Ryan To IRS: You Work For The Taxpayer

Paul Ryan: I see that there is a case being made for a budget increase. Your budget asks for over a billion dollars in more spending for your agency. And you’re asking us to hire another 4,572 employees. Let me read you what we’ve already learned in just two months. In just two months, we’ve got a conference in Atlanta, which had celebrity chef Wolfgang Puck cater, costing $2.4 million. We’ve got a conference in Anaheim, California—$4.1 million. A conference in Philadelphia, $2.9 million. A conference in San Diego, $4.1 million. At one of these conferences, you had $135,000 for 15 people. That’s about $9,000 per speaker. The IRS paid for the deputy commissioner to stay five nights in the presidential suite at the Hilton Hotel during one of the conferences. You paid $17,000 for a speaker to paint pictures of Bono, Michael Jordan, Abraham Lincoln, and others. We hear a report of crony contracts—an improper relationship between an IRS contractor and a person whose business had less than $250,000 in income the prior year is getting awarded $500 million contract. Between 2010 and 2012, you had 225 conferences costing $49 million.

Let me see if I can put this in perspective for you. I represent a town of Sturtevant, Wisconsin. A little less than 7,000 people live there. It’s a great village. The village of Sturtevant is basically a blue-collar town. People work at the Case Tractor factory. They work at the S.C. Johnson factory. It’s surrounded by corn fields and bean fields and lots of small businesses. It took more than 100 percent of the federal taxes paid by the working families of the Village of Sturtevant, Wisconsin to pay for the 225 conferences you had at the IRS between 2010 and 2012. That’s the way you need to think of this. People are working hard. They are living paycheck to paycheck. They are paying their taxes. And this is what you’re spending your taxpayer dollars on?

And now you come here, asking for a billion dollars—about a 10 percent increase. You are asking us to hire about another 4,500 people. I represent Rock County. That’s my home. The population of Rock County, in all of the working families in Rock County, their taxes wouldn’t even cover the billion-dollar increase that you are asking for.

You’re here representing the President. You’re here asking us for this increase. I know you are new to the IRS. You come from the Office of Management and Budget, and you have a great reputation. So you’re a budget cruncher. How on earth do you think you have the moral authority to ask for this? Why would we—representing the taxpayers we represent—give you all this extra money you are asking for, if this is what the IRS is doing with hard-earned taxpayer dollars? Just in two months, we are seeing waste, fraud, abuse, and taxpayer targeting. And you’re saying give us another billion dollars. Why should we do that?

Acting IRS Commissioner Werfel: Congressman, you’re asking very important questions, and I’d love the opportunity to address them. First, I agree that the costs that you are referring to are excessive and in many cases inappropriate and should not have happened. The reports that are coming out that are identifying these are covering events that happened two and three years ago. And my concern is great. But my concern would be even greater if I saw that those patterns of spending are continuing through today. In many cases, they are not. We are looking at a 68 percent cut in training travel. We’re looking at a 45 percent cut in other travel in the IRS. We cut our printing by 30 percent. We cut our professional technical services by 25 percent. There are deep cuts going on in a lot of these activities. Paul Ryan: Here’s my suggestion: Let’s have these cuts take place, and then come back to us in a year or two. And let’s see if you’re running this place well.And then we will consider a budget increase. How’s that sound?

Acting IRS Commissioner Werfel: That’s a fair point. I will say this: There’s more cuts to be made, and I think in this report, in section 3 and in subsequent testimony that I will give to this committee, I will furnish for you additional cuts so we can go even deeper so that every penny is watched even more closely.

Paul Ryan: Great. So it sounds like you don’t need a budget increase.

Acting IRS Commissioner Werfel: No, because I’m not saying that because I think there’s a broader macro point, and it goes back to some of the questions that Congressman Johnson was asking. We still have an indispensable mission to enforce the tax code, to go after fraud. The cuts that we are seeing dwarf any conference expenditure that we have. The materiality difference is much different. We just have to look at this and say “OK, has the IRS done enough to get its shop in order, to cut those excessive costs?” I’ll also make the case to you that we’re going in the right direction But I’ll also make the case to you that if we underfund other critical priorities that lead to improved taxpayer service and improved enforcement of the tax code, then we’re leaving dollars on the table for the American people. . . .

Paul Ryan: Just don’t forget: You work for the taxpayers, not the other way around.

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