[Senate Hearing 115-178]
[From the U.S. Government Publishing Office]
S. Hrg. 115-178
DUPLICATION, WASTE, AND FRAUD IN FEDERAL PROGRAMS
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HEARING
BEFORE THE
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
APRIL 26, 2017
__________
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Michael J. Lueptow, Investigative Counsel
Margaret E. Daum, Minority Staff Director
Sarah R. Garcia, Minority Senior Counsel
Donald K. Sherman, Minority Senior Counsel
Claudine J. Brenner, Minority Counsel
Laura W. Kilbride, Chief Clerk
Bonni E. Dinerstein, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 1
Senator McCaskill............................................ 3
Senator Lankford............................................. 17
Senator Peters............................................... 20
Senator Heitkamp............................................. 24
Senator Carper............................................... 26
Prepared statements:
Senator Johnson.............................................. 33
WITNESSES
Wednesday, April 26, 2017
Hon. Eugene L. Dodaro, Comptroller General of the United States,
U.S. Government Accountability Office.......................... 4
Hon. J. Russell George, Inspector General for Tax Administration,
U.S. Department of the Treasury................................ 6
Hon. Rebecca M. Blank, Ph.D., Chancellor, University of
Wisconsin-Madison.............................................. 8
Keith D. Repko, Medical Center Director, VA St. Louis Health Care
System, Veterans Health Administration, U.S. Department of
Veterans Affairs............................................... 10
Alphabetical List of Witnesses
Blank, Hon. Rebecca M.:
Testimony.................................................... 8
Prepared statement........................................... 86
Dodaro, Hon. Eugene L.:
Testimony.................................................... 4
Prepared statement........................................... 34
George, Hon. J. Russell:
Testimony.................................................... 6
Prepared statement........................................... 72
Repko, Keith D.:
Testimony.................................................... 10
Prepared statement........................................... 98
APPENDIX
Chart referenced by Senator Johnson.............................. 103
Chart referenced by Senator Johnson.............................. 104
Chart referenced by Senator Johnson.............................. 105
Chart referenced by Senator Johnson.............................. 106
Responses to post-hearing questions for the Record
Mr. Dodaro................................................... 108
Mr. George................................................... 115
Mr. Repko.................................................... 117
DUPLICATION, WASTE, AND FRAUD IN FEDERAL PROGRAMS
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WEDNESDAY, APRIL 26, 2017
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:01 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Ron Johnson,
Chairman of the Committee, presiding.
Present: Senators Johnson, Lankford, Daines, McCaskill,
Carper, Tester, Heitkamp, Peters, Hassan, and Harris.
OPENING STATEMENT OF CHAIRMAN JOHNSON
Chairman Johnson. Good morning. This hearing will come to
order. I want to welcome our witnesses. I appreciate your time
and your testimonies, and I look forward to your oral
testimonies and answering what I think will be some pretty
interesting questions.
I frequently say, from this podium, that the Government
Accountability Office (GAO) and the Inspectors General (IGs),
you are our go-to Agencies in government, doing so much to root
out and identify and eliminate waste, fraud, abuse (WFA) as
well as duplicated programs, which is what this hearing is
about.
The reports by GAO that really started with a pretty simple
amendment, offered in 2010 by Senator Coburn, in the debate
over increasing the debt ceiling--something we all hate to do,
but, if we are going to do it, it is kind of nice to get some
measure of control and a pretty simple concept--asking GAO to
start issuing reports and doing inspections on different
duplicative programs has resulted in $75 billion worth of
savings over 7 years, which is pretty remarkable. Based on the
amount of budget authority that GAO has--$3.8 billion over that
same timeframe--that is a 20:1 return on investment (ROI),
which is pretty good. And, I know your overall return on
investment is what, Mr. Comptroller General?
Mr. Dodaro. I will put the microphone on for this: 112:1.
Chairman Johnson. OK. And, I know the Inspectors General
have a pretty good rate of return as well. So, I do ask
unanimous consent (UC) that my written statement get entered in
the record.\1\
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\1\ The prepared statement of Senator Johnson appears in the
Appendix on page 33.
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Senator McCaskill. Without objection.
Chairman Johnson. I do want to start with a couple of
charts I have prepared here for the hearing, just to put things
in context. We got a recent Congressional Budget Office (CBO)
report on the long-term debt and deficit,\1\ and they always
report these things as a percent of gross domestic product
(GDP). And, we go through a fair amount of effort to convert
those to dollars, because I think it is just a little bit more
meaningful.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 103.
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For the last number of years--because it has been a couple
of years since they have updated their projection--I have been
saying that the 30-year projected deficit is $103 trillion.
Well, we have moved forward in time and we have not solved the
problem. And, now, unfortunately, the projected deficit, over
the next 30 years, is $129 trillion. That is about almost $10
trillion over the next decade, $37 trillion in the second
decade, and $82 trillion in the third decade. And, to put that
in perspective, the entire private net asset base of the United
States--in other words, all of the assets held by businesses
and households--is equal to $128 trillion.
This is, by the way, to be tacked on top of our $20
trillion of debt--$62,500 for every man, woman, and child in
America.
What is unfortunate is, it seems like nobody is really
paying attention to this. We are, certainly, not addressing it
here in Congress, obviously, from the change from $103 trillion
to $129 trillion, over the next 30 years.
So, I wanted to put that in context. And, I have one other
chart here, which also puts in context the $75 billion.\2\ And,
Mr. Dodaro, in no way, shape, or form do I want this detracting
from your efforts here, which I think are laudatory. But, just
so that everybody understands, in that same 7-year period,
where GAO with their great work--20:1 return on investment--
saved $75 billion, we spent $25,000 billion. We borrowed $6.6
trillion of that--about 26 percent. So, in other words, 26
cents of every dollar we spent, we borrowed. Again, this is
just kind of showing the magnitude of the problem here.
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\2\ The chart referenced by Senator Johnson appears in the Appendix
on page 104.
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Again, I want to thank all of the witnesses. I think we are
going to have a pretty good discussion with the Inspector
General for Tax Administration, talking about refundable tax
credits and the improper payments, fraud, and abuse of that
program. Obviously, one of our favorite institutions are
universities. And, one dear to my heart--all three of my kids
went to the University of Wisconsin (UW) in Madison. We have
Chancellor Rebecca Blank, and she is going to be talking about
the duplication of different regulations imposed on research
universities and just in general the overregulation--the
difficult time that universities have dealing with Federal
regulations on their operations. Then, we have Keith Repko from
the Department of Veterans Affairs (VA) health system to talk
about the problems in dealing with duplicative regulations in
constructing health care facilities for the finest among us.
So, again, I think this is going to be a really good
discussion--again, this is all laid before us because of a
pretty simple amendment by Senator Tom Coburn 7 years ago--and
then, the excellent work of Gene Dodaro and all of his good
people working at the Government Accountability Office.
With that, I will turn it over to my Ranking Member,
Senator McCaskill.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. I want to echo many of the comments of
the Chairman, and I continue to be frustrated--along with my
colleague and the former Ranking Member, Senator Carper, who
has carped on improper payments for as long as I can remember.
Senator Carper. One of my favorite verbs: to carp.
Senator McCaskill. There you go. [Laughter.]
I think that GAO is such an important ally to this
Committee. And, I want to take this opportunity, as I try to
every time you are here, to make sure you tell all of the
people in that big building that their work does matter. Even
though it is too often ignored or set aside, what you all do is
really important, and you are tremendous public servants. And,
I love associating with the auditors at GAO, as a former
auditor.
Your annual duplication report sets out some important work
that you have done in investigating how the Federal Government
spends tax dollars. You consistently identify concrete steps
that we can take--and the Executive Branch can take--to
eliminate a lot of wasteful spending. You all have saved so
much money for this country, but there is, obviously, a lot
more work that we have to do.
I want to welcome the other witnesses to the hearing today
also. I especially want to welcome Keith Repko, who is here as
the leader of the VA facilities in St. Louis. And, I do not
think, probably, any other Members of this Committee can
appreciate how nice it is to have that roll off my tongue,
since we struggled in St. Louis, trying to fill this position
for, literally, years on end. And, I think people need to
realize some of the management problems in the VA can be borne
out by the fact that we would open the head of the VA facility
St. Louis job position and no one would apply.
Now, that tells you something. That tells you that there is
a real problem in either the support these managers are getting
or what we are paying them. But, when you open a job that has
that kind of responsibility and nobody wants it, it means that
we still have a lot more work to do in figuring out how can--so
thank you for filling this position. It has been badly needed--
the stability there has been badly needed, and we are thrilled
to have you today. The reason you are here, today, is because
one of the things pointed out in this year's report is the
problems the VA has in managing construction. And, clearly, we
have put a lot of capital into the VA. I have been somebody
banging the table to get that done. I want to make sure our
facilities are first-rate. I want to make sure they are
adequate. I want to make sure that it is not a lack of
facilities that is causing any undue delay or problems with our
veterans getting health care. But, clearly, this report points
out that this is not always being managed well, in terms of how
these projects are being undertaken and how they are being
executed. And, we want to spend a little bit of time on the
management of those construction projects.
I also want to echo the comment about the tax credits. I am
glad you are here, Dr. Blank, to talk about grants and the
problems, in terms of administrative burdens on grant
recipients and also administrative burdens on reporting crime
statistics, which are difficult for our universities right now.
But, I am also glad you are here, because I think we need to
talk about the growth in improper payments and a new form of
tax credit--refundable tax credit--and that is the amount of
easily determined overpayments in the American Opportunity Tax
Credit (AOTC). It may not be as large as the other refundable
tax credits. It does not mean it will not be if we do not get a
handle on this--and the notion that it is just as simple as
double-checking with universities and seeing how many hours
someone is actually going to college is pretty jaw-dropping--
that we are allowing $1 billion to go out the door every year
without just the rudimentary checks and balances as to
determine whether or not those tax credits have actually been
earned by students attending higher education.
So, thank you all for being here. Thank you, Chairman, for
having this hearing. And, I look forward to questions and
comments as we move forward.
Chairman Johnson. Thank you, Senator McCaskill.
It is the tradition of this Committee to swear in
witnesses, so if you will all rise and raise your right hand.
