tv Key Capitol Hill Hearings CSPAN May 5, 2016 11:00am-1:01pm EDT
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>> former utah senator bob bennett passed away wednesday night. he was 82 years old. he had been fighting pancreatic cancer vermont's and he served three terms in the senate. this image is from the hill.com. mitch mcconnell said he approached his work with creativity, constructive ms., and honor and his former colleague orrin hatch of utah said in the senate, he was widely respected as a wise and thoughtful leader. bob bennett past way last night at the age of 82. veterans affairs secretary robert make donald talks now about health care policy and outlining goals to improve veteran access to health care and urged congress to take action on appeals reform and fully fund the va
>> good morning, everybody, thank you for coming on a gray day. it is warm inside here and we got coffee and i think it will be a very interesting morning. all, when we do public events, we start with a brief safety announcement. i am your responsible safety officer it is my job to make sure that if we have an episode that i will take care of all of you. i will take care of the secretary first but i will take care of all of you. exit, the exits are back here. stairwell going down to the street is closest to that door. if the problem is in the front, we will go to the back and go over to national geographic. we have a mutual support arrangement with them. if the problem is in the back, we will go out front and down to
st. matthew's cathedral and i will lead us in a east of praise and thanks that we all made it safely. that will not happen. you don't have to be alarmed or anything. we just want to be ready. for us tol privilege be able to host today. i especially want to say thanks to unitedhealth group for making this series possible. to presento do that to the american policy community of very important dimension that is too often neglected in america and that the state of america's commitment to our veterans. and their recovery. they have borne the burden of service and we have an obligation to make sure they are cared for, they and their families. this is as deep a moral commitment as this country can have. after the civil war, one out of three dollars that the
government spent the next 10 years was for veterans. it was actually for artificial limbs. it was such a horrific war. we are living through that now. andave had 12 years of war the secretary has been coping with the incredible challenge that has come from this. the veterans affairs hospital system is unique in that it combines not only physical care but spiritual care. there is an awful lot of healing that has to take place in this sort of environment. he is doing a fabulous, fabulous job. 9/11 weret admired on the firemen that went rushing up the stairs whenever but else was running down. did way, that's what bob when he was asked to come into the va, tremendous criticism at the time and everybody was
swarming and trying to score tactical points. at the time when general shinsek i had to leave and the president turn to him, he said yes. that is in character with his whole life story. point, graduated in the top 2% of his class, commissioned as an army officer, know whater and you that means if you've been in the military, superb officer, and then went on to become an eminently successful businessman at proctor and gamble and that's when we first met. for him to come out of right at life and into a time when america needs it, it is an and on this privilege for us to have him served at this time and it's a privilege for all of us to have him talk with us today. could i ask you, with your very warm applause, welcome the
secretary of the veterans affairs administration, bob mcdonald. [applause] >> thank you for that very warm introduction. there was no question in my mind when i got the call from the white house that this was something i desperately wanted to do. what higher calling could there possibly be? as john pointed out, when you think back to president lincoln's charge in his second inaugural address to care for him who has borne the battle, his widow and survivals, -- and survivors, we paraphrase that now to care for those who have served but also care for their families. what an enormous privilege it is to be in this role. i want to give a few brief ofarks so we can have plenty time for questions and answers. i will get right to it.
feinberg who some of you may know, the former president of the institute of crisis weaid that the had in 2014 around access, he saw it like this -- he said " va kennecott push things now it never could have." he was right and that's exactly what we are doing. as we try to use this crisis to take advantage of this great opportunity we have in the history of our department so we can better deliver outcomes for veterans and families. the potential here is enormous. is the largest integrated health care system in the united states. over one house and 200 health care for's -- over 1200 health care facilities all the way to outpatient clinics. , 25,000,000 employees
physicians, the largest employer of nurses in the country. 1800iations with over academic institutions and more. a single electronic health record across the entire enterprise, a lifetime relationship with 9 million patients, a psychosocial report for homeless patients, ,ntegrated mental health care and organic pharmacy system, organic geriatric care. besides health care, va is a veterans resource for important nonmedical determinants of health. these are services like career transition support, education services, vocational rehabilitation, fiduciary services, pension resources, disability compensation, home loan guarantees, insurance and much more.
vathe private sector, if the budget was its revenue, it would be fortune 6, the sixth largest company in the country. the point is this, the failure that manifested itself in mid-2014 was a crisis. but it was also an opportunity, an opportunity for inspirational change to make va better than it otherwise might have been. va that is the number one customer service organization and the federal government. that's our vision. we are building a high-performance organization to achieve that. that means an integrated, customer centric enterprise leveraging va's vast scope and scale on behalf of every veteran , every single veteran we serve. impossible?
impossible, you may ask. let me share that the american customer satisfaction index rated our national cemetery administration number one in customer service five times running. google, lexus,n mercedes, better than anything in the united states. jd power rated our mail order pharmacy best in the country in customer satisfaction six years running. aim to achieve those kind of successes across the entire enterprise in everything we do. here is how we get there -- we are focusing on five strategies for the long-term and 12 priorities for the short-term or the near-term. our five long-term strategies about va strategies, are first, improving the veteran experience, second, improving the employee experience.
third, achieving support services excellence. fourth, establishing a culture of continuous improvement. fifth, enhancing strategic ownerships. aree five broad strategies about achieving customer service excellence. andall the strategy my va that's exactly how we want veterans to see it. we want every veteran to see va as their own like you would ,hink about your cell phone customized for your individual needs. asalso want them to see va an organization they can be proud of that they can trust and canton and they can use for all of their needs. for the near-term, we have taken those five strategies and distilled them to 12 breakthrough priorities for 2016. none of us will know what will happen with the leadership of the va in january of 2017 so we
thought it was important to put a stake in the ground for desirable outcomes by the end of this year, december. eight of these 12 priorities are directly about improving service to veterans. for example, improving the veteran experience. i will go into greater detail on that later. access to health care. three, improved community care so if a veteran goes in the community for care, improve the quality of that care and also the reintegration back into va. unified veterans experience. five, modernize our contact centers. six, improve the compensation and pension exam. this is typically the first time va iseran encounters the when they go through this exam that determines their disability rating.
seven, develop a simplified appeals process. right now, we have a backlog of 440,000 appeals that need to be dealt with. the law is 80 years old and it's archaic and needs to be changed. eight, continue to reduce veterans homelessness. we made great progress to date, 36% down since 2010. in veteransn needing shelter in the evening. progress but more to be done. four of those 12 priorities are critical enablers. we have to get them done to enable the other eight. they include angst like first improving the employee experience. it's no secret that the best customer service organizations in the world are also the best places to work. we have to create the conditions for employees to better care for veterans. second, staff critical positions that are vacant, we have a lot
of agencies throughout the va. we have to change the way we staff positions and are asking for new legislation that would allow us to pay competitively and higher competitively with the higher -- with the private sector. we have to transform our office of information and technology. the scheduling system that got us into trouble in phoenix dates to 1985. it's like working ms-dos. the financial management system which we manage the budget is written in cobol, a language i wrote for the west point mainframe computer in 1971. it's a very inflexible language. want toour, we transform our supply chain to increase our responsiveness and reduce operating costs. everyone of our medical centers has its own supply chain. that's ridiculous. by consolidating the supply chain and simply having medical centers order from an inventory
we already own, we can take advantage of our scale likely have in the pharmacy example i gave earlier. those for critical enablers are about reforming the internal system, giving employees the tools and the resources they need to provide great service and consistently delivering an exceptional veteran experience. we have shared these with the house veterans affairs committee, our authorizing committee in the house. the senate committee on veterans affairs invited us, at my request, to a hearing to examine these 12 priorities. the president's proposed 2017 budget supports these priorities into the next year. we are making progress. it is lost on some that in just the first 12 months after the access crisis, we completed 7 million more health-care
appointments than we did in the same time the previous year. those were within the va. 4.5 million were within the community. last fiscal year, we completed nearly 2 million more appointment and we did the year prior. most 57 million appointments inside va and over 21 million appointments in the community. more than 97% of those 30ointment's were withinside days of the clinically indicated or veterans preferred date. 1.4 million more than in the fiscal year 2014. over the last 12 months, march of 2015 through this past february, veterans received 10% more authorizations for care in the community versus the same time last year.
