an agency of civil servants and dedicated to serving the american taxpayer and a fair and impartial manner. that's how it's been and that is how it will always stay on my watch. .. >> as we get closer to the april 15 deadline, for filing returns, i think it's important to realize what a tremendous

compliment it is for the agency to process 159 individual taxpayer returns every year. that doesn't happen by accident and it doesn't happen automatically. it happens because thousands of dedicated and experienced employees worked for months planning for the next filing season and then administering it. another top priority is taxpayer service. this filing season the irs provides services to taxpayers to help them fulfill their tax obligation. taxpayers want more online tax information and we are working to meet that demand by making improvements to our website at irs.gov. last year alone, taxpayers reviewed irs.gov webpages more than 450 million times to get forms and publications, finances for the tax questions and check on the status of the refund. one of the most vibrant features on irs.gov is the where is my refund button. taxpayers use more than 209 times last year. that doesn't mean there were 209

individual taxpayers. some of them just couldn't figure out where is my refund, tracking every day. sort of like the ups parcel delivery. this you we have several new digital applications that will expand what taxpayers can do online. one of those is irs directly which provides taxpayers with a secure, free, quick and easy online option for making tax payments. another innovation, get transcript, is a secure online system that allows taxpayers to get and print a record of the irs account, also known as the transcript, in a manner of minutes. we are in the final stages of revamping the irs in that agreement which allows taxpayers to apply for an installment agreement online. to provide better service we are expanding the methods used to communicate information to taxpayers. we have moved beyond traditional media like newspapers and tv news to take advantage of social media such as youtube, twitter and a tumbler.

i don't twitter and i don't tumble, but the are 100 irs videos on our youtube channel including one from me. some actually broadening my horizons. during my three months on the job i've been surprised to learn how much time and effort and resources we provide try to help taxpayers determine the amount they felt and how to pay. as i said, it may take me a while to convince taxpayers that we from the irs and we're here to help you, but we do work hard to make it as easy as possible to file your taxes. along with taxpayer service another high priority is maintaining a robust tax compliance system and building on the work that's been done to improve compliance in a number of areas. one of the most important of these is the battle against refund fraud, especially fraud caused by identity theft. i say battle because we really are, have a fight on her hands against identity thieves, many of whom are engaged in organized crime who steal people's information outside the texas

and use that information to file a return, claiming a refund every penny the taxpayer from filing their own tax return. we're doing a much better job of stopping returns before they can be process compared to a couple years ago when the problem exploded. our criminal investigation, investigators are making great progress in helping the justice department find these criminals and put them behind bars. last year we protected $17.8 billion from refund fraud. we initiated 1400 investigations, obtained over 1000 indictments and 400 convictions. we're doing a lot better in helping identity theft victims are up their irs account after they have been victimized. the time for resolving any case has been reduced by, from over 300 days roughly 120 days but there still room for improvement and we intend to be more and to do better. perhaps her most intense challenge is fulfilling the responsibility congress has given us to implement tax would provisions of enacted

legislation including the affordable care act. we have a lot of work to do to complete it for going to be prepared for a major a see a provision that go into effect this year, including the premium assistance tax credit and the individual shared responsibility provisions. as i told our employees, a significant challenge of implementing the affordable care act provides us with a major opportunity to demonstrate the skill, dedication and competence of the irs. after the difficulties experienced last fall with the rollout of the affordable care act, we can have a smooth filing season next year including the appropriate return, appropriate review of the returns of taxpayers who took over are eligible for the advanced premium tax credit. the public and congress will have to say that some organizations with an amazing workforce. along with the aca and other important piece of legislation we are charged with is implementing the foreign account tax compliance act which is commonly known as fact to come. it requires foreign institutions to tell us about accounts owned

and held by u.s. citizens. with this information we can do much better job of combating offshore tax evasion. our goal is to make it more more difficult for americans to hide their money in a tax haven to avoid paying taxes. the importance is not just it will be collecting more money. it's also important because the average taxpayer has to be confident that while they're paying their taxes, the very wealthy with fancy lawyers and accountants are no longer able to hide the money in foreign countries and avoid paying their fair share to support the operations of government. when i became deputy mayor of washington, the city's theory of snow removal was that the sun will come up tomorrow. [laughter] when i begin with a snow summit until the leadership team that whatever else we're going to do we're going to get the snow off the streets. that's my feeling today at the irs. what else were going to do, we're going to government the nondiscretionary mandates we have been given, the affordable care act and factfa which brings

to me the biggest challenge facing irs today, substantial decline in our funding which put significant strain on our ability to provide adequate services to taxpayers and to maintain strong service and enforcement levels to ensure the integrity of our voluntary compliance system. for the irs to continue making progress in all the areas i've just discussed it's critical for us to receive adequate resources. the agency continues to be in a very difficult budget environment since we are the only major agency functioning basically at the post sequence level of funding rather than having been moved back toward the pre-sequenced or level. since fiscal 2010, irs appropriations act and cut by about $900 million, 7%, we now have 10,000 fewer employees even as our responsibilities continue to expand. we recognize the need to become more efficient no matter what happens to our funding level. since 2010 the rss cut annual spending on professional and

technical service contracts by $200 million. would generate $60 million in annual printing and postage savings by certain tax packages and publications and transition debate was employed statements. real estate is another area where we found major savings. the irs began a sweeping space reduction initiative projected to reduce rent costs by more than $40 million a year and reduce total irs office space i more than 123 million square feet by the end of this fiscal year. all of these initiative means we're spending $300 million less in these areas. we'll continue our efforts to find savings and efficiencies are ever we can and we will continue to carry out our core responsibilities and work towards preserving the public's faith in the essential fairness and integrity of our tax system but those constraints will posters challenges to efforts to enforce the law and provide excellent services. essentially from the enforcement

side of it, the federal government is losing billions of dollars in revenue every year to achieve budget savings of up to a hundred million dollars. as i said during my confirmation hearing, i didn't find a single organization in my '20s and the private sector expense that said let's take a revenue operation, started for funds and see how it does. so far this filing season we been very fortunate that the volume of phone calls to our toll-free lines are actually down a bit compared to last year. one fact is the lack of major tax will changes in 2013 which means there are fewer questions from taxpayers. out improved website and its applications i discuss also helped provide taxpayers with important support without requiring a phone call to as a result for now we are maintaining a level of phone service during filing season around 72% which is better than last year's overall average of

60.5%. we expect for the real drop well below 70% as the filing season ends and are temporary employees wrote off and we will end up closer to last years 60.5% because we have no more money than we had last year. that would mean more than 30% of taxpayers trying to reach us on the phone couldn't get through. it wasn't that long ago with proper funding that our level of service was 88%. along with phone service we are concerned about the amount of time it takes people to get help in person when they go to one of our taxpayer assistance centers. we had reports from field staff in offices across the country of taxpayers lining up outside her centers while before they open in the morning to make sure they receive service that day, sometimes waiting up to three hours to be served after the end of the office. expanding our online offerings can only go so far to ameliorate these problems. as "forbes" magazine noted earlier this year, when you punish the irs, you punish taxpayers. our information technology operations to another area the

irs is focused on. our use of it helps us do a better job of stopping potentially fraudulent returns before they are processed and allows us to keep making improvements in operations and our website. our 2014 budget has $330 million for it work related influencing aca. none of that money was provided it says were mandated by statute implement aca, that meant other vital it projects have had to be shelved. a solution of the budget problem starts with the administration's fiscal 2015 budget proposal released last month. administration proposes a funding level of approximate $12.5 billion for fiscal year 2015 which would reverse the erosion in our budget of the last several years. i think it's fair to ask what value will the american taxpayer get for that extra billion or so dollars that the administration is proposing. it would help taxpayers get the service they need, strengthen compliance in key areas, especially as amended order, refund fraud and tax evasion.

budget proposal halt the decline in key enforcement personnel we've had and allows the irs to invest in necessary basic infrastructure. in fact our estimate is we would generate over $2 billion more in revenues with the increase in the budget, not just in enforcement but in the budget generally. ultimately, it's in everyone's best interest to have an irs i can do its job. we don't have any number of congress wants their constituents be taxpayers, prepares or financial advisers to go through the aggravation of not getting the help they need from the irs. they don't want their constituents waiting in lines for hours at taxpayer assistance center o were having trouble getting through to us on the phone. my hope is once we get beyond the issues surrounding the 501(c)(4) application process and once the major tax elated provisions of the affordable care act and fatca are up and running, we can have a more normal discussion about our budget. i look forward to working with congress to solve this problem. i hope one of the legacies of my

time as irs commissioner will be that we put the agency's money on a more solid and sustainable basis. there's another way in which congress can help the irs improve the work it does to assist taxpayers and ensure compliance with the tax laws. and it is too simple by the tax code. congressman dave camp, chairman of the house ways and means committee put it well when it reduces taxes for proposal a few weeks ago. he said tax code is 10 times the size of the bible without the good news. [laughter] the taxpayer advocate in the irs has estimated that individuals and businesses spend $6.1 billion a year, billion hours a year complying with the filing requirements of the tax code. all in an effort to determine the right amount to pay taxes. we can do better than that and while it always does tax policy is the domain of the treasury department, the administration and the congress, those of us involved in tax administration are anxious to do whatever we can to assist in the process.

