even though it actually is a program that is not a top down washington program and it actually saves money because it encourages states and localities to put in place prisoner reentry programs, keeps people out of this revolving door and encourages and is an successful in getting people into productive lives where they are taxpayers and taking care of their families and, of course, better for commuters but also better for the taxpayer. .. this is a direct quote.

the disgraced mayor, on-camera smoking crack cocaine downtown with a mistress, marion barry jr. led a controversial career. i don't know why you are here but thank you for coming. maybe the 2 but could make this more affordable. we will stick to the budget. as we are supposed to do. i worked for chris a lot over the years, we were on the supercommittee which ended up not being so super but it was a serious effort to find answert . some of what we propose you could argue later happened through sequestration, we did not get at this broader picture of how to deal with the biggest part of the budget and two sense of the budget which is called mandatory spending within ten years, the nonpartisan congressional budget office tells us it will be three

quarters of the budget so that is the biggest part of the dget out for us but again chris van hollen and i have worked together before and hopefully we will work together in the future to find common ground on this and other issues. the debt we currently have and the deficit is very serious and threatening to our economy. it is the most predictable economic crisis in our history and i agree with him. the deficits are projected to top $1 trillion in the next decade yet it seems it is off the headlines and i want to thank the national press club for having this because by shining a light on it and asking us to be here they believe this is an important issue. some of us suggested because the deficit is only $500 billion this year that is okay.

$500 billion doesn't seem ok to me. when i was at the office of management and budget, the deficit was $161 billion. and it is also, too high, we looking at trillion dollar deficits in the budget analysis. it is due entirely to costs on the mandatory side of the budget. and the sustainable entitlement programs. i will talk about that in the second. a pretty rosy scenario when you assume $1 trillion a year in deficits a decade from now. no recession, no terrorist attacks. interest rates are going to stay at relatively low rates, historically low rates for that period of time.

a lot of danger the deficits could affect higher than that. ceo projects an increase in the debt over the next decade so you go from $17 trillion where we are today, $17.7 trillion to $27 trillion in debt ten years from now relatively rosy scenario. i hope no one is declaring victory and i hope we continue to keep this on the front burner and talk about how we solve this problem. the problem is entitlement spending. i think most folks on both sides of the aisle understand that so we will spend time talking about the math. i don't think it is a matter of ideology or point of view but arithmetic, numbers i simply overwhelming, social security, health and vitamin, net interest comprise half the budget and yet they are responsible for 86% of all new spending over the next decade. entitlement spending is set to

double over the next decade. it will consume 100% of tax revenues within a decade. in other words the entire discretionary budget from defense to health research to education to second chance we talked about infrastructure, all that will have to be funded through the nation's credit card because every penny of revenue this coming in will have to be used to pay for this expanding in fetterman spending, 100% increase on the entitlement side. what do we do? we have got to do something to save these vital programs, if we don't, we are not serving the very people who rely on them, social security faces a $62 billion deficit this year so social security is in fine shape, cash deficit, $62 billion more in terms of benefits coming in terms of payroll taxes.

primary trust fund will go bankrupt in 20 years which when you think about it we are at a point where those who are retiring today, most will be alive in a time when social security trust fund goes belly up. as you know under the law law that means 20% cut in benefits unless we change the law. this is happening now, two folks who are currently moving to work into retirement, social security trust fund, goes bankrupt in 2017 just around the corner. medicare trust fund in just over ed decade. obviously these need to be modernized, reformed and the longer we wait the more painful those reforms will be. if we are going to do it we are going to take some tough steps and it will take reaching across the island will take both parties being involved and just as was done in the 1980s, ronald

reagan and tip o'neill, each party will have to evolve in my view. there are a lot of myths about spending, let me attempt in this perspective to clear the air today. i will touch on five of the most persistent myths which will take us from finding common ground and finding the solution. declining tax revenues are the problem. as we used to say in the cartoons, that is mathematics, sun. i think it is. you can argue with me but can't argue with figures. since 1960, tax revenues regardless what tax policy was, around 18% of gdp so that is the average since the 60s. revenues will see the historical average starting next year, over the next few decades the highest levels ever, the highest levels

tax easily, i am talking to% of the economy. more specifically individual revenues as a percentage of the economy will shatter roll records in the next decade so within a decade will be higher than it has been previously. the congressional budget office, some other partisan group, spending is even more. these higher revenues doesn't keep up with higher spending, spending has averaged 20% so revenue is 18, spending 20, the cbo projects health spending, net interest costs will drive spending to 25, 30, 35% of the economy in coming decades. their use to the baseline that i liked called the alternative baseline to lay all this out, it would happen in the 2030s time frame. they didn't offer that this last year but regardless if you look

at the numbers and project them out you see tax system can't keep up with spending, you can't have an income tax system, that collected taxes high enough to keep up with spending. one way to say it is cbo projects entitlement costs and resulting high interests on the debt, higher interest in the debt responsible for 100% of the rise in long-term deficits. even the highest sustained tax revenues in history won't come close to paying for that. if entitlement spending is driving this, shouldn't the strong majority of deficit reforms coming to this or should we keep chasing records ending with higher tax levels? again, that is a race we're going to lose because we can't keep up with it eventually. social security, medicare recipients receive only what they pay into the system. i hear this a lot. i am sure chris does too. social security, becoming more

true with current retirees. typical person retiring into medicare today will still receive $3 in benefits for every $1 at the end of the system. specifically, a couple retiring in ohio, maryland or anywhere in the country will pay $119,000 in lifetime medicare taxes and premiums, premiums included $357,000 in lifetime medicare benefits. when you multiplied that by 77 million baby boomers you can see why the medicare math doesn't make sense. the medicare trust funds will build taxpayers from additional costs. trust funds are asset to social security but also liability to the treasury. the social security trust fund assures seniors all security deficits through 25 would be funded it doesn't provide any actual economic resources to it. general funds thought to come up

with trillions of dollars to fulfill that pledge. the existence of the trust fund does not save current or future taxpayers a dime. all future benefits have got to be financed by future taxpayers. during the clinton administration the office of management and budget had a quote about this that i thought was appropriate. in a moment of can or they said these balances are available to finance future and the bookkeeping sense, they did not consist of real economic assets that can be drawn down to fund the benefits and their claims on the treasury that when redeemed will be financed by raising taxes, borrowing from the public, reducing benefits or other expenditures. pretty simple. there's a lot of misunderstanding of what the trust fund means. and sustainability and around the edges. according to trustees, social security and medicare face a combined $40 trillion unfunded liability over the next 74

years, that is trillion with a tee. they can't close that gap. the recent expiration of the upper income tax cuts which the president was committed to close raised $620 billion over the next decade and a lot of folks said that would solve the problem. a big sum, $620 million. it is 3.3% of the projected social security medicare and medicaid costs over the same period. 3.3%, about 130. on defense cuts, forget bringing the troops home, we could permanently eliminate the department of defense, it would delay the day of budget reckoning by 15 years. there's no possible set of tax hikes or spending cuts, the entitlement costs, the entitlements themselves require fundamental reform. because obamacare is paid for

that makes it fiscally responsible. again, a new little the entitlement was started to defend obamacare by saying it is paid for, at least almost all paid for by new taxes and medicare cuts. might view on that is it doesn't make any more fiscally responsible. a family that makes $100,000, they figure out a way to find $10,000 in savings through hard work, scrounging, built planning and they take $10,000 to go to the mall and spend it. i don't think they would say it is a spending spree that was justified because the $10,000 was paid for. we need to look at this in terms of what it does to medicare. with regard to medicare we can debate whether the obamacare cuts are appropriate and not. the cbs said these provider cuts aren't sustainable, they won't

be sustained by the congress work unsustainable in their view under the health care system in the country. let's assume it was the right thing to do. the savings under medicare providers was $700 billion. if it is appropriate, shouldn't it have been used to deal with this problem of medicare. some say you can double count it. just doesn't make sense. was used to fund obamacare. otherwise it could have been available for medicare. facing these record spending and debt levels in obamacare the federal government's great and the one$.5 trillion in tax increases and medicare cuts, and a new entitlement program. this matters because the options for budget savings are pretty limited, why they raise taxes so high before does impact the economy in a negative way. medicare providers, only cut so

much before they stop participating in the program. the poverty programs, education programs, veterans spending programs and retirement benefits already retired, have been taken off the table by republicans and democrats and the options are pretty limited. only so many problems can be realistically scaled-back and eliminated, is there waste and fraud and abuse? there could be some savings there but they failed in comparison to the costs we are talking about. of washington keeps using its limited supply to offset expensive spending, nothing left for the so-called bargain. is not a grand bargain. at least some kind of bargain to deal with entitlements, save them from bankruptcy and scaled-back the debt. the president's budget $1.2 trillion in new taxes is used to pay for new spending. senate democrats prefer a tax

increases called the buffet tax, proposed as an offset to nearly dozen proposed spending hikes, for those who follow congress carefully this happened again last week, the buffet tax was proposed and used to pay for another spending increase not to reduce deficit, the buffet tax would close 1% of the budget deficit, or zero it is used to offset new spending. it is a struggle frankly as chris will acknowledge probably because we worked on this together as did patty murray and paul ryan. so look. before i close let me add one point. we need to have ideas out there. paul ryan's budgets get criticized regularly but they do balance. democrats don't have an alternative that does that.