over the last 12 months, we have completed 1.6 million more appointments than the year before. in february, we completed overnight 96% of appointments within 30 days of the clinically indicated or veteran preferred date. nowage wait times, right mentale three days for care and primary care is five days on average and specialty care is about six days on average. clinical workload is up more than 20%. the last two years and nearly 18% increase inside the va. a 38% increase in the community. that is more than 7 million additional hours of care for veterans. we have people serving veterans more efficiently. we have increased our net onboard staff by over 18,000 the last 1.5 years. , nearly0 more nurses
1600 more physicians, almost 100 more psychiatrists, and 460 more psychologists. where expanding the clinical space we used to treat veterans. in the last two years, we have added nearly 4 million square feet of new space. that means more access points for care. veteran feedback tells us we are making some progress. about 90% of veterans using vetlink, our kiosk-based software, have said they were either completely satisfied or were satisfied getting the appointment they wanted. oo many told us they were not satisfied so we have a lot of work ahead of us to be the truly high-performing organization focused on customer service, the bedor-centric that we wanted
but that goals within reach. i worked at procter & gamble for 30 years. i learn firsthand what it takes to create a high-performing organization and one that is customer centric. procter & gamble serves 5 billion people on the planet every single, at least one product is used by 5 billion people every single day. to be a high-performing organization, it requires a clear purpose, strong values, and enduring principles supporting sound strategies. we already have a clear purpose. we talked about that. there is no higher purpose than caring for a nation's veterans. we have strong, admirable values. many of us where this icare pin that represents those values, integrity, commitment, advocacy, respect, and excellence. we are doing everything we can to make sure all of our employees are focused on that mission and on those values.
every year, we do annual training to have people recommit themselves to that mission, to that value. every speech i give, i always start with the mission and the values. that's how fundamental they are to guide our behavior. it takes strong, passionate leadership and effective management of a robust systems and efficient processes to have a high-performance organization. we have a growing team of talent making innovative changes and creating opportunities for even greater progress. 12 of our top 17 executives are new since i became secretary. they are all generally enthusiastic as misleaders, experience government and health care professionals, and many of them are veterans. it takes the kind of responsive systems and processes we are building, veteran centric, but you have to do it by design. here's an example -- one of our is seekingh parties
access to primary care by the end of 2016. ss,s called my va acce focusing our staff, tools, and systems to give timely veteran centric access to their health care. it means veterans seeking primary care get clinically appropriate health care encounters the very same day. happening atdy about a quarter of our facilities and we want to get to 100% by the end of the year. that could be a same-day appointment with a primary care doctor. it could be a call from a nurse with medical advice. alth and mean a telehe counter or a secure message or prescription refill or walk-in to a clinic or emergency facility. it takes world-class collaboration and strategic partnerships and vast networks working together to serve veterans. that is why we have enabled a
national network of 54 community veterans engagement boards. these boards are designed to leverage community access, not meet localess, to veteran knees. our goal is to have 100 of these by the end of the year. that's why we are capitalizing on strategic partnerships with external organizations and leveraging their goodwill, their resources and their expertise. our partners these days include respected organizations like ibm, philips, johnson and johnson, amazon, linked in, academic institutions and the best medical schools in the country's and other federal agencies and many more. it's why we are working collaboratively with world-class institutions like usaa, cleveland clinic, wegmans, starbucks, marriott am a
ritz-carlton, nasa, kaiser permanente, hospital appropriation of america, virginia mason, the department of defense and gsa among many others. it's why we are consulting and listening to experts good advice on our transformation. i set up a my va advisory committee called m-vac which is a diverse group of veterans, medical professionals, experienced government professionals and advocates. we meet once a quarter in the give us advice and we follow their advice and we are very transparent with them as to what we have done well in what we need to do better. for employees serving veterans, growing a high-performance organization means intellectually equipping more and more teams to dramatically improve care and service delivery to veterans. we have to engage our employees to make changes that they think we need to make. that is why we developed our
developing -- our leaders developing leaders program and it's helping us do this. think of ldl as a continuous enterprise growth spreading best practices across va. we work with a professor at the university of michigan was the theor to jack walsh and author of several books on business practices and the toginator ofge crotonville help us. we launched ldl last november with senior field leaders and 9000 are trained. we will get to over 12,000 by the end of the year. this is cascading training. we train the top 450 and then they train their subordinates theso forth until we get to housekeeper who cleans the room in the hospital. the goal of any high-performance organization is when president kennedy asked a guy sweeping the floor at the space center what he was doing and he said i am
putting a man on the moon. we need every employee to understand how what they do every single day leads back to that vision, that strategy of the enterprise. we are training employees on toanced business techniques drive responsiveness and innovative change. private sector experts are teaching employees skills. lean centered design and are helping employees reshape the pension process and compensation that veterans find burdensome. we are working to give every employee clear performance expectations, continuous feedback, and the performance management systems that will encourage continuous improvement and excellence. it means executive performance ratings and bonuses reflect performance. outcomes, employee surveys, and 360 degree feedback which we train as part of our
ldl training. we are committed to doing everything we can for veterans, advancing on all these lines and many others. important priorities for transformational change require congressional action. the presidents 2017 budget request is another tangible sign of his steadfast devotion to veterans and his commitment to transform the va. -- the senate appropriations committee approved a budget nearly equal to the presidents request and for that we are thankful. the house markup proposed a reduction of $1.5 billion. let's be clear -- that reduction will hurt veterans and it will impede some critical initiatives necessary to transform va into the high-performing organization that veterans deserve. we are encouraging congress to fully fund the va at the requested level. more than 100 legislative proposals for va are in the
presidents 2017 budget and 2018 advanced appropriations request. over 40 are new this year. they require congressional action. some are absolutely critical to maintaining our ability to purchase non- va care. mid-march, i testified to congress about the most important requirements to help us serve veterans better. we need the help of congress to modernize and clarifying the and purchase authority above all else, this needs to get done to ensure a strong foundation for veterans access to care in the community. we need congress to help streamline the v.a. care in the community. we have several different programs for care in the community and each one has their own specifications, their own criteria and repayment rates. not surprisingly, it's complicated for v.a. employees to administer an incredibly complicated for veterans to understand.