thanks very much for letting me spend this time with you. and with that i be happy to answer any questions. i would note that there are a number of irs executives here who are trained to throw hot biscuits at anybody who asks a really dumb question. [laughter] [applause] >> commissioner, the tax exemption for social welfare groups that engage in political activity has become a lightning rods. you see a way for result people to get the tax and agree on a path forward? >> being an optimist and ended around town a long time i always think that there's a middle ground that should be acceptable to people. as i said, my goal in this is for any regulation that is issued to be fair to everybody, clear and easy to administer.

as you probably noted in the press, we've gotten comments from people across the entire political spectrum, many of them very thoughtful analyze and the questions that need to be dealt with. my sense is that there ought to be away and i'm confident we will come up with was that while it may not satisfy everyone, for the average person an average person when one of these organizations, ssa should be viewed as something that's fair to everybody who is playing in the game, is clear, makes their lives easier both in terms of applying for except -- tax exempt status to render a decision the most important is easy good minister. we not to be dixon we can avoid it in the decision of making political decisions, we are attacked mr. schwab decision and michael would be for any new regulation to further that goal on our part. >> body won't finalize the new rules for a while with the campaign season approaching, and

what steps are you taking now to objectively evaluate applications for social welfare groups? >> as i noted, the ig industry port which highlight the problems in the determination process had nine recommendation to all of which we've adopted. a couple of them are very important about training that we should provide training and better training and more clear train to the extent you can about the situation for our employees at the front and. also renew that training so that we move into an election cycle that there are more organizations joined up, people have an appropriate level of training to be able to get through this. as you know the statute says you should be exclusively a social welfare organization, regulation issued in 1959 by the irs said you should be primarily a social welfare organization. so the test over time has been what are the facts and circumstances. part of the difficulty is

figuring out what does it mean that you apply to a wide range of activity. one of the things danny werfel who was the interim irs commissioner last summer, did a great job as far as i'm concerned, talk about an impossible situation. that's what danny had. one of the things they came up with to help solve a backlog was say what is there been a percentage number assigned to what is primarily anybody who's willing to sign that they weren't going to spend more than 40% of the time and resources on political activities immediately get an exemption and qualify. and a number of organizations, about 45 of them took that step and were qualified. so the people, almost 90% of the applications backlog in june have been resolved. that's a majority of those been accepted. there are still some pending, some providing more information can some litigating, all of those still pending turn down the opportunity to take the 40%

test as it were. going forward we now in addition to the training have an approved and more clear review process within the organization is selected for additional analysis, that decision is reviewed by a panel of people who have been well trained. the questions inflation that people are asked for has been standardized and is clear that it will go into detail about people's backgrounds or if we decide to forget what are you going to do as a social welfare organization. we are trying to spend as much time asking that question is what are your political activities. these organizations on primarily social welfare organizations but we're giving you applicants were activity to provide that but we're giving them the ability in this transition time to sign on again say they're not going to provide, spend more than 40% of the resources on political activities and they can be certified. we think also that rational part of my theory is, any

organization is there any issues that get raised in this process going forward i'm confident the employees understand we want those issues and concerns raised quickly and easily through the organization and will get responses back to them probably an appropriate. >> do you agree that the has mishandled the situation in the first place, and if so, how could the agency have handled it better? >> there's no doubt everybody who's looked at this has said selecting or decisions by the name only for special or separate our detailed processing was a mistake, should not have happened, should never happen again in the future. the irs, the irs ig, tigta, in his report is findings were that inappropriate criteria were used in the selection process which met the identification by name

only. people than have extrapolated from that and on occasion the inspector general and the public to refer to that as targeting. is findings simply sent inappropriate criteria were used or whatever you call it, it's clear that it was a serious mistake while as i said in the context of small part of the overall opportunity for the irs but i think it's an important issue for us to do with i. i feel strongly that all taxpayers need to be comfortable that whatever their interaction with this is, whatever their applying for, they will be treated same way as everybody else whether republicans, democrats, whether they go to church or don't go to church. they're going to get the same treatment as everybody else when they come to us. i spent my time parachuting into trouble or decisions and the private sector and the public sector with one major theme, which is you are where you are, you've got to play the hand you're dealt dick the need to move the organization forward. i've never spent time in any of my turnarounds second-guessing

judgments and decisions that were made going back to in this particular situation, six investigations going out there that have looked at everything. so i've been asked a couple times after the hearings what did i think lex how come i haven't done an investigation? i said, first, if we start asking people questions looking backwards we'll be accused by some of having time to camp with investigation. secondly, i don't have the resources everybody else has to try to do that. thirdly, i don't think it's productive. whenever the investigation is done they will tell us what facts they found. we will review those, respond differently, take action that we have overtaken the dean to be reasonable and we will move forward. i don't have a quick easy handling about how to go wrong or what could have done differently. it is clear to me, although there's been some debate about that as well, that when asked people to take a look at circumstances, the facts and circumstances test in light of continuing changing rules about what you can do or not do with

political funding. that's not the clearest guidance in the world. it are going forward in my plate and you're dealt i think it's important for us to try to the extent we can in this interim period to provide as many guideposts and examples as we can as to what political activity that counts and a small bucket that will jeopardize your primary activity and what's not. there's advocacy activity, individual campaign finance activity, a lot of things to get done at the best part of the competition. so i think that somebody in 1959 said the studies that exclude lycée can't do anything but social welfare activities, life would've been different and we probably wouldn't have this problem as we go forward. had we had a clear definition of what political activity or political intervention is rather than just facts and circumstances over the last several years we probably would not have this problem. my focus is primarily been on

trying to make sure that going forward we are as efficient as we can, that we deal with taxpayers fairly, that they are comfortable, that that's our position in that i satisfied the inspector general good recommendations. and i would be delighted to have accepted those and as i said if anybody else in the six investigations when they get done have other recommendations we think make sense, we will do that as well. >> national public radio reported yesterday and today about a $230 million christian television network in texas that is registered with the irs as a church. the report noted the irs allows dozens of entities to register in this way and, in fact, has not audited the church at any time in more than five years but do think it is appropriate for a broadcast network to have church status? because the irs plans exercise

any oversight role over these networks or churches in general? >> that sounds like a noncontroversial question. [laughter] ought to be able to answer it quickly. obviously, we all are familiar with churches that historically have had radio network, television networks, broadcast reaching out to their constituents, their members, people following those face. and i think ultimately everybody is comfortable, has been comfortable with it. it gets a little more difficult when you start having those networks use not just for advocacy but to start running campaigns although i don't know how many of them are doing that, but the question about are the rules clear is a good question that we need to always be aware of. one of the questions about the proposed draft regulation has been, the focus has been on (c)(4), should it apply to

other taxes in organizations? should we have a more clear idea if you're a trade association or union or church broadcast network, should the rules of the road be more clear for you as well as for the irs? heart of our issue and our challenge has been in terms of the examination side of the issue is that we get 60-70,000 applications a year for tax-exempt status. the majority of those are 501(c)(3)s. i think it's a million 600,000 texas improvisations out there, about 100,000 our social welfare organizations and then only a small percentage of those are political advocates. with all sorts of other organs nations out there, and what we are trying to do is we have a big backlog on the (c)(3) special because that's where it gets because a lot of them got decertified for not filing by statute, not filing their annual report. so we are taking a look, totally new look at how we process 501(c)(3) applications at the front and because i'm concerned

about the backlog there is people are concerned about the backlog. a lot or usage would do good things. part of our challenge is historic for all the obvious reasons we treated everybody a plan for (c)(3) applications as if they were the same. so if you're the des moines pda or uganda's been wondering dollars a year at some very arcane charitable activity, we do the same 31 page form and deal with you the same way. step back fine, bottom-up the most effective way of doing and there's a group of employees of in looking at streamlining, reviewing and assessing the front end of the process. this summer we expect of a much more streamlined application for those who qualify i call them the des moines pta and they should be able to be approved in a matter of days or a couple of weeks. which would allow us of the funding to spend our time with a really complicated organizations but also more significant allow us to spend more time on the examination side to make sure

that two years or five years after they apply and provide an exemption whether it's (c)(3), four, five or six, the public needs to be satisfied to doing what they said they're going to do. in most cases they are but if someone is not performing and not engaging in activities that they said they were, then we need to probably a conversation with them. the good news is the 990s and put a file are public documents the people supporting those are decisions themselves will have some indication of what the organization is up to come how much money it is spending on its officers as opposed to on its chair of omission. they're all sensitive, they'll start out trying to do very good things to think it is important to be able to assure the taxpayers that people benefiting from tax-exempt status are, in fact, performing as they said they were going to. >> regarding tax reform, what are the odds of achieving any kind of substantial reform

package approved now that house ways and means committee chairman dave camp has announced his retirement? >> you are sitting out during these questions, i'm getting suspicious there are some handwritten and i'm impressed and dinner sometime that which leads me to believe that somebody thought of this beforehand. [laughter] obviously two of the major leaders in the congress for tax application, tax reform or congressman baca's, chairman of the finance committee and chairman camp of house ways and means committee who work together during what i thought was a very creative things saying that start with a blank slate and then congressman and senators to write in which deductions, which tax expenditures should be continued and kind of why. you think that's a straightforward exercise and that would be so controversial they had to agree to keep it under lock and key indices and nobody would quite know what you again.

