Transcripts For CSPAN2 Key Capitol Hill Hearings 20140403

Because at the moment kanye, given the potential liability that were facing, it seems to me, and you are potentially facing, that this is a very important issue to ensure that no one can interview pashtun interfere at this point spent it is African Import investigation and thats why we only have one independent person doing that investigation, and the awe i believe over 200 people who already have document litigation holds. So were doing everything that we can to make sure he has access to everything and anyone he wants. So you have actual already set aside to ensure that these documents are preserved and ate what he needs access to come hes able to have access to . I would say anyone he wants to access to he will have access to. When you use the term set aside, again, everybody in place that is remotely in connection, is on litigation old so the they cann, the doctor does exist and there i noticed that they cannot do anything with their documents. Well, it seems to me that they may not even notice if they cant do anything with their documents, but i would hope that you as ceo would be making sure that its not just youre telling that to people but you actually are ensuring that these documents cant be edited with beforehand or my question to you would be, when this investigation is conducted, appreciate the usage are willing to come back to the committee, and we thank you for that. Will you make mr. Valukas available to this committees . I think that would be mr. Valukas option, not my decision to make for him spend well, you fired him and as far as i know when you are someone to conduct an investigation, because ive done it before as attorney general of our state, one of the terms i would want to work out up front is, will you be willing to present the results of your investigation and to whom would you be willing to present them to . So youre not come to that agreement within . I would chair the results of the investigation as ive already said i wished it with this committee, with congress, with the nhtsa and with our employees and customers. Well, i guess i think that if youre going to have confidence commend you have sent multiple times in the hearing that youre confident with mr. Valukas. I dont question his credentials but he has exemplary credentials and it seems to me that we would want to hear obviously appreciate your testimony as the ceo, and survey monkey are what steps you are taking to address this issue. But i would think would be important for this committee actually can are directly from mr. Valukas on the investigation itself over the scope of his investigation. So thank you. Thank you, ms. Barra. I know, go back and review this hearing, i will say to myself, you got too excited, and you went too hard. The passion israel on this side of the table. So to the extent this is been a rough day for you, it is coming from the right place. It is coming from a deep commitment that many of us have to these families, and to automobile safety in this great country of ours. You had a great country. Youve got an enormous responsibility to get this right. We appreciate you being here. I cant promise that the next time you are here i will not get as aggressive as i have today, but i do think its important that we point out the many problems that these facts present to you and your company and to the legacy of General Motors Going Forward. This is an incredibly important moment in your corporate history, and you are, youre in charge, and youve got to make some very tough decisions Going Forward, and well be monitoring all those decision and we will look forward to having you back your to testify when you can go into the details of the investigation. And i would ask that you make sure your investigator look at a pattern of Legal Counsel in your corporation, how are they cooperating with litigation . Why are they requiring confidential settlements . I think that is something that we need to understand, because it is, in fact, because those coverage of some is that many of these problems do not get the light of their like they should. Im glad in this instance mr. Cooper and his engineer mr. Hood did what they did, because they performed Available Services this condition up and performed by your company and by the federal regulator think very much for being here. [inaudible conversations] i want to thank you, mr. Friedman is the acting of mr. Of the national Highway Traffic Safety Administration and mr. Calvin scovel comments better general of u. S. Department of transportation. Thank you both for being here today. We look forward to your testimony and will begin with you, mr. Friedman. Thank you, chairman. Chairman mccaskill, Ranking Member heller, members of the committee, thank you for the opportunity to appear before you today. To begin, i would like to say that on behalf of everyone at nhtsa we are deeply saddened by the lives lost of the crashes involving the General Motors switch defect. The victims, families and friends, several of whom i know at the hearing yesterday and some who maybe are today have suffered greatly. And im deeply sorry for their loss. Safety is nhtsas top priority. Our employees go to work every day trying to prevent tragedies like these are our work reducing dangerous behaviors behind the wheel, improving the safety of vehicles, and addressing safety defects has helped reduce highway fatalities to historic lows not seen since 1950. In the case of the reseller recalled General Motors vehicles, we are first focused on safety and ensuring the General Motors identifies all vehicles with defective ignition switch, fixes these vehicles quickly and is doing all it can to inform consumers about how to keep themselves safe. We are also investigating whether General Motors met its responsibility to report and address this defect as required under federal law. If you fail to do so, we will hold the General Motors accountable as we have another cases over the last five years which have led to record fines on automakers. Internally at nhtsa and the department, weve already begun a review of our actions and assumptions in this case to further our ability to address potential defects. Today i will share what ive learned so far. In this Case Community use Consumer Complaints and Early Warning data, three special press investigations on the cold welcome industry websites and Agency Expertise on airbag acknowledge a kobold. Some of the information did raise concerns about airbag nondeployment individuals. So in 2007 we convened an expert panel to review the information. Our Consumer Complaint data on injury crashes with airbag nondeployment showed neither the cobalt nor the ion stood out when compared to similar vehicles. It to crash reports we reviewed at the time were inconclusive on the cost of nondeployment. The reports noted that the airbags did not deploy and the power mode was a access remote, but these crushes involved unbelted occupants and offroad conditions that begin with relatively small collisions where, by design, airbags are less likely to deploy in order to avoid doing more harm than good. Further, power loss is not uncommon crashes work indexed deploy and did not stand out as a reason for nondeployment. In light of these factors can nhtsa did not open an investigation. We continued monitoring the data, however, and in 2010 found that the related Consumer Complaint rate for the cobalt had decreased by nearly half since the 2007 review. Based on our engineering expertise and our processes, the data is able to nhtsa at the time was not sufficient to warrant opening a formal investigation. So the question were all asking is what does this all mean . From my perspective it means that nhtsa was concerned and engaged on this issue. This was a difficult case where we used tools and expertise that over the last decade have successfully resulted in 1299 recalls, including 35 recalls on airbag nondeployment alone. Those tools and expertise have served us well and we will continue to rely on them but also to improve them. For example, weve already invested in advanced computer tools to improve our ability to spot defects and trends and are planning to expand that effort. But what we now know also means we need to challenge our assumptions and look at how we handle difficult cases like this Going Forward. So we are looking to better understand how manufactures do with Vehicle Power loss and airbags, especially when the ignition switch is turned. We are also considering ways to improve the use of crash investigations and identifying defects. But we are reviewing ways to address what appeared to be remote defect possibilities and evaluating our approach to engaging manufactures in all stages of our defects process. Between these efforts and those of the departments Inspector General i know we will continue to improve our ability to identify vehicle defects and ensure they are fixed. Now i want to close on one Important Note to our ability to find defects over a requires automakers to act in good faith and provide information on time. General motors has now provided new information defensive linking airbag nondeployment the faulty ignition switches, identifying a part change and indicating potentially critical supplier conversations on airbags. Had this information been able earlier it wouldve likely changed needs his approach to this issue. The reality, however, is both nhtsa and the audit into should as a whole must look to improve. Madam chairman, Ranking Member heller, most of the committee, greatly appreciate the opportunity to testify before you today. Thank you. Thank you. Mr. Scovel. Chairman mccaskill, Ranking Member heller, members of the subcommittee, thank you for inviting me to testify to the important vehicle on Vehicle Safety. Since 2002 our office has identified opportunities for nhtsa to improve its efforts to address safety defects. Today i will focus on nhtsas action to address major weaknesses we reported in 2011. I will also discuss how our work will help lead to strong action against automakers that choose to withhold critical safety data from nhtsa. In 2011 we reported that nhtsas office of defects investigation at improvement in four key areas. First area concerns one of odis most critical functions, to determine when to investigate allegations of safety defects. Oei did not adequately track its position of Consumer Complaints or document decisions about whether to investigate, leaving its decisions open to interpretation and subject to questions after the fact. Nhtsa completed actions to address the three recommendrecommend ations we made to improve odis process for recommending investigations including modifying its central database for safety defect information to track its reviews of Consumer Complaints. We identified a similar process weaknesses in odis documentation of opened investigations. Some investigation files did not include sufficient information on meetings with manufacturers, Consumer Complaint identification numbers, or a determination of testing needs. Anyone investigation oei did not sufficiently document the basis for its decision to close the case. Consistent with a recommendation to strengthen controls, nhtsa develop a standard checklist for document the evidence investigators collect. Odette also lacked a systematic process for determining when to use Third Party Assistance to test for potential mechanical or electronic defects and to validate information manufactures provide. In response to a recommendation for nhtsa established a framework for determining when Third Party Assistance should be used. Finally, nhtsa lacked processes for ensuring adequate and well trained investigative workforce. In response to our recommendations, nhtsa develop a formal Training Program to open sure its investigators stay current on technology, advancement in the Automotive Industry and plans to complete by the end of may a workforce assessment to determine the number and most effective mix of staff needed to achieve odis objectives. We believe in nhtsas enhanced processes will put the agency in a better position to identify and investigate Vehicle Safety defects. However, the success of these process improvements will depend on how effectively odi uses and applies them when conducting its analyses and investigations. At the secretarys request we will initiate an audit building on our previous reviews of nhtsas efforts to identify and investigate Vehicle Safety defects. Despite the departments best efforts to improve its safety defect analyses and investigations, Vehicle Safety will remain a concern if automakers conceal vital information. The toyota case perfectly demonstrates the risk involved when automakers withhold critical safety data and fail to report defects to nhtsa. Our investigators participated in the mold agency criminal probe of toyota, reviewing approximately 400,000 documents and anythin interviewing more t0 individuals. Last month forfeited 1. 