last october, we submitted a plan to consolidate and simplify the overwhelming number of different programs and improve access to v.a. care in the community. that was last october, it's now made. we need congress to a neck legislation that linnell -- that will allow us to better compete with the private sector to get the best medical professionals to choose the v.a. the medical center director salary is currently capped at the title five limit of about $157,000. they can earn three times that in the private sector. that means flexibility on an 80 limit anderiod compensation reforms for network and hospital directors. we need to treat health care career executives more like the private sector counterparts. that means expanding title 38 hiring authority to vha senior executive level medical center
directors, visiting directors, and other health care position. then we can hire these employees more quickly with flexible competitive salaries and they would operate under stronger accountability policies. we have to be more responsive to veterans emerging needs. we're asking for modest flexibility to overcome artificial funding restrictions on veterans health care and benefits. i have over 70 line items of what it that i cannot move money from one line item to the other even if it is to give care to veterans. we have urged ambitious action on our disability claim appeals system. we simply cannot serve veterans well unless we come together and make a changes in the appeals process. it's a heavy lift. in the past few weeks, we have added a series of breakthrough veterans appeals organizations and other advocates and congressional staffers. through these sustained efforts in early april, the a provided
the congress with a comprehensive appeals modernization legislative proposal that veteran advocates designed with us. i believe congress is responding. on the senate side, chairman johnny isakson with vic blumenthal last earth day released to veterans first act, a large omnibus that includes many of the legislative solutions we have been urging. important elements that will benefit veterans are still missing including the comprehensive approach to consolidate community care and the break through appeals reform that veterans need. week, a coalition of veterans service organizations wrote to chairman isaacson and ranking member blumenthal to urge action on the appeals reform package. side, leading democrat on the house panel that handles appeals reforms has introduced as her own bill, hr
5083 which includes the changes we are seeking. we will continue to press in the weeks ahead. our window of opportunity will not be open indefinitely. this congress with today's the a leadership team can enable all these transformations and more for veterans are you then we can all look back on this year as the year we turned the corner for veterans. those are a few points about our progress and their challenges. youth at v.a.ur can best serve veterans by shutting down v.a. health care altogether. isy argue that closing va the kind of bold transformation that veterans and their families need, want, and deserve. postalct that are service some parties well. it's not transformational. it's more along the lines of dereliction. it does not serve veterans well and does not that well with me as a veteran.
aesident reagan gave veterans seat at the table of our national affairs nearly three decades ago. va is about keeping veterans at the table and in control of how, what, and where they wish to be served. thank you for sharing this time with me this morning i look forward to your questions and comments, thank you. [applause] >> secretary, that was both informative and inspirational. i think all of us are very your remarkable leadership right now. it really was exceptional. let me follow up and ask in more detail about something you mentioned. v.a. isioned that the
not able to capture its purchasing power because it does not have a unified purchasing system. how did this happen? i would have thought we would have had that. what can you do about that? >> the headline of that is i came to the v.a. and what i discovered is many things that business had done over the last couple of decades had somehow averted va whether it is pockets where we are outstanding like palo alto. human centered design come how companies like procter & gamble and disney design delightful experiences for the customers. consolidated supply chain to take advantage of scale. these things had all eluded the v.a. over time, the v.a. has been a loose confederation of independent entities. that is outstanding.
as a business leader you want that in order to foster innovation but once the innovation is identified, the innovation than needs to be put across the enterprise. that is one of the things we're work very hard on now. currentroaching the rest approaches in our medical centers. and spreading those across the entire enterprise. the v.a. far better than i and they say it's not a unified system. i'm told that the i.t. environment one centrist of the next will vary dramatically. what can you do about that? this is what you do in any business is identify the hard and soft points, the things you want consistent throughout the operation and the things you don't want. pantene, ifould be
any of you use it it's a hair care product. if you look at the bottle in japan, you would assume it's the same product. there would be japanese graphics but the brand name would be the same and the color of the package of be the same as will as the shape. there are some things you want to be consistent throughout the operation. japanesest to that, a hair is twice the radius of caucasian hair. if you remember your geometry, that means you have six times so service area ,2 x pi japanese hair is like this and caucasian hairs like this. obviously, the product in japan has to have more conditioning ingredients than the product in the united states. you want to decide what are the hard points and what will be consistent and what of the soft points and what will you allow to be different. you want those differences because they foment innovation.
that innovation is critical to improving the way you improve lives. for example, we want to have an electronic medical record that is consistent across the enterprise. right now, we have over 140 versions of that electronic medical record which meets every time we up date it come we have to up dated over 140 times. why not go to a standard electronic medical record and have that consistency and allow some innovation to find out how we advance that elect tronic record. that's what the secretary of health is about. it of the eight months to recruit him and he ran medical systems before nose at the do this and we are thrilled to have him. >> changing out in i.t. ecosystem in such a vast enterprises going to be very challenging. central to take a firm direction.
>> it is very challenging. even when i approached the transformation, many people said you will not be there that long. why do you want to take this on? one it just improve the things you can in short term? in my point of view, i go back to the west point to debt prayer which is dish which has animated my life, choose me to choose the harder right rather than the easier wrong. this is the harder right. knowing i.t. was a struggle and it took us too long but we recorded laverne council who headed i.t. at johnson & johnson and adle who knows that it do this. she has transformed me and the i.t. organization which is a dramatic change. previously, we thought about servers and hardware. now we are thinking about the cloud. previously, we thought about programming a creation of
software using a waterfall approach. now we iterate over time. these are practices that the private sector has been using for years. we are bringing them to the government and bringing the leaders with business experience to government to create a better result for veterans. >> i was at the defense department for a time and was startled at how little integration there is between the defense department health system and the v.a. how would you characterize working relations now? what do you think is possible? >> we have opened up to everybody including the department of defense. we know we cannot do this by ourselves. we also know there is no reason for the taxpayer to pay for a redundant system when they are unnecessary. this even started before my
tenure so we have several operations where we share those operations with the department of defense. and a sense, if we are a fine curve, the department of defense is an inverse sine curve. after the war ends, we pick up veterans who served during the time of war. we have joint facilities in san antonio, anchorage, alaska, in great lakes. we have a joint facility with the navy and those joint facilities are synergistic because we get a larger number and the department of defense would say that's great for them because it's hard to be a proficient doctor when all you are caring for his 19-22-year-old who are in good shape. they love the chronic and acute problems that our veterans have. >> this is a personal comment -- i have always felt that the defense department has not done a very good job of how it takes
care of people when they leave the department. . we are great about recruiting shame on us. we should have a higher priority. ashhuck hagel and now carter have made this a high priority. 250,000 service members are leaving the service this year. we have created a program called transition assistance program where we push that upstream. it starts about 120 days before the person gets out. i have attended the programs and spoken at them where the commanding officer of that unit actually gets up and says it's my responsibility to help you transition successfully to the private sector. i even did a session with noncommissioned officers, the hard-core of the hard-core, saying we will take responsibility for your successful transition. we give them their medical exam, we get them their benefits, we
get them signed up for everything they deserve and then we have a job fair. hopefully, they can even get a job before they actually leave the service. it's very different than my left the military. >> i'm so glad to hear that. >> we are working hard at this. >> we are coming into a transition of government which is scary. it worries me when this happens because you get tremendous up around awing talented leader and we don't know who comes next. can you tell us about your thinking of transition? how are you thinking about making continuous innovation? >> that's the reason we put the 12 priorities in place. we want to create irreversible momentum. it's my belief that if you teach people properly and train them properly and they see the benefits of what you're doing, they will carry it on whether or not you are there.
