OCTOBER 10, 1997
President Clinton received a set of some 200 separate recommendations for reforming the IRS. The plan comes after recent congressional hearings detailed cases of taxpayers being mistreated by the IRS and after tens of thousands of hours of work by a government task force. A background report is followed by a panel discussion.
MARGARET WARNER: Now, two people at the center of the current debate over the IRS: Deputy Treasury Secretary Lawrence Summers, whose agency oversees the IRS, and the critic we just saw, Republican Congressman Rob Portman of Ohio. He's co-chairman of the National Commission on Restructuring the IRS. And, Congressman, you were a little critical there. What's wrong with this plan?
REP. ROB PORTMAN, (R) Ohio, Co-Chair, IRS Restructuring Commission: (Cincinnati) Well, it's good as far as it goes but doesn't go far enough. We spent the last 15 months in a bipartisan effort, through this national commission to restructure the IRS, with involvement from the administration, putting together a comprehensive and bipartisan plan to solve the problems at the IRS. The President's announcement today is in reaction to that plan he picks up most of our provisions but not all of them. And the ones he doesn't pick up are very important. We go further in terms of taxpayer rights. We consolidate congressional oversight, which is a big part of the problem. We do more in terms of tax simplification and finally and most importantly we put in place an oversight structure that has real authority. Without that you're not going to see the kind of changes at IRS that the President hopes for.
MARGARET WARNER: Why not try this as a first step?
REP. ROB PORTMAN: Because we don't think it'll work. There is already an oversight board at the IRS that is advisory in nature. It's called the Commissioners Advisory Group. The President today recommended, as I count them, 37 additional advisory groups. The IRS doesn't need more advisory groups. We know what the IRS needs. They need more expertise. They need more stability of leadership, and they need more accountability to the American people. Again, we've spent 15 months looking at this. We've come up with these proposals on a bipartisan basis. The administration continues to be resistant to these more fundamental and more structural changes. We don't think you can really solve the problems unless you do that.
MARGARET WARNER: You, obviously, Mr. Secretary, think you can. Why?
LAWRENCE SUMMERS, Deputy Treasury Secretary: The proposals we put forward today, which include many things that were suggested by the commission that Congressman Portman chaired, along with Sen. Kerry, which did a very good job in most of what it recommended, go really to what I think concerns people. When you have a problem, can you get help? We give them new rights in cases like innocent spouse, in cases where because of illness they missed a chance to file a refund. We give them new opportunities to lodge a problem through a strength in taxpayer advocate which dealt with 300,000 cases last year, and an average of 38 days, and we're going to give those taxpayer advocates much more authority to stop collection actions where something has gone wrong with new citizens panels, outside citizens, who can get involved, when you have a problem. These are the kinds of steps that I think respond to the real concerns that people very legitimately have.
MARGARET WARNER: Congressman, what about that area that Sec. Summers just laid out, which is helping people who have problems with the IRS. How do you like what the President came up with there?
REP. ROB PORTMAN: Well, again, I think that Larry Summers just mentioned is in the comprehensive bipartisan package that's working its way through Capitol Hill, with the exception of the citizens review panels, which is something we thought seriously about doing, but a few months ago Treasury had a different view of that. They actually opposed it, and that's one reason it wasn't included in the commission's recommendations. It was merely a suggestion, and, thus, is not in the legislation. Personally, I think it's a great idea. We're happy to include it. So I think everything that the President did today in terms of making the IRS more open, being more responsive to taxpayers is consistent with where we are and is fine to include.
The problem is--we've seen this before--where a president or a commissioner or treasury secretary comes up with great new reform plans. You don't have any guarantee with this plan that they're going to be implemented, or that over time there's going to be the kind of follow through to get it done. This is why we think it is very important that you set up a new structure, which is an oversight board that is going to have the kind of expertise and the kind of stability of leadership and continuity you need to actually hold the IRS accountable for these plans, to make sure the taxpayer's rights are going to be respected, to make sure that these advisory groups are listened to. The difference is very simple. We think that such a board ought to have authority. They think it ought to be advisory. The President should be commended for entering a debate, but I think we need to go further if we're really going to solve these problems.
MARGARET WARNER: Why doesn't your board of trustees or your recommendation have more real authority? Explain how it would work and what the thinking was behind it?
LAWRENCE SUMMERS: Here's the difference. We all believe the President should appoint a board. We all agree it should be confirmed by the Senate. We all agree it should have private sector individuals who have staggered terms for continuity, who can bring to bear private sector expertise. The difference is that we think that the fundamental responsibility of managing the IRS, a crucial part of our government, should be something that's given to full-time government workers confirmed by the Senate not to--a part-time group of people, many of whose primary loyalties to something very different--running a private corporation or managing a portfolio, or doing something else. We believe that the way our government works we have an executive branch for Democratic accountability to hold the President, his key person, the Secretary of the Treasury, accountable for delivering better performance. And that's what this board of trustees is going to do. It's going to do it by writing an annual report to Congress against which the secretary and his deputy will have to testify to make sure that they recognize that this is an absolutely crucial part of their responsibility to help the IRS function. But I think turning the management of the IRS with its central law enforcement responsibilities over to a group of people whose primary job was doing something entirely different would be an untoward step. It's one that's been rejected by the American Bar Association, by the New York Bar Association, by the Brookings Institution, by the editorial pages of the Washington Post, and the New York Times, and I think it would be a dangerous kind of experiment.
MARGARET WARNER: Why dangerous?
LAWRENCE SUMMERS: Dangerous because of the potential it would have for conflicts of interest. Danger because you can't run a railroad by committee, and that's what this would be trying to do. Dangerous because it would be an untested kind of mechanism with people whose primary loyalties would be to something else.