one man's loophole is another man's deduction that's important for social purposes. but it is critical it seems to me for us to recognize the point -- the reason i quoted chairman camp's comment about 10 times the bible as the kids in whatever way for people to understand how crazy this system is, how big the tax code is. 10 times the size of the bible is one way to look at it. it strikes me it's a critical initiative to try to where we can whether it's corporations, individuals, december 5 the code. i think compliance would go up. it would be easy for people to forget what the right amount today is but the question is what are the chances? if before senator baucus went off to china and senator camp this week announced is going to retire, the chances we're not really terrific. particularly on an election-year the people going to attack the entire question of what to do with its tax code and all of the credits, loopholes, deduction, whatever you want to call them as we go forward.

so i think being an optimist, i tell people you can do all of this do all of his 40th that being being optimistic. is with a better. being an optimist i think it's probably not, there's a growing number of people who have formed different working groups at different times over the last two or three years in congress who have focused on the importance and the need for tax application. in my courtesy call on a promising close to 50 senators by now at 30 or 40 congressman. i get asked by a number of them, all parties, would we be helpful in trying to help them think about tax reform, tax application. reminded him policy is up to the treasure and the administration and the congress by taking a strong position if somebody wants to figure out how to simplify the code, we need to be in the discussion to make sure that the supplication really is simple. a lot of times people think they are simple and consumer public it. i'd like to see it happen but the bottom line, short answer a long time ago, kerry number one,

the bottom line is i think the chances are probably unfortunately slim that it will get done this year. >> if i could explain, as soon as we announced i'm not defensive, when we announced the speaker is coming to we encourage people, all of our members and the general public to send in questions in advance. my assistant stays up all night the night before or early morning hours typing them up. it does show everybody that we do get a diverse range of questions am a diverse group. another uncontroversial question but if you were rewriting the tax code will be the three main changes you would implement? [laughter] >> my first response would be to say that the tax policy question and just ask secretary lew what that would be. i think there are a lot of different ways. of the three major public board,

will issue of taxation of american companies are doing business abroad is cobbled -- public at the transfer pricing, if your software company, apple and you're located, products around, one of the board on some was a big international power company ca can be don't know por plants were readily from one country to another for tax purposes. nonetheless, a tremendous amount of time and effort is spent by corporations and figure out dignity was to pay more taxes than they have to a just idea how to work your way through that whole issue is very complicated one. for those are not taking a stand deduction and filing simply, i've always found the alternate minimum tax provision is almost independent -- impenetrable. every year i get in there and there's th the andy kay collatin and there's the andy kay collation of our country whether i'm better off are worse off or how it goes and it's very tough. the people know more about than i do say it's covering a lot of

people it was intended to cover and it again. there's a couple places that are obvious. my concern has been all of these are difficult. in 2008 we ran into a huge challenge with the deficit and people start to say we've got to look at this situation, it seemed to me a unique once-in-a-lifetime opportunity to look at all of us all at one time. a few guerrilla war fight your way through a reduction, there's an embedded group of people in induction motor complex supporting whether it's home interest deductions or checkable deduction or whatever else it might be slate got to do with each one of them. that's a problem. talking with congressman camp, i said because you are doing with all of which lobbies can all go to the door at the same time. to some extent they look little queasy about the fact that they're all there, self interest bleeding. my concern has been that as we

move forward, to do it right you got to do kind of all in a package. trying to pick around the edge is not going to work so i thought congressman camp's proposal itself was an important start because it tries to do it all at once. it tries to approach it that way. i would just take -- is adapting to try to build a political coalition and down in the middle of the road this is okay, we're going, it's been 1986 the last time we thought about it. every 30 we probably ought to say what could we do to make it more simple. >> since employer reporting of health coverage is voluntary for 2014, how does the irs plan to enforce the individual mandate? >> the individual mandate is actually going, as complicated in terms of information technology you will assume that but what we've got is the bass

hundred americans will check off they've got interest because they get insurance or medicare and none of this was in impact on them at all. the places where it will have an impact is on the people who have gotten insurance and qualify for premium tax credit, or the people osha insurance and don't have any and then there in the responsibility payment question. so the question is how do i know when someone shows up how to deal with their credit x. first of all, the fraud issues here are less attractive to criminals and others because your tax credit, bring back credit does go to but it goes to the insurance company to get an advanced pen tax credit which most people are. during the election of local radio blue cross you're trying to get more pre-\mr.{-|}\mister, you're basically not going to get any money yourself out of this so you are going to probably try to get as big or as you can but it will be tied to your estimate of what your income is just when the us but with dubya choose what our incomes going to be. when it comes in you're going to

say okay, here's my income and will have the usual questionable whether that's the right number and we've got a lot of experience. testing whether that's the right number. this is my income and it qualified me for assistance in this is what i got during the year and deleted be more or less and you are qualified for and we will have to figure that out according to your -- you will always little or we will pay you a refund for it. but he did what you had to have a policy because we are getting this year information from the exchanges and engines companies about who actually bought a policy. you can't show up and say i'm really eligible for tax credit or a policy that i don't own, i never had. third party employer information is coming in, working with the companies to figure out how to get all of that did in. ultimately, we will allow us to determine on a month by month basis which we won't be able to be quite as awful about this just with your coverage or didn't have coverage in different months during the year. there will be some issues there about whether you're qualified

the entire year. we won't have the same accurate information will have the following year but for what everybody has been sleeping concerned about how much vodka and involving people getting money, as i said the money is going to the insurance companies and if you apply at the end of year and have the credit coming, it's because of a policy that will know you had from an insurance company. >> news report showed that capital exploded legal loopholes to move money from its replacement parts business in the united states to switzerland to avoid paying $2.4 billion of taxes over a decade. what you think of what caterpillar did and should those loopholes be closed? >> the one good thing about the irs to measure, is i can't talk about individual cases. and, in fact, i'm not even allowed to know about individual

cases inside. so we protect taxpayer information against all comers outside agency. we predicted with any agency, irs and was can only access taxpayer information if they have a date to know with regard to taxpayer and we track that. you just can't come you can go into the database. e.g. can't wander through it. and then in particular because i don't have a need to know, i don't anything about what's going on and people are very careful not to do and. i avoid commenting on individual companies and what they are up to. other than to say even with constrained resources we still operate people. not maybe as many as we used to, and so we're always on the look out for places to audit and people got to keep an eye on. we spent a lot of time over the last three or four years working with countries abroad about individuals were hiding assets think you can get away with what you think they no longer can. but another issue is the whole issue in a global economy what i

companies doing trying to move assets around to avoid taxes. one of the reasons we're getting such significant cooperation from countries across the world is everybody has discovered in a global economy they all have companies and individuals, citizens one country living somewhere else so it's in everybody's interest to try to share information and try to make sure people pay the appropriate amount. my message to individuals and companies is our goal ultimately is everybody pay the right now, not more but not less, and if you are consciously cheating and trying to figure out ways to avoid tax, you're the people we are after. if you're willing to pay and just a difficult and lost her job, a health problem, again we want to work with you on that and with all sorts of ways that we can be helpful. if you're just out there trying to avoid your fair share, i'm happy to change the end of the earth and see if we can't throw you in jail. [laughter] >> we are almost out of time but before asking the last question,

and i'd wager the answer because i think you'll appreciate the question can with a couple of housekeeping matters to take care of. first of all i'd like to remind you about our upcoming events and speakers. april 14 lewis black, comedians will discuss politics and social issues. april 23rd general mark welsch, chief of staff, united states air force will be here. and on may 28, dr. ben carson, neurosurgeon and author will be here. for our last question, commission, i'd like to ask you how much of today's lunch can i deduct? [laughter] >> very good question. [inaudible]

>> if we had switched and i read lewis black's statements and speech to you and he read mine, and the question was, would be which way would that have been better? i'll leave that for you to decide. let me thank you again for taking the time to join us and patiently listening to all of the information. [applause] >> finally i'd like to present you with the traditional national press club mug. spent another question is what do i do with the cup? can i take it? [laughter] what am i being asked to do? i can't eat it. if you beat it, nobody cares, much like the bitcoin cookies. but i think it's within the minimum so i can say thank you very much. [applause] >> thank you, commissioner. ladies and gentlemen, we are adjourned.

