a little less than 7,000 people live there. it's a great ril village. the village is basically a blue collar town. people work at the case tractor factory, they work at the se johnson factory, it's surrounded by cornfields and bean fields and lots of small businesses. it took more than 900% of the -- 100% of the federal taxes paid by the working families of this village in washington to pay for the 225 conferences you spent at the irs from 2010 to 2012. that's the way you need to think of this. people are working hard, they're living paycheck to paycheck. they're paying their taxes, and this is what you're spending their taxpayer dollars on? and now you come here asking us for a billion dollars, about a 10% increase, you're asking us to hire another 4500 people. i represent rock county, that's my home.

the population of rock county and all of the working families in rock county, their taxes wouldn't even cover the billion dollar increase that you're asking for. you're here representing the president. you're asking us there are this increase -- for this increase. i know you're new to the irs. you come from the office of management and budget, and you have a great reputation. so you're a budget cruncher. >> be i am. >> how on earth do you think you have the moral authority to ask for this? why would we representing the taxpayers we represent give you all this extra money you are asking for if this is what the irs is doing with hard-earned taxpayer dollars? we're seeing just in two months waste, fraud, abuse and taxpayer targeting, and you're saying give us another billion dollars. why should we do that? >> congressman, you're asking very important questions, and i'd love the opportunity to address them. first, i agree the costs that

you're referring to are excessive and in many cases inappropriate and should not have happened. the reports that are coming out that are identifying these are covering events that occurs two and three years ago. and my concern is great. but my concern would be even greater if i saw that those patterns of spending are continuing through today. in many cases they are not. we are looking at 68% cut in training travel. we're looking at 45% cut in orr travel in the irs. we've cut our printing by 30%, technical services by -- >> why cowe -- >> there are deep cuts going on. >> here's my suggestion. let's have these cuts take place, and then come to us in a year or two, how does that sound? >> i will say, that's a fair point. there's more cuts to be made, and i think in this report in section three and in subsequent

testimony that i'll give to this committee i will furnish for you additional cuts so that we can go even deeper so that every penny is watched even more closely than -- >> great. so it sounds like you don't need a budget increase. >> no, i'm not saying that. there's a broader macro point that goes back to some of the questions congressman johnson was asking. we still have a mission to enforce the tax code to go after fraud. the cuts that we are seeing dwarf any kind of conference expendage that we have. the materiality difference is much different, and we just have to look to say, okay, has the irs done enough to make those costs, but i'll also make the case to you that if we underfund other critical priorities that lead to improved taxpayer service and improved enforcement of the tax code, then we're leaving dollars on the american people for the american people because everybody dollar -- >> okay. >> just don't forget, you work for the taxpayer, it's not the other way around. >> time is expired.

mr. lewis. >> thank you very much, mr. chairman. thank you, mr. commissioner, for being here. could you tell us how long you've been on the job? >> i started -- >> how many days? >> it's been about 34 days. >> so all of this stuff, all of this stuff just evaporated in the air. it didn't happen on your watch. >> no. i arrived in late may and am doing my best to identify the problems and fix them. >> could you tell, tell us something about your background? your last job? >> yeah. so i think, you know, and i've talked about this before in other hearings, i think the reason why i was chosen for this is a couple different reasons. one, and i appreciate congressman ryan's that i have a strong reputation. i served in leadership positions in both the bush and obama administrations. i consider myself to be

nonpartisan. the issues that i've worked on across my career have been very nonpartisan. it's all about better government management, reducing fraud, reducing error, reducing improper payments, improving the way the government manages its real estate. just very nuts and bolts. i think ranking member levin referred to me as a technocrat, and i've developed an expertise in public sector management. most recently in my role at omb i developed a reputation and experience in tackling some of government's toughest challenges. for example, back in 2009, 2010 i was the administration's lead on implementing the recovery act which was a very large and complex law that involved a lot of different technical complexities that needed to be done, and i was the point guard for it and developed a reputation of doing it effectively. more recently, i've been involved in the helping the government prepare for government shutdown, helping us

deal with the sequester. these are tough public sector management challenges, and i was able to distinguish myself to the administration leadership as someone who can handle a situation like this effectively. so when you combine those factors and i think the bottom line is that i present and when i was presented with this opportunity, i basically said i'll do this, i'm going to do it because i'm going to have this dividing principle that i'm always going to work to find the right answer to every challenge that i'm confronted with. i'm doing what's on the best interests of the taxpayer, i'm doing what's in the best interest of the irs, and i think if i can hold to those guiding principles, i'm going to be able to go to sleep every night knowing this was the right decision to take this job and take the irs forward. >> mr. commissioner, i want to thank you for your willingness to serve, to put yourself in the way and make a contribution to getting the irs in order.

how do you feel about irs future in processing tax-exempt organizations? >> i think -- >> or applications. >> i think, you know, when i arrived in late may we had a very broken process, clearly. the ig report points to both management and process failures that were going on in that area. there's new leadership in place, and i have a lot of trust in those new leaders. in particular an individual named ken corbin is now running the exempt organizations unit. he's a process expert. he's already inspiring me a lot of confidence that he is reworking the issue, reengineering and redesigning the process and making the appropriate fixes. we've agreed to all nine ig relations for how to fix the organizations unit. we're making good progress, and that progress is outlined in this report. we're taking steps above and beyond what the ig recommended because we think there's even more to be done to make sure that we are extremely robust in our fixes. those are also outlined in the

report, and we're making good progress there. it's a challenging environment. what i've learned is reviewing these applications for tax-exempt status is difficult because you're on a foundation of ambiguous laws and regulations, and it's -- as i said, nowhere, in very few other areas within the irs is a determination on the nature and extent of political activity a relevant factor to consider. so this part of the irs has this kind of unique set of requirements and, clearly, when you combine those unique set of requirements and management weakness and leadership weakness, we had a failure. but i'm optimistic that we have the right people in place right now specifically in the exempt organizations unit, in services and enforcement that are going to lead us to get this problem corrected. >> well, thank you very much. and i look forward to working with you. >> thank you. mr. like art. >> thank you, mr. chairman. mr. werfel, isn't it true that 100% of tea party applications

were flagged for extra scrutiny? >> many i think that, yes, the framework of the bolo -- [inaudible] [audio difficulty] it's my understanding the way the process worked is if there was tea party in the application, it was automatically moved into this area of further review, yes. >> okay. and do you know how many progressive groups were flagged? >> i do not have that number. >> which i do. >> will okay. >> our investigation shows that there were seven flagged. do you know how many were approved? >> i do not have that number at any fingertips. >> all of those applications were approved. i want to follow up on some questioning that occurred a little bit earlier in the hearing regarding intent. so i'm an old cop, 33 years. most of that time i was a homicide investigator. so we dealt a lot with criminal intent.

and so when you use the word "intentional" or "unintentional," it sort of is a flag for me to inquire further. are you talking about criminal intent? are you finding there's no criminal intelligent, or are you saying there's no intent to what? >> the questions that are being asked by investigators deal with both criminal intelligent and other types of intent which, for example, could mean political bias but no criminal intent. there's creations here. i'm not a legal expert on them, but i know part of it is to understand the nature and circumstance of this. >> so i also know there were two investigations that occur just like there were in the sheriff's office when i was the sheriff in seattle. you have the criminal investigation that's ongoing, and then you have an internal investigation. sometimes we know the internal investigation is put to the side while the criminal investigation continues on. are you in contact with those that are conducting the criminal

investigation? are they making you awe ware of the information -- aware of the information that they're finding as far as any possible criminal allegations with any of the employees within the internal revenue service? >> my main point of conta in this effort is russell george, the inspector general, and his team. he's working directly with the justice department. they give us periodic updates on their progress. >> do you have any information that there may be some criminal -- >> none, none such evidence has been shared with me at this time. >> so to get back to the intent part. your report states that some applicants were subjected to overly burdensome, intrusive questions, questionnaires and data requests that went way crond the acceptable -- beyond the acceptable level of fact finding, but yet at the same time it says none of the actions taken by the irs employees were intentional. i don't understand that. how you can ask those questions, provide those questionnaires asking for certain data but yet

be unintentional in conducting that sort of activity. tea party members said a donor had been threatened, some donors had been threatened, they had confidential information that had been leaked, they were sent inappropriate and intrusive questions, unintentional threatening of donors. i don't understand unintentional in that light either. and so i sort of am falling in line with what mr. brady said is that the report -- i understand your desire to be a public servant, you want to do the right thing. but in order for you to do that, mr. werfel, and for the american public to have trust in you and the irs again, you can't be vague and misleading in your statement that you've given to this committee. you say that even after senior irs leadership was informed of the inappropriate activities in question, it failed both to effectively put an end to the activity and to inform the proper committees in congress in a timely fashion despite

requests from congress on this topic. so i don't understand how your leadership could be found to be unintentional in their not reporting to congress. mr. miller sat here and conveniently lost his memory during his questioning. so could you explain to me -- >> i can. >> request it makes no sense to me, and i'm sure it makes no sense to the american public. >> let me offer my best explanation. first, i want to go back to the point that we're hearing questions from taxpayers. they want to know if there was intentional wrongdoing here. we're answering that question very carefully and saying there's more work that needs to be done right now -- >> but, mr. werfel, you really can't say it was unintentional at that point. >> let me address -- >> sir, you should not be saying in your report that you found this was unintentional, because you don't know. you don't know. >> and that's, basically -- >> is that true? you don't know. >> let me make the pointabout --

>> so why did you say it was unintentional? >> let me offer -- >> why did you say it was unintentional when you don't know? you just said you don't know. >> mr. werfel, why don't you answer briefly, and then we'll go on. >> >> first of all, i said very leerily in the report that -- clearly in the report more work needs to be done, but at this point we don't have any evidence of intentional wrongdoing and what we meant by that is that it's a different situation if a manager thinks and an employee thinks this is the right thing to do, this is how i'm supposed to conduct my business, and they could be mistaken. and they could be incompetent, and it could be total mismanagement and how they think they are appropriately carrying out their duties which is different than them saying i know this is wrong, but i'm going to do it anyway because i have a particular agenda in mind. and that's the difference that we're trying to distinguish. i -- >> thank you. time's expired. mr. neil's recognized. >> mr. werfel, do you need two more minutes of my time to -- >> thank you for the offer.

>> mr. werfel, i want to clarify something. the ig letter states there are at least two groups of specialists within the irs that use the bolos. the first is the specialists that are dealt with in the 298 cases flagged for political campaign intervention. the second, it's the team of specialists in the touch and go unit. we know that some of the progressive group applications went to the 298 teams of specialists. the inspector general did not investigate how the progressives were handled by the touch and go unit. have you looked so into this? >> we're in the process of looking into it. when the report says that we start with the audit report and all the various trls that the inspector general provided us in support of the audit report, we're going deeper than that and broader than that. and that's, for example, how we found the bolo lists with the inappropriate criteria, because we were going beyond the inspector general footprint.

and, of course, when we found them, we put an immediate suspension to them because we were very concerned about them. but, and within, when you go deeper and broader into this issue, you see other cat goes. you mentioned -- categories. you mentioned touch and go. we're trying to understand how are these lists used, what were the circumstances that caused these inappropriate political labels to occur, what impact did it have on taxpayers. these are all questions we're asking in realtime, and like everyone in this committee, i want answers to them, but i'm going to follow an expedient and fair and thorough process to get those answers, and i will be back here to answer those questions in the future. >> you congratulated -- you're congratulated members on the other side for the vigor with which you've taken up the task of pursuing these different questions. and then you're accused of not doing follow up. i mean, there's an element of inconsistency to that as you try to figure out how to pursue new information and data as you come across it.

now, the issue really here for all of us is the following: citizens united caused the irs to be flooded with applications from groups seeking 501c4 status. and why was that? in large part it's because super pacs must disclose their donor s while 501c4s do not. that's really what happened here. and as we've tried to unearth some of these questions where members on the democratic side have been equally vigilant in pursuing what we might deem to be egregious moments with irs pursuit, but it's obvious as well that you haven't finished your work. and you need to be given some time and opportunity to pursue these cases. we all need to be outraged. the american people shouldn't be afraid of the irs. we've all established that. but i think the simple point is

you would argue you need more time, is that correct? >> absolutely, we need more time. and my hope today and in this report and in every communication i have with the public or the committee is that there's transparency into the process that we're following. and i want to be clear that the process that we're following has certain legal and process constraints, procedural constraints, but we're moving as expeditiously as we can. we're getting documents to the committee. witnesses are being interviewed. materials are being furnished to the congress. a lot of the questions orient around materials that we provided as part of this growing investigation of information that we provided earlier this week. so, absolutely. there's more questions to answer, and i think the track record we're demonstrating here is a diligence to answer them but also a caution to make sure that we're following the rule of law and procedure in doing so. it's a tough balance because, as i said, i want these answers as quickly as possible. but i have to, and, you know,

it's absolutely essential that i follow appropriate due process procedures in running this investigation. i think any investigation across a broad spectrum of organizations and leaders and legal investigations would follow those same principles. >> mr. chairman, we're all better off if we have an accurate portrayal of precisely what happened as opposed to the accusatory tone that is being suggested. and you can see, incidentally, that the argument has already shifted here. we've moved to the conferences, which is a legitimate criticism, away from the focal point of this hearing. and that is whether or not political groups were targeted by the irs. so it occurs to me that perhaps some of the argument is weakening on the other side. thank you. thank you, mr. chairman. >> thank you. dr. boustany. >> thank you, mr. chairman. welcome, mr. werfel. >> thank you. >> i agree, it's going to take time to get to the bottom of

this, but one disagreement i have with you at this point in time with this 30-day report, mr. werfel, is i don't see a sense of urgency. the big picture here is that you have an obligation on your shoulders to restore the trust in this entity, the irs, restore the trust with the american people and with this congress. now, in your report you have a section titled "transparency with critical oversight organizations" where you talk about the irs's failure to properly inform congress about the issues that were occurring even after congressional committees specifically began asking questions, and we started asking questions years ago on this. but let me get this straight. in acting commissioner miller's june 15th letter to me after we'd gone back and forth, and i had meetings with shulman, meetings with miller, hearings with both of them and letters. i have a june 15th letter here, and the only response, essentially, that we got was that eo took steps to coordinate the handling of these cases to insure consistency.

now, mr. brady asked questions earlier, and you told mr. brady that you disagreed with the characterization that irs employeesen gauged in a cover-up. but if you know the truth on this, i mean, if you though that there were folks in senior positions at irs who were misleading, evasive, essentially covering up what was going on with targeting, if you know this and you're not coming forward with this, is that a coverup? >> no. and what i said to the congressman earlier was that there's not, i'm not ready to draw a con cloughs. he was asking a question in a way if i answered it, it could imply i was agreeing with the premise of his question. your question, is there cover-up, i don't know the answer to that question. i think the key is we have to make sure we do the thorough investigation. i think the justice department and the ig are doing that. >> we know that commissioner shulman and acting commissioner miller were informed of these things, and yet they continued to, basically, evade our

questioning, they were misleading with us. this has been determined so far in the investigation. it's certainly been determined by the tigta audit. we need you to have a sense of urgency, to come clean. you have an obligation to the american taxpayer and to this congress to follow through with our oversight function and with transparency to the american people. >> so the commitments that i'm making today are, one, to explore all the facts including questions about, you know, intent or concern that you have with respect to why answers weren't questioned more quickly. i'm not going to draw a conclusion now and say we've definitively decided -- >> all right. >> let me make one more point. one of the things in this report that i think is very helpful to this committee which is what i'm suggesting the irs needs to do is more readily share information on emerging risk areas and emerging operational issues within the irs within this committee -- >> oh, i get that, i get that. want to shift gears for a moment and talk about the bonuses.