one of my leadership believes is how the organization performs while you're there is not what's important. what's important is how it performs when you're not there. my friend jim collins likes to build a clock or tell time? we are trying to build a clock and that's what those strategies and training are about. it's so that whatever follow, we keep it going. these are pretty simple business principles, as most processes. they are tried and true and it made companies like procter & gamble admired companies. we should apply them to the benefit of our veterans. >> we've got the micron and camera so let's start over here. i haven't seen you in a little while. is it on? just slide that up.
can we get another microphone? let's get it over here real quick. >> ok can everybody see me? , mr. secretary, for coming in and presenting your case as far as improving veterans care and access. two things -- one is the appeals process that you're working on and one man who is 99 years old has been waiting to have his appeal approved and i will sure -- i will be sure to have ms the question as to where that is today. it's about identifying himself as someone who fought during world war ii. i will address to you is accessibility and availability of resources to include outsourcing -- i'm sorry, out reaching to veterans. aarp ambassador in
caregiving and the v.a. had a caregiving program post-9/11, almost 500 million, 20,000 have supported that so far. it's the only program that provides stipends to caregivers. there is 43 million caregivers in the united states today which takes about $500 billion of their own funds to provide caregiving. it has gone across the country and one of those issues about caregiving support is a lot of veterans don't know anything about your program. i have gone to san francisco and spoken to 4 venues last week. conference oniffe aging. they did not know anything about veteran caregiving support. toecially for walled world -- for world war ii veterans. the reason i said that is because your staff are never
present in those venues. i am very critical about that. let me give you an example. in san francisco today, we provided at least some context for aarp to get them involved in caregiving. they are slowly partnering in that regard. i was asked to provide some information on it goes back to my own father. survivor.for march 11 years , he was not seen by v.a. or anybody cared about him and he passed away. if, in fact, it's improving and i know it's hard when there is a gap between what you're providing today and what's in the community, i think it's vastly important that when we say care for our veterans, a veteran has families.
>> there is no question about that. >> i'm a big advocate of caregiving. i worked very closely with elizabeth dole and her foundation which is fantastic. i was at the easter seals celebration two weeks ago. easter seals does a great job with us as our partner in caregiving. the important thing that you mentioned that i want to highlight is the law now says we can help caregivers who are not post 9/11 caregivers. it seems unfair that if you are a pre-9/11 caregiver, you cannot get the v.a. help. in the new omnibus bill we ,orked on with the senate pre-9/11 caregiving is part of that bill. that is another opportunity for us to get out there and make sure the veterans sign up for the caregiving that there. another important point about caregiving is if you want to know it's going to go wrong with american medicine, look at the v.a.
it's the largest integrated system and we see the problems that american medicine will see before american medicine sees them. andgiving is a huge issue that's why we spent so much time on it. it's going to be a bigger issue for the american population as the population ages. i am thankful you brought that up. please invite us to all of the caregiving events you give so i can make sure people are there. and i will schedule get them there. >> ok, right back here. secretary mcdonald, thank you for your time. i am a reporter at cq. i want to talk to you about something you mentioned in your addres as to care in the community. future congress see the of the a health care relying more on care in the community. i sense the ultimate goal and
some members of told me that the idea is to unravel the reliance on v.a. facilities. i'm thinking specifically of senator john mccain's reason proposal to dramatically extend the eligibility of the v.a. choice program. i was wondering if you could talk a little bit about how you see care in the community kind of dovetailing with your efforts at v.a. and in the future where there are plenty more veterans coming and seeking care at the v.a., will we have to rely more on private facilities? >> go ahead. network ofve in a care for veterans, network of high-quality care that involves facilitiesoctors and and care in the community. we believe in a combination of both.
the question is what's the right balance. of that 7 million more 2.5intments, we added million and five were outside the v.a. and we don't know what the balance will be but there will be that balance and we are working to achieve that by creating a network. the plan i told you about that we gave congress last tober, if you look at that, it describes the network we are trying to create and the allen's we are trying to create between that. >> right there. the microphone is coming around to you. >> thank you for being here. i am an air force veteran. what you say to veterans like myself working with a veteran a claimorganization on and the organization is telling us don't expect help from the v.a. uncertain medical issues
that we did not complain often enough in the military. >> i don't understand the question. >> i am working with a veterans support organization they help me with my v.a. claim. they say don't expect any help from the v.a. on these issues your listing because while you were on active duty, you did not complain often enough about them. when you're active duty, we complain too much, we make it pushed out of service. by law, we were required to give the benefit of the doubt to the veteran. you're ine, let's say the 82nd airborne division and you jumped out of an air plane with a parachute 50 times and you never went to sick all but today, you're missing three lower discs in your back. you can still get that claim made successfully.
you just have to have the proof that that is what you went through. we look at other veterans in similar situations to triangulate whether the claim is valid. we've got a dual responsibility. our responsibilities to care for the veteran and advocate the we also have responsibility to the taxpayers. we've got to balance those priorities. if you have trouble with your claim, just e-mail me and i would be happy to look into it. >> yes, sir. there is a microphone coming. please, no personal appeals. this is a public event. >> we have met with you and your staff several times. do you remember me? >> yes, sir, i can't remember when we met. >> you are responsible for my denial.
i'm a veteran of world war ii. there was a decision of the court of appeals for veterans claims. 2014.dated march 30 1, we are now in 2016 and you have not rendered any decision on my appeal. what is your decision now? i am a veteran. care -- health >> this is a public event for policy purpose, not a private appeal. the secretary has told you how you can reach him. i cannot have you interrupted this meeting anymore. i'm sorry. i cannot have you interrupt the meeting any longer, or.
-- sir. secretary mcdonald: there are people who served in the military in world war ii -- we rely on the philippine government to certify those people served in the philippine military in conjunction with the united states. >> i'm looking for policy questions, not personal appeals. >> thank you for being here, mr. secretary. my name is jeremy bash. what is the future of technology in providing access to the v.a. health system for veterans and their families? secretary mcdonald: that is a great point, germany. technology plays a huge role. -- that is a great point, jeremy. last year, we had over 700,000
telephone appointments. health is a critical component to serving veterans in rural areas. many states do not have medical schools. as a result, many states are missing the primary care doctors they need, are missing the mental health professionals they need. lehealth toe contact veterans. fer and mental health appointment sitting in room living overcoming to a facility. this is a space where we are on the cutting edge of innovation. >> a policy question? ok. .> thank you
the congress has indicated that accountability is going to be the key to whatever legislation they pass. i think the house and senate's thinking on this issue is pretty different. what can you tell us about the conversations you are having with them with this accountability piece? to get some of these appeals -- what can there you tell us about that? secretary mcdonald: accountability is obviously important. sizeyou run a company the of procter & gamble, con ability is important, just like when you run the v.a. 2900ve terminated about employees. we have proposed accountability action. the system has not been terribly helpful, so we worked with a set senate and the house on this
new omnibus legislation, , to redo the accountability system. part of that is taking advantage of title 38. which would improve recruiting, compensation and account ability. -- accountability. >> thank you. business -- i want to bring to attention a potential cost savings. the medical disability claims process has resulted in significant backlogs. we began looking at improvements , processing improvements. one of the areas we looked at was electronic health records. the proliferation of those records and the treatment of veterans by the private sector.
