking it to permit live television broadcasts of the health care reform arguments next week. in november, senators bloomen that will, schumer and i wrote -- bloomen that will, schumer and i wrote a letter to the chief justice making the request, open the supreme court for this historic argument. let the court make the argument before the supreme court and the questions asked by the justices in open court. well, chief justice roberts responded to our request last week, and it sounds like he sent the same letter, incidentally, to senator grassley. the chief justice informed us that the supreme court has respectfully declined to

televise the health care arguments, but that the court would graciously offer an alternative. here's the alternative. now the court will post audio recordings and unofficial transcripts to the court's web site just a few hours after the arguments are over. for that gesture, i guess we can congratulate the united states supreme court for entering the radio age. america entered the radio age 90 years ago. the supreme court is catching up with a delayed broadcast, audio only, but i think america deserves better. decisions that affect our nation should be accessible by the people who are affected by those decisions, and they should be produced in a way that americans can both see and hear. the day of the fireside chat is gone. the day of radio transmissions exclusively, those days are

gone. television and even the internet are the dominant media for communicating messages and ideas in the modern america. it's not too much to ask the third branch of government at the highest level to share the arguments before the court with the people of america. understand, there will be hundreds of people present and watching this as it occurs. it isn't confidential or private. it's only kept away from the rest of america because this court doesn't want america to see the proceedings. the supreme court is an elite institution in our government. every member of the supreme court went to one of two ivy league law schools. most of the clerks before the court come from one of seven law schools. none of the current justices have ever run for public office. none of the current justices have ever tried a death penalty case, and the lawyers that appear before the supreme court

are part of a small and exclusive club. perhaps this limited exposure is why many on the court don't seem to fully appreciate the impact its decisions have on everyday america and why the american people deserve to have more access to the court's public proceedings. since the supreme court is the final word on constitutionality, on issues that impact every american, the american people should have full and free access to its open proceedings on television. now, let's be clear about one thing. our bill only applies to court sessions already open to the public. supreme court justices should be able to consult with each other, review cases and deliberate privately. no one, no one in this bill or otherwise is calling for those private deliberations to be televised. i believe that televising i believe that televising a quick reminder that we will have the same day audio of the supreme court oral argument on health care next monday, tuesday

and wednesday life on c-span3, r c-span radio and online. it will start at about 1 p.m. eastern and we all live now with remarks from senate republican leader mitch mcconnell on the second anniversary of the health care law. so far with not a whole lot of talent. [laughter] >> do we have to talk about something else? [laughter] i'm a little surprised but there wasn't a birthday cake to celebrate the second anniversary of obamacare. we all noticed that not a whole lot is being said about the new law that was involved and i have a pretty good reason for that. the -- after two years it is

pretty clear that it's full of broken promises. almost everything that was said about the law, predictions about how it would turn out have not worked out. they said would protect medicare. obviously it doesn't. it took half a trillion dollars out of medicare not to make medicare more sustainable, but to help provide the cost for the new entitlement program. they say it would bring about lower premiums. we all know that what happened. the health care costs that hasn't happened. they see taxes won't go out and we know right in the legislation there are $500 billion of new taxes. they said if you don't like your plan you can keep it. we know that's not working now. so, i feel we can pretty safely say that the reason the american

people like the law even if less than they did two years ago is because nothing essentially that was promised is occurring and will occur. even in the jobs front, you know, that's -- we all know the number one issue in the country. analysts for a simple say that the law as, quote, arguably the biggest impediment to hiring, particularly of hiring of less skilled workers. and the cbo director has said that it will mean 800,000 fewer jobs over the next decade. so, as we go into the supreme court arguments, interesting, ironic the i just finished a biography of chief justice john marshall. it's called designer of the nation, and of course in his time on the supreme court from 1801 to 1835, you had a huge

number of significant decisions defining what the constitution means. and the commerce clause of course was a big part of a member of those decisions. the supreme court in the nation has been wrestling with what the commerce clause means for 235 years. and once again, it will be before the supreme court. and if you think about the arguments the will be made next week, the plans will be essentially argue this, that if the federal government under the commerce clause can order an individual american to buy this product and tell each individual american what kind of product they must buy, is their anything -- because that decision, the failure to make the decision about the product could affect the health care somewhere else and is therefore in the state of commerce. if the court upholds that, could

