. the thesis of the book is that there is a whole group of people in america, in fact, a big swath of america, that is being ignored, left behind, not included in the discussion, i think, for either party. particularly, though, i would argue the republican party. i call them blue collar conservatives, the folks out there that are working people, most of whom don't have college degrees. folks that really still understand the value of work and the importance of work and responsibility and people who understand the importance of family and faith, believe in freedom and limited government. you would say, wow, those are conservative republican voters, and in many cases they're not. in fact, a lot of them aren't voting at all because they don't really see either party talking to them about the concerns they

have and trying to create an opportunity for them to live the american dream. >> former pennsylvania senator and candidate rick santorum says the working problems have been banned by both political parties. and this month on our on-line book club, we're discussing amity sheas "the forgotten man." book tv for serious readers. on tuesday the wall street journal held its chief financial officers network conference in washington, d.c. this portion discusses global economies and the overall global outlook. speakers include economic advisers chair jason furman and the chief economist at the world bank. this is 30 minutes.

thank you, john, thank you senator whiten, for getting up early, showing up on time. >> no filibusters today, now. >> a true fact about senator widen before we start. one is i got to know the senator a long time ago in the 1990s when i wrote a column about a young senator in oregon who had ideas about solving problems in medicare and making it solvent forever. so here you are, i'm here, and medicare is still a mess. so i guess we didn't succeed. secondly, in an earlier life, senator widen played division i college basketball for the university of santa barbara. was going to be a power forward in the nba, i believe. that was your career goal. >> a delusional dream. >> instead you became senate chair in the finance committee, so i think you made a wise career choice. he's been senator on the committee since february, so you

can't blame him totally for everything that hasn't gotten done in washington, only partially. you deal with a huge agenda on senate finance. let me start with the topic that everybody loves to hate, which is taxes. one of the anomalies of washington, it seems to me, in the last few years, has been that there is broad bipartisan consensus on one thing, which is that there ought to be a broad tax reform of the system, yet nothing ever seems to happen. tell me what your plan is to make it happen, you and your republican colleague senator hatch, who have announced some hearings just last week. what's on the road for tax reform? >> jerry, first of all, our people deserve a tax code that gives all americans the opportunity to get ahead, and not just those who have the resources to figure out how to get a brigade of lawyers and accountants to hot-wire the system so they can take advantage of the latest loophole. and i've developed a bipartisan proposal over the last few

years, first with mitch mcconnell's economics lieutenant, judd gregg, and most recently with dan coates, and it essentially builds on the good work that a big batch of democrats did in the '80s. bill bradley, ronald reagan, bob packwood, which basically means you go in there and drain the swamp. there had been something like 16,000 tax changes since that last tax reform, so you go in there, clean those out, use the money to hold down the rates and encourage producivity. when they did so, it helped create a number of jobs. >> what would you do to the top corporate tax rate, what would you do to personal rates? is it retro-neutral, in your vision? >> first of all, i think

pro-growth tax reform, the right kind of bipartisan tax reform is going to encourage job growth, it's going to encourage economic growth, and that will translate into revenue. my top rate is 24%, so it is really the lowest on offer. it means we're cutting the top rate a third, but i do think we need to go after some of these loopholes, and we have a big group of cfos here today, and one of the ways they can help is, first of all, give us some certainty for the next two years which is to pass these tax expe expender provisions that senator mcconnell and i have gotten through on a bipartisan basis, and close the loop holes which help drive down rates which helped keep republicans and democrats together a century ago. >> and the corporate rate you envision? >> 24%, the lowest on offer. and the reality is much of what we're seeing today, these

inversions, for example, which are very much in the news, stem from the fact that our corporate rate isn't very efficient, it's really putting us right up there at the top, and in a tough global economy, we need to have an efficient rate for business that's competitive and then also on the trade front, we need to find a way to build a new bipartisan coalition to expand markets, and in our country, make things here, grow things here, add value to them here and then ship them somewhere. >> you know, george wall pointed out in a column a couple weeks ago that it's hard to do tax reform before an election, it's hard to do tax reform during an election. unfortunately, those are the only two years that we have. when and how do you do this? >> by the way, 1986 was an election year, and that was the year of the bipartisan tax reform. in fact, bob packwood, a little

anecdote, wasn't able to make the signing ceremony because he was at home getting a from the citizens. so it can be done. but i think there is a prime 15-month window now, essentially from now until, say, the august recess of 2015, maybe early fall. that's why senator hatch and i have joined with three very important hearings. the first will start on the education provisions. i think we all understand that our students are getting smothered by debt. i mean, this is really harming their ability to be productive, and my focus there will be to consolidate these -- this array, this welter of confusing provisions into essentially a handful and also to create new incentives for everyone to save. right now if you're with a modest income and you want to set a little bit of money aside, you bump up against these asset limits that mean it's hard for you to get hunger assistance.