we felt that might be a way to substantiate medical disability aims and improve the process. we had a meeting last december with two team partners, one is a company called cerner and another is a company called secure exchange solutions. we did a live demonstration of accessing medical documentation in a case study to demonstrate how this documentation could be obtained. for a an echocardiogram heart disease problem. a letter later, we got back from the v.a. saying this is interesting, we already have a contract to do that work. it was an $8 million contract for paper document gathering. ast march, the v.a. awarded medical disability examination -- 12 contracts with a ceiling
of $6.8 billion. the contract or document -- four document recovery is $8 million. there is a significant opportunity to save hundreds of millions of dollars if the v.a. medicalin existing documentation to substantiate these claims instead of having the veteran get an examination from a contractor. secretary mcdonald: why don't you e-mail me that? i will take a look at it. >> we have time for one last question. >> thank you. you have sketched out a vision .or the v.a. in 2016 the veterans population is going to change a lot over the next 20 years. sketch out a vision of what the v.a. looks like 20 years down the road.
phil raisesdonald: a great point. problems in 2014 in the v.a. were not because of the wars in iraq and afghanistan. it would be common sense to think it was because we have been fighting wars for 12 years. the issues were because of the aging of the veteran population. d from westuate point, there were 2 million veterans over the age of 65. in 2017, it will be 20 million veterans over the age of 65. what happens when you have an aging veteran population? you get more disability claims.
the number of medical issues per claim has skyrocketed from 1.5 to about six. the aging of the population has become more controlling to the supply and demand of v.a. then has the number of veterans. all the time,ght the total number of veterans is declining. but, that is not what is really controlling -- what is controlling as the aging of the population. see what isto potentially going to go wrong with american medicine, look at the v.a. this is what is happening to the american population. we are aging, but we are not getting ready for that. if we do not build a system now when years from the iraq and afghanistan veterans age, we will not have the capable system to care for
them. we will be back to another crisis. the total number of veterans is declining. the system i foresee in the future is a network of preapproved providers, both inside the v.a. come outside the electronic medical universal. is i see a much higher number of 20%le veterans, as many as in the next 20 years or so. that means we will have to have gynecologists. we now provide pediatric care for the first week after birth. it means a whole host of diverse things we will have to do that we did not have to do in the past. 60% of our buildings are over 50 years old. communal built with
living space. we are trying to change that. it is hard to get that construction money from congress. we will have to be dealing with both genders, dealing with an inside and outside seamless approach. time, weg that over can continue to run this government organization like a business. and focus on our customers. wherever a veteran wants to go, whatever they want to be seen notices if they want e-mail or text messages, we have to be able to provide it. >> the secretary has to leave because he has to go to a meeting. thank you for an extraordinary performance. [applause]
secretary mcdonald: thank you. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2016] >> west virginia holds its presidential primary this coming tuesday. a road to the white house coverage will continue today with donald trump in west virginia for a rally in charleston and we will have that live at 7:00 eastern today on c-span.
bernie sanders also campaigning in west virginia today. bernie sanders with a sizable lead in the mountain state. mrs. clinton has been hurt by her march promise to put coal .iners out of work the words threaten to hurt her across coal country. you can read the entire story in thehill.com. book tv has 48 hours of nonfiction books and authors every weekend. 1:30saturday and sunday at , book tv is at the national conference.'s panel discussions on hip-hop and literature. reflections on hip-hop and race
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going to happen. the american people had no expectation this was going to happen. you had to be a little crazy to take this on. he was the right kind of crazy. >> go to booktv.org for the complete weekend schedule. , robert stack talks about the effects of foreign tax laws on efforts to change the u.s. tax code. potential changes to u.s. tax laws. bill: good afternoon. we're a few minutes past the hour. so, we thought we would get started. i'm bill gayle. i would like to welcome you to the brookings institution and this tax policy center event. we begin by asking the eternal question, how is this event different from all other events? in all other events, we talk about u.s. tax policy and what it means for the country.
in this event, we'll be talking about tax policy in other countries and, of course, what it means for the united states. also, this event is the first annual donald c. lubik symposium at the tax policy center. i wanted to say a few words about that. we are honored to have don in attendance this afternoon here. my glasses are for reading so forgive me that. don is here with his wife susan, his daughters caroline and lisa, lisa's husband, david. don also has a son, jonathan, and many grandchildren, so among don's many attributes, he's helped solve the social security problem. we organized the symposium series in honor of don and his many contributions to public policy. don was tax legislative counsel
in the treasury in the kennedy and johnson administrations. he was assistant secretary for tax policy in the carter administration. and then again in the 1990s, in the clinton administration. he headed the tax advisory program for central and eastern europe and the former soviet union from 1994, to 1996, which could not have been an easy job. he served on the transition team in the obama administration in 2008. in recognition of all of these successes, don received treasury's exceptional service award, in 1964. the alexander hamilton award, in 1980. and the treasury medal in 1999. you kind of get the sense that they started making up titles to give to him for his unselfish dedication to public service spanning four decades.
these are big awards for those of you who are not tax cognizant. they speak highly of don's abilities and savvy and determination. when he was not in the federal government, don was a managing partner in a buffalo-based law firm of hodgson russ andrews wood and good year. he was senior fellow at harvard law school's international tax program. he co-authored a volume which i think has the greatest title in all of public finance "basic world tax code and commentary." a template for tax reformers around the world. he advised the city of buffalo and the state of new york among other others on tax policy matters.
he has chaired the american bar association's committee on domestic relation tax issues. that sounds like fun. he's taught at the university of buffalo and american university, is a graduate of harvard university and law school. a member of phi bet kappa. don is one of the nicest people you'll ever meet. don, we congratulate you on your extraordinary record. speaking on behalf of len berman and the entire tax policy center, lets me say we're honored to establish the donald c. lubik symposium in your honor. [applause] bill: thank you. today is the first such symposium. before i turn to the substance, i want to note these events don't just happen. they require the dedication and patience of many savvy people to
set them up. i want to thank two people in particular. kareen at the urban institute basically does everything for the tax policy center and rebecca at the brookician ngs institution who put together all the logistics for this afternoon. i can guarantee you without their tireless work and their patience, none of this would have happened. so, thanks to both of you. all right in terms of the substance, changes in business taxes by other major economies are having important effects on the united states. everyone knows that our statutory tax rates are much higher than other countries. everyone knows that most other countries exempt most foreign source income of their multinationals.
while the u.s. continues to tax repatriated earnings. in newer developments, many countries are offering new benefits for their multinationals, including patent boxes that allow special tax rates for income for research and innovation. at the time the oecd's bep's initiative. limit the ways that countries can shift their funds out of high tax countries into low-tax countries, but american multinationals, many american multinationals feel that beps is aimed at them. them. some countries are now enacting new diverted profit taxes that target multinationals. we'll talk about all of these issues this afternoon. we're focusing on what happens in other countries, how that affects american workers, american consumers, american businesses. our keynote speak certificate bob stack. we're delighted to have him here. you have a bio in your packet. bob is the deputy assistant secretary for international tax affairs in the office of tax policy at the u.s. department of the treasury. and that capacity, he's responsible, among other things, for the conduct of legal and economic tax policy, including having the honor and the burden of representing the united states in bilateral and multilateral interactions with other countries.