>> yes. >> it's gotten a lot of press. and inclued in these bonuses -- included in these bonuses during the time targeting was occurring, we know a quarter of a million dollars were paid out to just four employees of the irs all of whom resigned or are on administrative leave to this point. one individual, the first to resign, received more than $83,000 in bonuses on top of a salary of $177,000. now, and we also know that others, you know, others have received bonuses who were involved in this tax-exempt issue. >> yes. >> targeting, tea party entities. now, in light of all of this, are you going to take any step toss put a freeze on this? >> yes. >> is there going to be an attempt to recoup some of that bonus money? >> let me answer in a couple difference ways. first, i agree. when you look at the juxtaposition of individual management and judgment failures that went on in this situation

and you juxtapose that against the bonuses received, it's very troubling. and it's part of my larger conclusion here that the irs leadership did not have timely enough understanding of what was going on with these particular activities to make informed judgments about compensation through bonuses. secondly, i mentioned earlier to congressman ryan about me coming back to this committee with additional ways in which we can cut costs even further, and i think bonuses is an opportunity. >> from you could put a freeze on it now. put a freeze -- >> i'm glad you asked the question because there's been some public misunderstanding about where we stand with our bonuses for this year, and if i could clarify it -- >> yeah, but the trust with the american people has been broken. i understand contracts -- >> well, if i can explain it, here's the situation with our bonuses. when i was at omb, i signed out a policy that froze bonuses across the government in light of sequester, okay? it was one of our methods of dealing with the sequester cutses.

but that guidance also said it was subject to legal constraints, so if the bonuses had to be legally paid out, we had to look into that issue. >> but the trust has been broken. >> right. what's going on at irs right now is we have a union and a bargaining unit and an agreement that we will bargain on the question of bonuses with that union. and my answer on bonuses is that there's no decisions been made. going back to my point about following the rules of law and procedure, i have an obligation before i freeze the bonuses for irs if that's the decision that's ultimately made, i don't know at this time. because my first step and my legal requirement is to bargain that issue with the unions, and that takes time. we're going through that process right now -- >> mr. chairman, we need a sense of urgency with 24 and length to put a freeze on these bonuses. >> time has expires. mr. becerra. >> mr. werfel, thank you very much for being with us. and look forward to having you come back. i think you've mentioned that

everything you've stated in your reports and everything that the irs has done so far to investigate this matter is not yet complete, is that accurate? >> that's correct. >> so when you say at this point you have found no evidence of wrongdoing, it's as of this point. >> yes, that's the question we're getting raised, and i feel compelled to give the most honest answer i can which is exactly the point. more analysis is needed, but at this point in time if you're asking me have we found evidence of intentional wrongdoing, we have not. and i had to -- and i understand the confusion around the word "intentional," because these actions till happen. i tried to explain, it's the difference between where someone knows they're doing something wrong or a question of management incompetence or neglect of duty. we certainly have evidence of neglect of duty, what we don't have evidence is of someone knowing they did something wrong

based on criminal intent. that evidence just hasn't materialized yet. >> and you use the operative words, evidence. so to date, there is no evidence of wrongdoing. >> there's no evidence of intentional wrongdoing. there's evidence of managerial wrongdoing. >> and today there is no evidence linking anything that occurred at the irs to the white house. >> that's correct. >> okay. and as of today you are still in the process of investigating. >> be yes. there's more people to talk to and in many cases under oath, and there's more documents to review. >> and as i think you've tried to make clear but been interrupted as you try to provide the answer, the reason you aren't spoken to some of the folks that are principal to this investigation is because others have the principal responsibility -- >> i have -- >> -- to do the investigation. >> i have two thoughts to this question because it keeps coming up. one is the legal, the rule of law, the legal process prohibits me from talking to these employees. the justice department and the inspector general are the appropriate officials. secondly, even if there was no

constraint, we also have professional investigators on the scene that are very skilled in talking to witnesses and, ultimately, we might make a decision that those individuals are the ones who should be interviewing the witnesses and providing that information to me. >> well, we want you to be able to continue that investigation the right away, and we hope that you're able to come back and answer the questions that you can given the work that you are doing and the jurisdiction you have to provide the answers. but i'd say at this stage what we're hearing from you, in fact, i think what we heard from mr. george, the inspector general, is that there is an investigation that's ongoing. in fact, the chairman of the committee in his opening statement said that we are still in the early stages of this investigation. that the -- and the inspector general is doing a more thorough investigation. mr. brady, my colleague on the republican side said we're not going to stop until we learn the whole truth. so we still need to find out the facts. at this stage we have an investigation ongoing. it's a half-baked investigation. and to reach any conclusions

would mean we've reached half-baked conclusions. so whether it's your conclusion or my republican colleagues, for anyone to make accusations at this stage, it's with only part information. >> and there comes the distinction. to answer questions this is exactly how it happened not a question we can answer yet. but i think we can answer is there any ed that any of this -- evidence that any of this has materialized, that's a question we can answer because we're in process, and i can meant -- >> good point. >> so far what the evidence tells you is what you're responding to, and we appreciate that. i would, too, like to have you back. i hope every one of my colleagues on this panel would agree that we have to have inspector general george back, because he has, as ricky ricardo would tell lucille ball, he has some explaining to do. there is a lot he has not yet answered. in fact, there are some things he answered that may not have been forthcoming. i'd like the finish with one

last point. now, this whole investigation centers around the issue of 501c4 organizations. now, as you know, 501c4 organizations are social welfare organizations under the law. 501c4 applies to organizations that are not organized for profit but operated exclusively for the promotion of social welfare. i'm not sure if you're aware, but those same 501c4 social welfare organizations spent $256 million on political expenditures in 2012. did you know that's more money spent by these social welfare organizations, nonprofits than the two political parties combined which spent $255 million? so that's the crux of the problem here. we have so-called social welfare organizations that spend more money than the two political parties combined. and so when irs is concerned that there may be some organizations that are trying to game the system at taxpayer

expense, that's why we have to have these investigations. .. because of the power that you have, and my prediction is that our country is at a tipping point right now, and the tipping point is there is an awaking amongst the governed about authority that they've delegated to congress and that congress has delegated in this place to the irs, and that authority has been used.

so you used language earlier, things like i'm serious, i cling to the rule of law, you know, those type of things. frankly, i would expect you to say things like that, and i would be discouraged do you not use things like that. but you're someone with a taxpayer bill of rights of 1998, autism, as a general document. it's a statute. and in a taxpayer bill of rights, it's very clear that the internal revenue service is prohibited under the law from willful misuse of provision of section 6103 for the purpose of concealing information from a congressional inquiry. la familia without? >> yes. >> this is a congressional inquiry, clearly. there has been a request by this committee of documents to be forthcoming from the internal revenue service. and here's an example of two of them. they have been redacted to the point of absurdity. now, we have knowledge that

there's information in these two documents that is not subject to 6103 protection, and so the entire section 6103 question should be set aside. and so what i'm suggesting is the fear that animates in the hearts and minds of my constituents is we are not getting a straight answer. we are seeing your graphic doubletalk. we are seeing a bunch of nonsense. how can we possibly pierce through this? and so the level of anxiety and concern that you hear from committee members is a recognition of an abuse of power, but it's a gratuitous abuse of power. now, even when the investigation comes up, the committee, based on lawful requests, is now not getting the type of answers. so can you assure us that this

type of nonsense where i know beyond a shadow of a doubt that there is information in these documents that should not be subject to 6103, that the irs is claiming to an absurd level that somehow this needs to be protected? can you assure us based on your 30 days on the job that this nonsense will stop? >> let me give you several assurances that you can give to your constituents to clarify. the first i would give is the information you're holding in hand as not being held just by the irs. we have submitted all the information minds all those black lines and as redactions to the chairman of this committee. so the notion and that implication that that information is being held just in the irs is incorrect. >> you know the law. you know when this is in 61 afford we are prohibited under the law from revealing that.

you've got to release this information so it can be publicly discussed. that's exactly what the statute speaks. >> let me get to my second point, because i want to address each of those points. i just want to make sure that the public understood that that information resides with this committee and the senate finance committee. the second reassurance is there is a tension here. we have a responsibility -- [talking over each other] >> you are not releasing the information% to 6103. >> i can answer these questions if you enable me. >> go ahead. >> i want to make sure that people understand, your constituents understand the tension exist that we have a solemn responsibility to protect the confidentiality and that's their taxpayer information and these procedures are set up, set up so that we redacted this information although we sent all of it to the chairman's to the chairman's other ways and means an senate finance committee, so outside the irs. and to the extent that there is a notion and a concerned that there's over redaction, that's something we need --

>> this is junk. this is junk. this has no meaning. >> it might be junk but it might be sensitive taxpayer information. >> it's not. we know it's not and you're hiding behind. i'm telling you, i'm putting you on notice, this committee intends to uphold the 1998 act and we're going to follow through on to make sure the irs is forthcoming and not creamy a bunch of nonsense hiding behind bureaucratic doubletalk. >> if there is a particular -- >> time has expired. >> okay. spent i know it's a staff level, mr. werfel, we have raised the issue of over redaction. what it does is it limits the ability of the committee to use this. and so i do think this is an issue that is appropriate that mr. roskam has raised. it's something we probably need to pursue further. >> i think so, and one thing that should be clarified, given

his comments, it's my understanding, you can correct me if i'm wrong, it's my understanding that if the chairman of the ways and means committee, you can release information if you think that it is not the 6103 sensitive. >> i cannot unless it is to the full house. and clearly this is an area that we will have tabbed experts involved. and the context of a final report, which clearly we are not there yet, i can release information ultimately to the full house but i can't, i can't be the single arbiter of what 6103 is and isn't because senator baucus and senator hatch received this as well. but we do have concerns that, at a staff level, there is an over redaction that makes it, limits the ability of the committee to use the information. >> as i've always said we've wanted to work with you. i want to clarify this information is not just resigned with a i respect that it was not my main point.

>> we do receive the redacted version but again, those are not shared other than with mr. levin at this level. the next person is mr. kind. no. mr. pascrell. oh, mr. kind this year, i'm sorry. >> sorry, mr. chairman, i was being blocked from my esteemed colleague from connecticut. mr. werfel, thank you so much and thank you for your willingness to semester tough duty. i mean, you obviously from today's hearings stepping into the lions den. i know you appreciate them give a much larger duty of restoring faith and just and confidence in the irs than just the spending that went on with conferences or bonus payment or even the issue before us today, the exempt organizations. let me steer back to a troubling issue that i have been wrestling with. we have many organizations, especially after citizens united case that are applying for (c)(4) tax-exempt status. the inspector general looked into it and recommended the irs certain steps and procedures in

how to review that and how to filter it down and you but we have some additional ideas. but the point here is that these groups are not automatically entitled to tax-exempt status. they have to meet certain qualifications, certain criteria in order to qualify for it. every time there is an organization out there that does qualify for tax-exempt status, that increases the relative tax burden on organizations that don't or individuals throughout a country that doesn't even. and (c)(4), the rule has been, they have to be principally engaged in social welfare. we've gotten away from the more definitive definition of exclusively engaged in social welfare. but how do we move forward now, today, doing a proper review of these organizations to ensure that they are qualifying under the (c)(4) definition of social welfare status, without being accused of them being picked on? or that political selection is taking place? in other words, how do you institute a generically neutral screening process now that's

going to pass mustard on both sides of the aisle, yet still doing the tough job of screening out those organizations that really ought not be qualifying for tax-exempt status because they're principally engaged in political activity. we know that's going on. i think anyone here who is fooling themselves in thinking that a lot of these (c)(4) applications are social welfare hasn't seen what's happened over the last couple of years in the american political system. >> so, we have an approach that begins to answer that question but i think it needs to be a dialogue between us, the irs, this committee and others, and and particularly treasury department plays an important role here because at reuters a but in the report we outlined recursive policy question to be answered. -- and what we simply take is our high party backlog, those