so we'll start with the education incentives and then very quickly we will move to looking at international competitiveness which involves the corporate rate inversions. >> we'll get to inversions in a second, but one of the issues that i think is paramount for a lot of people in this audience because they have to plan is the extenders. you mentioned that topic. somebody asked me about them at the reception last night. what are the prospects for getting those done? it's late. some of them are going to expire. are the extenders going to be extended? >> yes, but the real priority has got to be to do it quickly. i mean, the reality is so many of our businesses pay quarterly, so they're having to pay higher estimates now. i mean, i met with small businesses in oregon recently, and one of the good parts of the extender bill, a robert schumer bipartisan amendment gears it more towards the small person, the person in the garage with the innovation. but they said, look, if we don't

get this passed quickly, i'm going to be making estimated payments which take money out of my pocket which i could otherwise use to hire people. so let's get this passed quickly. if all these cfos will help with that, it also gives us more time to move on to the next tier which, of course, is comprehensive reform. >> quickly, can you define quickly for the extenders? what's realistic? what's your hope? >> i wanted to have them passed yesterday. i thought senator hatch produced -- senator hatch and i produced a proposal that had strong bipartisan support in the committee. we tried to bring it up. we made it clear that we would be open to amendments as long as they have some connection with extenders. for example, a number of my colleagues think that it's time for the government to get out of the business of creating incentives for renewable energy. that's something that -- a view i don't happen to share, but it's a legitimate bipartisan amendment. let's offer those amendments that are really relevant to tax

extenders, get this enacted and move on to reform. >> you mentioned inversions. this is becoming an increasingly relevant and somewhat emotional topic. we had a new one this week, medtronic announces it's moving its corporate headquarters for tax reasons. >> to ireland where the rate is 12.5%. >> you wanted to address that piece in our paper a couple weeks ago saying, essentially, we want to stop this and you wanted to trake some steps to deal with inversions. >> first of all, i think we want to understand what's at stake here, and that's that americans don't want a race to the bottom. what we want to do is have a more efficient corporate system. that's why i have this rate in a proposal that has been bipartisan for a number of years of 24. i think that's fair to all sides. clearly, to be competitive in these tough global markets, there are a lot of pieces to the puzzle, and if we're up on top in terms of tax rates, it's

pretty hard to do that. >> so you had talked about inserting a provision that would raise the effective tax rate and make that retroactive. are you getting supporters for that? >> what we've seen, and of course, we have not introduced it formally as a bill -- i was trying to put everybody on notice that that was what i was going to push for, so everybody would understand what the new rules are going to be when we get to tax reform. the reality is that any time you have one of these kinds of approaches, in the long term people pay more, and particularly they're going to be small businesses, what are called the pass-throughs. what we need to do, going back to the first words out of my mouth, is create a system that gives everybody in america the opportunity to get ahead. i want to say as part of the tax bill, whether you're a pass-through, whether you're a corporation, whether you're somebody just getting started, we know that our system is about marketplace forces. but right now we don't have a

system that equally gives everybody the opportunity to get ahead. that's what we're going to focus on starting next week with education. >> are you a tax expatriat fan? >> i am open to doing it as a transition to a new system that creates new incentives specifically to create red, white and blue jobs, jobs here in our country. but we ought to remember that in 2004, there was a repatriation bill, the sponsors of it in effect promised a repatriation rainbow, that this would generate new sums of money, and that was not the case. the auditors were scathing in their review, indicating that it did not create jobs, it mostly helped shareholders and encouraged giving out dividends. >> but is that a reason not to do it, or are you still in favor

of attempting? >> what i'm in favor of is for the transportation bill that's being considered that feverythig is on the table. transportation comes in two steps. the first is the short term. we've got three weeks, essentially, before this goes belly up. so this has got to be done before august. we're looking at a variety of ways to do it. for the longer term, what i want to do is encourage the private sector to come off the sidelines, and this is part of that debate, and make investments in infrastructure. now, we've got a history of being able to do this. the build america bonds program, which i authored with a number of republicans. in the last night of the recovery act, i was asked what might happen, and i said, back in the envelope, let's try $5 billion. and democrats and republicans said, pretty attractive. it generated more than $180 billion worth of investments. so let's deal with the highway trust fund immediately because you can't have big league

economic growth with little league infrastructure, then let's look at approaches, particularly, in my view, that encourages that private capital to come off the sidelines of transportation. >> the highway trust fund is about to run out of money, their projects are shutting down across the country because they're running out of money. are you confident that will get done before you leave in august? >> failure on this is not an option. with a fragile economy, the kind we're dealing with right now, we cannot take the kind of economic hit you would have if transportation starts to pretty much vanish. failure on this one isn't acceptable. senator hatch and i have had some very positive talks on it, and i anticipate our moving even during this work period to advance the effort. >> a couple more topics i wanted to bounce off you quickly and then i want to open up to your questions. let me start with internet