2 billion for intentionally concealing information on vehicle defects from nhtsa. This penalty, the largest of its kind since sends a clear message to audit manufacturers. Safety is a will remain beauties and oigs highest priority. To this end we expect the industry to be vigilant and forthcoming to keep the public safe. We will continue to assess nhtsas efforts to identify and investigate Vehicle Safety defects and stand ready to investigate allegations of wrongdoing by auto manufacturers. Finally, chairman mccaskill come with your permission i would like to offer these words to the family and friends of those who have been lost in crashes involving gms defective ignition switches. I offer you my deepest sympathy. My staff and the office of Inspector General and i are resolved to determine what nhtsa new of the safety defect, when it knew it and what actions nhtsa took to address it. We will also examine nhtsas current safety defects investigation processes and make recommendations or improvement. The secretary has asked us for this. The congress expects this of us, and you, the family and friends and victims the surface of us. I give you my word we will do our duty. This concludes my prepared statement of a happy to end to any question you or other members of the subcommittee may have spent thank you very much, mr. Scovel. I know that there was 1. 2 billion settlement in conjunction with the criminal investigation, actually technically it was i wire fraud charge, but the failure to give information to nhtsa, or the line to nhtsa, that is capped at 35 million. So if you dont have a situation that the facts lends themselves to criminal prosecution but rather if the withholding of information, which by the way, is negligent, they wouldnt have to be intentional withholding of information. Is 35 million enough . Is that really a deterrent to Companies Like General Motors or toyota or chrysler, or any of the companies that are supposed to be getting this data . Senator, when we find evidence that automakers have not acted in a timely manner, we will find them to the maximal extent allowed by law. And the last congress widget support increasing that fine of 300 million. Spent and deeply thats necessary also, mr. Scovel . Senator mccaskill, i believe that is a policy consideration for the administration and for the congress. And considering the purposes behind such penalty, whether it be those that can be similarly related to the basis for sentencing in criminal proceeding, retribution, deterrence, rehabilitation, certainly deterrence is one factor that the congress and the department ought to consider in deciding whether to raise the penalty from 35 million to any figure of a victim whether its a question of, is 35 million regarded by some automakers is sadly a cost of doing business, that can certainly be a conclusion that some may draw from it. There may well be information that an Inspector General or the Government Accountability office may be able to derive through an audit process to help congress and the department make that determination. I know you mentioned the workforce assessment is ongoing. I think i was struck when i was going through materials for this hearing because i asked the question about your budget, mr. Friedman. Especially for defect investigation at your budget has been at 10 million for defect investigations for a decade. Now, this is a decade that a seen major changes in automobile manufacturing. It is seen a much more complicated engineering scenario where we have interdependence of computers, you know, it is, it is, the complexity has gone up exponentially over the last decade. And do you believe that 10 million is adequate to spend it this country for defect investigation for the entire Automobile Industry . Senator, the president has requested an increase in our budget across this in order to increase our abilities to address the wide variety of challenges we face. In 2012 alone, 33,561 lives were lost on our highways due to a variety of factors, whether it was impaired driving, not wearing seatbelts, Safety Technology that hadnt yet been brought into the fleet, as was a small portion of that associated with defects. We have been asking to increase her budget because each one of those lives lost is a tragedy. But within your budget cannot ask you for increase in the defects investigation. I mean, budget has been submitted doesnt show an increase. The money is going other places in your agency. I believe weve asked for some increases in resources, service and increase in staff. Part of what weve been doing is interesting, using our resources to invest in tech talking to make her efforts significantly more efficient. One of things we have done is invest in a new computer told that is dry from ibms Watson Technology in order to enhance our ability to find patterns, to quickly get to those patterns can to connect information. And we do have plans to continue expanding that effort. We need to put more tools in place to be able to sift through the data we have so we can find these patterns, or examples of defects, and get them fixed. In 2007 you considered opening an investigation into airbag nondeployment. You chose not to. Was not come with the basis of the decision recorded in your . I dont believe we have complete records of that. The suspect one of the findings in the Inspector Generals report. Frankly, it is something that is currently hamstring our ability to fully pull together all of what happened. However, i do have stack actively working on making sure we understand what happened. But that is something that has changed, and it is something that we will have Going Forward. Already have and will continue to go forward that hopefully a case like this will not happen again but if it does we will have better resources to be able to understand exactly what happened. I think we need to have the resources and expertise at nhtsa to find these defects and then obviously weve got to have the transparency of the process that is available to the public. And available to anyone who wants to see it. Part of the complaints i hear about nhtsa is its very difficult sometimes to get information out of nhtsa by Safety Advocates that are trying to do their work in the public arena in terms of safety. And i think we will continue to fall on that. Senator heller. Thank you, madam chairwoman. Thanks for this hearing and thanks for those were testifying for being here today. Mr. Friedman, i have to but im a little frustrated with your administration. I sent a letter in anticipation of getting the results to questions prior to this hearing, and i think i was assured it was, before today, last night in particular. And, of course, that didnt happen. So with the chairmans permission i will submit questions and a letter to the record, if theres no objection. And i believe i have no other alternative but to ask you questions here now, if i cant get in writing. So first question i have, the gm report all Consumer Complaints related to the airbag failures that it considered in the recall to nhtsa . Senator, first fma apologize but im sure were not able to get you the answers to your questions but i know the same is the case with several other members. Our focus on making sure the we were testing the safety issues and responding to the committee has taken up a significant amount of our time but i will get you a letter, response to your letter this week. In terms of your question, General Motors reports to us a accounts of complaints but they do not provide to us the detailed complaints themselves. So what actions do you take based on that information . Well, we use that information, the number of the complaint along with a wide variety of other pieces of information oath that they provide and that we gather ourselves through our complaint database can store special crash investigation, through industry websites and other resources. We look at that data, have an Early Warning division that is focused exclusively on look at the Early Warning data which would include complaint numbers and other data and we have a defects assessment decision that focuses on Consumer Complaints in compiling the information. We gather that data. In this case we did, there were clear warning signs and concerns and, therefore, an expert panel was convened based on those concerned to determine after looking more deeply into the issue whether there was sufficient information to open speak any conclusions from the expert panel . In that expert panel the decision was made not to open the investigation based on a couple of key factors if the first is that the cobalt and ion did not stand out when it came to airbag nondeployment complaints compared to their peers. They were a little bit above average but they did not stand out. Second, in looking at the detailed crash investigations, the two that were available at the time, they were inconclusive as to the cause of airbag nondeployment. Airbags are understand that many people expect airbags to deploy in any frontal crash, for example, but they are actually designed to only deploy window help the occupant and not cause more harm than good spent win with those conclusions made . In 2007. That was the first time a look at them spent share with me what the threshold, what threshold is nhtsa used to determine whether a complaint like this warrants further investigation . We dont have a specific threshold but each case is different. In cases where a defect is clear, all it takes is one and we will act on that one case if theres clear evidence of a defect. If theres not we look for further evidence. We look for trends but we consciously do not have a specific threshold because each case is different. If theres a vehicle were only 5000 are sold per year and we see one incident, that may be sufficient to open investigation if theres a vehicle with a 500,000 sold in a year, if theres one incident that declared effect, we will open, but if theres a larger number and does not include defect trend, we may not open but it does depend on the facts of the case. You are saying in this particular case that you couldnt tell me how many additional incidents or reports would be necessary in order for nhtsa to take further action . We rely on a combination of our engineering expertise, data indicating whether not this is a new trend. So if a number of complaints had gone up significantly, that wouldve cost us to act. In fact, what happened will look at this again in 2010, the complaint rate over all went down. Okay. Ill hold off for additional questions. Senator blumenthal. Go ahead. Thank you. Thank you both for being here, mr. Friedman, general scoble. I first of all want to thank you for your service to our nation and now for your service at nhtsa as Inspector General. And thank you, mr. Friedman, for your service at nhtsa. Let me ask you, mr. Friedman, i take it from what you suggested and what you say, what you said here today that gm concealed material significant information from nhtsa, is that correct is because we are very concerned that they didnt provide us with sufficient information. Spent i know youre concerned. Were all concerned. Did they conceal information so far as you know . That is exactly the subject of an open investigation that we have into General Motors but and if we find that they did violate their responsibility to report information to act quickly and we will hold them accountable. But because thats an open investigation