the federal government then order you to eat carrots? could order you to quit smoking? coded order you to lose weight? because all of those decisions you could make could arguably have an effect on the cost of health insurance for someone else. obviously none of us know what the supreme court will do, but it strikes me that if this is permissible under the commerce clause, the commerce clause is essentially gone. that it's meaningless and kind of a relative ancient times. so those of the arguments that will be made. i think this applies to all lot of us, and probably a lot of you, is the court is apparently also going to be looking at the tenth amendment implications of the massive medicate mandate in

obamacare. in my state, for example, as in every other state in the union right now, the current struggle to pay for medicaid at the state level is all because in college tuition to go up. i tell you what, the two biggest items in every state budget on indicate and education comes of the medicate mandate goes up, education funding goes down, they pass that along to the universities and raise tuition in order to make up the difference. that's already a huge problem. in my state, we are going to add almost 400,000 people in the state of 4.3 million to the medicaid rolls. our democratic governors say they have no idea how they could possibly handle this. so you're probably thinking what are the constitutional implications of that. i'm not sure. but the tenth amendment initially we thought granted to the federal government specific powers and reserved everything

else for the state. maybe the reason the court wants to hear the medicaid arguments is because they may conclude that the federal government could make states do so much in terms of their spending that the basically taken over the state budgets. i don't know. but i think that was a surprise to many that the court decided it wanted to hear arguments related to medicaid as well. summing it up, it's a mess. this law is a mess. it's the single worst piece of legislation certainly passed in the time i've been here, the single biggest step in the direction of europeanizing america and the debt was going on in europe. we ourselves have a debt the size of our economy which makes us look like greece already come and then we are adding this on top of it. whether the court finds a constitutional or not is a mistake. there's plenty of mistakes you can make that are not unconstitutional, and so obviously our hope is that the court will find this law

constitutionally deficient. whether or not it does, it was still a huge mistake for our country, and as i have said before, i think if i were sitting the agenda instead of senator reid, i think we would have an obligation to the american people on day one to begin the process of trying to repeal the law. let me make one observation about one other matter and then i will throw it open. if you recall is thus skirmish the majority leader and i had this last week over scheduling which of course is not my responsibility, and i indicated that if i were -- if i had his job, we what turned out to the export import bank and the majority leader said well, we just don't have time i think you already know we don't have time to do the xm bank, but we are going to turn to the effort to raise taxes on energy monday and spend next week incredibly

enough having a discussion about what a good idea it would be to raise taxes on energy, when gas is at $4 a gallon. i look at that and i say, you know, we ought to do something about the price of gas, but it wouldn't have taken a very long to have cleared the xm bank. there are a significant number of my members who are in favor of it and instruct me that we could probably work that in. all right, let me throw it open. yeah. >> on obamacare the regulation last friday calling for all new health care plans to cover without copay to input a contraceptive method to all women of reproductive capacity. do you support requiring insurers to cover procedures to

all women? >> i don't have a comment about that. it's a regulation that cannot last week? we will talk about it in my office. >> does the supreme court struck the mandate -- what can congress do at that point? >> that's a really interesting question. i think the way forward after the supreme court decision -- a lot of it depends on what they do. i think most people have looked at this, both of those opposed to obamacare as i am or those that are in favor of it and believe the individual mandate is kind of a linchpin, but i think kind of discussing hypothetical about what you would do if they did this or that is probably not productive, but we've had some conversations

about it as you can imagine. i feel we have to wait and see what the court does. yeah. >> another hypothetical if the court says the mandate is constitutional, what does that mean for republicans who oppose health care reform? >> as i said a minute ago, something can be constitutional and still be a big mistake. you can't repeal the math here. this is a disastrous respect of europeanizing the country and even if it is constitutionally permissible there are plenty of things we shouldn't do that our constitutional so even if they find it constitutional it still would be a mistake that's been made in recent history and ought to be undone. yeah. >> they said this election is probably the last chance that you have to repeal laws before it goes into effect in 2014 and by the time that you get too far down the road to try to unwind it what are your thoughts on