taxation. you have been deeply involved in the question of internet taxation, both taxation of internet access and taxation of sales on-line. both those questions are up in the air. what do you want to happen? what do you think is the most likely outcome of the internet taxation debate? >> cox and i wrote the internet deba debate. we want to make sure that in our earlier days we didn't want to see particularly small businesses clobbered by thousands and thousands of tax inversions. it has been a huge tool for growth of business on line. i want to see the reauthorization we've seen in the last decade. now, the marketplace fairness act, in effect, goes in the other direction, and i have been

opposed to that legislation. there may be some ways in which both sides can agree, but my priority here -- >> this is the sales tax on the internet, essentially? >> well, what it is most specifically, is forcing on-line merchants to go through red tape and compliance matters that you wouldn't have to face if you were not an on-line business. that to me is discrimination. that's exactly what congressman cox and i on a bipartisan basis sought to prevent. >> you also deal with trade on finance. you are a free trader. your party is essentially moving in the opposite direction, won't give the president fast track authority for negotiating trade agreements, for example. why are you moving in a free trade direction? why is your party going the opposite direction, and how do you reconcile those two? >> first of all, jerry, the trade discussion has changed very dramatically since the '80s. if you go on indy media in

portland, you can see people walking through town saying ron wyden nafta, ron wyden cafta. what's next, ron? shafta? i understand people have different views on this. in the '80s, bill clinton and i were not talking about digital goods. this is an era where it's advanced america. the republican senator and i have introduced a bill to that advantage. there are a whole host of new kinds of issues. to me one of the priorities in building a new bipartisan coalition, so it's not just all the republicans and a handful of democratic free traders, but you're going to have to take steps, for example, that are significantly bolder in terms of enforcing the trade laws.

the first thing that a middle class person says, and of course trade is now co nn fconflated. one of the things they'll say is why aren't you enforcing the new laws with the stuff that are on the books today? transparency, labor and environmental protection, i think there is an opportunity to build a new bipartisan coalition. somebody the other day was talking about fast track. i said, well, maybe we'll call it smart track that, in effect, ensures that we can tap these markets. in other words, my part of the world is very interested, of course, in asia big growth markets. northeast maybe the european markets. it's called ttip, the agreement with europe, but the reality is this is a prime opportunity for

us to create more good-paying jobs. the trade jobs often pay better than do the non-trade jobs, and i'm determined to find a way to a new bipartisan coalition for trade policy. >> but you are swimming upstream against a populist current in the country, i think it's fair to say, and that makes it even harder. it's never been easy to sell free trade. isn't it even harder now than it was a few years ago, or certainly before the 2007-2008 recession? >> i may call it smart trade, but the point really is if you have a new agenda that focuses on the concerns middle class people are talking about -- i mentioned enforcement, i mentioned labor matters, ensuring that environmental, you know, policy, whether it's illegal logging or overfishing or not taking away american jobs. my determination is to get a significant block of democrats in the senate, well over a

majority of democrats, to be part of a new focus on trade policy. this is not going to be your grandparents' trade policy where it's all the republicans and a couple of democrats. >> i just have two minutes left before questions. let me ask you one final thing and circle back to where we started, so go back to tax reform for a second. do you think it is advisable to try to do corporate and personal tax reform simultaneously, or is it wiser, as the white house seems to think, to just do the corporate part first, personal is too complicated, tie that off and do it separately? or should these be done together? >> i think they have to be done together, jerry. the tax system is like an ecosystem. you put pressure over here and it bumps up over here. then there's the politics. if the word goes out across america that there is going to be business tax relief, we're going to have millions of businesses say, hey, that sounds pretty good, it applies to me.

then they may find out, hey, that really doesn't apply to the sole proprietor. it doesn't apply to the partnership. it doesn't apply to the restaurant that has 15, 20 people, it applies to huge multi-nationals who, in effect, are c-corporations, so you've got to make sure, in my view, that what are called pass-throughs, these businesses that pay taxes, these individuals, are also part of the equation. as i said, and people will probably get sick of me saying it, but it very much embodies my philosophy. that's part of giving everybody the chance to get ahead. >> john, do you want to take it and open it up to questions? >> yeah. right here, please. >> senator wyden, so if you look at the revenues of this country, almost 80% of it comes from individual taxes, and less than 10% comes from corporate tax. so the real issue with the gaffe