i often talk about means testing in medicare as an example where we could make a step in the right direction. does it talk about the problem, it is a step in the right direction, it is in the president's budget, it does provide folks that make $170,000 a year have to pay more in premiums under part b and part b of medicare. i would say it is about $60 billion in the first ten years according to the analysis we have, $450 billion over the next ten years which is a proposal we ought to be talking about. it is this expanding benefit to the debt and deficit we ought to be looking for because it is a long-term problem that the only be solved by those kinds of reforms but we can't seem to make progress there and so my proposal to date is let's make a commitment at least what is in the president's don't budget and

put that out as spending reform here even this year because it seems that is one where we should find bipartisan consensus and take a small step toward dealing with larger problems. success begets success and we cannot allow the current situation to continue without making some progress. i raised this in the confirmation hearings recently, when sylvia was before the finance committee wanting to move -- to the health and human services job, response was we can't move on that without a balanced approach and when pushed the balanced approach is raising taxes and is raising taxes on upper income americans, businesses who paid their taxes on the individual level land i understand the balance sounds great but think about this. think about the logic of this.

we can't ask wealthier seniors, by the way $170,000 a year equivalent to $2.5 million to $3 million annuity. so we are asking people who i believe given the situation we find ourselves in with medicare to find more on their premiums, but the answer was we need to raise taxes to have those people to pay more premiums. makes no sense. there is no logic there. i am hopeful we can make progress on these broader issues and come up with this grand bargain. this year is going to be difficult to do something grand said next year's an opportunity particular early first part of next year before we get into the 2016 cycle but in the meantime let's take this small step together. let's take the president up on his budget and the one thing in his budget that deals with this

entitlement. thank you for being here. i will take your questions. [applause] >> we are honored by the president of the national press club, anything you would like to say, myron? live on c-span. >> i know senator portman. >> we adopted bob to. >> accompanying to maryland to play. thank you, senator, congressman, the national press club as a model is where the news is made and thank you to you both for helping make news this morning. i don't want to take more than a moment of my time to thank you both because i knew everyone is here to ask questions. thank you for arranging.

>> congressman van hollen. >> there we go. let me start by thanking bob for bringing us together today. great to be back and thanks for your leadership. thank you for your stewardship at the national press club and it is great to be here with my friend and colleague rob portman. we worked together on these budget issues. they are tough, they are challenging and i am hopeful that at some point down the line we are able to resolve them in a more comprehensive fashions and we have been able to to date. we have had some piecemeal progress but what we need is more comprehensive progress on these issues. before i talk about the budget issues i also serve as co-chair of the bipartisan congressional caucus and by want to

congratulate team usa on a terrific victory in the world cup yesterday. hopefully that is a sign of things to come. as everyone knows they're in a tough bracket. bob indicated my father had served in the united states foreign service. earlier in my career i was on the senate foreign relations committee. i want to say a word about iraq because when we look at the situation obviously is a time of great chaos and uncertainty, we have learned over the last week that when it comes to foreign policy pundits in washington, there seems to be no accountability because what we are witnessing in iraq is the fallout of one of the biggest foreign policy blunders the united states has ever made and yet when i turn on my television

or look at the newspapers i continue to seek an repentant architects of the iraq war offering advice today as to what we should do. in my view that is like asking the arsonist how to prevent fires. i do hope that as we go forward in this debate we will have little bit more accountability with respect to some of the pundits that are out there. of course the iraq war is directly related to budget issues. we lost close to 4,089 americans, had 32,000 wounded and in terms of the budget costs over $1 trillion, and paid for, all on the credit card, all adding to the debt. let me turn to the budget and the economy. the good news is the economy has been steadily improving.

we have seen growth in jobs month after month, still recognize we could be doing better and our focus right now should be on boosting job growth and boosting wages. that should be the priority in our budget process and we have one challenging immediately before us which is the transportation trust fund, the transportation trust fund is currently scheduled to have a big shortfall as early as august. what does that mean? the money coming into the fund is not enough to pay for current programs, already seeing slowdowns in projects around the country, states don't know if they will get paid so they are more cautious about bidding jobs out so this is threatening thousands of construction jobs around the country so priority number one when we deal with our budget issues should be addressing issues like that.

the president has of plan in his budget novel way to provide current funding for the transportation trust fund but actually to boost investment in our infrastructure. it is the $302 billion, four year plan. it is paid for largely by closing the special-interest tax breaks that actually encourage american companies to shift american jobs overseas. he would end those paris and counterproductive tax breaks and invest those funds in jobs here at home in infrastructure development. unfortunately the house republican budget has no solution when it comes to the transportation trust fund. essentially assumes no more revenue coming in and it assumes the shortfall coming up. there is a proposal in the house being put forward by the house republican leadership to essentials extend it by ten months, i believe, by ending

saturday postal delivery, on a permanent basis, permanently ending postal delivery, that is not a long-term solution to transportation trust fund issues and we should bite the bullet and make progress on that. some other things we should do right now, we should deal with the huge burden on student debt and loans. everybody here knows student debt is now over $1 trillion. that means when students are graduating from college and university they don't have the funds to help to buy a new apartment or get a mortgage. they struggle simply to repay the debts so the president has put forward a plan to relieve some of that. there was a plan that senator portman mentioned, if we are not going to do that we should have an alternative to address this important issue. we should be boosting our

investment in science and innovation and early education, senator portman has a great proposal dealing with energy efficiency, that is a deficit neutral proposal we should adopt in the senate and the house, those are the investments and initiatives that i think make sense. we should extend emergency unemployment insurance. you have 3 million americans out of work through no fault of their own. congressional budget office tells us extending unemployment insurance will also create jobs between now and the end of the year. senator portman was part of the bipartisan agreement to pass that in the united states senate. is now sitting in the united states house. we asked john boehner for a vote on that measure and the speaker has denied us the opportunity to have that vote as he has also denied the opportunity of a vote on the issue of comprehensive immigration reform. there is a direct link between

comprehensive immigration reform and our budgets. the congressional budget office tells us one of the things we can do to both grow our economy and reduce our long-term deficits is to pass comprehensive immigration reform. they scored, they analyze and explored the bipartisan senate bill. and said it is good for reducing the deficit over the next ten, 20 years which is why the president included the comprehensive immigration reform measure in his budget as did the house democrats so that is an issue directly related to budget just as it is related to other things and again john boehner is not allowed as to have a vote on a bipartisan senate bill, or the house bill that was proposed by many of us so those are some things we can do right now to help boost jobs and wages. another thing we could do to

boost wages is to pass an increase in the minimum wage. we should do that now. in the state of ohio, they index their minimum wage. we should do that at the federal level so that it keeps up with inflation, we should have some catch up provisions because right now the purchasing power of the minimum wage is lower than it was when president truman was president and we should have equal pay for equal work legislation. those two measures we can take now that would also boost wages in the united states. now let me talk about the sequester. and dealing with long-term budget challenges. because we had a bipartisan agreement last december, we have some period of relative calm when it comes to budget issues, an agreement that provides the top numbers for discretionary spending for fiscal year 2014 which we are in now, fiscal year

