>> guest: sure, the federal government has a strong role. ever since 1956 the highway act, we funded the nation's highway system and mass transit system, but from high profile bridge collapses in west virginia 1969, and connecticut in 1973, they stepped in and taking the oversight role in rating bridges. we have a national bridge inventory, making sure states, every two years, look at basically how sufficient and safe and structurally sound the nation's bridges are. it does play a role. it's important to understand, though, that the states are in the driver's seat when it comes to spending dollars and federal dollars. >> host: there's ramifications unfolding from the skagit bridge collapse in washington state and it's tearing the town's economy because it's an important artery for transportation. what lessons were learned?

take us over what happened in the bridge collapse and what we can understand from this. >> guest: sure. you know, i think generally speaking, what we see here is an aging infrastructure in the united states. this is what's going to happen, the average age of a bridge in the united states is 43 years, built to last 50. it's a growing problem. in the i-5 in washington, this was actually what was known as a fractured critical bridge. it did not -- was not built or designed back in the 1950s with redundancy, looks like an oversizedded load hit that in the worst place to hit it, and, thus, collapsed. it is remarkable nobody was killedded in the collapse, but it suggests just a problem that the state of -- the crisis that is -- only going to be growing as bridges age, and get older, we have several thousands fractured critical bridge designs out there, some on busy highways, and others, smaller bridges, but connecting smaller

towns and really because they are the life blood of the economy. >> host: a truck hit that bridge, so how easy or hard is it to tell if prior damage or some of that infrastructure aging was really in play? >> guest: did -- >> host: weakening enough that a truck hilting it was a problem. >> guest: yeah, it's important, and having had noticed the bridge, on their list, and it was not what we call structurally deficialts, and it was not flagged as a real problem, but it was nope to be fractured critical, and there are thousands of those critical bridges that are beginning to take some investment to be able to replace and address the fractured bridges. >> host: we learned from the federal highway administration that there are over 66,000 bridges that are considered structurally deficient, and in the term, "functionally obsolete," over 84,000 categorized as that.

what's that mean? >> guest: sure. deficient, again, the feds require a rating system, structurally deficient is the structure itself and how sound it is. you see that with age, wear and tower, and weather, overtime, the bridges just get worse. they start to corrode. the piers in the water need repolice stationing, deck needs replacing, and deficient in our minds, probably, is the most important of the ratings, and as you say, 66,000 deficient bridges that need fixing in the united states. that's one in every nine bridges. that's only going to get worse. functionally obsolete is the design is actually out of date or older, not necessarily unsafe, but they may be narrow travel lanes, too sharp a turning radius, and, again, those may need attention, and they fractured critical at the top of the list for attention. >> host: parts of a bridge you mentioned words like "deck," and

we see here an example of a bridge in vermont, in montpelier, and how various parts of the bridge are rated, so why are these parts of the bridge important, and what are you looking at when you look for a safe bridge? >> guest: sure. there's three ratings in deficiency. there's sub structure, really the piers, the footings, what supports the bridge, the superstructure, the structure itself, and then the deck, literally the roadway that the vehicles pass over. each of those get a rating every two years from 0-10, 10 the best, 0 the worst. if any of the ratings are a 4 or less, that bridge isly -- is structurally deficient. it's not unsafe necessarily. that's important to understand. if a bridge is unsafe and deemed to collapse, they close it. they not let traffic pat #* -- pass over those bridges, you know, again, this is really, in some ways, an art, not a science

to figure out which bridges to fix first and the name of the game here is investment in dollars. we don't invest enough in taking care of the bridges. >> host: james corless, director of transportation for america. what is that? >> guest: a coalition, a 500-member organizations that really are trying to raise the issue of transportation infrastructure to get more investment and to take care of the problems at the national level, state level, local level, and we believe this is really the life blood of the economy, that we need to fix the aging 20th century infrastructure and build a 21st structure to compete in the economy. >> host: talking with james corless about bridge safety, republicans can call us, democrats, 202-585-3880, and independents, 202-58 # 5-3882. jerry, new york, new york, democrat, hi.

go ahead. >> caller: hi. >> host: yes, go ahead. >> caller: two questions actually. did the sequester affect the bridge safety inspectors, and why is it going to take another catastrophic structural failure in order for government to move on? putting people to work on the bridges. i live in new york, we have an abundance of bridges here, and it's, like, they are moving like monopoly las sis here in fixing these things. that's the extent of that. thank you. >> host: do you take the bridges? >> guest: yes. >> host: there's a story here looking local story looking at the bridge, commuters have at least one thing to look forward to, they won't have to pay more to cross the bridge next year. we're seeing some of the tolerates and things like that. this is an example of how the state is dealing with the bridge replacement. what's happening with that, and them biel get to the jerry's question. >> guest: it is reaching the end of the life, 50 years, functionally obsolete, needs

replacing, and it is a massive investment, and, in fact, the federal government is looking at a loan program to repay advanced construction to speed that up. back to jerry's questions, good ones, but the sequester, interestingly, in transportation, there's the highway trust fund that does allow some protection on some elements of the transportation, and i'm not sure how that affected bridge inspectors, but my understanding is that television not impacted by the sequester, but not exactly how many tragedies and collapses we need, certainly, we all said this after the 2007 minnesota bridge collapse of i-35, attempt by congress to increase investment, raise a gas tax, and the chairman, at the time, tried to advance a bill, and those didn't go anywhere.

i'm afraid we're going to be facing more collapses and tragedies if we don't act soon. >> host: we're looking at footage of the 14th street bridge here in the washington, d.c. area. tell us about the nation's capital's bridges? >> guest: washington, d.c. is not among the best, if you will, and the region in general. they are aging. the 14 #th street bridge is a good example. there's many others. you know, if you look in pennsylvania, they have the worst bridges, and they are trying in pennsylvania to fix, and they got weather, both in terms of winter, but in terms of just the terrain that they cross. oklahoma, interestingly, and one of the problems you got in oklahoma as we see now with the weather and the horrible tornadoes, is you get a real scouring effect on some of the sub structures in oklahoma that are a real problem.

>> host: deemed to be the structurally deficient is the 14 #th street bridge, the key bridge. seeing footage of those. arteries to get in and out of washington, d.c.. how many other bridges that you're looking at that might be on the lists are what you consider to be high traveled bridges like the tappan zee bridge compared to remote, rural bridges? >> guest: no doubt about it, most people drive over a structurally deficient bridge in the urban region. if you looked at the sheer volume, you had the bay bridge in san fransisco that collapsed in the earthquake, several decades, and it will take serious investments, and interestingly, the this is a

national interest. they are going to be so enormous and so huge that we're going to need, i think, targeting, let's say, you know, the top 100 bridges because they really are in the national interest in the traffic carry and the economic vitality provided. >> host: from chicago illinois, frank a republican, hi. >> caller: hello. i have a simple question, and i would like to know if anybody monitored the tax, and it's just a waste a money. there's nobody know where it goes? if you go up and down the highway, for instance, you see the same area getting repaired year after year after year. that's all they do. i appreciate if the federal government checks in and see what the states do with all the money they are getting, thank you.

>> guest: it's important to note there's a federal gasoline tax, every state has its own tax, and many of those taxes, the federal tax does not rise over time, but stagnant. that's part of the problem is people drive less and cars more efficient, but, believe me, there is a big under investment, most states gasoline taxes are not keeping pace, literally the transportation fiscal cliff happening in every state at the federal level, and i think the -- where i think we are concerned more in terms of expendsture of funds, sometimes is where politics kind of trumps some of the most needed projects that can happen all over the country in different places. sometimes we want to build new things rather than fix existing infrastructure. that's a real problem. i wouldn't say that, you know, other than those two examples, this money's really wasted, we

went from first globally in infrastructure investment to 15th. i mean, the u.s. is really falling behind. >> host: james corless, director of transportation for america, and there's a list of the states and british columbia, the busiest structurally deficient bridges. illinois, the last caller, they are both i-290 in cook and depage. let's go to john in virginia, democratic caller. hi, john. >> caller: good morning, thank you for taking my call. i think the gentleman already said what i was supposed to say. the notion is usually is when we say that the government is our problem, and we don't want to invest in the country, but there's something wrong with that picture because there's a lot of politicians who use the government attacking the government. they don't want to create in addition. bridges are part of the country. the more bridge, the more

people, the more country gets better. our bridge is just a matter of time. he mentioned minnesota's bridge. there's some bridge that i really, when i'm drying, i don't know what the bridge is going to collapse. it could be -- we are behind, behind, and we -- the -- we don't invest in our country because realistically, there's the people out there who say the government's don't create jobs. the government does create jobs because there's a lot more contractors who get a job, and we'll create more jobs in the country. i just want the answer, and thank you for taking my call. >> guest: look, there's a notion that we think, actually, a lot of the roads and bridges and transit systems are paid for, built back in the 1950s, by the previous generation, and we don't have to pay for them anymore. in fact, the bill is seriously coming due.