Do you swear that the testimony you will give before this
Committee will be the truth, the whole truth, and nothing but
the truth, so help you, God?
Mr. Dodaro. I do.
Mr. George. I do.
Ms. Blank. I do.
Mr. Repko. I do.
Chairman Johnson. Thank you.
Our first witness is Eugene Dodaro. Mr. Dodaro has been the
Comptroller General of the U.S. Government Accountability
Office since 2010 and has more than 40 years of experience at
the Agency, including as Acting Comptroller General, Chief
Operating Officer (COO), and head of the Accounting and
Information Management Division. Mr. Dodaro.
TESTIMONY OF THE HONORABLE EUGENE L. DODARO,\1\ COMPTROLLER
GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Mr. Dodaro. Thank you very much, Mr. Chairman. Good morning
to you, Ranking Member McCaskill, Senator Lankford, and Senator
Peters. It is a pleasure to be here. I appreciate very much the
words that you said, complimenting GAO--and I will make sure to
pass it along to all of the people in the Agency. We have such
a dedicated, talented workforce, and they deserve to hear such
compliments.
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\1\ The prepared statement of Mr. Dodaro appears in the Appendix on
page 34.
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I also want to assure this Committee, before I get into
talking about this year's duplication report, that I am worried
about the overall fiscal health of the Federal Government. I
issued a special report this past January, saying that the
Federal Government is on a long-term unsustainable fiscal path,
and I called for an action plan by Congress to deal with the
fiscal policy changes that need to be made.
Now, while there need to be changes made in fiscal policy,
both on the spending and the revenue side--particularly, with
entitlement programs--there are some other things that can be
done. And, addressing overlap, duplication, improper payments,
and the tax gap are among those areas.
This is our seventh annual report on overlap, duplication,
and fragmentation--we report on what has happened over the last
6 years with the 645 recommendations that we have made, to
date, in the first 6 years: 51 percent of those have been
implemented by Congress and the Executive Branch, 31 percent
have been partially addressed, and 18 percent have not been
addressed at all.
As you pointed out, Mr. Chairman, $75 billion has already
accrued in savings, but there is another $61 billion in the
pipeline that will be accrued because of actions that have been
taken. So, the total amount of savings is $136 billion, so far.
Now, this year's report adds 79 new actions in 29 different
areas that range across the Federal Government. For example,
in--from the Department of Defense (DOD), which could save tens
of millions of dollars by better managing their virtual
training programs and integrating them into operational
training--and simple things, like advertising for recruitment
purposes, where there are seven different advertising programs
that could compete in the same market. Hundreds of millions of
dollars could be saved in implementing our recommendations on
Medicare and Medicaid--as in providing payments for
uncompensated care that hospitals give. We think that formula
is outdated and does not reflect the true amount of
uncompensated care, particularly, since it is going down with
the expansion of Medicaid, for example. There are other areas
where improper payments could be reduced in Medicare and
Medicaid, and we have a number of recommendations in that
regard. Most of the improper payments of the $144 billion
annual total in the Federal Government come from Medicare,
Medicaid, and the Earned Income Tax Credit (EITC). So, I am
glad we are addressing that today, and I am glad Russell is
here to talk about that issue.
So, with the new areas that we are adding, there are 395
open recommended suggestions that have not been implemented. I
recently met with the Office of Management and Budget (OMB)
Director Mick Mulvaney. And, I mentioned to him that we are
going to be sending letters to each of the Departments and
Agencies, outlining our open recommendations. The letters will
give priority attention to those recommendations that I think
the head of the Agency needs to pay personal attention to over
the coming months. I have sent similar letters in each of the
last 2 years. And, I think, this will be particularly helpful
as Agency leaders go through their exercise of looking at
reorganizing, streamlining, and gaining some more efficiencies
in the Federal Government. Most of our open recommendations are
addressed to the Executive Branch, but I also have what I call
the ``Senator Lankford appendix'' to the testimony this year,
where he asks every year, ``What can the Congress do? Give us a
list.'' So, we have 61 open matters for Congress to consider.
I would comment that most of the savings that have
occurred, to date, have come from Congress taking action, and
there are tens of billions of additional dollars that are still
on the table that could be implemented and successfully
achieved through implementing our open recommendations.
So, I look forward to continuing to work with Congress, and
I look forward to continuing to work with the Executive Branch,
which I am committed to do. I am now in the process of trying
to meet all new Cabinet officials to talk about our working
relationship and the recommendations that GAO has to make their
operations more effective and efficient.
So, thank you again for the opportunity to be here, today.
And, I look forward to answering questions at the appropriate
time.
Chairman Johnson. Well, thank you very much.
I actually have a couple of charts. Let us put up the first
improper payment chart.\1\ Everybody has this in front of them.
This just lays the groundwork, in terms of improper payments on
refundable tax credits, just in these three programs: the
Earned Income Tax Credit--and this is, I believe, 2015,
correct?--$69.8 billion; the Additional Child Tax Credit (ACTC)
is $28.5 billion; and the American Opportunity Tax Credit is
$4.4 billion. Those are the refundable tax credits. Improper
payments were $25.1 billion, or about 24 percent.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 105.
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And, the next chart shows how this has been a problem,
certainly, for the 7 years of the duplication report,\2\ but,
as I was talking to the Inspector General ahead of time--this
has been going on for 20 years. And, in spite of all the good
efforts, and publicizing this year after year after year, it
does not look like we are making a whole lot of progress, as
you can see how much money is being spent on the tax
expenditure--on the tax credits--and how the improper payment
rate still is above 20 percent--just stubbornly stuck there.
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\2\ The chart referenced by Senator Johnson appears in the Appendix
on page 106.
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So, again, that is kind of the backdrop for our next
witness, J. Russell George. Since being nominated by President
George W. Bush in 2005, Mr. George has served as the Treasury
Inspector General for Tax Administration (TIGTA). Prior to
assuming this role, Mr. George served as the Inspector General
of the Corporation for National and Community Service (CNCS).
In addition to his work as an Inspector General, he served as a
member of the Integrity Committee of the Council of Inspectors
General for Integrity and Efficiency (CIGIE). Mr. George.
TESTIMONY OF THE HONORABLE J. RUSSELL GEORGE,\3\ INSPECTOR
GENERAL FOR TAX ADMINISTRATION, U.S. DEPARTMENT OF THE TREASURY
Mr. George. Thank you, Chairman Johnson, Ranking Member
McCaskill, and Members of the Committee. I appreciate the
opportunity to testify on tax-related improper payments.
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\3\ The prepared statement of Mr. George appears in the Appendix on
page 72.
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TIGTA has conducted a number of reviews that evaluate
efforts by the Internal Revenue Service (IRS) to reduce
erroneous and improper refundable tax credit payments. My
comments today will highlight our ongoing work.
Refundable credits are designed to help low-income
individuals reduce their tax burden or to provide incentives
for other activities. Because these tax credits are refundable,
they are vulnerable to unscrupulous individuals who file
fraudulent claims. To date, the Earned Income Tax Credit
remains the only refundable credit the IRS has designated as
high risk for improper payments. However, TIGTA has continued
to report that the IRS' improper payment risk assessments for
the Additional Child Tax Credit and the American Opportunity
Tax Credit, also known as the education credit, substantially
understate the risk of improper payments for these credits.
These credits, collectively, accounted for more than $100
billion claimed during tax year 2015. For fiscal year (FY)
2016, the IRS issued an estimated $25 billion in potentially
erroneous payments for these credits. This represents a
significant loss to the Federal Government.
In addition, the assessment of the risk related to premium
tax credit improper payments continues to present challenges
for the IRS. This credit, created by the Affordable Care Act
(ACA), assists individuals and families in paying for their
health insurance. Unlike other refundable credits, the IRS is
not solely responsible for administering the premium tax
credit. As a result, the IRS cannot effectively assess the risk
of improper payments for this credit on its own. The IRS and
the Department of Health and Human Services (HHS) continue to
work on a methodology to effectively measure improper payments
relating to this credit.
To reduce certain fraudulent and improper payments,
Congress enacted the Protecting Americans from Tax Hikes (PATH)
Act of 2015. Among other provisions, the act moves up the
deadlines for Forms W-2, Wage and Tax Statement, and other
income information-related documents, as well as provides the
IRS additional time to verify EITC and additional tax credits
that are based on the income individuals report on their tax
returns.
According to the House Ways and Means Committee, these
integrity provisions are projected to save roughly $7 billion,
over 10 years, by reducing fraud, abuse, and improper payments
in refundable credit programs. To date, our work related to
this legislation has found that the IRS has properly withheld
refunds for returns with EITC and additional tax credit claims
and released those returns that were not identified for
additional review. IRS management informed us that these claims
are being verified solely against Form W-2 data to identify
claims that have unsupported income.
IRS management indicated that, for the 2017 filing season,
they do not plan to use other income-reporting documents to
systematically verify income reported on tax returns with
refundable credit claims. The IRS has cited a number of
technical challenges and timing issues that need to be
addressed in order to use this information to verify income at
the time tax returns are processed.
In addition, the IRS was unable to implement processes to
identify erroneous claims for the 2016 filing season for
taxpayers filing tax returns for prior years to claim certain
refundable credits, referred to as ``retroactive claims.'' Our
review of tax year 2014 tax returns filed and processed during
the 2016 filing season identified $35 million in refundable
credits that were erroneously paid to taxpayers filing
retroactive claims.
Finally, the IRS still does not have the authority to
correct tax returns, during processing, in which the
information provided by the taxpayer does not match information
available to the IRS. As a result, the IRS must conduct an
audit to address potentially erroneous refundable claims.
Without correctable error authority, the IRS' ability to
address those potentially erroneous refundable credit claims
that it identifies, remains limited.
Mr. Chairman and Members of the Committee, we at TIGTA
remain serious in our mandate to provide independent oversight
of the IRS and its administration of the Nation's tax system.
As such, we plan to provide continuing coverage of the IRS'
efforts to identify and reduce improper refundable tax credit
payments.
Thank you for the opportunity to present my views.
Chairman Johnson. Thank you, Mr. George. I did fail to
point out the 7-year total on refundable tax credits--just
those three areas is $441 billion and the improper payments is
over $100 billion. It just shows the magnitude of the problem
in just those three refundable tax credits--and with
Obamacare--with even the House plan, we are looking at more
refundable tax credits.