[applause] >> joining us here in washington is the former chair of the federal election commission.m also joining us from our new york studio is brenda. we are going to be discussing the supreme court decision onpri campaign financing. brenda, let's start with you.. in your view what is the effect of what the supreme court did on wednesday, or choose a? >> well, the case were talking about, mccutchen versus sec, was brought by what the alabama who want to contribute more to federal candidates than the current limits allow.

he wanted everyone to contribute a $223,000. the court issued that extension -- the effect of that decision takes us from a total of contribution for any one individual of hundred $23,000, although a way up to about $3.5 million if you look at the amounts that an individual can now contribute to all federal candidates and party candidates combined. major influx of big money into the political process . our organization is estimated that it will add about a billion dollars to political spending in the next election.

is that a good thing, that thing, neutral thing? a disasterhink it is for our democracy. we already had a system in which the wealthiest few are able to exert so much more influence on our elected system and our elected representatives than the rest of us. a decision like this just makes a bad situation worse. donald mccann, do you agree with that opinion? >> no, i don't. first, the idea that there is going to automatically be a billion dollars of new money in frankly, with all due respect, ridiculous. people in this country can spend unlimited money on their own, independent of candidates already. this is been the case for years -- didrs going back to

you that there will be additional money is not exactly true. the candidates would then disclose the money that they are receiving. we would have more information, not less. finally, the candidates would be more accountable for the message. idea -- we have to be real clear of what was before the court and what is not before the court heard there's there are contribution limits as to member ofe given to a congress or senator. the hundred $22,000 was a bi-annual limit that capped all giving. the ideathat is gone, that there are going to be folks who can figure out a way to give over $3 million in our election cycle is kind of far fetched her it supreme court dealt his head

on in the opinion. they felt it was a wild hypothetical. there's a. that you can do this, but every state party in america, every candidate, and the national party must get together. >> c-span to providing live coverage of the u.s. senate floor proceedings and key public policy events and every weekend booktv now for 15 years the only television network devoted to nonfiction books and authors. c-span2 created by the cable tv industry and funded by your local cable or satellite provider. watch us in hd, like us on facebook and follow us on twitter.

>> gm ceo mary barra scituate allow her son to drive a chevy cobalt now but only if you use only the ignition key and execute our objects dangling from it. her comments ken turner second day of testimony on the hill. this sunday for the senate transformation subcommittee and some protection and product safety. the gm recall started in february and covers more than 2 million vehicles. a chevy cobalt and hh it, the saturn ion and the pontiac j5 and solstice made from 2003-2011. this testimony is just under two hours. >> [inaudible conversations]

>> ms. barra, it would go ahead and take the witness chair. this subcommittee will come to order. it was a rainy night on march 10, 2010, broken the own who is 29 and a pediatric nurse was driving her 2005 chevy cobalt to meet her boyfriend for her birthday dinner outside of atlanta. as she was driving on the highway, her car suddenly lost power. unable to control the vehicle, it hydroplaned, crossed the centerline and slammed into another vehicle at 58 miles per hour. her car ended up in a creek. the airbag never deployed. can and tough mountain, her parents, rushed to the hospital but she was dead when they arrived. in their nightmare of grief, they hired a lawyer, a trial

lawyer. they asked him to help them understand what had happened and if possible hold whoever was responsible accountable. and he went to work. spending his own resources to get to the bottom of what happened. to brock on that rainy night in georgia when she was on her way to celebrate her birthday. he hired an engineer to help them. together, mr. cooper, the lawyer and mr. hood, an engineer, began to identify a defect that someone at general motors had discovered years before. there was a problem with the ignition switch in chevy cobalt. it could easily be bumped or brushed or pulled from onto accessory, or off powering down the car, disabling the power steering, disabling the power brakes and preventing the airbags from deploying.

after two years of fighting general motors for documents and a timeline of events, at a deposition in april of last year, mr. cooper finally confronted general motors with the facts. someone at general motors had switched out the unsafe ignition switches in several car models and covered it up by using the same port number for the same switch, for the new switch. had covered up by using the same port number for the new switch. the simple work of the engineer hired by the trial lawyer representing the meltons had discovered the defective part and its replacement with the same number. and went mr. cooper confronted general motors mr. ray digiorg digiorgio, their league switch engineer with the evidence of the parts which, he lied. he said he did know anything about it.

documents, general motors, validation sign off. signed on april 2006 bears the signature of in fact ray digiorgio. spelled out in the document also new plunger was implement it to increase torque force in the switch. with the box checked resubmission doing engineering changes. further, it is now clear that gm knew of the faulty switch in 2004, new the airbags were not the point in 2005 and in late 2005 knew someone had died. we don't know how many people crashed because of this cover-up. we do know that many died, including ms. melton at least

one of my constituents, a missouri woman who died in a crash in 2009 out in the suburbs surrounding st. louis. so there's great work done by a trial lawyer and an engineer he hired in exposing a serious safety issue with a product, work that should have first been done by gm, and secondly, by federal regulators. and then there's the federal regulators failure to spot a trend even though the act was passed specifically to give this agency that information they need to get exactly this type of problem. and a culture of cover-up that allowed an engineer at general motors to lie under oath, repeatedly, lie under oath. it might've been the old gym that started sweeping this defect under the rug 10 years ago, but even under the new gm, the company waited nine months to take action after being confronted with specific evidence of this agree just

violation of public trust. thousands of my constituents in st. louis and kansas city areas go to work for general motors everyday building some of the finest cars on the road. i am proud of them and i'm proud of their work. this is not their failure. they and the american public were failed by a corporate culture that chose to conceal rather than disclose. and by a safety regulator that failed to act. with this hearing i intend to identify potential problems in our auto safety system, and work with chairman rockefeller, ranking members and the other members of this committee to rectify these problems so that this tragedy hopefully is never repeated again. it's time we finally get this right so that it doesn't take an enterprising trial lawyer and an engineer to bring, that he hired to bring to light what nhtsa should've known long ago, and what general motors should have fixed long before the meltons

lost their daughter, brooke. our job to do is to learn as much as possible about the failures of general motors and the regulars to keep unsuspecting daughters, fathers, wives and sons safe. senator heller. >> thank you, chairman mccaskill. thanks for holding this hearing and thank you, ms. barra, for appearing in front of us today. i want to begin by offering my deepest sympathies to the families and friends of those who have been affected by these tragedies. i also want you to know that we'll get to the bottom of why it took so long to get these pickles off the road. as many of you know, general motors has issued a recall of over 2.2 million vehicles due to problems with the ignition switch that gm has admitted to knowing about in some form as early as 2001. these faulty ignition switches have linked to 13 deaths. gms now recalled certain years of chevy cobalt, pontiac j5, saturn ions, the chabrol h.

h.r., the pontiac solstice and the saturn sky. last friday it was reported that sometime in 2006 or as late as 2007 general motors change the ignition switch part, a whole new part was manufactured and sold but gm kept the same part number for the new part. now, my hometown of cars and see where an engine company that builds pistons and rods for nascar teams. i've talked with him, talked with voters, talked with other builders in nevada, and i can tell you this, if a company solely part that was changed in any way and do not change the model number or the serial number on that part, it would cause significant problems for these businesses, these individuals, and, of course, the racing teams themselves. ms. barra, you know i have raced cars for years. i've used gm testing facilities on some of the cars i have raised. i have blown engines, broke

transmissions, breaux greer is, lost my breaks, throttle stuck in my ignition quit on me. i tell you this because we break those engines down, those transmissions, those were instead find out exactly what the integrity of those parts are and how they broke, why they broke and the difference of course being is winning or losing. i can tell you based on my experience, it is incredibly unusual for a car company to change a car part and not change the port number. government investigators have not requested that gm provide any documents chronicling the switch change, and to within the company provided it. i'm also requesting today that gm provide this committee with that same information. but that's only part of this issue. we also need to recognize that when gm emerged from bankruptcy in 2009, the federal government owned 60% of the company because taxpayers bailed the company out. so gm knew of this issue in some

capacity over 10 years ago. they changed the parts but didn't tell anyone. asked for a taxpayer bailout, and the current administration had to step in and restructure the company. through all of this, gm was unable to determine that they should pull 2.2 million vehicles off the road. this is why, from where i'm sitting, gm has a lot of explained to do both to this committee and to the taxpayers. here's the issue for gm. it looks like there are multiple moments when the company faced conflicts of interest. you said it yourself yesterday, ms. barra, gm as a culture based on cost, not safety. so many people are wondering, if gm did not initiate a recall because gm cannot survive one in 2006, or they did not initiate a recall because the government owned 60% of the company. it is possible that gm has an explanation for what it took so long to pull these cars off the road. however, after yesterday's

hearing i'm afraid we will not get too many answers today. i hope gm is is in a position o speak to what happened more specifically. that is why we called you here, and i think gm should take the opportunity today to explain their action and help as many get to the bottom of what happened. there's also another side of this story. this is whether the national highway traffic safety administration received all the information from early warning reports that it needed to determine if further investigations were warranted. nixon received 260 complaints over 11 years, and these vehicles were turning off while being driven. yet nhtsa did not move forward with a recall investigation in 2007 or 2010. i wrote to nhtsa asking very simple questions regarding their process in recalling vehicles and what they saw in 2007 or 2010 that compelled them to pass

on any investigation. i'm very disappointed in nhtsa's ability to respond to my letter in time for this hearing. when we are looking at incidents in which individuals died, i expect more from nhtsa and what they showed today, and i think nhtsa knows that they can do better. and they better do better. that being said, it's my understanding that the secretary of transportation has requested an integral investigation to conduct an audit of nhtsa's handling of the gm recall. secretary foxx also stated that he is directed nhtsa and the department's general counsel to jointly conduct a due diligence review. i'm pleased by both of these elements and look forward to the reports. we need to ensure that consumers are safe on the road. we need to understand the facts of this recall. there are many questions that need answering, and i hope that today's hearing begins to provide some answers to the u.s.

