returns from recess this week. david cameron will take questions from the house of commons live wednesday morning at 7:00 a.m. eastern on c-span- 2. next, a town hall meeting with republican presidential candidate mitt romney. after that, a conversation with former michigan governor granholm. that a program on irs returns that were the target of identity theft. watch her almost 40 appearances on c-span online at the c-span of video library, one of the more than 100,000 people you can search and watch for free any time. it is wash. your way. >> former massachusetts governor mitt romney held a town hall

meeting in new hampshire. the 2012 presidential candidate acknowledged that climate change exists. this is an hour. [applause] >> good morning. thank you , very much for attending on an early friday morning. thank you for attending the new hampshire town meeting, the staple of new hampshire politics, where you take your job seriously to vet the candidates. please, if he would not mind muting your cell phones or pagers before our event. it is my pleasure -- i had the opportunity to meet the romneys, where they sat at our kitchen

table, where we talked about a myriad of issues. i am pleased to have them back. mrs. romney, governor, good luck and welcome back to new hampshire. >> i'll take it. gosh, it is great to start this process again and to be in a place where we feel it is an extraordinary thing that happens in new hampshire where people get to know the candidates on a personal level. some are familiar faces in the audience. you all know mitt announced yesterday. [applause] >> thank you. >> we're in it to win it. >> yeah! for a verylso in it

important reason and an important reason why i encouraged him to run. i love my children. they are great, but i got to tell you, i love my grandkids even more. it's so wonderful to have grandchildren. my children will be ok. this economy is tough right now, but i am not that worried about my children. i am extremely worried about my grandchildren and their future and their ability to have jobs that will give them the kind of life that all of us enjoy right now. and that is why i pushed mitt into this, and as i look at who can lead this country and give expect the jobs we need, i said, you know what? tom sorry, sweetie, it's up you. it is a tough process. i have been through before. some of it is good.

some of it is not so good. you have to recognize that and know that it is worth the fight and worth, for me, my love of this country, and my love of my grandchildren and hope for a better america with prosperous jobs for all. so sweetie, it's up to you. >> thank you, sweetie. you're very generous to applaud even though we have not said much yet. i appreciate and number of you got up this morning to listen to me. we are here to hear from you as well as from us. i will say a few words and turn to you and your offer of kelso, advice, and questions is welcome. a little more about anne. she and i met in high school. she was 15, went to a party i happen to go to at a friend's house. she came with someone else.

i told the guy, i live closer to her than you do. can i get for our ride home? we have been going steady ever since that was -- we have been married 42 years. that was 46 years she and i have been together. [applause] it has been all good, but there have been some times of challenge and heartbreak. when she was diagnosed in 1998 with multiple sclerosis, that was a tough time. she was getting ready for an elevator to go to the house to take her to the second floor because she could not use her right leg. we thought she would be in the wheelchair. we went up to utah to run the olympic winter games. she was fortunate to get good treatment from people that practice decent medicine, western medicine, prayer. she has been able to recover and

hold back that disease. a couple of years ago, she was diagnosed with cancer, and she went to the surgery and radiation and battled back from that. she is the champion in our family. she is a fighter. and she's my inspiration. thank you, sweetheard, for all you do. tell you more about me, too. i spoke yesterday about my dad. i want to tell you more about him because he is a lot of inspiration. remember george romney. he was here running for president in 1968. i hope i do better than he did. he get out before the new hampshire primary. dad was born in meixico. his parents were american and living in mexico. there was a revolution when he

was 5 years old, and his dad went broke more than one-third they were in the construction business. i see some nodding heads. they lived in los angeles and idaho and finally utah. my dad learned how to be called -- a plaster carpenter. instead of dry wall, is used to be strips of wood he would now look on the to buy for -- the 2 x 4's. dad could take nails, put them in his mouth and spit them out. he never had the time or money to finish college. he did not graduate from college, but he believed in america and he believed in the opportunity america represents and this circumstance of your birth is not a barrier to what you can accomplish. so he gerrew up and was able to

become head of a car company. led a company called american motors. they made ramblers and jeeps. i have a rambler, 1962. when he got married, his financial resources were not a lot better. he filled the back of the car with aluminum paint and he sold aluminum paint along the way to pay for gas and hotel bills he became governor of one of the states where he sold aluminum paint. a lot of what i learned about america and the confidence i have in america came from my dad and my conviction of the greatness of the american spirit comes from him and my wife and from people i met all over the country. it is fashionable to be cynical about america.

come to think that the challenges we face are so severe that the american people are not up to overcoming them, or solving them. i have had the chance to my life and business which was 25 years and at the olympics which was three years, and then serving as governor and then campaigning, i have had a chance to get to know the american people pretty well. i have been inspired. asthe ened of my service governor of massachusetts, i got a call one day and it came from the airport. they said a u.s. air jet was flying in to logan airport and on board was the body of a service man killed in iraq, and the parents had been unable to be notified to receive the body. they asked if i could go to the airport to receive the body. of course i said yes and left my

office immediately. we drove out on the tarmac. there was a state trooper that took us out there. the u.s. air jet came in. the passengers disembarked. the luggage was taken off. down this ramp came the casket of the servicemen. and there were a number of state troopers that were there on the tarmac, and they took out -- they saluted the casket and the flags. i put my hand over my heart and i happen to look up into the terminal. we were right next to the u.s. terminal with a big glass wall. and the people coming off the plane had seen at the police cars. there were lined up against the window to see what was happening. people walking downhau the hall saw the people lined up along the window. there was a big crowd up their. i looked up and every person had their hands on their heart.

in the read the stears sadness on their faces. we are a patriotic people. we faced challenges right now, but we will overcome those challenges because of the energy, and talent and patriotism of the american people. we come from different backgrounds. some are going to school. where did that young guy go? he went to school. some have retired. some are veterans. moms, dads, single moms and dads. all different backgrounds. we come together in new hampshire to do something which you may take for granted but is really quite extraordinary, one of the great achievements in history. for all the wealth and power of the united states of america, the source of our greatness is not that wealth. the source of our greatness is our self-ruled, the fact that we

have a government that ultimately responds to a free people, an independent peopler. and so we come to you at the beginning of the process for you to have a choice to decide who will lead this country over the next four years. and i happen to believe that we took kind of an american idea and gave someone new a chance three years ago. we elected barack obama, a guy we did not know very well, without a very extensive record, no experience in leadership or in the private sector or in negotiations. he promised a lot of things we like. now, three years later, into his fourth term, we do not have to to look at the promises, we can look at the record. the truth is barack obama has failed america.

i say that recognizing he has tried. i am reminded of ronald reagan. he said it is not the liberals are ignorant. it is just that what they know is wrong. what he did simply was wrong on almost every dimension, what he did not help the economy get out of the slide it was in. instead he extended the downturn and made it cheaper. today, three years into his term, we have more news -- unemployment has ticked up again. we have 60 million people of work or stopped looking for work. -- 16 million people. we have home values continuing later.incline three years a record number of foreclosures, higher gas prices, higher food prices, people feeling more squeeze. the obama prescription for the economy did not ail what hurt

us. instead, it makes things worse. i think it is time for somebody who actually had a job to do the job of making jobs work for the american people. it's not my sister. i promise. i'm committed and devoted to making the number one job i would have as president of the united states going to work to get the american people back to work. as anne said, not just today and for the next few weeks, but over a long period of time. because the foundation of our economy has really been eroding, not just in two years. over some period of time. you know that. the agreements on trade we have made have not been the best for us. we have watched as china has

manipulated their currency to price their products below us and steal our intellectual property. we have seen us continue to borrow and borrow. think what that does. think what it means of for a government to borrow -- the number is impossible. we talk about trillions. it is impossible for the human mind that to figure out what trellises, but we do understand that the debt of the nation right now -- to figure out what trillions is, but we do understand the debt of the nation right note -- if you add on to that the unfunded liabilities we would pass on to the next generations, it is multiples of the entire economy. we simply cannot imagine passing on to the next generation of our bill. i want to pass on to the next generation a torch, not a dead. so we have work to do. i have spent my life in the private sector. i spent 25 years in business. little business became big business and work with companies

competing around the world. i understand of jobs come and go. i was successful in some respects, but not always. i learned from mistakes as well. there is no reason that america cannot re-emerged as the jobs- creating, rising income, prosperous and the liberty- loving nation we have been. this is the greatest nation in the history of the earth. that flows from the energy and passion of the american people. sometimes folks wonder that how is it the president obama was so wrong? he made some mistakes relating to our economy. i happen to think that in part he took his inspiration from europe. why do i say that? when the europeans work in trouble economically, they spend and borrow more money. that is what he did. when the european alps system was and trouble, they had the federal government to get over it -- when the european health system was in trouble they had

the federal government get over. when unemployment was high, they pushed more unions, just like he did with card checks and the stacking of the nlrb in favor of organized labor bosses. european policies do not work there. they sure as heck do not work here. i believe in america. [applause] you see, i think we got a right and they got it wrong. i think when the founders of this nation crafted what our nation would be, they considered not just our political rights and our political freedom, as important as those things are, they also considered our economic freedom. they said, we would all be led by king or central government that told us what to do and what to make and how to get paid. instead, we could choose our

lives course, not just our representatives, our life's course. by virtue of that decision, they made this the place on the planet that every pioneer, every freedom lover wanted to come here. it has made us who we are. and allow our economy to outperform those of the european ons from which we strong and some of the great asian nations with larger populations we are a larger -- we are better because of those early pioneers, those founders. i believe in america, in free enterprise, in capitalism. i believe in the constitution. when the father said, we are going to have certain powers of the federal level -- when the founders said we are going to have certain powers of the federal level how, but we will preserve those powers at the state level -- the 10th

amendment. it is not something i think barack obama has read. go read the 10th amendment again. recognize the power of the state. and i believe in the greatness of america. i was really troubled as the president in his early days went around the world apologizing to the world, saying we dictated to other nations. no, mr. president, we freed other nations from dictators. [applause] this is the greatest nation in the history of the earth for a lot of reasons. the big reason is because this is a nation that was willing to lay down the lives of our sons and daughters to defend our own liberty and to share liberty with others. of course, even something which is monday into a lot of people, and that is our economic system, free enterprise -- even the chinese today are copying the

principles we developed to build our economy. as they do so, tens of millions of people every year are coming out of poverty. over there, probably means making less than $1 per day. this is what we have contributed to the world. there is no reason to apologize. we should be proud of america and hold true to the principles that made america america. [applause] let me just say one more thing about my confidence in our futre. ure. i mentioned the hands of the hearts of the people at the airport at the u.s. air terminal. i noted during the olympic games that i had the chance to help organize that every time one of our athletes got a gold medal and they played the national anthem that our athletes put their hand on their part. and i noticed that the other athletes around the world did not do that. ours is a unique tradition. and i wonder when that began.

i was told it began under fdr, during the second world war. he asked us to place our hands over our hard during the playing of the national anthem. this, in recognition of the bloodshed by heroes who more than self their country love and mercy more than light. this is a great, patriotic mission. we face extraordinary challenges. we will overcome them and overcome them with leadership that will tell us the truth, live by the constitution, and get america on the right track again. thanks so much. thank you. [applause] [applause] now it's your turn. yes, sir. oh, you have a written question, you want me to read it to you.