i dont want to prejudge that. But im very concerned that they did not provide us with part never changes. Im concerned that they had conversations with suppliers about the algorithms and we werent aware of in your view, was the faulty ignition switch a defect . With what we know now, very clearly it was a defect. Was it a design defect . Im not sure that it was clearly a defect but it was a defect that represent an unreadable risk to safety. The key itself, and its, from i understand that the situation, its a combination of factors. They keep itself with low torque could turn and disclose something about their algorithm that would come adheres to disable the airbags in that case. To be honest that does make sense to me because speed its a moving car which in turn stable of airbag, is that correct . I dont know if were asking them very specific question to understand that. Power laws in a vehicle in a crash is not uncommon. That are capacitors built into these airbag systems to ensure that they have power in the case of speedaisspeedais h i have limited time, so let me just ask you very directly to it is your testimony today that it was a defect . Based on what we know now, absolutely. Better position to identify and investigate Vehicle Safety defects to the extent that odi uses and applies these process enhancements when conducting its analysis and investigation. The way i interpret that sentence is, you know they said they adopted the recommendation but you dont know in fact whether theyre doing them. Precisely, we dont know how effective these new process enhanesments will be. We believe based on our assessment of nhtsas processes as of the 2010, 2011 time frame using the toyota case as a case study if you will, assessing nhtsas processes and what we recommended to improve those, that the steps that nhtsa took should help. Now are they the silver bullet, would they have avoided or or prevented any problems we might see with gm that we dont know but what we do want to answer now is the mail from the secretary where he asks us specifically whether nhtsa acted in an expeditious and tilely manner to identify and pursue safety defects covered by the gm recalls and whether nhtsa had and currently has sufficient resources, processes and Data Available to it to fulfill its safety function with respect to the recall. So we want to see how its being applied. Are you involved, as you were in toyota, in a criminal investigation of gm . Senator, i cant confirm or deny that a criminal investigation is underway. Based on our toyota experience you were involved in the toyota criminal investigation. Absolutely. We were critical to, to the criminal investigation of toyota. Our agents were identified by name a couple weeks ago by the attorney general at his press conference where he announced the forfeiture and we are, we have gained a tremendous amount of expertise in this area. Let me ask you finally, id ask both of you to support the legislation that senator markey and i have introduced. Are you willing to do so . Senator, im very open to working with yourself and senator markey on how to make sure that we can best move forward and how we can improve and open further discussion on your legislation. Sir, if i may, and, my response is a little more complicated and i will apologize in advance. Im sure you appreciate as an Inspector General my is my presumption is more transparency is almost always better than less. By virtue of the fact that serve as d. O. T. Inspector general, by statute and by executive order i serve on the recovery accountability and transparency board, the Government Accountability and transparency board, so transparency is literally our middle name. However i am fully cognizant factors, the considerations on the other side regarding confidential Business Information and so forth. Thank you. Thank you very much. Senator klobuchar. Thank you very much, madam chair. Mr. Friedman, maybe you heard earlier about the case of a the three young women in the car in wisconsin, two were killed, one of them was one of my constituents, natasha wigel. Following the crash nhtsa opened up the investigation and found incidents of similar ignition switch problems but was unable to determine what was causing the problem. The report found that, this is a quote, such a determination would most likely require analysis of the airbag system to determine if in fact the airbag is capable of deploying when the ignition is switched from the on position to the accessory position. Such an undertake something beyond the scope of this investigation. Mr. Friedman recalls do you think that this report should have raised enough red flags to trigger further investigations into this question . This report was one of the piece that is did raise concerns and that the panel did consider. At that time our understanding of airbags indicated that, first of all, power loss in a crash was not uncommon and that airbag systems were designed to be able to function in those circumstances. Based on that expertise and based on information we had available it was determined it wasnt sufficient information to open up at the time. This is frankly one of the clear lessons that we are learning from this, a lesson that clearly comes too late, that we needed to question that assumption. And Going Forward one of the things that i have talked to my staff about and that were looking at is, how can we better consider remote defect possibilities. How can we better integrate these special crash investigations, even further. Theyre already part of the process but how do we better enat that integrate them into this process this was a tragedy. This report of the crash where they barreled 71 Miles Per Hour into a grove of trees. It was one of the first to be linked to the faulty ignition switch. So you think if you had Something Better in place it was potential for trying to prevent these tragedies in the future . Well, that is without a doubt my goal. One of the challenges in this specific instance was that as you noted, the vehicle hit trees. The first set of trees that they hit was kind after softer strike, with an unbelted occupant, which is the exact kind of condition where airbags, are designed often to not deploy because if the driver or passenger is moving forward as the airbag is expanding, sadly it could do more harm than good. More than 200 lives have been lost previously because of that challenge. And so our understanding of the system indicated that under those conditions the conditions of the crash was more likely reason for nondeployment but clearly as i said, we need to relook at our assumptions and relook at our understanding of these systems and we are actively doing that were talking to automakers to better understand their algorithms and if theres a problem out there. Investigators, as you know, are still gathering recall data and records to understand what happened here with gm but based on the records we have so far one thing we know nhtsa is dependent on the Automobile Companies for the data and context needed to tell whether something is in fact an isolated event or a dangerous trend or a defect. Is it your view that nhtsa has to rely too heavily on auto manufacturers to get this information . Senator, we rely on auto manufacturers for some information but we also have significant resources with information that have nothing to do with the automakers. One of the most important pieces of our database are Consumer Complaints. Right now we get about 45,000 of those a year which we look through each and everyone. I would like to see that number grow. We have plans and efforts underway to try to get more and more consumers when they see problems to report them to us. There is added data that we get from automakers and we do use that as part of the process. I dont think were too dependent on them. We try to make sure in this case we did rely on our expertise and our data as part of the process. You got about 260 complaints about the faulty ignition . Is that about right . I believe that is one of the numbers that was reported, on the ignition switch. At the time, what we were trying to understand, what we were looking at, was airbag nondeployments. At the time we did not have the information but you didnt know, well, i know were going to find all this out, i hope very soon. But i didnt know it was about ignition switches in you thought, you were looking at airbags instead of at the time our focus was trying to understand why airbags may not have been deployed. There was, there were these added complaints about ignition switches or stalling. I believe that 260 number may have been all stalling complaints. I would have to check on that to be sure. It is not clear that all of those were related to the ignition switch. There are many causes of stalls. Did the airbags not deploy because it wasnt a traditional crash right away, it shut down so that airbags dont deploy . The dynamics of these crashes to the investigators, to our crash investigators indicated that that was the more likely reason. But it is very possible now that we know what we know, that the ing ignition switch being in the accessory position was the problem. We now have that definitive link from General Motors a link if we had had earlier we would have been able to act. Mr. Scoff val, you look like you canted to scovel. Yes, senator. I have something that committee, itch a copy of the special investigation accident report that you referred to because you read from the last sentence or two of the main paragraph on page 7. It is encouraging to hear the administrator talking about reexamining process and used term integrating special crash investigate reports because we clearly, we, my office need to understand how the agency intend to do that because weve identified that on the basis of certainly, this one piece of evidence that youve cited as a key concern. The administrator has spoken to at least the preliminary finding or, assessment that the airbags didnt deploy because of the nature of the impact against softlyyielding trees. In fact the expert engineers conducting the special crash investigation about a year later submitted an amended, an amendmentment to the report that removed that as their initial assessment and said, that they couldnt tell whether it might be that or it might be the loss of power through the ignition system but then such an undertaking was beyond the scope of the investigation and they pointed out that it would require further analysis. It may have been the ignition switch. Right. But that is not what they were asked to investigate, is that what it is . It seems so strange. It does but properly beyond the scope of what nhtsa laid out what it wants to get from a special crash investigation. Is there away you could change that where you say we dont know what happened here . This is very odd these girls were just driving down the road and 71 Miles Per Hour surge into some trees . Well, part of the purpose of special crash investigations is to better understand the circumstances of crashes of interest. We were very concerned about airbag nondeployments which is exactly why we were having special crash investigators go out and gather data and information on these crashes. I do believe that is a food process. That is the right process we make sure that the special crash investigators around odi talk to each other. It is the job of the investigators to try to understand whether or not theyre a defect. So sci is a great teal for gathering the data but we need our experts engaged in the process to translate and understand that data. I have one last call on the recall process, i mean one less question, sorry. Manufacturers can voluntarily initiate recalls without waiting for nhtsa to order it or nhtsa can order manufacturers to do a recall however if they do that and ordering one they have a lengthy process, holding a public hearing, completing investigation, giving manufacturer time to file a detailed response and defending a recall in federal court. Recall seems to be rolling out a different one every day are we shortchanging americans and jeopardizing safety . In other words when lives are at stake and when manufacturers appear reluctant as appears in this case