this is a bipartisan issue. go back to the highway act, president eisenhower, and, in fact, the last time the federal gas leap tax was raised in 1990 was a republican president. it has traditionally been a bipartisan issue, and we would certainly want to and hope that we can get bipartisan support for increasing investment at the federal level in transportation, especially to fix what we any are some of the most unsafe conditions out there including bridges. >> host: one from twitter asks how do other country's bridges compare to our bridges? >> guest: great question. we know we are falling behind in infrastructure in general. it really varies country by country. you know, one thing other countries that is interesting is while we rely on a gasoline tax, and we've done that historically for a hundred years at the state level, other countries, actually, take infrastructure money out of the general fund, and we do see much higher levels

of investment in more of the developed countries. that said, we're also now seeing developing countries actually leap ahead of us in terms of using technology, looking at innovative ways, not just to fix bridges, but to build public transportation systems. again, i think, we got some serious problems on our hands in terms of other countries passing us by. >> host: pittsburgh, kansas, don, independent caller, welcome. >> caller: good morning, i went to your organization's website and looked up things, and, you know, there's a changing mix of transportation now, the amount of miles driven per person is falling, gas tax revenues going down, and how do we integrate, how do we integrate this into the planning in deciding what to do? thank you. >> guest: well, excellent question, and it's exactly, really, what our coalition is set up to do. as i said, we believe we got to fix the 20th century

infrastructure in the country that's falling apart. we also need to be smarter about how we plan a 21st century infrastructure. as you say, the demographic shifts alone, young people are driving less. they want options like public transportation, walking, biking, that's very good because those things actually, over the long run cost less. also, seniors and boomers are retiring and looking to downsize , move to more walkable, either urban or suburban communities with more options, living longer, shouldn't be driving that long, and, so, in many ways, we have to do these things making sure the existing infrastructure is safe, but be smart about how we think about providing mobility for the people in the next couple decades. it's going to look different than the last 40 years. >> host: congress passed a bill last year, did it address the bridge repair issues? how did it compare to past? >> guest: interesting. so, you know, and we workedded quite a bit on this legislation.

there was talk of a 30% cut in federal funding which would have been devastating for what we talk about this morning. there was a two year bill, a short bill, usually six years, flat funding, the bill increases money overall, and no increase in sort of the gas tax investments, and the one thing they did among others in that bill was eliminated the bridge repair program that was specifically dedicated to fixing bridges, and really gave more of a broader blank check to states. there are exbility -- accountability and performance measures in the bill we hope provide more transparency about whether the problem with the bridges is better, but time will tell. >> host: talking with james corless, director of transportation for america. this week's "your money" segment is looking at bridge statement. karenments a website of problematic website throughout the country or in the state?

>> guest: absolutely. our website,t4america oirg lists every bridge in the united states, 600,000 bridges, a red or green symbol saying if it's structurally deficient. those are numbers about to be updated so stay tuned next couple weeks to give folks some new information, but that's -- type in the zip code and see exactly where you live and how the bridges are that you travel over every day. >> host: how do you make decisions about how you travel? you talk about those terms, "structurally deficient," not suggesting that the bridge is about to collapse, because you said, if that was the case, the bridge would close. do you make decisions about how you travel based on what you know about bridges? >> guest: interesting question. i make my decisions about how i travel in terms of where my kids have to go on the weekends, getting from point a and b, but i know enough about this researching it that i don't feel

that a structurally deficient bridge is unsafe. that said, you know, i do think that we are in danger of having more washington i-5 bridge collapses if we are not careful. frankly, i feel much more uneasy when i cross the street sometimes. we do a lot of work on safety issues, pedestrian safety, vehicle safety, so i don't go out of my way to avoid deficient bridges because i think that, you know, deficient does not mean unsafe, but i do, absolutely worry very much about when and where the next collapse is going to happen. >> host: from georgia, bill, a democrat, hi, bill. >> caller: hi, mr. corless, i'm a little doubtful about a bunch of the stuff you're saying, and i'm sure bridges should be fixed, but the united states is not europe where we can have a transportation system like europe. as far as private capital, building bridges, pam overseas with the tax havens, they could

do a lot to help, but a bigger problem is states usually build roads, and in georgia, we have a company all over the state building bridges, and i'm sure they can't do bridges, roads, and everything else, cw matthews here, so they want toll roads in the area, and they widen roads, pay money, make us safer, and, you know, people are still going to drive. if you get off public transportation, a half hour in the car will take you two hours by public transportation. thanks guys, love the program. >> guest: we have a exraition of the united states and europe, and asia is doing amazing infrastructure, and airports in china looks like something we should try to emulate.

i don't think it's right to say that we can't be as good add other countries. certainly, we don't have to -- we need a much more important means of getting to point a and b as population ages, but, also, a lot of young 20-somethings looking for options doesn't mean it works everywhere, but, twaim, in cities like atlanta and other places, there's an effort to try to figure out how do we build a more comprehensive transportation system that provides more choice. that could be a bus, trollly car, a ride in the vehicle because you use technology and do ride sharing or car pooling, and i think the future looks very, very different than the past, and we limit ourselves by thinking we only know what we see in front of us in terms of the transportation system. >> host: let's look back at the 2007 collapse of i-35, the

bridge in minneapolis. what did we learn from that, and what happened? >> guest: yeah, the i-35 bridge collapse in minnesota was a structural defect, something called plates, a number of things going on at that point with that bridge collapse, and it was not designed for the loads. they were doing construction. they had heavy equipment on the bridge, but really, when it came down to it, it was a design of these plates that were flawed. again, it was a very particular thing that i think we learned in that case. i'm afraid, though, we didn't learn the bigger lesson of what it means for the infrastructure. it was not the wakeup call, frankly, a lot of people thought it should be. >> host: cheryl in new york, pat, a republican, president, good morning. >> caller: good morning. i have a question. i am concerned about our bridges and all our infrastructure in

general, but what i'm mostly concerned about, and i have a question for you, would you please answer it for me? >> host: what's the question? >> caller: my question is that i watch c-span every morning faithfully, and i hear different callers call in periodically about the 9/11 building, and i'm wondering why does c-span have a policy of not wanting to answer any of these questions? because when a person mentions this, you either call them some conspiracy person, or else you deflect them with a different question so that the guest doesn't have to answer, and i'm wondering why, is this a policy c-span has? >> host: no, pat, it's not a policy at all, and sometimes we stay op topic if we have someone on talking about a specific thing, but it's not a policy, and we invite all topics.

sometimes callers say they talk about one thing, and they talk about something else when they get on air, but we welcome the opinions and thoughts. did you have questions or comments for james this morning? >> caller: well, in terms of the bridges collapses like the one you cited about minnesota, there was building 7 that collapsed without a plane hitting it. i think many families and supporters are trying to get an investigation about why the building would just collapse. i wonder why no one will answer these questions for these people. >> host: we have, actually, had people answer the questions on this program before. james corless, did you want to weigh in? anything relate to the infrastructure that you can comment on? >> guest: keel -- i don't know enough about the exactly what happened on the scythe, but another tragedy last fall was superstorm sandy, and

that's what i was thinking about in terms of how that overwhelmed our infrastructure. the notion of resilience in infrastructure is one, again, i don't think we are as prepared for as a country. you saw what happened in the transit system, the roads and bridges and airports are at sea level in most places on the coast around the country. we are going to be increasingly overwhelmed with weather-related events and needing to figure out how we can invest in more resilient infrastructure. that's whether it's terrorism, whether that's a very real thing, and we are going to have to take it seriously than we have. >> host: louis in mississippi, independent line, louis, what's your town? >> caller: [inaudible] >> host: i need to visit there. i never know how to pronounce it. thank you for calling, what's your comment? >> guest: my question was posted online while i was waiting, but i don't have the website where to go to find

location of bridges that has deefficient ratings and whatnot? >> guest: sure, www. t4america.org. that's the home page. go to the bridge report, and you can find the link to a map, and on that map, it asks you to put the zip code there popping up, showing you all the bridges that are either deficient or not deficient by the red or green symbol. >> host: and let's look at the state of mississippi where the most well traveled sufficient, structurally deficient bridges are in mississippi. that's in warren, covington, and warren is i-20, and covington is i-49. do you know those bridges? >> caller: i'm in southwest so i was concernedded about lincoln county on u.s. highway 51.

>> host: okay, thanks, louis. >> guest: again, puts in the zip code, easy to use, and find what that looks like. i'll tell you that's information's about a couple years old now, and if you wait another couple weeks, we'll be updating that with the latest numbers. >> host: jennifer in ohio, democratic caller, hi. >> caller: hi, how will you today? >> host: good. >> caller: good. i have a couple comments, and then a questionment i'm terrified of bridges so when i travel, i usually take the back roads and try to stay off the bridges, and i'm ashamed that boehner's from ohio, they have not passed an infrastructure billment i mean, it's going to be horrible if another bridge falls, and i hear of the bridge going to mexico. is there a half structure sticking out someplace? i didn't know about that one,

and who okayed that bridge? >> guest: i don't know about the 96 million dollar bridge going halfway to mexico. i can tell you that we talked about the transportation bill last summer, so-called map 2 # 1, the two-year bill. that was speaker boehner in the house, majority reid in the senate that got together to pass that bill. you know, again, i think we would say about the bill it did not go far enough, did not invest enough or go long enough, and people in congress know that. we are worried, though, that we'll come back and see a debate happening in congress that perhaps could suggest the federal government could abdicate responsibility and perhaps not invest anymore, leave it to the 50 states, and that would be a disaster if we went that route. >> host: keith wants to know on twitter, where's the stimulus money to fix roads and bridges, and how much of my money do you want to fix the bridges in dc? >> guest: ha, i can't tell you

in dc, but you just cited statistics in dc where we need some funds. the stimulus, i know the stimulus is somewhat controversial, broke down by party line, but saying this, looking at the statistics, we have actually seen an uptick in the small one, not nearly enough, but in the bridges getting fixed, and we believe that's from stimulus money, but let me -- i also will say at the same time, we can't do the one-off stimulus investments. we need something that's long term, that's permanent, and, again, it's a fiscal cliff in transportation. we are looking at the highway trust fund going bankrupt next year if we don't do something. >> host: james corless, transportation directer for america. florida, independent, you're up. >> caller: hey, how you doing? >> host: good. >> caller: i happen to be a former road and bridge inspector, and as of right now, i'm in the transportation

business, and i own class a trucks, and i pay 550 a year on each one of those trucks for federal highway heavy use tax. now, i wonder how many trucks of class a at that $550 there are in the united states, companies like creek carriers, have, i believe, 10,000 trucks and 20,000 trailers. ..

certainly it is not just the federal government. there are other fees and taxes placed on vehicles and tires that go into the federal highway trust fund that i think this is really, in many ways a simple problem of math. interestingly, bridge age is not unlike people aged. when you get to 65 you want to retire. most of our bidders' right now, average ages of 43 years. in sin year's one in four bridgeses' is going to be 65 or older. you just simply built and world-class infrastructure in the 50's and 60's. it is -- the time is coming untucked fix or replace that. we have not been doing the up people need to do. that bill will be larger than we hope. when the we would not -- will be paying in one way or the other is what i would be saying.