MARGARET WARNER: Congressman, you don't think it's dangerous but respond to those concerns because we've heard that from a lot of different quarters.
REP. ROB PORTMAN: Well, I think Larry Summers and I have ended up now, I suppose, agreeing on the majority of this package but we disagree very sharply on this. I think what Sec. Summers has just laid out is the status quo. We've got a major problem at the IRS. It has to be solved. I think we all acknowledge that problem now and hope we do. And if the Treasury Department could have solved this problem, they would have solved it over the last several decades. This is not about the Clinton administration. It's about a structural flaw in the system. Treasury is not the right body to oversee the IRS and to manage the IRS. That's very clear. The record couldn't be clearer. What we're proposing is something bold, I agree, but it's something that's absolutely necessary if you're going to hold their feet to the fire and get the kind of fundamental change and have that change be implemented and follow through over time. So all I can say is another advisory group sounds great. The commissioner already has an advisory group. The secretary already has an advisory group. That's not what you need.
What you need are people who are going to really feel accountable for change, who are really going to make sure that the IRS culture changes from an enforcement bureaucracy to one that pays attention to the needs and concerns of the taxpayer, one that respects taxpayer rights. And I just have no confidence at all that keeping the status quo in place in terms of oversight and management is going to solve the problem. We had days and days of testimony. We've had reams and reams of documents on this. We've had lots of experts testify. Our support is very broad for this proposal, including the National Taxpayers Union, including the National Federation of Independent Businesses, the small business community, including most of the experts who have testified both before the commission and before the Congress on this. It's a sound proposal. Yes, it's a new proposal, but it's time to try something new at the IRS.
MARGARET WARNER: How confident are you, Mr. Secretary, that the President's proposal today can forestall the support that the Congressman's proposal has and that Bill Archer, chairman of the Ways & Means Committee, I think said today he hopes to get through his committee within a couple of weeks?
LAWRENCE SUMMERS: Margaret, I think what matters is not rearranging the chairs here in Washington with boards and so forth. What matters is doing better for taxpayers. IRS answered 50 percent more--nearly 50 percent more phone calls last year than it did the year before. 60 percent more people were able to file just through telephone. We've drastically restructured the computer system. We're going to have that taxpayer advocate--something that's known to every American--problem resolution day on November 15th, where people can get their problems solved. If we make a difference, if we get these steps in place on the ground, that's what's ultimately going to be important.
Turn the management to the IRS over to nine part-time outsiders. I think it's a reckless--nobody's talking about more advisers. We're talking about getting people in who can serve as trustees, who can establish firm accountability. We think that's the right way forward, along with those citizens panels, to make a big difference.
MARGARET WARNER: You both are experts in the workings of the IRS, and you spent a lot of time studying it. Why do you think the Internal Revenue Service was allowed to get to this point?
REP. ROB PORTMAN: Because of poor oversight and lack of management. It's just very simple. The people at the IRS are not bad people. They're stuck in a bad system. They haven't been given the tools they need by Congress, and they haven't been given the tools they need by the administration. And it's not about this administration. This was over time. This is Treasury Department inadequacy in terms of oversight and management of the IRS that dates back two or three decades. Unless you change that you're not going to see the kind of change you need for the American people.
Sec. Summers just said he thinks more boards and so on aren't going to solve the problem but yet the President just proposed, as I counted again, 37 new advisory boards. I agree advisory boards aren't going to solve it. You give a board with real authority that has citizen input people who actually have the expertise that's needed at the IRS you're going to see some changes and you're going to see the IRS's feet being held to the fire. You also need to do a better job in terms of congressional oversight, which is in our proposal, and the President chose not to address. You also need to do more in terms of taxpayer rights, and the President has done to be able to level that playing field between the taxpayer and the collection agency, so, again, I guess my summary would be it's good the President's entering this debate. I encourage him; I hope that we'll be able to see some progress on the legislation in the House and the Senate this year, send it to the President, and that we'll be able to come together in a bipartisan manner to solve this problem. The American people are ready for it.
MARGARET WARNER: And why do you think the IRS got to this point? I mean, you all have been running it now for five years. The congressman said it just isn't this administration.
LAWRENCE SUMMERS: We've recognized serious problems, and I think we've seen it get better over the last couple of years, but as the President said today, there's much more that has to be done. We're not talking about advisory boards. That's a red herring, Rob. Citizens advocacy--
REP. ROB PORTMAN: What are they?
LAWRENCE SUMMERS: Citizens advocacy panels are going to solve people's problems.
REP. ROB PORTMAN: Do they--
LAWRENCE SUMMERS: They're going to refer the problems. They're going to give them an appeal to the national taxpayer advocate. They're going to establish accountability. We're talking about things that will have the direct taxpayer advocate or the direct capacity when the IRS has behaved wrong to stop a collection. That's very different from some board of part-time outsiders here in Washington.
REP. ROB PORTMAN: Well, I think we just need to stick to the facts. These citizen advisory groups will not have the power to issue TAO's. That will be the taxpayer advocate, which is currently the case, which needs to be strengthened, which needs to be more independent, which we have in our proposal, but these are advisory groups. And my only point is that I think when you look at the record, you have to admit that advisory groups haven't solved the problem, and we need to go to the next step, which is to actually have people who have accountability, who have responsibility, who are able to hold the IRS's feet to the fire and get these changes in place for the American people. I think it's as simple as that.
MARGARET WARNER: All right, gentlemen. Thank you both very much. We have to leave it there.