tv Key Capitol Hill Hearings CSPAN April 16, 2015 5:00pm-7:01pm EDT
you never have to deal with the forms. i am struck by the chairman's concern, which is my concern, and that is the point that people are nervous about revealing their names if they have a problem because somehow they'll be disadvantaged in dealing with the i.r.s. it is critical for compliance, it is critical for the operation of the tax system in the united states for every taxpayer to feel comfortable that they will be treated fairly no matter who they are, no matter who they voted for in the last election the matter what organization they will long to, they will be treated fairly even if -- they -- even if they have a problem. taxpayers should let us know if things are not going the way they ought to or the way they expected them to go. the only way we will be able to fix this, the only way we will be able to get better is if we know what the problems are. my encouragement to any taxpayer is, if you have a problem, we are here to help you. our revenue agents say we distinguish between those trying to become compliant and those trying to cheat.
if you are trying to become compliant and you have a problem, you have a change in circumstances, a change in your ability to pay your taxes, we want to work with you. we spend a significant amount of time and money trying to help taxpayers figure out what they oh and -- owe and how to pay it. we have online instalt -- installments if you can't pay everything on april 156789we negotiate with people who have difficulty and we want to stress that if you have got a problem, we're here to help you. i would remind people that if you're are going to try to cut corners and cheat, we are going to find you and we will not be happy about that. but we are anxious, wherever a taxpayer has difficulty, to try to help them. call us and we will help. i always get nervous when i say call is because i know how, long it takes to get through and as senator carper said, it is not that we want to add back the 13,000 people who have been
retired from the agency and not replaced but the -- but we to needs funds in the interim to have the ability to have people answer the phones when people call. i am delighted to answer any questions you might have. senator johnson: i will say that this is not unusual that taxpayers are afraid to offer their names because of the fear of retribution. that is prevalent and people i talk to. that is a real problem because the targeting, it makes it important that we hold people accountable, that the american people see that those that did the targeting brought some semblance of justice and it is correcting the irs. this is a problem and it is very prevalent. this is not just something that is unusual. it did strike me, i was surprised that this is the first time you have heard that the marketplace or one of the exchanges gave out incorrect information.
i would think that because of the complexity of the law, that would be far more prevalent. commissioner koskinen: i meant in terms of an individual ring told and -- being told information about their income. obviously as has been widely publicized in this first year, c.m.s. has been very forthcoming about 1095 information returns an errors in some of those and trying to make sure taxpayers get the updated information in their 1095-a's. cms has been working with thousands of taxpayers to make sure the information is correct create to that extent and a transition year, there have in a reasonable number of cases but compared to the 4.5 million taxpayers with expect to file, the numbers are surprisingly smaller than you would expect. you are exactly right. as you would expect in the first year of some of these programs some of the returns have had to be corrected to my some taxpayers have said the information does not correspond with my either the payments i have made or the premium support i have gotten.
there are 30 or 40,000 of those who are being worked through by cms. senator johnson: you did correctly state that what they are paying, $11,550 is not a penalty, it is a reimburse ofment the subsidy that they are incorrectly provided. they view that as a penalty. and you can understand that. they followed all the rules. i was reading what they said. i take your point. but speaking of penalties, that is one of the things i found interesting in the briefing packet. the average penalty paid -- is -- those who decided to exercise their freedom and not purchase insurance. is that a penalty or a tax? the $95 is that a penalty or tax? commissioner koskinen: it is called the shared responsibility payment. senator johnson: the average
shared responsibility tax is not the $95 minimum, it's the $1% of income that is about $172 is that correct? commissioner koskinen: 95 is the minimum but it goes to 1% of your income. it is $95 for adults and your family. senator johnson: if you extrapolate, that is 80% higher than the minimum. 172 is 1.8 times the minimum of 195 so if you extrapolate that to next year, the minimum is $325, correct? or 1% of your income. commissioner koskinen: i think it goes to 2%. senator johnson: 2%. i just did the math on 1%, it will double that, then. what i was looking at is 300 -- $325, so $550.
the average penalty will he closer to $1200 next year. commissioner koskinen: you do not add both to 95. senator johnson: i am try to extrapolate what it will be in the future. commissioner koskinen: the shared responsibility payment is geared to go up and that is designed to encourage people to get health insurance. senator johnson: i am trying to figure out -- extrapolate with that payment will be. it is the greater of $325 or 2% of income. is that correct? commissioner koskinen: we think -- we have experts here. the consensus is we think it goes to 2%, we'll be happy to make that clear. either way, the statutory framework provides that the payment goes up if you do not have coverage in the second year to a reasonable higher amount than for the first year. it will be increasingly encouraging people to buy health insurance. senator johnson: here's my
point. what gets laid out there is $95, the $325, the $695. that is the number and the percentage of income, the greater of. this year the percentage of income is what drove it. the average spent 1.8 times that minimum $95. if you extrapolate that, if it's 1% will be $588. double that would be $1186. that would be a pretty good extrapolation in terms of what the average penalty would be. if this year's is $172 at 1%, next year's at 2% would be $1,176. and the third year of the implementation of obamacare we could look for, not $695, the minimum penalty extrapolate our experience from this year but closer to $2,500 will be the average penalty paid if americans don't, if the americans exercise their freedom
and choose not to buy an individual policy. so just kind of want to lay that on the table there. that is what the government is going to tax, i think it's a penalty but that's what we'll tax the american people for not buying health care. i was a little surprised, i shouldn't have been surprised, only 4 noveget subsidies provided are calculated properly. you say about half of them are calculated too high, about half are calculated too low. do you expect that trend to continue? commissioner koskinen: what is going to happen, right now, 70% of people get refunds and they do that because we over-withhold. most taxpayers estimating their income, understand you cannot estimate accurately, so they tend to over withhold so they get a refund. rather than having taxes owed. we expect taxpayers have done
that nobody tells them they have to do that, they do that learning the situation. we expect that what will happen is people will be careful and estimating their income as the basis for calculating the premium tax credit, and they will make sure that they overestimate their income to make sure that in effect, the adjustment is in their favor when they get to file their taxes, so we expect that as consumers adjust to the law that increasingly, what will happen is there will be positive increases in refunds or declines in the amounts owed because people will have adjusted to the fact that you want to be careful when you estimate your income and build in the possibility that you'll get a pay raise, your spouse will get a job, and if there's a big change you should call the marketplace. what we've seen in withholding generally, people are careful and they basically in the case make sure they have a refund coming rather than a tax owing. >> last question. how are you coming in terms of income verification to evaluate the correctness of the
subsidies? we have a 100% income verification now? commissioner koskinen: to the extent we ever have a 100% income verification now. it would be nice to get w-2s in january rather than march. we rely on taxpayers to be compliant. they provide us their income and we audit it over time when we get information returns. ultimately, it is as correct as what the taxpayers tell us and what the returns do. we assume that the income provided to us after the fact is correct. senator carper: i often say every day, find out what works, do more of that. trying to figure out how -- to make sure we didn't end up with an insurance pool which was largely old people, sib people, less healthy people. we tried to find out what works and we turned to massachusetts and the one state that actually
tried to address this issue. set up exchanges for health care coverage and had governor romney and the state of massachusetts established the individual mandate. that's where we took that idea from. they were several years ahead of us and we are going through our first tax filing system that was before us and before your employees. what massachusetts has been doing not just for one year, they have several years of experience. do you have any idea, has it smoothed out over time as people have become used to this? working with the exchanges working with their tax code there, hasn't gotten any easier? commissioner koskinen: at this point, -- senator carper: what, if anything can we learn from them? commissioner koskinen: the -- i think we should probably
learn a lot. the tax policy side of this in terms of what works and what doesn't work. the policy issues -- and all that i have seen, i have not seen that there is an ongoing issue in massachusetts which would lead you to conclude to the extent the mandate still exists, there are people who are adjusting to it and it has been implemented and executed without difficulty over time. the policy is, people outside of tax administration, we have, and i have personally, just kept track of what's in the press and i haven't seen any indications that massachusetts has run into any difficulties. senator carper: i want to go back to the example cited by the chairman. let's say a year ago my family and i thought we would earn $65,000. we ended up making twice that, let's say $100,000.