>> map 21 for bridges and tunnels consists of four primary programs. surface transportation, also highway safety and programs and an air quality improvement. mitigation issues, and we see some of the price tags into the future, 37 half billion dollars in 2013. a little higher in 2014. why these programs significant and what to do? >> they are significant. the national high performance program was a program that actually collapsed some smaller programs including the dedicated bridge repair program. we are pretty concerned about what will happen to that money as it really will go to the most unsafe bridges. the other thing that happened also in map 21 is important to understand. there were all lot of local bridges. some of your callers have referenced. they connect smaller towns and communities. if those bridges get posted on

weight limits or are closed and there is no other way around for dozens, if not hundreds of miles sometimes. that can really cripple a small, rural community. map 21 actually restricted some of that money being spent only on the biggest bridges on the biggest highways and took away some of the flexibility spent on the small routes. again, we are pretty concerned about exactly what that will use >> and we mentioned earlier the bridge collapse in washington state. there are still ramifications' happening. the new york times tells us that about 70,000 vehicles use the bridge daily with traffic deterred in burlington, washington state that drew shoppers from canada and seattle struggling for business with sales down 50% to 80%. republican from massachusetts. hi. >> caller: after that staggered river bridge collapse,

online nuys of postings about what the total cost of repairing all the bridges in the country might be. it seems to me like it was a figure that was a heck of a lot less than what the cost of one weapons program, mainly that comes to my mind, the f35 by airplane. figures recently thrown around that that would be $400 billion, in the neighborhood, not including cost overruns, and we all seemed to know what happens with some of these kind of programs. i am wondering if it is just a matter of priorities to a bigger extent and that if the cost of repairing all the country's bridges. i just -- your some of these big figures being turnaround. you have to think that it is a

lot less than some of the postings i saw on the web about the cost of repairing most or many of the bridges in the country. certainly al a lot less than what i just quoted on that one fighter plane project. thank you. >> short. one of the figures, the federal highway administration has come about 70 billion to either fix or replace the nation's deficient bridges alone. actually if you think about the price tag of things, the coalition tries not to get into other fields are say that we ought to have higher priority than health care or defense, but i will say that we think that transportation is far too low on the nation's priority list. it is to be much higher, and the investment is not just -- it is a bill that is come due. it actually really is about building a strong 21st century

economy. is not just about short-term jobs. sometimes it actually is about turning folks for careers that can last a really long time and transportation. these are good, middle-class jobs, if you can turn folks to get them. so there are just multiple economic benefits to doing this right. >> tony brings up the issue of state for is the federal government which he touched on. if you can elaborate, doesn't the state share the responsibility for their own roads and bridges? he says that the fed should only fix the interstate. >> and again, interestingly, there was a big debate in 1956 with eisenhower and congress. should this be a federal program? defense raised the money. should this be a state program. it really is a state program. a federal a program through the state. the states are in the driver's seat. the federal government raises the gasoline tax, provides money, and helps the states. does have more oversight than

pot holes on interstates and local roads. i would caution anyone not to think that the federal government is only about investment and long distance travel. much of our problems now are around smaller trips, ingestion of metropolitan regions, and clogging, you know, these economies like to washington d.c. and the atlanta and chicago and los angeles, moving freight through those. it takes longer to move a freight train across chicago than it does to move from the port of los angeles all the way to chicago. you have these bottlenecks, some of these real this functional problems happening not on our long distance travel, but right in the middle of some of our major metro areas. >> on twitter, how things like temperature affect stress points a bridge is? what are some of the factors and create real where and tear on the nation's bridges? >> sure. again, this is interesting. if you could florida, they have some of the better bridges in the country, partly because they have some good programs to

reinvest. partly because they don't have to deal with the weather that pennsylvania or ryland or north dakota has to deal with. beverly is -- it is really that freezing and unfreezing and freezing and unfreezing. those things really take its toll. we have to be cognizant in a federal program that some states really are up against the wall much more than others. >> director of transportation for america. thank you so much free time. >> on the next washington journal reelected foreign-policy with republican representative christopher smith of new jersey, chairman of the subcommittee on africa, global health, human rights, and international organizations. it will also be joined by a member of the house ways and means committee, a connecticut democrat to take your democrats about congressional oversight of the irs. you can also call in to talk with christian science monitor staff writer mark clayton about his article on terror watch lists. washington journal is live on c-span every day at 7:00 a.m.

eastern. >> book tv is live all we can from the chicago tribune printer's row let fest saturday starting 11:00 a.m. eastern. >> next, an oversight hearing on the irs starting of conservative groups. we will hear from acting irs to match tough commissioner danny were filled and treasury inspector general for tax administration. this house appropriations subcommittee hearing is chaired by florida congressman andrew crenshaw. [applause]

[inaudible conversations] [inaudible conversations] >> well, good afternoon, everyone. this hearing will come to order. first, let me say that it gives me no pleasure to convene this irs oversight hearing today because the facts and circumstances that bring answer are enough to shatter anyone's faith and trust in government. targeting groups based on their names and political beliefs is both chilling and outrageous. a voluntary tax system depends on the fair and impartial collection process. because as chief justice marshall once said, the power to

tax is the power to destroy. here is what we now. in an arrogant an absolute abuse of power the irs office in cincinnati singled out groups and individuals based upon a political philosophy for extra scrutiny. they were harassed, intimidated, bullied. this went on for almost three years, no one spoke up. we know that. there is a lot of we don't know. it is time for the irs to come clean. it is time to talk about what happened, how it happened, who came up with this plan and why, how widespread were these abuses , who was responsible, who will be held accountable, and how we make sure this never happens again? because more than $10 billion, hard-earned taxpayer money gets appropriated every year to the irs to conduct its operations. before congress spends one more

dime on the irs, we need to know how it spends the money it receives already. we need to know what safeguards the irs has in place or plans to put in place to make sure the funds are used in a legal and a proper way and are not wasted, poured down the drain like we just learned. that is our we're holding this hearing today. i have heard some say that the irs has been underfunded and using names and political beliefs to target these 501(c)4 for rochester knew was just a short cut to do with the growing number of tax-exempt application spirit these shortcuts started in 2010 when a number of data and applications are basically static and the total number of applications for tax exemption were going down. and the funds appropriated to the irs in 2010 were not only a record high amounts, but it's also the second consecutive year that funds appropriated the

virus actually exceeded, exceeded the budget request of the ira's. as a dozen dissing counter intuitive or strange that the irs had less work to do and more money than ever to do that work that they would decide to take these shortcuts. in addition to listening abusive letters and has been for unnecessary information from these advocates is not sound like a shortcut to me. and so now we learn of the flagrant waste of taxpayer dollars on conferences and videos. the money came, in part, from the unused funds from the irs enforcement budget. at the same time, the irs was asking for more money for enforcement so that they could catch the so-called tax cheats. now, for 2014 the irs budget request is for $13 billion. that's a full billion increase over the current year of which

$440 million is to help implement this so-called affordable care act, the so-called obamacare. now, even before the inspector general's report was released, any kind of increase of this magnitude was going to be a challenge for some very basic reasons. number one, there are a lot of objections and affordable health care, a lot of objection to obamacare. the subcommittee has limited money. we all know that the reader looking at this breach of trust that we are talking about today in terms of the scandal. now we have this newly discovered incredible waste. we're going to have to think very carefully about the amount of money and we provide to the irs. nevertheless, i think we know this, we need tough find his agency's -- accurately answer questions from businesses and individuals about tax matters , produce tax forms and instructions that promote compliance

. hazmat to process tax returns in a timely manner and it also asked to investigate the criminals that are committing textron . however, we cannot in good conscience, continue to provide hard earned taxpayer dollars to the irs and have them use those funds to abuse the rights of american citizens. and we cannot continue to provide the irs with money and watch them so flagrantly waste as dollars. today we will take testimony from acting commissioner of daniel werfel and treasury inspector general jay russel george, and i hope you will hear how we will get to the bottom of this and prevent this from happening again. here are some things i can tell you all ready. we will insist that the irs implement all nine of the recommendations in the inspector general's report to the

satisfaction of the inspector general. we're going to require more frequent and in-depth reports from the irs about how they allocate their funds among their different offices and we are also going to demand that the ira's to mr. to the committee that the funds provided by this committee are used without a hint of partisanship or ideology when it comes to the application of tax loss. this hearing is inspector general's second appearance before the subcommittee this year. we appreciate your willingness to meet with us again. this is the first congressional hearing in his new role as acting irs commissioner. want to congratulate you, if that is the right word, on your appointment and thank you for taking this assignment in a very difficult time. we appreciate your service. finally, let me say that this committee expects the witnesses to be candid and forthcoming, if additional information about the practice of targeting or other topics discussed your today comes to light after the hearing that we expect jay russel george

and daniel werfel to keep this committee apprised of the latest of permission. now, one everybody to have a chance to ask questions today and everybody to have a chance to have those questions answered, going to keep strict time in order to keep the hearing moving. we want to get as many rounds of questions as we can't do it right now would like to recognize the ranking member, mr. serrano, for any opening statement he might like to make. >> thank you, mr. chairman. i too welcome our guests to this hearing today. i think all members of congress, democratic and republican were appalled by the inappropriate actions taken by the irs in determining how to examine the tactics and status applications of various groups. the delays in processing applications, the criteria used for further review, the information asked for indicates an organizational failure that is simply unacceptable. the irs is supposed to administer our tax laws in a