we have right now, which is about $180 million every year, you got to focus on the top line. so it really comes down to the individual tax as the issue. why is it that we have not -- we are one of a handful of countries in the world that has not figured out lower individual income taxes and institute a consumption tax which people cannot cheat the system. at this point in time, we have all the wealthy people in this country loving their taxes with very smart people and a very complex tax code. why not just simplify the tax code and go to a consumption tax that's simpler to control and we'll bring in more revenue? >> you have the american people and me at hello when it comes to simplifying the tax code. and, in fact, if you go on line, you'll be able to see the 1040 form that i proposed as part of my bipartisan proposals. it's like 31 lines long, and the

people at "money" magazine, a prominent financial magazine, took a typical tax code under our legislation, and they were able to complete an individual's taxes in under an hour. so on the simplification issue, you've got me at hello. with respect to the revenue ideas, you advance a vat. certainly my colleagues will be interested in that. a number of them are looking at carbon taxes and the like, so that will be part of the debate. what i'm trying to do, and this is part of giving everybody the chance to get ahead, is to recognize that the consumer is driving 70% of the american economy, and the consumer right now does not have the kind of disposable income that we really need for those kinds of purchases. so the centerpiece of our bipartisan proposal is to triple the standard deduction. so if you're making, say,

$70,000, you're maybe close to median income in oregon, we're going to put well over $30,000 of tax relief out there for you in terms of that standard deduction, give you more disposable income to go out there and buy those goods and services that really drive our economy. to some extent today, particularly when you look at shopping purchases, we have what i call a neiman marcus/dollar tree economy. we have purchases that are being made at these stores with a lot of high-end goods, and dollar tree, we have many of those in our state, they're always mobbed. the places that are hurting are the sears and the penney's and the restaurants that cater to the middle class. those are the kind of places we ought to be looking at when we talk about economic growth, and some of it goes back to the days of henry ford. i mean, the history has been kind of distorted on it, but clearly, when he raised the wages of his workers, that was a

key to helping to found the middle class, which derives economic growth for the long term in our country. >> other questions? while you're thinking, senator, jerry raised the ttip authority. what happens with that and the transit specifications? it gives the opportunity to speed negotiations with partners. the argument is all the partners abroad are holding their best offer off the negotiating table until they see that the negotiations are not going to have to be approved by congress, that the administration does have, in fact, tpa. >> first of all, and it's hard to keep all the acronyms together, the lines have sort of blurred just as much has in government today. it used to be, and i have colleagues come up to me and say -- jerry, they would say, hey, what are we talking about this tpa deal for, because i

just read in the paper that tpp is almost finished. what's going on? i thought the whole point -- and when you read the text of the law is tpa is supposed to define your negotiating objectives. you do that first and then you come back and do your substantive agreements like ttp and ttip. now, obviously, this has sort of the yiddish word for schmergel, which means come together. schmergel will cover d.c. adequately. i think our trading partners know that clearly this is a matter of heated, domestic, political debate, but we are intensely serious about both of these matters. i have sent, for example, my lead trade staffer, the person who handles trade matters at the finance committee, to recent negotiations. i have had a number of

discussions with officials, including in the last couple of weeks, prime ministers who are coming through washington. we are making it very clear that we are intensely interested in getting this done, and as i indicated with jerry, i see this as one of the paths to generating more high-skilled, high-wage jobs. >> just as a follow-up, you can get as close as you want to the finish line. if you don't have fast track tpa in the president's hands, i don't think you can get across the finish line. nobody is going to go there with you. >> my hope is this bipartisan coalition that i'm talking about, jerry, is going to be in place here in the next few months. we're not talking about this being eternity. but i am spending a lot of time talking to my colleagues on the finance committee about provisions that would ensure my party, which legitimately is looking at this huge challenge to help middle class people get ahead in a tough economy, that

they're satisfied that we have a new trade agenda to do it, and that we can keep republicans on the program, and i think we'll have it together in the next few months. >> in the next few months, i was just about to ask. by this time next year, will we have a negotiated, transpacific partnership? >> certainly my hope, i, of course, am not in charge of the negotiations. mike fro mman and i talk constantly. i don't set the calendar in the united states senate, but it is my hope that in the next few months we'll have a new bipartisan coalition for expanded trade that for the first time in recent years puts a new focus on what i think is not just a political issue, but an economic issue. we need a trade policy that helps create more opportunities for middle class people who are legitimately very concerned about where our future is going. >> senator wyden, jerry, thank you very much. >> thank you.