we thought we would be eligible for tax credits at a certain level. toward the purchase of health care through the echange. as it turns out, at the end of the year, because of her income, additional income we had not anticipated, we were not eligible for either as much in tax credits or maybe any tax credit at all. we will say in this example it turns out i got a tax credit for $5,000 and i was not eligible for that. i had to pay that back, i presume, through the tax code, through the filing, but that is not a penalty, that is basie -- basically overpayment. i want to make sure we are talking apples and apples. that is essentially what has happened in the example that senator johnson shared. commissioner koskinen: yes, it is important to understand where the money went. in effect a taxpayer generally comes to the marketplace buys a policy, it is determined what their
premium is going to be and what portion of that premium paid to the insurance company will be paid on their have is a credit. in the particular case, you ought insurance, the premiums have been paid to the insurance company and the question is, how much of that premium do you owe and how much is eligible for the credit? in this case, it was determined that the insurance was bought, $11,000 was a premium payment and the question is in this case, the taxpayer owes the premium and is not entitled to a credit for that premium paid. it is not a penalty. it is money that went to the taxpayer. it is one of the reasons we spent a lot of time last year, we will continue to spend time this year reminding people in your circumstance, for instance, where your situation changes. your wife gets a job, you get a pay raise of any significant amount. you should contact the marketplace and advise them of the change and the premium advance payment would be adjusted accordingly.
therefore over time we think as many -- as more and more people realize it's not just a question of stopping payment, you need to make sure the marketplace is updated, we expect over time people will make those calls and make those adjustments earlier and will be careful in their estimates of what they're going to earn to make sure they don't underestimate it. so we think that this will work its way out to even a smoother filing system. thus far, say we monitor the calls that have come new york we have not seen a significant number of calls with people who had problems. we know there have been adjustments made by c.m.s. which runs the marketplace with a number of taxpayers, but even there, of the estimated 4.5 million tax payers who will find returns reconciling the premium tax credit, the must remember of people affected is, for the first year a relatively smaller
percentage. senator carper: gene dadero was sitting there yesterday and spoke pretty much without notes and did a terrific job. one of the questions i asked him was, what can we do to help the irs serve the people of this country, make sure that we are meeting our responsibilities as taxpayers and making sure we are providing the kind of service we would expect, hopefully the kind of service when claire mccaskill was auditor for the state of missouri and i was state treasurer, we provided really good service. the state of delaware division of revenue won the quality award because they provided excellent service and we're very proud of that. it galls the hell out of me to know that people call the iris and they have to wait forever to get someone on the line. they foe to the i.r.s. office and have to wait to see somebody. we are complicit in that because we are not providing a reasonable amount of funding for the irs.
yesterday, gene said there are things the irs has done to use the resources more efficiently so this is good. he said there are some things you haven't tone that they believe we ought to. we should provide more in terms of resources, three things. i would hope that what we would do is act on his advice, and certainly with your participation, that of your team, the last thing i want to say, we have a bunch of people who are preparing tax returns on which there's an earned income tax credit and we're hearing a lot about improper payment, we know there's a high improper payment related to earned income tax credits. a lot of those returns are prepared by people who are not credentialed. i know you have been pushing us to do something to better ensure that people helping millions of taxpayers prepare their returns, perhaps some reasonable amount of credentialed. this is in an -- is an important point.
commissioner koskinen: we have a wonderful working relationship with the taxpayer community and the vast majority know what they are doing and are working their way through the complexities. this cacks code -- this tax code is obviously more complex than anyone wants it to be. but there are 400,000 who have no credentials. they are not cpas or lawyers. a lot of them study hard, work hard, provide a good service. there are a group of them that do not have a lot of background, much train and do their best but make mistakes and threns a small percentage of them that are crooks. you can find them because you can drive through any center city and there will be signs saying, we can get you a better refund. sign a blank return, we'll take care of it for you.
it takes more credentials to cut your hair then to prepare your taxes and at some point, there are to be minimum qualifications before you can go to a taxpayer and say i will take care of your taxes for you. we have a voluntary program and the courts ruled we cannot -- we do not have the authority to require minimum qualifications so we asked the congress for legislation for continuing education the way c.p.a.'s and lawyers and others. senator carper: i would just ask my colleagues on the committee to see if we can address this. this cries out to be addressed. senator johnson: this may speak to the overregulation of the hair dressing industry. we got the information back of the envelope calculation on penalties. first year $95 or 1% of your income. this year about $172 dollars.
next year, 2% of income. the $325 minimum penalty times 1.8 times 2% is probably $1,176 next year. the third year, $3,145. that's the extrapolated average penalty over the next couple of years, $172 ramped up to about $1,176 then the third year over $3,000. chairman kos -- commissioner koskinen: you don't add them all up. senator johnson: but it's probably in the ballpark. senator.
senator portman: thank you, and commissioner, thank you for being here today. i usually see you at the finance committee and this is a tax day hearing, so it is appropriate to talk about the broader issues but i want to focus in on the 1095-a issue the relationship to the affordable care act. the administration announced it sent out a hundred thousand incorrect tax statements -- 800,000 incorrect tax statements. it's important to my constituents and folks around the country because they rely on these statements. i think they were initially told, you know, don't worry about filing your taxes until we get a corrected statement and they were recently told, go ahead and file your taxes and you won't be penalized based on information you rely on that's inaccurate. it has caused a lot of confusion. i am sure you heard a lot about it. i have, as i am sure many of my
colleagues have. i have a constituent named linda from ohio, she is not interested in sharing her last name today but she got the incorrect 1095-a from the marketplace in mid jap and has been trying to correct it ever since. one of these stories of contacting folks at the i.r.s., february 15, she was informed that her correction was denied. february 17, received a phone call it had not been denied, it was in escalation. she was able to arrange a phone call with a supervisor of the marketplace but is still unable to get a straight answer. commissioner koskinen: she is calling c.m.s., not the i.r.s. they have a vigorous customer service effort working through those kinds of questions. senator portman: i appreciate that and stand corrected. she did call inch r.s. initially but was redirected.