fair and impartial manner. anything else and the agency loses the confidence of the american people. the irs has not help the situation with the seeming lack of forthrightness. with congress on these issues. in march of 2012 this subcommittee was told in no uncertain terms that the irs was not targeting particular groups for further scrutiny and that there were several safeguards in place to prevent bias ton fair examination policies of 501(c)4 organizations. both of these answers were terribly wrong then and a terribly wrong now. while the impression we have now does not indicate that the commissioner believes these responses to be anything less than truthful at the time, most subsequent effort was made to ensure that this committee new that there was more to the story , especially in subsequent months when their of the irs

became aware of the problems. in other words, when you folks at the agency knew that things had changed and were not the way we were told, no one came back to tell us. this past weekend with all the press reports about excessive conference spending at the irs, the lack of oversight and accountability in both of these areas seems to point to a larger cultural issue of the irs. many of these issues have been well documented by the inspector general in several committee hearings of the past few weeks. today we as the next question, what do we do now. i'm not sure we have an easy response. we clearly need to reform the process by which 501(c)4 organizations are chosen for further review. many to provide more guidance into what is and is not allowable for 501(c)4 organizations and the greater accountability in the irs management structure to ensure

safe kurds are in place to prevent this type of behavior. we also need to do more research the current report provides us with important analysis into the problems, but i was struck by how much more we need to find out. we all know that someone, one-third of the organizations that receive further scrutineer were chosen for their review based on the organization title. when still done know how much, about two-thirds of the organization called upon the process. beyond the recent incidents and remember that the same complaints were level with the irs during the bush and administration by groups that were opposed to the war. clearly this is an issue that span the number of years, and this latest scandal is only the most recent one that we know about. i think we were all benefit from a longer and more in-depth look at the actions within a tax-exempt and government entity

provisions over a number of years and the number of the ministrations. we need to have a serious discussion about funding levels. the subcommittee has been given an allocation of 17 billion for fiscal year 2014, which is almost 3 billion below the current sequester impact. and utterly this is going to result in massive cuts to the irs and many other affected by many other federal agencies. the conference spending issue comes to mind. the ira simply cannot sustain itself with this overall funding level. although i am certain there are some who really view this as a good step, i disagree. there is no clear way to promote more scandal than by cutting funding that could be used for oversight, training, and reform. at the level of the subcommittee is funded right now we are just asking for more trouble at the irs and elsewhere.

lastly we need to have a conversation about why we allowed groups who are primarily involved in politics to have a special tax advantage status. i think it is clear that we have a number of groups on both sides of the political spectrum that have abused their tax status as either 501(c)4 or four. freedom of speech certainly does not require these groups to beat tax advantaged. we need to ensure the integrity of both our tax system and our political system. the current practice allows abuses from both. one step we should consider is to return to the previous 501(c)4 application which until 1959 were required to be operated exclusively for the promotion of social welfare. this will insure that organizations could no longer take advantage of the tax code in order to engage in political activity without the

transparency required by a campaign finance law. as i said earlier, none of these questions have an easy answer, and i hope that for today after we look at the report, after we hear the answer to the questions we can begin to move in the proper direction. let me just end up a very personal note, mr. chairman. i am second to no one in this congress and asking for more funding for the irs. and so it hurts me both as a representative of the american people, a member of this committee, and personally that what i and others stood to support the irs, it was not doing what it was supposed to do i don't care who the group's work, no one should of been targeted, no one should have been singled out for any bad treatment. that is not the way the irs should behave, and that is of not aware kutcher should be age. thank you, mr. chairman. >> thank you. we're joined today by the chairman of the full committee. like to recognize him for any

opening statement to my make. >> thank you. thank you for hosting this session. we want to think commissioner daniel werfel for making your first appearance on the health -- the hill. mr. george, thank you for being here again with this. i want to echo my colleagues deep concern about the targeting scandal and other inappropriate spending at the address. the irs is -- has committed grave violations of the public trust that should give all americans cause for deep concern . today we are discussing at least a threefold misuse of public funds. it is our duty as appropriators to get to the bottom of any misuse of federal dollars, particularly as the subcommittee draft the bill, they will find the irs for the next fiscal year

the alleged targeting of conservative organizations applying for tax-exempt status is a shameful violation of the intent of the constitution. i'm deeply offended, as i'm sure all americans are at the notion that the federal agency can somehow pass judgment on an entire group of people simply based on their political affiliation. this activity is even more egregious because the agency of the jerez has such power to ruin the lives of every american. we will not tolerate another political analyst. having in enemy last harkens back to a dark page in our past. the arrogance of power that we have seen from those involved and this instance is deeply,

deeply disconcerting. furthermore, i am absolutely appalled at the apparent waste of taxpayer dollars on frivolous conferences outlined in mr. georges forthcoming report. in no way, shape, or form is this kind of access ever pray. this bureaucratic largess is even more unsettling as we face budget shortfalls across the board in critical areas of government, including our own national defense. it seems we have a new misstep every day at the address. i am very troubled at what may come to light next. so we have to take every step possible to figure out how we can stop this kind of abuse in its tracks. mr. commissioner bud black,

you're the man. we are in the middle of some very grim budget types. we simply cannot allow the address or anyone else to waste precious tax dollars on improper practices, maybe even illegal that treat americans and a cool for any reason or on frivolous activities or improper tax refunds of which i'm told there are some 13 billion. when we provide you with more than 10 billion annually to fill your duties, we expected to spend it wisely and effectively. commissioner daniel werfel by now you already publicly stated that these conferences were inappropriate use of taxpayer dollars and that you intend to tap root out any other inappropriate behavior at the irs. i hope that this committee works with you to review how we can

prevent spending like this from ever happening again. mr. chairman, we may want to consider putting conditions on your funding and allow us to monitor your agency's compliance with proper practices. this committee has done that before, and we very well may be in that mode again. my committee already has and will continue to enact tough measures in oversight and other agencies as we did with the gao to root out this kind of excess and abuse. if it takes legislation to stop these latest misguided endeavors , so be it. that is what to do. this agency allegedly and independent agency should operate in and nonpolitical, fair way to every american. that rule has been violated. we look forward to your

testimony in your answers more importantly to member's questions to help this subcommittee provide the vigorous oversight necessary to prevent bad actors from running amok. thank you, mr. chair. >> thank you. now i would like to recognize mr. lowry, ranking member of the full committee for a remark she might like to make. >> thank you, mr. chairman. i want to join you in welcoming acting commissioner daniel werfel and j. russel george here today. we thank you and look forward to your testimony. i would like to think, again, chairman crenshaw and ranking member of serrano for holding this very important hearing. we know that the irs is the first line of defense in ensuring that hard earned tax dollars of american citizens are appropriately handled. and as my colleague said, i join

them in such shock that news that millions of dollars or unnecessarily spend on conferences, the diaz, sensors , baseball tickets, presidential suites, along with allegations of the irs targeting a large groups for increased scrutiny waste -- raised serious questions regarding whether the irs is properly working for the people. i, like so many citizens, and quite simply wondering, but was the irs thinking? what on earth were they thinking? it is truly amazing to me. i am furious that the irs engaged in is the logical scrutiny which is absolutely unacceptable.

we have a responsibility to the american people to make sure this is rectified and does not happen again. our nation was founded on the principles that freedom of speech and expression, no position or party has a monopoly in a public debate or governments. the irs should never be used for any activities that come close tough partisan or political act. the irs is responsible for evaluating applications of tax-exempt status and frankly has been lost in this debate. a dramatic increase in the number of 501(c)4 organizations will lead to more reviews, but those reviews should never target one part of the ideological spectrum over

others. and in this hearing and know we all want to year what went wrong , what steps are being taken to present -- prevent similar practices in the future. again, i would like to thank acting commissioner daniel werfel and inspector general george for being here today. commissioner daniel werfel, now you have been in this position for a matter of weeks. did not manage the irs or the division in question during the time of these improper activities. so i appreciate your assistance and hope that this hearing helps to get to the bottom of this issue. i think you, mr. chairman. >> thank you. i would like now to recognize mr. daniel werfel. he could limit your statement of five minutes or less would give us more time for questions and will be happy to submit your written statement for the record. >> thank you. chairman, ranking member,

members of the subcommittee. thank you for the opportunity to appear before you today to discuss the work we're doing to try to up -- to chart a path for for the irs. this is obviously a difficult time for the agency, and the public is rightly concerned and upset, as i might, about the inappropriate and nine -- and unacceptable actions highlighted in the recent inspector general's report regarding the 501(c)4 application process. working together i am confident that we can address the problems that exist and move forward with of better and more effective irs with that in mind, and my first few days i have initiated a comprehensive review of the agency and to take immediate actions to begin to address this significant and alarming problems identified in the report. in taking these steps i am guided by several possibles. first time we will ensure that we operate with the utmost fairness and impartiality in administering and enforcing the

nation's tax loss. second, we will be open and transparent with the american people. third, we will operate in close consultation and cooperation with the inspector general and congress. adhering to these principles will ensure that we always act with the best interest of the taxpayers in mind. although additional investigations are underway that will shed further light on what happened with the 501(c)4 application process, i have reached an inescapable conclusion about the behavior described in the ig report, the use of certain political labels to determine how applications would be handled resulted in applications being inappropriately singled out for additional scrutiny. moreover, there was a fundamental failure by an irs management to prevent this inconsistent treatment and insure that it was halted once management became aware.

these failures have undermined the public trust in the irs ability to administer the tax laws in a fair and impartial manner. there must be corrected. the agency stands ready to confront the problems of a kurt, hold accountable those who acted inappropriately, be open about what happened, and permanently fix these problems so that such missteps to not occur again. clearly insuring full accountability for the actions taken and the management failures that allowed them to occur must be one of our first orders of business. that is why there are new leaders at several critical levels of the managerial chain of command. we have a new leader in the commissioner's office and new leaders carrying at the duties of the deputy commissioner for services and enforcement, the commissioner of tax examine government entities, and the director of exempt organizations while this new group is in place