taxpayers and to what they deserve. so thank you, chairman mccaskill. aske..

so it is my responsibility to resolve it. when we have answers we will be transparent with you with our regulators and customers. while i can't turn back the clock as soon as i learned about the problem we acted without hesitation and told the world we had a problem that needed to be fixed because whatever mistakes were made in the past we will not share from our responsibilities in the future. gm will do the right thing. this begins with my apologies to everyone affected by the recall especially the families and friends of those who lost lives or were injured. i am deeply sorry and the men and women of general motors are deeply sorry. i've asked the former attorney to conduct a thorough investigations of the actions of general motorgeneral motors andd updates and he tells me his work is well along. he has the free reign to go

regardless of outcome. the facts will be the facts. once they are in my leadership and i will do what is necessary to ensure this doesn't happen again. we will hold ourselves accountable. however i want to stress we are not waiting for his results to make changes. the top priority is to quickly identify and resolve any and all product safety issues. issues. he's not taking on this task alone very and i stand with him, my senior management team stands with him and we welcome input from outside gm from you, from our customers come our dealers an, our dealers andour current r employees. i have asked everyone on the team to work with one thing in mind, customers and safety are at the center of everything we

do. customers of the by the recall are getting our full and undivided attention. we have empowered dealers to take measures to treat each case specifically. if people do not want to drive a recall vehicle before it is repaired dealers can provide a loaner or a rental free of charge. to date we've provided nearly 13,000 loaner vehicles. a supplier is manufacturing parts for vehicles that are no longer in production and we have commissioned two lines and asked for a third and those will start being delivered to the dealers next week. these measures are only the first in making things right in rebuilding the trust with our customers. i would like this committee to know that all of our gm employees and i are determined to set a new standard. i am encouraged to say everyonee at gm up to and including the board of directors supports this. as a second-generation general motors employee i hear as the

ceo and also representing the men and women who are part of today's gm and i can tell you they are dedicated to putting the highest quality and safest vehicles on the road. in addition i announced yesterday that we have retained kenneth feinberg as a consultant to evaluate the situation and recommend the best path forward. i'm sure the committee knows that he's highly qualified and is very experienced in the handling of matters such as this. having led the efforts involved in 9/11, the bp oil spill in the boston marathon bombing. mr. feinberg wrings expertise and objectivity to this expert. as i have said i consider this to be an extraordinary event and we are responding to it in an extraordinary way. as i see it, gm has both civic responsibilities and legal responsibilities and we are thinking through what those responsibilities are and how to balance them appropriately.

bringing mr. feinberg on is the first step. i would now be happy to answer your questions. thank you. >> thank you. i want to briefly go through your resume. beginning in 2004 and the defect was discovered by someone you were the executive director of manufacturing engineering from 2004 to 2005 and you are the executive director of manufacturing engineering in from february 12008 to july of 2009 you were vice president of global manufacturing and engineering and until february 12011 you were vice president of the global human resources from february 1 to 2013 were the senior vice president of global product development and from 2013 to january 152014 you are the executive vice president of global product development.

is that a correct rendition over the last decade? >> in april and may of last year, gm employees were deposed in the lawsuit trying to get some kind of justice. they were confronted with the fact that there were two different parts with the same part number and the different torque on both of those parts leading to the malfunction of the ignition switch. at the definition he couldn't position they had a lawyer and it was very clear that there were two parts with the same number and they had been switched out and one of them was defective. when that lawyer left that hearing who did he reports to. you have lawyers here today don't you? who that lawyer would report to after that deposition.

>> again we are doing a full investigation and all of the individuals that are associated and this incident will be a part of that and the findings will be conclusive. >> it was mr. philip holliday applying on behalf in atlanta georgia. and he didn't report to general motors. he would have reported to his client. he was the agent at the deposition. i'm at a deposition where this bombshell has been dropped on my clients that there are two identical different parts with the same number one of which is defective i guarantee i don't go back until the folks at the law firm. i'm on my cell phone in the lobby saying that the lawyers that you have and would report

to a litigation. >> it would have been a part of the senior legal team. >> it would be important for us to identify who they reported to after that deposition. >> that will be a part of the investigation. >> i'm assuming when that happens there will be an investigation happening internally. >> one of the findings that we have had already as he has done the study is that within general motors there were silos and as the information was known in one part of the business for instance the legal team it didn't necessarily get communicated as it has for the other parts for instance the engineering team. that's something i've already corrected. >> i am not asking whether or not the lawyers called the engineers. i'm asking whether or not any multimillion dollar lawsuit where there has been evidence of a defective switch and replacement that have never been identified to the public being

presented to the lawyers and the companiecompany is not reportinp to the executive level. they don't work for the engineers. they are hired by the senior counsel. that's who hires those lawyers, correct? so what i want to know is what investigation began after that deposition? connector that is part of the investigation. >> so you don't know whether anything happened after that investigation. >> i don't have the facts to share with you today. >> that is frustrating to me that you don't have a timeline of what happened once you got that knowledge. so what went on for nine months. you have no idea even though you were at the executive level at the time it was never discussed anywhere in your presence for nine months even though this had occurred? >> i became aware of the defect into thand the recall on january 302001. >> on february 7 you wish you'd

the first recall. 12 days later mr. cooper wrote pointing out that in addition to the recall that you've done it was not complete. he pointed out there were four other models that had the defective ignition. six days later you in fact recalled those vehicles. on monday of last week mr. cooper filed in california but there were additional cars that should have been recalled and had not been recalled because they had a defective switch is placed in them during repairs. last friday, four days later, gm finally issued a third round of recalls. is this the new gm, is barra, that takes a lawyer having to write and a court pleading for you to finally recall the cars that have been impacted by this defective switch? >> as we look at the first population we immediately go and read across the other vehicles that may have the same parts. often when you have the same part in another vehicle it can

be another configuration or geometry. as we looked into the population, we've been recalled of the population. and then we immediately started to look at where were the spare parts, from the general motors perspective from the dealers we could go to the dealer wreck or didn't understand if the dealer put a spare part into the vehicle window as we worked with our supplier we knew that they had sold these parts to other third-party repairs where there were no records kept in when we learned that we immediately recalled the entire population of all of these vehicles because we couldn't be certain if there was a vehicle that had a part put in that we couldn't track. >> and i think it's a great it's just it's worrisome that it took three shots after nine months. >> is barra, the public is very skeptical of general motors and let me explain to you what they are seeing. at some point in the last decade gm knew there was a problem with

the faulty ignition switch that led to the deaths of 13 people. in late 2006 and early 2007 gm replaced the ignition part but kept the same part number and didn't tell anyone. shortly thereafter g. and needed u.s. tax payers to bail them out. the company was provided so much assistance that when they emerged from bankruptcy the federal government in 20091 to 60% of the company. so from where i sit it looks like gm is not forthcoming with the american people who bailed them out. it looks like there were multiple moments the company had conflicts of interest either initiating a recall at the time when gm was not financially sound or when the government owned 60% of the company. so what i'm going to do is allow you to explain yourself to the american people and i think we need to know whether you belief

the company acted in the best interest of the consumers who bought your car and the u.s. taxpayers who bailed you out. >> first i agree it took way too long for this to come to the attention and to do the recall and we have admitted that and we also apologized. it's tragic that there has been the livelives lost and infectedh this event. from the part number perspective i find it unacceptable that a parts would be changed without a part number that would be identified but is it a process of good engineering or an acceptable process it wasn't then and it isn't now. and if we do our investigation we would deal with that situation. the park was designed in the late '90s and went into vehicles and production in 03.

the culture of the company after time had more of the cost culture focus and i can tell you we have done several things since the bankruptcy to create a new culture of general motors to be focused on the customer. we have also taken quite a bit of beer a christiane of the process into the structure itself. we genetically improved the quality organization and the customer experience organization so there's bee there is been drc improvements made in general motors since this time. technet is barra i read the transcripts from yesterday's hearing and use it when you're on the other side of the capitol you said safety comes first at the gm. that you don't look at the cost. gm looks at the speed that you can fix it and you said that there was a change that gm has gone from the cost culture to the safety culture.

why don't you explain that and explain that does that mean that in 2006 general motors was more concerned with the bottom line as with opposed to the recalling of their vehicles? >> when we look at the complete investigations done, there were documents produced yesterday that if those are in complete context that they value cost over quality once we knew there was a safety defect that is unacceptable. in today's culture we don't condone it and it serves with the leadership in product development across the company. if there is a safety defect there isn't a calculation done on the business case or the cost. it's how quickly can we get the repair and put the right part or fix or inspection or whatever needs to be done to make sure that vehicles are safe for the customers are driving. driving. hispanics about me ask you again, if safety wasn't the highest priority is it fair to assume that the gm only acts in the best interest of gm at all times, was that true in 2006?