to initiate a recall as we go back through time on their own is the length of time it takes for nhtsa to order a recall a problem . Senator, the good news here is that we very, very rarely ever have to go to that length. Were actually potentially involved in such a situation with a car seat manufacturer who has resisted moving forward with some infant seats but the vast majority of the time, almost every single time the industry does act but sometimes it does take extra pressure. What i would like to see, frankly, when we provide evidence to an automaker that there is a defect that they act right a way. I would like to see quicker action from automakers but to be clear the vast majority of the times we dont not have to go through that full process. We can get recalls much earlier in the process and we very often do. Thank you. Mr. Friedman, first, do you monitor the legal claims against manufacturers . The legal claims are one of the pieces of information that does come into nhtsa through the Early Warning system, through our Early Warning data system, however, depending on the, where those climbs are in the process in terms of litigation, whether or not that litigation or the findings are sealed, we may not have all the access to that information. So but youre monitoring because it is very easy to find, i could go on my ipad right now and google lawsuits against General Motors and pull up hundreds of them im sure in fairly quick order. Do you yall do that, so you know if a complaint has been filed on a defect on an automobile . Because what im trying to do is harness the great work that clearly is going on since it was a lawyer who figured this out, harness that work for your agency and i dont get the sense that you all are paying that close of attention to these cases. Were paying very close attention to these cases. We get death and injury reports which include claims, unsubstantiated claims in some cases associated with these vehicles. We get those reports and when we see something that raises concern we do reach out and ask for additional details. In this case, when the cobalts and other vehicles, if my numbers are correct i believe we reached out 98 times to follow up on various claims, death and injury claims associated with these vehicles. We looked at that data and that information as part of that process. I so i would be interested to know the specifics of that. How many of those 98 claims, when you looked at them how many of them had been settled, how many were tried, how many went to jury verdict, what were the verdicts if you actually did that. I would like to see that documentation. Look and find one of those cases that is settle thed confidential and do you have the Legal Authority to ask the manufacturer the details of that lawsuit. I dont know know exact details of our Legal Authority. I know if it hasnt been sealed we can ask for additional information. Lets assume it has been sealed. General motors, toyota, chrysler, or any of them insist they will not settle with the client, with the victim unless there is an agreement of confidentiality. Do you have the ability, independent of the confidentiality between the victim and the defendant, do you have the ability to go directly to the defendant and get that information . I will have to verify with my team but i do not believe we have the ability to request sealed documents. What about subpoenas . You can subpoena, right . Thank you. Yes. That worries me you didnt know. It worries me as well. So how often have you utilized the subpoena power of nhtsa to get more information from automobile manufacturers . That is something i will definitely get back to you on the record. Okay. I would be very interested in that. Finally, im a little worried about this whole deployment of airbags power on, power off. As you have said and your testimony said that you believe the specifications were that if the power was off the airbag would still deploy. We are now learning that the reason the airbag didnt deploy was because the power was off. This is a problem. Well, and it may even be more complicated than that actually and thats one of the questions that we actually have in our timeliness query to General Motors. Is possible that it is not simply that the power was off, but a much more complicated situation where the very specific action of moving from on to the accessory mode is what didnt turn off the power but may have disabled the algorithm. That to me frankly doesnt make sense from my perspective. If a vehicle, certainly if a vehicle, the airbag algorithm should require the airbags to deploy, even if the vehicle is stopped and you turn from on to accessory, i believe the airbags should be able to deploy. So this is exactly why were asking General Motors this question, to understand, is it truly a power issue or is there something embedded in their algorithm that is causing this, something that should not have been there in their algorithm. Yeah, is pretty important we figure that out and what you need to do is look across the entire manufacturing spectrum. Weve already gun. Either, the airbag is dependent on power or it isnt and if it is dependent on power, weve got an issue. Yes. Senator. In fact i have already directed my staff several days, well, at least days if not more than a week ago, as we were digging into this to reach out to automakers and to suppliers because i have the same concern you have that i want to make sure that we fully understand this issue so that americans driving around on our roads are safe. Safety must always be our top priority. Thank you. Mr. Friedman, how long have you been the acting director . Ive been the acting administrator just over two months. What was your Prior Experience with nhtsa . Prior to that i was the deputy administrator for about eight months. Okay. Anything prior to that with nhtsa. Prior to that i worked for a Nonprofit Organization and we engaged on fuel economy and fuel economy and safetyrelated issues where they overlapped, i worked there trying to get your history of nhtsa. All right. Probably one of the biggest complaints i getgo home talking to businesses and companies is, that government interference and strong hand of government themselves in some of the regulations. Could you describe to me what the relationship between nhtsa, gm has been in the past . Our relationship has been a relationship you would expect between a regulator and a regulated entity. Our goal, as part of that relationship is to insure that we are catching any defects involved, that were discussing with them possible safety technologies. And that were insuring that they are providing information to us and we are raising concerns to them when appropriate. Are you comfortable with the relationship . I would like to see from all automakers increased efforts to be responsive when nhtsa reaches out on defects issues. I would like to have the confidence that they are all sharing all the information that they have. Do you have that confidence today . I think clearly the toyota case indicates that no, i should not fully have that confidence because that is a clear case where in fact there was a part number change, a part change that was not revealed. It is also one of the reasons why im concerned in this case and one of the reasons why we have opened an investigation into the automakers. In fact over the last five years we have issued record fines against automakers, not just toyota but ford as well in at least one other manufacturer because we were concerned they did not act properly under the law. And they didnt, we found they did not act properly under the law. Is the secretary of transportation consulted with decisions regarding nhtsa investigations . Thats, thats a very broad question. In terms of. There are some investigations that the secretary of transportation is made aware of. Certainly in defects assessment panels or secretary of transportation is not involved in that decisionmaking process, no. Was he involved in this one . No. He was not . No. Just to be clear, there was a panel that happened in 2007. Thats the panel that were discussing and absolutely not. Was anyone in the secretarys office consulted . No. Okay. Let me ask you another question. Did any, did any government official, outside of the department of transportation, consult or provide input on the decision not to move forward in 2007 and 2010 . Not that im aware of, no. That would not be our standard process. Mr. Scovel, let me ask you the same question. In your investigation, did you check to see or, was that part of your broad scope of thing to find out what influence may or may not have occurred in 2007 and 2010 . Senator, it was not part of the audit we conducted in the 20102011 time frame which was prompted most immediately by the toyota problems. Going forward, i can tell you that in the current audit which the secretary has requested us to do, we will be looking at everything, that nhtsa knew, what it didnt know, when it knew it and what actions it took in response to that. Should we come across any documentation and our auditors are trained and will be instructed to be on the lookout for such matters, we will take them, take them under cognizance and refer them to the proper authorities. Including other government influence on decisionmaking process . Yes, sir. Very good. Thank you, mr. Chairman. I want to thank both of you for being here today. I think weve had a product at this day and learned a lot. There will be followup hearings and calling on you particularly mr. Friedman, to give us more information as your investigation continues. Thank you both. Thank you. [inaudible conversations] [inaudible conversations] army chief of staff general ray odierno and Army Secretary john mchue will be on capitol hill and are expected to talk about yesterdays fort hood shooting. Theyre officially expected to testify about the pentagons 2015 budget request before the Senate Armed Services committee. Live coverage at 9 30 a. M. Eastern on cspan3. Now is commissioner John Koskinen on the agency and challenges facing the tax system. He spoke at the National Press club yesterday. Well show as much of this as we can until our live coverage of the u. S. Senate at 9 30 eastern. Good afternoon and welcome. My name is myron belkin, im an adjunct professor at George Washington University School of media and public affairs, former International Bureau chief with the Associated Press and the 107th president of the National Press club. The National Press club is the worlds leading professional organization for journalists committed to our professions future through our programing with events such as this while fostering worldwide free press. For more information about the National Press club, please visit our website at www. Press. Org. And to donate to our journalism institute, please visit www. Press. Org institute and you will find, all you have to do is click and you will find all the information you need. On behalf of our members worldwide i would like to welcome our speaker and those of you attending todays event. Hour head table includes guests of our speaker as well as working, as well as working journalists who are club members. If you hear applause in our audience, i would note that members of the general public are attending so there is not necessarily evidence of a lack of journalistic objectivity. I would also like to welcome our cspan and public radio audiences. You can follow the action on twitter using the hashtag, npc lunch. After our guests speech concludes well have a question and answer period. I will ask as many questions as time permits. Now it is time to introduce our head tables guest. I would like to have each of you, on the head table, stand briefly as your name is called. And so let me begin. From your right, ralph winy, euro Asia Business coalition. Shauna press secretary, the embassy of finland in washington. Peter blank, kiplinger washington editors. Margaret sherry, irs Deputy Commissioner and guest of the speaker. Mark heller, tax policy reporter, at bloomberg. Mrs. Pat koskinen, wife of the speaker. Jerry srmky, Buffalo News Washington Bureau chief and chairman of the npc Speakers Committee and past president. Speaking over speaker. Debra