, a critical area where we're turning our attention is the unacceptably large backlog of applications of 501(c)4 status focusing initially on the potential political cases referenced in the ig report that are more than 120 days old. some of these applications are 400 or 500 days old which is simply unacceptable. i have directed my team to submit a plan to me by the end of this week that contains specific milestones for expeditiously resolving this group of cases. i have also made clear that these applications must be examined in a manner consistent with the ig recommendations said that the reviews, while a thorough, are also fair and impartial. i further instructed my team to work swiftly to ensure that all nine of the recommendations in the ig report are fully implemented. i have asked to receive at minimal weekly updates on the progress, and i intend to

regularly update the public both on this effort and the progress being made to eliminate the backlog of applications. i am also reviewing the prospect from of irs operations, processes, and practices to focus on how we deliver our mission today and how we can make improvements in the future. in that way we will develop a better understanding of organizational risks wherever they exist within the irs. for example, in line with the ig reports we published this week on conference expenditures, we must ensure that we continue to have the right controls and oversight in place to prevent wasteful or inappropriate spending and risks in other areas. wherever we find management failures are breakdowns in internal control we will move to correct these problems quickly and in a robust manner. we will report to the president, the treasury secretary, and the public by the end of the month about our progress on all of these efforts. we have a great deal of work

ahead of us to review and correct the serious problems that have occurred at the irs and continue the important work of the agency on behalf of the taxpayers. in the few days that i've been at the irs to may have already become clear to me that this agency is populated by thousands of dedicated public servants who are strongly committed to carrying out the agency's mission. it is an honor for me to serve alongside them, and i am confident that together with congress and other external stakeholders we will address the current challenges and move forward with the indispensable work of this agency. mr. chairman, ranking member, this concludes my testimony. i am happy to answer your questions. >> and i will turn to j. russel george for 80 opening remarks he would like to make. >> thank you, sir. chairman, ranking member, members of the subcommittee, thank you for the opportunity to discuss our audit recommendations concerning the

internal revenue service's treatment of crude supply for tax-exempt status. as you know, our audit was initiated based on concerns expressed regarding text their allegations that we -- they were subjected to unfair treatment by the irs. you confirm that the irs started specific groups applying for tax-exempt status. teleprocessing of the group applications and also requested unnecessary informational from these groups. to its credit, during our audit the irs took some actions to address these problem areas. the irs corrected the inappropriate criteria for selecting applications for additional scrutiny as potential political cases in may 2012. the revised criteria focused on indicated in significant political campaign intervention, not on names our policy positions. these revisions will -- were still in place in december 2012 at the end of our audit field work.

the irs also put new to controls in place by having exempt organizations headquarters in washington d.c. involved in reviewing all criteria, it including the lookout for the listing and are reviewing all letters requesting additional information for potential political base. however, we identified other areas needing improvement. we reviewed to statistical samples of the internal revenue code section 61 501(c)4 applications and estimate that the determination unit specialist did not identify more than 175 applications with indications of significant campaign intervention that should have been referred to the team of specialists for review. furthermore, of the 296 potential political cases were reviewed, almost one-third, 91 cases, did not contain indications of significant campaign intervention in the case file.

as noted, we made nine recommendations in our report. the irs should formalize this new requirement for an exam organization executive to approve all criteria on the lookout listing, the irs plans to incorporate this requirement in its manuel by september 30th of this year. the irs should require the specialist document for specific reasons why applications are chosen for review for potential political cases. the irs informs us that it would review its screening procedures and determine what documentation can be implemented by september 30th of this year. the irs should develop a process for formally requesting assistance from the eggs and organizations technical unit to ensure that requests are responded to timely. the irs indicated that it would develop a formal process by june 30th of this year. the irs should provide oversight to ensure open cases are

approved or denied expeditiously the irs agreed to a closely oversee the remaining open cases as of april 30th of this year. however, it did not provide a date for completing the cases. the irs should recommend to the department of the treasury that guidance on how to measure of the primary activity have the social welfare organizations be considered. the irs agree to share this recommendation with its chief counsel and the treasury's office of tax policy by may 3rd of this year. the irs should provide training and guidance in four areas. first, properly identifying applications requiring additional review of campaign intervention activities. second, processing applications for tax-exempt status involving potential campaign interventions . third, understanding what constitutes campaign intervention. fourth, requesting additional information on how to word the questions.

the irs plans to develop a schedule by january 31st 2014 to provide this-the recommended turning. in closing, the irs still has work to do to resolve these troubling allegations and to ensure that they do not happen again. we plan to conduct additional workers to assist the irs progress. we also plan to review how the irs monitor social welfare, agricultural, labor, and business league organizations to ensure the political campaign intervention does not constitute pat -- that primary activity. also continuing to look into whether any violations of the internal revenue service restructuring and reform act of 1998 have occurred and if any inappropriate influence caused the change in criteria and the unnecessary questions posed to applicants.

thank you for the invitation to provide my perspective on this issue. >> thank you very much. as thank you both for your testimony. we will turn for questions for the members of the subcommittee. i will recognize the members in order of seniority who were here when the hearing started. it up or recognize those in order which they appeared. we will go from side to side. let me start out by asking you, it's good to hear your perspective because you're the new guy. yet barely been working on the weekends. in another 18 days your expected to give your first look at your 30 day review of what is going on here. i think we have all looked at the facts and recognize that what has happened here is really shaking the trust of the american people and the irs and

its ability to be fair and impartial. as i said earlier, i think you have to have a fair and impartial agency is going to collect taxes when you base the collections on volunteerism, people voluntarily paying their taxes. many to be able to trust the agency that is collecting those taxes. and one of the problems i found is that this went on for some time. yet no one spoke out. now, there is some question, is this some of rhode -- rogue agents in cincinnati? it is hard to believe the someone to step up one day and said, here is a way that we can really embarrass people of that particular flight -- political philosophy. we're trying to figure out what happened. and now you want to figure out what happened. you will conduct a top to bottom review of that. one of the problems we have had is that we never get straight answers.

the story seems to change from time to time. the facts seem to change from time to time, and i think that's why we all want to work with you to find out what happened. most imports mike, we want to make sure it doesn't happen again, and we want to help you, help us all figure out some way that we can restore the trust of the american people in the irs. because, as you know -- and most people are just now realizing, the irs is going to be the face of this new affordable care act. so-called obamacare. the irs will be charged with making sure that people have insurance, not only to have insurance, to have the right type of insurance. when they don't have the right type, the irs is going to be the agency to say we're going to collect the penalty, collect a fine. and so it seems to me that more important than ever before, we are at a critical time and half to do everything we can do to make sure that we let people

know that you can trust the irs, that they're going to be fair and impartial. so let me start by just asking you, do you feel like the irs has betrayed the trust of the american people? >> i do, mr. chairman. i think that is why it thinking about this in terms of my primary mission is to restore the trust. i am hopeful that by the end of this hearing today through the various questions that you ask that i can lay out our approach. but i think it has to start with the recognition that the trust has been violated. it has to start with the recognition that we have to get all the facts out. part of this process of restoring the trust, is a multi step process. he stuck with making sure that you are given those facts out and understanding of who needs to be held accountable for the breakdowns that occurred for the missteps that occurred that led to that violation of trust. we have to fix the problem to be

part of the fact finding is not only to get to the accountability element but to understand the root causes of what cost is pretend to occur because that will help us fix it and put in the right controls and processes to make sure it never happens again. i don't think it is smart to stop there. i think that this type of problem, and when you look at the conference report that just came out, it shows that there are other issues throughout the irs, other control issues, managerial oversight issues that we need to to really look at and start bringing into the public light. i'm planning to work very closely with the inspector general on this to make sure that we have an understanding across the entire agency where the weakness is and how we fix them. it's really not just the inspector general and night. >> i'm glad to hear you say that because i do think that bad news does not get better when time goes by. you're committed and we're committed to trying to find out

what went on and let those facts lead us with elitist. let me just ask you one more question, and i'm glad to hear you say that you do believe that the trust of the american people has been betrayed, because it seems fairly obvious. i want to ask you if you're willing to cooperate fully with these congressional investigations that are going on so that we can find out what went on and, again, restore the trust that the american people need to have. >> absolutely. yet my commitment for full cooperation. >> thank you. now i will turn to mr. serrano. >> thank you, mr. chairman. i'm going to ask you a question that may sound easy. if analyzed it can be a more tougher question that sounds. i can assure you there are many members of congress who would like to map out the future of the irs. you are not one of the most popular agencies. you never were. and so rather than do that, we

in this committee are charged with a special responsibility to allocate dollars and then make sure that those dollars are spent properly. others may just comment on how those dollars are spent. we have to come up those dollars and then oversee those dollars in many ways. so my question to you is, what concrete steps that we on this committee can take to prevent this sort of inappropriate activity from happening again? i'm giving you an opportunity, both of you, to tell this committee what can be done by us to make sure this doesn't happen again. >> of start. acting first holding hearings like this, asking us the right questions to make sure that there is transparency from both the inspector general and the irs in terms of the facts and circumstances that were in existence when this happened. helping us evaluate what the

right fixes are. i have only been there for a few days. when i start to die dig into this issue around how you appropriately set up a 501(c)4 review process, they're not a lot of easy answers in terms of making sure it is set upright. that doesn't mean we won't find them. we will. it strikes me that trying to find those answers just within the irs in an insular way is definitely not the right answer. we have to surface these issues. experts sitting across me right now in terms of the irs and now operates. experts from the inspector general's office and an external and experts that have been looking and evaluating the address for years. many to bring these people together and sort through what the issues are the reasons we are sitting here in front of the appropriators, i think it makes sense to talk about funding. one of the important points of want to make is that the solution here is, in my opinion,