>> again that is a very broad statement. there've been times in the past where there is been a safety focus general motors is a 100-year-old company but i can tell you now from post-bankruptcy there is a focus on the customer. and on tv and on quality. >> i have more questions but i will wait. >> we will have another round of questions. senator boxer. >> i have a timeline of when you knew, when the company knew there were problems. it started in 01 and 03 a service technician noted that there was a stall while driving, and there is a constant theme of things getting worse and worse through the years. now you are new at your job that you have been there for how many

years? thirty-three years. so when this was first discovered, you were the executive director of competitive operations engineering where you developed and executed strategies to improve the effectiveness of the vehicle manufacturing and engineering but you didn't know of this. nobody told you about this. and then you were the plant manager in 03 to over four and you were responsible for the day-to-day plan activities related to safety. we didn't build any of these models. >> in that position you knew nothing about this. and in 0425 few were the executive director of the manufacturing engineering and responsible for developing and implementing the global bills of processing equipment to optimize the capital deployment and manufacturing operating costs.

you knew nothing about this when you read the executive director of manufacturing and engineeri engineering. how about when you're the vice presidents of the manufacturing engineering you knew nothing. whenever the vice president of the human resources. you are an important person to this company. something is very strange that such a top employee would know nothing. have you seen photographs of the cars that have had about ignition problem and the problem went to death have you seen photographs of the cars what they look like? >> yes. >> i have another one for you to look at. people are here. mary, teresa. she died at the age of 21 and she was a senior. her parents are here with fami

family. i guess it's somewhat shocking after the pinto and that goes back to when i was an elected official i was shocked that there was such a cold and calculating way that ford decided not to fix the floor tank and learned through lawyers as the chairman pointed out they made a very, through discovery they found out there was a cost benefit analysis and forward decided it was cheaper for them to pay off the families than to fix the problem that would have cost them even leading dollars. did you make that kind of calculation in this situation? >> i did not. >> do you know of anybody that data? >> that is the purpose of the investigation. >> but you don't know now? >> do you know if gm ever used this kind of cost-benefit

analysis in its history? >> there were documents shared with me yesterday that if they are true as we go through this complete timeline we will demonstrate that it's completely unacceptable. >> i didn't ask you that. i said do you know if gm ever used this kind of cost-benefit analysis at history. >> if it was used not for a safety item it would not be acceptable. >> it's okay to do it for a safety item come is that what you're saying? >> i said the opposite of that. >> no you didn't. what about in 1973 when they concluded that it was not cost-effective for gm to spend more than $2.20 per vehicle to prevent a fire death? do you know about that? >> i heard of it. >> you haven't looked into it? >> in general motors toda today finances anytime there's an fins any time there's an incident -- >> but today he is today. yesterday i did some things that i am accountable for. it's not about you -- you have

been involved in this since before you became ceo. have you not looked into this? book, he studied the value of a human life lost of 200,000. an estimated the custom he could cost-effectively have spent only $2 for the impact protection to prevent fuel fire fires in neighboring death would cost the company $22.40 a vehicle. they determined it would b it we cost-effective to pay more than $2.20 per car for each burn to death. so you talk about today's gm but evidence shows as recently as 2005, gm used used a cost usedt analyst is to determine fixing the problem was, quote, not an acceptable business case. are you aware of the situation in 2005, has that been called to your attention to? >> i was aware in general of the letter but i've never met. >> what about in 2005, is that the new gm or the old gm?

>> general motors was formed in 2009. >> said the old gm in 2005 were not aware they used the cost-benefit analysis to determine if fixing the problem was not, quote, and acceptable business case? and if there's a safety issue there shouldn't be a business case calculated. >> but you don't know anything about this? >> that's why we have hired an investigation. we are going back over a decade. >> as people know, the commerce committee does order of arrival so to remind everyone we do it different, senator rockefeller does order of arrival. i will respect him in that regard. i respect him anyway. i respect him in all regards. [laughter] [laughter] but i will respect him in that regard. so next will be senator klobuchar. >> thank you senator mccaskill for holding this hearing. as far as one of the families involved in this is a young

woman who was killed named the tosha from minnesota. i met with her dad yesterday. i talked to her mom were to her mom's husband yesterday and this young girl was in wisconsin. she was in a cobalt and suddenly the ignition went off into the car bear up 71 miles per hour into trees into two of the girls were killed including the tosha. she was a hockey player, a young girl and at one of the letters that her dad gave me that she wrote to him just a few months before she died she talks about them and this is her words, i wouldn't be the good goalie that i am now if it wasn't for you, dad, standing behind the net, behind the glass. knowing you were there made me trust myself better and i definitely felt secure to know that you've had my back. and i think you understand that these families need someone to

have their back. they want to have the backs of their kids at least at the memorieto thememories of their i think this is a lost of what this is about including a major change in process that we need in gm and probably in the transportation field in terms of how we look at these things. and as you look at this internal evidence, the things we need to know including why gm opened numerous internal reviews and that elevates the informal investigation until 2011, why was the gm management of aware of the decisions being made to the fact, that didn't gm disclose the issue during the company's bankruptcy proceeding, these are the things on the mind of the american people. and on the government side with ntsa that they have the resources to prompt their own investigation, did they have expertise and technology to evaluate this evidence? i know in our case the family

claimed the rico complaint was made way back when the tosha was killed. what could they have done differently as it was receiving complaints over this long period of time. so my first question of you is about this internal process. and i would like to know what factors as we have seen the recalls with more and more of them rolling out over the next few weeks would factor big gm consider when it is examining whether or not to elevate a potential safety defect to the higher level of review? >> in today's general motors, we look at as an incident is learned about and it can come from any source, it can come from the dealers that can come from outside, it can come from a claim he made and it gets assigned to a team of knowledgeablengineers.they try s happening. there is an incident what it could cause and then it gets

reviewed either cross functional team and goes to a final group to make the decision. that is the process used. >> what is the most important factor the company looks at when considering whether to do the recall? >> the most important thing is if there is a safety issue. over the last two years we have made great strides to quickly get the information and to get in as quickly as possible. if you look at the data right now we actually do more recalls than anyone with a smaller population because if we find something we are trying to fix it as quickly as we can. >> you think there will be further recalls to come? >> id leave as we find problems large or small, we will do the right thing and if it requires a recall we will do the recall. >> now we have the issue of the claims with many of these families that have it and faults. do you think the families have equal opportunity to the compensation regardless of whether and when gm went through

bankruptcy and if you could describe at this appointment with mr. feinberg have that would work so that the families would get their compensation. >> we hired mr. fienberg released last week. we had our first meeting on friday and it's open right now. he has guided us on what we need to consider. we have civic and legal responsibilities. and we anticipate based on the timeline he has given it will take about 60 days. that's the timeline he told us to prepare for as we explore and look at all the different options. we haven't made any decisions yet. all options are open but i don't have that decision today. >> should they be regardless of the bankruptcy issue? >> that's why we hired mr. fienberg to look at the issue. >> last question. what does gm have to do to

regain the american public trust? >> we have to work everyday and i am 100% committed so with my team to make sure that we are putting the safest and highest quality vehicles on the road across the globe and that is what we will work to do. that is what the men and women of general motors want to do. >> senator coats. >> thank you very much. ms. barra correct me if i'm wrong but yesterday you said you hired mr. fienberg to investigate the matter but you also did not commit to sharing the results of that investigation with the public and with the congress instead of saying you will share what is appropriate after a nights sleep on that question. is that still your position or do you think it would be appropriate to share everything mr. fienberg discussed with the