Our next witness is Rebecca Blank. Ms. Blank became the
Chancellor of the University of Wisconsin-Madison in July 2013.
Prior to serving as Chancellor, Ms. Blank served as the Obama
administration's Secretary of Commerce. Under President Bill
Clinton, she was a member of the Council of Economic Advisers.
Chancellor Blank.
TESTIMONY OF THE HONORABLE REBECCA M. BLANK, PH.D.,\1\
CHANCELLOR, UNIVERSITY OF WISCONSIN-MADISON
Ms. Blank. Thank you, Chairman Johnson, Ranking Member
McCaskill, and Members of the Committee. I appreciate having a
chance to say a few words about the regulation of Federal
research at our Nation's top universities.
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\1\ The prepared statement of Ms. Blank appears in the Appendix on
page 86.
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I was an economist prior to becoming Chancellor at the
University of Wisconsin in Madison, and I believe deeply that
we must do everything we can to help research universities
thrive. These institutions hold the key to our future economic
prosperity.
But, they have also become some of the most regulated
entities in this Nation. At least 35 Federal Agencies regulate
our research at the University of Wisconsin, with multiple
interpretations of the rules and many confusing, duplicative,
and often unnecessary requests.
So, my message today is very clear. We have added layer
upon layer of regulation, and we are at a point where this is
seriously impeding the productivity of our scientists. There
are as many as 23 different administrative responsibilities
associated with every Federal research grant. Each of those
steps requires time from either the researcher or the support
staff.
Ten years ago at UW, we had 50 full-time staff handling the
regulatory compliance issues on human and animal research
projects. Today, we have 80. There is not another function on
campus that has added 30 full-time positions at a moment in
time when we have actually been working hard to increase
efficiency and reduce staff.
Still, much of the burden falls not on staff, but on
teachers and researchers, taking valuable time away from both
the classroom and the lab.
The latest Federal Demonstration Partnership (FDP) survey
indicates that, nationwide, scientists with Federal funding
spent
42 percent of their time on regulatory and administrative
activities--about 4 hours in a 9-hour day.
We recently surveyed our scientists at UW who do research
involving human subjects. And, half of them--48.5 percent--told
us they had given up--or almost given up--on at least one
research study because of the red tape involved. We cannot
afford to sideline potentially lifesaving research.
The 21st Century Cures Act and the American Innovation and
Competitiveness Act (AICA) took some big steps in reducing
these administrative burdens, but, as GAO notes in their
report, there is more to be done. So, let me give you two
recommendations.
First, two key provisions of the 21st Century Cures Act and
the American Innovation and Competitiveness Act should be
prioritized for implementation. The new Research Policy Board
should be set up and streamlined grant application and
reporting requirements need to be put in place as soon as
possible. Right now, almost every Agency has different formats
for submitting a research proposal, reporting on research
progress, reporting on effort, reporting back on what your
results are, and demonstrating compliance with the regulations.
And, the Agencies have very different rules on how results
should be saved and be made publicly available. That is
confusing, costly, and inefficient. Recently, there was a
report by the National Academy of Sciences (NAS) that details
these problems. I encourage any of you with an interest to read
through their much more extensive recommendations.
Second, the implementation of the final rule should be
prioritized. This allows low-risk projects to be subject to
different restrictions than high-risk projects. The recently
adopted final rule, scheduled to take effect in January 2018,
aims to reduce regulatory burden on human subjects research
that poses little to no risk to participants. For example,
survey research should be subject to different rules than
medical research that may be testing medical procedures on
human beings. But, without clear guidance to address
differences in how these regulations are interpreted and
applied, I promise you that problems will persist. Let me give
you an example.
One of our pediatricians wants to create a registry to
track health information from children across the State of
Wisconsin, who have a very serious but relatively rare
condition that can cause heart attacks at a young age. Sharing
that information can improve medical care and can help keep
health care costs down. We are actually 6 months into the
effort to try to get approval for this project. And, we still
have not been able to do so, because there are multiple sites
that provide information to this registry. Every site is
interpreting the regulations differently, and, therefore, every
site is demanding different information from us and different
restrictions.
Let me be clear that I am not arguing that we should do
away with all of the regulations governing research. Federal
regulations help us ensure research integrity, they increase
access to research data and results, and they help protect
human and animal subjects in research. But, we need to be smart
about the regulations that we have and how we implement them.
I have spoken today about the regulations affecting our
research enterprise. But, let me note that my written testimony
also gives a number of examples of excessive regulation that
increases unnecessary costs and interferes with how we serve
students.
No Nation on Earth has been as successful as the United
States in building remarkable institutions that offer an
outstanding education and conduct the kind of basic research
that fuels innovation and helps solve immediate problems in the
real world. That is why the rest of the world wants to send us
their best and brightest students.
But, international preeminence does not come with a
lifetime, forever guarantee. Excessive regulation of research
universities can only erode their success over time.
Thank you for your commitment to helping to bring this
unwieldy system under control. With your help, great research
institutions, like the University of Wisconsin, the University
of Missouri (Mizzou), the University of Michigan (UM), and the
University of Montana, will continue to keep this Nation on the
cutting edge of innovation.
Thank you.
Chairman Johnson. Thank you, Chancellor. Again, I really
want to thank you for bringing this to my attention a couple of
years ago, when you came to my office. And, the Small Business
Administration (SBA) has studies that put the costs of
complying with Federal regulations at $2 trillion per year,
which, if you divide that by the number of households, it is
almost $15,000 per year, per household. So, I appreciate the
fact that the university is grappling with this problem and
that you are highlighting it--our entire Nation--our entire
economy as well. So, again, this is really good testimony. I
appreciate it.
Our final witness is Keith Repko. Mr. Repko currently
serves as Medical Center Director of Veterans Affairs of the
St. Louis Health Care System where he oversees 3,000 employees.
Prior to becoming Medical Center Director, Mr. Repko served as
Deputy Director, where he led efforts to reduce veterans'
access time to be in the top 25 percent of all VA facilities,
as well as improved patient advocacy. Mr. Repko.
TESTIMONY OF KEITH D. REPKO,\1\ MEDICAL CENTER DIRECTOR, VA ST.
LOUIS HEALTH CARE SYSTEM, VETERANS HEALTH ADMINISTRATION, U.S.
DEPARTMENT OF VETERANS AFFAIRS
Mr. Repko. Good morning, Chairman Johnson, Ranking Member
McCaskill, Senator Lankford, and Senator Peters. Thank you for
the opportunity to participate in this hearing and to discuss
the design and construction projects at the Jefferson Barracks
and John Cochran campuses of the VA St. Louis Health Care
System.
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\1\ The prepared statement of Mr. Repko appears in the Appendix on
page 98.
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The St. Louis Health Care System is a dual affiliated,
full-service health care system that provides inpatient and
outpatient care in medicine, surgery, neurology, psychology,
rehab, and many other subspecialties. It is a two-division
facility that serves veterans in east-central Missouri and
southwest Illinois. The John Cochran Division, named after the
late Missouri Congressman, is located in midtown St. Louis and
comprises the medical center's surgical capabilities,
ambulatory care units, intensive care units, outpatient
specialty clinics, and our emergency department.
One of the top priorities for the Department has been
improving access to care. In St. Louis, we have taken that to
heart. While more work remains to be done, both the VA and St.
Louis have made real progress. In FY 2016, St. Louis hired 385
staff members, including 36 physicians, 4 physician assistants
(PAs), 93 nurses, and 252 other critical occupations. We have
extended clinic hours at five of our locations and hold
Saturday clinics at two of them. Additionally, we have
increased the delivery of care by using telephone consults and
secure messaging to better use our providers' time, to improve
access, and to meet veterans' care needs where it is convenient
for them.
The Jefferson Barracks Division is a multi-building campus
overlooking the Mississippi River in south St. Louis County. It
provides psychiatric treatment, spinal cord injury treatment,
geriatric care, rehab services, and has a domiciliary program
for our homeless veterans. The VA is currently pursuing a major
construction project on this campus that will enable us to
better serve veterans' health care needs for decades to come.
The project is a joint Veterans Health Administration (VHA)
and National Cemetery Administration (NCA) venture and will
construct a total of five new buildings. The project will
relocate primary care, mental health, and specialty care
clinics out of its current 1920s-constructed building into a
modern environment and allow for expansion of care. It will
also construct a new patient aquatic and rehab facility,
replacing an older facility that frequently we have to shut
down in the heat of the summer due to the lack of adequate air-
conditioning. Lastly, the project will replace an obsolete fire
alarm system, construct a new support building, provide 800 net
new parking spaces, and construct a facility to replace our
obsolete engineering and consolidated warehouses.
Upon completion, the project will decrease the amount of
infrastructure maintained and operated by VHA through the
demolition of energy-inefficient and underutilized buildings.
It will also provide approximately 30 acres to the NCA for the
expansion of the Jefferson Barracks National Cemetery. Without
this land, the cemetery will be closed to burials in several
years. The total project cost is $366 million. And, it was
approved as a VA major project in 2004, partially funded in
2007, designed in 2008, started to be constructed in 2010, and
is scheduled to be completed in 2020. Currently, the project is
52 percent complete and has no cost overruns.
The John Cochran campus also has a major project that was
funded for design in 2010. The project proposes to construct a
new inpatient bed tower and allow for the expansion of
specialty care clinics--with an estimated cost of $433 million.
In 2015, all of VA's major projects, including the John Cochran
project, were reevaluated and rescored through the Strategic
Capital Investment Planning (SCIP) process to ensure the
project's requirements are still valid and that the project
remained a high priority for the Department. The St. Louis John
Cochran project did not score high enough to be included in the
2015-16 budget cycle, and, therefore, it is currently not
actively being developed by the Department at this time.
However, the project is eligible to be reconsidered in SCIP and
will be reconsidered for funding in a future budget year.
In closing, each day we move toward our goal of improving
and streamlining our processes, in order to provide the
exceptional care that veterans earned and deserve. Mr.
Chairman, this concludes my statement. Thank you for the
opportunity to testify before the Committee today. And, I am
pleased to respond to any questions from you and Members of the
Committee.