thanks, everybody. this weekend, american history tv is live from the gettysburg college civil war institute saturday morning starting at 8:45 eastern. you'll hear historian peter carmichael on robert e. lee followed by state university professor brooks simpson on ulysses s. grant. and later, kate nelson on the burni burning. well, an f on transparency and freedom of information, and i think my colleagues in journalism would give a similar grade whether they're liberal or conservative. the freedom of liberation process has become a joke. it was already well on its way prior to the obama administration, but this administration has perfected the stall, the delay, the redakcti s redactions, the excuses. it's shocking because i feel very strongly that the information they withhold and protect many times belongs to

the public. we own it. there is no sense of that when you ask. they covet it as if they're a private corporation defending their trade secrets without understanding what they hold is information gathered on our behalf. >> journalist and investigative reporter cheryl add can i say s -- attkisson -- cheryl attkisson. about $10 million in bonuses were paid out by the phoenix va system over three years. this is live coverage on c-span3. >> yesterday the va delivered information regarding the removal of six scs employees for the past two fiscal years. this request has been made by multiple members of this committee, including myself in multiple hearings going back to

february. this morning va delivered the second set of documents which i requested via letter in october of 2013. the documents cover the performance reviews for each ses individual for fiscal years 2011 and 2012. although va's response to my request and your request was delayed, their production of the requested materials is sufficient, and, therefore, after consultation with a ranking member, we will no longer be having a business meeting this morning. so this morning's full hearing is entitled "review of awarding bonuses to senior executives at the department of veterans affairs." and this morning we're going to examine the outlandish bonus culture at the va and the larger organizational crisis that seems to have developed from rewarding awards to senior executives despite the fact their performance fails to deliver on our promise to our veterans. as the committee's investigation

into the department continues and new allegations and cover-ups are exposed, it's important that we examine how the department has arrived at the point where it is today. sadly, it's a point which has eroded veterans' trust and americans' confidence in va's execution of its mission. part of the mistrust centers on a belief that va employees are motivated by financial incentives alone, and i can certainly see why that perception is out there. it appears as if va's performance review system is failing the veterans they're supposed to be serving. instead of using bonuses as an award for outstanding work on behalf of our veterans, cash awards are seen as an entitlement and have become irrelevant to the quality of work product. i know we all agree that preventable patient deaths, delays in care and continual backlogs of disability claims, cost overruns and construction delays for va facilities and

deliberate behavior to falsify data are not behaviors that should be rewarded. yet despite startling issues that continue to come to light as well as numerous past ig and gao reports highlighting these same issues, a majority of senior va employees received a fiscal award for 2013. over $2.8 million was paid out in performance awards to senior executives for fy-13. these performance awards went to at least 65% of the senior executive work force at the department. in fact, not a single senior manager at va out of 470 individuals received less than a fully successful performance review for the last fiscal year. not one. based on this committee's investigations, outside independent reports and what we

have learned in the last few months, i wholeheartedly disagree with va's assessment of its senior staff. it should not be the practice of any federal agency to issue taxpayer dollars in addition to paying six-figure salaries to failing senior managers just because a current opm statute for members of the ses allows that to occur. bonuses are not an entitlement. they are a reward for exceptional work. va's current practice only breeds a sense of entitlement and a lack of accountability and is why we are here today. this issue, unfortunately, is not a new one for the va. the committee has focused its oversight on bonuses for years. and if members were to go back and review the 2007 subcommittee on oversight investigation hearing on awards and bonuses, you would find that the issues

we raised today were also questioned seven years ago. there seems to be little, if any, improvement. in a may 2013 hearing, chief glenn hagstrom couldn't explain why he collected almost $55,000 in performance bonuses despite overseeing failed construction plans that cost our government nearly $1.5 billion in cost overruns. in december of 2012, an investigation by this committee revealed a legionella outbreak in pittsburgh that led to at least 60 deaths. nevertheless, the director there, gary wolf, received a perfect review, and the one who oversaw pittsburgh at the time collected a $63,000 bonus. to the average american, $63,000

is considered to be a competitive annual salary, not a bonus. the medical center director in dayton, ohio received a nearly $12,000 bonus despite an open investigation into veterans' exposure to hepatitis b and c under his watch. the director at the atlanta va medical center who oversaw several deaths received $55,000 in bonuses over his four years there. the officer in waco, texas received over $53,000 in bonuses. while under his tenure, the waco average disability claims' processing time multiplied to inexcusable levels. unfortunately, i could go on and on. these are not the only instances of those charged with managing va programs and health care facilities failing far below short of the quality that

veterans and their families deserve. so in short, there are far too many examples that prove that bonuses do not ensure good performance. as we have previously heard from several witnesses in this committee, including ones from va, the quest for monetary gain rather than public service has led to data manipulation, a secret list designed to create a false impression of quality health care that is timely and responsive to veterans. this is scandalous, even criminal. i would argue that it runs far deeper than just phoenix. today we'll explore the circumstances surrounding the award and event wual rescision a performance bonus award in the medical center in phoenix, arizona, ms. sharon helman. she was given an $85,000 bonus

for her performance in fiscal year 2013. only as allegations against ms. helman came to light as a result of this committee's work did a conscientious va employee examine whether she received a bonus in fiscal year 2013. when we questioned the award, they said she was given this bonus due to administrative error. however, past documentation from va has stated that all performance reviews and awards are ultimately reviewed and signed by the secretary. furthermore, ms. helman's direct supervisor, susan bower, stated in may that sharon helman received her bonus for a highly successful rating and for improving access concerns and wait lists. perhaps we should also question ms. bower's qualifications.