before joining the government, mr. stack served as head of international tax, at the law of firm of ivans, phillip and barker. he graduated from georgetown law in 1984, where he was editor in chief of the georgetown law journal. he also clerked for at the the supreme court. let me turn it over to bob, . we're delighted to have you here and we look forward to your comments. [applause] bob: thank you very much. i want to say before today i have not had the pleasure of meeting mr. lubick, but the outpouring of affection and support that we see at the beginning of the ceremony demonstrates i think the great affection you've been held in and the fact that you've been a giant in tax policy and i want to express my appreciation for that. i fully appreciate how instrumental don was in creating an office of tax policy at the treasury. with excellence and integrity as
the hallmarks of that office. an effort that began with your participation 50 or so years ago. and it's something that as a current person at the treasury department, i wanted to begin my remarks today by expressing my deep appreciation for the contributions you've made and for the way that i have benefitted from them in ways seen and unseen, thank you very much. when i began to prepare today's speech, i noted that figuring it was on foreign tax law changes and their impact on tax law policy. i should speak on the topic assigned, that's something i've learned to do. i am basically a rule follower. and as bill just mentioned, i checked out the set-up on the brookings website and that bill just quoted from and i worry that my speech had been obsoleted as the answers are
staring us plainly in the face, . here's what the website says, "changes in the taxation of business income jish nated by our major partners are creating shock waves in the united states. corporate tax rates in other fallings have been while the u.s. federal rate has remained at 35% since 1993, the combined state, federal corporate tax rate in the u.s. is now the high end in the oecd. most other countries exempt income from their tax, while the u.s. continues to tax repatriated profits. and many other countries are providing new benefits for their multinationals, including patent that allow special tax
exemptions." how could any self-respecting tax policy maker do otherwise than readily acknowledge that we must join the race to the bottom, dramatically lower our corporate rates and make one with those countries exempting foreign income from further domestic tax and for good measure, throw in a patent or innovation box to further lower the rate of further tax payers, . what more was there to say? crestfallen as i've been allotted 25 minutes to speak, i was fumbling about for what i could possibly add to this debate. in which one side seemed to command the unimpeachable intellectual, an economic high ground. but as i recall, having been the parent of teenaged sons, it hit me. i heard these arguments before. mom, dad, everyone else's parents are letting them do such-and-such, you should too. and failure to acquiesce to whatever it was we were being
asked to go along with, always was purported to result in the direst consequences. i don't mean to make light on the need for business tax reform. the president has put forth a very robust revenue neutral business tax reform that the administration is proud of. but i do hope, as the debate unfolds, it will address important questions, and be more than a cry to join the race to the bottom. but as important, i want to talk about the international context in which this debate is unfolding, and how the context should inform our discussions, . on the specifics, the president has insisted on business tax reform, that is revenue neutral in the budget window and over the longer term, by lowering the rate and broadening the base. this seems reasonable in light of the fact that we face mid to long-term fiscal challenges and while we agree with the need to bring our statutory rate more in line with the rest of the world, the responsible thing to do will be to make business tax changes taking into account our overall fiscal constraints. too often it seems to me a major impediment to business tax reform arises because there are those who desire revenue-losing
business tax reform. without making the case for how we are as a country to make the numbers add up, to produce fiscally responsible tax policy. this argument with revenue-losing business tax reform is often advanced in urgent tones by those who insist the survival of american business depends on our joining the race to the bottom and in corporate tax rates and heaping on other tax breaks on top of that, while ignoring related issues, such as the current ratio of corporate tax-to-gdp, as compared with historic norms or for that matter the overall ratio of tax revenues to gdp compared to historic norms. the issue of whether such tax cuts favor capital or labor or even whether other revenue sources might be available to offset such losses. there are other weedy questions, too.
in a territorial or quasi-territorial system won't there be a need for strong base prosecute protection measures? in such a sch system, shouldn't -- in such a system, shouldn't u.s. parented deductions enjoy current interest on deduction expense and a whole potential topic unto itself, what should our tax rules on inbound investment look like? how should we insure a level playing field between companies investing here, and those already here and competing with them? all of these questions arise in a politically challenging environment. marty sullivan pointed out in
recently, a gallup poll results in over the last decade, seven out of ten americans believed american corporations were not paying their fair share of taxes. similarly, according to marty, a 2015 pew research poll found that 64% of americans are bothered a lot by the belief that corporations are not paying their fair share of taxes. indeed, the business tax reform debate is also taking place in an environment in which riders on tax policy have wondered whether the political steam has been let out of the drive for business tax reform in light of issues that affect everyday americans. such as minimal average wage growth. in the panel that follows and in the weeks and months ahead, we'll continue to debate those issues. i only want to add today that i
do not buy into the notion that the u.s. must willy nilly do what everyone else is doing. because we have our own unique circumstances and fiscal challenges that need to be taken into account as we do the responsible thing for our country. however, as the nation's top tax diplomat such as it is, i think my value today is really to step back and share a couple of observations about the global tax landscape that we face as woo consider international tax reform. and i have two observations i'd like to expand on. first, there is an urgent need to create an international tax system that permits greater certainty and stability for investment into the system so that businesses can get back to doing what they do best, running great businesses. second, i want to elaborate on what i've recently described as a greater need for business involvement in the global tax debate, beyond the halls of congress and the u.s. treasury. i'd like to begin with some very high-level observations based on over three years of representing the united states treasury department in all manner of engagement with foreign governments on the subject of taxation. covering the gamut. the g-20, all manner of engagement on the tax engagement issues, asserting u.s. interests in the ongoing state aid investigations by the european
commission and dealing bilaterally with our important trading partners on a regular basis on all manner of tax issues. based on my experience, it is clear that the greatest contributors to the unstable tax environment we see in the world, have been one, the ability of u.s. multinationals to dramatically reduce their worldwide effective tax rates as reported to investors by permanently investing sums offshore. two, the so-called mobility of ip-incoming capital. and three, these are all related, the role of tax havens, however defined, as players in the international tax system. let me discuss each in turn i . i don't think it's open to debate that the ability of u.s. multinationals to defer income has been a dramatic contributor to global tax instability. i need to point no further than the eu state aid investigations where it's clear to me that fum sums that were deferred from
u.s. tax had been taxed severe there, including the u.s., these cases might never have been brought if one needs more -- been brought. if one needs more proof, look to the points accentuated in the places like the permanent subcommittee on investigation hearings in the u.s. senate. the hodge hearings and public accounts committee in uk parliament, as well as those held before the eu parliament and the australian senate. these all focus on the very low rates of tax that are achievable whether abroad or individual countries by multinationals, and it is this effect that has caused a great deal of outrage in the international environment. these effective rates can be gleaned from financial statements and other sources,
and can be achieved by multinationals through techniques widely available to them. countries around the world in times of austerity, pounced on these deferred earnings, which the rest of the world believes will never be taxed in the u.s. and have sought to right the rules in such a way as to take what they view as their fair share of this so-called stateless income. but deferral alone of course does not produce low effective rates. the mobility of intellectual property income and capital that is the relative ease with which multinationals can move these assets to favorable tax jurisdictions, aided by u.s. cost-sharing and check the box rules, has been a major contributor to the ability of m m&e's to achieve low effective rates, which has promoted instability in the tax system,
by feeding the notion that m&e's, and in particular u.s. m&e's are not paying their fair share. none of this instability would have been possible without the the presence of tax havens, however defined. for present purposes, it should suffice to say that large disparities in income tax rates whether based purely on the location of the income, or by qualifying for special mewi inevitably drive behavior to take advantage of the arbitrage possibility. a goal of the beps project simply was to have countries that write the rules write them in such a way as to minimize income shifting into low and no-tax jurisdictions as opposed for example for doing such impossible things as seeking convergence on tax rates. any u.s. international tax reform that does not take a major step towards restoring stability will prove to be a puric victory. no matter the rates agreed, the degree of territorial or the presence or absence of patent boxes. while the u.s. has worked hard to put the issue of tax certainty on the g-20 agenda
during china and germany's presidency, this agenda simply will not succeed if countries perceive that they are getting ripped off under whatever rules we end up with. one aspect of today's topic is the effect of foreign tax changes on the tax reform debate , but let's look at some foreign tax changes that are flying under the radar and perhaps not adequately appreciated by all policy makers. i would submit that many, if not all of these rules i'm about to talk about, are motivated by a concern that the rules as they exist today, let companies achieve unacceptably low foreign effective rates. and the countries are fighting back. let's consider the uk-diverted profits tax and its australian equivalent. but let's also consider jurisdictions that are limiting deductions on royalties and other payments if those payments are going to low tax jurisdictions. these sorts are rules are squarely the efforts of source countries to take aim at companies that shift income into lower jurisdictions, often by imposing taxes that would likely be creditable for u.s. tax purposes.