Chairman Johnson. Thank you, Mr. Repko.
I will start the questioning with Mr. Dodaro. Quite
honestly, when you take a look at the number of recommendations
that have not been addressed at all in government, it is
actually surprisingly low. The fact that you have over 50
percent fully implemented, 30-some percent partially
implemented, and less than 20 percent not implemented is really
a testament to, I think, what you have been able to accomplish
in getting your recommendations implemented.
You said that Congress has actually passed laws that have
been the primary reason for doing that. And, you have 61
recommendations now. Can you give us some kind of sense how
many different laws--just kind of in general--it took to get
that level of implementation? And, what would you contemplate
with your recommendations, right now? Would you, maybe, suggest
this Committee try and put those 61 recommendations into one
piece of legislation and try to get that out on the floor and
get it passed? Or, is this more effectively done kind of
individual bill by individual bill?
Mr. Dodaro. The approaches that have been taken, in the
past, have mostly been bill by bill. For example, in
eliminating the direct payments to farmers, it was handled
through the Farm Bill. Congress let the ethanol tax credit
lapse, so they did not actually have to do anything--and it
went away. But, I think any legislative vehicle that you can
come up with would be an appropriate vehicle.
Some of the recommendations to Congress for action have not
been addressed for a number of years, and I am concerned that
they could get stuck in the normal legislative process. So,
perhaps, having a combined omnibus, if you will--or a package--
would help. So, I think, any legislative vehicle would be good.
Chairman Johnson. I know, in past Congresses--I know
Senator Ayotte and Senator Manchin tried to propose legislation
that would have forced the Agencies to do this. But, I would
love to work with Senator McCaskill and work with GAO.
Senator McCaskill. Yes.
Chairman Johnson. And, let us craft something that will
actually impose that requirement on the Agencies to implement
these things.
Mr. Dodaro. I think the past efforts have been focused on
getting Agencies to implement all of our recommendations. I
think it would be better if you target the specific
recommendations that you are comfortable with that we have
included--particularly, the ones on the list of 61 for Congress
to take action on. And then, there are other opportunities for
Congress to put some pressure on the Administration to
implement some of our other suggestions.
Chairman Johnson. So, we will work in a bipartisan fashion
with your staff and different Senators. And, we will figure out
what that list is. And, we will get a piece of legislation. I
think Leader McConnell would be very open to--he is looking for
bipartisan pieces of legislation to move across the goal line.
So, let us definitely do that.
Mr. George, I remember--I think it was your 2012 report.
You listed 10 addresses with--I believe it was the Earned
Income
Tax Credit--where there were multiple filings. And, the top
address--I think there were 24,000 filings requesting and
obtaining $46 million of refundable tax credits. Was that the
Earned Income Tax Credit or was that the Additional Child----
Mr. George. There were so many instances of people taking
advantage of the tax system using that scheme, sir. So, it may
have been the Earned Income Tax Credit. It could also have been
the First Time Homebuyer Tax Credit (FTHBC) or the Additional
Child Tax Credit.
Chairman Johnson. So, my question was--I mean, to me, one
address with 24,000 claims--$46 million. I know we are not
making a whole lot of progress. Have we at least closed down
that abuse after all of these years? Or, has the IRS still
failed on that part?
Mr. George. I have to give--as I noted in my testimony--the
IRS some credit, as it relates to the Earned Income Tax Credit.
As, Senator, you and I spoke about out in the hall--and then as
you discussed your opening remarks--and my comments--the amount
of improper payments for the Earned Income Tax Credit was in
excess of $20 billion a year a few years ago. And, even though
it is now roughly $16 or $17 billion, it is still moving in the
right direction. Even though there was a slight uptick in the
last----
Chairman Johnson. But, again, my question was: To me, it
would be pretty simple to take a look at an address and say,
well, we are not going to allow--if there are more than 10
refundable tax credits claimed, we are going to take a look at
that. It is absurd that 24,000 claims went through one address.
Have they fixed that problem at least?
Mr. George. They have not fixed it, no. No, they still have
the problem, sir.
Chairman Johnson. Yikes. Part of the problem with these is
the individual taxpayer identification number, correct? Rather
than the Social Security number?
Mr. George. That is correct.
Chairman Johnson. That is just rife with abuse.
Mr. George. As it relates----
Chairman Johnson. Can you describe that?
Mr. George. Yes. Congress passed legislation that now
requires the use of a Social Security number or, if you are a
green card holder, the use of that number, for the Earned
Income Tax Credit. However, for the Additional Child Tax
Credit, which, again, is a growing problem--while we at the
IG's office believe that Federal law does require that same
restriction, the IRS has taken a different position on that
issue. While we, again, have debated this back and forth with
the lawyers at the Department, they will not----
Chairman Johnson. Well, let us tack that onto our GAO piece
of legislation here.
Chancellor Blank, I do want to give you an opportunity,
because I thought your written testimony about other
overregulation was pretty powerful. As I am hearing your
testimony too, what you are asking for is not no regulation,
but some common regulation--some uniformity, so that you are
not trying to comply with umpteen different reporting
requirements that could all be grouped together--and provide
common forms. Can you just talk about some of the other parts
of your written testimony?
Ms. Blank. That is absolutely correct. Right now, we have
different forms for conflict of interest and different forms
for reporting, submitting, and saving data. And, it becomes
incredibly complex when a university like Wisconsin--like other
big research universities that are getting research funding
from many Federal Agencies--and every one has different
requirements.
In my written testimony, I talk, not just about the
research issues, but about the issues relating to students. One
of the regulatory issues there that I find most compelling
relates to the Jeanne Clery Disclosure of Campus Security
Policy and Campus Crime Act (Clery Act), which regulates how we
deal with crime statistics on our campus. It is a very
important Act--very useful and valuable to us for tracking.
But, certain interpretations of what the Clery Act--what the
Department has put upon us, include such things as the
requirement that, for any place where our students spend more
than two nights, we have to collect local crime statistics and
report them as if they were on our campus. So, whether our
students--we had engineering students going off to an Elon Musk
competition recently. Our athletic teams, obviously, often will
spend multiple nights over--that takes an enormous amount of
time and effort, working with local police in those areas. And,
quite honestly, it results in a reporting of crime statistics
that has nothing to do with our students and is simply a
misperception about what type of crime is happening on campus.
So, that type of interpretation of the law just makes life
very difficult and increases our expenses in ways that are not
helpful.
Chairman Johnson. I will come back to this. Senator
McCaskill.
Senator McCaskill. Thank you.
Let me first do the VA. Mr. Dodaro, your 2017 report talks
about the management of medical facility construction projects.
And, basically, what I gather from the report is that you have
an Agency within the VA that is supposed to be overseeing this
at each local site, but there is not appropriate coordination
between the onsite personnel and this part of the VA that is
supposed to be managing all of these construction projects. Is
that a fair summary? Or, can you fill in----
Mr. Dodaro. There is really not good coordination. Now, the
VA, generally speaking, is a very decentralized organization
with very little oversight and accountability from the central
organizations of the VA. I could say that, broadly speaking--
that applies to health care and that applies to disability as
well.
In this case, the change orders that were being approved
were not going through regular, timely process and design
changes. And, you could see these add to the cost of the
projects. So, we asked them to put that under a better control
process, so that the change orders could be approved in time
and so everybody knew what the consequence of the change orders
would be, and design processes there as well.
I think the big change that Congress required is now, going
forward, any project over $100 million is to be run by someone
outside of the VA. Most of these projects right now are run by
the Army Corps of Engineers, so you actually have people that
are experts in construction projects. The projects under $100
million are still being run by the VA. And, some of the
projects that were over $100 million that were not new--some of
them were transferred, like the Denver project that ran into a
lot of problem under VA management.
Now, the responsibility--if the construction is done by the
Army Corps of Engineers or another organization--is for the VA
to come up with the costs of activating the facility--actually
putting the medical equipment in there and preparing it for
operations. And so, that should help a lot by taking the big
new construction projects out of the hands of the VA and
putting them with the Army Corp or another competent
organization.
Senator McCaskill. So, going forward, the Army Corps will
be doing the projects that are as large as Cochran----
Mr. Dodaro. Anything over $100 million--it will either be
the Corps or--the legislation requires somebody other than the
VA. So far, they have gone with the Corps.
Senator McCaskill. Yes.
Mr. Dodaro. They could choose someone else, but the Corps
is the only one so far.
Senator McCaskill. I am proud that we do not have cost
overruns with the projects in St. Louis. Mr. Repko, I think
that is terrific. I know we are a little bit behind schedule,
but a lot of that has to do with how quickly the VA has decided
to request the money.
I think one thing that Americans need to realize is that
Congress has been very generous to the VA. Since FY 2008, we
have funded 177 percent of the requests from the VA. In FY
2009, we funded 183 percent of the requests. In FY 2010, 106
percent and in FY 2011, 100 percent. FY 2012 was the only time
since FY 2008 that we funded less than 100 percent of the
request that was made by the VA. I do not think there is
anybody else in government that has that kind of track record,
in terms of securing appropriations--particularly, for capital.
Even the military does not have that kind of success rate, as
it relates to capital. So, I am glad there are not overruns.
I do want to bring to your attention that I have recently
learned that there have been some concerns regarding the
quality of the ongoing construction at the facility at
Jefferson Barracks. And, we have been in contact with the VA IG
about this, and we have been assured that they are looking into
it. Are you aware of any of these concerns about the integrity
and quality of the construction that is ongoing there? I know
it is not your direct responsibility, but are you aware of any
problems? Have they been brought to your attention?
Mr. Repko. Just recently--actually, working with your staff
in preparing for this--I became aware of some. But, I can tell
you what--we have had a very good relationship with the
facility. In fact, we have a team that works for the medical
center--so works for my office--that interfaces--and that is
their full job--to interface with the construction folks in the
central office for the VA. And, our project is managed by the
VA Office of Construction and Facilities Management (CFM),
because it was prior to that other regulation.