solomayo, speaker member who organized todays event of the thank you, deb ralph. John dalrymple, irs Deputy Commissioner and guest of our speaker. Marilyn bee wax, Senior Business Editor National public radio. Rec live svensson, executive editor of aarp. Jose calderon, Treasury Department recreation association. [applause] it has been called the worst job in washington. [laughter] need i say more . If thats at case, running the Internal Revenue service didnt get any easier after a controversy erupted last year over irs scrutiny of tea party groups. The acting commissioner was forced to step down amid critsystem that the irs, that the irs was unfairly singling out these groups in reviewing their applications for taxexempt status. In the wake of that controversy John Koskinen took the helm of the irs. It is a tough job but koskinen is no stranger to tough situations. He spent more than two decades running a business that specialized turning around Failing Companies before he was tapped for government service. He has taken on several high level challenges over the course of his public career. For instance, freddie mac was shaken to its core during the financial crisis after taking on risky loans that pushed it to the brink of insolvency. President bush tapped koskinen to rebuild freddie mac. Earlier president clinton had called on him to oversee the nations y2k efforts when it was widely believed computers inability to recognize the year 2000 would result in calamity. Koskinen also served as Deputy Director of the office of management and budget, city administrator for the district of columbia, and president of the u. S. Soccer foundation. He refers to it as his quote, checkered career of interesting challenges. Now he embarks on perhaps his most interesting challenge yet. As irs commissioner he leads an agency that is responsible for collecting about 2. 5 trillion a year in revenue while administering the tax code, including new rules related to the Affordable Care act. Please welcome to the National Press club the commissioner of the Internal Revenue service, John Koskinen. [applause] thank you all for that warm welcome. It is truly an honor for me to be here at the National Press club for the first time as an irs commissioner. I was here awhile back as noted during my tour of duty as the y2k czar which was also an interesting time. Interesting you may recall, that the chinese curse, may you live in interesting time. It did not mean that as really a polite thing to wish you well for. Im intrigued by the desserts here which seem to be tied into where we are. Mine was a piggybank which reminds you that, it is a little too late for this year, april 15th is almost here but it is not too late to start saving for next year. More interesting are the 10 cookies. They are, obviously designed to be a new currency to rival bitcoins. We will soon have guidance out but would i tell you having thought about it a little, the first part of it will be they will sees to be currency if you eat them. [laughter] now that weve turned the calendar to april i know there are usually a couple other things on peoples minds of the first is spring which took a little while to get here after the snow on sunday and the second is obviously taxes. Plus some of you may be watching the final four this weekend. As former chairman of the duke board of trustees we had a moment of silence early in the tournament. But i would draw your attention to the loss to mercer was a part after longer term strategy to increase the duke endowment in hopes of a substantial contribution from unnamed major investor in the United States in recognition of the billion dollars we had saved him. Moving on, if youve come to this luncheon or tuned in, expecting to hear about the state of affairs at the Internal Revenue service youve come to the right place. I was sworn in as irs commissioner a little over three months ago and i feel exactly the same way today as i did on day one, excited, and proud to lead an agency thats critical to the functioning of our government and one that touches virtually every american. These last three months ive traveled to 18 of the 25 largest irs offices around the country. In fact im off to chicago and detroit tomorrow. I talked with and listened to almost 8,000 employees thus far and been delighted to see the professionalism, skills and dedication of our employees. Im on this journey because throughout my career, i have found that the people who know most about what is going on in an organization are the front line employees. They have important insights into the opportunities and challenges an organization faces. In light of all that has happened to federal employees in the last four years and irs employees in particular, no pay raises for four years, government shutdowns, furloughs and the negative publicity about the irs over the last year, you might have expect and to some extent i did i would heard a lot of grumbling about employees not being paid enough or having to work too hard. Instead the consistent response i heard in all 18 cities is a concern that we do not have enough employees to provide the level of Taxpayer Services our employees want to provide and think taxpayers deserve. Ive also heard at every stop, even in the 18 cities and new york last friday, interesting observation and suggestions how we can improve the daytoday operations of the agency and ive explained in town halls with front line workers and meetings with managers at each stop one of my goals is to foster an environment where information flows easily from the bottom up to the agency as well as from the top down. Its critical not only for to us get the benefit of observations and suggestions from employees but also to learn as quickly as possible about problems or challenges. Ive noted that it is illusory to think that well never have a problem or make a mistake, that things will always go the way we planned. We have 90,000 employees. Administering the worlds most complicated tax code and dealing with millions of taxpayers. Instead, my goal has been for us to find problems quickly, fix them promptly, make sure they stay fixed and perhaps most important be transparent about the entire process. Ive told our employees if theres a problem in the organization it is my problem and well fix it together. If an employee makes an honest mistake it is my mistake as well and well Work Together to remedy the situation. And if theres a problem that i dont know about, it is my fault, because it means that we wouldnt have built a culture that encourages information to flow up from the front lines through the organization, even if its a problem. As i tell employees, my theory is, bad news is good news. The only problem we cant solve is the problem we dont know about. And as corollary i think it is important for all employees at all levels, that we dont shoot the messenger, we thank them. In moving the irs forward one of the most important things we have to do to restore public trust in the agency which was shaken by management problems that came to light last year with regard to the determinations process used for applicants applying to become taxexempt social welfare organizations under section 501 c 4 of the irs code. Organizations that have 501 c 4 status can be everybody from garden clubs to homeowner associations but the focus last year has been on advocacy groups that spend part of their time and their money on political campaigns. As a result of the inappropriate use of an organizations name alone, as the criteria for setting its application aside for special treatment, doubt has been cast by some on the independence of the irs. It is an important issue that deserves our attention. But its also important to put the issue in context and in perspective. The irs has about 800 employees in the exempt Organization Division at large and only a small subset of those folks work on processing applications for taxexempt for social welfare organizations. Meanwhile there are 89,000 other irs employees and in offices all across the country doing critical work for our tax system and for the nation in other areas. Nonetheless, taxpayers need to be confident that the irs will treat them fairly. It doesnt make any difference who they are, what organizations they belong to or whom they voted for in the last election. None of that matters to us at the irs. We will do about one million audits of individual taxpayers this year. Some will get audited. Maybe democrats, some may be republicans and some may be Something Else all together. But they will all have one thing in common, that theyre being contacted by us at the irs because there was something on their tax returns that needed follow up. Perhaps we need ad clarification. Maybe there was a mathematical error. Or there could be something seriously wrong with the return. But the return alone is the reason for our inquiry. And anyone else with the same issue would receive the same inquiry and same treatment from the irs. To make sure that does not recure weve done a number of things. We accepted all nine recommendations in the Inspector General for Tax Administration. It was his report last may that found applications for 501 c 4 status were being screened using inappropriate criteria in the determinations process. Since then for the last several months the irs has been cooperating with the investigations into this matter that were launched last summer. There are now six ongoing investigations, four conducted by congressional committees, one by the department of justice and one by the Inspector General. We were asked by members of congress to quantify the work weve done and how much it has cost thus far. The answer is more than 250 irs employees have spent over 100,000 hours working directly with complying with the investigations. The work cost more than 14 million which include adding capacity for our Computer Systems to make sure that were protecting taxpayer information while processing and producing these materials. In letters to congressional committees two weeks ago and in my testimony before the House Oversight and Government Reform Committee last week, i was pleased to report that we have now provided all the documents we have identified as being related to the determination process, which was the focus of the igs report last may. We have provide the taxwriting committees, the Senate Finance committee and house ways and Means Committee which mr. Our primary oversight committees with almost 700,000 pages of documents. Were still redacting taxpayer information from the last of those documents before they can be shared with the other committees that do not have authority to see taxpayer information. As a result, my hope is that at least some of the six pending investigations will be concluded soon and reports issued sometime in the near future. I made it clear we will respond appropriately to the facts revealed and recommendations of those reports and move forward as an agency, taking as i say whatever actions are necessary beyond those that weve already taken. Our production of materials has preceded according to priorities set with all the investigating committees and as we have now completed our production of documents related to the determinations process, were prepared to work with the committees on any new matters or avenues they want to pursue. You may have noticed that during my threehour hearing last week before the House Oversight and Government Reform Committee some members of the committee expressed unhappiness with the rate at which were reducing, producing redacted information for them. As i tried to make clear we never indicated we were not going to respond to the very broad subpoena for documents we received in midfebruary. Indeed we have produced documents responsive to each of the subpoenass categories. In the private sector a court would require these requests to be reduced to those relevant to the inquiry but thats not the way subpoenas from congress work. There are no limitations and so the volume of materials requested mines we could be at this as ive noted for a long time. Another recommendation by the Inspector General was that the Treasury Department and the irs should provide clearer guidance