advocacy cases that a been a backlog for more than 120 days and we're offering them a more object of review. essentially if they attest that not more than 40% of their voluntary personal hours will go to a volunteer campaign intervention and at the same time they also test them with 60% of their social expenditures and to which their personal hours will go to a social welfare purpose, then they would reserve and approval from the irs and they would go further with responsible to update us if the nature of the activities changed and understand like every other (c)(4) or (c)(3) organization that they are potentially subject to audit or examination at some point in time in the future. >> i hope we're not going down the road of the irs being subjected to this type of scrutiny every time tough questions have to be asked in regards to how these organizations are spending their money and what activities are ultimately engaging. you will be set up for accusations from here on forth from any group that's receiving rhs here has been more

denials of organizations applying for (c)(4) status who are clear engage in political activity. that's the main purpose for being. so is the taxpayer advocates office, do they have a role in -- >> absolutely and that's a big theme in the report is that we want to involve the taxpayer advocate more clearly in all of these elements. in particular and one of the main concerns that i have is that when you look at the situation, we had taxpayers that were frustrated by the length of time that they were not getting an answer from the irs, they were frustrated by the types of overly burdensome questions they were getting from the irs and they did have an avenue and in many and in most cases they didn't exercise that avenue to go to the national taxpayer advocate, to raise greater awareness about the issue. there is a track record of helping the public to resolve matters before the irs that the individual taxpayer is having trouble doing on their own. we didn't see the connectivity here in one of the important recommendations in this report is to raise awareness and

effectiveness of this framework of the national taxpayer advocate so we can solve those problems. >> you have a tough job issue -- as you go forward and i were looking for to working with you very closely and your candid investigation and the recommendations before this committee. we have a role to play for clearing up i think lack of a clear definition as far as (c)(4) applications. i think irs would be helped if they were brighter line rules that for people the institute, and more objective criteria, that's use and look forward to hearing your recommendations as we move forward on that front. >> thank you. >> we will now be moving to to one. mr. gerlach and then dr. price. >> thank you, mr. chairman. thank you, mr. werfel, for being here today. my first question is would you agree that irs officials disclosing taxpayer information to outside groups or individuals is improper and, in fact, illegal? >> it is under section 6103, yes. >> what is the process if

there's an allegation that an irs official did, in fact, the taxpayer information to an outside group or individual? what is the internal process if you can summarize it very quickly for handling of the investigation of that? >> so what happens is we refer the information or the allegations immediately to the inspector general. the inspector general makes one of two conclusions. one, it was intentional or, to if it was not. iit was not. it was not in the next up is if you want process break down or control breakdown led to the unintentional release. we have those situations emerge and we make those process improvements. if the finding was that it was intentional then it is referred for further investigation which could be criminal or some other type of disciplinary action. >> now, mr. brady raised the issue of the national organization for marriage and the fact that its form 990 information from 2008 was disclosed and passed on to the human rights campaign.

based upon the testimony that was given at our last hearing by the representative from the national obsession of marriage, what do you know about at this point the irs passing that allegation to the inspector general's office, and what is the status of that investigation, to the best of your knowledge? >> two responses. one, i'm not aware specifically of the issue at my fingertips that i can give you the exact process. two, i would be concerned to mention a specific taxpayer it may be more appropriate for me not to comment into setting given -- >> has, in fact, they are is passed or referred the matter to inspector general's office? >> i don't want to comment specifically on this because i just don't have familiarity with the particular issue at my fingertips. you don't know at this point whether -- >> i would say any given point in time there's a series of

issues in this area that have been passed onto the inspector general, which are either in process for discipline action or in process where it was inadvertent, and we're doing process improvements. where this situation fits in i don't know but i can get that for you. >> if you would respond as soon as you're able to do that it would be appreciated. >> i will. >> i would like to ask you as a follow-up to mr. johnson questions with regard to get out of money, $46 million of child tax care tax credit, checks that were sent to just to the one address in texas. and in your comment you mentioned that on issue of why checks are being sent for this credit, how do you verify that children in fact reside at the place of residence for at least six months, which is one of the requirements for the. you said it was hard to confirm that a child in fact was there for at least six months. >> there's no national childhood residency database.

it's one of the difficult aspects of enforcing that particular eligibility criteria. if that's one of the criteria and you could not confirm that a child has lived there for at least six months, why are you singing at -- sending out a check? >> well, what happens is that it's not am i did say it's impossible to confirm, it's just judging and, therefore, have a higher degree of errors associate with that criteria speculate does the irs has sent checks to individuals that don't meet the eligibility criteria? >> that happened unfortunate but it's calling improper payment. we have way too many of them in the irs and we need to work o >> that issue. >> what discipline action heavy taken as an agency against the individuals that continue to that practice? >> i've not taken -- first of all, i've not personally taken any. i'm not sure discipline action would be appropriate in all situations. >> in other words, individuals within irs whoever responsible over the mounting that is released by the irs back to a taxpayer who is sending checks outcome in this case $46 million, just to one

address, not making sure the criteria for the eligibility for that check is confirmed is still sending the money out, no disciplinary action has been taken against that individual or individuals? individuals? >> one would have to look further into the issue to see if discipline action is warded. look, we make -- >> does any disciplinary action -- >> absolutely. >> can you share the amount of disciplinary action taken against officials and voice over the past year for improper conduct? >> in an aggregate way, yes. i would have to do in another setting but i can share that information with you, just not with the public. >> if you can share that with the committee i'm sure the committee members would be interested to see under what circumstances >> i would point out i've been irs for short time i've taken a number of display actions within the irs i know for a fact they do go on and i've personally been involved in several of the >> thank you, mr. werfel. yield back. >> dr. price. >> thank you, mr. chairman.

mr. werfel, this far down the panel is hard to say welcome, but welcome. >> thank you >> thirty-four days into challenge and we appreciate that. i think all this committee is asking and all the american people are asking is that you be honest and forthcoming. >> always. >> in that light, i would suspect you agree the ir >> process has been broken, would you not? >> i would agree with that. would you agree to trust with the american people and the irs has been violate? >> i would agree with that. >> mr. werfel, the irs has targeted groups, it has leaked information on donors of groups and then targeted those donors are auditing. this is chilling stuff. as mr. roskam said this is a kind of thing that frightens his constituents. it concerns and frightens my constituents as well. the chairman asked you if you spoken to the number of people in the process of investigation. former irs commissioner shulman,

you said no. former acting irs commissioner mr. miller, you said no. and then sarah hauling, you said yes. who is she? >> sarah hauling runs the affordable care act operations within the irs, and i speak to her on an ongoing basis as part of my responsibly to engage with my senior leadership team on the ongoing operations of the irs. >> what was her role during this period of time a tax-exempt -- >> that's a good question and one that we're looking at and i will do my best to explain it right now. ms. ingram was the commission of a tax-exempt government entitiey organization leading into when these events occurred. so the ig report starts to service issues in and around early, say march 2010, is when this fact pattern begins on the ig timeline. it's my understanding that she served as the commissioner of

tax-exempt government exempt organizations which is a level above the exempt organizations, and that org chart is in my report. she served in a capacity until somewhere around the spring or summer of 2010. >> so there was an overlap the? >> there was an overlap. at the time she moved over and was detailed over to begin her work in running the affordable care act. >> let me ask you why should the american people believe that the trust that is required between the internal revenue service and the american people on the implementation and enforcement of the affordable care act by an individual who was involved in a tax-exempt status, entity, of the irs during this time in question, why should they trust the individual? >> what i would ask the american people to do is trust in the process that we're going to make sure we're getting to the bottom of this. and with respect -- >> you understand the process of

the irs has gone through has violated that trust with the american people already, and candidly, my constituents and i believe the vast majority of the american people want every individual who was involved in this process to answer the questions prior to being able to have any further testing situation in the capacity, and the internal revenue service. is that too much to ask? >> i think it's valuable input. i would like to share what we're doing, which is analyzing for any employee, ms. ingram is a -- no different. we are analyzing what their footprint of responsibility was, and wit with respect to this individual there's some complexity in doing that evaluatioevaluatio n because she did move over to the affordable care act early on. at the same time, just an interest of full candor, why she did move over to the affordable care act within a few months after this fact pattern begins, her title didn't change and

there's some lack of clarity in terms of her ongoing -- >> and the concern that many of us have. >> we are looking into the question. >> have guidelines been promulgated for the enforcement of the employer mandate from the irs? >> not at this time. i think the schedule for the proposals is the summer if i understand your question correctly. >> and have rules been promulgated? [talking over each other] >> have rules been promulgated on part-time full-time employees distinction? >> i don't know that -- >> have rules been promulgated on the difference between seasonal workers and part-time workers? >> i will give you the full schedule of our ach rules. i don't have it on my fingertip. >> there's a huge lack of trust at the irs, and now the enforcement arm over the four lookup is extremely concerned for those of us on this panel

and our constituents but i would urge you, urge you to get this information to individuals who will have to comply off all of the rules that you promulgate and make certain that they are true to the letter of your rules as soon as possible. i yield back. >> thank you. mr. pascrell. >> mr. chairman, thank you. mr. werfel, it appears after the time that you been here this morning that we are not passed the point where members of congress would be speculating about enemy's list cultures of corruption and conspiracy theories. i mean, if you took the last set of questions to you, first of all on one to ask why in god's name you took this job in the first place at this point in your life. you have a distinguished past. very distinguished past. that if i took the last series of questions come if you want to

talk about a conspiracy theory, the person is not in front of us to ask direct questions is that young lady. now, everything is open. ask questions on anything, i understand that, but both sides of the aisle seem to be against, appear to be against singling out any particular groups because of the political thinking. this is what we are opposed. this is what we are opposed to so i commend you for standing up, standing tall and i wish you success in your job. i think you're trying your best. in your report you announced that inward to deal with the backlog of applications for 501(c)(4) status, the irs would allow the option for groups to get preliminary approval if they self-certify. self-certify, that they devote

to more than 60% of their spending and time on things reduce social welfare. to go with no more than 40% on political activities. is there any reason that this is not the existing standard for all 501(c)(4) organizations? >> it potentially could be. what we thought would be appropriate was we have a situation with an overdue backlog. we have a situation in which we clearly have had struggles to effectively implement the current regulation of primary. we came up with this self attestation program because we thought that it would be less burdensome on the taxpayer and still effective in meeting the underlying effect of the primaries. but we haven't broadly applied across all five will see one forced -- >> how did you write u that the 40% in the first place? >> keep in mind that the irs is

role here is to implement the laws and regulations as clearly and as effectively as possible. we have this word primary, and so we sat down with and we said what is the most plain like which understanding of primary that we can defend. we came up with the conclusion that if you're north of 50% -- >> who came up with that? >> the irs. we sat and we talked through it. we briefed committees and others on it before it issued in final. that if your activities are greater than 50% you are clearly not primary. your political convention is more than 50%. if you're less than 40% we would think that your in a comfortable safe zone of not being in that primary range. between 40-50% it gets tougher. and, therefore, if you're a taxpayer and you believe that your expenditures are somewhere between 40-50%, you wouldn't a test. you would go to the traditional review and we would take a close look to make -- >> and that's what people

applied to inward to obtain the status speak with yes. >> you determine what they did it, the information they give you as to whether or not they are more than 40% involved in whatever political culture that exists because we are trying to forget what primary means of what we're offering with the self-attestation in some inherent structure as how we can think about is. >> once that organization receives approval, will they be able to increase their political activities beyond 40%? >> you know, if they do that then they are no longer operating under an approval and have to alert the irs that they change the nature and extent of activity. >> but they are allowed to continue? >> the reason why they are allowed to continue is because one of the key point here is that you can operate as a 501(c)(4) today without an application. there's two different types of entities that are operating as a 501(c)(4). those who have an application approved and those who never

applied but just file the appropriate forms and operate as a 501(c)(4). if you exceed your 40% after a testing, you just made yourself into that second category where you are operating without an approved application and your joining many other 501(c)(4) taxpayers that are doing that today. >> said the exemption is very important in terms of revenue. the exemption is more important to decide whether more than 40% or less than 40%, and if you go over 40% who said they have to file a form with the irs. >> exactly. >> i can't assume and conclusions there are other organizations out there that are performing more than 40%, or maybe more than 50%, and the political area and are being exempt from taxes? >> i think -- >> time has expired to answer briefly. >> if they are performing more than 50% my hope would be we would have an effective exam and audit process that would identify the and work with a taxpayer to correct it.