I can tell you we have daily conversations--my staff does--
with CFM staff, in managing the project--and myself and my
Associate Director have weekly and monthly meetings with our
staff. And, at this point, we have no concern of any serious
issues with this project, either--moving forward--either in
quality--I can tell you, I served as Chief Engineer for 12
years. And, in those years, I managed a lot of projects and had
staff that managed a lot of projects. I can tell you that there
is no such thing as a 100-percent perfect contractor or
project. I would say that contractors would say that there is
no such thing as a 100-percent perfect customer. But, I can say
that, in our project, CFM is working through any issues. And,
like I said before, there is nothing significant, either in
quality--that I am aware of--or any concern that would
jeopardize this project.
Senator McCaskill. OK. Moving on to the tax credits, I
tried to take a look at the education tax credit. One of the
things that jumped out at me, Mr. George, was that, of the 3.6
million returns with questionable education credit claims, 49
percent of them--almost half of them--were prepared by a tax
preparer.
Mr. George. Yes.
Senator McCaskill. Do we not have something in place that,
if there are tax preparers that are doing this--I mean, is that
why one address is responsible for all of those, because that
is somebody who has put a shingle out in a community saying,
``Let me prepare your tax returns?''
Mr. George. There have been examples of that, Senator, but
the IRS, in response to recommendations that we have made and
concerns expressed by Congress, has begun outreach to tax
preparers, who, in all candor, are at the front line, in terms
of helping to avoid tax fraud.
Senator McCaskill. So, you think that, for 50 percent of
these questionable education credit claims, these preparers
just did not know any better? Or, were they trying to get over?
Mr. George. Well, I do not want to impugn everyone's
reputation. There is no question that some of it is ignorance
and some of it was malfeasance.
Senator McCaskill. I would be interested, if it is
possible, to know if these tax preparers were individual
proprietors or if they were some of the large chains that do
tax preparation. Obviously, if this is something that is
endemic, it seems to me that the basics are making sure that a
refundable tax credit that your agency is preparing for a
client would follow the rules as to the Form 1098 and as to how
long they are in school, as well as to the appropriate
institutions that qualify, which are the three big ones on that
particular credit that always raise the flag.
Mr. George. We will endeavor to give you that information,
but if I may, Senator, I do not want to let the IRS completely
off of the hook here. The IRS has not used every avenue that it
could to confirm that someone who applies for that credit is
entitled to it. So, for example, the Department of Education
(ED) has a list of databases, which the IRS--for free--or for a
nominal fee at least--could have access to----
Senator McCaskill. And, they are not doing that?
Mr. George. They are not doing it.
Senator McCaskill. OK. That is ridiculous.
Mr. George. They are not doing it.
Senator McCaskill. That is totally ridiculous.
Mr. George. And, it applies to additional credits, too. I
have said this many times before at other hearings, but,
whenever there is third-party reporting of income, it is almost
a 99-percent compliance rate. But, once the IRS fails to have
access to that third-party reporting and relies solely on an
individual, the compliance rates drop dramatically.
Senator McCaskill. Finally, I know I am out of time, but I
really would like--and if you want to, I will wait until the
next round for you to answer it--but I think it is important
that, when you report to this Committee or any other Committee,
you at least give us a sense as to whether or not the lack of
staff--there have been dramatic staff cuts at IRS. No question
we are leaving money on the table. I am not aware of any
business that is in the kind of financial trouble we are in
that decides it is a good idea to cut the receivables
department. And, for some reason, because of politics, we have
decided around here that the way that we are going to make
points with our constituents is by cutting the IRS. Well, that
is like cutting off our nose to spite our face, because these
are the people we need to bring in the receivables. And, it
does not make sense to me. And, I would like for you at some
point--I know I am 2 minutes over, and the Chairman has been
indulgent. We can wait until the next round to answer that.
Chairman Johnson. Very indulgent. [Laughter.]
Mr. George. Thank you.
Chairman Johnson. I would point out that we have given the
IRS a lot more responsibility in these things as well. So, it
is a real problem.
Also, I just want to be clear. The address used on a tax
return is the taxpayer's address, not the preparer's address.
So, again, 24,000 returns. It implies there are 24,000 people
living at that address, which is, again, a pretty simple thing
to check with databases. Senator Lankford.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. That is a very crowded house, is what
that is. [Laughter.]
Thank you all for being here and for the work that you are
doing to be able to bring some of these issues to light. We
appreciate that very much.
Mr. Dodaro, we have talked often about a bill that Senator
McCaskill and I have worked on and tried to get done in the
last session of Congress called the Taxpayers Right-to-Know
Act. What you have done in the duplication work is phenomenal.
What we tried to get accomplished in the last session, and what
we can hopefully get accomplished very soon, is to be able to
get some of these evaluation tools that are out there. We are
missing a tool and you are missing a tool. We wait for this
report yearly. When it comes out, it is something we should be
able to pull immediately just with the Agencies making that
information available.
Mr. Dodaro. Right.
Senator Lankford. Every taxpayer should be able to pull
this information. We should be able to see how things are
evaluated. We should be able to see the basic spin patterns. It
should not be a ``rocket science request'' of our Agencies--
they already have that information--just to be able to make it
available.
So, are there any other comments you want to make, as we
have talked about before, on the Taxpayers Right-to-Know Act
and that particular bill?
Mr. Dodaro. I would urge Congress to complete passage of
that bill and send it to the President for signature. I think
it would make a huge difference in identifying overlap,
duplication, and fragmentation in the Federal Government as
well as provide a better accountability tool to Congress and
the Agencies.
One of the biggest difficulties we have had in executing
our responsibility under this requirement to produce this
report is the lack of information that is available on the
costs of programs. Have they ever been evaluated? What has the
evaluation shown? This would have that information
automatically available and be a much more efficient way to
address this issue. So, I would encourage its passage.
Senator Lankford. Well, we look forward to that. It has
passed unanimously in the House. And, it seems to get caught up
in the Senate. And so, we will try to work toward final passage
on that, to be able to get that done.
You mentioned in your report this year the uncompensated
care issue in hospitals, which is an incredibly difficult issue
to wrap your head around. I would like for you to be able to
talk through anything you can about it. This balances out
whether the Federal Government--as they pay hospitals for
uncompensated care that comes in--or they pay it under the
Medicare or the Medicaid portion. Talk us through that, because
that is a $1 billion savings, but that is also a very big issue
to hospitals.
Mr. Dodaro. Yes. And, it has been a big issue for years.
The problem that we identified is that, right now, in order to
determine how to pay uncompensated care, the Center for
Medicare & Medicaid Services (CMS), uses the Medicaid workload
of that particular hospital. They do not have actual numbers on
what the uncompensated care has been, so they use a proxy. That
proxy is not a good proxy. And, of course, with the expansion
of Medicaid under the Affordable Care Act, there are more
people insured, so there should be less uncompensated care, in
theory and in practice. And, right now, payments do not reflect
that change.
The second part of this that is a problem is, when CMS pays
hospitals under the Medicare program for uncompensated care, it
does not take into consideration what it has already paid under
the Medicaid program. So, there is a possibility that CMS could
be compensating hospitals more than once for the same costs.
So, we have recommended to CMS that it collect the actual
cost figures for uncompensated care and reimburse the hospital
based on the actual uncompensated care costs. CMS has agreed
with that, but does not plan to implement it until 2021. They
want to give the hospitals time to adjust. I would encourage
Congress to encourage CMS to act more quickly. Given the
unsustainable nature of these two programs and the need to
reduce their costs, CMS should do it quicker.
Senator Lankford. You brought to CMS an issue that you
identified before with the Affordable Care Act and the way the
subsidies are done in areas where there is fraud potential
there and areas you all tested.
Mr. Dodaro. Right.
Senator Lankford. You brought to them eight recommendations
about what to do. CMS said they were going to do it, and then
did not implement any of those.
Mr. Dodaro. CMS told us they are still trying to work
through doing the fraud risk assessment. We understand it is
almost complete. We are looking now at the premium tax credit,
and its implementation by both CMS and the IRS. And, we should
have a report available this summer for Congress. That will be
our first complete look at that whole process. As Mr. George
mentioned, both the IRS and CMS have responsibilities under
that credit, so we are looking at both.
Senator Lankford. Thank you.
Russell, we have talked before about this as well--and that
is the EITC and all of the refundable tax credits. Often, the
IRS will come back and say this falls on preparers. As has been
mentioned, about half of them actually have a preparer. IRS has
said that, if we get a certification on these preparers, then
we will get fewer mistakes. But, they attempted to do that
about 6 years ago and failed. And then, they are trying to come
back at it again.
The recommendation has been made to IRS before--instead of
having a requirement that is a mandatory requirement for all of
your preparers to go through a certification, you just say to
preparers, ``If you are going to get faster returns, you then
have to go through this certification. If you are going to be a
preparer, your return, if you are not certified, may take 3
months to come back. If you are certified, it may take 21
days.'' And, to be able to just tell them, ``If you want to be
a certified IRS tax preparer and get faster returns to your
clients, you have to do this.'' That way they get training in
the EITC. Why would that not work?
Mr. George. Senator, before responding--and I neglected to
do this at the outset of my comments to questions--since
President Reagan, every President has issued a directive
indicating that tax policy is within the sole discretion of the
Assistant Secretary for Tax Policy. And so, the answers that I
am giving you are not on behalf of the entire Department or the
Administration.
Senator Lankford. Fine.
Mr. George. But, there is no question that that is an idea
that is worthy of consideration. But, as you pointed out, there
was a sensible proposal to have certification. And, for some
reason--again, whether it was the industry or others--it was
not accepted.
Senator Lankford. Mr. Dodaro.
Mr. Dodaro. Certainly, I could add on to this point. We
recommended to the IRS several years ago that they should
regulate the unenrolled tax preparers. They went ahead with a
proposal. It got taken to court. The court found that the IRS
did not have the statutory authority. So, I think Congress
could give some authority in this area. It could be a good
program. I think Congressional support would be important. We
have an outstanding recommendation to do this. It is one of the
things that we mentioned in our ``High-Risk List Report.''
Senator McCaskill mentioned that there is a high error rate
associated with paid preparers. We sent an undercover team in
to 19 tax preparers to try to see if they would give us the
right answer. Only 2 of the 19 gave us the right answer.