that and what should republicans do? >> it's hard to look past the election. the american people are going to speak this november. you always hear people say this is a really important election. it's a really important election. we have done this country and the congress in 09 and in ten a lot of damage to the country. obviously i hope the american people will give us the supporters cheering congress here to undo a lot of that. and i'd rather not speculate about what might be the situation down the road. >> you say that the law is full of broken promises about everything that was said. everything. but would you acknowledge certain pieces of the law are popular and working? >> the two things that test well and you hear the democrats talk about pre-existing conditions and about the devotee of younger people to stay on their parents

policies until they are 26. look, in a 3,000 page bill, i'm not surprised that there are a couple of things you will be able to point to come and these both test well in the polling and i think they will make every effort to try to get people convinced that this 3,000 page bill is all about those things coming and they certainly are popular. >> if you break down the entire law would you quickly moved to -- >> you're asking me a question i can't answer or i'm not going to answer. what i can tell you is if we have a different majority here next year, we feel we have an obligation to the american people not a republican voted for this to do everything we can to get it off the books and replace it, to use a medical metaphor what we did was take a meat ax to the best health care

system in the world when we should have used a scalpel, and we would like to undo this huge mistake at the earliest possible moment if the american people give us the support to do it. >> what do you intend to replace it with a few more amenable to repeal it? >> some of the things we've talked about, which i would do with a scalpel type of adjustment to the saddest health care in the world would be things like interstate sales for health insurance, being able to buy health insurance across interstate lines, medical malpractice. we don't think the problems we had in health care -- and we certainly do help them -- have them would require a massive overhaul of the current system and ray on medicare and the kind of cuts they need to hospitals and hospices and nursing homes. all of us know people better serving on the boards of hospitals, nursing homes,

hospice. they are struggling under these provider cuts, and every time we talked about trying to get a handle on entitlements and all our friends on the other side want to talk about this provider cuts. pretty soon there will not be providers to take care of the number of people that we are putting on the role. a good example of that is medicaid, which i already talked about. we have had a massive number of people to the medicaid rolls. >> d'aspin talk on the democratic side of the legislative -- >> legislative response to what? >> to the size of both forms and i know you see if republicans would back the majority one of the first things you would try to do is repeal the health care law. i'm wondering if there is any legislative strategy or things you can do on the floor even before that to try to make the

point about for the court decides. >> i think i've already answered that. i think it's impossible to know what the reaction to the court decision would be before we have a court decision. >> this question is relevant if not germane. where do you think the budget and the deficit are going to be on the continuum of issues you're talking about in the campaign relative to gas prices, the economy or health care? voters talk a lot about trying to get the deficit under control but then when you confront them with traces, they don't want to cut medicaid, they don't want to cut social security. how big an issue is that going to be -- >> i think we all know things like jobs and the economy are number one. the obamacare mistake is a job

killer, so it's directly related to the number one subject on the mind of the american people. it's not -- i think they do care about the debt and deficit but you are absolutely right. if you look at what people are most concerned about it some the list. i forget exactly how far down the list. if you are asking me if it is a huge campaign issue i think it is a campaign issue probably not bigger than jobs and the economy and not bigger than obamacare. whether or not it becomes an issue in the campaign is an issue for our country. when you have a get the size of your economy coming in you've suffered a credit downgrade, erst and bowles called the most predictable crisis in the country. regardless the campaign and the best issues in the campaign, this is a big issue for our country, and it's not going

away, and it will still be there after the election. >> two years ago there was so much passion with of the tea party, the town halls, the big rallies with tens of thousands of people here at the capitol. do you think that the tea party is as strong as they were two years ago and you expect that same passion and if the healthcare law is still there? >> i do. i think the passion that brought about the rise of the tea party had a lot to do with the issue we are talking about today. i believe the passing of obamacare -- even though the party came into existence in 2009 -- i really think obamacare is a metaphor for all of the excess of this administration, the stimulus, the debt, the takeover of health care, the nationalization of the student loan program. all of this government access. so i think all the folks who've been involved in that movement understand that the single most important thing we can do would be to replace the current