2015 that begins in october. we have also set the caps for defense spending and nondefense spending so we should be able to avoid that dispute at least going into fiscal year 2015. to answer your query about i would say prospects are good that we will of white shameless, unnecessary government shutdown this year because of that short-term agreement. but working below the surface is the sequester. fiscal year 2016 it is going to rise up and hit the country again unless we resolve that issue. i would like to see us resolve that sooner rather than later meaning before november but i think the prospects of doing that are relatively remote right now which means right after the

midterm elections it should be a priority. it is important to provide some 70 in having this sort of damocles in the form of a sequester to create uncertainty in the country and the congressional budget office has indicated that because of some of the provisions in the house republican budget you will see a drag on the economy and a half short term and i hoped we would avoid that. in terms of dealing with the long-term deficits replacing the sequester, the president has advocated a balanced approach, house democratic budget i advocated and propose on behalf of my colleague calls for a balanced approach that involves reductions in spending, and as senator portman alluded to, we also believe there should be cuts in special-interest tax breaks to help produce our long-term deficits and in fact

if you look at the president's budget proposal that has less revenue over the coming years than simpson-bowles provided in their balanced plan. the president's budget was submitted to the congress, has less revenue composing tax breaks than the simpson-bowles proposal because what simpson-bowles recognizes there are $1 trillion a year in tax expenditures. these are provisions in the tax code that provides for deductions and credits. some of them have good public policy and should be kept but some of them are simply eater, strong political lobby getting a special break for themselves in response to everyone else because when they get a break it means everybody else pays more. those should be on the table in

terms of long-term deficit reduction plan combined with looking at other things. the unfortunate reality is yes, paul ryan has a budget and house democrats have a budget but in the house republican budget they refuse to close one single tax break for the purpose of deficit reduction, not one. if you look at the last times we balance the budget in the united states it was four years. 1998, 2,000, 1990, 1999, 2000, 2001. what was revenue as a percentage of gdp? it was 19%. it was over 19%. it was 18% but the last time we actually balance the budget was 19% and if you look at current

congressional budget office projections at the end of the ten year window revenue as a percentage of gdp will still be around 18%, not where it was the last time we balance our budget, despite the fact the we will have tens of millions more americans on social security medicare. we have tens of millions more americans on health and retirement plans and yet the current projection is revenue as a percentage of gdp will be lower than it was the last time we balance the budget in that four year time. that doesn't make sense from a fiscal perspective. that is why we called for a balanced approach going forward. let me just close with a little reflection on where we are in the political process. because of those items i listed

that we should be doing now in our view we have not even had a chance to vote on those things in the house. we had votes on the budget alternatives but not on things like comprehensive immigration reform or emerge as the extension, not on minimum-wage, not on those other measures i talked about. i don't see a high likelihood in the near term of us getting to move forward on those issues and i fear that the situation in the house has grown even more difficult because the signals that was sent to the house republican caucus by congressman eric cantor or's defeat was don't even whisper about compromise, on these big national issues to move the country forward. don't even whispers that or you will be called a traitor, and called a traitor to the cause

because eric cantor for all our differences, i am not predicting we would have made a lot of progress on these issues before but at least on things like comprehensive immigration reform he expressed some openness to a conversation. unfortunately the signals that was sent in that election was don't even talk about those issues or you are going to be punished by right-wing talk radio. i hope moderate, reasonable voices can pull this conversation back on track at least after the november election because that is what the country needs, we need to tackle these issues, i am hoping once we get through the political season we will be able to do is that. in the meantime the american public is going to have to make a decision that follows the best way forward so thank you.

[applause] >> maybe you could both stand up here for the questions, and we will be able to do a little better presentations that way. let's make some news here. let me just read it off with this. am i right to understand that you both believe there will not be a shutdown even though nbc and others reported that the debt ceiling is coming in august or september? in your expert views will we not have a shut down by the end of the year? will we have resolution that accommodates to get us past the election? yes or no? >> yes or no. i think because the bryan murray budget agreement was put in place for two years i think it is likely we will not have any kind of government shutdown.

i do think this gives us an opportunity this fiscal year and september and we are into the final fiscal year of ryan mary so that is the time period, early next calendar year we have to deal with these issues i talked-about and the obvious way to deal with this is to focus on the mandatory side of the budget. ryan mary did that but frankly they took all the low hanging fruit and didn't take on the tough issues that take on these important but unsustainable programs, medicare, medicaid and social security and thin to the tax reform we should be doing because we talked about revenue as a percentage of the economy. we have a difference of opinion that can be resolved by the congressional budget office, non-partisan are better here, i think our revenues actually get to record levels in the next couple decades and then above the 18%. chris talked about 19% back in

1999, 2000, 2001. we had 18%, a deficit of $160 billion, we can get back there. instead of talking so much about how much taxes are a burden on the economy we should talk more about growth and pro-growth tax reform by lowering rates, bargaining and the base, could be revenue neutral, in other words not have an impact on the static perspective but from a macro economic perspective through growth, and frankly creating more jobs and opportunities and part of this discussion, probably realistically next year. what i talked about this year is the president's own budget put in place as part of a continuing resolution and what we have to deal with this year as part of the debt ceiling, something that takes that first step. even a baby step toward dealing

with mandatory spending programs where we had an agreement between democrats and republicans and that means testing here. >> shutdown, no shutdown, you addressed it. >> fingers crossed but more importantly as a result of the short-term bipartisan agreement i think we will lead the shutdown. whether or not we come together to work out separate appropriations bills is another question, but i believe we will avoid a shutdown. >> one other and we will go to questions. since we started a little late made we can go until 10 after. the situation in iraq you addressed a little bit, what is the impact of that on the budget. could iraq military action bust the budget? >> it certainly could. there are two budget baselines.

one people talk about where you have defense spending that continues the spending we had in previous years which could be the current law baseline and incurred policy baseline data little bit different. it wouldn't bust the budget, but as a real matter, if we have an additional commitment to will cost more so regardless what the baseline's show, there could be an impact. the obvious point is if we had a status agreement with iraq which is what many of us push for, very disappointed we didn't have one, some of these problems could have been avoided the is a dangerous world out there. clearly what is going on in iraq and syria is part of a bigger issue we have to deal with as a country and terrorism in this pet to give the group, the isis group having ambitions beyond iraq but not to have an agreement with iraq to provide

for continued training to provide forces for special operations response to terrorism to assure the iraqi government could sustain itself in terms of their international security, many of us thought was a mistake and we are hopeful we are now learning, having seen tragedy's unfolding in iraq, people being summarily executed and so on, we will learn that as it relates to afghanistan and as we continue to withdraw from afghanistan we put in place an agreement with the government, the new government of afghanistan to ensure we don't have these kinds of security problems that could have been avoided had we hadson training and ability to respond quickly with a strike force from special forces presence in iraq. >> let me quickly respond to a

couple of points, first the status of forces agreement with iraq. everyone here knows maliki's government rejected the proposal, we made sure americans are held harmless from any actions against them, legal or otherwise, and maliki said no. i am not sure we should have been to his wishes in that situation. second, i urge all of you to go back and look at a great quote from dick cheney back in 1991. happy to provide it to you later where he is explaining why at the end of the persian gulf war when the united states went into eject saddam hussein's forces from kuwait why u.s. forces did not go into baghdad because

george bush administration was criticized by some for not taking advantage of the situation and marching into baghdad and dick cheney posed the question if we go into baghdad, what kind of government will we create? is it a city government, kurdish government, how long will it last, what will happen when the united states leaves? he said the president made the right decision by not going into baghdad and i think those who have followed in that region of 3 decades recognize we essentially took the lid off of pandora's box and the idea that the united states can micromanage events in these parts of the world in my view reflects a lot of the hubris, not that we should engage. i-man internationalist but not a serial interventionist and i think that is the issue with respect to afghanistan.

we do expect the status forces agreement in afghanistan and we should be careful in how we exit afghanistan. the last time the united states left that region we left after the soviets left and in that vacuum, you did have chaos and the taliban government to go for and invited -- allowed al qaeda to become part of the country and they launched attacks. with respect to the budget issue. we have the overseas contingency funds, that fund is expected to come down in fiscal year 2015. the president submitted a budget that is not submitted his request for the overseas contingency fund. he has in recent weeks

talked-about setting aside $5 billion for certain other purposes with respect to nato commitments and some of our objectives, but certainly events in iraq could have impact on what that ultimate number is with respect to the overseas contingency fund. we have the defense appropriations bill on the floor of the house this week and i am sure we will have lots of debates on these issues going forward. >> questions? where are we going? >> thank you. i am a longtime member of the club, and chris van hollen is very impressive, no question about that. he has -- we in bangladesh feel very proud.