anyway. lots of questions about how we can help solve this problem and really, the scope of the problem. if you could today give us what the i.r.s.'s best estimate is of the people who received a subsidy in 2014 and have to repay a portion of that subsidy do you have a sense of that? commissioner koskinen: we will not know because it takes us a while to post. it will be three or four weeks. thus far, it appears that slightly less than half of the people are getting an increased refund because they got a smaller credit than they were entitled to. that's because based on their final income. about 50% to 55% are getting a smaller refund because they got too much advance payment. they are still getting a refund but it's an adjustment. the adjustments are, we do not know what the dollars are. i have seen tax preparers estimating that it is 300 dollars one way -- $300 one way and $500 the other way. we do not have an indication of
who as a result of having gotten too much of an advanced payment to the snirk on their behalf ended up owing tax, the situation the chairman's constituent is in. the indications are although i would stress we will have better information into or through weeks, it is a small number of people in that category and that is what our estimate was. the vast majority get a refund in any event. the swings and whether you have too much of an advance payment or two little -- too little, but we will better data in two or three weeks. senator portman: we will appreciate that. just so we can submit the question for you today and we will submit more for the record. an estimate of what percent would be in terms of the folks receiving a subsidy have to repay a portion of it if the
verification process were more accurate and working properly. that is obviously one of the big challenges we have. the other issue i think will continue to be something we hear about from our constituents is the state federal data sharing. there's a story in the "wall street journal," yesterday, i think. martha chapman from new mexico had to pay taxes instead of a refund. the exchange did not account for her husband social security benefits of $9,000, so there may be a lot of reasons for that failure. it concerns me that estate might not be committee -- communicating with the federal databases. it seems like the government should have enabled to help her avoid that. she felt this was kind of a trick, that she had -- would not
have gotten the insurance if she understood the full price and has dropped the plan for this year. in terms of the information flow between the state in the federal government, do you believe that that is adequate and help could that be improved? commissioner koskinen: about income verification, i should explain how the process works. the taxpayer goes to the marketplace and makes an estimate of what they are going to earn. you estimate what you will earn in 2015. we then get pinged by the marketplace, either the state or federal marketplace and ask for income verification, and that income verification is surrounded by protections and not revealing it to anybody outside. what was your earnings in the previous tax year? in the case of the social security payment, if this was on the income the year before, that data would have gone back to the marketplace.
suppose a taxpayer said i would make $25,000 next year. we'd be asked what did they actually file the year before and if that was $42,000 or $35,000 with some social security payment that information would go back to the marketplace and they would have a discussion with the applicant or make a note to the applicant that their estimate of income doesn't correspond with the verification. the i.g. looked at the income verification we provided in the initial enrollment period over several -- 15 million to 20 million and found we were 99.5% accurate in terms of the information we gave to the state and federal marketplaces. it's ultimately up to the consumer to make an estimate, just as we all do when we're filing our withholding estimates and our estimated tax payment estimates, what are we going to earn in the next year? most people with any variety in their employment circumstances never know exactly what that
will be. our expectation is that is the process -- as the process moves, more people will understand the have to become careful about estimating their income. if you underestimate it and get it -- a bigger premium, it will work out when you have to pay it back. our expectation is, those percentages of the number of taxpayers when they reconcile will get larger refunds will go up because the same wabe people when they file their taxes, 60% of 70% get refunds because they overestimated what they will owe so they will have a refound. the information we're asked to verify thus far is not a difficulty and not a problem. the states get the same information from us automatically.
senator portman: you've implemented a predictive and analytical fraud model i want to -- i'll submit some questions for the record about that process and again appreciate your service and the fact that this is going to be a complicated tax season for you and we'll be following up with more questions. >> are you familiar with jonathan adler a piece in "the washington post" yesterday about the 100% to 400% qualification levels for the a.c.a.? commissioner koskinen: i did not see that. >> he's summarizing a piece about the a.c.a.'s authorities and who qualifiers in tax credits, and it's 100% to 400% of the federal poverty line, correct?
it looks to me that you have put forth a rule that disregards the 100% income level. commissioner koskinen: i am not aware of that. i would be delighted to get your information. i am not aware that we have done anything that ignored the statutory framework. sen sasse: we will follow up with a letter. tray to engage your staff and understand how that would work. the particular concerns i have a related to the broad application of irs discretion. obviously in the regulatory rulemaking process but also in particular cases. as the chairman and ranking member mentioned many of our constituents, when i travel nebraska, there is genuine fear of the i.r.s. because there's a lack of understanding about how discretion is applied by the agency. if section 36b were rewritten it's not clear that an employer wouldn't be subject to employer mandates if employees -- employers -- employees would have been medicaid eligible end up on the exchange they could end up penalized for that.
i would love to get more information about that. can you help us understand more broadly how policy decisions in the rulemaking process are made between hhs, the irs, and the white house. you 36 components of your jurisdiction? commissioner koskinen: we have all the tax components come under our jurisdiction. as a general matter, our role is tax administration. policy issues about what legislation ought to look like what changes in this act ought to be, are decisions made by the treasury, the white house, and the congress ultimately. we simply implement what goes on. issuance of regulations is a joint effort between the treasury department and the irs. we are a bureau of the treasury department. we don't issue regulations by ourselves. they technically have the authority but obviously designed regular laces with an eye on what's the impact on tax administration. if there's a policy decision
about wodo you increase this or that, for instance, the policy decision about the penalty application, that's a decision by the treasury department. we get involved in that only to the extent that it's a question of what are the implications for tax administration and would it work better, easier, which is the best way for it to work? but all the policy issues are decided again by the administration and ultimately by the congress in materials of legislative recommendations or fixes. sen sasse: would that be true with regard to the credits for illegal immigrants as well. the decisions that were made about the refund ability for folks that appeared to be getting credits in certain cases. the irs plays no role in that rulemaking process? commissioner koskinen: we participate in the discussions about if you are going to make that change about tax decisions. there's an office of tax policy in the treasury department responsible for tax policy.
we meet every two weeks going over regulations to make sure as the regulations are designed that they are designed with tax administration not only in mind but as a part of that to make sure that as the regulations get changed they don't inadvertently make life more difficult for taxpayers or for the administration of the tax laws. sen. sasse: in the king v. burwell case, those decisions were made in the treasury department's tax policy division? commissioner koskinen: those interpretations of the policy issues are up to the treasury. we participate, getting our view of how it would be for tax administration. what works or doesn't work. but the policy calls are --ened the development of the act to begin with -- are the responsibility of the treasury, the white house, h.h.s. and ultimately the congress.
sen. sasse: going back to the chairman's opening issue with his constituent. if a decision was made, what was the number $11,000? how will the decision be made about the timeline of repayment of that? i understand you want to dispute calling ate penalty, but that obligation they have. commissioner koskinen: that's -- they will either file their taxes and pay the $11,000 they owe, or they will contact us. you don't have to hire somebody off late night tv to deal with the i.r.s. they can work on an installment agreement. you can develop an installment agreement yourself on line one of the new things we've developed over the last year. if they have substantial financial difficulties, they can work with us about an offer of compromise to figure out how to settle it. those are tax administration issues and we're responsible for those.
sen. sasse: one last question. these 34 provisions of the aca who is the point person inside the irs for the tax administration of all the new aca authorities? commissioner koskinen: ultimately the commissioner's which is why i am here i met every two weeks for the last two -- haas 15 monthers in people in the i.t. office, the business people working toward the implementation of the development of the system the implementation of them, making sure this filing season got started so i'm ultimately responsible. >> and it's your judgment that the i.r.s. is up to the task of administering the new a.c.a. authorities? commissioner koskinen:thus far, i think filing season has shown that we have done a remarkable job in the face of both the challenges, getting them into a model t with not a great sound system but applications running for 60 years. to pull that off, i am delighted. could have made a lot of money
betting on that 15 months ago. i think we are up to it. i do think we do statutory mandates, so we will always have a highest priority of whatever statute you past. but if our resources are cut, we can't do other things we have discretion over. it's tax enforcement it's a pay -- taxpayer service, improvement of our i.t. systems have to be put on hold. with the implementation of the affordable care act i couldn't be more pleased with the irs has been able to do. senator sasse: thank you, commissioner. sen. johnson: let me just admit because back of the envelope calculations are dangerous. really the explanation would be $172, then $340 the second year i want to correct the record, i was wrong. it really looks like the minimum penalty will be the maximum penalty. so we're not talking about $3,000, but probably $695 as being average. i want to correct that.