>> sorry, governor, my memory not as good as yours. welcome to new hampshire, and your statements of your grandchildren resound to the question i want to ask. my question is about climate change. how do you look at climate change as a policy issue? the science of climate change is not. it's about the recognition of science. in 2010 the national academy of science issued a comprehensive report requested by the congress. and their conclusion that there is a strong body of evidence that climate change is occurring and caused by human activities. and some say that so many have been evaluated by these reports and the likelihood of these being found wrong is vanishing

strong. this is the case for the climate change. now my question to you, sir. all of the other candidates suggest there is no science consensus on climate change. some insist it's not occurring. we haven't have a meaningful discussion about solutions until there is an agreement about the problem. will you sir, state now that under a romney administration that global warming will be accepted as reality and this will form the foundation of all climate and energy policy? >> thank you, do you work in the energy field, tell us more about yourself. >> (inaudible) don't want to. >> ok, it's an important topic, i had the privilege of writing at book at the end of my lt camign. i found the challenge is if you

answer questions with short answers and you have debates. and i wrote a book called "no apology" and i have a section on this. i don't speak for the scientific community, of course, but i believe that the world is getting warmer. i can't prove it, but based on what i read. and number two, i believe that the humans contribute to that. i don't know how much our contribution is to that. because i know there are periods of greater heat and warmth in the past. but i believe that we contribute to that. and i believe it's important to reduce our emissions of pollutants and greenhouse gases that may be contributors to the climate change. how do we go about doing that? one of the opportunities are the people that are focused on climate change and global

warming have the same interest as the people that are really focused as i am as getting ourselves ofthe dependence of foreign oil. and i think that buying a trillion dollars of foreign oil and gets us involved with the enemy cartels and i want to get us off the dependence of foreign energy. there are things we can do to accomplish both. one is to use more natural gas in the propulsion of our vehicles. and now there is horizontal drilling, and now to drill vertically and horizontally. and it tap into gas pockets and

that contributes to 100 years of natural gas, i want to get that in the interstate highways and this is domestic and sve many challenges. nuclear power doesn't generate carbon dioxide and also domestic. and nuclear power is something i think we have to have. so i look at our natural resources and domestic resources. and america can be energy dependent, we can trade with canadian energy and so forth, and trade with. but i wan to get us off o dependence of foreign energy and to move towards being energy efficient. i am told that we use almost twice energy per person as european, and three times more than a japanese citizen.

we can do better, i would like to see in our homes and systems of insulation be for more efficient. i think that's happening. for me the highest priority is to get ourselves off the foreign energy and improve solar and wind and nuclear and gas and clean coal. and we can't say it will all be solar and wind. i love solar and wind. but they don't drive cars, and we will have to get ourselves carbon sources that are less co 2 emitting and get us towards energy dependence. and any policy that relates, we talked about cap and trade. we cannot as america enter into an agreement that causes our ergy to be more efficient if

we lead the big leaders off the hook. we don't call it america warming but global warming. and if there is an effort in this, it has to be international in scope. thank . . >> governor, when you get to washington, how do plan to get the spending that is going crazy in washington under control? >> we of our colleagues in the house that are doing a broad job. they are fighting spending.

they will not raise the debt limit unless they seek a commensurate reduction in spending. congratulations to them for keeping that battle going on. how would i do with it? well, there are three parts of the budget. the first is what we will called discretionary spending. that is 20% of the budget. that has to come down a lot. we have a lot of programs in washington we all like but we do not have to have occurred when i was governor and had a $3 billion budget gap, there was not $3 billion all just waste. there was some of that doing stuff we like but we simply could not afford. at the federal level, we are spending money on things we like but we have to borrow money from the chinese to pay for. that does not make sense. on some of these programs, i like them, but we have to stop them because i am not willing to pay for these by borrowing and putting this burden on my kids future. that is number one.

on my children's future. that is number one. pplause] that is about 20% of federal spending. the nt 20% is military. there is a lot of waste in military. i would like to eliminate that waste and not use it to buy new programs or even fund programs that iike, rather use it to fund a stronger military. if we are going to send our men and women into harm's way, i want them to be well protected and well secured, with that the best armaments in the world. our navy has been depleted and design a path to be even further depleted. i know that they're just putting in place a new series of jets to do fuelling for the aircraft.

i am glad they are doing that, but the ones that we have nell are 707's. these were built in the 1960's. we have a very old airforce that needs to be brought up to date. finally, iould make sure that we have enough funds to care for our veterans in the way that they deserveo be cared for. [applause] that is only 40% of spending. then comes 50% and 60% of the so-called mandatory programs, which are largely entitlement. medicaid i would send back to the states. i would let the states care for their own corporate. that is theay to reduce costs , fraud, and abuse. give those dollars back to the

states. it will help to hold down the costs. [applause] than social security and medicare. no one in my party has proposed any change to those programs for anyone who is retired or near retirement. the question is, what are we going to promise people in the 20's, 30 boss, 40's, and 50 +. let's not give them promises that we know cannot be met. it is not the same as what i will of the pullout, bring out. but it takes a step forward. how do we make these programs sustainable? i do not want these programs to be jeopardized. we want to make sure that we put out programs that we can honor and commit to.

what entitlements will make sustainable, we will cut dramatically our discretionary budget. if i am president of the united states, i will get america untracked for a balanced budget. [applause] thank you. anyone over here? coming back, this is the front row here. >> i wrote down some notes as well. i do not have a good memory. something that is going under the radar screen is education. it does not seem to be a topic in this campaign. i am going to ask a question about the national takeover in education by the obama administration, which is similar to the national takeover of

health care. i hope that this becomes more important in the campaign. especially when the chosen candidate runs against him. as governor you had some of the highest academic standards in the country. >> number one. [applause] >> your students were scoring the highest in the country. proving that this should be a state and local control the issue. right now we have obama taking over education, setting national standards, giving us a defect of national curriculum. they can call it what they want, but we will wind up with a defacto curriculum. by question is -- tell me your views on as, first of all, and would yocome out against this?

i am looking for a candidate that will be vocal in explaining to everyone what is going on, lettg them know that we are going to fight against this. what are we going to do when they set the standard? where are these parents with lousy curriculum schools going to go? where do they go? whose face is behind this? it is not at the state and local level. i am hoping that this is something you can take for your campaign and perhaps encourage the other candidates to be vocal. of all the candidates, you are best set to speak on this. you have shown what can be done on the state level. unfortunately,ur governor here has just shifted it up words. we lost the power here.

>> you have some kids in school, but the way? w are they doing? >> doing good. catholic school. [laughter] >> of course. one of theeasons massachusetts does so well with our students is because we have such a strong catholic school system. the catholic school system has a very low commission cost. people of modest means are able to send their kids to catholic school using the very large scholarship program. school choice is a huge source of the success in my state and i have to give credit to them. i agree, by the way. it is amazing to me that there really are not people that somehow think that the conce -- constitution was brilliant. that they know better than the constitution. i think that the decision by the

founders saying that they would specifically limit the power of the federal government, that they would give to the states the right and ability to deal with those things that are closest to the citizens. issues like education, caring for the poor, those will be held at the state a.m. local level where they can have eir views more fully expressed. in massachusetts we have a referendum program. if you do not like something in a state, it can be put on a refereum and we can change it. states of the place for those issues that touch us most directly and i cannot think of anything that touches us as directly as the education of our children. i like what we have in my state. a statewide series of academic curriculum. the kids take a test every year to see what they're doing.

you cannot graduate unless the best the test and i think it is working pretty well. i will tell you one thing, if barack obama wted to impose that on the nation, but would fight that to the nth degree. the federal government does not have the right to take over ste and local governments. it is against the constitution and it is not right for america. so, i am with you. [applause] you know what this is about, by the way. this is about millions and millions of dollars that go into the obama campaign from a national teachers' unions. the bosses of those unions want to get their hands on education at the national level. but they are losing. they're saying that they want to pay for performance. that they want process work

where teachers are removed from the classroom. they want school choice in cyber-learning. they want to take it over at the federal level. i cannot imagine in america where you will have a white house, republican or democrat, or in congress, republican or democrat, laying out what our kids are taught. i will go with what ever state gives us our freedom. thank you. [applause] >> go back to the days when you were running game. if someone said to you that they had programs that stink and they were born to cut them, and we are spending too much money, so i will cut costs, you would probably tell him, sir, come back to me with a detailed plan on all of these issues. this is what i am going to do. you are a great manager.

why can you not treat us the same way? give us a detailed program of what you accomplished as president. >> the best place to find that is my book. where i lay out the challenges that i think we face in the military, globally, the economy, excessive federal spending and how i would change entitlement programs. it is hard to do in a couple of minutes here, but take a look at the book. and i will give you a discount. they are going for less money right now, i think. i spent almost nine months writing it. by the way, by hired a ghost writer, sat down with a ghost writer. he interviewed me and came back and i said that this would never do. i sat down, did the research,

and wrote it myself. you have got me in there. the english might not be so great, but let me tell you about the things that i do. these are the issuethat i think most of us are concerned about. will we have a strong economy that is able to provideor our those of us that are retired, but we want to make sure that we give to our kids and grandkids a nation that is strong and can defend itself. you cannot have a first year military if you have a third tier economy. what do you do to get the economy going? i have seven things. one, we have got to bring corporate employer taxes ballot to those that are competitive around the world [applause] .- around the world [applause]

but in place modern regulations. adjust trade policies. we love trading with other nations, but we want those policies to be good for america, not just the other guys. and we want to be energy independent of the cartels. number five, we abide by the wall. every successful economy abides by the rule lot as opposed to a crony capitalism. when general motors was finally taken bankrupt -- by the way, i propose early on that it needed to gthrough bankruptcy. when it finally was taken bankrupt and wiped out the senior lenders, it was pushed along to give the company to the uaw. it said shock waves through a

system that relies on the rule of law. finally, we need to have great schools. seven, we need a government that does not spend more than it takes in. if you spend more than you take in, people wond if the currency will be worth anything down the road. those are seven things that would do to get the economy going. thumbs-up will be enough. thank you. [applause] >> in 2014 there will be no americans that have to face pre- existing condition costs. what are your thoughts and ideas on upholding this really amazing new chapter in our country? >> my own view is that to repeal obama care, for a couple of reasons --

[applause] my bill in massachusetts was 70 pages and we dealt with at the issue of pre-existing conditions in a fairly comprehensive way. his is 2600 pages. in tho extra pages he does more than pre-existing conditions. he tak over health care. the american people are saying, in every way that they can, no way. i will repeal obama-care on day one of my administration. i will direct the director of health and human services to take obama care away from the 50 states. [applause] that said, there are things that we need to make sure that we do at the federal lel relating to pre-existing conditions. let's say the to develop

diabetes wking at a company for 20 years. and that employer goes out of business. you have to change jobs, moved across the country, whenever. meles new employer does not want to pay the cost of your care. that does not make sense to me. at the federal level i would say that if individuals have been continuously covered for some period of time, they cannot be denied ongoing coverage because they've developed something called a pre-existing condition. little things about insurance, we should be able to buy it across state lines. but the way, employers in small groups should be able to purchase in pools so that we can get the discounts and in groups. one more thing, let's get rid of

the extraordinary cost of our malpractice system that makes health care so much more expensive. i agree with you, it is important for us to make sure that we can stay continuously and shared. [applause] -- and assured -- insured. [applause] >> i question is about the differences between the federal government and the state's. i believe that we should appeal roe vs. wade. if abortion becomes legal in some states, should there be criminal sanctions against a doctor is that still perform abortions? >> has anyone proposed that? i do not think that any political person has talked about boat -- criminal sanctions. the right thing for matters

relating to abortion is similar to other measures, turn it over to the states. i think that this is a decision best handled at the state level. thank you. [applause] you guys, i want to say thank you for being here this morning. ok? yes, hi. let's take you for being here. i have a question about this whole healing thing -- this debt ceiling thing that is going on. if they raise the debt ceiling it is just a welcome mat to spend more money. in the fall sperm head of paying our bills, they are still taking out money. i know that it is still coming into the government. all we have to do is pay our

bills instead of letting out shrimp and other programs that are ridiculous. i am tired of the government raising the debt ceiling on my back. >> a powerful point. [applause] the spending going on in this nation that has not been financed by ourselves makes no sense at all. we do wonderful things in the world. we have a eat humanitarian efforts that are wonderful. but we are borrowing money from the chinese to go help other people. while the chinese not helping other people? why not said to them -- you go out. [laughter] [applause] why are you not helping to fund

those things? rather than loading money to us to get ourselves deeper in debt? it cut its us in jeopardy. it says that the average american household has, if you take the national debt and unfunded liabilities, almost half a million dollars by an obligation. it is unthinkable. by can tell you this. i am pretty confident that we will have a republican house, senate, and white house. because this president has fail. look, he is a white -- a nice guy. well spoken. he could talk a dog off of e meat wagon. [applause] in the beginning it was all about george bush. we are not hearing much about george bush anymore. unemployment went up again

today. you know what? you cannot keep blaming george bush. thiss now his economy. the borrowing and spending, the $1.60 trillion deficit, these numbers are his. it is why he is going to lose. we will have a republican house and senate. it is not that we have all of the answers, but one of our answers is to stop spending everything that you take in. [applause] and i will hold the line so that we do not keep adding depth on to the backs of our kids. sir? you do not have to get out, if you do not want to. let's in just a handicapped old citizen. in an ordinary american who has been self-employed my entire life and i really appreciate what medicare has done for me.

at the same time, it has been pointed out, and i know that it is full of fraud. the simple idea of coming to washington, no longer will the government pay bills to doctors and hospitals without havg received the written approval of the patients. in the one cancer treatment ipad oconomowoc and i am thankful for that, $120,000 for treatment in one hospital. $5,000 by another. something is wrong with the overseeing of the medicare system. with that movement, we need to care about who is paying the taxes. we cannot have it in the manner that is being given. >> a great point.

