tv Politics and Public Policy Today CSPAN April 6, 2016 11:00am-1:01pm EDT
of charge. we have 24/7 hotline. anybody can call at any time. and we always answer the phone. but we also support research. we have over -- there are over 5.3 million americans who have alzheimer's disease today and we expect that to triple by the middle of the century if we do not solve the disease soon. the alzheimer's organization is the largest provider in the world. we're the third most impactful funder of alzheimer's and dementia research in the world behind the u.s. government and the chinese government. according to thompson reuters. we are proud of our research program and we recognize the need for the whole research ecosystem to work effectively. that includes the private sector, pharma and biotech and government, as well as funders like ourselves. so i'm going to talk about alzheimer's disease.
give you a little background. a lot of people confuse the terms dementia and alzheimer's disease. and it's important to note that dementia or the symptoms, they're the cognitive decline, memory loss, that sort of thing. there could be multiple causes for the symptoms. alzheimer's is the most common cause, but not the only cause. so it can be caused by vascular dementia as an example. it's important when thinking of treatments to understand the cause. when a patient comes in with the symptoms it's important to understand why they have the symptoms. so that you can treat them appropriately. so what is alzheimer's disease? the bottom left picture there is a picture of dr. alzheimer, about a hundred years ago he first discovered this disease. the patient is pictured in the
top left-hand corner and she had the early on set of alzheimer's disease. she had it in her 50s. but when he -- when she died, dr. alzheimers took her brain and he saw what we know are the hallmark features of alzheimer's disease. the blaplaques and tangles. the plaques and the tangles have proteins. until recently, that was thank you alzheimer's disease was diagnosed at autopsy. for most people that's a little too late to be useful. so we now have new techniques that allow us to diagnose people before they get to autopsy. what are the risk factors around alzheimer's disease? well, quite a few, but the biggest one is your age. the good news is you've got another birthday, you have lived longer, but your risk for alzheimer's disease just increased. the longer we live, the greater our risk for getting
alzheimer's. we're learning more about the heart and head connection with alzheimer's disease. we know that there's a greater risk for --you have high blood pressure or heart disease, stroke, high cholesterol. so we like to see what's good for your heart is good for your brain so a lot of the same strategies we have been taught for a long time is important. head injury. that's a risk factor for alzheimer's and dementia. we know there are some genetic components as well. we know the one gene is a risk gene. if you have this gene, you do t don't -- you're not guaranteed to get alzheimer's disease. just means your risk is higher. so i want to -- i just want to mention if you've got a brain -- does anybody in the room have a brain? i know -- >> back here. >> thank you. i just -- i tell that joke pretty regularly. don't feel picked on because you're a room full of politicians, but if you've got a brain, you are at risk for alzheimer's disease.
so that's important, just remember that. so as i said, we know a lot more about the risks and there are things you can do to lower your risk. and the same kinds of advice we have been giving people about heart disease for years applies to brain health as well. so get out and exercise. adopt a healthy regiment, it's good for your heart and your brain. you need to get the blood pumping. you need to get things moving and that's useful for lowering your risk. we also know that a healthy diet is important. and also, life long learning. don't just get to a certain age and just say you know what i've learned everything i need to learn that's valuable. keep learning and challenging yourself. these may be useful in slowing
the alzheimer's, and it keeps you active and keeping you moving. very important. and -- and we also know there's a lot more to learn about the risk factors and the strategies to kind of combat this. and that's why we need more research and so that's what we advocate for at the alzheimer's association. in addition, on our website you can find this. ten ways to love your brain. these are -- this summarizes the kinds of strategies that someone can take to lower your risk factors. again, it's about slowing your cognitive decline as you age and also preventing -- setting you up for a better chance to prevent alzheimer's disease. doesn't guarantee that you'll prevent alzheimer's disease. if your genetics are against you, may still get alzheimer's disease but this may give you more time with a healthy brain. so this chart kind of shows how alzheimer's progresses. you don't wake up -- you don't
go to bed one night and you're completely healthy and you wake up and you have alzheimer's disease. alzheimer's disease occurs over years. decades even. we now know by studying the biology around aming and alzheimer's disease that the biological changes occur up to ten years before any symptoms occur. so as i talked about healthy lifestyle, it's really in middle age when you start to adopt the healthy lifestyles. like putting money in the bank for your retirement. you need to start thinking about what you're going to face when you're in 80s and 90s but need to do it in your 50s and 60s. don't wait until it's too late. do it now. even if you're older, it's -- we see benefits to those healthy lifestyles. but that can slow your decline. but we know that the decline in alzheimer's disease is precipitous.