senator mccaskill. >> i appreciate your staff's input, i couldn't do that on my own. commissioner koskinen: $435 sounds a lot better. sen. mccaskill: commissioner, everybody is offended at the notion, regardless of party or ideology, at the notion that the irs whatever target groups based on their belief. i understand the outrage, i understand the need to hold people accountable. i would like you to explain when we vent that frustration by cutting your agency, who exactly are we punishing? commissioner koskinen: as other people have noted, when you punish the irs by cutting its budget, ultimately you are punishing taxpayers because you limit the ability to provide the service to them that our
employees want to provide. the people who care most about it come from people working in our call centers and assistance centers whose satisfaction comes from helping people and they feel they don't have the resources to do that. sen. mccaskill: your budget has been cut by 18% since this scandal came up and, what is the call wait now for a taxpayer who has a problem, what is the average amount of time they have to wait on the phone because you don't have enough personnel to answer the phones? commissioner koskinen: at this point, it would be on average about 28-30 minutes. sen. mccaskill: what percentage of the phone call can even answer at this point after these draconian budget cuts that were supposedly punishing you but are actually punishing my constituents that can't talk to anybody? because you've had to cut so many people. commissioner koskinen: about 60
noveget call this is year are not going through. that exacerbates the problem because if you can't get through, we have had over 6 million -- the phone company calls them courtesy disconnects, because when the system gets overloaded and we know you will be there too long you simp he get disconnected system of it exacerbates the problem, people are calling two, three, four times just to get in the queue to wait for an hour. sen. mccaskill: and we have seen the scam in this country of people calling and claiming to be the irs and basically stealing money through coercive efforts and misrepresentations on the phone. when you are able to go after the criminals, what is the return on investment for every dollar that you are given to go after the criminals? and i saw this criminals firsthand as a prosecutor, that are using the irs and the tax
code, and cheating all of us in america who pay their taxes. what is the return on investment for every dollar you get. what do you return to the treasury in terms of your ability to go after the criminals? commissioner koskinen: enforcement alone, the return is over 10 times the amount. as a general matter, when you give us one dollar you get 4-6 dollars back. we're the only agency where to give us money we promise to give you more back. sen. mccaskill: let me make the -- make sure i understand, make the point, because sometimes -- and i don't want to get to -- maybe i will get to an aggressively partisan place here. when you estimate your taxes you are deciding what you're going to make it what you are going to all of the government and then you decide what will be withheld. if you are right, if you are perfect, then it is even.
you don't owe anything or get anything back. but if you underestimate your income, you might owe more. if you overestimate your -- you get less. and if you overestimate you might have to pay more. this is something every taxpayer has to do every year, correct? commissioner koskinen: that's correct. senator mccaskill: so what we're doing with the a.c. samplet the same thing. the individual has to estimate if they're entitled to get this amount of money for the insurance premium and if they estimate wrong they're either going to get money back or they're going to owe money. commissioner koskinen: that is correct in one of our goals is to try and educate the public to understand that. sen. mccaskill: and they will get better at this. commissioner koskinen: our experience is that after the first year everyone pays attention and understands it is not a free good. when you get an advance payment and ultimately has to be
reconciled with the reality of your income sen. mccaskill:. finally, calling it a personal responsibility tax. i've got a couple of minutes and i'm going to take it. a 32-year-old man in america has enough money to either buy a new harley or health insurance. under the umbrella of freedom he decides i want a new harley. he goes out and put that harley on the pavement and he is sent to the nearest hospital where, in america, we don't say to him, you decided to buy the harley, we are going to let you die. instead we take him in the hospital and sometimes give him millions of dollars of health care. he goes bankrupt, the hospital has uninsured care, another is -- now there is no magic fairy that i'm aware of, i don't think there's one in the i.r.s., that come into the hospital and pays the bill. what happens when that happens, when that guy decides to buy the harley instead of the health insurance, the hospital calls
the insurance company and says you know, we're going to have charge you more for labor and delivery. we have to charge you more for a knee replacement. year going to have to charge you more for an angioplasty. and then the insurance company calls the small business down the road and says, i have to raise your premiums. and those premiums will be going up by double digits every year for years. prior to this reform. now the question we have here is one of personal responsibility. and i am lectured about personal responsibility from some of my friends on the other side of the aisle constantly system of the question is, do we owe, all of us who pay insurance, should we pay a higher premium because he got to get a harley? or should he have personal responsibility to be able to cover his medical bills?
and that is really the essence of this question. we say you have to have insurance when you're driving a car because you might harm someone else. when you go into the hospital with uninsured care, you are passing those costs on two people that have taken personal responsibility. i get so tired of this notion that somehow this is the big arm of government instead of the notion that it is time that we acknowledge that personal responsibility in the health care sector is just as important as personal responsibility in any other sector. i feel better. thank you, mr. chairman. >> thank you senator mccaskill. >> can i just say something? sen. carper: i'm tom carper and i approve that message. sen. ernst: i want to stay for the record that i do ride a harley, i have insurance, and i wear personal protective gear. so yes, thank you very much. i am personally responsible. >> did you all work this out beforehand? senatorerness: we did not. fortunately, i don't make that
choice. i know what i can afford and do so accordingly. senator sasse had brought up some good discussion about king v. burwell, and where your role will be once that decision is made. if it goes the way i think it should go, then we will have subsidies that have gone to states and to individuals that shouldn't have gone to those individuals. but what do we do, and maybe you have thought about this, in a hybrid situation. there are a handful of states in which iowa is one. it is a hybrid exchange, neither state or federal but a combination of both. have you thought through that and what role the irs might be playing? commissioner koskinen: basically, there is no way for us trying to predict what the court will hold and what it will decide in terms of how to parse
through all of this and what the responsibilities are of states federal government, the congress. much like potential tax extenders, we basically play the hand we are dealt. the court will make a decision and then we will respond. the policy issues, back to the earlier question, about what the implications are beyond tax administration will be decisions made by the treasury department and the administration. at this point, we have enough challenges running the filing season and so that is what we are focused on. sen. ernst: i do appreciate that. i hope that once the decision is made we can all jump on that together and figure out how to handle that decision. i do appreciate that. since september of 2014, hhs has dropped over 300,000 individuals from obamacare because those individuals have failed to document their legal residency.
we don't know what their status is. many of those were enrolled for over a year. so 300,000 individuals. during that timemark of them did receive premium assistance tax credits and cost-sharing subsidies for which they are not entitled. they can't prove their residency, they're not entitled to those. so under the administration's current policies, if an individual or family is unable to prove his or her citizenship or lawfuly present status, h.h.s. provides coverage and taxpayer funded subsidies under the affordable care act before the individual's legal status can be verified by any government agencies. if citizenship cannot be verified, those individuals are dropped.