[applause] oing better? >> i am flying out, thank you. >> a fighter. [applause] you are absolutely right. but the waste in our health-care system is absolutely amazing. one of the challenges is this. 350 million people as a lot of people. think about the differences between new hampshire and montana. mississippi and michigan. lifornia and rhode islan. the difference is not population or health care system, in cannes, it is enormous differences.

putting into place this in single program trying to over see the whole program. the fraud, the abuse, the paper work, the waste is overwhelming. i would like to see patients have the ability to choose the current medicare plan or a plant provided by private providers. t the seniors decide which plan they like. i am not talking about changing anything for anyone who is currently retired, but people in the 20's, 30 +, medicare advantage, you think so? you are an advantage person. this is a program that we have to protect. as you say, medicare and social

security has to be protected. no one wants to cut those programs the way. but we have to bring to those programs but kind of damism and competition and choice that has allowed the rest of the econy to be so vibrant. congratulate you on being wise enough to see the difference between a hospital that charges $100,000 and the one that charges $5,000. if that happened more, we would make other choices in this country. let's i will give you another one in regard to ira's and social security. we should have regulation that permits me as an employee to deposit my money is in the bank of my choice and to withdraw it under the plan of the federal government.

there is souch going on long in the social security account. it is unbelievable at wcoul have a social security system that is going bankrupt. individual accounts like ira. >> i have an idea in that regard. see what you think. i know that the specialty of ira, to put your money in a retirement account, but you are allowed to take it out but you get taxed. my own view ishis. if you make $250,000 per year or less, almost all americans, you should be able to save your money any way that you want to without paying taxes on interest, dividends, or capital gains. [applause] i knothat i am taking longer

than i was supposed to. so i will stop here. but i am confident in our future. restoring the principles that made america great in the first place, we are a part of that. new hampshire has a loud voice. the facthat you are here this morning speaks volumes about the interest of the people in the hampshire in choosing a leader. thank you so much. thank you. [applause] canno [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> thanks for being here.

>> good luck. >> thank you so much. thank you. hi, how are you? >> i just graduated college. you are an inspiration. >> able to find a job or still looking? >> that is what i hear a lot. >> see as a degree in finance. >> good luck. >> hi there. how are you? >> thank you very much. appreciate it. >> smart move. thank you. i appreciate you being here. thanks for being here. registered democrat,

proudam hhave to say i am to support you. >> you're very kind. i appreciate that. i hope we have a good job for you when you come out of school. thank you. >> hastings. >> is that right? miracle on ice. i was trying to have mike aruzioni here. >> my daughter was in human resources. >> that's a good job. congratulations. tell me your name again. good to see you, ralph.

>> i voted for you last time. i hope this time you win. i really do. good luck charm for you, too. >> that's the best. >> nice to see you again. i liked your response on the palin bus tour. keep it positive. >> we need to aim at obama. >> the country is very important to me. >> great to have you here this morning. i appreciate your help. >> are you concerned about the debt ceiling? >> i want to make sure we get spending reductions. >> i was with your four years.

-- ago. >> keep bringing up education, because this is important. they are not covering it. we need to canada to speak out on int. >> u.s. secretary duncan is a some good things at the beginning -- you had a secretary duncan it says some good things at the beginning. >> money is behind all this. where are the liberals who are not happy about corporate influence? bill gates is behind this. he is helping with the national courtroom right now and nobody is speaking out. -- the national curriculum right now and nobody is speaking out. . .

special takeover in education should be just as important. by would use that as an example. i did not realize some of the points that you made. >> naudible] obama [inaudible] abolished. >> thank you. a lot of people are still burning. three years into the four here, this is simply excusable. >> it breaks your heart in this great country to have so many people suffering as they are. is that right?

>> [inaudible] >> thank you. >> [inaudible] lile guy? >> seven months. >> seven months? >> with you the whole way.

line. "washington journal" continues. host: joining us from michigan is the former governor, jennifer granho. she is working on a book, "of governors story -- the fight for jobs and america's -- "a governor's story -- the fight for jobs and america's economic future." thank you for being with us. the state of the u.s. economy is what?

guest: is challenged and has a tremendous opportunity to improve. what the president has done in stabilizing the economy is really important. i bet you'll be hearing a lot more about job creation as a singular focus. host: let's look at the latest unemployment figures. in april, 9%. in may, 9.1%. in michigan,he unemployment rate is in excess of 10%. in detroit, it is over 11%. w'd you dig out of that -- how that hole?it out of that hg ouf guest: we were hit harder than any other state because of our automotive iustry. if you are going to have a healthy economy, it has to be more diverse. our economy has been seven times

more reliant on the auto industry than other states, so we were hit seven times harder. last year, after the intervention to save the of the industry, and because of the things -- the auto industry, and because of the things the government did to encourage clean energy, the unemployment rate dropped six times faster than the number of -- than the national average. it still has a long way to go. we cannot do this overnight, as many who run for office often suggest we can. you cannot. it takes thehoulder to the grindstone for a long time. we were very encouraged that, in february, and there was an about tuition of the state economies for 2010. michigan's -- there was an evaluation of the state economies for 2010. michigan has continued to climb.

you might ask why. what is that happened in michigan or is happening in michigan what -- what is it that happened in michigan or is happening in michigan? with respect to creating a clean energy economy -- i hope we can talk about that -- that has turned the corner and allowed for mr. dihn to stabilize -- for michigan to stabilize. host: many of those manufacturing jobs that were lost came back. when it comes to traditional manufacturing jobs not have given homeowners and others the chance to have a middle-class lifestyle, those jobs appeared to be going away in many parts of the country. guest: you approach your finger on the crux of the problem in

amera, which is that globalization has created opportunities for these multinational companies to get twice the work at half the price. they have located there -- not just their manufacturing, but other secrs. we have seen 2.9 million jobs in america from these multinational corporations and 2.5 million created in other countries. this is a structural change to our nation's economy. this is not a cycle. that is why the response to a caste be different than what it has been in the past. this is true -- theesponse to this is true -- theesponse to wait a jazz -- the response to it has to be different than what it has been in the past. over the past decade, because of the loss of these manufacturing and in thehigan,

upper midwest, we are all seeing this loss of jobs. the question is, what do you do to replace those lost jobs, given that we have a global economy, given that you are going to see this global shift, this large-sucking sound, as was predicted when we got into these free trade agreements. how do you respond? host: some of that has been with electric cars -- a lot of research in dollars being put into the vehicles by general motors, ford, and, to a lesser extent, chrysler. are people buying those cars? is there enough to make people spend $35,000 to $40,000 for these electric vehicles? guest: the question is, what is our nation going to do about our reliance on foreign oil? is it satisfactory that we

continue to import 55% of our oil to countries that may have adverse interests to us? if we can become -- if we want to become free from foreign oil, we have to invest in the technology that gets us there. that is where the electric field has a huge opportunity to lead the world to become independent --dawson wherehe electric vehicle -- that is where the electric vehicle as a huge opportunity to lead the u.s. to become more independent. when the first electric vehicles were tried -- general motors had an early one -- e battery was $35,000, just the batte. prices have come down. the battery last year was about $15,000. there are projections that the battery itself, the electric- vehicle battery, which is different than your lead-acid

battery -- it is lithium-ion. it is much more sophisticated. as technology advances, just as it did with your computer, the cost of the battery will go down. it will reduce in price, wait, increase in efficiency -- weight, increase in efficiency. in a few years, the electric-mea culpa engine will be on par with the combustion engine -- the electric-battery engine will be electric-battery engine will be on par with the combustion engine. the tax credit for encouraging people to buy electric vehicles is very important. general motors has added a whole new shipped to double the amount -- newuction of the voltag shift to double the amount of

production of the volt. it has a small range extender attached to the electric vehicle so that you do not have ranged anxiety and feel like you're going to run out electricity. it is a huge opportunity. these products will knock people's socks off. there has to be held in allow people to purchase it and all the technology reaches -- there have to be help in allowing people to rchase its until the technology reaches the tipping point. host: you can reach us at twitter.com/cspan or our e-mail address, journal@c-span.org. caller: where do young black men go to get these kinds of jobs? i am tired of people calling in

and saying black people don't want to do anything but collect welfare and get food stamps. what are we to do? we're willing and ready to work. can you please answer that question? guest: i can answer it fromhe michigan perspective. obviously, we have a very diverse population. factories had caused the great migration north of the african- american community. the house a lot of our african- american population -- they housed a lot of our african- american population in the upper northwest. we're seeing the level of jobs that require- do not require a college education go away. even in the next generation of manufacturing, they are going to require a sophistication of

college degree or tactical location -- technical application certification. that is why it is so important for us to tell our kids that the next generation of jobs will require some lev of further education. that is why the effort on the part of the obama administration' ask to be to boh people as well as to provide -- we have to be realistic in a global economy about traditional manufacturing about traditional manufacturing jobs. i hope we get the chance to talk about this. the mother of all markets, as one venture-capital list has said, is this clean-energy economy. it creates jobs for all types of people and all levels of skill. if we do not preppies of that, it is a huge missed opportunity

-- do not grab a piece of that bill, that is a huge missed opportunity. one in four jobs will be in ean energy. it will require a level of skill. however, if we do not do something as a nation. if we do not have a national policy to be able to get those clean-energy jobs, we will see them go to china, germany, other places that have national policy. that is why for the nation, for people on both sides of the aisle to realize that policy matters in creating jobs in america. that is the biggest opportunity, i think, no matter what your color. host: following up on the queen- energy vehicles -- clean-energy vehicles -- a twitter comment. guest: here is what we did in michigan, another example of why

policy matters. we learned that a recovery act would provide some interned -- provides an incentive to building the electric-vehicle batteries. we pancaked state incentives on top of the federal recovery act dollars. as a result, we now have, in michigan, since august, 2009, 18 companies that are building the electric vehicle battery or components of it in michigan. those 18 companies are projected to create 63,000 jobs in our state alone. i'm just saying -- policy matters. this gs to the previous caller as well. those are jobs for everybody. we want to make sure we get them in this country. without some kind of policy, we will not. before the recovery act and our state policies, these electric-

vehicle batteries were all being made in asia. because the policy, now 40% of them will be made in the united states, the vast majority of that in michigan. the battery has four parts -- anode, cathode -- etc. the jobs should be american jobs everyone to become energy independent. the opportunity is there. we need to make sure that, as a nationwe are committed to the electric vehicle future. host: the final. "-- define "clean energy." what cegories are included? est: i declined broadly -- i define it broadly.

the president has talked about a clean energy standard. if you have some kind of standard that america sets, that will send a signato the marketplace, to the job providers that america is serious about having a market for their products. last year, bloomberg new energy finance did an evaluation of all of the clean-energy investment by the private sector in the g- 20 countries. since 2004, there has been a 636% -- 630% increase in jobs in this sector. the opportunity is huge and it is only going to get bigger. last year, 2010, guess which country was the no. 1 attraction for clean energy jobs? it was cna. i will answer for you.

it was china, but not because of jobs or wages, but because a policy. the number to the country was germany, which told use that -- the number two country was germany, which tells you that this is centered around policy. china and germany have policy. the u.s. has no national energy policy. i know you have ally smart viewing audience that comes from both sides of the aisle. the pew organization attended to determine whether americans would favor a national energy policy. would you favor a policy that promoted renewal but energy and energy efficiency? 84% of americans believe we should have a national-energy policy. 75% of republicans believe we should have a national gas energy policy that promotes queen--- a national-energy

policy that promotes clean energy and renewable. host: scott, good morning. caller: good morning. miss granholm, i was in battle creek, mich., not too longgo. they have a solar plant that they built with obama's money -- our taxpayer money. they got it totally up and and it's at their -- it sat there you had 800,000 gallons of oil going all throughout the leaking system -- laking system. the chairman chancellor just stated that they are going to be shutting down their nuclear power plants.