>> okay, thank you. mr. beginning. >> thank you, mr. chairman. i also want to thank mr. werfel for being here today. want to recognize also you have been 34 days on the job and from what it appears you've had a great background. let me ask you because i think you got cut off, you're going to mention, looking at your resume , you manage an agency of 90,000 employees. your budget is about $11 billion a year. i think you're asking for additional dollars, and part of the reason you wanted the additional money from the taxpayer is you said a dollar invested in enforcement, gives you back such a return. what was the numbers you're going to tell us about that? u..

is that what you are saying? >> that's what i'm saying. >> you've heard the saying the power to tax is the power to destroy. i can tell you there seems to be a culture at least from what i've heard. i've been here in little over six years. and the irs there's a lot more money being put in enforcement, and you can destroy people's lives. so you've got to understand that, the power, the leverage, the magnitude of the irs, 90,000 employees, he $11 billion in budget. it's not even a level playing field for individuals. i look at a lot of small businesses. why hearing from my constituents, when you want more money to go after more

americans, they are very concerned because it seems like that's been ramping up in this environment, and i'm telling you what i hear every day. in this environment, a trillion dollar deficit, people are feeling like the irs is a lot more aggressive about coming after organizations, especially small businesses and individuals because at the end of the day you can win every time and say go to court. you need more cpas and lawyers? they run out of money. you didn't run out of money or resources. go ahead. answer that if you what. >> you are raising an important question. and i will go back to the reporting if i could. the report, the question about the taxpayer concerns coming and we've heard this i think it's notable that in the report we are candid about organizational failures within the irs. we are not claiming that nothing went wrong. we are recognizing there were significant problems and that this represents a --

>> let me go back because of the limited time, let me ask you in terms of yourself it says he managed 90,000 employees. is that a correct statement? >> it has roughly 90,000 employees. >> who is responsible for the attitudes and the culture and the environment? >> to share the responsibility of the irs and the staff, but i place a lot of importance on the leadership driving. >> i'm just saying in 34 days i recognized that. i just want to make sure that you have a balanced approach going forward then you don't create an attitude on climate and the irs about going after americans. i'm very concerned that it's for a balanced approach. there is a sense that that's been heightened not just in the last three months of the last five or six years. there is a sense that we have to make sure that if you are looking for more money to go after more americans because you

get a return i tell you, you are going to win at every turn. they can't begin to compete with the irs with the leverage and the power that you have. that's why it's important as the leader going forward and your team of leadership is it has something that makes sense that we are not killing small businesses and as a result killing jobs. >> one final point. in the report there is a direct commitment by redoing the review across all irs of the appropriateness of the criteria and filters and activities who was accountable for the object of pity and in the report we are going to share the results of that with you and the american people -- >> but you don't understand it's not a level playing field, right? at the end of the day you want to win because they run out of money. they would like to get their day in court and resolve it, but they can't afford the costs to get their day in court. so i'm just telling you if someone had seen that

environment what i hear every day you got to be careful how you move forward in terms of going after americans. >> thank you. mr. smith? >> thank you, mr. chairman and to the commissioner today. how long has the 501c for been around? >> i'm not exactly sure, but it's decades. >> how long do you think an application should reasonably take for approval? stand we have a standard of 120 days. >> and obviously many of the cases exceed -- >> yes, that was unfortunate and needs to be fixed. >> and you have indicated that no intentional wrongdoing has taken place to your knowledge? >> again, the evidence has not surfaced yet but i would caution for analysis, review and investigation is needed. >> so would be inconclusive -- >> if the taxpayer is going to ask has there been any evidence

yet we are going to say no but more needs to be done. that could be determined inconclusive i'm not going to argue with that characterization. >> sifting through the documents that we had over the last few weeks, we know that there's been exhaustive list of questions asked of applicants, is that correct? >> that's correct. >> we are talking about requesting the lists of books read and reports seceded and requesting membership, volunteer, whether or not an applicant intended to run for office or a family member of there's. would you agree that it took a vast number of resources to even come up with those questioned? >> i don't know how many resources it took, but i would agree that we needed to stop asking a great number of questions that were asking and revisit and change how we approach our outreach to taxpayers. >> i appreciate that. that just strikes me as difficult to sort through all of

this when we are asking for more resources for the irs when it would seem to me there were some existing resources that were misappropriated and apply when it reaches into asking applicants the question. so moving forward, i would hope that we can accomplish our objective of reducing the complexity of the tax code leads to this situation and the complexity and the application of resources. thank you mr. chairman i yield that. >> mr. crowley? >> thank you mr. werfel for being here today. after the first hearing on all irs which we have this committee, the chair highlighted a culture of intimidation. a culture of intimidation. at the time he was hinting that

it was coming from the white house. a claim i believe was made without merit or evidence. as the weeks have gone on, we have seen there is a culture of intimidation but not from the white house but rather might republican colleagues. we know that there's been targeting of the tea party and progressive groups by the irs. but this was not divulged by the treasury in the audit of the irs. the ing didn't even give the hint that the progressive groups were targeted until committee democrats dug further and deeper into this investigation. my fear is that an appointee of george w. bush and a former kennedy staffer of the oversight committee chaired by darrell issa drafted a report that

suited the chairman's personal ideology and not the facts of the case. we then saw members of the majority party make basis claims about the so-called white house enemies list, and ideological targeting again false. we know congressman issa knew about the investigation in 2012 before the national elections occurred. does anyone think for a moment that there was the white house targeting of conservative groups before the 2012 elections that the chairmen issa wouldn't have said anything about that, that he would have sat back and said nothing about that? then as we see progressive groups targeted side by side with tea party counterpart groups the chairman of the kennedy excused that in my opinion both in public releases

and again here in the opening statement. there is the no outcry by the chairman oreccan colleagues when progressive groups were also targeted thestl point out in the testimony interviewed by the committee and the oversight committee which was asked the question concerning the tea party investigation and didn't raise any questions with you come her answer was no. people have a shorthand reference to cases by name. and i was aware of, you know, other cases at the time working their way through office that involved proposed denial of exemption to liberal organizations that supported the democratic party. so i get no indication that we were not being balanced and will we were doing. our committee knew that.

testimony was given that there was no outrage just as there was no republican of reagan-bush administration targeted christian groups and the naacp between 2002 to 2004 when they were being investigated by the irs. so there is the culture of intimidation going on. but it's not by the white house comments by republican colleagues. that's why we demand that they be summoned back to the committee to answer questions once again under oath. we also demand the culture of intimidation stop so progressive groups will feel comfortable testifying before us here but right now they are not comfortable coming before this committee and the germans continued silence or excusing of the abuse of the progressive groups makes it harder for the groups to come before us. we need to be a committee of fact and not a witch hunt if we plan to get the bottom of the investigation and hopefully be

able to tackle other legislative issues we have coming before the committee with great importance to the country. biden and the public culture of intimidation against progressive groups be stopped and that they be as outraged as we were not reached, democrats were outraged. we've expressed our outrage when groups we don't agree with politically or archaeologically are being attacked or being intimidated or being investigated by the irs. i would like to see a similar outrage from a republican colleague when folks testified before the committee. we don't agree that we stood by them and said as americans the shouldn't be investigated. >> i would prefer the gentleman to my opening statement where i mentioned that progressives were on the lookout list. will the german yield?

>> no, i will not yield. i thought you were talking about the sort of modicum of this committee and yet the gentleman continues to interrupt the chair. you had your five minutes and referred to me by name as the chairman and i'm going to respond. i would further my statement mention progressives were to be on the lookout list and i made one thing clear no taxpayer regardless of affiliation should be unfairly targeted. i yield to the gentleman of illinois. >> before i begin my question i would say i think the chairman has been more than accommodating. more than outreaching to the other side. in fact the chair would indulge when we had our first hearing when we invited witnesses who were victims of targeting, the chair asked for witnesses from the minority and with the chair remind us how many were submitted? >> there were none.

>> mr. werfel, welcome. on page 14 of your report that you submitted you outlined a proposal to eliminate the backlog of certain 501c for applicants currently before the irs. he specifically said just to eliminate the backlog you ask for the 501c for applicants to certify under the county of perjury to the irs that no more than 40% of their expenditures and volunteer hours will go towards political campaign activity and the remaining 60% would go to the promotion of social welfare if that is certified by the 501c4 applicant it is your policy than they would be approved in the next two weeks. >> that is correct. >> i would like to bring your attention to a specific case and asked how that would fall under this category specifically the

63 co 40 rule that you are proposing to the estimate is this a hypothetical case? >> this is the case 48 hours ago. >> i may have difficulty answering -- >> let's try to estimate thursday the president released the vision to cut greenhouse gas emissions. within hours and e-mails were sent to his election campaign supporters through barack obama stockholm, owned by organizing fraction a 527 organization. within the e-mail it asked volunteers to, quote, called out over twitter, e-mail, letters from facebook and so on members of congress that our so-called climate change deniers. the action item doesn't just suggest they should educate but they should call them out. then links to 85 plus members of congress they would like to be targeted all two more republican and more on this committee.

under that circumstance i am wondering whether that activity, those hours and that money would be classified under the political campaign activity or the promoting social welfare category? >> that is a good question. you are getting into a territory i am not an expert but i will do my best to provide some clarity as far as i understand this. it's my and standing that the political campaign intervention has to do with -- and in answering these as a blog matter because i don't want to get into 6103 issues of the specific taxpayer so i want to qualify my answer is in the broader context how we think about the political campaign intervention. the key issue as the entity seeking to influence the outcome of an election by either supporting a particular candidate or opposing a particular candidate.

the federal election commission provided guidance to help us on that. when you have a situation which for example and added mentions a candidate within 30 days of an election they say there you go you have political campaign intervention but the mention that candidate 120 days before an election it isn't as clear and more work needs to be done. so to get to your question as a broad matter one of the first questions i would have been analyzing it and the lawyers who are experts is there a candidate involved and is the activity intended to influence the outcome? >> there's 85 members of congress targeted. i understand you don't want to get specific but the point i am attempting to make is that the rule you are proposing requires the applicant to make the determination. so as the commissioner is proposing the rule under not a

hypothetical but the real situation if you can't make a determination, how can we then asked a non-attorney commissioner, not irs employees to make the same decision under penalty of perjury to classify their activity as either advocating for promoting social welfare or political campaign activity if we are going to let it under the 60 period 40 rule. >> there is specific guidance we can provide in our of vacation that we ask the taxpayer to look at and determine if they are meeting the criteria. right now we are articulating it to the taxpayer and it's done more specificity and the materials the taxpayer received in exactly how to answer those questions. so again, the key issue is are they attempting to influence the outcome of an election?

you take it from there and the tax payer can help determine whether they believe their expenditures will go higher than 40% for those types of activities. >> i realize my time is expired. i would follow up on exactly how this rule would then be enforced whether it be additional auditing and require additional personnel. >> and i can provide for the record the more specific guidance to read was just handed to me that the man at the in the best interest to read it out loud. >> you can make submitted to the committee and we will make it available. >> mr. werfel, you opened your report with the irs used inappropriate criteria that identified the tea party and their organizations applying for tax-exempt status based on their names or policy positions to get i'm going to ask you this question for some of the organizations to our target for their personal beliefs, or they asked for their list? >> it's my understanding roughly

27 entities were asked for their donor lists. >> do you know with these lists were used to target individual donors and the irs for audits? >> i don't have precise information on exactly how that information was used. that's part of the ongoing review. >> the reason i'm asking this is page 41 of the report states all current indications are that this sort of political activity analysis and subjective utilization of criteria does not occur elsewhere in the irs. it seems pretty definitive. how can you be sure? >> what i was referring to is there are four main operating divisions and the irs that deal with tax administration. the one that is the subject of this is the government entities organization and the conclusion in the report is right now in the investment division that gives individual taxpayers, small business and large

business we don't have current evidence the criteria would ask the leaders to run a thorough review and one of the reasons we can be reassured that conclusion is that it is very rare outside of this part of the irs political activities relevant to any determination. >> why would you assume they would be rear to occur in the first place? i know there's a publication that's the declaration of taxpayer rights and was part of the report submitted. is states up front protection of rights irs employees will protect your rights as a tax payers throughout your contact and will not disclose to anyone the information you give accept by authorized by law to the we know that has already been violated and the information leaked publicly. you have the right to know why we were asking for the information and how we will use it and that also hasn't been followed through because the organizations testified before the committee that the asked why certain fruition was being asked

for and there was no response for follow-up. i will tell you why also have constituents in my district who are fearful and have come forward to be concerned if they have become targets because in recent years audits that have been stepped up by their accountants, finance planners, they are concerned it's happening because of their political activity. it's happened over the last couple years and members in congress and in the entire body expressed the same concern. several told me these personal stories telling them we have never, ever in the history of our experience we keep the receipts and keep the books clean and monitor activities and we've never had this type of systematic auditing on an individual to this level before. we now know information on individuals has been collected and we know it has been leaked and the audits have intensified on individuals.

i think there is from my perspective the report before us has growing emissions that has to be a follow-up report coming down the road and what assurance can you give the american people and the committee making sure individual taxpayer rights are being protected and there is a plant in place to make sure that will happen. >> to the extent -- i probably should have said this earlier to the committee and the german -- to the extent there are particular areas in the report and questions that aren't answered, me along with the irs would be interested to have that feedback and would commit to exploring those questions with the committee and figuring out the best way to get answers. our goal with this report was to present a -- several things. to recognize for the taxpayers part of our reassurance in the path forward is to recognize our failures up front. to recognize that we need fundamental mistakes.

there are more questions to be asked on how the nature of the mistakes occurred. we want to show the american people in the report that we recognize them and that we are putting together and actively implementing corrective actions to move forward. we brought in experts in the public sector and management to help lead the irs going forward on these new activities to get some of the activities involved reviewing the current operations to ask the very questions that you are answering. >> mr. werfel, let me ask you this as my time runs out. there are several and please -- you describe how you have to go through the appropriate procedures -- but are you aware of any individuals and as congress need to have legislative procedures to make sure the trust is restored for the american -- >> you can answer briefly. >> i will answer in two ways. one, with respect to a specific employee i can refer you to the actions i just have to do it in

a non-public setting to protect their rights. secondly, as i said earlier there are due process procedures that are put in place for federal employees with respect to how they are disciplined or the potential handle. i'm not going to comment on whether they are good or bad. saying right now i'm following the rules law moving it as aggressively as we can. >> ms. sanchez is recognized. astana i appreciate you being here answering these questions. i know you've been on the job for roughly a month and i am sorry but some of my colleagues seem to be confusing with the main decision maker at the irs. you are not personally responsible for things like tax refund abuses or conference spending abuses or bonus abuses. that's what your position, is it? gannet i want to stand by my colleagues. i am here to make sure any actions that occurred before i

got there that need correcting or getting correcting. >> i think you are an easy target and nobody really likes the irs so it's easy to throw different issues that you when we are here to specifically talk about the tax-exempt applications and the process that went on. you are still investigating that report to the commander coming your partisan the final report. >> there are several entities in the ongoing investigations. >> including potential criminal investigations? to connect the department is looking at the right now. >> you stated numerous times and people said you seemed a little dispassionate there are rules need to follow as you investigate these allegations. >> i don't feel dispassionate. i feel very concerned and i think the report has some important language about failures of leadership and management that are very critical.

but yes, that concern and that sense of urgency i feel have to be balanced against these procedures that need to take place because the art legally required and i cannot enforce mistakes the irs made in the past if mistakes haven't followed the appropriate procedures required by law and regulation. >> i have a legal background and maybe others on the committee do not appreciate that but i would like to point out that the vigilante justice was often swift but not always correct or fair. and i think that probably compounding some of the potential failures that the irs would be mistakes on how the investigation is handled and if it were to be done not through the i don't think that serves the american public. >> i will be right back before this committee answering questions we can handle the investigation fairly. spec i appreciate that very much. now your initial assessment in

the preliminary report is that perhaps some inappropriate criteria was used by a group of irs officials in selecting certain applications. is that fair? >> if there were inappropriate criteria used similar to what pirg found. >> during the course of the investigation that assessment or to change their p.m. update i'm assuming. >> my hope is that type of information helps us understand better the nature and circumstances that led to these inappropriate criteria being used. >> i appreciated the identification of certain areas of failure and also certain suggestions moving forward in ways that you can make the process a fair and more transparent one. one of the things i want to ask about because it is something that is perhaps little known.

your report suggests the tax payer advocates of this could have helped exempt organizations struggling to have the process by the irs. is that correct? >> the national tax player can play a critical role helping the taxpayer for resolving the matter before the irs. they divi-divi effective job in many situations. i think looking at this situation in particular, they noted a very smaller dennett msm not contact between the tax payer for applicants that were receiving unfair and burdensome requests and all the things they went through. there is a lack of connectivity between them and the national tax payer advocate and that is a lesson learned and we want to try to educate them better on the avenues they have to help when they are having trouble resolving the matter with the irs. >> do you think the broad education project can make

people aware the fact that a taxpayer -- >> that is one of the recommendations in the report and we are committed to it. >> much is made up of the funding and how would this spent at the irs and there's been a request for additional funding for enforcement, but one thing that i'm hearing from my colleagues on the other side of the eye always on the one hand, they want you to enforce these people who are cheating on refunds, and they want you to, you know, come down hard on people abusing the tax code, but by the same token they don't want to pay for that. ..