300,000 individuals have been dropped from obamacare. because many of those if they are illegal immigrants, they're not necessarily filing tax returns. i understand that it would be difficult for the irs to try and recoup payments or credits are -- for subsidies because they won't be subject to the reconciliation process when they file tax returns because they don't file tax returns. so how, as the irs, are you able to handle that situation and what is the plan moving forward for those folks that were receiving credit or subsidies? commissioner koskinen: the qualifications and determinations were made by hhs. this is an area where they will -- they have experience on recouping payments made in in error. this is an area where they will be responsible for doing that
sen. ernst: that won't even be run through the irs? commissioner koskinen: if the premiums have been paid on their behalf, at this point, the idea is that cms will pursue those to the extent that they pursue any other payments that they make that turn out to be improper. sen. ernst: this is going to be a very difficult situation with so many different entities involved with subsidies, tax credits. one agency not knowing how another agency is going to handle it. commissioner koskinen: we worked together on that, there is not a gap. this has been an effort that is not totally unique, but for us we spent a lot of time with cms and have a very good working relationship with them. we have a lot of conversations with the treasury department. the policy issues are regularly
reviewed by h.h.s. and treasury together. we chime in in temples of how it's going to affect tax administration. but i don't think there's any gap where they are. as new issues come up, they all have to be resolved. but that's part on an ongoing discussion the agencies have. sen. ernst: i know it is a very difficult situation and thank you for coming today to testify. sen. ayotte: thank you chairman, thank you commissioner for being here. i wanted to ask about a situation we have in dealing with in new hampshire but i don't think new hampshire is unique in this. i received a number of complaints from my local libraries that they didn't receive the necessary tax forms and instruction booklets. in new hampshire, we happen to have a high percentage of people that actually will file by paper and historically they have been
able to go to the local library and get the tax forms so that they can do their taxes. i wrote to you, originally in february, about this issue. the first response i got back, one of the primary reasons you said that these forms weren't being provided to people at their libraries in new hampshire was that the irs budget was cut. but the reality is, on taxpayer services, congress allocated the same amount of money. so why is it that irs is not able to provide the same level of customer service this year? it is not just this library issue. for us in new hampshire to have to go through the runaround that we did to get our libraries basic tax forms, it just was kind of unbelievable to me when my staff told me all the
runaround we were going through. can you help me understand why this is happening. and what troubles me even more is that the national taxpayer advocate recently testified before the senate appropriations committee that this year taxpayers are receiving the worst levels of taxpayers service since at least 2001 and the statistics are staggering in terms of 40% of the calls that the irs is receiving from taxpayers are not being answered or responded to in any way. commissioner koskinen: the answer to that is, we get an appropriation in buckets for enforcement, for operations, which is for customer service and information technology. we also have user fees they go through to part of our operating budget.
historically, we have never been fully funded for taxpayer services. the amount of money provided has been been supplemented by about $150 million out of the various user fees that we charge. because in both 2014 and 2015, we were zeroed out and funding for the affordable care act. we asked for $300 million each year just for i.t. and congress provided zero. the only way we could do it was to move money from wherefore it was. while the base appropriation for taxpayer services was the same we have to take $100 million out of our user fee allocation to put it into information technology. to implement the act. we have a significantly smaller amount of money available for taxpayer services than we have had before and the appropriators understand that because we go through that with them regularly. we are as concerned as you are about the low level. i have now visited 37 cities. i have talked with in town
halls and otherwise 13,000 i.r.s. employees. one of the common thems is not that they are overworked but that they want to help taxpayers. they get satisfaction out of answering questions. one of the concerns they had was when we told them we can only answer simple questions because, complicated questions make the queue get longer. we told congress that fur our budget was plat -- was flat by $350 million, we expected the level of service would drop to 30%. we got cut by $350 million. we have to run the filing season. we collect over $3 trillion for the government in the ordinary run of the filing season. if you cut our budget, the only places they can cut is enforcement, taxpayers service, and improvements in the information technology. with regard to the forms, first of all as i hope i explained, i thought when i read the letter and signed it to you, our
experience has been 85% of the forms we have been sending out don't get used. we have been providing a lot of forms for land fills. for the libraries, we have provided them the basic forms, not scheduled and otherses, but we provided a format that would allow them to make copies of any form they wanted. they could download and make copies of those. anyone could call us and ask for documents and we'd mail them to you. there was a problem because with the extenders, we could get them up online and you can download them online. you can go go straight online to get them. if you called us, it would take a few weeks longer before they actually got through the process. we tried to give taxpayers alternatives. the library concerned, which i understand, is that making copies is not a free good. whether it's 10 cents a copy or 15 cents a copy work limited budgets, libraries are strained by that. that is why we encourage them to say that their constituents could go online and download them themselves.
some people don't have -- >> the people going to lie prayers don't have access to the web. commissioner koskinen: and we tried to give vissability, that they could call a special line. sen. ayotte: we had to send my staff are people he over to get these forms for people in new hampshire and we were only able to get 10 at a time. it was a little crazy. let me just point out that from your testimony the one thing that people need to understand is you had to take money from the taxpayer services line to fund the implementation of the affordable care act. essentially is what happened here. we flat funded you funded you the same on taxpayer services and you took the money to implement obamacare. commissioner koskinen: it is the -- the money you fave us for tax payer is services went to taxpayer service, but we took the $100 million from elsewhere.
sen. ayotte: the gao found the irs used $12.1 million for taxpayer services to implement the informal care act. -- the affordable care act. commissioner koskinen: the congress passed an act three days after our budget was cut by $350 million the congress passed the able act with no additional funding, they said you have until june 1 to do that. we'll do that because you told us to do it. but we have to find the money somewhere and we have to take it where we have discretion. senator ayotte: we are taking it from our core functions to do that. i wanted to follow up on an issue someone may have asked you, i want to followup. that's the incorrect 1095-a forms sent to 800,000 individuals who enrolled in health insurance through the federal exchange. do you know how he taxpayers in new hampshire received the wrong form? commissioner koskinen: those forms are provided designed and filled out by cms. they would be the ones, if anybody knows, they would know.
sen. ayotte: do you think that the people who waited a little longer -- as i understand they are being treated differently and are still on the hook for paying if they owe a larger premium, there may be a distinction between those depending on when they filed and how are -- how they are going to be treated. how are the people in this country who were misled in terms of what they thought they would be received, how are you going to treat those individuals and what are we going to do with the lost revenue on that? commissioner koskinen: of the 800,000, the estimate of the cms was about 50,000 involved. in terms of being misled, we had a long, informative discussion on that and i think after the transition of the first year people will understand better. when you register and apply for insurance coverage, you make an estimate of what your income
will be for the year going forward. the way we all make estimates when we file our estimated payments and withholding. you make that judgment. we then provide income verification about what your last tax return filings were. so the marx place can determine if you've got an accurate estimate going forward. on that basis, a determination is made. first, you know by working it through what the premium for your insurance is and then a calculation is made about how much of that premium will be paid on your behalf to the insurance company. one of the things we have tried to make clear from our standpoint, because we wanted to make sure that if people had a change from their circumstances that they would have an estimate and could go back to the marketplace. so they wouldn't have any bigger adjustment than necessary. a lot of people actually went through and assumed that once they get the premium paid to the insurance company, that somehow it was never going to get reconciled. most people understood that it was going to have to be reconciled but a lot of people
have not understood that. we think that going into next year that most people will understand that when you estimate your income, if your income goes up, then there is less support for your insurance payment going forward. end of the year. we have spent a lot of time and cms has spent a lot of time getting people to understand that if your estimate was wrong or changed, you need to get back to the marketplace. a number of people dead. that would be to get a 1095-a for the one part of the year and then another one when you're premium changed so that then at the end of the year you know exactly what your premiums were. we think that will be a lot better the next year because
people will have been through it once. if your income changes of the course of the year, due to get back to the marketplace. sen. lankford: thank you for the work that you are doing for the american people. you've walked into the middle of a lot of chaos, with laws that we all have some frustration with. i want to talk about just a couple of things. we talked about the eitc and identity theft issues. we had a 22% estimated fraud rate with the eitc. the challenge has always been, this has been a high priority issue, how to get on top of this. what is the plan now to try to get on top of this 13 to $16 million loss. commissioner koskinen: it is a
major challenge for us and i have been concerned since we started. we have made progress, good progress, in some areas. except for the itc. the percentage of payments and the dollar volume of those have been pretty much with a range and not changing. the plan is, we did put together a working group of everybody who anything about this. we can't keep doing this expecting it to magically get better. we went back to the drawing board and it turns out that we have asked for support from the congress. we need to get w-2's earlier.