these stories do not match up, and i believe it further brings into question va's transparency as well as diligence when issuing thousands of dollars in bonus bonuses. although acting secretary gibson has rightly put a freeze on bonuses for the time being, it is still this committee's responsibility to understand the rationale for awarding five-figure bonuses for individuals who have clearly fallen short of the department's mission and their commitment to those who have served. a performance bonus award should not be received because you were able to check off a few boxes on a form. a performance award should not be an expectation. a bonus is not an entitlement. those at the department of veterans affairs are there to se serve the veterans and their families. anything less than the highest possible quality should not be rewarded. gaming the bonus system is not

the business the va should be in. today we'll hear what the va has to say about their performance review system, why senior managers who have overseen failure have received thousands of dollars in bonuses, and how these large performance bonuses could have led to the terrible situation the department is now in. with that, i now recognize the ranking member for his opening statement. >> thank you very much, mr. chairman, for having this hearing. i want to thank the witness for coming this morning as well. michael lebuff in his book entitled "the greatest management principle ever" said, and i quote, the things that get measured are the things that get done, end of quote. we've seen this statement borne out endlessly in the va in a very negative way. as witnesses have stated in recent hearings, va's focus on unrealistic wait time measured resulted in employees manipulating the system to make it seem like they were meeting the measured standards.

lebuff went on to say in a later book, and i quote, the things that get measured and rewarded are the things that get done well, end of quote. today we're going to look at the second piece, how va senior executives are awarded and how the system does or does not incentivize things to get done well. before we get into that discussion, let me also recognize that there are a lot of va employees who do things well. as we shine the light on those who do not, let me pause for a moment and shine a brighter light, more positive light, on the hardworking employees at va who do do things well. and we must not forget that. and to them i say thank you for your service and for setting an example, and hopefully all employees within the va look at keeping their bottom line on how do we serve the veteran.

with that, mr. chairman, i know we got votes this morning, so i would ask unanimous consent that the remainder of my remarks be put into the record, and with that i yield back. >> members will hold opening statements. your opening statement, should you have one, will be entered into the record at the appropriate time. thank you for being with us here today. we have one panelist. we're going to hear from the honorable gina farisee at the department of veteran affairs. i would ask that you please stand and raise your right hand. do you solemnly swear under penalty of perjury that the testimony you are about to provide is the truth, the whole truth and nothing but the truth? >> yes. >> thank you. you may be seated. your complete written statement will also be made a part of the record. thank you for being here with us this morning, and you are recognized for five minutes. >> chairman miller, ranking member, distinguished members of the committee. thank you for the opportunity to

appear before the committee to discuss va senior executive performance management system. i would like to express on behalf of the va work force our commitment to the department's veterans. to accomplish this mission we must recruit and maintain the best talent, many of whom require special skills in health care, information technology and benefits delivery. in particular, va requires talented senior executives to manage the complex set of va facilities and programs. we are competing in tough public and private labor markets for skilled personnel. to remain competitive in recruiting and retaining, we must provide tools such as incentives and rewards that recognize superior performance. however, we also acknowledge that we must do a better job at holding our leaders more accountable. senior leadership must engage plans to include counseling, midyear assessments and documentation. we realize that improvement in

ses performance management also serves as a model for the general work force appraisal process. the key is precise implementation and oversight for all performance plans, whether for executives or generally scheduled employees. equally important is that we have good training programs for executives. performance management has many challenges. by its nature, it is very subjective and complex. it is used to identify sup superlative and poor performers and it is the foundation of mentoring. senior executives must understand how to crack the goods for management purposes. they must also fully understand the process and know how to document assessments so that decisions on poor performers will be defensible. leaders must confidently communicate directly with a subordinate and prevail in the due process steps that follow such decisions. the va is fortifying to train

individuals on how to confront poor performance. we cannot assume our executives are skilled in these areas. our executives must receive frequent and better training on the performance process and guidance on confronting poor performers. the data shows the va's implementation of the process has become more rigorous over the last few years. from 2010 to 2013, the va decreased the percentage of outstanding ratings from 35% down to 21%. we presently have an opm certified senior executive performance appraisal system. to receive opm certification, agencies must demonstrate adhere ens to laws and policies in the evaluation of senior executives and distribution of awards. agencies must also make meaningful distinguished certifications. failure to receive certification has consequences to a federal agency. as outlined in the statute,