on how to assess the permissibility of 501 c 4 social welfare organizations activities. So last november, treasury and irs proposed regulations designed to clarify the extent to which a 501 c 4 organizations can engage in political activity without endanking its taxexempt status. While i was not involved in the drafting of the proposal which was released before i was confirmed as commissioner, i believe it is extremely important to make this area of regulation as clear as possible. Not only does that help the irs properly enforce the law, but clearer regulations will also give a better road map for applicants and it will help those already operating as 501 c 4 organizations properly administer their organizations without unnecessary fears, of losing their taxexempt status because of activity which theyre engaged. During the Comment Period which ended in february we received more than 150,000 comments. Thats a new american record for an irs rulemaking Comment Period. In fact, im told if you take all of the comments on all the treasury and irs regulations for the last seven years, double that number, youre close to the number of comments that we have on this single regulation. Were beginning to review those and analyze them. Obviously it is going to take a little while to sort through them all because we treat them seriously. These are people across the political spectrum who have taken the time to write and give us views what the definition of Political Activities ought to be, how much of it you should be able to engage in and which organization should it apply. It will take as you while, once we finish reviewing the comments and hold a public hearing to consider possibly reproposing a modified regulation and obtaining more public comments. So as i have said in the past it means unlikely well complete the process before the end of the year. Before leaving this topic i want to note one other thing. Last month former irs commissioner randolph thrower passed away at age of 100. Commissioner led the irs from 1969 to 1971 during early years of Nixon Administration which turned out to be a challenging time for the agency. Holed against types to attempt to politicize the agency. White house eventually fired him because of his principled stance. Im sure commissioner thrower would here today he would say he was doing his job but he was doing much more. His refusal to let politics compromise the irs is a important reminder to all irs commissioners now and in the future what our mission is. I intend to follow his example. I want to reassure everyone listening here today that the irs is an agency of career Civil Servants who are dedicated to serving the american taxpayer in a fair and impartial manner. Thats how its been and that is how it will always stay on my watch. We have other important challenges to face. One example of this is insuring that the Filing Season goes smoothly. When i started in december i told employees i wanted to help with the Filing Season as the new kid on the block perhaps the best thing i could do was stay out of the way. Ive been very successful at that. I met my performance standard and at probably at least partially as a result the Filing Season has gone very well thus far. Through the end of march we received more than 90 million tax returns and issued more than 70 million refunds for approximately 207 billion. In fact, it is going so well i may start claiming credit for it rather than standing aside of the as we get closer to the april 15th deadline for filing returns i think its important to realize what a tremendous accomplishment it is for the agency to process 150 million individual taxpayer returns every year. That doesnt happen by accident. And it doesnt happen automatically. It happens because thousands of dedicated and experienced employees work for months, planning for the next Filing Season and then administering it. Another top priority of ours is Taxpayer Service. This Filing Season as we do every year the irs provides services to taxpayers to help them fulfill their tax obligations. Taxpayers want and need more online Tax Information and services and were working to meet that demand by making improfits to our website at irs. Gov. Last year alone taxpayers reviewed irs. Gov web pages more than 450 million times to get forms and publications, find answers to their tax questions and check on the status of their refunds. In fact one of the most popular features on irs. Gov, is where is my refund button that you can push. Taxpayers used more than 200 million times last year. As you know, that doesnt mean that there were 200 million individual taxpayers. Some of them just couldnt resist pushing the app to figure out where is my refund, tracking it every day. Sort of like a ups parcel delivery. This year we have several new digital application that is can expand what taxpayers can do on line. One of those is irs direct pay which provides taxpayers with a secure, free, quick, easy online option for making tax payments. Another innovation, get transcript, is a secure Online System that allows tax payers to view and print a record of their irs account, also known as a transcript in a manner of minutes. We also are in the final stages of revamping the irs paymenton line agreement which allows tax payers to apply for installment agreement on line. The irs is also expanding the methods is uses to communicate information to taxpayers. We moved beyond traditional media like newspapers and tv news to take advantage of social media such as youtube, twitter and tumblr. I dont twitter and i dont tumble. But there are 100 irs videos on our Youtube Channel including one from me. So im actually broading my horizons here. During my three months on the job ive been surprised and learned how much effort and resources we provide trying to help taxpayers determine the amount they owe and how to pay it. As i said it may take me a while to convince taxpayers were from the irs and were here to help but we really do work hard to make it as easy as possible to file your taxes. Along with Taxpayer Service another high priority for the irs is maintaining a robust Tax Compliance system and building on work thats been done to improve compliance in number of areas. One of the most important of these is the battle against refund fraud, especially fraud caused by Identity Theft. I say battle because we really are, have a fight on our hand against identity thieves, many of whom are engaged in organized crime which steal peoples information outside the tax system and use that information to file a return, claiming a refun and preventing the taxpayer from filing their own tax return. Were doing a much better job of stopping such returns before they can be processed, compared to a couple years ago when the problem exploded. And our criminal investigation, investigators are making great progress in helping the Justice Department find these criminals and put them behind bars. Last year we protected 17. 8 billion from refund fraud. We initiated 1400 investigations, obtained over 1000 indictments and 400 convictions. Were doing a lot better helping Identity Theft victims clear up their irs accounts after they have been victimized. The first, the time for resolving a new case has been reduced from over 300 days to roughly 120 days but there is still room for improvement and we intend to do more and do better. Perhaps our most intense challenge is fulfilling the responsibility congress has given us to implement tax related provisions of enacted legislation including the Affordable Care act. We have a lot of work to do to complete if were going to be prepared for major aca provision that is go into effect this year, including the premium assistance tax credit and the individual shared responsibility provision. As ive told our employees, the significant challenge of implementing the Affordable Care act provides us with a major opportunity to demonstrate the skill, dedication and competence of the irs. After the difficulties experienced last fall with the rollout of the Affordable Care act, if we can have a smooth Filing Season next year including the appropriate return, appropriate review of the returns of taxpayers, who took or are eligible for the advance premium tax credit, the public and congress will have to say that some organization with an amazing workforce. Along with the aca another important piece of legislation were charged with implementing is the foreign account Tax Compliance act which is commonly known as factca. It requires foreign institutions to tell us about accounts owned and held by u. S. Citizens. With this information we can do a much better charge of combating offshore tax evasion. Our goal is to make it more and more difficult for americans to hide their money a tax haven to avoid paying taxes the importance is not just that were collecting more money. But the average taxpayer has to be confident while theyre paying their taxes, very wealthy with fancy lawyers and accountants are no longer able to hide their money in Foreign Countries and avoid paying their fair share to support operations of government. When i became deputy mayor of washington the citys theory of snow removal was the sun will come up tomorrow. [laughter] so when i began we had a snow summit and i told Leadership Team whatever else we were going to do, we were going to get the snow off the streets. And thats my feeling today at the irs. Whatever else were going to do were going to implement the nondiscretionary mandates we have been given, Affordable Care act and fatca. This brings me to what i believe is the biggest challenge facing the irs today, substantial decline in our funding which puts significant strain on our ability to provide adequate services to taxpayers and to maintain Strong Service and enforcement levels, to insure the integrity of our voluntary compliance system. For the irs to continue making progress in all the areas i just discussed, it is critical for us to receive adequate resources. The agency continues to be in a very difficult budget environment since were the only major agency functioning basically at the postsequester level of funding, rather than having been moved back toward the presequester level. Since fiscal 2010, irs appropriations have been cut by about 900 million, or 7 and we now have 10,000 fewer employees, even as our responsibilities continue to expand. We recognize the need to become more efficient no matter what happens to our funding level. Since 2010, the irs has cut annual spending on professional and Technical Service contracts by 200 million. We generate 60 million in annual printing and postage savings by not mailing certain tax packages and publications and paperless employee statements. Other areas is where we found major savings n 2012, the irs began a sweeping space Reduction Initiative expected to reduce rent costs 40 million a year and reduce total irs office space by 1. 3 million square feet by end of this fiscal year. Taken together all the initiatives means were spending 300 million more or less in these areas. Well continue our efforts to find savings and efficiencies wherever we can and well continue to carry out our correspondsabilities and work toward preserving the publics faith in essential fairness and integrity of our tax civil but these budgetary constraints will pose serious challenges in our efforts to enforce the law and provide excellent services. Essentially from the enforcement side of it the federal government is losing billions of dollars in revenue every year to achieve budget savings of a few hundred million dollars. Since the irs estimate that is for every dollar invested in the irs budget, it produces 4 in revenue. As i said during my confirmation hearing, i didnt find a Single Organization in my 20 years in the private sector experience that said, lets take our revenue operation, starve it for fund and see how it does. So far this Filing Season weve been very fortunate that the volume of phone calls to our tollfree lines are actually down a bit compared to last year. One factor is the lack of major tax law changes in 2013 which means there are fewer questions from taxpayers. Our improved website and its applications i discussed also helped provide taxpayers with important support without requiring a phone call. As a result for now were maintaining level of phone service during Filing Season around 72 which is much better than last years overall average of 60. 