>> your question. >> on the five mystical things you have mentioned, would you please respond to senator portman's mystical things so that makes the air clear. thank you very much. >> they were not mystical, they were mythical. >> i didn't write fro number one, which was the biggest issue at has stymied the negotiations at least from my perspective, has been this disagreement over whether or not as part as reducing deficits we have to have additional revenue contributions achieved by closing some of these tax breaks, eliminating or reducing some of the tax and expenditures, rob mentioned simpson-bowles framework and i want to wonderscore the fact and

i urge you to take a look, the simpson-bowles proposal called for more revenue as part of its long-term deficit reduction plan and the president's budget that is before the congress today. i am glad that a lot of our colleagues have embraced the framework, balancing simpson-bowles but sometimes they leave out the fact that simpson-bowles included additional revenue generated from tax reform. they had tax reform but also had tax reform proposal that generated significant revenue. >> we talk a lot about closing the loopholes today or chris has. i believe tax reform is urgent, not just necessary but urgent and i say this because when you look at the democrats in the senate what they mean when they say closed loopholes has to do with the business tax code and taking individual parts of the business tax code and taking

away a preference our corporate tax code is so uncompetitive and so inefficient that we are losing jobs and investments even as we sit here. some of you saw medtronic over the weekend doing what pfizer was talking about doing two weeks ago and one already happened with other companies including several companies, when it's off becoming a u.s. company because the tax code is so onerous for them, they can become a foreign company, in this case they are talking about merging with a smaller company in a jurisdiction whether it is ireland dorr the uk that has a lower tax rate and in international tax system, that is happening. we have seen a couple dozen of these so-called conversions but what is happening every day is u.s. companies can't compete so there's competition or acquisition based on their fiduciary responsibility of looking at whether they can

compete with another company or another country, we're going to lose more u.s. companies. this is frightening for those who argue drinkers in the room, try to find an american own beer. the biggest one is probably sam adams was 1% market share, the rest are foreign owned because of our tax code. i am happy to talk to when the challenges me on that because i talked to these companies about their numbers and we got to deal with it. the notion democrats have, let's make the tax code less competitive by taking away the preferences is going to exacerbate that problem and result in more challenge going overseas and more investment overseas. we should reform the entire code and that means getting rid of a lot of these preferences. these very loopholes we are talking about let's get rid of them but in the context of overall reform where you get rid of preferences as a result you are able to lower the rate and come of with more competitive international system consistent with almost all of our trading partners we unfortunately in the

united states icing on the sidelines while other countries do this. the only country that has not reform our tax code and we are suffering the consequences. who is suffering the most? the workers in these companies which the congressional budget office said 75% of the benefit goes to the workers, blue collar workers who will get higher pay, higher benefits and actually have a job versus what is happening now. we need to be very careful as we talk about that this loophole now. let's reform the code and help everyone including american workers. >> just briefly respond to that. actually if you look at the president's budget, most of the revenue is generated not by closing the business tax preferences. most of it is generated by reducing the deductions that higher income individuals can take to the 28% rate instead of the current 35% rate.

right now if you are a millionaire for every dollar of deduction you get a 35% benefit whereas if you are a middle income taxpayer you get a 20% benefit. what the president has said is higher income individuals, millionaires should get the $0.28 benefit, not the higher $0.35. the president has proposed and i support the idea of corporate tax reform where we lower our rates and broaden the base. 35%, our corporate tax rate is not competitive but our effective corporate tax rate is actually kind of average. the problem is that creates a huge winners and losers within the united states and so we need to find a way to deal with that issue. i didn't support all of dave camp's proposal almost of it but it was a professional effort.

i would say people who ran the fastest on the tax reform effort was the house republican leadership who haven't made tax reform, and h r 1, the top priority, decided to run away from their own ways and means committee chairman when he actually put something on the table. let's do tax reform, simplify the code but in the process we also have to do what the bipartisan simpson-bowles commission did which was generate some revenue to help reduce our long-term deficits. >> running out of time. you had one in the back. 1, 2, 3, that will be where you go. >> jonathan nicholson, this is for both you guys. the senate last week approved legislation to deal with the va to create in thailand for $50 billion a year and paid for. the house last week did tax

breaks or tax extenders' that added on top of other ones, $360 billion and paid for. these are all things, seeming bipartisan agreement but also bipartisan agreement to not find ways to pay for these things. why should joe schmo, 6 that voted who expects deficit-reduction this think that either of your party's has an interest in deficit reduction given those two pieces of legislation? >> great question. it is beyond that because we are not doing what we can to grow the economy which is the way to get increased revenue to deal with the deficit and debt issue and we are not paying attention to existing deficit. i appreciate the opportunity to talk about it today because most people think $500 billion in washington is something we should not worry about. of course we should especially when it is over $1 trillion a

year. on the veterans issue the understanding was as you know, we would conference that with the house. the house version of its score by the congressional budget office is a lot less. there are emergency spendings, so we need to figure out a way to work with the house to come up with something fiscally responsible. of the congressional budget office analysis of the senate bill was done about an hour before the vote which i think is a huge mistake, you need to have time to go through this process and look at what the analysis is. some have challenged the cbo's assumptions with regard to how many veterans will use the private sector health care system for the choice part of the legislation. let's have that debate rather than rushing of votes so quickly after cbo analysis so i was very

discouraged by that. put us on a tough situation that wasn't necessary. we have to take our time and legislate correctly but we haven't chance to work with the house. the bills are different in some respects and come up with a more fiscally responsible alternative. >> let me address both pieces with respect to veterans. i agree with rob we have to reconcile the senate and house piece of legislation but we are dealing with emergency situation and we have lots of veterans who turns out have been put on these long lists, not getting the care they deserve that they have been promised another example frankly of iraq and the fact that it continues to impact the country in these ways because you have a huge influx of new veterans who

have been severely wounded in many cases on the veterans system. i was at a veterans service discussion group, veterans service group discussion the other day that said from now on when we decide to use military force we should require the president to assume the calculation of what the costs to the va are and in the house ways and means committee has passed tax breaks on these extenders on a permanent basis, adding over $500 billion to the deficit over the next ten years. >> senator portman has to go. myron wanted to present something to go to. let's listen to the my run

presentation. >> and present to our distinguished speakers and visitors the traditional national press club, we use it in the late night sessions appropriately. >> i will just really wrapped up. i don't want to take advantage of the senate vote here but jonathan raised the point that in the house last week, we voted on a number of measures to permit the extend business tax preferences and paid for and if you look at all the bills out of the ways and means committee that would add $500 billion to the deficit, the house had to waive their own rules because it immediately made the claim house republican budget out of balance, the budget a claim to be in balance which by the way included $1 trillion in the

affordable care act to clean balance at the same time the beginning with the affordable care act so it was full of gimmicks but on their own terms this would have put somehow republican budget way out of balance in terms of passage of these tax breaks that were not offset as you point out. we made the argument on the floor that this was a violation of house rules and house budget, but to no avail. hopefully people will come to their senses in the next couple months. >> we are close to concluding when we wanted to. we increased our leave time, but thank you very much, this was an example of the bipartisanship we really all hope as americans to see in congress so chris and senator portman, thank you very much and we are adjourned.

[inaudible conversations] [inaudible conversations] >> live to capitol hill where irs commissioner john koskoman is testifying on the irs targeting of conservative groups, seeking tax-exempt status. he is also expected to explain missing e-mails in the case. the associated press writing, quote, in the weeks since the internal revenue service acknowledged it can't produce e-mails from 7 officials connected to the tea party investigation there are mysteries about computer crashedes inside the agency would, the government advocates to recover the missing data and why the irs assured a congressman will provide him with e-mails already knew were

lost. .. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> good morning. the committee will come to

order. well, good morning. over three years ago this committee started asking the irs, was a targeting conservatives for the belief? wasn't asking groups inappropriate questions? was it harassing conservative donors? the irs assured this committee and even testified before congress time and time again that no targeting was occurring. then as we all recall one year ago when a signature new stuff, then head of exempt organizations at the irs lois lerner admitted to the american people that the irs targeted conservative organizations. the irs lied to congress and the american people. in fact, this committee has found there's ample evidence to

suggest the irs violated constitutional rights of taxpayers. as of today the investigation into the irs intentional organize targeting of americans for the belize has been ongoing for over a year. what we have found so far is outrageous. the i arrest spent over three years responding to top democrat complaints and calls to action to stop all activities of conservative groups. the i arrest in washington, d.c. took their marching orders and subjected americans to harassment going so far as to question the content of their prayers and their political beliefs while subjecting them to audits and making a personal taxpayer information. when the scandal first broke out the president vowed that his administration would work adequate hand-in-hand with congress to get this thing fixed, end quote. and the spring commissioner koskinen can you said your goal was to quote find problems quickly, fix them probably to make sure they stay fixed and be