>> thank you. mr. marchant. >> thank you, mr. chairman. mr. werfel, in one of your first days on the job, i wrote a letter addressed to you requesting that you find out the status of a group in my district, the -- [inaudible] county tea party. are you, is it your representation that over the next week or two weeks that this organization will receive its determination? >> met me answer that question very carefully since you've named particular taxpayer, and i have to be very cautious. i will lift up your question and say that all taxpayers that are in our priority backlog who are in this advocacy group that are in the backlog for more than 120 days will receive a letter from the irs this week explaining

their option to self-certify and get an expedited approval if they're willing to self-er is certify -- self-certify. >> this floor group joined in a lawsuit. will that lawsuit have any effect whatsoever on the determination of that group or any group that a's inside of that -- that's inside of that -- >> two responses. one, i definitively don't want to comment on the lawsuit. secondly, i'll just repeat my earlier point. if they're in the backlog, they're getting the letter. >> so there will be no retribution for a group that joined in that lawsuit? >> it would certainly be the policy of the irs to not have any type of retribution in those situations. so, yes, they will receive -- if there's an entity, if there's, if there's an entity that's in the backlog, it's our intention to send them this letter. and if they don't receive the letter for whatever reason, then

they should immediately reach -- and they can reach out to you or this committee or reach out to the national taxpayer advocate, and we'll look into it. again, our intention is to try to get every entity within that backlog to the extent appropriate a letter. >> on february the 11th, a subcommittee that i serve on, mr. boustany wrote the acting commissioner a request to produce a star trek parody video that contained no training content and was produced at taxpayer expense. subcommittee also asked for the cost of the star trek video and any other video produced by the, with irs resources. two months later and three letters later, we have the star trek video and the cost estimate in hand. turned out that that video was produced as entertainment for the famous irs convention that's mentioned. >> yeah.

>> imagine the committee's surprise when late on friday, may 31st -- i believe after you had taken over -- in an effort to get ahead of the tigta report expected the following week, the irs, about the irs's lavish spending at this conference, it turned out that this video depicting line dancing and of irs employees was also produced in the 2010 conference. it was wrong for the irs not to undertake a good faith search in february for other responsive material, but that was not on your watch. when was the second video brought to your attention? >> very early. i mean, obviously, very early in my term. i arrived on may 22nd, may 23 rld, it was one of the earlier issues that was raised to me in terms of it was my understanding that this committee had a

request for videos, and we were delivering that. >> did you produce it immediately to the committee? >> i -- it's my recollection that once i became aware of it and we had it in hand and it was requested by the committee, we provided it. i think there may have been a need to redact some of the names on it to protect perm privacy but, yes, i think we turned that video over to you very quickly. >> and did you or ores in -- ots in the irs directly consult with the treasury on how to produce that video to congress? >> how to produce it? i'm not aware of us consulting with the ir -- with the treasury department on how to produce it. but i necessarily don't understand your question. >> well, let me follow up. the lack of transparency pertains to just a silly video. and being from texas, very bad line dancing. now for something really more consequential, chairman boustany wrote then-acting commissioner steven miller on may 10th to ask

about all documents containing the word "tea party" in a list of irs employees involved in the targeting. you wrote back on june 7th. did you consult with the treasury on any of the correspondence that you had with the committee before you responded? >> i talked generally to the treasury department about our correspondence with the committee to make sure i'm giving them an update on the various requests we're receiving and how we're producing information. i don't have a particular recollection that we talked about this letter. >> all right. >> but in general, we do talk about discovery requests that we get from congress. >> all right, thank you. >> thank you. >> ms. black is recognized. >> thank you, mr. chairman, and thank you, mr. werfel, for being here. helping us to work through this situation. i want to start out by saying that the very basis of any relationship is trust. and we certainly see here that the trust has been broken. there's no doubt about that.

i think prior to all of this being revealed over the last several months here if you'd have asked someone what kind of reaction do you have if you get a letter from the irs, they would have already said have fear, they're so powerful that even if i haven't done something intentionally, they're going to come down on me. it's not an organization that helps you work through something if you haven't dope it properly -- done it properly. a lot of uncertainty. i can call one day and get one answer, call another day and get another answer. so there was already this image of the irs with people prior to this. and i think this this has all jt confirmed what their feelings were, that there was a distrust and a fear. and restoring this trust is going to be very difficult. and i just want to go back and chronicle a couple of things that have been said here, and i want to add one to it. you know, obviously, we're here for the targeting issue. that's what this hearing was

called for. but also we with heard chairman johnson talk about, and i was on that committee and heard mr. miller, i believe, was here the day we talked about the abuse of the earned income tax credit that results in billions of dollars improperly being sent to people. and there wasn't a concern that we could even work together to fix this. we actually had to bring legislative action to fix it. chairman ryan talked about the misuse or the inappropriate use of funds on these activities, over $100 million which a significant amount of money. chairman boustany talked about the bonuses being given out to people that were perhaps involved in in this, and we can't be sure those are bonuses they deserve. i also want to lift up a tigta report that showed that 1.7 million recipients received over $2.6 billion of improper payment where we couldn't confirm that they even attended the school

that they were asking for the tax credit for on the american opportunity tax refund. and so we see over and over again this is not just about what's happened here in targeting that is a very serious issue. but it's a culture. there's a prevailing culture within this organization that leads people the think when they turn on their television night after night and they continue to see one thing after another after another that there is a reason to distrust this organization that has so much power over them. so my question for you is in your report you do report here that there were three things that you're looking at; accountability, fixing the problem with the tax-exempt status and then the third area was a broad review of the irs operations and risk. are those three things only related to what's happening with this tax exempt, or is this something you're going to look at overall? >> it's broader. i mean, if you -- in section three of the report what we

attempt to do is we draw four general conclusions coming out of this issue with respect to the ig report, and we ask questions about the broader applicability of those four areas into the rest of the irs. and we analyze each question and come up with a series of actions intended to deal with the issue. for example, and i think an important one, is the taxpayers that were not getting the appropriate customer service or treatment by being in a backlog too long and getting inappropriate questions -- >> okay, so i'm going to interrupt you because i'm going to be limited on my time. >> please. i understand. >> -- what i would like to know, i like to know your plan, and i know you can't give me your whole plan today, but given what we are seeing here, there has got to be a plan to show the american taxpayer that they can have confidence, that they can trust the irs in their own -- >> an initial blueprint is in section three of this report, and i would love feedback on it,

and certainly there's places we can fill out and do more, and i think this report is about starting that dialogue. >> i'm going to run out of time here, but i do have one more question. your report states that you have found no evidence to date that anyone outside the irs had any role in initiating or encouraging the tea party targeting. the question that i have for you is did you come to this conclusion by asking the white house or the treasury officials whether they were aware of the activity? >> we came to this conclusion by looking at the evidence that we had which was a variety of documents, e-mails, employee interviews, a lot of it conducted by the ig in their audit report -- >> so reclaiming my time -- >> we have looked at the evidence that we have, but we've also said there's more evidence that needs to be looked at. >> will okay. so i hope then that you will have a conversation with those in the white house all the way up to the president, and that will be a part of your report that comes back as well. thank you. i yield back. >> thank you. mr. davis.

>> thank you very much, mr. chairman. and commissioner, how are you? thank you for being here. you know, like a number of other people who have sort of expressed interest in the fact that you would take this position and even asked why, i think i've come to the conclusion of why. i think you know it's a very difficult situation, that you're going to have a tough job restoring trust in the agency by the american people. but i operate from the premise that if there is righteousness in the heart, there's beauty in the character. and listening to you all of this time this morning, i get the impression that that's really where you are. and that's what you really want to do. and that's how you're going to

manage this agency in a balanced kind of way. adhering to the policies and practices, procedures and points of law that have already been established legislatively, that this is what you are supposed to do. i've been tremendously impressed with the report that you have issued, and there are some things that jump out at me. one is the fact that you, you're ready to make some rectification for those groups and individuals who feel that they've been harmed with unusual delays of the process and of their applications even to the point of self-certification. how would that work? how do you propose to have that work? >> this week the taxpayers that

are in our priority backlog for more than 120 days will receive a letter that will explain this new program that we have that would enable them to get a fast track approval if they are willing to certify to these particular facts and realities. as i've said, it has to do with the expenditures and their voluntary person hours and not to exceed certain thresholds. so they, if they feel comfortable that they can attest to that's the way they're going to carry out their operations with respect to political and social welfare activity, they will sign the document just like they sign their application today, submit it to the irs, and we will give them an approval. and if their activities change, they will be required to let us know, and it's possible like with any taxpayer that they could be reviewed on audit or exam at some later point. and if we find compliance, we'll move forward. if we find noncompliance, we'll deal with it at that time. >> are i know that much of our

conversation has been about transgressions and activity that was outside the realm of what one would expect. and i also know that history is history. and that it's very difficult to change what has already happened. but it's not impossible to make sure that it does not happen again. you mention in your report that there are certain risks that -- and information relative to operations of the entire agency that the commissioner's office may not have had enough information about. >> yes. >> and that you would want to seriously analyze that. and how do you change that information gap that may exist?

>> when i came to the irs, i reck -- recognized that across the organization i do not believe today there is enough work being done to both identify, categorize, understand emerging risks and operational challenges within the organization and bring it together on a portfolio basis across the irs so that the senior leadership of the irs can understand those issues and deal with them. not just deal with them, by having transparency into them, it automatically triggers accountability for them to deal with it. it creates an environment in which the leadership and the division itself are working together towards a solution. and, very importantly, it enables the leadership to then push that information out earlier in the process to the irs oversight board, to the ig as necessary, to this committee as necessary. we have a, an architecture that

we're putting together, an enterprise-wide risk management program that will redefine the way in which we capture this information and report it up. it seems very textbook within this report, but it's actually very important. and it's potentially, i believe, transformational to getting at some of the root of the very issues that this committee is raising. how can we -- >> thank you. >> yeah, okay. >> mr. young is recognized. >> thank you, mr. chairman, and thank you, commissioner, for being here today. you're certainly entering this organization at a difficult time. your organization, like all others, is only as effective and good as the people who populate it. by extension, the extent to which we hold people accountable. we have many good, public-spirited, conscientious public servants working in the irs and ore agencies -- and other agencies, and we must

insure that we don't put forward any baseless sort of disciplinary actions with respect to these individuals. i know you agree with that. my preference would be to hold these individuals, however, to the same standards that other workers around the country outside of the federal government must pertain to. you have said time and again during this hearing that we need to discover the facts. there's some variant of this. first, discover the fact, wait on those facts to emerge and then take corrective action. entirely, eminently reasonable, and i agree with that. this would presume my apply to personnel actions as well. we've taken some bold actions over at the irs with respect to management failures. within your agency. replacing four individuals, five positions, this is prominently displayed -- >> yes. >> are -- in your plan of action here. and so what i want to know is what specific facts have you

collected which justify the replacement of steve miller? we'll begin with mr. miller. >> okay. as i mentioned earlier, the, at that level of the organization we perceived in our review a deficiency in leadership and not understanding earlier in the process the emerging challenges that were happening within the exempt organization unit, the emerging concerns that were being registered by taxpayers, a lot of the activities that were going on in the ig report should have surfaced to the leadership before the ig brought it to their attention. >> what did he fail to do? were there signals that existed that he failed to identify? did he fail to put in place quality control mechanisms that should have existed? this ought to be documented. you know, i know that throughout our federal government union protections for your rank-and-file workers are typically also applied at the higher echelons of management.