monetary rewards were designed to be part of this ses accomplishments. failure to recognize performance puts va at risk or the private sector of some of the department's most effective senior talent. the process the va uses is described in my written testimony, but i would like to touch on some of the high points. most important is the va has uniformity in evaluating executives and has a single performance management system for both title 5 and title 38 employees. we use five ratings in the va and have development standards for these ratings. the appraisal system goes beyond the minimum standards set by opm. in 2011, va added a viewing official, which is not required as part of the rating process for most senior executives. this reviewing official is responsible for highlighting degrees for each official. in addition, the department

formed performance review committees that conducted initial review of appraisals prior troet vio the review by t review board. it is an added feature that looks at consistency throughout the va lines of business. we are also currently refining our policy on deferred ratings to ensure clear, concise guidance on the process step by step. in closing, it is clear that va must do a better job of holding our executives and employees accountable for poor performance. good organizations establish clear standards, training employees to meet those standards and then holding them accountable. va cannot assume that executives are adequately trained in management, so we are taking steps to address the shortfalls. in order to better serve our veterans, va must continue to attract and attain the best leaders. thank you for having this hearing today, and i look forward to answering your questions. >> thank you so much for being

here with us. according to your testimony from fy-2010 through 2013, not a single member of the ses, a pool of 470 individuals, received a less than fully satisfactory or successful rating. is that correct? >> that is correct. >> knowing what we know now about the fraudulent actions being taken in facilities all across this country that have harmed our veterans, do you think that the department's assessment that 100% of senior managers at va have been fully successful in the past four years is in line with reality? >> mr. chairman, if we knew what we knew today at that time, it is unlikely that their performance would reflect what it reflected at the time the reports were written. >> do you go back and change a performance review based on information that's gathered after the fact? >> mr. chairman, you cannot go back and change a rating once it

has been issued to an employee as the final rating. >> even if there is information that was hidden from the raters? >> even if there is information hidden. >> is that a law or a rule? >> it's a law. >> aits lit's a law that needs changed? >> there are other ways to discipline employees for misconduct. if you find out -- >> wait, wait. you're telling me if you find out somebody does something that specifically harms veterans, is potentially criminal, that the department's position is you would not go back and change somebody's rating if you had the ability to do that? >> if we had the authority, we would use all authorities provided to us. >> and so my question to you, is that something that you would recommend that this committee do, is look into having the law changed so that you can go back and change performance reviews? >> mr. chairman, if that was across the board in federal

government, i could agree with that. >> well, we're focused on the va, okay? and the va ain't been doing very well lately. and i would hope that the anger and the frustration that i frus in the acting secretary's voice would filter through every employee. and especially in the central office. things have to change. we can't keep doing it the way it's been being done. >> i concur, mr. chairman. >> you're aware this committee has spent considerable time looking at the outbreak of legionair's disease in pittsburgh in the water system where it has been proven there were at least six preventable deaths? >> question, mr. chairman. >> during this time period, mr. moreland, who was in the director, had the responsibility of overseeing his facility and was given a one time $63,000 bonus. are you aware of that? >> i am aware of it. >> during questioning at a september 9th field hearing in pittsburgh, then secretary

petsle told this committee that it was his understanding that secretary shinseki did not have the authority to rescind the bonus that he would look into that. are you aware of that. >> i am, mr. chairman. >> did anyone ask you about the v.a.'s authority to rescind bonuses prior to ms. hellman's case? >> no, mr. chairman. >> anyone ask the office of general counsel? >> mr. chairman, i'm not aware. >> it's safe to say dr. petsle then sought his own legal counsel on the matter and then never looked at it at all? >> mr. chairman, i would assume that he discussed this with general counsel. general counsel's views when i have talked to them about rescinding bonuses, that rescinding awards based on a rating that was already given to an employee in finality, is we have no authority to take the rating back nor the award which is a result of that rating. >> so how did we take ms.

helen's bonus back? >> ms. helen's bonus was erroneously released. the v.a. does have a standard operating procedure of any employee who has an investigation ongoing, that we have been made aware of by the ig or equal opportunity or other venues, we put them on a deferred list. ms. hellman's name was on the deferred 2013 list. her rating should not have been released. it was never definitively said that was her final rating. it was not her final rating. and because it was not final, we took the opportunity to rescind that rating. we worked with general counsel and also opm. it is unprecedented for that to have happened. but based on the fact that the v.a. has a standard operating procedure of maintaining deferred ratings, it was proven that that was not a final rating