we have party had five incidents of nuclear -- we have already had five incidents of nuclear problems in the west. -- in the u.s. i do not get the reasoning behind what you are stating. guest: you do not get the idea of moving to clean energy and renewable is, or you do not believe nuclear should be part of it? of it? caller: they stated that we would have more meltdowns because of the climate we're in. we're going to have big earthquakes. we will have over another foot of water going into the oceans, the equivalent of filling every inch of land on the planet two- feet high with water. we have pblems. we need t go to renewable energy, but when you set down a

plan before it is even open, it does not make sense. no jobs came into that plant. guest: that somebody put that guest: that somebody put that plant up, built under the bush administration, because they anticipated that the united statesould have an energy policy. michigan has a modest, renewable portfolio standard, requiring that we get 10% of our energy standards from renewable sources. patrick opportunities that some of the states have entered into are not going -- the patchwork opportunities that some of the stes have entered into are not going to be enough without a natial policy. they have applied -- they applied to the federal government. they assumed there would be national policy. there was not, so they could not

open the plant. very disappointing. what a they doing? they're moving to canada. why? because canada has a national policy that creates demand for solar products. solar products. withou policy, these jobs are going to leave. that is a prime example of it. if we sit back, like some would have us do, and assume that we do not intervene in the market at all, that we do not create a at all, that we do not create a goal of getting 20% of our energy from renewable sources by the year 2020 or 2025, if we decide we're going to do nothing, you better believe that giant sucking sound is going to continue and these jobs along with others are going to go to other countries. other countries are intervening to create jobs in their orders for their citizens. we have to -- in their borders for their citizens. we have to do the same. we cannot stick to 20th-century

economic century that may have worked when it was not such a global world. we're in a new age. we have got to get in the game. host: your comments on china are getting a lot of attention. on our twitter page -- guest: n necessarily. you are seeing the wages i chinrise. it is not just about wages. it is also abo skil. here is what china is doing. they have not only committed to getting 20% of their energy from renewable sources by the year 2020, but they're making it happen. they are partnering with the private sector to make a case for businesses to locate within their borders. a lot of the advances in the advanced manufacturing have meant that the price, the cost of labor is less of a ftor than the level of skill and ability to get your equipment in the ground. if we decide as a nation that it is important for us to keep these jobs in america, then we have to be public-private

partnerships like some other countries are doing. i am not saying the government run the cotry. -- government run the company. there is an up-front cost where you invest in the technology, in science to be able to get equipment in the ground. that is the most expensive, the biggest barrier. what china has done is created a market for the product and they have made it easier for businesses to locate and partner to make sure they are successful. we have not done either. that is what we need to do as a nation. host: if you are just joining us, our guest is jennifer granholm, the for governor of michigan, joining us from lansing, mich. -- the former governor of michigan, joining us from lansing, michigan. landon, richmond, virginia.

caller: good morning. it is great to talk to you. i am a republican, but i admire you so much. i cannot agree with you on several points -- electric vehicles. 60 miles per hour, 70 miles per hour -- we have not found out what happened in an accident with an electric car. i suspect that those vehicles should be used by groups like the postal service, cities that can buy them. general motors in china is doing great right now. the chinese are buying large vehicles like the buick. vehicles like the buick. the middle class -- this is

awfully true. what happened in your state is pretty bad. i would say that -- the proper thing to do -- there is 1.3 billion people in china. they bought all of the tooling that the -- " can make cars, automobile parts that we buy. equality as much better than it used to be -- and the quality is much better than it used to be. they had to join the rest of the .orld pic then they bought our stuff. the government and the michigan -- the government in michigan -- the politicians in your state, i

do not know whether you had part of it, were responsible for all of that ruling and stuff to leave. those factories are empty now. host: there are a lot of issues on the table. guest: i am not sure what the politicians are responsible for the jobs leaving michigan -- why the politicians are responsible for the jobs leaving michigan and going to china. what he mean by that? paula >> of the were the ones that were in position to an -- caller: they were the ones that were in position to know what to do about this. guest: i think the auto industry would disagree that politicians know how to build cars. in a vehicle, labo is 7% of the cost of the vehicle. everyone assumed that all of these jobs are being moved overseas purely because of labor. it just is not true. the jobs have gone to china and

other developing nations because the markets are delong there. because governments require the investment, the factories to be located there. they're not making cars in china that are being sent over here, but they are making parts. e challenge for us as a nation is to ensure that our trade agreements do not allow the theft of designs, intellectual property, that it does not allow countries with whom we trade to cheat. that is a challenge. it has to be a piece of the economic agenda going forward -- that we're tough and our trading partners, as tough on them as they are on us. let me give you an example. two years ago in south korea, we made vehicles -- they made vehicles and 400,000 of them were sold in the united states. the same yr, our automakers

were only able to sell 4000 cars in south korea. south korea put up a number of tariffs and trade barriers to american vehicles being able to even be imported into south korea. the obama administration has just negotiated a new trade agreement with south korea, which removes that disparity. that is very important. we have to bsure that the trade agreement with dr. not disadvantage the home team, which is america, and when we adopt them, we have to enforce them. we have to make sure the playing field isevel. host: ray from florida. caller: i am waiting for the drill baby drill, palin corwd to -- crowd to raise their heads.

my neighbors are ready to put a drilling rig it in their backyard picnic we will not see -- in their backyard. we will not see the price go down -- most of theil goes to the highest bidder, which are china and india. mobil drilling -- more drilling will not even touched the price of gas. guest: since the obama administration has come into office, the amount of domestic oil production has increased by 11%. you have not seen a corresponding drop in the price 11% because oilt is sold on a global market. because we're not competing for those resources -- we are now competing with developing and trees for those resources -- you will see a 49% increase in

economic growth in developing nations. that will correspond to a similar increase in the energy demands. china is now importing more oil than it is producing. we're competing against china for those resources. for those resources. it goes back to the issue about how can america become independent of foreign well so that we are not ping $4, $5 -- for awhile so that we are not paying $4, $5, and so that we paying $4, $5, and so that we are determining our own energy future. it is not about drilling. people are misinformed if they believe that more drilling off the coast is going to translate automatically into lower prices at the pump. host: that leads to the larger issue and this week from one of our ewers -- tweet from one of our viewers --

there are pragmatic steps we can take, even in this comment. this one does not even cost a dime and would have a huge impact. if we establish our renewable- energy standard in america, it woulhave an enormous impact on jobs. the job providers would say, wow, america is serious. if we say as a nation that we are committed to getting 20% of our energy from renewable sources by 2025, or something like -- the president has p as a clean energy standard getting 80% of our energy from clean energy sources by the year. 35 -- either way, it would send a message that america has created a market. it does not cost a dime. 84% of americans supported. -- support it.

75% of republicans, 63% of tea party yeariers. it should be an easy first step. there are other steps we should do. we should have a goal of having 25% of our vehicles be elected by the year 2020. we should have a commitment -- be electric by the year 2020. we should have a commitment to the number of energy-efficient plants. we should have a commitment to investing in research and development, so that we can be the place where the products are not just thought about but commercialized. all of that needs to happen, but if you want policy that does not cost a dime and that has support on the partf democrats and republicans, let's get a commitment as a nation to our noble or clean energy is right now -- to renewable or clean

energy right now. host: we're talking with jennifer granholm, the senior adviser to the pew charitable trusts. she served two terms as the governor of micgan. sheila from norwalk, conn., welcome to the conversation. go ahead. we will try one more time. caller: please doot c me off. i have a lot to say. what i want to send is i am turned off by all of the political talk sorry in advance. i turn off all of the stations because i do not want to hear that. you get me back and that old, jennifer -- i have been an independent now, tired of what the democrats were not doing, so i switched to independent. what will bring back -- i listen on c-span. i do not know what is wrong with c-span viewers. i am all gung-ho about the

governor of montana. i took notes. just to give you a short run down. he had a budget surplus when times were good because they saved the money. he vetoed 40 bills. he did not cut critical programs, did notaise taxes. he was a rancher before governor. he had a master's degree in soil science. what i especially like is he cut his own salary by $11,000 and for the next two years, did not take a salary. i was so impressed that i said, we need a blue caller person like that in the white house -- blue-collar person like that in the white house. deis kucinich and governor schweitzer -- i do not know if they could steal away, but he is the best thing going. we need bluecollar in the white house. i know that for a fact because

my ex-husband and my son are heavy equipment operators. my father was a glass blower. very smart people. they had street smarts and the new better than a lot of these white caller people -- white- collar people. dennis kucinich was endorsed recently by willie nelson. appreciate her sentiments that we need people with magnetism -- pragmatism. i think brian schweitzer is a big fan of president obama. he is tremendous. there is no doubt. he is a total star. love him dearly. he has been quite an iconoclast and montana -- i montana. he has a tremendous story to tell. i am glad to hear you are supportive of him. i know he is supportive of the current administration. let's make it happen in 2016. host: on twitter, "run,

dennis, run." join the conversation at twitter.com/cspan. politics've been into since 1950. regarding the elevation of the wto during the clinton administration and many of the senators controlling the house and the senate at that time, and that administration, voting for the wto -- that has closed many steel plants. their retirement went out of the door with it. many manufacturers, about 15 to 20 years ago, and to t present day, have also been going under, and they will continue to go under because the fact is that

anytime you have a government or foreign into the gment -- foreign entity government that is going to be just -- might as well say it -- crazy to downplay our economy -- they are sending over more to us than we can ship over to them, even if we wanted to ship more. the wto, who was supposed to be our protector in this fiasco, it is not playing by the fare rules of t doctrine -- fair rules of the doctrine, which is the doctrine of the uruguay agreement. guest: i think that is an important point. the world trade organization, the wto, is supposed to be the referee among disputes in the nation's regarding trade. because of the advent of

technology, we have seen an explosive growth in the globalization of trade, technology, and movement of goods. i know that, perhaps in the 199's -- i am sure this is true any time. somebody votes for something they think will be good for america. there is no doubt that trade has created jobs, but it has also enabled the off-she of jobs at an alarming rate -- off-shoring of jobs at an arming rate. we need to look at whaw're doing as though -- with the world organization and say, we cannot stand by and not file cases against our trading partners. we have to be tough with our trading partners to ensure that it is fair trade and not just unfettered, free trade. if it is unfetted -- if do

not file against some of these countries that are stealing our designs and unfairly competing with us -- if we do not file, then we are not going to get fairness. we have to get fairness. weave to negotiate fair trade, not just an unfettered, free trade. we will lose if it is the latter. host: we have a minute or two left. guest: i believe this can happen. i so strongly believe in it. i know that if it policy in the right place, it will create jobs in america. i appreciate the comment. host: debbie, good morning. you have the last word. caller: thank you so much for taking my call. the you think there should be a policy that supports and compels -- do you think there should be a policy that supports and compels ceo's and others to

implement on the job training programs? guest: this is an important point and i will try to be crisp about it. our labor laws for fine in the 1930's when they were adopted and for much of the last century. they need to be updated in the context of a global economy. windy -- we need to have on the job training, internships, like never before. i would suggest we look to germany, which has a very robust trading pipeline. those young people, high school, college, who get on the job training and are then hired by the companies -- we need to have more flexible labor laws and much more efforts on retraining and training and a pipeline of workers for the technology-based jobs of the future. host: what is a bigger challenge

-- serving as governor of michigan or " writing a book with your husband -- cowriting a book with your husband? guest: that is a great question. my husband and i are very aligned. it has been a great pleasure. serving as governor ichigan was the hugest challenge in my life. it is the toughest economy in the nation. it is not out yet, it will be out in september. it looks at what michigan's experience is as the canary in the coal mine, as one of the laboratories of democracy for the nation. host: former governor jennifer granholm,