so you had to overcome a pretty high threshold of evidence before the decision was made to replace steve miller. or any of these other individuals. so i want to know with particularity why was steve miller replaced? commissioner? >> well, let me first state that i was not at the irs when this situation happened. that was a decision, i think, that was determined between mr. miller, the secretary of treasury and the president on terms of whether the confidence had been lost due to this current situation. >> but you're -- [inaudible] it hasn't been documented. have the reasons for that decision to replace mr. miller been documented? or could they be articulated by the new commissioner, yourself, though you go by a slightly different title? >> yeah. i think i'm -- this report is in part an attempt to provide a review of what we found in the organization at multiple levels. and i think we talk very explicitly about particular --

and i think we identify them as failures within the commissioner's office, to -- and i think these are the exact words we use, to identify, prevent, correct and disclose the information that was -- >> all right. you know, to my constituents that sounds like a lot of washington speak. >> okay. >> a lot of words. you're taking up my time here. i've got five minutes. i appreciate the answer, but maybe i need to ask the question a different way. so i'll move to a different individual. how about joseph grant? can you tell me with specificity why joseph grant was removed from his position in. >> be again, let me take a step back and make sure that i don't violate anyone's rights of privacy. let me also step back and make sure that i don't impugn any particular individual because there's, these are organization allayiers, these failures were both individual and organizational. and i don't want to necessarily place the holistic blame for the situation on a given individual.

this was a collective organizational failure. there was particular individual failures. and i don't think in 25 seconds i can articulate -- >> well, i don't either because you've used the clock. you're down to the end, and i do appreciate the answers that have been forthcoming. i would like to know, i would like you to report to this committee what disciplinary action beyond replacement of these individuals has been taken. >> and we can provide -- >> the privacy act -- >> we can prosaid that to you in a different setting. >> right. and perhaps you'll think of or acquire through other means the reasoning behind these separations and communicate those with congress as well. thank you. >> thank you. mr. kelly. >> thank you, mr. chairman. mr. werfel, because with i was thinking along the same way as mr. young coming out of the private sector, and i did notice you do have a great deal of concern for the folks that we're asking you to take a look at right now and saying you want to be sure we don't violate any of those rights or privacy, and i think that's very noble.

and i think that is your desire. but when i'm back home in western pennsylvania. people ask me about, you know, why are they able to do this, and why are they able to continue doing these things and nothing happens? what i would like to say is, you know, our role as congress to be here for the people that we represent, the voters in office. i guess my question would be we're so concerned about these individuals' rights and privacy, but these folks that were targeted, we don't have the same amount of concern. and for all of this idea about my rights, my privacy, all of those things seem to be secondhand to an agency that you're running right now, there's over 90,000 people, is that correct? >> yes. >> in an $11 billion budget. my goodness, is there any doubt that anything this big and this expensive could possibly be with reined in? i don't understand how you're going to do it.

i think it's a noble idea, but i don't know that it can be done. and, again, moving forward, though, tell me, the people that were let go, what can you do to assure the american people that they really haven't been let go, have they? >> there's a combination of personnel actions that have been taken -- >> but nobody's been let go. >> there's, again, there's been -- >> well, but it's -- [inaudible] it's an easy answer. >> has anyone been fired yet as a procedural matter? no. but all of these options are being pursued -- >> well, because the way government works, they usually get redeployed. i haven't seen anybody get let go for anything. and i know that you don't have a lot of tools in your tool box when people go on a leave of absence that's always fake. and i think the american taxpayers think you know what -- >> people do get fired from the federal government. >> i understand that. >> it follows a process. >> well, i understand. i understand all that. but as my two and a half years

there any of the wrongdoing nobody's ever been let go. they've been redeployed, repositioned, placed on administrative leave with pay, all different types of things. both ms. lerner and i think it was mr. roseberg yesterday immediating the fifth when they come before the people's house to give the fifth amendment. i can appreciate that, but that adds then to the public's distrust and loss of faith in the government. so i know you have a large job on your hands. as we go forward though, you said to start off, and maybe i didn't understand you, but more investigation needs to be dope. to be done. how long do you foresee this going? >> that's a good question, and i don't want to lock into a particular time frame because i want to make sure that we follow the facts wherever they take us. but i would anticipate that over the next, you know, two months there'll be a material amount of interviews and document review

that would enable us to revisit the issues and see where we are. i think that's probably the right complement of time. will i say it's over at that point? no. but i think that seems to me a good milestone to check in and figure out have we learned a material amount of information. >> so far what i've seen in your comments is that there's been a lot of wrongdoing or somehow things weren't handled the right way, but nothing you could say that was intentional. >> at this time we haven't seen anything, but we're open to the fact that it may have occurred. we just want to make sure we're doing all the right due diligence. >> >> i understand that. i understand that. just to switch real quick to since -- cincinnati. >> yes. >> did it only happen in cincinnati? does it go any deeper? can you. >> what i think -- >> i'm running out of time. >> here's the point, i need to make in this point. the individual who supervised the office, and i said -- >> i understand the answer is,

no, you don't know yet. >> i could offer more than that but we don't know the answer. if you wanted me to expound, i could -- >> i don't have the time. >> i don't know the definitive answer to that time. >> with okay. is there any doubt in your mind that it doesn't lead back farther? >> i don't understand that question. >> well, is it just cincinnati, or does it come back? does it come toward washington? how high does it go? >> i was about to say there are people in washington, d.c., in particular the director of rulings rulings and agreement which is in my -- >> okay, so it could do. >> that person sits in d.c., but there are five levels below, but their office is in washington d.c. >> i just want to tell you that the people that i represent back in northwest pennsylvania do not for any -- they don't believe right now that there is going to be a serious inquiry into this, and they don't think that the irs is going to come out on its own and do it or the administration's going to do it on its own. it's going to be up to us in congress to continue to look for answers. so i wish you luck, but this is

critical to the faith and trust people have. their tank's running on zero because we haven't seen anything that makes sense that this is fair and just to them. >> all right. mr. renacci and then mr. griffin. >> thank you, mr. chairman. thank you, mr. werfel, for being here. i was listening to all these questions, it reminded me of my private sector life. and i had to report to a court every week in bankruptcy and those situations as a trustee's representative. so one of the this ings that people -- things people always wanted to know is what are you going to do to change things, how are you going to fix things, and i think those are the line of questions that the american people want to hear. i've got a lot of questions, so i'm going to ask you for yes and no answers, but if you want to go back to them, we can. did you talk to the treasury about your testimony and discovery today? >> yeah. i consulted with the treasury about this hearing. >> did you supply them your testimony or submit your testimony -- >> my testimony today was the

report. so they had the report. >> the treasury, did they make any corrections or revisions or make any suggestions on what you would say or not say or submit today? yes or no. >> i wouldn't say corrections. i was keeping them informed of how the report, i briefed them, and, you know, they offered kind of i'd say high-level suggestions, but as an important point i don't think we got a single line edit from them. >> okay. >> general guidance. >> right. so you did discuss. okay. you know, ranking member levin said in his opening statement that individuals at the irs that targeted groups should be relieved of their duties. i made a quote of that, relieved of their duties. i agree with mr. levin. do you agree with mr. levin? >> i believe that if there's -- >> if they targeted? >> if there's management neglect or inappropriate conduct, then -- and it depends on the nature to the extent of the -- >> if they targeted groups -- >> intentionally, yes, i would agree. >> okay.

you have testified several times today that there was no intentional wrongdoing. was there wrongdoing? >> i said there's no ed yet of intentional -- evidence yet of intentional wrongdoing but, yes, i would -- >> okay. like i said, i've got a lot of questions. i don't mean to -- >> please, keep going. >> you testified there was neglect of duty. you said that earlier. >> yes. >> do you believe there was neglect of duty? >> i do. >> so there was wrongdoing, and there was neglect of duty, but there was no intentional wrong doing. would you agree with that? >> there's no evidence yet of intentional wrongdoing, but i'm not going to reach a definitive conclusion until all the evidence is obtained. >> okay. do you believe targeting of individuals or organizations for political purposes is illegal? >> targeting -- with political bias? yeah. i think there's potentially legality. >> okay. do you believe it is wrongdoing? >> yes. >> do you believe it is neglect of duty? >> yes. >> did the irs seek a removal of

mrs. lerner? >> i can't answer that question in this setting, but i can answer that question in a different setting to you directly. >> so you can't answer whether she was asked to resign or be fired? >> not in this setting, but in a separate setting, i can. >> what is mrs. lerner doing right now? >> i can't answer that question in this setting. >> do you believe the irs, again, i'm going to go back, do you believe irs employees who were deemed to have target someone for political purposes should be fired? >> if it, if it was based on political animus or that type of intelligent, yes. intent, yes. if the seriousness of the management neglect was to the appropriate level of seriousness, then yes. >> are you aware of section 1203 of the irs restructuring form act of 1998? >> i'm aware of the act, but you'd have to tell me exactly which section you're referring to. >> creates a list of ten deadly sins that irs employees can be

terminated for. >> yes. >> are you aware that political targeting is on that or not on it? >> i don't have the list memorized, but i can -- >> okay. >> i can look into it. i think it's implied through other more general criteria. is my recollection. >> it's specifically not mentioned. can you think of any reason why we should not add the targeting of an individual for political purposes by the irs agent to that list? >> given these events, i think it's a reasonable suggestion. >> okay. well, i agree, and that's -- so you know, i'll be introducing language to do that, and i hope your agency will support that. mr. chairman, i yield back. >> thank you. mr. griffin is recognized. >> thank you, mr. chairman. thank you, mr. werfel, for being here. i also have heard great things about your reputation, and i hope that you will get to the bottom of this. i want to raise some specific questions, though.

this report charting a path forward at the irs is a public report, and in this town as you know, you've been here a while, and identify spent some time -- i've spent some time in this town. a public report whether it's intended to be or not is a political report. people are going to seize upon what's in that report, and they're going to statements like the one that you made where you have not found evidence of intentional wrongdoing on behalf of irs personnel. they're going to seize on statements like that, and they're going to hold that up and say, uh-huh, see there? no evidence. i was a staff investigator here in the house, i've been a prosecutor. did you not know that by putting that in the statement you were communicating to the world even though this is a, this is a simply an update, you were

communicating to the world from a political perspective that there is no evidence of wrongdoing? i understand factually what you mean. but the reason this has gotten so much attention is because what a responsible investigator would say is either nothing where that line exists, or the investigation comets. continues. the idea that you would say there's no evidence of intentional wrong doing at this point is -- i worked at the white house in political affairs, you've worked at the white house, i worked up here. that's a political statement whether you intended it to be or not. that's a political statement that whether you mean it to or not gives cover to people politically at a time when lois lerner pled the fifth amendment

where any, anybody who's gone to youtube and seen the testimony of high-level irs officials in front of this committee based on what we know now, it's clear that they were not being forth right in telling the whole truth with this committee. now, whether that constitutes what you would call evidence or not, if i knew that one of my top lieutenants had just pled the fifth and my other lieutenants had given less than the whole truth to this committee and i saw a staff person write that sentence if they did, i would take it out. so my first question is did you write that sentence, or did a staff member write that sentence? >> we, there was a group of people. i i was one of the authors. we co-authored it amongst a group of people. i'll take ownership over every sentence in this document. if you allow me the opportunity,

i can respond to some of your points, but i don't want to use your time. it's up to you. >> i know. i'd love to have a lot more time than i do. and maybe because i'm last, i can keep going. maybe not. but did the white house at any time -- i know the white house as i used to say and probably you used to say is not a person. did anyone at the white house review this statement? >> no. >> no one? >> not that i'm aware of. >> okay. anyone at treasury? >> yes. >> will -- yes. >> i, and let me just say, i did brief the president a few hours before the report went out on the morning the report was issued on monday, and i did mention this conclusion. so i just want to make sure that that was clear. >> i appreciate you pointing that out. i think, i think the bottom line is here we have an ongoing investigation here in this committee, we have an ongoing investigation in the senate, we have an ongoing investigation at another committee, we have a criminal investigation, we have a top lieutenant who has pled

the fifth amendment, we have, in my view, we have video of high-level officials giving less than the whole truth to this committee which is a potentially criminal act. i just think that whether you believe that statement or not, putting it in here with your background in washington is irresponsible. and let me, and let me go into the next point here. these individuals that you personally did not interview, josh grant, steven miller, doug shulman, lois lerner, can you tell me who is interviewing -- first of all, is someone interviewing them? >> there's a, the inspector general and the justice department are putting together a witness list or have put together a witness list. i assume it's evolving based on the facts that they're gather, and the professional investigators of both the inspector general and justice department are conducting those interviews and at the appropriate time will share

those results with me and i assume you in order to insure we have a collective understanding of the facts. >> all right. thank you. time has, pyred. thank you, mr. werfel, for your testimony this morning, and with that, this hearing is adjourned. [inaudible conversations] [inaudible conversations] >> the u.s. economy added 195,000 jobs in june as the

unemployment rate remained unchanged at 7.6%. the bureau of labor statistics today released those employment numbers. over the last six months, the economy has added an average of 200,000 jobs a month. >> you're watching c-span2 with politics and public affairs. weekdays featuring live coverage of the u.s. senate. on weeknights watch key public policy events. and every weekend, the latest nonfiction authors and books on booktv. you can see past programs and get our schedules at our web sites, and you can join in the conversation on social media sites. >> the national cable and telecommunications association recently held its annual meeting in washington d.c. one discussion featured remarks from education secretary arne duncan, gloria -- [inaudible] of cnn and jennifer lopez. this is an hour.

muck. ♪ ♪ >> thank you, and good morning, everybody. thanks for being up early on this last day of the show. it is day three of the cable show 2013, and i am glad you joined me. now, if you've come in this morning thinking that you're going to lean back and relax during this sleepy final show session, well, you're at the wrong convention. we have an incredible lineup in store for you today. where else can you find the secretary of education and jlo sharing the same stage? [applause] i agree. she just kept stalking me in the green room, she wouldn't leave me alone, i tell you. [laughter] in my dreams. [laughter] not to mention some of our industry's finest education leaders and many successful and creative entertainment executives.