Senator Lankford. That is not surprising in some ways, but
it is stunning. And, one quick comment on this, Mr. Chairman,
for the VA as well. Thank you for stepping up and taking the
lead in the St. Louis VA and other areas. We have a brand new
Director in the Oklahoma City VA, Mr. Vlosich, who is doing a
fantastic job in trying to help with a turnaround. We are the
poster child for what GAO has mentioned on construction issues.
Currently, our seventh floor is not usable. Our third floor is
not usable. We cannot get a parking lot finished outside. And,
it has been a chain--the elevator does not work in the middle
of the building. It has been just a chain of issues with
contractors that Director Vlosich is
trying to help us unpack and to be able to fix. But, this issue
has been an ongoing issue. It is not new. But, I appreciate
everyone stepping up to be able to take the lead and to be able
to help us in that--as our Oklahoma City Director has done--as
others have done as well. So, thank you.
Mr. Repko. I know Wade, and it is my privilege and honor to
serve in this capacity. Thank you.
Chairman Johnson. Senator Peters.
OPENING STATEMENT OF SENATOR PETERS
Senator Peters. Thank you, Mr. Chairman. And, thank you to
each of our witnesses for being here today and for your
testimony. We certainly do appreciate it.
Dr. Blank, I owe you a special debt of gratitude, not
solely because of your long track record in public service,
which, of course, is distinguished, but also because you are
the former dean of the Gerald R. Ford School of Public Policy
at the University of Michigan.
Ms. Blank. It was one of the excellent jobs that I have had
in the past.
Senator Peters. Well, that was the right answer to that--
even though it was not a question. [Laughter.]
Senator McCaskill. She is not Big Blue anymore, though. She
is all Badger, my friend.
Chairman Johnson. I was going to say, then she moved to
God's country.
Senator Peters. Point well taken, Senator. But, I will tell
you, actually, I have several of my staff, including some of
the folks who are in this room today, who appreciate your
service at the University of Michigan.
Ms. Blank. Thank you.
Senator Peters. And, at the Gerald Ford School. So, thank
you.
And, Mr. Dodaro, I also want to add to my colleagues'
comments to thank you and your staff for your tireless work in
putting this report together, as well as your other report. I
am encouraged to hear that the $75 billion figure that we have
been given is soon to grow quite rapidly as well--and it is
because of the tireless work of everybody there. So, please add
my thanks to the other thanks that you have received from my
colleagues.
Also, before I ask a couple of questions here, Mr. Chairman
and Ms. Ranking Member, I would like to join in your efforts to
get greater compliance with these GAO recommendations as well.
In fact, I am working right now with Senator Gardner. We have a
bill before this Committee called the Congressional Oversight
to Start Taxpayer (COST) Savings Resolution, which would
require hearing from the relevant Committees on these reports
within a 90-day time period. So, however that may integrate
with the work that you and Senator McCaskill are doing, I think
there is a great opportunity for us to come together to make
sure that what we have seen in performance continues.
The first question I have relates to what we have been
talking a fair amount about today, and this is the payments,
particularly for the Earned Income Tax Credit and other
credits, as far as compliance. The figures are stunning. The
fact that you have 20,000 returns going to one address is
stunning. And, I say that--and the fact that I am really a
founding member of the Senate Payments Caucus with Senator
Rounds, looking at modern payments technology. I had a chance,
recently, to be at one of these payments companies to see the
work that they are doing in fraud detection. The private sector
has really figured this out, because fraud is not just a
problem with the EITC. Any kind of payments you are making as a
company, if you are in the payments business, there is a lot of
fraud out there. And, they have made great strides and have
limited it substantially. And, the new technologies that are
coming on board are really incredibly impressive.
To what extent do you think we need to just be looking at
modern payments technology? It seems as if the IRS is not using
any of it. This is to both Mr. George and to Mr. Dodaro.
Mr. George. Well, thank you, sir. I will say this: The IRS
is not in a position to not disclose mistakes that occur or
fraud that occurs when it is questioned by Congress, the IG, or
GAO. I have worked in the private sector, Senator, and I am not
questioning your point directly. But, a lot of times, banks
will not disclose when their systems are broached, because they
do not want to shock stockholders or regulators or what have
you. Whereas, again, the IRS is not in that position.
There is no question that the IRS, in theory, could
implement changes in their processes that could make it more
difficult for people to engage in unscrupulous behavior. But,
they are so malleable--``they'' being the ``bad guys,'' as I
call them--that it is very difficult for the IRS to keep up
with it. As Senator McCaskill pointed out, it is partially a
resource issue. As I pointed out before, the IRS sometimes
simply does not implement changes that we think would be
simple--and I believe you were in the room when I talked about
how--if they shared more information with other Departments,
such as the Department of Education, as it relates to the
American Opportunity Tax Credit.
This is a little factoid I wanted to make sure that I
conveyed to you before the end of this hearing. And, this is an
opportunity to do so. The IRS did, on its own, make a request
to Congress for what is called ``correctable error authority,''
which would allow them to--if they saw mistakes or different
types of information that they have, versus what the taxpayer
provided, they would be able to change the taxpayer's tax
filing form and give the taxpayer the opportunity to contest
the information if it hurts the taxpayer, in terms of causing
more of a tax liability than they think they are entitled to.
Now, if the IRS were given that authority, we estimate that
it would cost the IRS approximately $1.50 to implement that
change. But, without that, the only way the IRS can do it is
through an audit of the tax return. And, the audit costs
roughly $300 per taxpayer.
So, there are changes that could be made, but the IRS needs
more authority. And, there again, they need to be able to
cooperate more with other government Agencies.
Senator Peters. Actually, with the time remaining, just one
other question that is important--and we can talk further, Mr.
Dodaro, about this issue offline. But, I want to draw attention
to the issue in the duplication report about the challenges
that we face in maintaining some of our satellite weather
monitoring capabilities. I am the Ranking Member on the
Committee that oversees the National Oceanic and Atmospheric
Administration (NOAA). I am also a member of the Senate Armed
Services Committee (SASC). And, you identify work--or
duplication--between the Department of Defense and NOAA and
what we need to do in order to have these essential
capabilities operating.
Could you speak, generally, on how the Defense Department
may need to rely on and collaborate with NOAA and other
Agencies on this issue moving forward?
Mr. Dodaro. It is very important to have collaboration
between the Department of Defense and NOAA. NOAA is the gateway
to a lot of the international agreements that our government
has with satellite systems around the world that could be
available to provide assistance. That is one of the problems
that we identified in the Defense Department efforts. They did
some outreach to NOAA, but did not follow up and did not have a
formal process for doing it. And, as a result, DOD made some
inaccurate assumptions about the availability of a European
satellite, which would dictate what kind of coverage they would
have, both for cloud characterization as well as in defense
theaters of the imagery of weather situations that they would
need for military purposes. And, as a result, they had to
conduct additional analysis and come up with different plans.
This could have been avoided through a more formal process. We
have suggested they do that. The Air Force has signed some
agreements with NOAA, but they do not cover the rest of the
Department of Defense. And, it does not focus on the actual
exchange of data that would occur--or should occur--between the
parties. This has been a longstanding problem.
Senator Peters. Right.
Mr. Dodaro. As you know, the next National Polar-orbiting
Operational Environmental Satellite System (NPOESS) program--
before, there was supposed to be coordination on the whole
development of polar orbiting satellites. They were supposed to
have combined programs into one capable of satisfying both
civilian and military requirements. They never could come
together. After years of efforts and billions of dollars, they
could not reach agreement. So, the Obama administration decided
they could develop their own efforts individually, because NOAA
is responsible for one polar orbiting satellite for the
afternoon orbit and the Defense Department is responsible for
the polar orbiting satellite in the morning orbit. Our view,
now, is that, even if that is the policy decision, DOD and NOAA
need to talk to one another and to coordinate. And, they could
use spare parts. They could exchange between each other. It
just makes eminent sense. But, for some reason, they just are
too sluggish in implementing this recommendation.
We have broader issues and recommendations with the space
programs at DOD. There are 60 different entities operating it.
Nobody is in charge, and we have made recommendations that
there need to be some organizational structure changes.
So, I would be happy to talk to you or your staff more
about this issue, along with our experts in the area, but it is
very frustrating. And, billions of dollars get spent here
without adequate management coordination.
Senator Peters. Well, I would like to have further
conversations with you about that. It certainly makes sense to
coordinate that. But, I am also concerned about, in the
President's budget, significant cuts to NOAA and what that
would mean for weather satellites--and those satellites, as you
mentioned, are important for the Department of Defense as well.
And, a cut on that weather forecasting capability has impacts,
not only with civilian operations, but for defense operations
as well.
Mr. Dodaro. Yes.
Senator Peters. And, we have to think about this in a
coordinated way. Would you agree?
Mr. Dodaro. I definitely agree. In fact, I added the
environmental satellites issue to our ``High-Risk List''
several years ago, because of concerns about gaps in
environmental satellite data coverage that could have
significant consequences both for DOD and its operations, but
also to weather forecasting within the United States. These
could include public safety and economic consequences, if we do
not get adequate warnings, so that people can take
precautionary measures. So, I am very concerned about this
area--and I would be happy to talk to you more about it.
Senator Peters. I appreciate it. Thank you so much.
Mr. Dodaro. Sure.
Chairman Johnson. Thank you, Senator Peters.
I want to quickly pick up on two comments you made. It
``makes eminent sense'' and ``for some reason we just cannot
get this thing done,'' and then go right to Mr. George, the
error correction authority. As a business guy, if my
comptroller comes to me and says, ``Well, we can correct this
for $1.50 or we can keep doing it the way we are doing it right
now that costs $300''--again, it makes eminent sense that you
would go the route where it only costs you $1.50. But, for some
reason--can you describe why we have not done this? Has there
been an attempt in law? Has somebody tried to block this? Is
there any rationale for not giving the IRS that error
correction authority, so we can do it for $1.50?
Mr. George. I have no idea whether or not there was
resistance within Congress, but they do need legislative
authority to do it. And, they currently do not have that.
Chairman Johnson. Gene?
Mr. Dodaro. Yes. The IRS has been given this math authority
for very specific types of tax credits and other issues. They
have not been given the broader authority that Russell
suggests--and we have made a similar recommendation. And, I
think, with proper safeguards, the authority could be designed,
I think it goes perhaps to mitigate concerns that Congress has
about giving the IRS too much authority. There is a good case
for it. With proper safeguards, it should be put in place.