that was determined by the secretary to be released. >> is it final now? >> it is not, chairman. >> can you explain why? >> her -- she -- it was rescinded. her name is still on the deferred list until tdefer ed list. until the investigation is complete no decision will be made on that rating. >> she is still employed by the department of veteran affairs and being paid her full salary? >> she is, mr. chairman. >> and so you don't believe that it was extenuating circumstances or -- i've forgotten what the term was that you used, that dr. moreland who oversaw the division that there were six preventable deaths, he got a $63,000 bonus and nobody thought that was worth looking into to see if that could be rescinded? >> mr. chairman, i can't answer that. i wasn't there when that award was given. >> okay. thank you. mr. michaud. >> thank you very much, mr. chairman. once again, thank you for your

testimony. some of my colleagues use the words like bonus, award and performance pay interchangeably. but i understand they are different. can you please explain -- describe to us the different categories of additional pay available to v.a. senior executives? >> yes, i can. there are several different kind of incentives. there are relocation, recruitment and retention incentives that can be given in proper situations to employees. there are standards that we must meet in order to provide any of those incentives. for our health care, doctors and dentists, they receive what is called market pay and performance pay, which are in addition to a base pay. they all have different, complex ways of calculation. but a normal title 5 employee is

not authorized for those pays. that is only for our physicians and our dentists. >> title 38 employees. >> title 38, yes, sir. >> yep. what's -- can you discuss a performance award bonus initiatives and the tiered pay? >> the tiered pay for our awards is based on the rating. the highest rating being outstanding. and then exceeds fully succe successful, and fully successful. a determination is made by the secretary at which level he will provide awards based on the ratings. for the last two years, employees who received exceeds fully successful and outstanding were the employees who received awards. those awards are calculated at different percentages. part of the certification system by opm requires that there be a differentiation made between levels of performance and those awards that are provided to those employees.

>> okay. what's the difference between a performance award and a bonus? >> we don't use the word "bonus." we only use the word "performance award." >> so you don't -- so just performance award. who's eligible for -- when you look at this issue, and i actually just got -- the chairman and i received a letter on the 19th from the senior executive association. and what was interesting in it is partway through it says, reports proclaiming large bonuses for senior executives at the v.a. often fail to note that few employees on the list provided are title 5. which are scss. that the largest, nearly all the large bonuses are for title 38 and employees. so what are the criterias you

use to determine who's provided each? is it different with title 5 versus title 38? >> congressman, as far as the bonuses for title 5 and title 38, when we look at our ses performance award system, they are the same. they would fall under the same categories of outstanding, exceeds fully successful, fully successful, and those percentages. what is different about title 38 employees is in addition to performance awards, they can receive market pay and a performance pay that is based on a separate contract if they are a health professional, if they are a physician or dentist, with their superior at the medical center. so they have things in addition to title 5. they are not a part of the performance appraisal ses system i was speaking of. >> some of the criteria for opm certification includes alignment that is linking individual

performance objective to organizational mission. second is results that is performance expectation are linked to outcomes. and number three, the overall agency performance that is linked between individual performance objectives and overall agency performance. if v.a. receives opm certification, it must have met these criterias in aggregate. how do you explain the specific failures to this committee that we've discovered recently over the past several months? >> congressman, as people received awards based on their performance appraisal, those decisions were based on them meeting critical elements that were written in their performance plans. and proven by metrics, the words written in their performance appraisals by their superior.

that is with the performance review committee and performance review board saw. basically, the four corners of the paper, what is written, and that's what they went by. >> thank you, mr. chairman. >> thank you very much. dr. rowe, you're recognized for five minutes. >> thank you, chairman. let me start by asking, i looked from fy 2010 to fy 2013. you mentioned in your ratings system outstanding, exceeds fully successful. i just did the percentages, and they're unchanged. you just changed the mix a little bit. and if you add the outstanding and exceeds fully successful in 2010, it was 73%. if you look at 2013, it's 78%. it actually went up. so that means there's an expectation. and it's varied between 75% and 73%. so you really didn't change anything other than the very top ratings so that the bonus or performance award or whatever you want to call it went down just a little bit. so fully 80% of people last year got an award.

and were exceptional out of the 470. do you think that that's normal in business? that every single executive is exceptional? >> congressman, i -- i can't answer that question about business. >> well, i mean, the awards here seem to say that. i mean, if you look at -- at your own data. i'm not making this up. this is your data i'm looking at. >> congressman, i understand. based on the critical elements and the performance plan for those sess and the results that were on those plans, that is what was seen. >> that means that you put the bar down here, then. so that anybody could step over it. if your metrics are low enough that almost everybody exceeds them, then your metrics are not very high. >> congressman, that is something we should look at. every performance plan is written for the fully successful level. and if they exceed that -- >> i got that. what i want to also understand is, i've been able -- i've asked this question for the last five or six hearings. is that to