occupant of the white house, and it would be an assist if they were to shift the majority in the senate. >> being in this congress to you offer an amendment to repeal the entire law -- to members of your conference want there to be another vote to repeal the entire law? you don't control the agenda, but you can press for an amendment if you really try. are you going to try to do that again? >> that's a good question. this has been an ongoing discussion in the conference about that. we're thinking about it. we already know where everybody is. we've had to vote to oppose obamacare and retial obamacare to read every single republican voted to oppose the law in the first place and retail it later. we know where everyone is but it's a matter under discussion we haven't decided yet. >> i wanted to ask about the shooting death of trayvon

martin. i wonder in light of what happened to you think the laws need to be changed and the justice department is now investigating this based on what you are looking at, do you agree it's right for the civil rights position to look at it -- >> it's a an incredible tragedy and huge proportions, and i'm glad that it's being investigated, and we will take a look at it as the investigation moves along. >> senator, it looks pretty good in late march doesn't it? i did want to ask that the transportation of the highway bill. if i'm not mistaken, he might oppose that and i'm wondering if you can say why and also with the way forward is that you

would see? >> the reason, transportation is very popular in our conference but it ended up having some no votes, including my own. my principal reason for opposing it is there was a provision i believe by senator bingaman that basically what has prevented the innovative efforts of governors like mitch daniels to do outside the box funding mechanisms for their state highway systems. and it involved a public-private sector effort. it's wildly successful, and get the bingaman amendment prohibits any state, as i understand it, prospectively from engaging in that kind of innovative, outside the box solution to save transportation problems. you know, we don't have enough money generated by the gas tax to take care of all the infrastructure means we have in this country. why in the world what we want at the federal level to present

creative and innovative governors from figuring some of the box way to meet their transportation needs? so that was my principal motivation. senator corker felt it finally to the budget control act. there were different points of view about that, but my principal motivation was i thought that was an absolute outrage at a time we ought to be encouraging state governments to engage in really innovative ways to meet our transportation needs. and the most successful i'm aware of and the country was mitch daniels that made it impossible for any of the governor to do that. >> [inaudible] >> well, they won't go along with that. you have to ask the house what they want to do. they've had a number of discussions how to go forward on the transportation bill, and we've had enough challenges over here without giving them advice. >> do you think next week will be the house extension --

>> is next week the expiration? we will certainly do some kind of extension, yes. i'm going to take one more. >> are there a lot of conservative groups who are urging congress -- >> urging the congress to what? >> [inaudible] are you concerned the opposition will affect -- >> i'm having a hard time -- >> i'm wondering if you are concerned on the positions the xm bank -- >> i think i covered that. i mean, we could do that very quickly. the majority leader scheduled it and i found as i said earlier she found the time to turn to trying to raise the price of gas upon, and it looked like that could end up dominating next week when we could have passed

the xm bank probably in a day or so. okay, thanks, everybody. >> wrapping up here with minority leader mitch mcconnell. president obama signed the affordable health care law act into law two years ago today. several senators spoke this week on the senate floor about the anniversary and we will show comments in just a moment from senate democratic leader harry reid, committee chair tom harkin and others. you can also see all of this online at c-span.org.

president obama today nominated caribbean foreign dartmouth college president

the genetic scientists to finally nailed down a rough date for when the hiv epidemic starts describes tinderboxes and wet moss. in most parts of the world there's not that much hiv, yet in some places there is a ton and it is incredibly destructive, so understanding that these categories exist and allows you to think okay, what are the factors to keep this moving and what can we do as a world to end this? senators from both sides of the al qaim to the floor this week to talk about the second anniversary of the health care law. republicans tried to repeal all and democrats talked about the

benefits. right now we are going to show a variety of comments beginning with senate democratic leader harry reid who talked about how difficult it was for him as a 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 or how much money they make. millions and millions of americans have already felt the benefit of this law. seniors are saving money, millions and millions of dollars, on their prescriptions and their free checkups. the doughnut hole is rapidly disappearing because of this bill. this law, i should say. insurance companies can no longer set arbitrary lifetime

caps on benefits. mr. president, what they would do is you thought you were in good shape. you had an insurance policy, a health insurance policy, and you get in a car accident or you get cancer or some other dread disease, and you're in the process of being taken care of, and you're told your bill is not being paid anymore. 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 and nicole burta be 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