different than normal aging, it's not normal what happens to someone with alzheimer's disease. i talked about the changes that occur. here is pictures of living brains. people who have living brains that get an amyloid brain scan. the pictures at the top are a normal brain and at the bottom, you see yellow and red spots, those are amyloid plaques in a living brain. so today we have the ability to look at someone and know who's on the pathway or who has alzheimer's disease. now, each one of these lines represents a biological change. i'm not going to explain each one. but on the far right -- far left is someone who's completely healthy and then you can see that progressively they get sicker and sicker as you move to the right. the lines get higher and higher and there's a stage where they start to grow called the preclinical stage. those people don't have any symptoms. and that stage can last for ten years or more.
but they're on the pathway to alzheimer's disease. now, traditionally, drug developers and researchers worked on the dementia stage because that's where they can find the patients. they had to wait until the people had symptoms to treat them. those people are already really, really sick. and if i'm trying to prevent a -- or treat a disease i'd rather have people who were at that stage. because your chances are better that your drug is going to work better if you can get them earlier. we know from cancer that prevention strategies are more effective than treating someone down the road with the disease. a lot of new strategies to treat alzheimer's disease are focused on the prevention side of the disease. and now that we have these bio markers we can start to think about that. through, this is what -- now
this is what's approved for alzheimer's disease. the first one is the first one approved and it's no longer available in the u.s. the first three are inhibitors. then there's a glutamate modulator that's approved. last year, a combination therapy called namzeric that was approved. these drugs work to treat the symptoms of cognitive decline. they work on healthy neurons. but it's the disease -- as the disease takes over and more and more neurons die, these drugs become less and less effective until they become ineffective altogether. so they don't stop or slow the decline of the disease. in fact, alzheimer's disease is the only disease at the top ten causes of death in the u.s. without a way of slowing, stopping or curing the disease. the only one. and these are the drugs we have today. around so we need better therapies.
the attrition rate in drug development was discussed earlier. on the far right, you see the industry average. so the amount of drugs that go into preclinical testing that is with animal models come out with about 4% success rate. but if you look at alzheimer's disease, it's been such a challenge to come up with new drugs we're at point 5%. so we really need a lot more shots on goal to have success. but we hope as we learn more about the biology of the disease we will get better success. so i'm not going to talk about each one of the drugs in the pipeline but i was asked to talk about the pipeline. as a scientist what excites me about this list, this is a list of the drugs that are in phase one, phase two clinical trials, mainly focused on safety. these are drugs looking at attacking the disease from all kinds of different angles. they're not just taking one approach. there's lots of different
approaches here. it's important scientifically because that will teach us about the disease. also gives us a better chance of success and also hopefully will get more than one approved and then we can go back to the combination therapies the way that cancer is treated. if we can do that that will provide better success for us. this is the phase three status, fewer compounds, fewer therapeutics because we have attrition from phase two to three. there's a variety of approaches. the last two slides i'm going to highlight a couple of these candidates just to give you a sense of where things are. so the first is from lilly -- eli lilly. and this is an anti-amyloid therapy. it would be injectable. if it's approved it's in phase three. we hope to see data this year in our conference at toronto, canada, that's my little plug for alzheimer's association international conference. the big scientific conference.