public. the findings from the study is the investigation of what happened over this more than a decade ago and when i said we would share with appropriate, we will share everything and anything that is related to the safety of this incident, we will share that with the customers and we will share that with you and the regulators. if we learn things that are broad from the perspective we will share that. the only reason why it is appropriate is that if there is an issue of competitiveness because we have opened up everything that would be everything that is again, there was a safety issue we would override on the safety side but other competitive issues and also as an player we have responsibilities and privacy through some of our employees as a part of the employment agreement i have to respect as well but clearly i appreciate

the opportunity to clarify this. anything remotely related to the safety of vehicles or anything that could improve the process, we could have done better with steam oven and it will be shared in a transparent process. >> i'm glad you clarified that because it raised concerns with all of us. so, just to make the record clear, anything related to safety issues will be shared with the public and with the congress. >> absolutely. >> were you aware of this problem when you were offered the chairmanship of the ceo position at gm? >> i became aware on january 302001. i was aware in late december that there was an alice is going on on th this weekend that i dit even know what the part was. >> whether you like it or not you have become the face of the problem. but hopefully also the face of the solution. but it is important that i think we understand what your role was

during the 33 years. and more important than that, that the investigation points out just who knew what and when did they know it. i would suggest to the chair that perhaps a follow-up subcommittee hearing potentially involve those that held a leadership in the positions in gm during the timeframe that we are looking at and that would include government officials also since they own 60% of the company a considerable period of the time. i say that because i think we need to hear from people wh who headed the team positions in gm that perhaps any knowledge of this and made the decision of the cost basis or for whatever reason to come before the committee and explain their role in this rather than dumping the whole issue on its new ceo.

.. >> thank you, senator coats. we will in all likelihood do some kind of follow-up hearing on this and i think it would be helpful to hear from some of the people in key places. it certain love to talk to, under oath -- i shouldn't say under oath. any committing setting i like to talk to the legal team about how they handle the lawsuits around this defect.

senator nelson. >> thank you, madam chairman. ms. barra, i have been a general motors customer virtually all my life. and have been very satisfied. i'm concerned by virtue of what we've learned, is there a corporate culture, and since you're the new sheriff in town, you're going to have to get into that culture. as senator boxer had mentioned, back in 1973, that accident of the fuel, fires, and so an engineer for gm wrote the value analysis of auto fuel fed fire related fatalities. and senator boxer had already talked about that.

madam chairman, i would ask that that be entered into the record, that engineers report. >> without objection. >> now, given this potential culture problem in gm, since i am the gm customer, if i were to have a recalled chevrolet cobalt, would you recommend that i drive home in it tonight? >> if you take all the keys off the ring except ignition key or just use the ignition key, are inching team has done extensive analysis to say that it is safe to drive. >> what if are going on a long trip? >> again, if you don't have anything else on your key ring and i recommend just the ignition key, you are safe to drive the vehicle. the analysis has been done over weeks. >> i suspect that cobalt drivers

would not take comfort in that advice on doing what has come up. and you all may want to revise that advice. you mentioned here that gm has hired ken feinberg. you know, he's accustomed to large claims. he handled the bp oil spill in the gulf. you all have confirmed 13 deaths. does this suggest with fienberg coming on board that the number of deaths and injuries is going to be potentially much higher? >> we are starting our work with mr. feinberg on friday. we think is an expert in this area and we want to do what's right. so we thought he was the person with the most expertise to go

forward. and i would also, to the previous question, if a person is not culpable driving their cobalt or one of these models, we are providing loaners free of charge. >> with fienberg on board, does that suggest that gm is going to compensate owners who feel the need that they have to park their car, other than the loner that you're speaking about? >> again, working with mr. feinberg, there's many aspects that we need to work through with him, and so that is why he, on his timeline, the same it would be about 60 days. >> the center of auto safety has suggested that they think this defect may have caused over 300 deaths. that's a big difference from the 13 that you've acknowledged. why do you think those numbers are so far apart the?

>> my understanding is there's data sources from the forest database where it captures a proportion of incidents that occurred in those vehicles in a broader population but in some cases the way air bags are designed they are not intended to go off. depending on the crash but if you like me to have -- with the team is very knowledgeable. they've spent virtually their entire career working on airbags and attended. we could share that. >> tomorrow you're going to have to formally respond to nhtsa about what the company did and did not know. companies are legally required to report safety defects within five business days of discovering them. and so this information is going to be critical to determine

whether gm broke the law. while we're waiting on this determination, can you tell us whether you think that gm inform the government and the consumers pursuant to the law in order to prevent those accidents to? >> i want to know that answer just as much as you did, and -- you do, and that's why i've got mr. valukas of doing this report. we are working on all the information that nhtsa has requested to provide that in a timely fashion. >> thank you. >> see who's next. senator booker is not here. senator blumenthal. >> thank you, madam chairman, and thank you, senator mccaskill for holding this hearing. thank you, ms. barra, for being here today to you and i've met before, happily? and going to kill you know what i said then which is i have enormous admiration and respect

for your career, what you've accomplished and the leadership that you provided to gm. and i also have enormous respect for your company. it's an iconic, enormously important manufacturing company, and it produces terrific products, generally. and i know that you are a company here by a regiment of lawyers and a battalion of public relations consultants, and that you are breaking with the culture. it's a very difficult step, but let me come with all due respect, such as three steps, at least three steps that you can take if you really want to break with the culture and show the leadership that i think is worthy of gm and worthy of your leadership. number one, commit to a compensation fund that will do justice for the victims of the

defects that killed people in your cars. number two, warn drivers who are currently behind the wheel of those cars that they should not drive them until they are repaired. because they are in safe. and, number three, support the measure that senator markey and i have proposed that would improve the system of safety accountability going forward. require more disclosure to the public and better transparency and reporting by the car manufacturers in case of defects to the federal agencies. and the federal agencies have a substantial share of the blame in this instance. i think it's pretty much incontrovertible that gm knew about this lethal safety defect, failed to correct it, and failed

to tell its customers about it and then conceal it from the courts and the united states. so i think these steps are appropriate, and i hope that you will adopt them, despite whatever the complexities that you see and whatever the advice is that you're getting. and i want to know, first of all, what is it that ken feinberg has to work through to convince you that there should be compensation to these victims? >> ken feinberg has just indicated to us as he goes in, he interviews a lot of people, tries to get a complete understanding of the process -- >> but he is not, and excuse me for interrupting you, but we all have five minutes here, for trying to make the best use of it as possible. he's not a bankruptcy expert. and right now, gm is still in courts across the country

invoking a blanket shield from liability that is the result of its deception and concealment to the federal government. it and post it at the time as attorney general for the state of connecticut. not foreseen that the material adverse back to being concealed was as gigantic as this one, but why not just come clean and say, we're going to do justice? were going to do the right thing. we're going to compensate the victims, knowing that money can't erase the pain or maybe even easier, but it's the right thing to do. >> our first step in evaluating this is to hire mr. feinberg, and we plan to work through with them and understand his expertise. as i said, their civic as well as legal responsibilities. we want to be balanced and make sure we are thoughtful in what we do. >> let me go on to the next step. let me show you the recall notice. i'm sure you've seen it. it says the risk increases if your key ring is carrying added

weight, such as more keys, or a key fob, or, and i stress or, your vehicle experiences rough road conditions or other jarring or impact related events. even with all the weight off the keychain, doesn't the recall notice tell you that cars should not be driven where there are rough road conditions or other kinds of potential jarring events the? >> that testing that has been done has been in, on our proving ground that has extensive capability where the vehicle would be jarred and with just the key or the key in the rain, it has performed. >> is it your testimony here today that those cars are passing as any other car on the road today? >> again, as you look across all

the safety technology that is on vehicles from the past to present, there is variation on safety based on the technology that's on cars today. so there's variation across the whole population. >> is that cobalt car after the now safe for your daughters to drive? would you allow them behind the wheel? >> i would allow my son and daughter to drive -- well, my son is the only one eligible to drive, if he only had the ignition key. >> so the added risk, if you have only the ignition key, of driving that car on the road is zero? there's no additional risk of driving the country called -- and recalled cobalt on the road? the testing we've done as relates to this indicates that the weight would not cause that issue. >> my time --

>> could i just say, if someone is uncomfortable that we are providing loaners if someone asked for a loan, a loner is provided. >> well again, i would respectfully suggest that you advise your customers to get loaners rather than driving these cars. thank you, madam chairman. >> senator ayotte. >> thank you, madam chairman. ms. barra, you described the situation with the duplicate parts, the duplicate ignition switches. one had a defect, one didn't however the same part number was kept. and as i understand that, that happened, part was actually approved by the chief engineer in 2006, and that it was the redesigned ignition switch was put at some point into the model during the 2007 year. and you've described it as an unacceptable practice.