transparent about the entire process, end quote. well, since my time in congress i've never seen and i arrest so broken. late last friday the irs admitted to congress that the agency had lost over two years worth of lois lerner e-mails and blame the loss on a computer crash. my committee staff later learned in an interview that it wasn't only ms. lerner's e-mails, e-mails of six other individuals relevant to this investigation including the former acting commissioner chief of staff. and just two days ago we found out the irs and white house have known for months and kept it secret from congress. this is not the most open and transparent administration the president promised. this is about as far as you can get from getting this thing fixed. now, what does this really mean? it means the irs has claimed that ms. lerner's hard drive is really unrecoverable, the public will never know the full extent of the abuse of americans for

exercising their first amendment rights. let me give you an example. ms. lerner told to do investigative she first learned about the two-party targeting in july of 2011. that wasn't true. instead were 2011 ms. linda told subordinates by e-mail quote tea party matter dangers come into court and discuss ways to deny the applications. we only have this e-mail because they came from another employees in box. had ms. lerner e-mailed this to the treasury department or justice, for example, it would be gone for ever according to the irs. we are missing a huge piece of the puzzle. the years between 2009-2011 are the very peak of an irs organize and gentlemen it's targeting schemes. how convenient for the irs and the administration. i find it hard to believe that i don't believe they either as through every possible exercise to recover these documents. we are missing the e-mails of

seven irs officials during periods critical to this investigation. how is this possible? making matters worse the irs kept all this secret while informing political set in the administration account all the of destruction either this congress and the american people cannot take the irs at its word. one thing is for certain. you can blame it on a technical glitch. it is not a technical glitch to mislead the america the america. usage of lost e-mails of what you've lost is all credibility. the irs is in charge of hundreds of millions of taxpayers information. and you are now saying your technology system was so poor that years worth of e-mails are for ever unrecoverable. how does that put anyone at these? how far would the excuse of i lost it did with the irs for an average american tried to file their yearly taxes and have lost a few receipts?

oddly enough, this seems a satisfactory answer for the attorney general. as far as i can tell this administration has done nothing to investigate what truly happened, not withstanding this committee sending the department of justice a detailed referral letter of nearly 100 pages. they have repeatedly tried to keep this under a rug and quote -- never looking for the facts. the american people have no reason to trust the irs or frankly the administration on this issue. to wait years to reveal the fact the arrest was targeting the american people and then wait months to reveal your conveniently missing years of documents. it's know what i've heard the word cover-up thrown about a lot this week at the time for denial, delay, obstruction and intense to -- attempt to blow this off is over. this committee is set up and we expect some answers. not only from the irs but the whole administration but it's time we restore the american people's trust in the government but i fear with recent events that may not be possible. and now, mr. levin, i recognize you for an opening statement.

>> thank you. on september 11, 2013, internal revenue service provided this committee with one of the 770,000 pages of documents it has turned over since ways and means undertook its investigation into the irs in may 2013. in total, more than 250 irs employees has spent over 120,000 hours working to produce documents at a cost of at least $16 million to taxpayers. that document received a lot of september, last september, included an e-mail from lois lerner to other irs personnel

dated june 14, 2011. it began, my computer crashed yesterday. we now know the full extent of that equipment failure. despite an exhaustive effort by forensic i.t. professionals at the irs, they were unable to save her hard drive, and are e-mails between january 1, 2009, and april 2011. although her e-mails from june 1, 2009, through april 2011 our unrecoverable from her hard drive, the irs will produce 67,000 e-mails related to lois lerner. the irs has or will be producing 24,000 e-mails that have been recovered from the carried before her computer crashed. they recovered these e-mails

from other irs employees. that is on top of more than 43,000 e-mails involving ms. lerner after april 2011 that have already been produced. there is absolutely no evidence, absolutely no evidence to show that ms. lerner's computer crash was anything more than equipment failure. at the time of the incident in june 2011, irs computer experts reviewed the issue and inform lois lerner that, and i quote, unfortunately, the news is not good. the sectors on the hard drive were bad which made your data unrecoverable, and quote. -- end of quote. was your computer crash a conspiracy? no.

was the internal revenue service's system for backing up the system entirely underfunded and wholly deficient? clearly, yes. in fact, congress has cut the irs budget for operations, which includes what it spends on computers and other information technology every year for the last five years. house republicans are proposing to slash it once again next year. commissioner koskinen, whom we welcome here today, has informed this committee that the irs has $1 billion worth of computer equipment, and that the agency should be spending $150 million, to $209 on maintenance for that equipment. instead, the agency spends virtually nothing because he cannot afford to properly maintain what it has. it is important to remember that

e-mails were routinely lost during the bush administration. in one instance in 2007, according to report by democrats on the oversight and government reform committee, the bush white house acknowledged having lost nearly 5 million e-mails between march 2003 and october 2005, related to allegations of the politically motivated dismissal of u.s. attorneys. lost data under the bush administration, coupled with a number of computer crashes at the irs, clearly demonstrate the need for government agencies to have adequate budgets to invest, upgrade and maintain information technology. my colleague's on the other side of the aisle have taken this opportunity to rehash well-worn allegation, allegations of white house involvement.

allegations that republicans have made from the very moment the inspector general released his report more than a year ago. on the day the report was released, before a congressional investigation into the issue had even begun, chairman issa accused the white house of him in quote, targeting his political enemies. three days later, our chairman, mr. camp, in your opening statement during the first hearing on this matter, you accused the white house of a culture of cover-up. congressional republicans are so determined to find a needle in the haystack that they seek desperately to add to the haystack, even though no needle has been discovered. it was in that vein that chairman camp this week said that this entire case started with the white house, and sent a

letter to the president requesting all correspondence between lois lerner and the executive office of the president between january 2009 and may 2011, the period before ms. lerner's hard drive crashed. the white house has conducted a search, and what have they found? there was not a single e-mail correspondent sent to or from ms. lerner and the white house. this committee has been involved in this investigation for over a year. here is what we have learned. the 501(c)(4) applications of both conservative and progressive groups were inappropriately screened. they were long delays in processing applications. there was serious mismanagement, and i was among the very first to call for ms. lerner and then commissioner miller to be relieved of their duties. in all of the 770,000 pages of

documents that the irs has supplied congressional committees, including ours, there has not been any evidence of political motivation or of white house involvement. now there have been computer failures at the irs, and republicans, conspiracy theories have started a new. the evidence today reinforces this long evident truth, the prevailing conspiracy in this matter is that of the republicans desire to stir their base, tied the problem to the white house, and keep up this drumbeat until the november election. i'm glad that you, commissioner koskinen, is here with us today to set the record straight. we are glad you are here.

you started at the irs last december, after distinguished career in the public and private sectors. at omb, at freddie mac, as the chair of president clinton's y2k computer consult. so again we welcome your testimony. we are glad you are here. we look forward to your testimony to set the record straight. >> all right, thank you. if i recognize commissioner koskinen, for his opening statement i asked him to stand to be sworn in. commissioner koskinen, please raise your right hand. do you solemnly swear or affirm that the testimony you're about to give will be the truth, the whole truth and nothing but the truth, so help you god? >> i do. >> let the record reflect the witness answered in the affirmative. thank you. commissioner koskinen, thank you for being with us today. you will have five minutes to present your testimony with your full written statement said it for the record.

you are now recognized for five minutes. [inaudible] >> chairman camp, ranking member levin, and members of the committee, thank you for the opportunity to appear before you today to provide you with an update on recent irs document productions to congress. the irs has over the past year made a nasty document production in response to inquiries from congress. in march the irs advised of this committee and the senate finance committee that we completed the production of documents them identified as linked to the investigation of the processing and review of applications for tax exempt status as described in the may 2013 report from the treasury inspector general for tax administration known as tigta. the production efforts included 11,000 e-mails from lois lerner former director of the irs exemplary fashion a cent or decisions division. this committee has noted they've now received more than 770,000 pages of unredacted micheel. we are sending another production to you later today,

additional lois lerner e-mails but you already have more than 25,000 e-mails from ms. lerner's computer account and more than 5000 e-mails from other custodians accounts for which wh ms. lerner wasn't also a recipient. the irs expects as noted earlier in my conversation with you to complete its production of the remaining lerner e-mails to this committee by the end of the month. at that time you have all of the e-mails, 43,000 of them, that we have for ms. lummis computer and e-mail account for the period january 2009-may 2013. in addition is no do you have 24,000 lerner e-mails from other custodians accounts during the period that her hard drive was crashed come for a total of 67,000 lerner in this. in the course of respond to congressional requests the irs in february reviewed the e-mail available on ms. lummis custodial computer accounts with and a limited element of a search template worked out with investigators and identify the