in the absence of fixes to the international system, i think we are closer to the beginning of this trend than to the end. and these changes go beyond limitations on deductions for payments for low tax jurisdictions. consider the difficulties multinationals have in deducting management and service fees paid among affiliates all over the world. regardless of the destination of those fees, as well as the drive in some countries to find a permanent establishment and then go search the globe for the ip income that could be potentially sucked into that jurisdiction, once the p.e. is found. and finally, for good measure, consider the recently proposed 6% equalization levy in india, with respect to outbound payments for digital advertising services. the levy is a supposed nonincome tax, with holding tax imposed on -- withholding tax imposed on
all payments made to those outside india for advertising services in india. what's remarkable here is india decided to leapfrog beyond income tax and its related permanent establishment treaty rules to impose tax on income often destined for a tax-advantaged location. there is no movement among the countries in the oecd to examine any of these various proposals that may be or considered to be beyond beps. if u.s. international tax reform perpetuates this instability, shame on us. we will see more of it and more time and money spent by our multinationals combatting an increasing flow of inconsistent results around the world. as well as the resulting disputes. and if the u.s. multinational community continues to see it as in their best interests to perpetuate a system built on tax arbitrage and highly engineered tax planning, shame on them.
you are signing up and bringing on more of the very instability you loathe and impedes your business. the president's global minimum tax proposal may well provide a strong antidote to such perceptions around the world. first, our business reform permits tax-free repatriation of amounts earned in countries taxed at rates above the global minimum rate. wherever it's ultimately set. thus permitting our multinationals to compete on a level playing field in virtually all of the major markets around the world and repatriate the profits without additional u.s. tax. but the global minimum tax plan also takes the benefit out of shifting income into low and no tax jurisdictions by requiring that the multinational pay to the u.s. the difference between the tax haven rate and the u.s. rate. the global minimum tax concept has an added benefit as well.
that is protecting developing and low-income tax countries from foreign-to-foreign shifting so they can mobilize the necessary resources to grow their economies. while it is true that concepts such as minimum taxes and controlled foreign corporation rules are most effective, if most countries go along in imposing them, and so far the uk has been a staunch opponent of tightening these rules, i believe it is also true that the pressure will continue to build in the international community for the traditional resident's countries to take into account the spillover on to poorer countries of tax policies that encourage foreign-to-foreign stripping. stay tuned. indeed, at a recent imf symposium, the minimum tax was identified as something that could be of great help to developing countries, by the mere expedient of disincentivizing foreign-to-foreign shifting by
multinationals resident elsewhere. this last point, this discussion of what's happening in the debate with developing countries, and the need to help them protect their tax base shifts me nicely into my final observation. the need for greater involvement by the multinational community in the international tax debate. let me begin by making two rather obvious points. first, the beps project plainly took the business community by surprise. particularly in its effectiveness of changing the rules of the road and the environment in which these companies operate. second, whatever the eu does with respect to requiring companies to report public country by country tax data and revenue data, we would all have to admit that transparency issues, spurred on in part by
the panama papers, have shot to the top of the global agenda and no amount of lobbying at treasury or on capitol hill will stop global pressure for more transparency. might the arms-length standard be served up next? it's broadly suspect. shepherd, one of our reporters had some choice things to say about that. if you watch how quickly country by country went as an idea among poor countries in developing spaces to being a headline story in europe potentially making it public, ask yourself, how quickly might the arms-length standard and country by country be put on the chopping block? back to transfer pricing.
the effort we had in the beps process, to take a paper that seemed to us to write the arms length standard out of the oecd toes to bring it back something more familiar to u.s. tax practitioners was a very heavy lift. the u.s. has been a staunch defender of the arms length standard and will continue to be for reasons i've elaborated on elsewhere. but we don't control the global agenda so what do i mean by greater m&e involvement? i don't advocate greater m&e involvement as a means of taking sides, as in i really need their help, although sometimes i do. it just occurs to me from my perch that when i meet with governments as i regularly do, and as i attend global tax events which community has a compelling perspective on global tax issues that should be appreciated by policy makers around the world, it is not being made effectively. but that leads me to my second point.
the m&e perspective needs to evolve way beyond we pay all the taxes we owe. to something more, shall i say, fulsome. to combat the pervasive perception that multinationals do not pay their fair share. that transfer pricing is some sort of illicit practice, that blatant profit-shift something rampant and that therefore those nations need aggressive national action to rein those multinationals in. how the mulnatsonet engaged and participate fully in this debate, i leave to them. i don't think it's a tax that can be ignored. part of the discussion relates to creating conditions that are supportive of foreign direct investments in kunlts around the investments inct countries around the world.
that relates back to the facts the g20, we are going to look at the relationship between tax certainty and creating environments to increase foreign direct investments in countries around the world. that's a good thing. by investment we need to teach those countries that investment and growth mean more than attaining the investment needed merely to serve their large markets. part of this discussion relation to the need for more data to analyze taxes paid by multinationals, in the jurisdictions around the world and to focus the international tax debate more around a data-driven search for best policies and practices and much less on sensational and politically palatable anecdotes. mindy hertzfield made reference to the bubbles in the tax world where people surround themselves with like-minded thinkers and fail to see the perspectives of others outside it. to give you an appreciation of this fen none from where i sit. this from where i sit.
on one day i might be attending a conference in which we parse in excruciating details the pin and theming i'm involved in multinational settings, where the question is how we can stop the scourge of illicit transfer pricing and stop companies from using transfer pricing where the word is used in the same way as money laundering. those are the bubbles that as your representative i live in and what i was asking today was that we try in some ways for the
sake of better policy, to bring those debates together. from my perspective, this is not about picking sides, but rather the discussion needs to be fully engaged by all stakeholders so we can move forward and promote growth and create more favorable conditions for investment around the world. including in the developing world. ngo's and representatives of the business community should be at the same conferences, listening to and challenging each other's facts, arguments, policy proposals and visions for an international tax structure that works for everyone. i made these points at a recent speech and afterwards, someone in my the audience came up and said, he didn't think maurloral persuasion was going to be he .ffective i was somewhat crestfallen
because it drove home to me how ineffective i had been in trying to make my point. because i think i am making a point based on the bottom line and not moral persuasion, i think i'm making a point aimed at boardrooms and not technical tax people. after all, it's the boardrooms that are supposed to care about the long-term consequences of actions, and the reputational effect on the firm. aggressive tax planning and all the related elements that i've talked about has already imposed a great reputational cost on some firms, and the future trend is clear. i am suggesting that, at the end of the day, companies and countries will both prosper in an international tax system that minimizes distortions, built around tax benefits that can be achieved through a combination of the mobility of ip income and capital, and games played through tax havens with a boost from u.s. cost-sharing regulations and the check-the-box rules.