>> but are glad to have received the written testimony from all of our witnesses and again, we appreciate everyone's patience

and flexibility as we juggle the schedule. we have the commissioner of the irs douglas ace shulman. we appreciate your work and the work of your department. and you're working with this committee and members and staff as we try to address this very important issue of how better to protect american taxpayers from being defrauded collectively by tax identity theft -- or identity theft that's tax related. and also to protect each and every citizen who's victimized by these criminals when such fraudulent conduct occurs. i'm not going to go through your whole bio in the interest of time. you've been very patient as we juggle the schedules as the other witnesses have been so we'll go right to your testimony. it is the practice of the oversight committee to swear all of our witnesses in so if i could ask to you stand and raise your right hand. do you solemnly swear or affirm the testimony you're about to

give this committee will be the truth, the whole truth and nothing but the truth. so thank you, commissioner. and the record reflect that the witness affirmed that oath. and with that, i'll turn it over to you for your statement. >> chairman platts, thank you for the opportunity to testify before the committee on the important issue of identity theft. before i discuss the efforts the irs has taken to combat identity theft, and to assist its victims, i just want to personally apologize to the taxpayers sitting behind me. i had a chance to talk with them and apologized to them personally. i know that they had a frustrating experience with the irs. as the head of the irs, which serves 140 million individual taxpayers, i always stress to our employees that we need to

walk in each taxpayer'shoes. and while most taxpayers have a smooth seamless experience with the irs, we obviously need to do better with the taxpayers who are here today. on behalf of the agency, i apologize and i've asked my staff to follow up immediately with each one of them to make sure all of their issues have been resolved. let me talk about identity theft for a minute. first i want you to know that we take the identity theft issue around the tax system very seriously. regrettably by the time that we detect and stop a perpetrator from using someone else's personal information, that victim's data has already been compromised outside of the tax filing process. i think it's very important to state for the record that all of the examples here today, the irs

is not the cause of the identity theft. rather, the terry sensitive information was stolen outside of the system and they use that identity to try to get a tax refund. it's a growing problem nationwide identity theft and we've seen a five-fold increase of tax-related issues around identity theft in the last five years. in 2007 because we saw this as an issue we created the office of data -- information protection and data security. let me briefly highlight some of the actions we've taken to try to get ahead of this. first of all, we set up filters and we stopped about a billion dollars since 2008 of potentially fraudulent returns coming in due to identity theft. we've also tried to set up ways to assist victims of identity thefts. we put markers on accounts which puts heightened scrutiny on

those accounts when they came through. the key to those markers is setting up the right filters that block the criminals and don't put too much burden on the victims. while not perfect, we've gotten a lot better. two years ago, 80% of the returns that were tripped by our filters ended up being legitimate taxpayers. this year that's almost reversed. 75% of the tripped returns ended up being the fraudulent taxpayers. so we're going to keep getting better every year. we've also this year launched a very promising program which is we've given 56,000 taxpayers a p.i.n. when they file the return, it will go through, if you have the p.i.n., if a return comes in with that social security number with no p.i.n., it will be blocked. i really think this is the future and i commend my staff for being in front of this and working on it although it didn't help the folks who did not have a p.i.n.

i could go on and on. we do a number of other things. we have criminal investigations. we coordinate with the justice department, the fbi, the federal trade commission and i'm happy to talk about it in questions. before i conclude, let me just turn to the written testimony of the witnesses who experienced unprofessional behavior on the part of some of the sisters that they encountered at the irs. i must tell you in all candor that all of my personal experience and the data that i review on a regular basis suggests that our telephone representatives on a whole are extremely professional and courteous. all of our customer satisfaction measures, those measured both by the irs and by external third parties show that while we run one of the largest phone centers in the world, the irs manages to provide high quality of service with a high degree of accuracy. with that said, i take these

taxpayers at face value that they had a bad experience with the bad irs and i take this very seriously. i believe the conversations we have with victims of identity theft present unique challenges to your assisters. often, it's during the initial conversation with the irs that the taxpayer is told that they've been victimized. as we've heard, these can be very emotional conversations and they're very unlike the majority of calls that we receive on a daily basis with specific questions about your account or the tax law. and so for many of our assisters, especially the ones on our general toll free line, this may be the first time that they've received a call from a victim of identity theft. so based on this testimony and what i've heard, i'm initiating a thorough review of the training provided to all of our phone assisters to ensure that

they have the tools and the sensitivity they need to respond in an appropriate manner to victims of this heinous crime. let me conclude by telling you that i realize that in the process of increasing our efforts to block attempts by identity thieves to exploit the tax system, there have been inconveniences and frustrations created for honest, hard-working american taxpayers. for that, i'm deeply sympathetic. as identity theft continues to grow as a problem for our country, we need to do our part in the tax system to assist innocent victims. we dedicated significant resources over the last few years, streamlining the processes for innocent taxpayers caught up in an identity theft. these efforts are starting to pay off but we're going to need to keep working on it and you've got my commitment that we're going to be focused from this day forward on continuing to improve our operations in this

area. >> i thank the commissioner for your statement. and the commitment you've made as far as going forward. certainly, i'm grateful for your apology for those witnesses here today and all those who have been victimized and perhaps have believed they've not received the level of assistance that they should have received, whether they're here today or around the country. and, you know, i think what you said here as far as going forward, you all captured in your april 6th address at the national press club and it was about continuous improvement. that since you joined the irs in 2008 and in your own words, i've made it one of my top priorities to put the irs on a path of continuance improvement to get better. i believe we should perform the best we can today while embracing change that we can perform better in the future and i think this is what this is about. especially when we look at the numbers in this area where we see identity theft-related tax

issues jumping about 500% in roughly 2.5, 3 years, 50,000 or so that we're aware have to over 250,000 in the most recent year. and i think that goes to your other statement about the training of the staff who are on the 1-800-number that is for most constituents that will be their first point of contact. that the committee made to go back and evaluate and strengthen that training because as we get more and more of these cases, as we're seeing, that's who's going to get that initial call. and as you reference the written statements of the citizen witnesses who will be testifying a little later today, yeah, their description of the treatment they received is pretty outrageous.

and, you know, not putting words in the mouth but quoting them, as we'll hear from lavona thompson. i spoke with the most rude and discourteous person i've ever spoken with in my life. another witness after dealing with an irs agent in person, in a local irs office, and feeling so frustrated and how the engagement occurred, i went out to my car and cried. i was very overwhelmed. this is a case where we have individuals who were victimized and, in essence, feeling victimized the second time and your acknowledgement of that and your commitment to go forward to improve the training of your staff is much appreciated. and i'm one as we talked about before, yes, believe in the ideals of public service and am grateful for the work of all

public servants and that includes all of the personnel at the irs who are out there in the irs and trying to do a good job and the misconduct of certain individuals to paint a bad picture of any and all irs agents personnel. we know that's not the case. so as a committee we certainly will be grateful to be kept in the loop as you move forward with these training changes or upgrades so that we can make sure we are doing better with the assistance provided to the victims of identity theft. a number of issues i would like to address with you -- you mentioned the -- the -- about a billion dollars in savings that you prevented from being fraudulently paid out. and the filler system is now identifying of those that it kicked out, about 75% were

fraudulent and that would have otherwise been paid out but for being caught. do you have a number roughly in, say, the last three years the best estimate of you've identified what was paid out fraudulently and what, if any, of those dollars have been recouped since being identified? >> let me address -- we have the specific identity theft maneuvers that were moving and we have very sophisticated algorithms that block out fraud. we block out 2 million returns every year that never go out. and a bunch of those are probably identity theft 'cause they can be duplicate tins but they haven't gotten an identity theft marker so we don't know what that is. so we don't have a good number as of today how much potentially that went out that we know was identity theft, but, you know, it's something that we're going

to work on going forward. the other thing i just would mention -- there were a bunch of statements in the testimony that assumed just because the innocent taxpayers refund went out and that means the perpetrator's refund went out. that's not the case. there's a bunch of cases where we get a flag on the first one and we're working that and a second one gets a flag because it's a duplicate. and we have someone who has a purse stolen. someone gets their identity. they sell it to 20 people so we could get multiple filings with the same -- it doesn't mean that any of those necessarily go out. a lot of times we're holding them all trying to sort out exactly who's who and who deserves the refund. >> i understand you don't have the exact amount perhaps that's identity-theft related in the recent years, is there a number

that you have at this point of how many returns were filed that are identity-theft related, whether you know -- >> our cumulative number is a little over 400,000 since we started tracking those but those are the ones that we put the marker on. so, for instance, the ones that are coming in this year until the case is resolved, you know, the markers are not on it 'cause sometimes, you know, the most common mistake in tax filing is someone not transcribing their social security number so sometimes it's literally is a number. it's not an identity theft it's called a duped social security filing. but the cumulative number over three years has been 400,000 that we've marked as having some identity-theft related. some there's never been a return but we found through other criminal investigation, a cache of information that has a bunch of social security numbers so we'll mark that. and some, the taxpayer identifies some we find the way most of the people who testified

found out, which is when they filed they realized somebody else had filed. >> i know one of the issues that you kind of touched upon that comes through in the testimony where a fraudulent return was paid out, and then the law-abiding citizen submits and, you know, is told it's going to be four, six months or longer. can you address that -- you know, we have cases that have been brought to our attention where a fraudulent return was paid out within two weeks of an e-file being submitted in, say, january or february, then the law-abiding citizen -- and that was based just on the name and social security number and no supporting documentation done in the e-file. they created an employer id and income but then the law-abiding citizen comes forward with all the documentation, w-2's, you

know, all the proper id to show that they are legitimate taxpayer -- you know, why is it four, six -- or i think in the one witness used, it was about a year and a half till they got their legitimate refund. i know there's a man power issue here but that seems pretty extreme that the victim has to go that long, you know, given how quickly we paid out the fraudulent payment. >> so one thing i just really want to verify because i think there was confusion in both a bunch of the press reports and other things, the first return that came in was received and put into our system. that doesn't mean the refunds were paid out. and so the refunds weren't necessarily paid out in all those but then to address the question of when the real person comes in what would take it so long. one there was a staffing issue

and i told you we more than doubled the staff so that we can get this addressed. frankly, we didn't know there was going to be this explosive growth and we were trying to balance budget cuts and potential government shutdowns and once we found out there was more growth, we threw more resources in this. >> is this just in this current calendar year. >> yes, this current calendar year. we're trying to balance resources as we go. second is, there are cases and one of, i think, the witnesses described a case where the person had, you know -- had their w2, had their employer, had their dependent, all those things -- when you get all of that, identity theft has become a very serious organized crime. and it's one thing -- you get a social security number you file, you probably will trip a filter and get blocked. and if you don't, when the real person comes in, they're obvious but sometimes we write to both people and both people come back

with a driver's license, with a social security number on it. maybe they've gotten a passport. they know the names of all the dependents. they know what the agi last year was. that usually means that there's some sort of work-related crime or someone has gotten into some sort of payroll processing system where they get information, and when that happens, it can take a while to sort through. some of the delay was we had some things sitting on the shelf waiting for people to get to it. we think we've addressed a lot of that by putting more people but sometimes when our analysts get there, they have to start making calls to employers. they have to ask for more information. and again, this can be 30 people all that they're trying to unsort those cases so those will always take really long. >> understandably. >> and i guess the other thing i would say is, you know, i did -- i looked into -- there were a lot of public accounts about people and without getting into any taxpayer, there were lots of public accounts that i saw where someone said someone told me it would take six months but we know for a fact they got their

refund within a couple months and a lot earlier than that. i think it depends on circumstances. with that said, you know, it shouldn't take nine months. it shouldn't take a year and a half. and we should get better at sorting this through. i think the p.i.n. i mentioned is going to be one of the real solutions. everyone testified here want to make sure the p.i.n. here assuming the pilot will go, their refund will fly through. anyone trying to use their social security will just be blocked. much better than the flag and the filter, which is a step in the right direction but the p.i.n. could be the real solution here. >> and i certainly understand where you have a fraudulent claim, where they didn't just get a name and social security but they got access to, you know, all that information. you know, so they're filing correct status, you know, everything is good other than where the money is going. and i understand those are going to take a lot longer. those where it is just a name and social security number and

this kind of comes back to the issue of the training of your staff and how they handle it. that initial saying we're going to do this as quickly as possible, hopefully, it will be, you know, you know, a month or whatever you think is the best case scenario but it could be six months but please know, you know, we're going to be giving you regular updates. and that is part what i would call an internal control on the training side and the follow-through. i really -- when you and i talked yesterday, my wife served on the victims assistance board in why can in her home community a number of years back. and, you know, there's -- when you're dealing with victims of crime, you know, it should be one of our highest priorities in how we handle them because it's not just what they, you know,

lost and here the taxpayer loses the money ultimately collectively, the american taxpayers, but it is a financial impact on the law-abiding citizen who has been victimized and for those who especially are really looking to that refund to pay, you know, whatever pressing bill they have, whatever there may -- maybe it will be a financial impact and there's a mental health aspect to it as well. and i think that's what came through to me, not just again in the witnesses we're going to have here today but the other cases, i think, we have 12 cases that we're currently working in my office. and i haven't talked to my colleagues, mario-diaz in florida and around the country, is that, you know, we really look at those individuals appropriately. that they've been victimized by criminals and so, you know, we really need to prioritize how we held out and one of those

regular contact between your agency and those individuals once they've been identified so they're not sitting out there waiting so to your knowledge but kind of get those regular updates. i'm going to touch on one other area that you just mentioned before i turn to the ranking member, and that is in trying to prevent it, and i appreciate that preventive approach, in fact, in your april 6th statement at the national press club, i appreciated that you're looking at how to be proactive and not just catch them after the fact and do something but to prevent fraud and other misconduct, and i think one of the things you mentioned about trying to have the employer's identification number and that w2 data up front rather than getting it in a sense after the fact and then trying to play catch up. and i realize that's a substantial engagement to pursue and i think maybe it was good