Nobody wants to disadvantage the taxpayer and the due process
that they have.
Chairman Johnson. That would be the resistance--legitimate
resistance about giving the IRS more power than it already
has--kind of a suspect Agency. I got that.
I will go right to Senator Heitkamp, if you are ready.
OPENING STATEMENT OF SENATOR HEITKAMP
Senator Heitkamp. I am. Thank you so much. Thank you--and a
very important topic. And, as we look at narrower and narrower
spending opportunities and more and more cuts, obviously
eliminating duplication and making this work right is critical.
An area that Senator Lankford and I have been focused on
has been Federal hiring. Last Congress, I introduced the
Flexible Hiring and Improving Recruitment, Retention, and
Education (HIRE) Act of 2016 to help the Federal Government
hire and retain vibrant and effective Federal workers. I think
that is absolutely critically important to supporting the work
that the government does.
This idea came out of the challenges that we had during the
Bakken explosion, and then taking a look at the challenges that
we have in hiring U.S. Border Patrol and U.S. Customs and
Border Protection (CBP) folks on the Northern border. So, my
bill would give Federal Agencies a toolkit, I think, of
resources to make hiring and human resources (HR) more
flexible, improving recruitment and retention.
I think, Gene, my question is for you. Ensuring that
Agencies have the resources they need, I think, is absolutely
critical to addressing the Federal hiring challenges. And, it
was really great to hear OPM's launching of the Hiring
Excellence Campaign (HEC). How do we maintain efforts like
that? What do you see, in terms of Federal hiring duplication
improvements that we can make in the hiring structure that will
get us people who actually pay attention to duplication and
come to us with great ideas on how we can save the taxpayers
money?
Mr. Dodaro. One of the things that we suggest and recommend
in our report is that these be a broadview of hiring efforts.
We looked at hiring by Agencies in 2014, and we found there
were 105 different hiring authorities Agencies used. But,
Agencies used only 20 authorities to hire 91 percent of the
people hired during that year.
And so, our recommendation to OPM is to determine whether
the less used authorities are helpful. And, if not, maybe, we
should eliminate them--refine them. Which ones are effective?
Have they effectively communicated that across the Departments
and Agencies?
In some cases, there may be a need to give additional
authority, but we found that there is plenty of authority
available--and Agencies are not using it fully. The question
is: Why not? That is what we have recommended that OPM do. But,
so far, they have only looked at and evaluated a handful of the
105 hiring authorities that we suggested they review.
Senator Heitkamp. When you look at the aging of the Federal
workforce and you look at how many people, theoretically, will
need to be hired to replace people who are going to retire--I
think it is like a third of the people in the next 5 years.
Mr. Dodaro. Yes, right.
Senator Heitkamp. How do we improve that process? And, how
do we encourage some autonomy on the part of the Agencies, but
still maintain an overall systematic approach? And, how do we
avoid duplication and slowdowns in Federal hiring?
Mr. Dodaro. Well, one of the first things would be to go
back to regularly appropriating the money on time before the
fiscal year----
Senator Heitkamp. Really?
Mr. Dodaro. Yes.
Senator Heitkamp. So, we have to do our job in order for
them to do theirs?
Mr. Dodaro. I hate to bring this up. [Laughter.]
But, operating under a continuing resolution (CR) that is
less than last year's money effectively limits----
Senator Heitkamp. The most amazing thing, Gene, is that we
all agree with you, but somehow it does not happen.
Mr. Dodaro. I know. But, I would start there.
Senator Heitkamp. OK.
Mr. Dodaro. And then, I think you need to have OPM look at
the hiring authorities. I do not think it is a problem of
hiring authorities, to be honest with you. I think it is just a
matter of execution on the part of the Agencies to use the
hiring authorities. I think there is a cultural problem here
that most of the personnel departments in Departments and
Agencies are rule-based. And, they view their responsibility to
make sure nobody does anything wrong, as opposed to making sure
that they are proactive and helping the managers bring in the
people that they need as soon as possible.
So, I think that Congress needs to push OPM and the Chief
Human Capital Officers Council (CHCOC) to change that approach
and make them much more proactive and supportive of the clients
in their Agencies. I have no problem at the GAO in hiring good
people. If we have the money and the authority, we can bring
them in. But, I see other Departments and Agencies struggling
with that process. OPM is not providing enough leadership in
this area. I think you should look for more leadership out of
OPM and the Chief Human Capital Officers Council, and put more
pressure on them to be more aggressive and helpful.
Senator Heitkamp. I know that you know that this is a major
focus of our Subcommittee this year. And so, I just want to
close by thanking you and all of you for your service--but
especially you and your team, Gene. You guys--if only we would
listen to you, I think we would be better at what we do. So,
thank you so much for the great work that GAO does, and that
you do, personally.
Mr. Dodaro. Thank you.
Chairman Johnson. Senator Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thank you, Mr. Chairman. Good morning,
everybody. Good morning again. I apologize for being in and
out. We have a hearing in the Senate Environment and Public
Works (EPW) Committee that I serve on as well, so I have been
trying to do justice to both. We are working on cloning here in
Congress to take care of more than one assignment at the same
time. [Laughter.]
I do not think they have done it yet, but I understand the
Administration is going to put out a tax proposal--tax reform
proposal today. And, we will wait to see what the details look
like. But, I understand that it has some steep rate reductions,
maybe, in corporate taxes and some other taxes. And, the
Congressional Budget Office would suggest that it is going to
make the deficit a lot bigger by, maybe, trillions of dollars.
And, the Administration says that the way to offset that would
be growth. And, I hope they are right, because it is a lot of
increase in the deficit. But, what it does--it makes more
important what you are talking to us about--that we find other
ways to do our work more cost-effectively going forward.
I never understood why we are so intent on reducing the
amount of resources we provide to the IRS to do their job. We
provide constituent service. All of us have constituent
services operations in our offices back in our home States. We
have three counties in Delaware. We have offices in all three
counties. And, we get a lot of inquiries that are tax-related
and that pertain to the IRS.
The IRS used to provide reasonably good responses. Over
time, it has degraded. And, one of the reasons why is because,
when we make changes in the Tax Code, we usually make them late
in the calendar year--and they become effective beginning in
the following calendar year. We do not make the Tax Code
simpler and easy to understand and comply with. And then, to
add insult to injury, we reduce the amount of resources that
the IRS has to--either through technology or through people--
help explain and work through all of this. It is mind-boggling
to me.
I am told that, for every dollar that we might increase for
the resources of the IRS, we actually increase revenues by a
substantial amount. Mr. Dodaro, do you know anything about
that? Have you heard anything along those lines?
Mr. Dodaro. Yes. They do have a good return on the dollar
investment for every dollar that they are given. What we have
noted, though, is that the IRS cannot, generally, tell you
which specific enforcement activities would lead to a greater
marginal return on the investment. And so, we think that they
ought to collect and use better information to determine what
is the most effective way to get the additional ``bang for the
buck'' and have better ROI information, in order to do that.
So, with that, they could use whatever resources Congress gives
them in a better way.
Senator Carper. Good. Thank you. Commissioner Koskinen was
before the Senate Finance Committee not too long ago. And, I
asked him about this, and he said, ``We believe, for every
extra dollar that we would be provided in resources, we could
pay back $4.'' I have heard other estimates that are even
higher than that, but it sounds like real money to me.
This might be a question for Russell George. Mr. George, it
is nice to see you. One of the other things that the IRS has
asked for is something called ``streamlined critical pay
authority,'' which is something that you know a little bit
about. Would you just take a minute to explain what it is and
why you think it might be important, and the right thing for us
to give them?
Mr. George. Yes. Because of the technical nature of many of
the responsibilities that they have, they have to compete with
private sector entities in order to gain the expertise needed
to fill those positions. And, because of the disparity between
what the private sector pays and what the public sector pays,
that authority allows, not a huge pay differential, but enough
so that you can attract--and they have attracted--key and very
effective officials--government workers. And, that authority
expired recently. And, they lost every single one of the people
who were hired under that authority. So, we highly support--
and, actually, TIGTA recommended that that authority be
provided once again to the IRS.
Senator Carper. Are you familiar also with the issue of
folks who are preparing taxes and getting paid for it--and they
are not certified public accountants (CPAs)--they are not
necessarily
accountants, but they are people who routinely prepare
millions--maybe tens of millions of tax returns--and the work
that they do is not always very accurate?
Mr. George. Oh, most definitely. Earlier, Gene spoke about
this, but we, too, at TIGTA have, in the past, conducted tests
where we would send in people who were acting the role of
people who needed tax returns completed. And, at the outset of
that endeavor, the response rates were terrible. I mean, it was
less than 50 percent accuracy, in terms of tax----
Senator Carper. What would you suggest that we do about
that--Congress?
Mr. George. Well, because of limited resources, as was
pointed out, the IRS is relying on Volunteer Income Tax
Assistance (VITA) centers, more so. They still have their own
tax assistance centers, but they are not fully staffed because
of resource limitations. The IRS directs people to their
website, which is helpful if you are computer literate. And,
unfortunately, many people who are senior citizens or who are
not financially able to gain access to computers are not able
to take advantage of that. But, there are ways in which to
address this.
Senator Carper. Thank you. Mr. Dodaro.
Mr. Dodaro. We have an outstanding recommendation that
Congress give the IRS the authority to require some
certification of these tax preparers--not an onerous thing, but
some minimal educational certification requirements, because
there are so many tax returns prepared by these preparers. A
couple of other things Congress could do to help the IRS----
Senator Carper. Good. Please.
Mr. Dodaro. One is to lower the threshold for the
requirement to electronically file form W-2, for example. Right
now, if you file 250 or more information returns annually, then
you have to file electronically. If you lowered that to 5 to 10
returns, then you would be OK. As of February 2017, The Social
Security Administration (SSA) had received about 17 million
paper returns. And so, they are still somewhat drowning in
paper, even though more returns come in electronically. So,
that would be a big help.
Senator Carper. OK.
Mr. Dodaro. You would need fewer people, because the paper
returns have to be handled, they have to be coded, and they
have to be converted.