we need to have correctable error authority. we see in the returns when there are errors. two people claim independent in our database says different, we can't make that correction without entering into an auditor exam. we did last year about 450,000 of those exams. but we have 27 million applicants, and to the extent that 20% of them are getting the improper payment, we will never be able to audit our way out of the problem. we said if we had error authority, we can make that correction, advised the taxpayer. the taxpayer would still have the right to come in and say they really have three kids as opposed to one. you always have the ability to make that clear, but we would be able to make those corrections directly.
over 50% of the eitc returns are filed by taxpayers. it is a complicated tax statute that if anybody wanted to simplify we would certainly support that. they are making honest mistakes. and then as we said, there are crooks. they are advertising that we don't get you a good refund. we have tried to more taxpayers. if your preparer says just sign a blank form, you may never see that refund or they have nothing to do with what your reality is. if we had correctable error authority and minimum requirements and qualifications training for tax preparers, we think that we could make a dent in this problem. we will never get it to zero but to me, you just can't keep running the system this way.
it looks either like we don't know it is a problem or we don't care about it, or we can't do anything about it. sen. lankford: that is an aspect of this committee to determine where we are stuck and what we can do to be unstuck. you just articulated three issues that you need congress to help with. w-2 issue, correctable error authority, and the standards for tax preparers. less gray area. more black and white and how that gets applied. those three picking up? commissioner koskinen: w-2's, correctable error authority and minimal qualifications for preparers and simplify the statute, it would be helpful. senator lankford: this is something you are trying to manage in the transition of obamacare. h.h.s. dropped 300,000 people
saying they didn't have the correct documentation. some of those individuals who are lieu already in the process with the subsidies and everything else. is there a plan to recoupe. we have a loss of 00 them that they received and said they are not eligible. how is it working out? commissioner koskinen: what they got was advanced payments of the premium tax payments and not got to the tax credit. the government made an advanced payment to the insurance companies on their behalf. as a general matter, h.h.s. and c.h.s. who deal with medicare and medicaid payments that are made improperly made, so the basic policy is that c.m.s. and h.h.s. are responsible. if the payments are made on the basis of improper
identification, recouping those or collecting them is up to them. senator lankford: that is not up to you? 300,000 people received that advanced payment or don't have advanced documentation and that's over there. let me ask another issue on this. the law itself with the affordable care act. the law prohibits the providing to employees to help them pay for an individually purchased plan for the smaller businesses and individuals. someone says they are going to go out onto the general market and the employers is going to provide them a tax-free amount. small businesses would say, i can't afford the policy. my understanding is that is not legal. are you aware of what the tax
policy is? commissioner koskinen: it's not a policy of the i.r.s. but a policy set by the treasury department. lanchinglamping would the i.r.s. have to carry that out? commissioner koskinen: once somebody has decided either in the statute or policy under the statute, the tax administration is our responsibility. to the extent that once the rules are set we are responsible for administering so the penalties and tax payments would be our responsibility. senator lankford: there is a consequence of hell ming to help someone rather than providing someone coverage. commissioner koskinen: at that point has been made. senator lankford: kaiser family foundation has done research. they listed in their research, % of households receive the
correct obama subsidy. that becomes a big issue. and affecting a lot of people as they go through their tax planning and precipitation. if we have 4% of these folks that are receiving the correct subsidy upfront, we have a major problem that needs to be dealt with. they are trying to clean up the consequences of it. >> i'm not sure we have a higher percentage -- in other words, what you are doing at the front end is making an estimate of what you are going to earn in the future and that determines the advanced payment jeer you are entitled to. unless you know your job today and know your family isn't going to change, going to make an estimate. senator lankford: sets americans to fail. and be able to update pay.
commissioner koskinen: the reason 60% to 70% is they overestimate. and that's what we expect people will be doing here. and will not make it down to the last dollar and say i'm going to overestimate my income and i'm entitled to and when it gets calculated, are going to refund and in april and it will be i think that normal taxpayer behavior which is the way they behaved generally. >> mr. commissioner, in june of this year, the supreme court is going to be deciding on an i. r.s. ruling. has the i.r.s. done any planning in case that ruling comes down and is an adverse ruling in
terms of your rulemaking? commissioner koskinen: as i said earlier, there are a wide range of possibilities of how the court is going to rule in both of how it decides to have its ruling implemented. in light of our challenges, moving forward and there is no way we can adjust the filing season planning in trying to anticipate the various options. much like we do with tax extenders, we run on the assumption and then we have to a just. senator johnson: if the supreme rules that the subsidies can only be paid through exchanges established by the state, that that is going to create some real problems for the i.r.s.? commissioner koskinen: again on how the court rules. senator johnson: let's say they
file the law and they say only subsidies can be paid through exchanges. and how many states -- how would you handle that? have you given any thought to that, any planning in terms of that? commissioner koskinen: will be a set of issues. there are policy questions. some statutes are passed and people are given more time to transition. depending on what the court decision is, there will be policies how to transition from one point to the other. depending on the decision, it could be complicated. senator johnson: you weren't commissioner when that decision was handed down is that correct? commissioner koskinen: correct. senator johnson: did you determine how that ruling was developed? commissioner koskinen: 20 years in the public sector and 20 years in the private sector and
i play the hands that are dealt and that decision was made before i got here and my job is to administer the decision. senator johnson: you never loonged into whether the i.r.s. was trying to get determination from the white house? commissioner koskinen: the policy discussions we have are with the treasury department, the regulatory process is worked with the treasury department. and how those decisions were made. senator johnson: the i.r.s. is responsible for evaluating the exemptions for the individual mandate. how many americans in general or what's the estimate in terms of how many will be provided for? commissioner koskinen: at this
point, we haven't pulled that data, so i can't give you an answer on that, but the assumption was basically that probably more people would file for hardship exemptions or they had coverage for part of the year than people who will pay the shared responsibility payment. it will be a number that will actually see and in three, four weeks will be able to accumulate that data. senator johnson: those that are grant the exemptions that will be on an honor system. any way to verify that? commissioner koskinen: what we'll do is when we -- the computer selects returns that have issues, whatever they are, when we go into those, we look at everything. of the 75% give or take americans saying they have coverage, if we have an issue
with your return, we'll ask you for backup support in the fact that you have coverage. so we will track through when somebody says, i had a hardship and it turns out you made a lot of money and we are aweding you it will be noted that you don't seem to have -- qualified for and then you are subject to penalties and interest and the purpose for understating your income can over time mount up. senator johnson: the timing of that what point in time are they unable to repay it. because they don't have the cash on hand and don't have the ability other than to pull money out of their retirement fund, which is a high penalty for doing that. if you pull money out of your retirement fund, there is a 10%.