possibility of an issue because the date this tradition of e-mail was uneven. it was not within whether lerner e-mails were overlooked, missing, or at other technical issues involved. irs information technology professionals identify documents that indicated ms. lerner had experienced a computer failure in 2011 as congressman levin noted. some of those e-mails had earlier been provided last fall to this committee. in mid-march 4014 the irs focus on redacting materials from the non-tax writing committees and processing the rest of ms. lerner's e-mail for production. as we reviewed additional lerner e-mails, lot number to buy search terms can relevance or subject matter, in other words, all of her e-mails, the irs review team learned additional facts regarding ms. lerner's computer crashed in mid-2011 which occur before these investigations opened or the ig's report began. we learned that in 2011 the irs information technology division had tried using multiple

processes at ms. lerner's request to recover the information stored on her computer's hard drive. a series of e-mails available after all of ms. lummis e-mail was loaded we count the sequence of events in 2011. a front-line manager and i.t. reported to ms. lerner in an e-mail on july 20, 2011, ethical, i checked with the technician and he still has your drive. he wanted to exhaust all avenues to recover the data before sending it to the hard drive cemetery. unfortunately, after receiving assistance from several highly skilled technicians including hp experts, he still cannot recover the data, unquote. ms. lerner was told by e-mail on august 1, 2011, adequate, as a last resort we center our drive to ci, that's the irs criminal investigation division, forensic lab to attempt a data recovery, the end of that corporate in india on august 5, 2011 after three weeks of attempts to retrieve her e-mails at a lois

lerner's request, ms. lerner was advised quote unfortunately the news is not good. the sectors on the hard drive or bad which major data unrecoverable. i am very sorry. everyone involved tried their best, end of that quote. the committee has been provided earlier these e-mails, earlier this spring. in light of the hard drive issue, the irs took multiple steps over the past month to assess the situation to produce as much e-mail as possible for which ms. lerner was an offer or recipient. we replaced -- retraced, located process that include e-mail from an unrelated 2011 data collection from ms. lerner. we confirm backup tapes from 2011 no longer existed because they have been recycled pursuant to the irs normal policy. we searched e-mail from other custodians. from mid-march to late april the irs review team concentrate on loading her review all the main e-mail from ms. lerner's accounts and then repeating the

entire process for quality control and to ensure that no new e-mails from ms. lerner were missing. during this time into men also were identified and reviewing lerner e-mails to and from 82 other custodians. by mid-may as result of these efforts, the irs identify the 24,000 lerner e-mails between january 1 and april 2011. as the search for a production of lerner e-mails was concluding i asked those working on this matter to determine whether computer systems of the other 80 to custodians had experienced any similar difficulties, especially in light of the aged equipment the irs has been increasingly using as result of its budget provisions. after the irs report on ms. lerner's e-mail production was delivered last friday to congress, it was determined earlier this week, actually on monday the seventh additional custodians had experienced hard drive failures during the search period. a hard drive failure does not

automatically mean that any or all e-mails have been lost or cannot be reconstructed. given the extremely broad scope of our production effort it's not surprising we would discover that some employees have encounter some technical issues especially in light of the aging information technology infrastructure. as you know, the irs described in great detail in its public report last week its effort to reduce lerner e-mails. we are still assessing what affect him if he can hard drive crashes had on the e-mails of any other custodians are at this time it is too early to know if any e-mails have been lost in any of those hard drives. we are committed to continuing to work cooperatively and since billy with you, this committee, and we'll continue to provide you with updates. this concludes my testimony. i'd be happy to take your questions. >> well, thank you. what i didn't hear him that was an apology to this committee. >> i don't think an apology is owed. there's not a single e-mail has

been lost since the start of this investigation. every e-mail has been preserved that we have. we have produced or will produced by the end -- >> you don't think that time period between january 2009 and april 20 levin is relevant to this investigation? >> it is a very relevant timeframe. >> the letter we received from the irs on friday the 13th admitted that lerner e-mails were lost for the two and a half year period spent they were lost offer hard drive but we also -- >> let me finish. i'm not finished with the question of give you an opportunity. but you failed to explain that timeline of events that led to that admission. my question to you is, from the interviews that we've had with the deputy chief of information, deputy chief information officer for the irs, i'm told the irs knew as early as february that her computer crashed supposedly caused a loss of her e-mails during the time period january 2009-2011. has the irs known since february? >> the irs new in february there

was an issue. as noted we all had e-mails from ms. lerner last fall and which she recited she had had a hard drive crashed. >> in favor you knew that he knows were missing? >> in february what we knew was there's problem because we're looking at it from the standpoint of what the time frame was in which her e-mails appeared, and it appeared that were not enough e-mails in that time frame. >> so why didn't the irs notify congress at the time it was a problem with the potential loss of the e-mails we were investigating? >> because i thought it was important, it was my decision that we complete the investigation so we could fully advise you as to what the situation was. >> i got a letter to just two days ago that said treasury contacted the white house in april, in april of this year to tell them about the lost e-mails. who told of the treasury department? >> part in? >> who told of the treasury? the letter i received said treasury told them at april 2014. so my question is who told the treasury department? >> my understanding only from

that letter which i've seen which does not say e-mail said the laws. my understanding of the letter says someone in the general counsel's office at the irs inform the general counsel's office at treasury that was an issue and the irs was investigating. >> no. the letter reads as treasure was told that treasury told the white house. we have a letter from treasury said they learned in april 2014. who told treasury? do know who in treasury told the white house of? >> i have no communication with the white house. >> you are the end of the irs. you don't know something this important, the content? you are unaware speak with we are part of the executive branch. we have regular fumigation with treasury. we issue regulations. we review them. were in the process of reviewing the regulations on the 501(c) issue. we have regular to mutation, particularly between our counsel's office and the treasury counsel. >> the irs new in favor or maybe even march and treasure and white house knew at least in april but congress and the american people didn't find out

until june. were you purposefully not telling us? >> no spent where you purposefully not telling the american people? >> my proposal, my original thought was to complete the review of what other custodians have a problem and produce a report to you laying it all out. >> so why did the irs inform the executive branch agency, the executive, the white house but kept it secret from the congress who is conducting an investigation? >> we were not getting it is ago. it was our public report to you that provided you this information. there's been no attempt to keep it a secret. my position has been that when we provide information we should provide completely if we provide you input the information people sometimes tempted to lead to the wrong conclusions without will be important to to give you the full description -- >> it's okay for the white house and treasury to leap to conclusions six weaker congress but my question also is, have they been discussion within the irs about when to reveal this

information to congress? >> certainly. >> these discussion included treasury? >> no. >> how did treasury find out about it speak with treasury and covers a i'm not aware. apparently the first time i knew was -- >> i will have a lot of questions to write to you to follow up with you. completely unacceptable. >> can i answer that question and get -- >> i want to move onto another topic. your letters describe the lois lerner e-mails as being unbreakable. >> correct. >> but failed to mention with the damaged hard drive is today. you know what actual hard drive is that crashed in 2011? >> i'm advised the actual hard drive after was determined there was dysfunctional and with experts noting that could be retrieved was recycled and destroyed in the normal process, which did was to physically destroy? >> that's my understanding. >> was it melted down? >> i have no idea what the recycler does with it. this was three years ago. >> does the irs have a system for tracking items?