congressman diaz balart being here as an appropriator on the subcommittee that directly overseas irs, you know, as you looking to make those type of improvements that will prevent fraud up front that we engage him in what those financial aspects may be as far as making those improvements. but you mentioned the p.i.n. -- you know, the filler system and putting flags on, and i think at least one of our witnesses in the next panel testified that they were supposed to have been flagged and apparently were not properly flagged so they were a victim of identity theft a second time regarding their refund. whereas, the p.i.n. approach seems like it would more than likely prevent that. where do we stand in that pilot program? and i think it was 50-some thousand individuals in the current year and how quickly do you envision anybody identified as even a possible victim of identity theft being able to get that p.i.n. to try to make certain that only they will be

receiving their refund? >> so we're really -- we've got all the data now. although people still file after april 15th. they just -- they've gotten themselves an extension but we've got most of the data in. we're looking at it and are parsing it. like i said, i think it's very positive. my desire would be to expand it dramatically. and potentially give it to anyone who's been a victim. we for next year we got to balance that against, you know, all of the demands but i think unless we see something we're not expecting to see, by next year, we're going to try to dramatically increase that. >> you know, my hope is that we can move that -- that direction. in fact, you know, not a witness here today but one of the victims that had submitted a written statement, pamela eslee from york and without objection, i'm going to submit her statement for the record and in the name of full disclosure as i shared with you before, it is a

family member -- i'll say my big sister, although she's in the audience. she stands 4'10", maybe that. she's one of these victims. and, you know, because of it being a family member i'm most familiar with how her case played out. and the filter system, you know, is what really worries me. that if we rely on that, while i'm glad it's getting 75% of those that are kicked out are ones you want to catch, is how many we're not catching with the filter system because as in this case where my understanding, you know, it was a different filing status, a different employer, you know, a different address, a different dependents. i mean, there was one -- what i would call that mario referenced earlier, one red flag after honor that i thought that filter system would have caught and kicked it out, hey, something is askew here.

unfortunately, it didn't. and when the written returns were received by irs, about a month after the fraudulent returns, nothing happened for another two months until the taxpayer, miss lee, then contacted irs saying where's my refund? so now it's three months after the fraudulent return was submitted and paid out in january, two months after the irs received paper documentation that, hey, there's something wrong here. yet, even then nothing had been done. and so that's why i do worry about the filter approach versus getting to the p.i.n. and as a way to maybe better protect. and this may be too broad a sentiment or thought. is there -- the possibility of getting beyond just a social security number for each and every taxpayer. you know, what would be the cost

of, you know, the p.i.n. being sent out annually that here's your p.i.n. not just, you know, the half million or so that have been possible identity theft. is that something you're even considering or is that because of the additional cost and, you know, would it be effective or not? >> if you don't mind, if i could just address the two things about that you had mentioned. one is the -- that series of filters you said, why didn't it stop someone? >> yeah, yeah. >> i just learned of the taxpayers and obviously i can't discuss individual taxpayers publicly but there's nothing to say it didn't trip a filter or that that refund didn't get stopped. and so we're going to look into all of these, but i will tell you, like i said, there's 2 million refunds that gets stopped and there's enough indicia there. we change these very year. they're very sophisticated and the crooks keep testing all our

tolerance levels but we're very serious of stopping refund fraud. >> and i don't want to imply otherwise. as i've said to you, i know you want to prevent every fraudulent filing and payment as much as i do. and i know your department across-the-board shares that and that's why the purpose of this hearing is how do we partner here with you to help you do just that? >> on the -- on the p.i.n. -- i mean, it's an interesting idea. we're, as you know, everybody is in very tough fiscal times. my guess it would be very expensive. we're looking first to expand the p.i.n. to make sure it works. second expand it to the group of people most likely to have one of these problems. right now the social security numbers is what's used. i think it's been an overstatement in some of the testimony submitted today that all you need is a name and a social security number and you automatically get that refund. there's a lot of things that go

into looking at that. with that said, you know, i'm very open -- you know, as you quoted from a speech earlier this year, we should always be looking at how we do it better. and it's certainly something as identity fraud grows, we're going to have to figure out how to stay on top of it. >> i do appreciate that it's not necessarily that simple, but i'm looking for -- yeah, i've got too many pieces of paper in preparation for today's hearing. but that is a statement from a conference call with an irs employee stating to committee staff that social security number and name is all you need. you know, the e-file and that it is that simple so that's not just citizens, witnesses making that statement. that is one of your employees saying that to my committee staff. >> well, i'll look into both the employees who are rude to people on the phone and that employee

because there's a lot more that goes into issuing a refund than just a name and social security number. >> yeah. it was -- yeah, you know. we won't identify the individual here -- >> no, i take it at face value that i'm glad to share that information with you. >> but i'm finding my place here. i'm not finding the exact one but we'll get it to you 'cause that seemed to be what was being conveyed to us. a final question there and then i'm going to yield to mr. towns, is there any conversation -- again, we're looking at ways how to prevent this wrongdoing, to stop the criminals, protect the innocent. you know, i know in some of these cases -- and i don't know if it's consistent or something that you've identified as a consistency in the fraudulent claims, they were filed in january electronically, which is

before most americans -- i know i never get a w2, you know, till the end of january -- the last minute from current federal government as my employer or from previous employers. is there any consideration that that is a specific red flag? that anybody who's filing electronically in january that we look at with extra scrutiny because, you know, of -- the propensity, you know, they're trying to beat the law-abiding citizen who hasn't yet got their w2's so they have not yet -- or not yet -- i think, i'm generalizing here and i may be wrong that most americans are not able to file till at least the end of january or the end of february until they get their employer information and then go forward and submit everything, that that would be a specific red flag that anybody filing electronically that earlier, you know, would get extra scrutiny? is that something you would

consider? >> you know, i guess there's two things about that. one is a lot of the people who are -- you know, the common perception is april is when everyone files. the reality is, you know, our peak starts january/february and there's a lot of people who file who are as you discussed earlier, people who are really counting on that money and to go get from their employer because most employers, especially large employers who employ, you know, large chunks of lower income workers can make the w2 available earlier. and so there's a lot of people who file who are some of the neediest taxpayers who really need the money. second of all, as we talked about yesterday, i just want to be -- we have seen no nexus between electronic filing and this identity theft-tax related fraud because you can get your return in just as quickly by sending it overnight mail to us. and the speed issue a lot of times is about, you know, whether you get a check or direct deposit and we have to send something to fms.

so it's again -- everything is on the table and i would certainly look at anything. but usually the time is not the issue because we actually -- the thing that nobody wrote about and, obviously, there wouldn't be a hearing and a lot of interest in it, but we stopped lots of people who -- the legitimate taxpayer filed got their refund and never knew anything had happened and then the crook comes in later and we block those, too. obviously those ones aren't devastating to the victims. so but it certainly is something we look at. what i will tell you is we have technologists, statisticians looking at our screens, refining them year after year, working with our criminal investigators and other people and these -- and i get brief on them all through december to make sure we test them. we test them gets last year's data. we test them throughout the year

and so we're looking at these filters very carefully and we're trying to get as jim white from gao testifies, you know, the key to these things is, stop the bad returns and don't burden the honest taxpayers. >> am i mistaken that if you file a paper return then you do have to have your w2's -- i thought when you file an electronic return you don't send any w2's in, you know, with that because you're dealing electronically but if you file by paper i thought you then had to file your w2's with the return. >> the electronic return usually has -- you can do it electronically next year. we've been working on our e-file. next year we'll be able to actually pdf any attachment to an electronic return. >> but i meant as far as -- that identity theft is paper or electronic, isn't it harder to do it with paper because you have to have those w2's

attached? >> a lot of people get them late. what i can tell you is we look -- we screen with the same material on paper and electronic. >> okay. that's what -- i'm looking for that nexus that you referenced. and i would encourage you and if you see anything with the -- with that 75% of those that you did kick out and were fraudulent, you know, that analysis, you know, was a large percentage of them in january, you know, and what percentage of them was electronic if your staff could follow up with the committee on those two specific issues. that would be great and my ranking member has been very tolerant of me going very long here. i yield to the former chairman of the full committee and the ranking member of the subcommittee, the gentleman from new york, mr. towns. >> thank you very much. no, i think, you know, your questioning, you know, i think is just so important to try to get to the bottom of it. and not get involved in terms of

a blame game because we're all in this together. i think so your questions i thought were really right on point. and to the point. you know, because i'm always concerned about if people do things and get away with it, you know, then they will almost encourage them to do it again because if nothing really happens -- and then, of course, others hear that they did it and nothing really happened so i guess the point i want to ask you -- since 2008, how many prosecutions have there been? >> so i actually don't have -- i don't have the cumulative number, but i nut my testimony and mentioned earlier, >> can we keep the record open so that we can receive that? >> just last year, we took to

full investigation and recommended to prosecution and we don't do that unless we've coordinated with the justice department prosecutions of people who had stolen 50,000 identities that had been used in tax crimes. so when we prosecute we obviously like any other agency, you know, we've got a very small part of our operation that has a criminal investigation division. we have to spread it across terrorist, financing, offshore tax evasion, any number of things. as this problem has grown, we put more resources and plan to continue to put more resources into it and we try to find prosecutions, a, where we can get the proof. but importantly, that the ones that impact large numbers of taxpayers is, frankly, the ones that u.s. attorneys will take and work with us on, et cetera. and so if you look at 50,000, i think the number was actually 56,000 taxpayers who are affected with the prosecutions

that we took all the way through our criminal investigation chain, that represented, you know, more than a quarter of all the identity thefts that was identified, which is a pretty high number for any federal or frankly state or local investigator to be able to follow up on that percent. >> would you know the rate of conviction. >> what's that? >> would you know the rate of conviction? >> a very high rate of conviction. i believe it's 95% but let me get back for sure on the record. >> right. how much of the fraudulent paid money has been recovered from thieves? >> so every year we block billions of dollars of fraudulent refunds. we blocked about a billion over three years with identity theft. i mentioned to the chairman, we haven't tracked specifically identity theft numbers related that has gone out and what we've gotten back. we haven't started tracking that. we plan to as this problem grows so i don't have a number for you, mr. towns.

>> you know, my concern is that, you know, sometimes when we don't have the resources, you know, we know there are things that should be done, you know, but we don't do them because we don't have the resources to do it and, of course, sometimes in that process, you know, the wrong kind of message gets out. i know that, you know, as the commissioner that you just can't come up here and bang, bang, bang saying you want money, money, money. but the point is i think that when you see a problem that, i think, that it becomes our responsibility here to give you additional resources to be able to go out there and fix the problem because if a person is expecting his or her return and then they don't get it, and then all of a sudden they can't get an answer because really somebody else has gotten it and the frustration around that and the problem, you know, to me is something that we need to really

take very seriously, i'm talking about members of the congress as well, and i agree with the chairman. i was so happy that we had one of the appropriators here today because, you know -- and i think if you feel that you need additional resources, you know, don't hesitate to make that case because i think at the end, we're going to save money by you doing that at the end of the day. based on what i'm hearing and what has been said here. that if we spend it to fix it, then in the long run, we'll be much better off. and i know how difficult it is to make the case for resources especially in this atmosphere and climate. but sometimes we have to do that in order to be able to correct the situation that we now find ourselves in and to make certain that people have the confidence and not to be worried about

whether, you know, somebody is going to get my return because of my identity. let me ask you, what department really covers this in your shop? what department -- the name of the department that handles this? >> handles, i'm sorry? >> that handles the claims in terms of the identity -- you must have a department that handles that and looks at identity theft. what's that called? >> we have the centralized office of information protection, privacy and security that sets all policies and cordinates. the fraudulent -- most of it is in our wage and investment division that deals with individual taxpayers. that's where all the service officers are, where we talk with the victims' testimony and our criminal investigation is the arm, obviously, that follows up on fraudulent schemes that we see. >> right. now, was that the department -- i know there's some cutbacks, was that department had some cut

back. >> we had some cutbacks in every department of the irs this year. >> because i'm really concerned about making certain that you have the resources that do the job that needs to be done. and that's really -- i think sometimes, you know, we are involved in situation where is we have a problem and we know that resources are actually needed to correct the problem, but we do not deal with it. and we're guilty of that here in the congress. so i want to let you know that i stand ready to push to be able to assist you to get what you need to be able to correct the situation because, you know, it's going to grow if you don't. and that's the problem. you see, when people do something they get away with it, they tell others. and then it gets bigger and it gets bigger and bigger. and then the problem, you know, becomes one that becomes a lot more costly to be able to