commissioner koskinen: if you are retired, you can pull money and pay income tax on it. senator johnson: they might have been retired. commissioner koskinen: you pay tax on it if you are under 59, fl is a penalty. senator johnson: they may be paying a retirement. what about paying the subsidized -- subsidy any way? commissioner koskinen: you can actually go on-line and if you qualify, you can do an online installment agreement that could spread the payments over time and do it online or call us after the calling season. and you can arrange that so you don't have to immediately take steps to pay everything on time if you got legitimate concerns and sounds like in this particular case, an online
installment agreement would be an appropriate response. senator johnson: over what time line? commissioner koskinen: three to five years. senator johnson: do they pay interest on that as well? commissioner koskinen: yes, but no penalty. interest rate goes at the government interest rate which is very, very low. that's all i have. senator carper. senator carper: not that i don't want to encourage people to pay on time because the interest rate is low and your response toe senator johnson's questions explaining how people can file online and ask for an installment payment and pay no penalty and cost of borrowing is
low. that seems to be using common sense and seems to be freeting people the way i want to be treated. good for you. when i had to walk out -- i serve on the committee, and subcommittee and has the jurisdiction of the united states and i wanted to be there for that. i walked in and you were responding to senator lankford's questions, what do we need to be doing. i'm going to ask you and this is important and i want to make sure. in terms of what we can be doing, to enable you and your folks to do a better job. i just want to have you hit it again. >> this was in the context of what we can do and this has been a problem in the earned income tax credit area.
senator carper: you may have answered this question. commissioner koskinen: you have to make seven impressions. this will be two. we need to get w-2's earlier. it would help us in a lot of ways. we need what's called correctable error authority and in a set of returns that we have to go out and audit and don't have the resources. if we can make the correction, send the correction to notice to the taxpayer, they can say we do have three kids instead of one or that child isn't my fault, i give credit for it. the third point is we need help because half of the returns are -- making sure there are minimum qualifications.
>> and we are here to help you and we spend time to get information and help people. if you are trying to become compliant and figure out how to pay your taxes, we want to help you. it has been a remarkable experience. we are under a lot of attacks and go talk with them. i have 37 cities that i had lunch with employees in addition to the town halls. they are a remarkable group. it gives me great satisfaction and to work with them and it's a great honor to be the i.r.s. commissioner.
affordable care act and how it works and make sure it goes as smoothly as possible and helpful for the people to understand as those who are participating in the marketplaces what they should pay attention to. when their circumstances change, they should get back to the marketplace so their reconciliation is painless as it goes. but i do take senator carper's point the i.r.s. is important. people ask me why i have been at this going on a year and a half. and i said again as you have spent 45 years of your life, you have to be optimistic and assume it is going to get better. i am optimistic. i think there are people anxious to be supportive of us.
we have the responsibility to spend taxpayer dollars carefully and given these monies from people who provide them to us and use the funds well and when there are problems. my goal would be life to have no problems. but even with the shrunken work force, 87,000 people and we deal with every american and every american family. our goal needs to be that when we have a problem. i don't want individuals because of something i said. i want them to understand there is an issue in their return that
caused us to look at it. and i do think it's a basically a system that depends upon voluntary compliance. we collect $1.3 trillion because americans are trying to do the right thing. for that system to work. they have to have confidence in and be comfortable with the fact that tax administration is not a political enter rice but designed to treat everyone fairly. they have difficulty with it, they can work with us. and if we can move in that direction, then we will be making progress in the most important way, which is to protect the voluntary tax compliance system of this country. >> the fact of the matter is the credibility needs to be restored. senator johnson: i appreciate your service, your thoughtful testimony and answers to our a
questions. this hearing record will remain open for 15 days for the submission of statements and questions for the record. this hearing is adjourned. [captions copyright national cable satellite corp. 2015] [captioning performed by national captioning institute] >> in about half an hour, live remarks from secretary general ban ki-moon on global challenges and won re-election as secretary general in 2011. see that event live in half an hour at the national press club, 7:00 p.m. on c-span.
chris young and aaron quing for the center of public integrity look at food ingredients and safety reviews and george mason university's and national partnership for women and families look at issues looking at working women. plus your phone calls, facebook phone calls and tweets live friday on c-span. tomorrow, the new hampshire republican party kicks off its summit with speeches from governor christie and florida senator mark rubio and former governor jeb bush. holds the first presidential primary. starting at 12:15 tomorrow at c-span.
of seats to be filled about the challenges associated with the white house working cructtively with republicans in congress and it has been a lot of speculation that politics that prevents the white house for working political differences that prevent the white house working with congressional republicans, is it differences about policies that prevent us from finding common ground. i actually am ready to stand to you and present exhibit aa why it is challenging to work with congressional republicans. back in september 2014, shortly after attorney general holder indicated that he was prepared to step down as attorney general of the united states, there was a lot of speculation about how
soon the president would seek a nomination. in the days after that attorney general holder he was prepared to leave, senator grassley appropriately relishing the possibility that republicans would assume control over the united states senate, said rather than rush a nominee through the senate in a lame duck session i hope the president will take his time to nominate a qualified individual. so senator grassley said, i hope the president doesn't nominate someone right away, this will be considered by the new republican-led congress. just today, on television, on bloomberg, senator grassley was asked about the delay. again, citing the historical
issues. and he said, and i'm quoting here. if you subtract november and december from that time frame, you should do it. the democrats were in control of the congress and they decided not to bring her up. that in my mind is an astouppeding display of due policity. and i know that it may be that you guys are looking at me, many of you have been in washington longer than i have and gosh, josh likes working at the white house. he has stars in his eyes. but this kind of dramatic reversal and going back on one's word is just business as usual in washington. the sad part, i think, is that senator grassley, particularly in his home state of iowa has
cultivated a reputation is somebody who is true to his word. and the only conclusion i can draw from this astounding exchange is that it is possible that senator grassley has been in washington for too long. >> that was a portion of today's white house briefing. see the entire event online. house speaker john boehner signed a bill to strengthen medicare before sending it onto the white house for the president's significance in a and joined by several other members of congress. here's a look now.
the speaker: in a few minutes i'll sign h.r. 2, bipartisan legislation to strengthen medicare. at a time when we face a serious spending problem, this marks the first entitlement reform in nearly two decades and it was accomplished by working together to find common ground on behalf of the american people. by getting rid of the notorious doc fix, seniors will have a reliable system to seeing their doctor. they will have more peace of mind and taxpayers will save hundreds of billions of dollars over the next 0 and 0 years. we extended the children's health insurance program and community health centers authorization, doing all this without raising taxes.
this is a win that every american can share in. i thank leader pelosi for her leadership in helping challenging issues. and thank all who helped to get it through the senate. and thank the leaders of the ways and means committee and chairman up ton and chairman ryan mr. levin and mr. pallone and all of the members and their staffs hole really worked hard to get us to this moment. and special thanks to the doctors caucus here in the house who have been working to solve this problem. about a year ago, after 17 patches over the past 11 years, i decided that we had enough of this doc fix. and so in recent months we began an effort to see if we could find common ground. a lot of hard work by our
committees and 484 votes in the house and senate, we have reached this important moment and on the 100th day of this new congress. we have a lot more to do to fix these entitlement programs for our kids and grandkids but have taken a good step here and we have done it by finding common ground on behalf of the people that we serve. ms. pelosi. ms. pelosi: this is a happy day indeed. thank you for your leadership. i'm pleased to welcome our colleagues from the senate to the house side for some of them back to the house side and i want to acknowledge senator wyden and snar hatch. it is a doc fix, yes, but it is a remedy for seniors. that's what it is about, our
seniors and their ability to access the doctors whom they like and who they choose. it is about our children. it is about the child care -- the children's health bill. i call it s chip. the s chip, because it was one of the first bills we sent to president obama's desk when he first became president and this continuation of it is very very important, recognition of the priority that our children are to us. the speaker mentioned that the health centers are very, very important, and extension for the community health centers is essential. so this is -- what is exciting, it is not a remedy about the doc fix, but the manner in which we recognize performance, not procedures, value, not volume.