does the irs have a tracking system for items of? >> we track items but we don't track every item that everybody has everywhere but i'm sure we track some items. >> does someone better have a serial number for that our drug? >> i do not know whether they do or not. i was just advised as a normative one hard drive fails, the e-mail cannot be reconstructed to the hard drive is turned over to recycler's. >> it seems to me that it was recycled to government property would have been tracked. >> part in? >> it seems to me if it was recycled government property would have been tracked. you could walk away with property sites and there's a tracking system for the disposal of government property. >> there's tracking for computer question is lois lerner's computer continue to be functioning with a new hard drive. the hard drive fits with inside. i'm not aware whether hard drives have computers, have identifiers. >> and we get the serial number and all the other employees whose hard drives, you know seven loss of? >> if they have serial numbers

you are welcome to them. >> all right because i want to hard drive and what hard drive every computer that crashed during that timeframe. so what i've learned in the last week i think calls into question every document in response the irs has given. for that matter has failed to give due this committee. the only way i see any hope of restoring confidence is established a special prosecutor with the authorities, powers and resources needed to uncover the truth. for the sake of the agency to restore the trust of the american people will you support the appointment of a special prosecutor? >> there are six investigations going on -- >> yes or no? >> the ideas already investigating -- >> can you give a definitive answer, yes or no, do you support the appointment of a special prosecutor? >> i -- >> on controlling the time. i'm ask a question that can have a simple yes or no answer. [inaudible] >> he has answered. >> regular order. spent i think the appointment of a special prosecutor, the ig

investigation into this matter ongoing would be a monumental waste of taxpayer funds. >> is that a yes or a no? >> that is a no. >> thank you. mr. levitt is recognized. you have five minutes. >> you know, i think witnesses deserve some respect. i think it's in the tradition of this committee to give witnesses respect. this is not the committee of decades ago, led by people who disrespected witnesses. mr. koskinen, you had a long career. what have you done in the years

of your career, briefly? >> i'm sorry, what have i done what? >> what has your career penlight? >> my great has been 20 years and the private sector turning around large troubled organization. i started my career as the chief of staff for senator walkoff before he was in the states in a concert on the presidential commission as staff member in late 1960. of represented new york city here for a year and a half. i was the deputy director for management at omb for three years. i was the chair of the presidents council on year 2000, for two years guiding the country through the year 2000 transition to i was asked by the bush administration to take over freddie mac as the chairman of the board when the government took over those enterprises and i was asked to come to the irs which i did last december when i was confirmed. is to the agency through these difficult times. >> the letter that went from the

counsel to the president to mr. camp and mr. wyden spelled this out and indicated when the treasury was notified, when the treasury consult inform the white house counsel about this problem with the computer. it also has indicated, contrary to this effort by the committee and the republicans are, connect the problems, and there were serious problems with the white house, that there is no such connection. they are desperate to find a connection. they've never found it. they will keep looking because i think it makes sense for them politically. i don't think whatever clinical affiliations their we should be disrespectful. so will you repeat again what

happened these last months after you found out about the computer crash, and why you decided to conduct yourself the way you did? >> we learned in february, i learnt in favor there was a potential issue with her hard drive. that was investigated through march, into early april, the i.t. people had uncovered the e-mails training, you can see the talk about the effort to restore her computer because the nose up and provided some time ago to this committee so they were not hidden or covered up. thereafter i told people we needed, we decided we look at all the other custodians and produce as many e-mails as we could that were, in fact, within our system which is the 24,000 t24,000 ialso asked that we i sl review all of the 82 custodians to see what, if any, happened been. our plan was when we produced, completed the production of all of lois lerner e-mails at the

end of this month will provide a full report and by the time we would know what the situation was with excess but there's been a question as to why i didn't advise congress earlier and my expensive than we do better to have a discussion when you know all the facts. it's shown by the fact that on monday we were advised monday morning that there were preliminary indications that there were difficulties with a handful of custodians. that information was passed onto the staff of the committee on monday afternoon. immediately thereafter rather than ask us for additional information a press release went out from this committee identifying knuckle flakes as a particularly interesting person to this committee and stating that nicole's e-mails have been lost. have the committee waited to asia that release and renew further information which were continuing to drive through discovered that nicole had two computers. or office computer which she used during the day and chat and tell a computer, a portable but it was the portable computer that crashed but it ran on the same e-mail system as her office system. so it turns out there is no indication that a single nicole

flax e-mail has been lost not within the press release and statements out of this committee. those press releases with regard to nicole flax were inaccurate and misleading and to demonstrate why we'll provide this committee a full report about the custodian review when it is completed. we will not dribble out the information and have it played out in the press. >> time has expired. mr. johnson is recognized. >> thank you, mr. chairman. thank you for holding this hearing. you know, learning about the loss of lois lerner's e-mails and other irs officials is troubling, and we received that information with great skepticism. americans have been waiting for the whole truth, and we hope to get it today but it doesn't sound like we are getting it. it's past time told all of those responsible accountable for targeting americans for their beliefs. mr. commissioner, welcome. i have some questions for you.

you have argued that the irs practice is destroying employee e-mails after six months with a cost-cutting measure. in fiscal year 2011, the irs enacted budget was $12 billion, a high watermark of spending. can you tell you whether in 2011 the irs was engaged in a policy of destroying and reusing its backup tapes? >> actually what happened with the irs in 2000 a went on to i.t. director came, the retention policy then was only for less than three months but in point passion into those may be increased the retention back a policy to six month. it's a disaster recovery system. if the entire system goes down you can reconstitute the e-mails. those systems actually are usable and then it is a disaster you continue to produce and back up the e-mails so they are available. i would note as it did in my testimony, since the start of this investigation every e-mail has been preserved, nothing has

been lost, nothing has been destroyed. >> which tells me that you got plenty of computer space. you know, i wondered at the time to you to keep track of everybody's irs requirements when you lose your own. let me just ask you, did the irs estimate the keeping and storing those would only cost $200,000 annually? >> $200,000 annually every year but as it grows we collect more trillions now of terabytes as a call, millions of e-mails stored over six months and the disaster recovery program, it's not come in no system as a sit in testimony is not a system of record. a system of record is, in fact, the records acted to produce carbon copies and follows in the record so that the irs has historically only preserve the backup tapes for six month. we are reviewing all of this but i told people some month ago when we get through it as we need to take a look at what we can do to actually create a more

searchable in the process. the problem right now is anything anybody wants a piece of information, we have 90,000 plus, whatever employs one we have to pull the e-mails accounts, we have to pull their hard drives and then take them and vote them into a search machine to be able to discover what's in them. that is an antiquated system. i refer to our i.t. system as a model t with a gps system and a sound system and redone engine but it is still a model t. >> in a, my constituents and i refuse to accept that, in years of record high irs budget, you know, you wouldn't let us refuse to give you information on our tax returns. the irs destroyed employee e-mails every six months just to say 200,000 annually. i'm far too familiar with the rampant wasteful spin at the irs during that time. to date the committee is uncovered wasteful spending from the star trek videos to the

spending on lavish conferences to an irs estimated 23.5 million in spending on salaries and benefits, and two bonus is going to workers who owe back taxes. mr. commissioner can you and i both know the irs go to back up employee e-mails began long before any budget cuts happened to that agency. there's simply no excuse for what happened. i yield back. >> mr. mcdermott is recognized for five minutes. >> thank you, mr. chairman. today we are here listening to a myth that there was a conspiracy by ms. lerner and whoever else to get rid of some data. and before i came to congress i was a physician and one of eventually did with the patient was taking history. and i would like to review the history again with you,

mr. koskinen. on june 13, 2011, lois lerner's hard drive failed, meaning all her e-mails were lost at that point, is the true? >> that's correct. >> sixteen days later she was briefed that inappropriate criteria have been used in this management in cincinnati, according to the ig's report. is that true? >> that's what the report reports. >> wealth in the question is, did lois lerner preemptively crashed her hard drive? >> all the evidence is to the contrary but the e-mail string i told you shows that her request ex ord efforts were made to retrieve e-mails from her crashed hard drive. >> do you think did she for see something happening in the future and make the decision to destroy her own hard drive? >> the record shows quite the contrary. also after the crash on april 11

she continued to send an archived e-mails on her computer. with produce, will produce 43,000 of those, she was, in fact, going to try e-mails, visit indication in the record that her performance demonstrated that. >> in all the e-mails that have been collected is there any evidence to suggest that she call the white house or the white house called her and said, get those right wing organizations? >> there is none that we been able to produce and understand although announcing the production from the white house that the white house did not find any e-mail to or from lois lerner. >> and the inspector general didn't find them? >> no. his report stated that the evidence of political involvement. >> in fact as you quote, as you talked about, on july 19, 2011, lerner wrote to the feel director of customer service support for informational technology saying whatever you can do is helpful, would be

greatly appreciated. now, in mid-july 2011 she learned about cincinnati. and for a couple of weeks the i.t. division tried to repair her hard drive, bringing in experts inside i.t. and also the forensic division of the irs, is that correct? >> that's correct. >> and they failed? >> they failed after three weeks of efforts to the e-mail trail was clear that i would note the criminal investigation division is expert in seizures in civil and criminal cases seizing hard drives and restoring e-mails. so it at that time apparently great conference you could find those e-mails, they would find them. and they were unsuccessful. >> finally she wrote, thanks for your efforts, to them. i really do appreciate the