not more money. the solution here in this situation is to understand what controls need to be put in place , what overside, getting the right leaders in place, the right process these in a collective weight and then determining what their resources footprint that is needed to sustain those in an effective way is. if you start with more money, it's the wrong starting point. right starting point has to be what is the optimal footprint or framework for doing this right. then we sit down and figure out what the resource allocation is, and that is what i offer to you as i think the right way to analyze the situation. a very open and eager to work with you. >> as our audit concluded, what happened in this instance was the result of gross mismanagement of a key program, a key function of the internal revenue service. that said, i associate myself

with the comments that the commissioner indicated. i would add to that something that chairman rogers indicated, conditions a funding, regular reports to the committee's jurisdiction in this instance the house appropriations committee for the irs to regularly report how they expanded their funds. of course the oversight responsibilities that the inspector general's office had in addition to that type of activity. >> so you both would welcome or not oppose that deeper% load by the appropriations committee in this particular case? >> it is very important that occurs. >> and when you say gross mismanagement, was that mismanagement as reported in the past for some have said one that targets groups based on what those groups believe in or do you believe that it was so

mismanaged that it did not care who it held up or who it asked silly questions of. >> sur, for me i could not give you a definitive answer at this time because if there is an ongoing review of this matter by my organization and others obviously on this, but there is no question that there is a little above in this matter. >> thank you, mr. chair. >> thank you, mr. rogers. >> i'm beginning to like you. that is music to my years, and i'm sure they feel the same. in addition to the $50 million for conferences over the last three years, the press is reporting that the irs paid out more than $92 million in bonuses during that three year timeframe and within that some key figures in the current scandal cut

bonuses. sarah hall ingram, the former commissioner of the tax-exempt and government agent division which was responsible for overseeing the 501(c)4 applications. receiving a bonus of $103,000 plus which increased during the increased scrutiny of these conservative groups and in addition to that she was promoted nafta head of the irs involvement with obamacare. joseph granville, former deputy commissioner of tax-exempt, three bonuses, 83, almost $84,000. director of the exempt organizations division, given

$42,000 in bonuses during that time, and all of these had to be approved by the president, isn't that right? >> my understanding is there is a small subclass of bonuses, presidential rank awards that are approved by the president, but they're relatively small in number, ibm couple hundred throughout the entire government the larger amount of bonuses in terms of quantity are typically approved by the agency had. >> the guidelines say that bonuses over $25,000 have to be approved by the president. so did the president approve these bonuses, these very critical people in this scandal that we are investigating? >> i am not sure to the answer that question. i'm also not sure from the way you phrase the question of the

bonus totals are you articulated were individual bonuses that added up to those numbers or if there was an individual bonus that exceeded 25,000. but that is something we conserve and look into and get back c-span2. >> would you let me know? >> yes. >> now, looking forward, how do we -- how do we set up criteria for the awarding of promotions and bonuses to employees at a time when every other federal employee pay is frozen? >> this is a very important question. as i look at the situation and we see the type of gross mismanagement that inspector general spoke about and a new layer on top of that the existence of bonuses in this area, it speaks to a larger issue that we have within the irs to improve our overall management oversight, and that includes not just making sure that we understand where the

weaknesses are, making sure that people are adequately trained. a release to compensation in fairness, and this has to be part of the review. >> of these people receive these bonuses and opium guidelines were required to be approved by the presence and he did not approve them, should they not pay the bonus pack? >> again, that is a question i would have to go back and talk to age our experts and others. we can get an answer. >> you get back to me on that. >> i will. >> mr. chairman, i would note that my organization is conducting -- we have an ongoing audit on the issue of bonuses paid at the internal revenue service that is due sometime this fall and we will certainly share those results with this committee and with you. >> switching gears briefly, one scandal to another, mr. george, it was your report that the irs had overpaid low-income tax

credits by up to 13 and a half billion dollars in one year, 22 of. when secretary lou was before the subcommittee in late april, i made clear to him in no uncertain terms that this was unacceptable. that sum is more than the entire budget of the irs. what steps are being taken to tackle the problem? >> this is one of the most intractable problems confronting the internal revenue service. refundable tax credits which are credits that can be paid to people who do not have tax obligations, once the money is out the door it is extremely difficult for the internal revenue service to collect it. and then i will defer to the commissioner to define their procedures and policies, but as they conduct a cost-benefit analysis and in many instances it is more expensive for them to go after those who have gained

the system or cheated the system then too, in effect, write it off. we are just talking in one instance in terms of the earned income tax credit, additional child tax credit, among many others. a very, very difficult issue for the irs to confront and a longstanding one, sir. this is something that congress has been looking at for decades. ..

>> suggesting that there are other fixes. >> one out of every $5 of earned income tax credit issued, one out of every $5 was improper. that is not a good record. thank you, mr. kerry. >> thank you. >> thank you, mr. chairman. the commissioner and inspector general. i would like to get a few facts on the record. is there any evidence to date that political appointees at the irs directive order requested or recommended or in any way supported a review of this application based on a particular ideology? >> welcome the answer to your question directly is no from the audit. but that was not the focus of our audit.

>> that is my understanding as well. including the underlying support. there is no evidence of that at this time. >> now, is there any evidence that the white house directive, requested or reported any such a review? >> no. i am not aware of any evidence of that. >> okay, to be clear as of this day, there is no factual evidence that this was a politically motivated review with senior officials at the irs of the white house. is that correct? >> i can honestly say that we did not look at that aspect of it. >> i'm going to have to rely on mr. george. for the most part, i am lying on his added finding an audit work to help draw conclusions.

>> okay, so if that is the case, it seems to me that the reviewing of this application was done by career irs employees who made a series of incredible bad decisions -- incredibly bad decisions, which reflect poorly on management. those who should've known that these activities would have been taking place and put it into it immediately. >> at the end of our audit fieldwork, that is correct. again, congresswoman, this is an ongoing matter. we do not know. we are going to go where the facts lead us, ma'am. >> as of today, can you tell us why they did not realize that there was a problem with their methodology?

is there no routine mechanism in in case to prevent ideological practices? >> keep in mind that once again, when this first occurred and was brought to the attention of senior officials in washington, corrective action was ordered. subsequent to that, the people reverted back to this very inappropriate type of activity. there was a breakdown against management going back to this. it is something that they ultimately seem to have a draft. a subsequent of review will be necessary to confirm that. >> sends the citizens united decision, which i strongly oppose, since it removed limits on independent political donations i corporations and

others in federal elections, scores of new political organizations were created and a record amount of money has flowed in in support of these political activities. this is one of the primary reasons, in my judgment. an increase of 226%. meanwhile, the irs budget has sunk. 226% increase. the rs has a responsibility of making sure that those who apply for this status are primarily engaged in clearly the reviews were not clear. can you share with us as you are

reviewing the process what should be the process to review this as part of the organizations? >> that is one of the recommendations that we have issued an and this for report and on its own. how to undergo this. it is important to note again, congresswoman, that not all organizations who operate like this do so in the event that the irs determinedetermine s whether or not there is a tax liability. they can still operate they would like to. >> thank you, mr. chairman, we will continue this discussion. >> i have to tell you that we are angry about this.

>> as i come into this meeting today, there is a lot that is on my mind. you need anyone to prepare for this meeting. have you spoken with president the president about this? >> i spoke to the president on may 16 or 17 around today. we had about a 20 minute conversation where he articulated expectations for admission. >> he ordered you to clean house and hold the accountable? >> he essentially -- ian secretary jack lew gave me a first assignment. in that plan there were three aspects. the first aspect was getting to the bottom of this and holding

the appropriate people accountable. that is the way that this was going. >> regardless of that, do you plan on terminating anyone or holding them accountable? >> i certainly plan on holding people accountable. >> what is your definition of accountable? >> okay, that is a good question. here's where we are in the process we have in our word that the inspector general provided area that includes reports about mismanagement. the first part of the review is to figure out whether that would lead one -- >> you have if someone has done something wrong would you terminate them? this is in accordance to the refundable tax credit. you said that to someone

knowingly and intentionally did this, yes, you would fire them. so you know that something has occurred here. yet we know that there is a long review process and no one has been held accountable. has anyone else been held accountable? >> if you look at the day the aig report was issued, we have a commissioner for tax exempt and entities and in regards to the organization. >> i think that the leaders that were replaced -- in most cases, they are resigned. >> actively resigned? >> that is a combination.

>> so the this is an accountability? is that what you're telling the american people? >> is this something you are saying that lois lerner is being paid today? >> if you'd indulge me to answer the question remapped yes or no? >> the first stage is based on the fact that we have now to determine who can no longer hold the position of the irs. the second is to determine whether there is any malfeasance. we are going to file this and we do not have this completed review. >> if you do not know that there was malfeasance, why would you ask someone to resign? >> because of the public trust and the failures of management oversight. whether those were motivated by something. >> they were asked to resign to

restore public trust or public perception purposes. >> i wouldn't say that. i would say that when there is a breakdown in management, when there is gross mismanagement, you have to make tough decisions. >> one last question is have either of you asked individuals, who order them to use that extra scrutiny to punish or penalize or deny? the question has been asked by many and it needs answered. >> during our audit, congressman, we did pose that question. no one would acknowledge that direction. no one would acknowledge you gave the directive to be there.