a quality not quantity. as the speaker said, this has been going on foia long time. and the more expensive it became. in terms of reducing the deficit as we meet the needs of the american people, it's great to be here with you mr. speaker in a bipartisan manner so you can send the bill to the president. with that, i'm pleased in joining the speaker and welcoming and acknowledging the republican leader, the majority leader of the senate, mitch mcconnell. senator mcconnell: the american people have chosen divided government since world war inch i. they want us to look for things that we can agree on to make progress for the country. i want to thank the speaker and
democratic leader of the house being able to come together and figure a way to go forward is extremely important. we were very pleased in the house, senator hatch and senator wyden has been working on this for a number of years. but this agreement between the speaker and i think leader pelosi is what finally brought it together and i want to congratulate everyone up here. only eight senators opposed it. this is a very significant piece of legislation, a big step forward for the country and i think the message to the american people this congress intends to be present productive and intend to look for things that we can work together on a bipartisan basis and make progress for the american people.
this week, we also observed equal pay day. this week, republicans rejected our attempts to pass the paycheck fairness act. equal pay day, for those of you weren't at the press conference is the day in which women start earning for this year. and worked until the middle of april for free as a donation to your employer at the expense of your children, your retirement, your ability to reach your fulfillment. so i think this is one of the strongest manifestations of the
difference between the democrats and republicans in terms of middle-class economics versus trickle-down economics. in this same week as they are rejecting inputting more money in the pockets of women, largely in the middle class, they are rejecting the opportunity to turn our economy around. the middle class are the job createors. when the middle class succeeds, america succeeds and when women succeed, america succeeds. all these indicators talking about how great our economy is doing and they are good and going into some of them in a moment, we aren't going to have the full recovery until we have until we have stronger paycommecks for america's middle class, because the middle class will have money to create jobs,
turn around the economy. the confidence -- the consumer confidence that we need is directly connected to strengthening paychecks on america's middle-class economics. the president talked about it in the state of the union address. on the on the other hand you have, you have trickle-down economics, which took us down to the brink of depression in 2008 before president obama took office and they want to take us right back there again. in the short period of time, in the first 100 days, they already passed or marked up tax bills that will give tax breaks to the super wealthy and special interests up to $600 billion and more to come. this isn't job korea iting, it is deficit increasing. this is the same trickle-down
economics, republican president after republican president and now congressional republicans. again, took us to the brink they want to return us to that. hopefully it can be nonpartisan it takes a while for americans for americans to recover from the scars they received in 2008 from their homes paychecks and children's education were threatened by what happened in 2008. and while other indicators show the economy on the rebound, we won't have that full rebound until we put bigger paychecks in the pockets of the middle class. that's what you see this week. it's an amazing thing. they had a bill on the floor to eliminate the estate tax.
that is $269 billion and affects the top 5,400 estates in the country. 5,400 families are subsidized by taking $269 billion out of our pool of the source -- it increases the deficit and rezuses the opportunity to invest in our economy. and that's -- this is the -- that's how they are starting the second 100 days. they voted to give millionaires a tax break. if you are a millionaire if you make over $1 million a year, you
will get a tax break and at the same time, it has to raise taxes on the middle class if you are going to have any balance in how we go forward. increases the deficit. undermine our ability to invest in the future. nothing brings more money to the economy, to the treasury, than investing in education. because of what they are doing, they say we have to give $38 billion in tax incentives to drill in bill oil who will make $1 trillion, they don't need any incentive tom drill. and make any profit. not revenue, profit. but making reduced pell grants
where are enabling us to support the infrastructure that we need. better infrastructure, bigger paychecks. on another note, i'm proud of my house members. in the days following objection to the corker legislation, my members rallied to the president and said we will support a veto. we will support sustained veto of that damaging bill that i will be harmful to negotiations to go forward. i believe it has an influence on the senate. it was going nowhere and i seen public opinion wave in and thank goodness it is something that is a nonevent and people will vote for it and i don't think we need any legislation, but as inocuous
as it is, no problem going forward. but we are proud with what the president has done. to organize the 5-5 plus-1. china, russia. u.s. france, it is very, very exciting and it can't be squandered because of somebody's view of their role in the world when we have to weighing the equity to stop iran from getting a nuclear weapon. let us give diplomacy a chance. diplomacy that is p-5 plus 1. it is very significant. i was proud of the briefings. our members were already a very good place to support the president, reassured by those
briefings, increasing our numbers in thard. you want to know about the gyrocopter. we were having a meeting with the administration -- the morning we had the administration and having the environmental groups to speak about the impact on the environment and it was shut down because a helicopter, a small helicopter had landed outside and didn't and our meeting was a success. and members could come. but it's my understanding that the capitol police are now conducting an investigation working with the secret service, f.a.a. and the d.c. police and when we see that, we will be working in a nonpartisan way.
the speaker and i have always valued -- unstood our responsibility of protecting the capitol for the members of congress, the press, the families, who visit, for everyone who come here. but it's a stunning thing to think that we have that visibility and interested in getting answers to that. i don't know how that investigation will take. yes ma'am. >> talk about why -- [inaudible question] ms. pelosi: it doesn't require
that. it is much different from the original bill which had certain requirements. congress can act on anything. but the bill in the form that it was was harmful. i don't think it's as harmful now. yes, sir. >> you said the events were stunning. and this happened in the middle of the day. are you confident or concerned about the policies that are currently in place to keep the campus safe or a complete review of everything to determine whether tourists come to visit? ms. pelosi: the first incident is horrible. it happened outside the capitol.
when i first heard of it i was in california. but it wasn't in the capitol. and fortunately, it was on saturday. that doesn't mean there weren't a lot of tourists. that's what these investigations have to be tasked, so how much security can you have to have the free flow of people coming into the capitol. so nonetheless, it is essential that we have the investigation to see how people have gotten that far or the gyrocopter, that exposure is stunning.
what safe guards can we use. and we don't want to be a place where we say there is a iron-clad capitol. nonetheless, we have to ensure the safety of these people and we can surmise and can guess, but we want to know what the facts are. >> after 9/11 there was a different mindset. and does that at all -- ms. pelosi: we lost two of our capitol police a number of years ago and that hit home in a very sad way. security changed a bit after that. and 9/11 changed everything. so, again, we have to subject what we do to the hashest scrute
any to enjoy employment, legislate in the capitol but ensure their safety. i don't have anything more to tell you until we hear what the investigation will yield and we'll go from there and i'm sure we will be doing it in a nonpartisan way. >> you are finishing up -- >> you are a -- i see your mouth moving. you can be next and you can speak for him. >> increasing events of the tax bills today, your criticism of those and your democrats almost demand -- supported the s.g.r. fix, which adds $10 billion.
what's the difference between the two and is that a prove efficiency. ms. pelosi: that's an extent that we have. it's not going to have. and the longer we prolong it, the more expensive it is and it is an investment in people and in that people, not only you call it the doc fix but a remedy for our seniors and as i mentioned earlier today, one of the first bills that was sent to president obama's desk. we couldn't get it signed until we had a democratic president and president obama signed it in this legislation. we extend that and investing the health of our children is a very positive investment. some of it is paid for. we have the initiative to help
very -- poor seniors. and that is paid for by increasing to mr. hughes: i am the president of the national press club. we are committed to our profession's future through programming just like this and we fight for a free press worldwide. for more information visit our website, press.org. to donate to programs offered but thrur club's journalism institute, visit press.org/institute. on behalf of members worldwide, i want to welcome you all here in our live audience to today's newsmaker dinner. i'd also like to welcome our c-span and public laid yow -- public radio audiences. you can follow the action on twitter