5 . But what we expect for the year we will drop well below 70 as the Filing Season ends and temporary employees role off and well be closer to last years 60. 5 , because we had no more money than we had last year. More than 30 of the taxpayers trying to reach us on the phone couldnt get through. It wasnt that long ago with proper funding that our level of service was 88 . Along with phone service were also concerned about the amount of time it takes people to get help in person when they go to one of our taxpayer Assistance Centers. We had reports from field staff and offices across the country of taxpayers lining up outside our centers well before the centers open in the morning to make sure they receive service that day, waiting sometimes up to three hours to be served after they enter the office. Expanding our online offerings can only go so far to ameliorate these problems. As Forbes Magazine nighted earlier this year, when you pin niche the irs you punish taxpayers. Our Information Technology operation is still another area the irs is focused on. Our use of i. T. Helps us do better job stopping potentially fraudulent returns before theyre process ad and allows us to make operations and improvements in our website. Our budget hat 330 million for i. T. Work implementing aca. None of that money is provided since wehrmann dated by statute to implement aca that meant other vital i. T. Projects had to be shelved. The solution with the budget problem starts with the administration 2015 Budget Proposal released last month. The administration propose as funding level of 12. 5 billion for fiscal 2015 which would reverse the erosion in our budget the last several years. I think it is fair to ask what value will the american taxpayer get for that extra billion or so dollars that the administration is proposing. It would help taxpayers get service they need and strengthen compliance in key areas, especially as i mentioned earlier, refund fraud and also tax evasion. Budget proposal halts the decline in key enforcement personnel weve had and allows the irs to invest in necessary basic infrastructure. In fact our estimate is that we would generate over 2 billion more in revenues with that increase in the budget, not just in enforcement but in the budget generally. Ultimately it is in everyones best interest to have an irs that can do its job. We dont believe any member of Congress Wants their constituents, be they taxpayers, tax preparers or Financial Advisors to go through the aggravation not getting help they need from the irs. They dont want their constituents waiting in lines for hours attacks payers Assistance Center or have trouble getting through to us on the phone. My hope once we get beyond the issues surrounding the 501 c 4 application process and once the major tax related provisions of the Affordable Care act and fatca are up and running we can have a more normal discussion about our budget. I look forward to working with congress to solve this problem. I have hope that one of the legacies of my time as irs commissioner will be we put the agencys funding on more solid and sustainable basis of the there is another way which congress can help the irs improve work it does to assist taxpayers and insure compliance with the tax laws. That is to simplify the tax code. Congressman dave camp, chairman of the house ways and Means Committee put it well when he introduced his tax reform proposal a few weeks ago. He said that the tax code is 10 times the size of the bible without the good news. [laughter] the Taxpayer Advocate in the irs has estimated that individuals and businesses spend 6. 1 billion a year, billion hours a year complying with the Filing Requirements of the tax code. All in an effort to determine the right amount to pay taxes. We can do better than that and while i always stress tax policy is the domain of the Treasury Department, the administration and the congress, those of us involved in Tax Administration are anxious to do whatever we can to assist in the process. Thanks very much for letting me spend this time with you and with that, i would be happy to answer any questions. I would note that there are a number of irs executives here who are trained to throw hot biscuits to throw at anybody who asks a dumb question. Well leave the program at this point as the u. S. Senate is about to gavel in. You. The senate is gaveling in as i said. They will continue work today on longterm Unemployment Insurance. A number of amendments are under negotiations. Senate majority leader harry reid halves said that he hopes the senate can complete work on the measure sometime this week. And now to live coverage of the u. S. Senate here on cspan2. The presiding officer the senate will come to order. The chaplain, dr. Barry black, will lead the senate in prayer. The chaplain let us pray. Eternal god, descend on our hearts. Thank you that your mercy is from everlasting to everlasting upon those who come to you with reverence. Today, incline the hearts of our senators to your wisdom, empowering them to keep your precepts, keep them mindful of lifes brevity and their accountability, to you. Lord, protect them from lifes dangers, as you guide them through the darkness to a safe haven. Please be near to the families of the victims of the fort hood shooting. We pray in your merciful name. Amen. The presiding officer please join me in reciting the pledge of allegiance to our flag. I pledge allegiance to the flag of the United States of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. The presiding officer the clerk will read a communication to the senate. The clerk washington d. C. , april 3, 2014. To the senate under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable john walsh, a senator from the state of montana, to perform the duties of the chair. Signed patrick j. Leahy, president pro tempore. Mr. Reid mr. President . The presiding officer the majority leader. Mr. Reid mr. President , every time that i see the presiding officer lead the senate in prayer and certainly introducing the prayer, but directing the attention to us all to follow the presiding officer in reciting the pledge of allegiance brings back to me a lot of memories. When i first came to the senate, we had lots of members of congress who had been to war. Now thats not the case. We all look at john mccain with such idealism of what he did in the vietnam war. And there are others, but there arent many. And to have now the presiding officer having not only been to war but being a general and leading hundreds of people from montana to war, when that pledge of allegiance, im sure is said by the presiding officer, your feeling is a little different than everyone elses, because during those bitter battles in iraq, members of your unit were killed and injured. So even though we dont say much publicly about the new addition to the senate, i want the record to reflect that the people of montana are so fortunate to have this patriot here in the senate. Well miss max baucus tremendously. He was my friend. But im really impressed with the presiding officer and his having been i repeat not only a warrior, but a general leading a lot of warriors to war. Mr. President , following leader remarks and those of the republican leader, the senate will resume consideration of h. R. 3979, which is the vehicle for the Unemployment Insurance extension. Working on an agreement on the Unemployment Insurance bill as well as some executive nominations. Well be notified when were able to arrange those votes. Mr. President , talking about the military as i just did, we have to reflect on what took place in fort hood yesterday. Another tragedy. Motives, we have just a general understanding, but our hearts are all broken as a result of another tragedy at this great military training facility. It was just a few years ago that there were mass murders on that military base. Our nation mourns every casualty that befalls our brave service members, but these seem so unnecessary, and its such a sad thing. Fort hood has seen more than its fair share of tragedy in the last few years, and we know this community and their families are grieving and questioning this latest act of senseless violence. The chairman of the joint chief of staffs, general martin demsey, said it as follows quote this is a community that has faced and overcome crisis with resilience and strength. Close quote. Thats true. We stand with the people of fort hood today. We stand with all of our military wherever theyre situated in the world, admiring their strength and resilience. Mr. President , Winston Churchill, no one can dispute that he was a statesman, one of the most famous in the history of our world. This is what he said and i quote of this i am quite sure. That if we open a quarrel between the past and the present, we shall find we have lost the future. Close quote. Why do i say that . Even though, mr. President , i quote these remarks made more than 70 years ago, i believe many here in congress should focus on what Winston Churchill said because its true. For far too long republicans have obsessed over the Affordable Care act, over obamacare. The Affordable Care act is the law of the land. It has been for more than four years. But from the very day that this law was signed, republicans have zealously worked to undermine it in so many different ways. Day in and day out theyve clamored for repeal of this bill. House republicans have voted more than 50 times trying desperately to cripple obamacare. They shut down the government trying to defund health care. And how has that worked. While they obsessed over the past, the country has moved forward. And now, mr. President , republicans have to face the fact that millions of their own constituents, millions of republicans are benefiting from Health Reform in record numbers. My republican friends insist still on nothing short of repeal. I ask my republican colleagues, what would they like to repeal . What would repeal look like . Because of the Affordable Care act, millions i repeat millions of americans will no longer be denied Health Insurance because of preexisting conditions. What are some of those preexisting conditions that caused so much trouble in the past . Diabetes. How about this one . Youre a woman. Many Insurance Companies considered women having a preexisting disability because they were a woman. Millions of young adults are now able to stay on their parents policies through age 26. Its more than three million. Millions of seniors are saving huge amounts of money on prescription drugs because we are in the pros process of filling the doughnut hole. This year alone millions of americans will receive maternity coverage. Repealing the Affordable Care act would repeal every one of these provisions and many more. I could spend a long time talking about what would be repealed. My counterpart, the senior senator from kentucky, will address the senate probably after i finish. In his home state of kentucky, 360,000 people have signed up for coverage under the Affordable Care act. 360,000. Kentucky is not new york. Its not texas. Its not california. Its a sparsely populated state somewhat like nevada. But yet, 360,000 people have signed up for coverage. Of those, 75 were previously uninsured. Thats approaching 300,000 people, mr. President. Over a quarter million kentuckians who did not have insurance now have health care under the Affordable Care act. Or, in other words, obamacare has reduced the uninsured population in kentucky by 40 . I wonder when my friend from kentucky will explain to the 270,000 kentuckians how he tphraopbs repeal the law how he plans to repeal the law without stripping their new health benefits, how he and his colleagues can guarantee their newly insured constituents have no lapses in coverage. Remember they want to do away with the 270,000 people who didnt have insurance. They want to do away with the 360,000 people in kentucky who have signed up for insurance. So i await their answer. In the meantime democrats will