Also, it would be helpful to expand the mandate for
partnerships and corporations, including S Corporations, to
file tax returns electronically as well. These are very
complicated entities, and having more information in an
electronic format would be helpful. So, those are the things we
would recommend. And, we talked earlier about giving IRS
broader authority, so they could correct errors with proper
safeguards to have taxpayers appeal if they think they have not
been treated fairly. Expanded authority--as Russell pointed out
before and as Senator Johnson mentioned--would also allow
correction of tax returns without a costly audit. It just makes
sense to give them that authority. And, between GAO and the IG,
we could check to make sure they are using those authorities
properly and not disadvantaging taxpayers.
Senator Carper. Mr. Chairman, the words of my father are
ringing in my ears: ``Just use some common sense.'' And, I
think we have heard about six good ideas here, today. And, I am
interested in pursuing them, and I hope my colleagues will want
to join me. Thank you.
Chairman Johnson. I think we are.
I know we are going to have a vote called here at 11:30, so
we have a few more minutes left. But, I do want to go back to
Chancellor Blank really quickly, because this is a duplication
hearing. In your testimony--remind me again--how many different
Agencies does your university report to in some way, shape, or
form?
Ms. Blank. Forty-three.
Chairman Johnson. Forty-three. Again, you are not opposed
to regulation, but what you would like is some cooperation and
coordination--uniform, common types of standards, correct?
Ms. Blank. Absolutely.
Chairman Johnson. Is part of the problem not that you are
reporting very similar things, but that each Agency has their
own process for developing their little questionnaire? How much
do you think you could reduce it? Just really talk--if you can
give one example of what we are talking about here.
Ms. Blank. It is hard to come up with dollar figures on
something like this, and I think the real issue is the time of
researchers actually going into teaching and research, as
opposed to paperwork. So, let me give an example of a
particular project where there was a great deal of interest in
trying to use a variety of samples that another research
project had collected. These are medical tissue samples. And,
it took over a year for the researchers to work their way
through a variety of approval processes. They finally simply
gave up on the project entirely. It was very closely related to
some of the issues around Alzheimer's--had a real potential for
expanding our research in that area. And, they essentially
wasted a year of their time trying to get approvals on
something that they simply could not get approvals for, because
enough different Agencies and approval processes had to be gone
through. All of them required different things. So, they just
said, ``This is not worth our time.'' They gave up on it.
Chairman Johnson. Kind of off of the top of your head, can
you just name some of the Agencies? Not to point a finger at
them, but, I mean, just going through--the U.S. Department of
Agriculture (USDA), HHS, the Food and Drug Administration
(FDA)----
Ms. Blank. It is all of the major Agencies--the National
Science Foundation (NSF), the National Institutes of Health
(NIH), USDA, and the U.S. Department of Energy (DOE). Those are
some of the big funders.
I might also say that the IG's office--while it does very
good work--is also often a problem here. And, they often
disagree with the Agencies on what certain standards should be.
And so, they come in and audit us and hold us accountable for
doing things the way the Agencies told us to do them and say
that that is wrong, and then ding us in various ways for that.
Without better coordination between the IG and the Agency, it
means that there are two groups in each Agency coming at us--
often with different standards and different beliefs. And, that
type of coordination just has to start occurring.
Chairman Johnson. In your testimony, you use the exact same
language that I talk about--layer upon layer upon layer. I mean
procurement policy.
Ms. Blank. Yes.
Chairman Johnson. We have layer upon layer upon layer of
different controls designed to prevent us from wasting a
dollar. And, we probably spend billions trying to comply with
all of the layers of regulation. So, we have to, in some way,
shape, or form, figure out how to cut through that--provide
some uniform standards on similar types of approvals, where you
are not having to do--some of these things conflict, right? You
have one over here. If you comply with this one, you are
probably out of compliance with something over on the other----
Ms. Blank. That is part of the problem, yes.
Chairman Johnson. OK. Senator McCaskill, do you have
anything?
Senator McCaskill. Yes. First, on the Do Not Pay (DNP)
Working System, is it true that we are going to have to do
something, in order to let the IRS get the full Death Master
File (DMF)?
Mr. Dodaro. Yes. The Social Security Administration
believes there needs to be an amendment to the Social Security
Act for Treasury to get the full DMF. And, this includes about
10 percent more records. We think this is important and
encourage Congress to do----
Senator McCaskill. That should definitely go in our
legislation. The notion that we cannot figure out who has died
before we pay them--I mean, we have talked about this in this
Committee many times.
Mr. Dodaro. Right.
Senator McCaskill. We pay and then chase, and that never
has a good ending. We have to figure out how not to pay up
front, instead of paying and chasing. It is just something
basic, like knowing who is dead. It seems to me----
Mr. Dodaro. Right.
Senator McCaskill. If the Federal Government cannot figure
that out, then there is no hope. [Laughter.]
There is no hope.
I wanted to briefly talk to you, Dr. Blank, because I care
very much about the Clery Act--and I am painfully aware of how
laborious that particular requirement is. And, I would not mind
it being laborious if we were getting data that allowed us to
actually get a handle on an apples-to-apples comparison--
campus-to-campus--apples-to-apples comparison between
communities and campuses. But, because the Clery Act does not
mirror the Uniform Crime Reporting (UCR) at the Federal Bureau
of Investigation (FBI), we--in fact, your report talked about,
Gene, we do not even--there are like 16 different ways sexual
assault is defined against 4 different Agencies that are
collecting data. We have no hope of understanding this problem
if the data that we are collecting is not done in a way that it
can support good public policy--and there is no question that
this is a problem here.
Would your police department at the University of Wisconsin
be willing, if we could do it, to do the same standards for
Clery that they have for UCR?
Ms. Blank. We would be delighted to have that type of
coordination. I might say that it is a further problem on our
campus that the University of Wisconsin system requires us to
report in a different format and in a different way as well.
So, we have three different reporting standards on----
Senator McCaskill. You have Clery, you have UCR, and you
have State.
Ms. Blank. Yes.
Senator McCaskill. Yes. Well, it would be good if we could
figure out a way just to make everybody do UCR.
Ms. Blank. I agree.
Senator McCaskill. And then, you are doing the same
definitions for each crime. You can compare community to
campus--all of those things. And, I made the mistake in a
public forum of saying that I thought Clery--I was not,
frankly, as articulate as you were, talking about how important
Clery is and that you want that data. I just said that Clery is
messed up--and, of course, everybody came down on my head like,
``oh, my gosh, you cannot quit making campuses report this
data,'' which, of course, is not what I intended. I want the
data to be good, and I want police departments to spend most of
their time catching people who are doing bad things to people,
rather than trying to figure out three different reporting
standards.
Ms. Blank. I agree completely.
Senator McCaskill. All right. Maybe we can put that in
also.
I want to also say that I think if we cannot get NIH and--
especially, if we could just get NIH and the NSF to agree on
one standard for reporting and have it be interchangeable--I
mean, that would do a lot for all of the medical research
facilities in this country.
Ms. Blank. Both the issue of putting in reports--reporting
on effort and on conflicts of interest and on steady progress--
as well as what happens after something is completed--where it
gets filed. As you may know, there is a recent requirement that
is going to be going into effect, asking us to file the data
for all research that is federally funded. Every Agency is
doing this differently, right? And, you get many projects that
are funded by multiple Agencies. That creates just an
enormous----
Senator McCaskill. And, by the way, the data is not very
useful then.
Ms. Blank. Absolutely not. You cannot find it.
Senator McCaskill. Because somebody comes along, and they
have to go to four or five different databases. And,
invariably, what happens is, we end up paying a contractor to
make the databases talk to each other, when it would be much
simpler if we would just require they do one set of data across
Agencies.
Chairman Johnson. We add another layer.
Senator McCaskill. We add another layer.
And, finally, I want to give you a chance, Mr. George, to
talk about the problem at the IRS, because we are trying to
starve them and make sure that they do not have adequate
resources. I mean, right now, a taxpayer that has a serious
problem that they need addressed--they are the customer of the
IRS--they are sitting on the phone to talk to a real person--
they are sitting on the phone for 10 hours--the customer. I
mean, this is all under the idea of ``let us make sure the
IRS--let us cut it and cut it and cut it, because we all hate
the IRS.'' OK. We all hate the IRS. Let us have enough people
there, so they can do their job and serve the taxpayers that
deserve to have their questions answered--and, particularly,
deserve to catch the people that are trying to get tax credits
that they do not deserve.
Mr. George. Senator, the IRS is a revenue-generating arm of
the Federal Government. It needs the resources necessary to
help people comply with their tax obligations. There are
studies that show that, the easier you make it to comply with
your taxes, the more likely people are to do so.
But, Senator, if I may just take one quick minute, because
I--in response to a statement by the Chairman and by Senator
Peters about multiple refunds going to tens of thousands of
addresses--in response to our identifying this, the IRS has
instituted some changes. And, they just reported to us that, in
April of this year, they were able to stop over 92,000 of these
ill-gotten gains--almost half a billion dollars. So, some
progress is being made there.
Chairman Johnson. OK. I appreciate that.
Senator McCaskill. That is good.
Mr. George. I just wanted to give them credit.
Chairman Johnson. And, by the way, I have been making this
point for quite some time. The real solution here is
simplifying the Tax Code. We can talk about tax reform. I would
much rather be talking about tax simplification--tax
rationalization. And then, I think, you actually could have an
IRS that does its job--responds to the customers--the American
taxpayer--and can actually do it with less money. But, it is
about tax simplification. That is really the solution. So,
hopefully, we can work together on that in a bipartisan
fashion.
I want to thank all of you. Again, this hearing, I think,
has pointed us in a direction. You will see that this Committee
has a tradition of working in a bipartisan fashion. You hear it
from a number of Senators right here. We are going to hop on
this, work with the Agencies, and work with all of you, quite
honestly, to try and address the problems that you have so ably
highlighted here. So, this is very valuable. This will result,
I think, in very positive, bipartisan action. So, thank you
very much.
With that, the hearing record will remain open for 15 days,
until May 11th at 5 p.m., for the submission of statements and
questions for the record.
This hearing is adjourned.
[Whereupon, at 11:39 a.m., the Committee was adjourned.]
A P P E N D I X
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