you know, i have to say when i look at the situation, particularly the fact that there is indications that gm may of not as soon as 2001 about the problems with the ignition switch, the fact that there would be two identical parts and, in other words, one is effective and one isn't and that you didn't change the part number, strikes me as deception. and i think it goes beyond unacceptable. i believe this is criminal. and i guess my question to you is, have there been any other instances where gm actually is changing a part and fixing a defect and keeps the part number the same? because this to me is not a matter of acceptability. this is criminal deception. >> i am not aware of any. and it is not an appropriate

practice to do. it is not acceptable. it is crucial to its engineering principle 101 to change the port number when you make a change. >> i think it's obviously, someone made the decision and it was approved by gm to do this. and i would like to know whether it's ever been done in any other instance, because i think that we should get to the bottom of that in terms of deception, in terms of the potential safety issues that can flow from that, i'm not triggering for people that there's actually a part that is being fixed but not with a different number so it's really a matter i think of being honest and truthful with the public year or so i would like to get a follow-up answer to that as this investigation goes forward. because i don't see this as anything but criminal when i see the change in this part number. i also wanted to ask about, the

chair asked you about the deposition in april or may of last year where clearly in the deposition, the trial counsel had raised this issue of the two parts with the same number, one defective, one not. and does the general counsel report directly to the ceo? >> yes. >> and i find it shocking a something like that, and i share the chair is concerned, wouldn't have gone directly up through the leadership of gm. and i think this is a very important issue that we need to understand. even a year ago, but was told and who knew what when, because it seems to me, i'm a lawyer by background as well. this would've been shocking for me to hear in a deposition representing a client, and i would have gone to the top if i heard something like that to make sure that my client

understood what was happening and the risk that they faced. i also wanted to ask you about, with regard to the taxpayer bailout of gm in 2009, at that point had their already been lawsuits filed related to the ignition switch? >> i can't answer that question. i don't know. >> i would like to know whether gm actually notified the administration's auto industry task force, which helped administer the taxpayer bailout, about the ignition switch. but i would assume that if there were any lawsuits that have been filed that were pending with regard to this safety of the products of gm, that this would've been something that would've been brought to the attention of the administration. and i would like to know what information was provided to that task force, or to other officials in the administration,

as we provided taxpayer dollars to gm to address the bailout and the bankruptcy. site think this is an important issue as well. and, obviously, an important issue i think for nhtsa as well. so he could back to us on that i would appreciate it. thank you. >> senator rubio. >> thank you, madam chair. ms. barra, here been at gm for how many are? >> thirty-three negative discussed a lot today about the culture of general motors and the change in the culture. and ask about the culture at gm and your years there? was there a culture adding time you worked there about avoiding, a culture of discouraging bad news about the company? >> i think the culture wasn't always as welcoming of bad news, you know, again it was not across the whole company, but in pockets it was as always welcome as it should've been. >> certainly a senior management positions in light of, for

example, the bankruptcy and the subsequent need for the federal government to intervene and bailout the company for it to survive, did you notice that was exacerbated during that time, that at that point in time there was a particular amount of resistance towards any sort of bad news about the company like, for example, faulty ignition switches? >> i wouldn't draw that conclusion. >> so you were never involved come universal any conversations with regards to the need to diminish the amount of bad news about the company or anything that would be disruptive, even if it involved safety issues for? >> no,. >> let me ask you this question leading to the next point. i want to ask it and i know your answers going to be there's an ongoing investigation by think it's important to ask it. from what you know now, from the documents you been able to review and the conversations you've had, i would imagine this issue has captured the attention and perhaps consumed much of your time and the time of senior management at gm, right? that's probably the principal issue facing the country right now. based on what you know having

dealt with this issue, can you tell us whether general motors intentionally misled its customers and federal regulators when someone decided to delay this goes in -- disclosing the faulty ignition switch? >> i do know. that's why we're doing the investigation. >> but you won't rule that out the? >> mr. valukas has the range to go where ever the facts take them come and the facts are the facts. we will deal with those. >> if, in fact, it turns out that there are individuals who made decisions, is the purpose of this investigation to deduce two things? first, a process that led to the decision to be made? how was this the decision was made so you never do that again? that's the first part of the investigation. the second part and the one i think that is important because this is not just about general motors. there are other companies after making all sorts of products and but we never want to do is live in a country where companies can decide that as a business model we will decide not to make fixes to things despite the fact that they are dangerous because it

cost too much money to fix it. that's a dangerous precedent. we would never tolerate that, i decide not to change the recipe. if it cost too much money and someone died. they wouldn't just close to my restaurant. i would go to jill. so my second question is, as part of this investigation to decide who made these decisions, who, in fact, decided by what group of people decided not to disclose these flaws, and to do something about them in a timely manner? is part of the investigation to identify those individuals who made those decisions? >> if there were decisions made by individuals that were inappropriate and some the things that i've seen i'm very troubled by, as mr. valukas completes his findings, my team, my leadership team will take steps and if that means there's disciplinary actions up to and including termination, we will do the. we demonstrate that already when we dealt with an issue last

year. >> if someone was negligent, if someone so we have this information and we don't think it's a big deal, we shouldn't anything about it, that is negligence in certain select that should not continue to work for the company. but would you also look for evidence in that investigation that infect people knew that this was a problem but decided that the costs weren't worth it? are you also in search of that to see if, in fact, there were individuals or a culture in the company created by a group of individuals that encourage employees to make these sorts of cost-benefit analysis based on economics and not on customer safety? >> that type of analysis is not acceptable to god we were going to do business and that is not the culture. we will make sure that that is not the culture we have going forward. >> my question if, in fact, you discover or will you look to see if, in fact, there was a decision made by a group of individuals not to move forward on this because of its cost? >> yes.

>> you want to know the answer to that question. we will know the names of these people at will know the process by which they made that decision as well? >> we will work on the process but in raising to make it to sure i stay consistent with employer laws that i have. but trust me, we acted swiftly when we had issues with individuals who are no longer with the company in the past. >> i would follow up, talking to counsel and ours as well, but i'm not sure there are any laws that allow companies to shield an individual who made at that point what appears to be a criminal decision not to move forward on a safety item and it's because of some sort of interim economic consideration. >> i guess we need to complete the investigation and have the facts in front of us, and we will act not only from a company perspective, but if there's issues beyond that that have to be dealt with, we will deal with those. >> i have one last question to with you fully cooperate with the justice department if they want to conduct a concurrent investigation alongside into one? >> we will fully cooperate with the justice department.

>> thank you. >> senator johnson. >> thank you, madam chair. ms. barra, like senator klobuchar i met with the step father and mother of natasha weikel. the actions happen in wisconsin. it hits pretty close to home. your background is a tactical engineer, correct? >> correct. >> you have been with gm for 33 years. in that capacity i would imagine general motors has been a real leader in terms of total quality management of their manufacturing process? >> we've improved over our quality dramatically over the last several years. >> i got a manufacturing background myself. iran plans for 31 years. in your engineering capacity, i would imagine you dealt with the quality management system in pretty robust fashion, correct? >> in the manufacturing arena, yes. >> i want to truly down a little bit in terms of where chairman mccaskill answered ayotte went on the change of that part

number. i've gone through a lot of quality audits and, of course, the reason you have different numbers for different parts is for traceability, correct speaker is correct. a number of reasons but having a t-1. >> so if there's a problem, a defect in the manufacturing process you can trace back exactly where that happen. you call that not good engine in principle. that's really just a total violation of a total quality management system? >> correct. >> totaled quality nation as been part of gm for how many decades the? >> i would say the least of my career and it's been improving along the way. >> the injuring departments in particular are totally focused on those tqm principles, correct? >> correct. >> wouldn't -- when you change apart, okay, there's going to be an awful lot of engineering that goes into changing that part, correct? there will be some parts that go

with in a part -- >> it depends on the change of the park. >> there are multiple parts two and ignition switch, correct? >> correct. >> there are going to be different parts combined with that part. >> and then the part number that general motors uses as the subassembly comes to us would have a unique and individual part number. >> so it would be very difficult within a total quality management system to have multiple changes in part numbers combined in an assembled part and then not have that part number changed in a completely different part, correct? >> i agreed. >> almost impossible. >> it's wrong. >> which means it wasn't just a mistake. somebody had to proactively make sure that that part number did not change, correct? >> that's why we're investigating to learn exactly why that happened. >> but again, within a total equality management system with

everything that goes into changing apart, and assembled part, so there are going to be different part numbers combined into that part. there's almost, there's really no conceivable way within a total quality management system with computers as they are today, are the types of controls you put in total quality management system that within that system a new assembled part would not have a different part number spent i agree with and that's what i find so disturbing. >> so basically the conclusion would be that process, that procedure, that computer system was purposefully overridden? >> that's why we're doing the investigation. >> that's the essential we have to make, right? also within the traceability art of the total quality management system can we should be able to quickly identify who or what departments were involved in that, correct? >> and we're doing that. ..

>> thank you madam chair. this is a chevy cobalt 2006 ignition switch. this is the same design but failed to shutting off the vehicle airbags killing innocent victims. we now know that the