policy makers should be exploring how to build those structures. and all stakeholders, including m&e's and ngo's, should consider whether they share these perspectives. and if so, how to participate together effectively with government representatives to build them. we are long past the days, if they ever existed, when congress and the executive branch were the only players of importance with respect to u.s. international tax policy. globalization and the emerging political structures that support it have brought these issues to the world stage. and the actions of each country, have effects beyond its borders that must be taken into account, as we build an international tax policy for the years ahead. and the actions taken outside our borders, likewise can have a
profound impact on our tax payers and the policies we set and we're living through that. this is all hard work in a challenging environment. and i will be the first to admit that other countries sometimes do a little more than to seek national advantage instead of supporting principle rules. but we owe it to average americans to stay at it. form can help to international u.s. tax policy. thank you very much. [applause] >> this is the moderated
discussion. i found your speech very interesting. it seems to raise a question about whether we should think more about the general values or ethical climate in which we all approach these issues. and i was wondering, what things the government could do to kind of encourage more of that, both on multinationals and with respect to other governments' policies. >> i'm afraid i'm not going to rise to that bait. because, as a technical tax guy, i've had trouble distinguishing my extra mortgage deduction when i buy a really big house, from the double dummy irish. we could have a debate later about it, but i can't do it i . i think it is about making policies and rules that we all agree to live by. but i don't think it's about naming and shaming.
bill: i guess we'll have a couple of minutes for questions from the audience. anyone have a question? way in the back. >> it seems with the new more inclusive framework that the oecd has announced for the beps implementation the transfer pricing follow-up work on profit split and related things like attribution of profits to a pe -- that may sort of be the acid test of the ability to sort of reach any kind of consensus with this larger group. can you comment on that? bob: from my experience, i don't expect that expanding the group will actually expand the number of very engaged players in very technical transfer pricing issues, number one.
it's just not been my experience -- we found it difficult to keep up with the flow of oecd paper and one of the biggest countries in the world, so i'm not too worried about that. second, in the follow-up work, like all in beps, we're a player, it's a consensus process, and you know, i think we'll have a strong influence in the work as it goes forward. i'm not terribly concerned about the effects of that. i do think to return to a theme. that i was trying to hit on is i think u.s. policy makers completely ignore at their peril what's happening in developing countries, low-income countries on the global political stage. a lot of that bubbles up into things you see every day. some people in the tax world think i do this as many like an a avocation, it's a nice thing that he cares about those things. if you're not paying attention there, you're missing is a ship that can sail two years before you realized it sailed. so for u.s. policy, i think it's critical.
>> do you think there's a legitimate role for international tax competition? bob: well, whether i think there's a legitimate role for it or not, it's going exist, we're never going to drive out the arbitrage that comes from differential rates because that's kind of the the rules of the road. we're going to build a system that gets away from arbitrage. when you get to highly structured transactions through what we would all recognize as tax havens, you're in a different place that you can do a better job of policing and u.s. companies should welcome it. >> [inaudible] bob: i think it wants to be. [laughter]
bob: i think it's conflicted. as a source country, we're seeing it's going to be very protective of anyone using the uk market. they're going to limit deductions, watch tax havens, if you're in that, as mike williams has said to me, we'll have a 17% rate, but you're going to pay 17%. they've thooer going to be very -- they are going to be very aggressive in protecting their market. get the spillovers of the benefits of having such and such headquarters in london, they're going do want to do that, too, they're going to fight to have weak cfc rules so companies will find it an attractive place to be. yeah, the patent box, the patent box is part of what will be driving it. but in my discussions, for example, with some countries, they have viewed that as something that will be beneficial to their mid-sized companies, they're not convinced themselves that the world is going to rush their researchers
over into the patent box. if you're getting 10% on your patent incox you getting a 10% deduction. the game here to get the high deduction and the low amount of income. it's not clear to me you do that by doing all your research offshore and moving all your researchers. >> last question. >> you talked about, uk headquarters companies. you also referred to u.s. companies. i mean, isn't one of the issues that we're facing here, that companies don't have national nationalities? how as a policy maker do you address that, other than you know, fighting a rear-guard action with anti-inversion proposals? bob: great question. when i first got my job i quickly realized, i consulted with some of the bright academics that there's all sorts of interesting ideas, that system of sales-based income blocks. we have the system we have, you're absolutely right that mobility of headquarters, mobility of these items makes the current residence-based system fragile. no question. but as policy makers, we get to play the hand we're dealt and that's the hand we have for now and we'll play it best we can.
i just want to say, it is really an honor for me. i'm eric toter, codirector of the tax policy center. it's an honor for me to be here to honor don lubic one of the my of my mentors. we have a great panel here. you have their full bios, i will introduce them briefly. manuel koran is kpmg. she was previously a deputy assistant secretary for international tax at the u.s. treasury department, and during the obama administration and has done many other things before them. i won't go through them all. david rosenbloom is a visiting professor of tax ace and -- taxation and director of the
international tax program at new york university's school of law. he's also been a member of the kaplan drysdale law firm. and david has many other accomplishments, but the one i'll mention is he also was the top international tax officials at the treasury department back in the carter administration. john samuels is now the chairman .f global tax at blackstone many of us remember him for years as the vice president and senior counsel for tax planning at general electric. serviceer john from his at the treasury department during the carter years. where he was tax legislative counsel. and finally, we have barbara angus, the one member of panel who is now in government. she has been a principal with
ernst & young. before then, she was also the top international tax person at the treasury department during the first term of president bush -- the second president bush. i think i will try to hold you to eight minutes each, if you could. we're a little behind on time. barbara: i will take a moment to say i am privileged to be here, don, in your honor and have served under your limp at at ther your leadership treasury. i think moments we experienced earlier, in looking around the room, i've had the privilege to work with many of you and were reminded of what is important. i just want to take a moment to say that. we have wonderful colleagues we wish bobby the best.
so i'm tasked with starting off just to set the stage around the baps initiative and how it started. i think understanding the origin of the anti-beps movement, which i distinguish from the initial movement itself is really critical to understanding the current impact on multinationals, but also the relevant impacts on u.s. tax reform. since it launched the initiative beps,ined the acronym many have pointed the finger at the organization for have been having opened a pandora's box that has unraveled long-standing international tax rules and upset what was perceived stability ahead of their involvement. i think a closer look both at the historical record of the oecd and being able to effect significant policy shifts at anywhere near a breakneck speed, as well as its limited ability to keep the initiative in check , more recently in check
relative to its original policy objectives, suggests that the origins and reasons for the beps movement goats much deep me initiative itself. is not the first rodeo in terms of addressing concerns more broadly. relevant examples include as far back as 1998, the on harmful tax competition. in 2004 we solve the establishment in oecd of the tax planning hearing group with established and shared concerns about aggressive tax planning technique that started out with the participation of seven countries and is now 46 countries strong with an inventory of over 400 aggressive tax planning techniques. there was also the work begu