so it'll be a pourhouse session that's likely to keep you on the edge of your seat. now, i want you to know how excited i am with the show this year. it's been wonderful. we've had some great highlights. we've hosted visits from members of congress, fcc commissioners and public policy community generally at large. hundreds of people have spent time in the rooms with us and on the floor with us. yesterday we got to explore amazing new worlds of technology with my colleague, brian roberts. that was pretty cool. yesterday we got to meet many men and women who have served in the armed forces and might soon call cable their home. we got to glimpse into the views of cable's contributions in our observatory and imagine park. and along the way i hope like myself we had some fun on the show floor. so i think it's hard to ask any more of the cable show than what we've experienced for the last two and a half days. so now it's time to mark your calendar for next year.

it starts april 29th through may 1st, 2014, in beautiful los angeles. just a few weeks earlier than this year. thank you for participating in this year's cable show and for all you do to help us generate huge success while bringing so much joy to our customers. now, let's get down to business and kick off this morning's impressive session. please welcome to the stage west coast news editor "entertainment weekly," lynette rice. [applause] ♪ ♪ >> have a great panel, lynette. thank you. >> hello, welcome to today's opening act. i know you're all here to check out the hottie at the department of education, so we will rush through. last month in new york it was announced that jennifer lopez, who apparently doesn't have quite enough to do in her life,

has added the title of chief operating officer of nuvo tv. here's a little bit more on that. ♪ ♪ >> this is where i belong, right here with all of you. ♪ ♪ >> i'm involved in everything creative about the network. i am committed to supporting diversity both in front of and behind the camera. it's time for television to reflect who the modern latino actually is, not who we are believed to be, not who we may have been, but who we are now. ♪ it's a new generation. ♪ ♪ we can do anything we want,

live it up, so live it up, live it up. >> on nuvo tv, it's us front and center. you'll say, that's me, that's my family, those are my friends. just people we recognize and relate to. new stories without stereotypes. we are real stories. we are it. ♪ ♪ live it up, live it up, go, go, go, go. >> ladies and gentlemen, jennifer lopez. [applause] ♪ we can do anything, live it up, so live it up, live it up, go. ♪ and we ain't stopping til we're done, live it up, so live it up, live it up, go. >> just a couple of little notes. >> i want to repeat the quote

that you just said with conviction, you said latinos are a force in this country, and it's time for tv to reflect who the modern latino actually is, not who we are believed to be. can you expand on that? how has tv fallen short? >> um, for me it's always been about a lot of stereotypes, and even things have changed, you see more latinos on tv, it's not really a reflection of who the modern latino is. this is an english-speaking network, there's a lot of spanish networks -- [laughter] was that for us? >> yeah. [laughter] >> but this is an english-speaking for the modern latino. it's a different thing. and it requires different programming. it requires a very targeted agenda. >> why this? why now? you clearly have got so much else going on. >> yes. well, i think when nuvo first came to me, they came to me maybe just for me to be the face of the network. and when they sat down, when i

sat down with michael swimmer and we really started talking, i think he realized i had a lot of ideas about the network and what with it should be and programming for that tee knows. so my point of view came from my upbringing, you know? i grew up watching marcia brady or rudy huxtable, but i didn't really see myself. and when i think about growing up in the bronx and watching tv, i think about, like, once a year west side story would come on. and this, this movie inspired me so much, you know, to do everything that i've done. and i just, when i thought about nuvo and the network, i thought this is a great way to empower and uplift the community. because if i could be inspired by just one movie once a year that my mom had to make sure that we watched at thanksgiving it came on -- [laughter] then we had a cable network that was 24 hours a day with

programming that was relatable where i saw myself, where -- imagine how many people could be inspired and imagine how many things could be done. i saw it as a real opportunity to empower and uplift this community. >> so how, how is your role going to work? are you going to be there day in, day out? [laughter] >> well, you know, i can't be there day in and day out, but i'm the chief creative officer. so i, the whole look and feel of the network i'm involved in, involved in creatively. so, you know, marketing and how the marketing looks, how the network looks itself, um, the programming, the development of the programming, being in distribution meetings and all that kind of stuff, you know? it's a big job, but for me it's really important because for me, like i said, it represents something bigger than just television, you know? it represents doing something for this community that has been so underserved for so long. >> talk about those distribution meetings. >> are eek.

>> were they wonky? was it a little weird? >> no, they actually were great. i'm such a creative person, i'm always thinking about stories, and the distribution was a totally different thing. but i think what i learned from them was really that everybody's trying to target this community, everybody's trying to figure it out and crack that nut. and it's not an easy thing, you know in. >> how did your celebrity help in those meetings, and how do you think it'll help launch this network? >> and um, i think being a celebrity everybody thinks, okay, bringing awareness which is an obvious thing, and that's true. but i also, you know, i've had 20 years in front of and behind the camera. so one thing that i do bring is relationships, you know? just with our partnership and association we've already attracted different talent, different, you know, the agencies are willing to work with us in a different way, just everybody, just directors and

writers and all that kind of stuff. it makes a huge difference. so we're able to kind of be able to boost the programming and boost the quality of the programming in a way that hasn't been done before for this community. >> when you're in those distribution meetings, did they, was their idea or some people's idea of what works for latino television is, you know, a lineup of telenovellas? >> i don't think so. you're dealing with a bunch of smart people, i just don't think they understand it. i am a modern latino, i know what i saw and what i didn't see. so i'm able to bring that knowledge. and, of course, my whole family and all of my friends, i'm able to bring that knowledge to it, say i want to see this, i don't want to see that, you know? and at the end of the day art, great art, great television -- which you have to have great television these days because television so cutting edge -- is just about making quality, doing quality stories and really making great television, you know? and so that's what i feel we

have to concentrate on. this should be a network not only that draws in all the latinos, but also anybody. i often think of this movie, "the joy luck club." never having been to the far east and knowing nothing about the asian culture in any way, shape or form, but this movie touched me so much. and i was young at the time. i don't know if you guys remember that movie, but it was by a director who i worked with in "maid in manhattan," and i knew the movie very well. it was a great story. it didn't matter that it was about asians or that culture. you saw yourself in it. some story in that movie touched every single person. pleasure and that's what i feel great art does. and i think with the nuvo network, that's what we want to accomplish. we want to accomplish just great art, great programming that, of course, is targeted toward the modern la toe know, but at -- latino, but at the end of the

day, you will tune into bet, so i will, mtv, each though it's for a younger demographic, so will i. for me, that's the goal. >> do you know yet what the perfect nuvo tv show is? can you define it right now? >> the perfect show? >> yes. >> it's a lot of different things. honestly, there's going to be so many facets. that's really trying to put us in a box again, and i think that you can't. we're very diverse, and there's a lot of things that interest us. one of my wish lists for the thing is to infuse more music. i feel like when you think about networks that were launched and were targeted toward a specific demographic like a bet or an mtv, like i said, for the younger generation, there was, they drew them in with music first, and then the network grew from there. and i think we can do that with nuvo tv. so that's one of my things that i'm always kind of, music, music, music. [laughter] >> so that basic question, when will we see you? >> me on tv? [laughter] >> you on tv. >> well, for the launch there

are some programs that i'm involved with, so you're going to see me on probably sooner rather than later. again, we're just infusing the network right now with energy. this is a long-term project and goal like any network, bravo network, any of these networks, it takes years and years to get it right. but i feel like we're on such a fast track with lil' hillary now come -- bill hillary coming on who worked at comedy central and bbc, with our new marketing held jenny, we're on the right track already. and this new energy that we infuse for the launch in july is just a taste of where we're going. you'll get the new look, you'll get the new feel. but, you know, we want to go into scripted, you know? that's a big thing for me that i push for, too, because i feel like one show can launch a network. one amazing show. and we're constantly on the lookout for that. >> with now, your production company will sell to nuvo tv. >> absolutely. and everybody else. >> okay. so you're not exclusive.

[laughter] now, you also, there's some things that were announced at the up front yesterday -- i mean, last month. a special involving you is one of them, correct? >> yes. yes, yes. >> what it will be? >> one of the things that was important to me too was to have some education, let's say. not hit you over the head education, but education in an interest withing way. i don't feel like you can go anywhere on tv and get any of our latino important figures or their history. you know, whether it's politics or comedians or actors or writers or directors or, you know, like i said, political figures, you just, you know, historical figures who people who change things who had different turning points in their life that led them to a path that was, that wound up being very inspiring or aspirational. and so one of the shows that we're doing is aimed at that, and i'll be the first episode just because i was available. [laughter] >> now, is there a chance that

maybe you'll trade on some relationships and try to woo in producers to do shows? >> absolutely. i mean, we're going to everybody. i work with caa and a lot of great -- which is a great agency and has a wealth of writers and directors and, obviously, actors. but all of our, all of my relationships i'm calling on for this because i really do feel like it's an important, it's an important initiative. i don't want to say initiative, but it's an important -- i don't know what the word is. it's just bigger. it's bigger than just a channel. >> of all your accomplishments, where does this rank or where will this rank especially in terms of your legacy? >> oh, my legacy. >> yes, talk about your legacy already. >> already? i don't want to. [laughter] i want to just, you know, have fun creating the shows. [laughter] i don't know. i just, i want to, i think what i want is for it to be remembered as a place where we gave a home to artists that didn't have a home before, a

real place to go and where latino artists in front of and behind the camera had a place to tell their stories, to tell our stories and that at the end of the day we changed, literally changed the face of television. >> i gotta ask you, i'm not sure if you have time to watch television, are there any shows on tv now that you feel like speak to you, speak to a modern latino? >> hmm. i'm going to have to get back to you on that. [laughter] the fosters. [laughter] >> all right. last and most important question, i don't understand -- how are you going to balance this with going back to "american idol" and saving it? >> what? [laughter] >> yeah. >> that's just a rumor. >> is there saving to be had? >> not right now. i don't have any announcement to make on that front right now. i'm concentrating on building this network. on a couple other businesses i have and also just working on my tenth album. >> tenth album. >> yeah. >> wow. ladies and gentlemen,

jennifer lopez. >> thank you. [applause] >> many i had one other thing -- well, okay. that's it. thank you so much. pleasure. ♪ ♪ >> good morning. and now it's my great pleasure to introduce a very special guest, a man who shares our belief that all americans should enjoy the benefits of broadband, that all children through the power of our technology can be ennobled to be good digital citizens and that cable and broadband technology can transform our schools, their class rooms and our children. over the past four years, arne duncan has forged a reputation

as one of our nation's most distinguished secretaries of education. building on his success in his hometown of chicago, he's instilled new energy, vitality into our nation's educational system. through innovative programs such as race to the top and through his personal commitment to america's educators and their students, he has lifted the united states educational system into global competitiveness. we have been proud to partner with him, the department of education and the administration in insuring that critical broadband technology is accessible to american schools and in making that technology a change agent in our classrooms. and, oh, by the way, did i mention he's got a hell of a good jump shot? ladies and gentlemen, please welcome the united states secretary of education, mr. arne duncan. [applause]

♪ ♪ >> thank you so much, michael, for that kind introduction, and i always love following jennifer lopez. [laughter] i'm going to talk to you about some really sexy topics like academic learning standards and fiber optic cable installation. but i promise you and i hope it'll be a lot more exciting than it sounds, because i'm going to talk to you about the intersection of education and technology, and that means i get to take you into the future. last month i visited a school in the heart of detroit, brenda scott academy. it's one of the lowest performing schools not just in the city, but in the state and a very, very tough neighborhood. they're working very hard to turn that school around and create new opportunities for the children there. you wouldn't know about the past history and the challenges or any of that if you visited christy ford's classroom. if you did, you would see young children working independently

and in small groups. you would see them discussing the study of the solar system and building 3-d models of it. you would see others engrossed in learning games and apps on their laptops. and you would see ms. ford not at the front of the class lecturing, not closely directing the flow of activity, but simply working quietly with a few students who need help. all of her students are on individual learning plans working at their own pace. and if that sounds like great teaching, it absolutely is. if that sounds like a wonderful way to learn, it is as well. but it's an example of what technology makes possible through both the flexibility it gives teachers and the opportunities it gives to our nation's students. teachers are asked all the time to personalize their lessons for each child's strengths and needs which is very important, but it's also really hard to do. they're expected to know how each student is motivated and match that to the right content

and instructional approach. that's also powerful, and it's also hard to do. technology helps to turn those goals, those aspirations into reality. it also allows fantastic teachers like ms. ford to give her students experiences that you and i could never have dreamed about having in school. ..

most schools have about as much internet bandwidth of your house. actually more than less of your home because you know this business. let's talk megabits per second. it takes about 1.5 to do what she needs to do with broadband. a classroom that would require me be 45. and about 120. we recommend the school should have about 100 with a clear path to getting to a thousand which they provide. today the honest brutal truth the typical school is nowhere near that. and the competitors are far ahead of us and in south korea for example 100% of schools have access to high-speed internet. here it is only about 20%. we are denying our teachers and students the tools they need to be successful. that is educationally unsound and is unacceptable.

as a country we are not keeping up. america used to have the highest support of college credits in the world and now we are 14th. in a knowledge base globally competitive economy that is a job killer. the status quo is bad for children, that for families, that for communities, and ultimately bad for the nation's economy. so what are we going to do about it? simply put, we must innovate and invest. we need to make the pockets that we see in many places the norm and not the tax section. so at the federal level we are pushing for fundamental dramatic change in the education system from cradle through career. it starts with making high-quality preschool available to every family and president obama is outlining the plan to do just that. it's totally paid for with a cigarette tax and it needs to happen because investment in

high-quality education is the best investment we can make with at least 7-1 of. at the cape ralf level we are supporting to raise academic standards. this is a game changer and in the voluntary development of shared standards for college and career readiness, a meaningful high bar for students opens the door to innovation that can work in almost any state. we are investing $350 million in the two state led consortium that are creating on-line assessments tied to the higher and more rigorous standards. those assessments will replace the traditional fell in the bubble standardized test everyone knows that no one loves. but to give assessments that measure critical thinking and 21st century skills most will require bandwidth they don't have right now. at the college level we are pushing for new ideas will make college more affordable because

of the students and families can't keep up with the cost. and innovations and we think can be helpful in moving forward. at every stage along the education continuum, we need new ideas so we have created a competitive funds aimed at spurring innovation in putting for the school districts in the personalized learning tailored to each student's needs. we have to get better, faster even during the tough economy, and technology is critical to raise the bar for all students and close what i call the opportunity gap. but much of this depends on good access to the internet. broadband internet has become the internet highways system for communication and ideas. today it doesn't reach most schools and it's time that together we build on ramps. that's why president obama and i traveled to north carolina last week to announce connect ed.