>> you will find out who made this award. >> let me ask the same question in a different way. the accountability is going to happen, but there is a process to it that requires time and investigation. >> that is exactly right. we have to do this fairly and thoroughly. but like everyone ask him i am frustrated as well and i want to ask to emerge quickly. >> it is a complicated process but to ways to get us here. is that correct? >> yes, it is a complicated process. >> as much as the anger exists, without knowing exactly what to ways, it is hard to find people accountable in the correct way.

if you don't know exactly what happened and who did what, it is hard to immediately find people accountable it just is going to take a little bit of time. is that correct? >> that is exactly right. we have to get the facts in a fair way. >> the chairman is talking about scandals and people being embarrassed red you know, it is hard to have shock and also awe. so i get it. this is getting there. clearly this -- i am often asked what the real cost of corruption is. clearly there is a lot of trust. that is probably the greatest

thing. it makes it very difficult we when you don't have the public's trust. let me just ask you this. and i know that your agency is the one that brought the stuff is there some sense that it took too long to get this out and catch the others scandals that are involved here? if we didn't catch it before, how do we know that we can prevent it in the future we may. >> we are the ones who have to respond to this. you can only be proactive in the context of the tax code that the law will allow. unless someone brings your attention malfeasance or what have you. there is very little that you can do proactively to address

it. so in this instance, members of congress as well as media reports brought to our attention allegations that certain groups are being targeted by the irs. an instance of the report that is going to be released tomorrow on conferences, there was a whistleblower within the internal revenue service about that matter to our attention. you can only do so much in this type of circumstance. >> is there any common agreement. >> no, i think it is incumbent upon the public sector organizations to ensure they have the right control of management leadership processes. >> you agree that it should not take a whistleblower? >> that is correct. we should be reviewing this on an ongoing basis to see if they are appropriate. >> i think one of the lessons learned is going to be much more

sophisticated risk management and controls sector within the irs based on what happened here. >> thank you, mr. chairman, can i yield back. >> thank you, sir. mr. werfel, a few and we certainly have our work cut out for us or. >> thank you. >> in regards to the targeting of specific political groups. most of the hearing has been the actions that have occurred. the audits that were put in place. how many americans -- how many groups of americans continue to have their applications delay. how many continue to be held under unjust and unconstitutional scrutiny by the irs of today?

>> that is a question i want answered you as well. what we are doing is initiating as quickly and efficiently as possible a review of the irs to see if there is any common elements of impartiality or other parts that occurred in this particular area. >> not just in other parts. how many groups have applied this status, some of what the inspector general's report had been about over the last two years, now over three years. over the past few weeks, this has come about and frankly sends the irs officials were alerted to this over a year ago, many of these groups continue to have their applications tonight and we talk about this today in this hearing in washington dc. the we are going to hold those

accountable. the irs continues today to deny and lock the constitutional rights of americans. as we sit here at this very moment. there are 132 cases that are in this grouping of potential advocacy. there is new leadership with these organizations. our new chief risk officer that comes from this they plan with

specific milestones for how we are going to knock that out quickly and effectively. >> is this something you can provide today? >> absolutely. >> can you inform us how many groups are waiting over two years have that that application approved? >> yes, i think we have that data is provided to you or not you have any information relevant to this? >> as of december 17 of last year, the 296 that we have identified in the political category, 160, which is 54%, were up from 262 to 1138 calendar days.

then 129 of the 160 open cases that have been open for more than one year as of december 2012. >> people who would not be tolerated. today we had an opportunity to go through the same experiences going forward. we have heard that there have been those who have been

concerned about those engaging in similar practices. are there specific audits for it political activity or any political activity? >> i am not aware of any such behavior. i have initiated a review to answer that very question. and if i find anything that is similar with what is in the inspector general's report, i will make you aware. >> inspector, did you find anything related to this in your review? >> we have not conducted a review in this area. >> thank you, mr. chairman. thank you for your testimony. let me begin with this. some media outlets have been reporting that the irs was targeting conservative groups for political purposes. your report contradicts that claim. could you please comment on if you found any political motivation in reviewing tax-exempt applications?

>> let me respond to your question in the following way. when we looked at 298 -- there were 290 cases that were put into a category for political activities, we were able to look at 296 of them because two of them did not contain enough information. we were able to identify roughly 79 that were definitely put it aside because they had tea party and patriot in the names of the groups. the vast majority of the other organizations were so innocuous that we do not even possible to determine whether or not they work conservative as groups or groups that might be on the other side of the political spectrum. so that is something that we are continuing to look at.

in the instance of the political activity matter, we did not uncover instances of groups that could readily be identified for lack of a better term. they were treated in a manner that the tea party cases were. >> in your report, there is quite a pie chart that shows that the vast majority of groups that were investigated. >> am i reading this correctly? >> you are right because it is not by the title of the organization that is readily identifiable. >> in 2000 and 10 there was a supreme court ruling that allowed unlimited amounts of money to be assembled for a political campaign, many times by secret donors that don't have to disclose. i am wondering if this is

incorporated in our options. if they want to engage in civic life and if they move into donations of campaigns. they could have been operating this and we had many groups that do that. am i correct? this is part of the cincinnati office and why my an organization choose to implement this rather than 527? >> is interesting because they do not have to disclose donors. if one looks at this, and i'm going to ask you for the record, after the citizens united

ruling, how much did this increase? i think the ranking member talks about this. >> i have the number of seaboard applications is 175. and he doesn't follow the 357. >> it is very interesting as trends here. there is not a person of your who doesn't understand what is going on politically in this country. also the hidden nature of what is affecting the campaign today. it is very unlike what many of us face? >> i just want to elaborate. of the 298 that was put into that category, singled in transit for specialized treatment, part of this 501 c-3.

>> what percentage would you guess was 501 c-4? >> the majority were 501 san francisquito canyon's. very interesting. how many, well, how many of the group that you investigated, what number possibly fell into the tea party, 9/11, however that is described, the so-called super conservative group. >> one moment, please. >> there were 11 that were identified under the 912

category. >> why the cincinnati office? >> that is where the unit is housed in the a have the responsibility to do the 501 c-3 >> for the whole country? >> yes. >> in this instance there were a few irs employees located outside of cincinnati. >> that is right, there is a general matter that most of the work happens in this unit. >> i am very interested in knowing if the definition of political end 501 c-3, c-4, if it is inadequate. if there is language in their allowed for a miscalculation. i don't know, but i'm looking at the changes in the law and what

happens to us as a country. the fact that you have had so many more applications in a category. in a political nature, you said 357,000, the additional ones? >> we will get you that information. >> thank you very much. >> sir? >> thank you very much, mr. chairman. mr. werfel, i must tell you that i'm grateful for your willingness to be here. some people would say that they would just run away. >> you mention that you are not

usually in the shock and awe of corruption. you know, competence, missteps to corruption, brinkley always destructive and unacceptable. i will tell you and this could be because i represent a constituency that comes from countries where the government targets people for their beliefs. i think this is worse. as dangerous as it is mentioned that those are, one government targets individuals for their beliefs, this is an affront on democracy. just wanted to see if i was untrendy thought i was exaggerating in my understanding of how dangerous and

unacceptable this issue can be. >> i agree with you. it is completely inexcusable and inherently damaging now that i have been at the irs for a few days. i recognize that this important agency is founded upon the principle of operating impartially. we have failed in the most basic core principle here. it is devastating to us as an agency and to the people of that agency. they are very upset and appalled by this as well. that is a story that has been told. many of the people, and most of the people would articulate this. i one point that i would raise to you, and this is frustrating for everyone involved. more analysis and investigation is going to be needed to understand what motivated, if

anything, what were the circumstances surrounding the. we have to get to the bottom of this. and i think that we can fully better understand the problem. but i agree that it is completely un- excusable and it is a violation of the fundamental tenet of the irs. which the people take so seriously and it's very upsetting. >> i'm not putting words in your mouth, but not only the irs but it is the basis of our country. the you should not fear the government because of your beliefs. >> again, i think you for your willingness to do this. some people are going to talk about funding. i think that is a bit of a joke. yorty mentioned that you don't think the more money is necessarily the way to do it. i think whether it is 220 conferences between 2010 and 2012, state funding doesn't seem to be a problem.

or the bonus is that the chairman mentioned doesn't seem to think that funding is an issue. there are all sorts of different excuses. you now have a choice to make. i am optimistic that you're going to -- because you agreed to take this on, you will make the right choice or the choice is very simple. you can either try to change her story and cover this up, to try to give it a spin. or you can make sure he that you get to the bottom of this. the people are held accountable for this and proposals are made to make sure that in the future, this is more difficult to do. none of that is already starting. but the american people have a clear understanding on this is said and done as to who did and who ordered what and for what reason. to trust the we are going to do the right thing. but the right thing means

absolute transparency. >> we need to be completely open and everything we do. i have a briefing on section 16103. i realize that there are certain -- we are getting the congressional request and i want to push information out as quickly and expediently as possible so we can get to the bottom of this. i'm learning that before we on that information, we have to review it to protect taxpayer information. if we don't get through, that is fine. presidents budget is out there.

with respect to this exempt organizations unite. the point i was making was that we need to -- it would be a mistake for me to ask for more money as a solution. the right answer is for us to figure out what the right process is on the budget necessary to sustain it. it could be the same or less or more. the chairman started hearing by saying how can we give another dime and my answer is let's explore together what is going on in this process and figure out what the right funding us. is. but i can't say that we need more money for that aspect of our operations without working with you on the review. that is what i don't. >> okay. thank you very much. the irs is part of the better of eight years, a lot of inspections is what you have been through.

for me and this panel, your relationship up to the point included the service you expected. there is a relationship between the agency and that we were once part of the irs until they were restructuring and reformatting it in 1998. when not helped us in our current capacity, we retain him of the responsibility it also included the responsibilities with inspector general. >> has ever been an occasion when you talk about the hierarchy, not this gentleman by his predecessor and others that have not been acknowledged or armored were put into effect. >> very few. we take this seriously. >> it has happened?

>> anything along this line? >> no, sir. >> this surprise you? >> yes, very much so. this is unprecedented. obviously during the nixon administration. they attempted to use it in manners that might be comparable in terms of misusing it. i'm not saying that the actions that were taken are comparable. but the misuse of the system occurred some time ago. but this is unprecedented. >> thank you. sir, i don't know whether to admire you for pity you. because you have the weight of the united states constitution on her shoulders. literally. and figuratively. because you said in your conversation with the white house that the first job, job number one, in your words,

restore the public trust. >> that's correct. >> how do you do that? >> well, it is going to be a difficult process. but the best thing i know how to do right now is articulate a roadmap. the roadmap includes several key principles and ingredients. the principles revolve around openness, fairness, expediency, cooperation. soon all of the things that the citizens of the united states have always expected, not just demanded, but in expectation of the government. those are the things that you have to restore. a few minutes ago we asked you about consequences that were part of partial to this whole process. some of whom are still trying to cut federal paycheck.