efforts. sometimes stuff happens but is this a woman rejoin us in over losing her hard drive and saying thank god that thing is gone, they will never get me? no. it's a woman who is resigned really to the fact that the thing is lost. in my office on we just upgraded. we upgraded to windows 10 -- 2010. and my staff director in washington state lost her hard drive. they friday. i don't know how it happened. nobody knows how it happened. she lost all her records. she did not rejoice over that experience, i can tell you. but dimly, fast-forward to february 24, 2014, and chairman camp asked for all, and i emphasize all lois' e-mails. is there anything you can see in the time that you've been there that they didn't, that the irs

did not do to try and get all? >> doesn't in the kitchen but as is it would've gone to great length. would retrace the process for producing or enos twice just to make sure no e-mail was missing. we understand the importance of this investigation. we've gone to great lengths to spend a significant amount of money tried to make sure that there is no e-mail that is required that has not been produced. >> i understand you sort of backtrack come went out to 83 people in the agency that should contact with and retrieved their e-mails to try to get the e-mails? >> that's right. rather than having lost loves learned in those, we will produce 24,000 lois lerner e-mails from the timeframe in question. spent time as expected i would ask men's consent to put into the record a letter from this committee funding as chairman to then commissioner doug shulman on june 3, 2011 asking for the

name, title, and divisions of any individuals who were involved in investigating taxpayer contributions to 501(c)(4)s which were sent to the irs 10 days before lois lerner's e-mail crash. without i would yield to mr. brady. >> point of information, mr. chairman spent the latter without objection is put into the record. >> was that less are committed to members of the committee? >> the letter was signed by me and sent to the commission of the irs. >> so we have, none of us have seen it, okay. spent you may have seen it. it's certainly been -- we can get you a copy. but i think is larger bring up a time when we got to get a complete picture of the timeline which is the e-mail crash occurred 10 days after the first letter went to the irs. mr. brady is recognized spent when we told about the problems with the lerner e-mails, february? >> i was told there was an issue with her e-mail? >> in february? >> instead were spent why did you choose to withhold that

information speak was i've no intention. as i said our plan was to investigate and find out what the details were. of that what we did not know whether that been a crash that affected three meals or not. as noted -- >> you testified you gave your agency three weeks to determine if it could be retrievable or not. they were successful. so giving you the benefit of the doubt, in march you knew these e-mails were not available. why didn't you inform this congressional investigation them? >> as i told you, my goal was to invite determine all of the facts would give you a full report. as i noted earlier this -- >> yet, yet, you inform -- [talking over each other] spin can answer the question? >> can the witness after the question? >> regular order, mr. levin. the gentleman from texas has the time. he is questioning a properly. so please no more interruptions the regular order allows a witness to answer a question. >> review order allows the witness to conduct his

questioning as he sees fit. this committee has given broad latitude to members of both parties to do that. >> chairman, parliamentary procedure spent the gentleman will state his parliamentary inquiry. >> under the rules of the house, every member has five minutes to ask compos question to the witness and the witnesses given opportunity and right to respond to is the chairman singh the witness does not have a right to respond to a question? >> the gentleman has had plenty of time to respond. that is not a parliamentary inquiry. spent my question is, does the witness have a right to respond? >> the gentleman has not started a parliamentary inquiry. the gentleman from texas. >> start again with a question. >> you knew in march withheld information, and in may you assure this committee that all of ms. lerner's e-mails would be provided to us, yet you knew that that was not possible spent no. in fact, i knew we would provide you all lois lerner's e-mails we

had. >> you already knew in march that they were not retrievable. a., you didn't inform the congressional investigation. too much let you told to fight all the e-mails without them addition, and you knew you didn't have them. >> by march i didn't know they were not retrievable and, in fact, we received, we have received 24,000 -- >> mr. mcdermott -- that was the case, you knew. and enable your agency informed treasury about the problem, and treasury agreed with you that congress should be told as soon as it was able to. yet you didn't provide the information and then you assure us he would provide all the e-mails about limitation with no mention that you then you two, three months into this that they weren't retrievable. spent as noted and i think the record should make it clear, all of this issue is result of our

providing you a public and fulsome document about this matter. so we've not been hiding -- >> sending a letter months after you knew the e-mails were supposedly lost, withholding information -- you were aware there was a congressional investigation, great? >> i was aware. >> so you withhold the investigation -- information. he misled congress when you said the e-mails would be provided. >> we have provided information and it turns out you had information for some time. >> mr. commissioner, you did not tell me under oath that you told us in february, in march, in april, in may that the information was lost. that was just what you said. tell us that again. >> february, march until april i did not know if any information was lost. >> yet your agency had already in april communicate with treasury department about the problem. in the letter we have from

treasury, says we agree with the irs that it should inform congress as soon as it is able. that, that is the letter today that exactly disputes which just told us under oath. exactly disputes it. >> that letter from treasury reveals and provides you all of the lois lerner e-mails so that there is no issue that any lois lerner e-mail -- >> assistance at your legislative affairs, quote, treasury agreed with the irs that it should inform congress as soon as it was able. yet you did not. >> we actually provided to the information. my goal was -- >> you have not provided us any information. in fact, we didn't learn and to last week, and then this week that you have supposedly lost e-mails, not just from ms. lerner but other persons of interest.

>> there's no evidence that any of us in those have been lost either. and, in fact, as i said earlier my process has been to make sure that we are all of the facts provided so that, in fact, -- >> why at this point, why should anyone believe you? the irs denied for two years targeting of america's based on their political police. that wasn't the truth but they said it was a few wrote agents in cincinnati. that wasn't the truth. you said you were targeting liberal organizations. that wasn't the truth. dangerous shortage would provide us all the e-mails in may, and that wasn't the truth. and today you are telling us out of thousands of irs computers, the one that lost the e-mails was the person of interest in an ongoing congressional investigation. and that is not the truth either. this is the most corrupt and deceitful irs -- [inaudible] >> mr. lewis is recognized.

>> mr. commissioner, first of all, i want to thank you for your service. thank you for your patience. and i want to apologize to you for the way you have been treated this morning. i thought this was a hearing and not a trial. i want you to take the five minutes that i have and use it to say anything that you haven't had an opportunity to say. >> thank you. i think that between my full testimony and my oral testimony and my response to the questions, which i hope is clear, that we have not in this investigation lost in e-mail from the start of the investigation and till now. i hope it is clear that by the end of this month we will provide all of the lois lerner e-mails that we have, that those

will number 67,000. it should be clear that any period of ms. lerner's hard drive crashed we have located 24,000 e-mails that lois lerner sent or received. it should be clear on the basis of the e-mail track that lois lerner was not trying to destroy e-mail. in fact, was working very hard and asked for extranet efforts to try to restore her e-mails at that time so it does appear to be any attempt on her part as noted to rejoice over the loss of those enough. it should be clear that when we did provide this committee with, on monday preliminary information reporting, the net result of that was a press release a row nissley making the conclusion that nicole flax in those have been lost along with others. it turns ou out on for the wco e continuing the investigation that none of the nicole flax's e-mails appear to have been lost. will provide this committee a full report on the other custodians as we complete that work. thus far incidentally

demonstrated that peace in the out information about there's a possible problem simply results in press releases and angry letters to me. for my position from the start and will continue to be we will as we have continued to keep this committee fully informed of the facts as we find them, if there are situations we will investigate those and give you all of the information. i did not come out of retirement to run an agency that did not create transparency, responsiveness to congressional inquiries, congressional letters or otherwise. this is an important agency. and provides critical work for the government collecting 93% of the money the government uses to run more importantly it touches virtually every american. and i think it is in port for every american taxpayer to feel comfortable and confident that when they treat, deal with the irs they'll be treated fairly the matter who they are, whether they are rich, poor, republicans or democrats, whoever they voted for in the last election. to say that this is the most corrupt irs in history ignores a lot of history and seems to me

again is a classic overreaction to a series problem which we are dealing with seriously. and i would just like that to be our record. i'm comfortable with it. i'm confident about it and i'm willing to stand on the record in a six-month i've been the irs commissioner. >> thank you, mr. commissioner. i yield back spent i ask unanimous consent to place into the record at june 18 letter from neil adelson counsel to the president as well as a june 20 letter of this year from alastair fixed-income assets and second for legislative affairs at the department of the treasury. without objection so a speed reserving my right to object spend you may reserve the right to object. >> and i will tell you why. i hope everybody will read the letter from mr. fitz and come which says it is that is the purpose of placing speed i just want to continue with -- i know and want to continue with my reservation.

>> the gentleman has reserved his objection spent i wanted to you why. it says in response to your questions, irs informed treasury in 2014 that ms. velazquez to e-mail box appeared to contain very few females prior to 2011. .. -- few females prior to 2011.