handle. so i think that if we can move forward now and correct some of the things that are going, and send a message forward that this is not something that you do. you know, if you do this, you're going to spend time in jail because -- and i think that point has to be made because if people do it and they get away with it, they're being encouraged. >> yeah, i couldn't agree with you more. what i'll say and i'm biased because i'm the commissioner of the internal revenue service and responsible for this agency, but this problem is a good illustration of why, you know, i advocate for the right resources for the irs because on one side we need to have the service resources to quickly process the returns and the refunds for the victims and on the other side, we need to get the enforcement resources to pursue this kind of crime. the service resources i think are fundamental because every

american is expected to pay taxes so this isn't a choice. this isn't an optional department and we owe it to the american citizen to see treat them right. the enforcement resources are just obvious from an economic standpoint where there's a huge return on investment. you know, we return for our enforcement from 8 to 1 to 23 to 1. $23 for every dollar we spend and that doesn't count -- that's conservative accounting that omb and pbo has come up with. that doesn't count the deterrent effect of people seeing it and never doing it to begin with. this is a kind of microcosm of why, you know, we always argue this agency is a little different, collecting the money for the government because it has a huge return on investment and a real obligation to serve every taxpayer in a way that's dignified and respects their own individual situation. >> but the problem, mr. shulman, is that people compare you with

other agencies in terms of american express -- and they say well, this person went to purchase something with his american express card and they called me, you know. but the point is that they can do that because they have the staff, and they have the system in place that they pay for to be able to raise these kind of flags so that's the point i want to make and, you know, because you're going to be compared with them, you know, and, in fact, some of our colleagues have already done that today. and i was on the nor of the house and a guy came over to me and says he doesn't understand the problem because of the fact that he won't talk about in terms of how the credit card -- that company woke him up. he was asleep at 2:00 in the morning and they called him and said, are you making this purchase, you know? but the point is that in order to do that you have to have staff. you have to have resources.

and that's the difference. and i told him there's a big interest on that card, there's a big interest on it so, therefore, they can hire staff and do things and say things and we just want you to know that we sit here -- we're not just going to blame, but we want to work with you and we think together that we can do better. that's what i'm saying. and i know that in order to do that, we will have to do some things on this side of the aisle. and other than just saying you got to stop it. you know, we have to help you stop it. and i'm prepared to do that. >> i appreciate it. >> on that note i yield back. >> i thank the gentleman. and i'll wrap up quick for you, just a couple of quick follow-ups. one is on the issue that the ranking member raised on the prosecutions. there was a press story in the "sun sentinel" in florida, end

of april, that identified -- and i'll read it verbatim, prosecutions for identity theft-related tax fraud are rare, agents for the internal revenue service who are responsible for criminal investigations have pursued just 412 such cases nationwide since 2007. now, there's specifically referencing identity theft-related tax fraud. i take it that you believe that's an inaccurate number? >> as i told mr. towns, i don't have the cumulative number with me but i'll get back for the record. >> if you could. >> but i think the important thing is a lot of these people are committing -- there's one criminal with thousands of taxpayers. that could represent a lot. thathat's not one victim that could be 100 victims. >> but that very well may be the number but what i'm telling you as this problem grows, we're going to devote more resources and, you know, our prosecutions will -- or our investigations will continue to grow and our recommendations to justice for

prosecutions will continue to grow. >> and that kind of follows up with what ed just said. we're an authorizing committee, we're not an appropriation but we're glad to work with our friends on appropriations in kind of two areas that i think you're looking at doing. one is your manpower commitment to the victims so that after being victimized by the criminal, that the government does right by him so it's not six months or nine months till they get their legitimate -- that's a man power issue but also a man power issue of going after the criminals and -- 'cause if that number is accurate 412 cases going from 50,000 to 250,000 obviously that's a very small percentage of prosecutions if we're accurate in those numbers. that question on these prosecutions, i know, excuse me, on statute -- the irs -- you're

understandably restricted pretty significantly in what information you can share with anybody because you're protecting very personal data. and are there statutory restrictions on you that in some way are preventing your criminal investigation division in working not just with justice but with local law enforcement because i understand that as with some of the cases, you know -- i've heard about or we're going to hear about today where it's a 3,000 or 4,000 and it's not multiple but one person defrauding using one, you know, name and social security and information, when that goes into the department of justice and they prioritize all these criminals are going after, that's probably going to go pretty well in that totem pole because of that amount. because for local law enforcement they prosecute shoplifters who maybe stole $100 worth of goods. it's something they know how to do. is there anything that prohibits the agency from working with

local law enforcement so that we can -- we know who the person is, they don't get the message as mr. towns mentioned, as long as i don't ask too much each i can prospect 3 or $4,000 because they're never going to come after me and we're sending that message, hey, you know, i'm good to go. and just don't get too greedy, as long as you don't get too greedy you're safe, i think to combat that we've got to engage, i would contend, local law enforcement. i don't know if here today, you know, if there's anything that prohibits or restricts it or hinders it? >> what i will say is i think some of the articles might have overstated the restrictions but there are some restrictions around specific information. we need to give information that's pertinent to the investigation to know where the investigation is going, et cetera. you know, i always people i got sworn in as irs commissioner when i came back to the office the people who talk about the laws around taxpayer privacy were in my office. just as an example of how

seriously this agency takes data protection. and there are very restrictive laws because we're holding very sensitive information about taxpayers. we can, though, do coordination with other law enforcement agencies. it's not always just, you know, look at our databases and we'll share everything that comes in but there's specific things we could do. i'll be happy to have further conversations about exactly -- where there could be some restrictions. if you don't mind, i also just want to be clear because i've not been clear earlier, when you said 250 cases of identity theft with only 400 prosecutions. >> 250,000 -- >> and those numbers seem skewed, one, is 250,000 was the flag that were put on. we put some of those on because we happened to find, you know, a database. or someone called and said, my

wallet was stolen and so those aren't necessarily anything. there hasn't been a crime committed. it's just a flag so that we can put it through more screening. >> okay. >> and second of all, you know, even though last year it was 116 investigations, 41 of them ended with recommendations for prosecutions, that was still 50,000 taxpayers. so the number was more like 50,000 for 200,000, just -- and i don't know that i was clear earlier. >> right. >> 'cause again because of the likely prosecutions at this point are those more large schemes involving laudable or significant number of taxpayer id's being taken so the number of cases might be small that you're prosecuting but the impact is that 50,000 number >> yes, i want to be clear in my explanation number earlier. >> one other item if you could follow up on the record, my earlier questions of those identified in, you know, and kicked out as being fraudulent,

you know, that -- how many were e-filed, how many were in january and the issue of how many were asked to be refunded in the form of a debit card versus a check or a direct deposit, again, i'm looking -- trying to help personally so i can, you know, better work with you and your agency, you know, what is a common issue that comes to the broad issue of internal controls and how do we ratchet up our controls to address whatever is most common. and knowing as you well stated that the criminals are always going to try to stay -- whatever we do they'll try to get a step ahead of whatever we did. if we could have that information about the debit card refunds that are identified, that they were asking for refunds and you caught them. but they were looking to get it on a debit card. and again, the belief that that maybe is easier to get away with

it versus if they know they got to go to a bank and have some kind of contact with a bank to get that fraudulent refund from that bank. with that, mr. towns, do you have any other questions? i'm going to thank you for your testimony. conclude by saying, you know, while i think as you've referenced and in a written testimony and we're about to hear from our other witnesses, we do have a lot of progress to make, work to do. i also want to recognize the progress you have made and the commitment that you -- your understanding of this is a growing problem isn't because we asked for this hearing. it's because you're seeing the data as we're looking at it and are out there, you know, trying to lead the effort forward in a positive way. and for those hard-working employees, we're grateful for

them and hopefully those who haven't provided that level of service you clearly want to be provided that, you know, they'll learn from their mistakes and do a lot better in the future with the american public that they interact with. so i thank you again for your testimony. i look forward to continuing to working with you and your staff and our thanks for being flexible here today with the schedule. >> thank you. and if you wouldn't mind, since i was up here at 12:00, and i hoped to be here when the other witnesses spoke, i'm going to have to step out but my team is going to stay to follow out. >> and we shared -- >> you do all have my apologies again with having a frustrating experience with the irs. >> and, you know, we appreciate your understanding of their testimony from the written and as we discussed yesterday, you know, at pretty good detail the subject -- the message of their testimony and your staff's willingness to stay with us is also appreciated. thank you, commissioner. and a 2-minute recess while we get the next

panel situated. and then begin. [inaudible conversations]

this year i learned i, i reject i had fallen into the crime can. the storm state to refund -- stole my state refund. i realize the irs has been dealing with this crime sent the start of the millennium. done to't anything been combat it? there has been an increase in efile.eft as a result of defil

direct deposit only requires a banking routing number. no further identity information is required. than $1,000e in the amount i was due. and i received a notice from the irs saying that i had -- that i owed them money. cases jumped from 2004 to 2007 and an additional 300% from last year. this is a broken system.

it is assert that the government pays out twice on a single stolen a refund multiplied by thousands of stolen refunds each year. this appalling travesty need attention -- needs attention. as an upstanding citizen of this country, i demand change. i ask that legislation be put in place to prevent this from happening. law-enforcement agencies should find these criminals so that we can rest easy knowing that they are serving time for their

crime. and corporation tax offices need to safeguard their operations. thanks for your time and effort for making these critical changes. >> thanks. >> my story begins in march 15, 2011. i received an envelope from the irs. there was a change of address forms and a notice for tax year 2010.

my social security number, and other information for all accurate. it had me listed however at a different address that i had never lived at. it gave me a new refund amount. i read the formed several times in disbelief. i knew my joint tax return was prepared by my accountant. we had just mailed our return within the last two weeks. of wanted to believe in error was made to explain this. i was on hold for 20 minutes when i called the irs hotline

number. i give up. i arrived at our local irs office early on march 16. the counter is not private. everyone that was sitting in the tiers behind me could hear our conversation. when i told her this was not my return, she said your identity has been stolen. the entire waiting room heard this. she asked me to recite muscle security number. number. she wanted me to recite the

sensitive information that had been stolen. i told her no. she wanted to see the card, but i do not carry it with me because i do not want it stolen. she told may that this person filed a return as a single person and a cut over $4,000. my legitimate return would be held up until october or november. i asked her how can a person file a return without validation or proof of anything and receive a refund. she said, do you know how many people file electronically?

she said to not forget to file a report to the social security administration. she was courteous and said this happens all the time. i went to the car and cried. i was overwhelmed. i wondered how far the thief would go. i printed my credit report and reported identity theft. i was late for work to protect all that i had worked hard for. i told my supervisor and chief as i worked in law enforcement.

i filed a report with the ftc and a police report with one local municipality. this is a cyber crime. i explained what had happened with the police director. he gave me an incident report number. he said he had no jurisdiction to investigate. i had to leave work early to go to the social security office to inform them of identity theft. they did not have much 2010 earnings to verify accuracy.

i would have to be vigilant with the credit bureaus for the rest of my life. of was not the only government employee in your county affected by identity theft. one suggested that a local congressman's office could help. i told my story to two special agents at the department of treasury. i am here today to tell you that i am a victim of identity theft. i am forever changed. i will be vigilant in what information is shared with others. the irs is holding up my refund

because they do not have checks and balances in place to prevent crimes like this from happening. data not timely help people like me -- they do not timely help people like me who have been victimized by identity theft. i have lived at the same location for the last 12 years and never filed a change of address with any government agency. we always a file by mail and not using the internet. thanks for the opportunity to tell my story and i hope the changes will occur in the irs to prevent this from happening to others.

thanks. my accountant said that he cannot file my return. >> he said a return had been filed in my late -- name. he told me to call the irs to find out what the other person did to file their return. they cannot tell me that information.

i called again, and they told me to file an identity theft of vacation. -- application. and then i called the ftc and spoke to mark who gave me a confirmation number after taking my complaint. i informed the representative that i had spoken to someone. she said i was the sixth person she had spoken with that today who had their identity stolen. i filed an incident report with the d.a.'s office in york county, pennsylvania. , filed a police report with the police department.

the detectives found out who did its, but could not charge the person, because they were living in a new jersey. i forded a letter to the irs with the following documents. an incident investigation information. a copy of muscle security card. bonn -- social security card. they would not release information on my case to the detectives. i had to call to get it. i spoke to a rude and discourteous person.