it challenges the fcc to why you're pretty much every school in the country with fiber-optic connections over the next five years. it challenges states to train teachers for the revolution and it challenges the private sector to make digital devices as affordable as textbooks for the nation's children. we have to move absolutely as fast as we can. in the same spirit i would ask for your help and ask all of you to come together with us. they may never have been such a powerful content and ways of getting to it as of this in this room this morning. it's absolutely amazing but it's also huge responsibility. i have three challenges, three requests. first, we need you to get behind the goal of connecting the nation's schools. we think we can do that with the speed that literally amounts to the price of a postage stamp on your monthly bill. you can helpless connect schools

and the most cost-effective manner possible. you are the expert on connecting the community in a cost-effective way. please help us do the same for america's 100,000 schools. and to build on what you've already done on connect to compete which is off to a good start bringing the internet to low-income homes and families, we need you to help make sure that our children when they leave school they cannot be living in a different century than more affluent children. i firmly believe history will look back on this moment and the cable industry did the right thing for the nation's children and helped close the digital divide or they didn't do enough to make a difference. and i want to thank you and your colleagues that comcast for your vision and leadership and commitment and the hard work that you've already done. second, we need your content, one of the most significant opportunities is to bring these engagements you generate through your programming to classrooms across the nation.

but it needs to be easy for teachers to find it and match it to their children's individual needs. we have created a platform called the learning registry to help teachers find great digital learning content. please be part of that effort and finally i want to make a personal plea for your leadership on behalf of children's safety both online and in their streets and neighborhoods. online our children need be saved from predators come inappropriate content and the risk of making mistakes that can haunt them the rest of their life. it's about teaching them and their teachers and parents about the control that you can provide. then finally the leadership on the culture of gun violence. we buried at least one child deutsch a gun violence every two weeks. was a staggering loss of life and unfortunately it isn't unique to chicago. parents shouldn't have to bury

their children. what kids see on tv and video games do matter and the decisions that you may have consequences. please help us to be part of the solution. thank you. i look forward to the panel that comes after this. thank you for the opportunity. [applause] ♪ ladies and gentlemen, please welcome the moderator for today's education and technology panel, the cnn chief political analyst gloria borger. and once again u.s. education

secretary arne duncan. next come executive vice president of comcast corporation, david wu cohen. the cofounder of zeal, john banner and fifth grade teacher at the elementary school, valyncia hawkins. [applause] >> thank you for having us here. thank you very much, secretary duncan for following jo lo. br between jo lo and desperate housewives years we have to have an exciting panel. let me ask you first, david,

you've heard that alleges that the secretary laid out for cable. you've done a lot of comcast for making broadbent accessible, but are we really succeeding? what is left, how much? >> first of all, thank you for having me moderate. we appreciate it. mr. secretary, thank you. as always an articulate vision of what this country needs. there's no more passionate advocate for education in the united states of america than the secretary of education and this president. thank you very much. [applause] >> i think what i took out of this or two critical things. first of all, what we heard in the presentation is something that i believe is essential which is solving the problems of education are not one of. requires an innovative solution that goes from the beginning of the title to education through the school day, after the school

day, providing support for the kids and their parents, it gets them graduated beyond college intern chips, mentoring programs and after-school programs. you can't just attack one piece of the problem and expect to make a difference. and the policies of that i think the secretary articulate it and all of us in the education space share. and second, i hate to sound like this but i think that he's in the right room. the cable industry has a unique role to play. those challenges are all challenges and which not only are we currently doing things that we can do more. so i look forward to going and parsing apart each one of those challenges and seeing what we at comcast and i would like to suggest all of us in the cable industry can do to advance the agenda. >> you have spoken of what about

parents, parents involvement in this. how do you integrate the parents with all of the kind of new tools that you are all talking about? because it can help their kids if they don't have access to them or they don't understand them. >> i think the most important thing about getting families connected is that you unlock the potential of parents to help their children. so in a world especially the organization i started most parents are very low income, they literally never been on the internet. there is no way for them to engage in any easy way with their teachers. as a providing them connectivity is the first step and then providing them the tools to get information about how their children are doing and can communicate with their teachers and schools that is a huge change. >> where do you get the money to do that? >> i would say if we were having this conversation five years ago i don't know where we are going

to find that money. but so many things have happened over the last several years that its loan the barriers down. the comcast cable industry was to have a very affordable programs into the house and the connectivity, a huge for our parents. the smartphone revolution we may not talk about as much here, but it's happening. a huge impact on very low-income families. so the devices and connectivity are really getting into the homes now. you are on the front line. you were out there and you've been involved in blended learning programs. what is your worry about it if you're students bring their smart phones and to class and are involved in connecting to the internet that need to connect to the teachers. >> we are no longer teachers, we are facilitators for the learning. having a broadband within the

classroom is learning is becoming quite reciprocal. as i am teaching or instructing my students, they are also teaching me and we are finding of information. they are teaching their parents and it is becoming a community working together, learning and moving forward. that is what is happening with the community. >> i want to go to mr. secretary. you talked about digital textbooks and how that is quite be the next thing. can you explain that to all of us what that means for our students and schools and how cable would be involved in that? >> it's fascinating to me that we are still spending seven, eight, $9 billion a year on textbooks and in very tough economic times not a huge influx to the money so i'm always challenging folks to think about how we can spend differently, how can we stop doing things? it is interesting. we have states on a seven year textbook adoption cycle so every seven years they buy a new science book.

the next year they buy a social studies books and math book. we no information is changing by the minute. as of the fact that we are spending so much money on something that is so outdated makes no sense to me whatsoever. >> why are we doing it? >> it's the way that we've always done things. we change things are too slowly. we are challenging states and governors and education leaders to take that textbook money and put it into this conversion. the school district we visited last week in north carolina, just a quick story. they are well above per pupil funding. they are the highest performing. seven or eight years ago they had the vision to stop buying textbooks, put all their money into technology and teacher training and in aging family and the result speaks for themselves. much higher graduation rates, but not very quickly. we need to take those kind of

examples and make them the norm. we are a couple districts doing that. we have 15,000 in the country. we are not at scale. >> i think the secretary would agree that digital textbooks doesn't necessarily mean let's take the bold text book and put it in an electronic form as the pds and will show up on a pc or tablet. with the textbook if you can make the lessons more vibrant and understandable, to the lifetime network from what they do and the education space with its vibrant educational contact, i've seen some amazing learning modules into which actual video clips from the news have been embedded. so it's not just money, it's dramatically improving the quality and making it more encouraging for the students more interesting and improving the educational quality and it

is a place where we can be partners and participate in this revolution. so they advance the needle and move the needle on the quality education and learning in america. >> that's his job but the other thing that is going on that i think is helpful ways that teachers are taking it on themselves to figure out how to adapt to this new world. and as the do that, what i saw is teachers coming up with ideas how to use these tools that no administrator, no secretary of education, no company would ever think of because they are with the kids every day and can come up with ideas so there is also kind of a grassroots part of this thing where coming up through the teachers and students ultimately it may be

bigger change than anything we can do from the top down. but let's see how that goes. >> you set the model for selling this technology is totally broken. >> completely. >> can you talk about that a little bit? >> the secretary may disagree with me. i would say the schools are possibly the worst single buyer of any industry group there is. any company in the states that survived basically shift all their money from the r&d to the marketing. so you get the companies with 80% of their revenues coming towards the sales and marketing and then of course the products are terrible. so the industry has gotten what it's got him but the light on the horizon is that we are beginning to have a consumer business in learning. when 2 million kids are coming on line on smart phones and on the net over the next ten years,

you know, whereas before it only made sense to sell products like this to schools maybe there is a consumer market for this and i think there would be much more rational -- >> psychiatry? >> i do not disagree. the further difficulties have been a dysfunctional marketplace was the we had every state with different standards. so it's hard for anyone to take to scale what is working. now on a voluntary basis a huge amount of the state level, 46 states in b.c. praised standards so having a high bar for everyone and having a common hi are creates a level playing field folks can compete and folks can get out there and let the best ideas rise to the top so it is a huge opportunity going forward that literally has never existed in the history of education. >> our children are going to use the technology that's their. why not be more productive and me get educational.

i very what i do each year based on the needs of the students come up the standards are still there and we are getting successful what we are doing. >> can you talk about the evidence that this is actually working in the classroom? it all sounds fabulous kids using their smart phones to learn to read how we know that it's working? >> we need to continue to improve and not challenge each other but to give you a couple of examples, where districts are outperforming the state in part due to access to technology if john's school der doing creative things and they talked about in the trunk which is one of the worst schools in the city of detroit which is telling you something historically. we see students engaged in their own learning in different ways so we have a lot of hard work

ahead of us that there are indicators saying it's transformed how children learn and how teachers teach. its connecting them in powerful ways and i am convinced this is where we need to go and need to get there faster than we have been. >> the one thing we learned is that knowing more about a student really helps you teach them better. one of the things technology gives you is you're collecting data on what are they doing well and what are they not doing well. so it helps you to figure out in the classroom okay this child is struggling in this area. let me help them with that which sounds incredibly simple for anybody running a business of course you run your business based on data. but education has been run certainly in the classroom without the data for the last 100 years. that is a huge change we are able to collect and use data for the instruction productively.

>> stevan we haven't made enough of skill in the technology space and the classroom and at home to be able to have reliable data but like john and the secretary, anecdotally as i travelled the country with the internet essentials program they had a chance to meet with hundreds of teachers and i will tell you teachers are constrained by the inability of the students. they have technology in the school and analyst for nutter to assign homework the requires the work to be done at home and on the internet you have half the kids in the class who can do it and half who can't and they are so grateful about the existence of the program that of leased provides more ubiquitous

coverage and increases their flexibility about what they can teach in the classroom to use the not even adequate technology tools that are being provided to them to the fullest intent. so anecdotally there is no doubt in my mind that this makes a difference. >> and i am going to give our front-line person the last word about what you are seeing in the classroom and the crystal ball priority for the next few years. >> the students come to school knowing there is technology in the classroom and it takes ownership of what they are learning and how they are learning and also we are giving them the parameters. in a few years now i see students coming to school waiting for teachers to get in the door. i have students that say are you here yet just to get in and work on something, not a game but something academic. we are broadening the world of

our children taking them out of the neighborhood and they are seeing the world and that is what technology is going to do. >> thank you. [applause] >> now please welcome the moderator for today's content creation panel once again the news coast editor for entertainment weekly, lynette rice. the executive producer of desperate housewives, marc cherry. the executive producer of

"breaking bad" and rectified, mark johnson. and the creator, executive producer and show runner of "the american," joe weisberg. >> i am privileged to moderate the first ever panel at this cable convention. let's hope there will be more. before i get into the questions i have to go back. you just left a show with very complicated women. why are you jumping into a new show with four new women? >> that is a good question. i love writing about women so it's not really more complicated than that. i find women on television really works. i got my start being the

personal starts when she was on designing women and the golden girls and the first show that i created was the buchanans and i've done desperate and now i'm doing this one. i love getting the girls together and having them talk with something like understanding and i find them to be endlessly entertaining. i don't mind the complications as you say. >> i should give you a second to explain why your show is about. >> it's about some women working in beverly hills for some crazy rich people and it's about their lives and that relationship between people that work in the home and employers and how that work place is different than any other kind of work place because the people that work there were exposed to certainly when i was working at the home in bel-air you get exposed to different things and becoming part of the family in a weird way and their trials and tribulations become

yours and the format was brought to me from mexico. and i thought i have a unique perspective on this because i was the help at one time. i had a lot to say about that world and i thought it would be fun. it turned out really well and the premiers a week from this sunday and i'm looking forward to folks taking a look at it. >> this is a question for both. you started your career with television creating content for broadcast. what were your perceptions about the content on cable and creating for cable? >> i come from a future world. i've been producing movies i guess since the 80's. we did 11 movies together so that was the perspective that i came from.

tv my first list tbs, a show called l.a. doctors and then a show called the guardian. i didn't really know about cable and most of the people i was working with had no idea what the possibilities more and today of course everybody i'm working with, writers, actors come there isn't a person in the future world that doesn't desperately want to get involved in tv, primarily cable. >> marc cherry come how about you? >> i got involved when there were only four networks. you know, fox had come into being. and that was what i did for, you know, the last 23 years. then this past july i started doing lifetime and that is my first experience with cable. what it means now is something completely different than it meant a couple decades ago.

even the most casual viewer you can see the most exciting work is being done on cable and that is where the bulls worthy shows come from and they put on something that get some attention but for whatever reason it's because they are hungry to get viewers and as we all know the safest thing you can do is take risks and that is what is going on so it is a fun world to be part of and i'm certainly glad that i joined the parade. >> that quote the safest thing to do is take risks. you started with damages, connect come on cable? >> i've only been working in television for about five or six years. i can't say honestly that i got involved in cable because it was more interesting or better work was being done. i remember talking to my agent about what would be a better place to work and he just started talking about what it was like to try to do 23

episodes of something on the broadcast network. we were talking about the grinding and what it would be like and i just didn't think i could survive if not having any kind of a break working these long hours and doing it for eight years i didn't think i had that in me and then he started describing cable to the start of something like being back in school and right now on hiatus from my show and that is why i am a good mood. if you had seen me two months ago i was a different person. i was exhausted, i had a headache, so that was it for me. >> i asked how many episodes had you done of "breaking bad," and it's close to 60, right, and then you are shutting down? we did 180 of desperate housewives and i was much thinner and i had more hair when