keep looking to the future, and the future of the Affordable Care act is bright. Every day more americans are Getting Health Coverage under the law. On monday we learned that 7,045,000 people already signed and about a million on the state exchanges, 370,000 in kentucky, for example. We know that theres more than 3 million young people on their parents insurance because of that act. We know that there are millions and millions of people who are now covered because of their the ability to become part of medicaid. So were talk about a lot of people, mr. President. Health reform is working, and the law is here to stay. The more the americans see the law as working, the more they want it to stay. The time of fighting over the past is over. Remember, mr. President , what Winston Churchill said, of this i am quite sure. That if we are going to quarrel between the past and the present, we will find that we have lost the future. Thats what Winston Churchill said. Mr. President , i invite my republican friends i say this very seriously to look to the future. Put this obstruction behind them and work with us to make the Affordable Care act even better for their constituents and our constituents and americans generally, and together we can help millions more americans get the Health Coverage they deserve. Mr. Mcconnell mr. President . The presiding officer the republican leader. Mr. Mcconnell id like to start this morning with a word about yesterdays tragic shooting at fort hood. As the investigation continues, well learn more facts. But what we already know is that fort hood has faced a great deal of adversity and challenges over the past few years, and that the community there has rallied around our uniformed personnel. We also know that the onbase military police appeared to have responded quickly, appropriately, and obviously at great personal risk to themselves. So as always, in a tragedy like this we admire the courage and the commitment of those who rushed to help the victims. And of course we are thinking and praying today for the victims, their families, and their fellow soldiers and civilians at fort hood. Now, mr. President , on an entirely different matter, all week republicans have been coming to the floor to talk about our proposals to ignite job creation and get the economy back on track. Weve been talking about ideas that can help middleclass americans who have been struggling just to make it in the obama economy. But our democratic colleagues dont seem to care all that much. They seem too preoccupied with an election thats still seven months away instead of working with us on ideas for job creation, they have been talking about pretty much anything else. Time and again yesterday republicans asked our democratic colleagues for consideration of our amendments by the senate, and time and time again those efforts were rebuffed. Now, republicans have a lot of good ideas. All were asking for is that those ideas get fair consideration. Lets get our amendments pending, have a debate, and actually take a vote. But some Senate Democrats seem to see things entirely differently. They dont even want the elected representatives of the people to have a say, a say on what americans say is the most important issue facing our country. This is especially galling because our friends across the aisle always seem to find time for polltested show votes aimed at firing up the left. They may not be overly concerned about passing jobs legislation for the American People, but you can bet theyll be forcing everyone to endure plenty, plenty of political show votes as we get closer to november. The socalled agenda they rolled out last week basically guarantees it. They have already admitted that they dont really intend to pass the things it contains. Thats not the point, they say. The true aim is to help democrats retain their senate majority. They have already admitted that, which is somewhat astonishing. No wonder americans are so disillusioned with washington. Look, the American People want us to focus on their concerns, not political show votes concocted by a few political strategists over at the Democrats Campaign committee and as i indicated, jobs are right up there at the top of that list. So well see today whether or not Senate Democrats are actually serious about giving our constituents what they want. It appears our colleagues might allow consideration of one amendment just one. Were not even sure about that yet. At least the amendment wed be considering is a good one, and i appreciate the work of senator thune and others in putting it together. This amendment would reduce the tax burden on small businesses. It would provide relief to the Kentucky Coal communities who have been under continual assault by this administration. It would approve the Keystone Pipeline which would create thousands of jobs right away. It would repeal the medical device tax, which even Many Democrats acknowledge is killing jobs. And it would eliminate obamas 30hour workweek rule which is cutting paychecks for the middle class. In other words, this is an amendment that seeks to take the causes of joblessness head on rather than simply treating the symptoms of a down economy. Its an amendment that aims to help americans find jobs with a steady paycheck and the promise of a better life. There are other amendments not contained within this package that the senate should be voting on too. For instance the national right to work amendment senator paul and i introduced, transformational legislation that would put americans to work. But the larger point is this, the senate needs to be allowed to function again. Amendments should get due consideration. Thats particularly true when those amendments have bipartisan support and aim to address our stillailing economy and the families struggling in this economy. My hope is that our democratic colleagues will allow this to happen. These are serious times, and we can afford to waste months on purely partisan proposals that have no hope of passion. We need to Work Together to advance serious proposals that expand jobs and opportunity. Now, mr. President , on yet an entirely different subject. I want to pay tribute to a kentucky special Operations Officer who was lost in the service to his country. The life of sergeant firstclass matthew s. Slusstiller of catlettsburg, kentucky, was ended in pakistan where he was sesqui in support of Operation Enduring freedom. He was killed when the enemy attacked his unit with an improvised explosive device. He was 35 years old. For his service in uniform, Sergeant First Class slu slusstiller received many awards, medals and decorations, including the bronze star, the purple heart, two Meritorious Service medals, five Army Commendation medals, the joint Service Achievement medal, five Army Achievement medals, five Army Good Conduct medals, the National Defense Service Medal with Bronze Service star, the Armed Forces Expeditionary medal, the Kosovo Campaign medal with bronze star, two afghanistan Campaign Medals with Bronze Service stars, the iraq Campaign Medal with Bronze Service star, the global war on terrorism Service Medal, the humanitarian Service Medal, three noncommissioned Officers Professional Development rib boons ribbons, the army service ribbon, two overseas service ribbons, the nato medal, the combat action badge, and the senior parachutist badge. Obviously, a muchdecorated soldier. Pictured behind me is Sergeant First Class s. Luvment sstiller with his slusstiller, with his daughter hanna, who was only three years old when he died. His wife sent this picture to my office so i he could be honoredn the senate floor. It was taken the summer before he was killed and it was his last picture with his dawmplet melissa remembers the bond between matthew and hanna fondly. He used to sing to me and hanna, she says. He would dance with her standing standon his feet, sing. Thinking of it makes me smile. He loved being a husband and father and he was great at both. Born and raised in eastern kentucky, matthew graduated from Lawrence County high school in 1993. Brenda thorn bury remained friends with matthew after he graduated and recalls that he knew from a young age when he wanted to do. Matthew was a wonderful person, she says. He was always eager to do whatever he needed to do to serve his country. He knew he would serve his country. He loved the lord, and he loved his family. Matthews father, edward tiller, agrees. From the time i bought him his first g. I. Joe, he wanted to be an army man, he sayings. In short, mr. President , it seems clear that for matthew, the army was not just a job; it was a way of life. Evidence dedicated to just he was dedicated to justice and service in the name of our country. In 1991 matthew enlisted in the u. S. Army reserves as a heavy construction mechanic and served at the 261st Ordinance Company located in cross lanes, west virginia. In 193 he left the family farmed and enlisted in active duty army as a signal specialist. He served at fort bragg, north carolina, as well as in germany and in kuwait. Sergeant first class jamie mullenack knew well the look of happiness we can see on matthews face behind me. If you knew matt, you knew that smile, he says. He always strived to do the best at what he did. I know he believed in what he was doing and loved wearing the military uniform and believed in what it stood for. As the list of awards, medal, and decorations i read earlier made clear, matthew excelled at being a soldier. In his many years of training, he completed the Army Airborne course, the jump master course, the master jump master course, the air Movement Operations course, the military Transition Team courings, the Civil Affairs qualification course, and the advanced and basic noncommissioned officers courses. Proud to his final deployment, matthew deployed in support of Operation Iraqi freedom and Operation Joint guardian in kosovo. In his final deployment, matthew was assigned to the 96th civil awears battalion, 95th Civil Affairs brigade based out of fort bragg. In his free time, matthew loved golf, hunting, hiking, camping, and riding motorcycles. And he was a Passionate Fan of u. K. Basketball. The many people that came to pay their respects as his funeral, saw a 3star general come to their small town to lead the honor guard. Lieutenant John Mulholland deserved remarks. Matthew was part of Americas Army special Operations Forces and as such was one of the finest soldiers in the world, the general said. He went on, theres no exaggeration that he was embarked on a very important, if not critical, mission that is directly tied to the security f this country. Of course, as impress i hav imps Service Record washings i think the picture makes clear that the most important job to matthew was husband and father. I know his father misses him terribly. Melissa says the following about her husband i believe that our souls are behe beacons flowing immensely with life. Only in heaven can we become a true vision of yourselves. I know my matthew is standing tall in heaven. His light so stunning, a reflection of what he was. God needed him, and i cannot question that. Were thinking of matthews loved ones today, including his wife melissa, his daughter hanna, his parents edward tiller and jane blankenship, his step parents, bound tiller and forest blankenship, his siblings and many other beloved family members and friends. Our country has lost a faithful and devoted hero with the passing of Sergeant First Class matthew s. Slusstiller. I know my colleagues join me in expressing joit condolences to his family, for their loss and great gratitude to them for although d lending our country such an honorable and noble patriot. I hope hanna and all of matthews loved ones know that america will always always be grateful for his sacrifice. The presiding officer under the previous order, the leadership time is reserved. Under the previous order, the senate will resume consideration of h. R. 3979, which the clerk will report. The clerk calendar number 333, h. R. 379, an act to amend the Internal Revenue code of 1986 and so forth. A senator i suggest the absence of a quorum. The presiding officer the clerk will call the roll. Quorum call quorum call