she yelled and screamed at me. she hung up on me. i tried to call back. i cannot stop crying and told this person what happens in may. she kept of -- what happened to me. she told me a person used my security number, first and last name to file the return. when the irs got my return, they considered it to be a duplicate.

there was a un helpful attitude toward the public. on march 30, 2011, i called to get an update. and was told it would take up to six months to receive my return because of the identity theft. i had to close my checking and savings account and get a new one and order new checks because of this. it was an added expense that i did not need. so far, there has not been any activity on my credit reports. i had to put a 90 day alert on my social security number.

i did that at all of the credit reports. this has been stressful. i wonder what the person will do next. i cannot sleep. i am told the irs will monitor my number for the next three years. when i file my return, it'll be a longer process because of this. what is the irs doing to rectify that this does not happen again to me or another person? i have seen the effects of this.

the system and worked with makes every effort to avoid this from happening a second time. i have been made a victim a second time. i wonder how many people have had the same unpleasant experience. i received correspondence from the ira's regarding another individual filing a tax return using my so-so security number. why would it take three months for me to receive this information? thanks for your attention. >> thanks.

i want to add my words of apology to you. a want to discuss how each of you are treated. you have been victims of criminal conduct and poor service from the federal government. we want to do better on your behalf.

i apologize. in the commissioner in written testimony, talk about the screening process. i am not sure if any detail, how you use that and if you can make any assessment where we have these three witnesses where it

has work and others slipped through that have turned up red flags? i am not sure if you can give an opinion on how to assess the process. >> we have not assessed it ourselves. it does stop some fraudulent returns and refunds from going out of the door but there are false positives and false negatives. some got stopped by filters by mistake. on the other side, there are false negatives where some slipped through the filters,

perhaps the thieves stole so much of the honest taxpayers identity. so we have problems on both ends with the filters. we have recommended and the iris has agreed with our recommendation is they need to do the assessment of the actions they take every year. they are taking a number of new steps this year. there needs to be feedback where they learn from what they have done and correct and adjust properly. it needs to be >> they should annually audit their system >> yes, to learn what is working in what is not working.

it is something to think about as far as expanding. >> are you engaged with the irs to assess the pilot? no, we are not -- >> no, we are not. it should be in addition to the filter system that would make it work more effectively. if many identities are stolen, they can make up a return that looks realistic. they can get through the filters.

there is no perfect solution, but having a certain penn number seems to be somewhat effective. >> that may be one way to crack down and prevent this problem from occurring. >> there are some long-term solutions. the irs does not match tax returns to the wage statements that employers file until months after the filing season ends. the first match is done in june. employers do not have to send it to the end of february or march. refunds go out of the door first

and matching is done later. they could go out and catch more refund fraud >> that is part of my conversation, referencing that in looking ahead. i did not get a chance to ask my question.

they could move it up, the earlier the better. >> we are looking at this trying to see if there are options to move that up. >> let me say to the witnesses that i apologize and regret that has happened. thanks for taking the time to come in and share with us. we appreciate that. you realize your identity was compromised after receiving an adjust -- address change request. was the thief attempting to change your pennsylvania

addressed to a younkers address? >> the irs and wrote my name and address -- handled by name and address from their files. when i saw it from this younkers address, i knew something was wrong. >> have there been any other attempts to use1 reformation2? >> and no. >> your identification was used

for tax fraud. do you know anything about the status of the investigation being conducted by the department? >> i have heard nothing except through the office of mr. platt. >> have they used in anything else besides tax fraud? >> not to my knowledge. >> how long did it take for you to talk to an agent while you're waiting? >> the first year i was dealing with various agents for about 12 months with the irs.

then they assigned me to a national tax payer advocate agent who continued the quest to get my refund. >> have you received it? >> it took 14 months from 2008. this year i did not get a funding agent at all. >> do you have any indication that action is taken by the irs to find and prosecute to the person that used your identity? >> it is very difficult to get information about fraudulent claims and how much the refund was 4, when it was issued. that is not something that they freely share. they have to identify that you are a legitimate taxpayer.

i have no idea what the status is like on the criminal investigation. >> any idea as to where your identity was stolen and how they were able to ascertain it? >> it started when i went to a local tax preparation office. i have been going there for five years. 20 additional offices -- people who went to the office said the same thing happened to them. >> i have no idea. >> i have no idea. >> you talked about the appropriate procedures being put in place. you talk about modernizing the system. that costs money does it not?

>> the irs has spent a lot of money modernizing their system to date. after congress passed the restructuring act, there are better at monitoring system registration. >> i am concerned about this money. sometimes we react to things when not do certain things and it costs us more. i am concerned about that.

this is very serious. if a person is waiting for his or her money, it is stolen, that is very frustrating. the >> i agree. there is a separate appropriations account under the irs. they look at that account before they can spend money out of it. the balancing act has been to make sure the irs has controls in place to spend that money smartly so they do not get more money than they can spend. , not so that they can continue to make progress modernizing. i am thinking in reference to credit scores, employment, other

things, bad things that can happen that you could be impacted by this happening. have you dealt with this, such as the credit score? >> i am cautious to begin with. even prior to this happening, i kept up on my credit reporting agencies. this exacerbated by need to continue the freeze is on my account in the be on top of them. this will be a lifelong issue to deal with. i will always be concerned that my identity is compromised. i will have to be worried about account being open in my name. it is not a onetime thing to deal with. it is a lifetime issue.

>> i do not see it ending for me any time soon. i will be filled -- vigilant about this and the credit scores. i worked in law enforcement. the bigger impact for me is the fact that i am a law-abiding citizen and i am supposed to be protecting others in my role. i do not know which way this person is going to use my identity. my name is unique. that limits the amount of people that have that name out of their. >> it has been about three months before he discovered that

your identity was used to commit tax fraud. he reported the problem to the irs and the ftc. have you received any written communications from either of those agencies collects the federal trade commission wrote me a letter. i never got anything from the irs except what i got the other day. it said that an individual used muscle security #to file a return. it was telling me what to do as far as the affidavit and contacting the ftc, but i already did that. it is three months late. and the police report has -- a police report has been filed along with the d a.

the city police department found an address and a name in new jersey, but the irs said he cannot arrest her. he cannot touch her. >> you mean? >> the irs. >> have you received a written or verbal communication from the irs to give you an update on tax fraud? >> nothing. >> that is a real issue in terms of the amount that is involved. if they discovered $5,000 has been stolen and nothing is going to happen, the irs is not going to pursue it, that maybe the way

you make your living from this point on until something is done about it. we need to look at the possible legislation to encourage local law enforcement to get involved in terms of even if it is $1,000 or 500. until we come up with something of that nature, i think this will continue. we need to do everything we can to make sure it does not continue. >> thanks. i share the interest in pursuing this further, especially from the prosecution stand. -- stan point -- stand.

atandpoiont. >> the justice has local -- limited resources as well we will continue to work with the committee and irs officials to see how we can strengthen this. if we do not start sending a message that, whether it is 1000 or $100, we are coming after you if you steal money from tax payers and you victimize law- abiding citizens, we are not

going to ignore that. we go week -- we will go after it and hold you accountable. to our three victims here, sincere thanks for being willing to tell your story. you have raised public awareness of this issue. you personalize and humanize it. this is one piece of a huge issue of $25 billion a year of payment being made. millions of dollars going out in a fraudulent tax dollars. you telling your story is very

important. you captured in different ways, the need to work with the staff in training are as agent and how we assist victims of crime, which is what each of you are. he stated it in different ways, but very well. i am a victim of identity theft. i am forever changed. and the way you have been treated by the iris system has major victim second time. >> -- he said that they said you were the one to blame adding more stress to the situation. that is unacceptable. thank you for sharing your stories.

we understand the importance of doing right by you. you all dealt with iris agents, who were not living up to the standard of assistance as you well reflected in your statements and testimony. we appreciate the ira's representative that is here who has spent years to do right by you. on how the interactions with with the irs, i want to make

sure i understand one part of your written testimony that you shared today. let me find my spot again. you were contacted in october 2009 in writing the duke vote and amounts over $1,000 back to the irs, it was the difference between what you were lawfully supposed to get and what the criminal had gotten fraudulently. >> that is correct. by this time, you were dealing with representatives of the irs. >> yes. i spoke with the identity protection specialist unit. every time i called, there was a

different agent. >> that captures what we were talking about from the training aspect. there is a breakdown in the training system, not just in training but the internal tracking system. you are working on identity theft in the system, and the system said that they overpaid you. but they did not overpay you, they paid the other person the full amount. when you were dealing with those in the identity theft the

permit, they were not aware of a specific unit to deal with victims of a dead heat deaths? >> i called the general 800 number -- victims of identity theft? >> i called the general 800 number and they were giving me different instructions on how to file my paper return. >> not understanding the scope of the issue you were trying to deal with. you knew what was going on and were trying to get to the bottom of it. those agents that do not typically deal with that, that is part of their review and the

training they get. one other specific question is, the after 2009, and you were supposed to be flat, were you given a pin number? >> i requested one. a gentleman had this happen to him earlier in 2000. he wanted some sort of a verification said it would not happen again. i requested it and they said they would look into it, but i never received it. this year when i found out it happened to me all over again, the irs did not know why.

they did not have an explanation. >> you were told to be flagged in 2009 and asked for the number, it did not happen. you thought you were still fly, but then it did not work in 2011. that goes to our discussions that hopefully, we are able to expand that pin #process so that it will be more exact. only you can file with that number. it depends on how you receive that, whether it is electronically or through the mail.

but you want to make sure that that penn number is not stolen. -- pin number is not stolen. i appreciate everyone's patience. i think i covered this, when you were dealing with the new york city detective, understanding that the criminal was in new jersey were you told over the phone they were pursuing it or told by the detective debts -- a

>> when the agents spoke to was, they told the detectives that they cannot arrest her, the ira's would. >> they came out, but you have not received any feedback since then. >> nothing at all. >> a final question in the new york office and rattled when you were trying to figure out what was going on, and being concerned being a victim of identity that is occurring in a public setting, did the agents

understand why you did not want to say the information publicly since other people were sitting there listening? did they not realize what they were doing? >> my tone of voice i think may have let her know. i do not think she really thought about what she was saying or put it all together. i ask that in the issue of training and sensitivity of this information.

anything that has identifying information goes into the shredder. i tried to be very protective because of this. it sounds like each of you have tried to do this. unfortunately, it was not enough. it was not due to lack of effort on your part. >> as i indicated, a lot of things have a fall through the crack and the nod dealt with. you can very easily almost ignored this. why would you spend $15,000 to collect $750?

he sort of pass it along. that is my concern. we need to look at that. if they are saying that a person in new york cannot make the arrest -- i am not sure an arrest will be made. there being no communication is very troubling to me. the victim should be informed as to what is really going on. that is something we really need to look at. how much do you want to spend to collect 500 -- $500? we have a role to play here. it is not just the blame game.

we need to make it possible that they should be charged if they take someone else's money. >> i agree completely with the point. the solution is to take the profit out of the crime. if pin numbers can be introduced and work, it could reduce the profits from the crook. more refund check king takes the profit out of the crime. -- checking takes the profit out of the crime. it must be prevented up front.

that is what this is such an insidious crime. for the victim, it is a big deal. >> if we do better upfront on internal controls, the more flags that go off, you mentioned all the things that have not changed in 28 years. if it is a jan. return asking for a debit card without substantiating documents, it should be a big red flag. the more we to up front, against

the number of fraud cases, there are fewer to pursue $3,000 or not, we are coming after you otherwise someone knows they can get extra money each year. if we reduce the number, there are fewer to go after. in doing that, we do better with assistance where there is criminal conduct in the victims of crime, an important part of the healing process is the victim being kept fully informed through the process of pursuing the criminal, the wrongdoing, to know that they

will get their refund and justice was served. no matter what the dollar amount, if we are not pursuing them, justice is not served. prevention, prosecution -- i think the commissioner understand that. we need to partner with them and the committee and the appropriations to make sure that we are devoting the top resources to this issue. i thank the witnesses on this panel and to the irs officials. you have helped raise great awareness of this issue. the committee is more effective going forward to make sure you

are never victimized in this way as well as other americans. the taxpayers should be better protected. we will keep the hearing open for two weeks for any additional information you requested that you may want to submit to the committee. with that, the hearings stands adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] -- 2011]

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>> next, "q&a" with james grant, author of house speaker thomas reidful then live at 7:00 a.m., your calls and comments on "washington journal." >> lieutenant general william caldwell, commander of the nato training mission in