>> i'm not taking any consequences in this way. >> has the white house suggested there are certain consequences that should be taken off the table for any individual or individuals? those deemed to be involved? >> there is a treasury department and do they ask you to take any consequence was off the table for any of the perpetrators involved in this process? >> no. >> now or known were to be discovered through the investigation process? >> the job is to get the facts and then figure out together, collectively. it is a point in response to the congressman's question. are we going to find similar problems, are we going to realize what happened here. the question is it is a missed date if that process unfolds in

the irs alone. including the issues and concerns about the irs. it is not just within the irs. we are doing and collectively. i would ask the chairman about this. i need to be able to call to convene meetings. to get periodic updates about what we are finding so that we can collectively determine what the right answer is and analyze these facts. as we get more facts, we are going to have to figure out what happened or it will not be an easy analysis but when we can do collectively to are you prepared for the worst possible outcomes? >> there may be a universe of people. a large number of virus and ways caught in the process that has probability. >> i am prepared to follow the facts wherever they take us. i think it is the only way to restore the trust them and i thank you, sir. i know my time has expired.

>> thank you, thank you very much. i believe that we will have time for another round of western. let me start. on one hand i am encouraged by what you say, following the facts were you we. and you want to hold people accountable. but it seems to me that is it is not just this. it you can argue about what was spent on going on conferences and videos. that is gross mismanagement. but when an entire office of the irs somehow begins to single out conservative groups and bullied him and harass them, it occurs to me that that just doesn't happen. that is not bad management. that is something gone wrong. quite frankly, somehow people

started doing this. as i said earlier, nobody spoke up. you know, a lot of people were watching this abuse take place and nobody speaks up and says this is not right. if that is all there is, like somebody just said that there is a plan to do that. that scares me more than anything. the people got together and they were just doing now. nobody steps up and says that this is wrong. but this does happen, ordered somewhere along the way somebody give some direction? because i think that is what accountability is. finding out that someone is responsible. i don't know if anyone came up with this plan or not.

when i hear you say that we just want to kind of uncover the mismanagement and whatever, here is my question. if you're going to be there 120 days, what do you want to happen when you leave 120 days from now? would he want to be able to report us? >> let me start with the following the facts. that statement needs to be backed up. we have inspector general conducting additional investigations, following up the audit. the justice department investigating and congressional oversight. then there is my review with my leadership team are you there are separate reviews, critical to that is making sure that we are supporting one another and reinforcing one another to get this information.

i'm not sure right now, i can give you an answer in terms of what the world looks like in 120 days. but i know that we have already started sending responses and information back to congressional committees based on responses we have received. the justice department is actively engaged in investigation as of today and as of a few days ago. the process is unfolding and israel. what is happening is real. but it is happening and it is frustrating that it's going to take time. but the process is underway. anticipate that that process is robust. i will do my job to make sure. what i want to get accomplished while i'm here is to initiate this roadmap, this plan. talk with you and other committees and the american people about what that roadmap needs to look like.

we have the key ingredients fixing the problem, my bottom line. >> at the end of the day, the best way to stop this what kind of questions are you going to ask? you have all of these people down there that were participating in what is an absolute abuse of power. no one said that this is right. that somehow, someway, we now know that that is what is going wrong. so are you going to talk to those folks and say, how did all of this happened on here. i understand the roadmaps, but it seems pretty simple. either you all decide to do this? that someone stand up one day on a desk or did someone send a memo from somewhere. things like that at the end of the day, we want to find out who

is responsible and i know you do as well. i'm just wondering how you do that, putting these systems in place. it seems like there are basic questions and that is why i want to know what you plan to do and who you will talk to and what kind of questions you ask to okay, let me ask that question and see what we are dealing with. there are a lot of people asking questions. members of congress and i have to ask questions as well to network and the questions are you asking? >> i'm asking my leadership team to evaluate the management breakdowns that took place. i want to understand and initiate processes to ensure the type of control will occur. >> like my nobody on the management team knew what was going on and they didn't say this was right or wrong? >> there are new leaders that have put things in place, including top ranking officials.

i can walk through with you in great detail the plan and the roadmap. part of it involves evaluating the audit report, a lot of good work done by mr. george, that reveals how things are were violated in terms of mismanagement. there are further questions to be asked and the challenge that i have and i want to talk through that challenge is that i have to make sure that i am talking about the work of the justice department and those that are doing those interviews. >> my time is up, but i just hope that somebody made it happen. i hope that we can figure that out.

>> when it comes to gross mismanagement, that is what created the problem. some people have written articles in different places that show different numbers. i have some figures that indicate that the aggrieved or the people that were scrutinized, 26 were tea party or patriots, 76 were clearly conservative at six cannot be determined and 48 were not conservative groups. my outrage is about anyone being targeted if anyone was targeted. i suspect if anyone was targeted, it might've been right across the border. in answer to the ranking member, mr. george made it clear that there is no direction showing or any information showing that anyone even order to that.

this is why you have called a gross mismanagement because people can get caught up in thinking that they are doing the right work. again, for the record, people were the people were targeted, we need to know that. i think we are spending too much time trying to figure out why it was done and who did it. that is where we are wasting time, not necessarily today, but in general in the congress. can you repeat for us again what you said before? is there anything to indicate that this was something that was set up at a larger level was more in line than actually what we know has happened? >> not in this order. once again we are continuing a review of this matter. we aware of where the facts take

us. >> mr. commissioner, you made some very happy and others perplexed the thing is that i don't want any more money. we have an agency that about four called the sec. and i was chairman they were not interested in oversight. that is part of the reason that everything fell apart. i must tell you that if you want to classify me in this way today. i guess it's a liberal i would say, are you sure you don't want anymore money. we don't we do not want any more money. i am sure that is not what you are saying. but please understand that there are consequences to the fact that we are cutting this budget

all the time. your job is not only to find out what went wrong in this issue working jointly and i have to commend you for coming back every time we invite you. one could say, well, you have to do. but you could be sitting there and not smiling at all ever. we do it with great grace. but for instance during the year, we will remind you to go find out and we will tell you to find out and making sure people are not making money overseas. all of that cost money. it has been proven for every dollar that you get, seven are returned when there is no management. what i'm saying to you is firmly

advises find another way of saying that we will get to the bottom of this without saying don't give me any more money. trust me, there are folks here who don't want to give more money, some would like to cut it to the bare bones. i appreciate the question. >> an opportunity to recurve ident. my testimony is not that i'm not asked and for any money. my testimony is that i am for nerd to defend the president's budget request because i think the increasing resources are going to have a very positive impact on the federal budget in terms of reducing refund fraud, identity theft, improving taxpayer service. i testified earlier is that with respect to whether there is a need for more money and the determination to process to solve the c-4 issue, what i'm suggesting is before we answer that question, let's determine

what the right approach is for the reviews and align our budget to that process. it could be an increase or level or less. i wanted to erase any notion that i think this problem can be fixed. >> and closing, mr. chairman and mr. commissioner, yes, you said that there is money that goes out that maybe shouldn't be going out, people who don't deserve it. those people usually fall into the category of folks with very few resources. i'm not suggesting they should be getting this. but i do not think we should go back to the days when cortical or sent by the audits were being conducted on 44% of the people. meaning that 44% of the audits in this committee were being conducted on this program and

the billionaires were not getting audited all. i would hope that as we go through dealing with what is there, what is fair and unjust, that we also remember the mission of the irs to be fair to all taxpayers and all-american. >> thank you, mr. turner. >> i think you for the clarification. i think most people understand what you're saying and i think you should be commended. the first response is not everything is solved with more money. i think that you can look at the facts of this whole discussion about mismanagement that started in 2010 when the irs got the most money that they had ever gotten. and they have less work to do. maybe they had too much money, maybe that is why mismanagement started. >> i appreciate your clarification. i just wanted clarification to be clear that i have dealt with

agencies that one of more money and that is because they had no interest in oversight which created the problems that i believe. >> thank you for your clarification. >> i would like to turn to this. >> we don't have any money anyway. [laughter] >> whether or not the denial of the application of conservative groups was a product of a few rogue employees in cincinnati, whether or not it was directed.

>> we want you to push the facts, to find out where the orders came from. i can't imagine too low-level employees taking on such a hefty political policy decision. on their own. that just doesn't hold water. it just doesn't make sense. in fact, one of the junior agents told the investigators of the oversight committee of the house that he believes that in order to target tea tea party groups, it was impossible for the targeting of tea party groups -- he went on to describe how the agency requested the

specific tea party groups contain their applications for tax exemption. it is widely believed that the washington dc office was closely involved in the targeting of these groups from the outset. including those made of these applicants, some groups, most notably the coalition for iowa where an agent asked to pledge not to protest outside of a planned parenthood office in exchange for granting tax exemption. that is completely unacceptable. you agree that? >> let me say that your question, i think it enters into a particular tax question, which

was actually from commenting on that. what we want to know is who gave the orders. where did this come from. we will not stop until we get some of the answers. that is very important to united states of america. in the past, the committee has, when we had an agency that was not doing something they were supposed to do, this committee

would put conditions on the financing of that agency. so that your money would not come until you do what you're supposed to do. that is a straight jacket and i don't like to do that. this includes the gao and others and it may well be that the subcommittee may recommend is to the full committee and we may take it to the floor. ..

i'll tell you the 501(c)(4) category is one that demands serious attention by the irs. and i think because of the supreme court rulings, and perhaps because of insufficiency in the law itself what is deemed political and worthy of oversight is not well expressed, perhaps. perhaps there's a short coming in the law. i would like to place two articles one from forbes magazine, one from ""mother jones"" that relate to one organization i would gets is