but we're hoping to see some data and if approved, it could be the first disease modifying therapy for alzheimer's disease. it would slow the decline of people toward alzheimer's disease. the other one is a biological, injectable from the company biogen. they really invig rated -- invigorated the community last year. even though it was a small trial about 150 people, every one of the people had amyloid deposits in their brain based on a pet scan and after one year, those on the active treatment showed a slower decline based -- as compared to placebo. not only on their cognitive assessment scores but also based on the pet scan. believe it of not, that was the first time a trial has been done in this way where you knew you were treating people with amyloid deposits in the brain
because we now have the tools to do it. and that has really excited the whole field because again, we're getting these diagnostic tools to help guide the clinical trials. but as i said, we had over 5 million americans with alzheimer's disease today and a prevention strategy is not doing to help them. we need something to help them with the symptoms so we have people who are working in that area too. so two examples, the rvt 101 compound. this is another symptomatic approach. so this can provide another treatment, another option for people and may even provide better outcomes. also, there's a drug that was -- that is approved for the
pseudobobar effect, which is laughing and crying. this is a symptom that really -- that causes a lot of problems for people dealing with alzheimer's and their caregivers. this is way to treat that symptom of the disease. not just the cognitive symptoms but a behavioral symptom associated with alzheimer's disease. attacking the disease from all different angles really trying to bring new therapies forward. that's the way to attack this disease. we need better support for research, and that's what's going to stave off this health care crisis. and with that, i just want to thank you for your attention and if you want to learn more about the alzheimer's association, we're happy to work with anybody. >> now is the time you have been waiting for. question time. we have a few minutes if anyone has a question they'd like to ask any of our speakers. yes, ma'am. >> i guess my question is,
the -- the stages of alzheimer's, i'm going to go into that. and you say it's years before it's really diagnosed. so what i don't understand is the -- when you say -- i guess my thought was incorrect i guess, but that my mom at 94 years old started dementia at -- what we thought was dementia of some kind at 93 years old. otherwise, she was fine. and the question, you know -- so was that dementia or was that alzheimer's or did we miss the whole thing? i have no idea. but now seeing my sister going through alzheimer's, and with my -- yeah, my sister's wife going through alzheimer's and
just seeing what she's going through at a younger age at the age of 75, 76 years old, you see the increase daily. there is nothing out there that slows it down then in your feeling? >> no. the drugs that are approved -- they do not stop or slow the progression of the disease. and as i said, it's the only disease at the -- of the top ten causes of death that there's no way to stop or slow the progression. >> but is that -- is there one type of alzheimer's disease or are there other kinds? >> so there's other -- there's types of dementia. there's -- alzheimer's disease as it's defined is the medically -- it's one disease. but as we learn more about the disease, it could be that we learn that there are subtypes.
and -- but today it is defined as one disease. but there are multiple types of dementia. that's why it's important to get a really good medical work-up from a top physician to understand if the causes of dementia might be something other than alzheimer's disease. where, for example, there are people who are on the wrong medicines -- medications. so they have a weird medical combination and so the dementia could be easily reversed. if properly treated. that's rare -- usually rare, but it does happen. so it's important to understand what is the -- what is actually the cause and the course of the disease. so we're -- we need better -- not only better treatments, but better diagnostics to get a handle on that and hopefully identify people earlier in the stage of the disease that these new therapies we hope will prevent their progression.
>> because it's usual i will the family that notices it more than the individual? >> yeah. so it's usually -- it's typically a loved one that will report, but often sometimes the loved ones are also reluctant to report it too. so i think we hopefully when we have new therapies will get to the point where we can tell people how important it is and under the affordable care act, everyone can get a cognitive assessment as part of your wellness visit. and unfortunately not everybody takes advantage of that. but hopefully, as -- again as new therapies will become available. but it's important to recognize that even without new therapies it's important to know what is going on. because people -- especially as they grow older have other health issues. let's take for example if somebody had diabetes and they
were experiencing dementia. if the family kind of brushed that off, oh, it's just normal, they're forgetful from time to time, what happens if they forget to take their diabetes medications? they'll end up in the hospital. it's very expensive and unnecessary. but if they had been treated and cared for properly because they actually did have a diagnosis of alzheimer's or dementia, maybe that proper care would have prevented a health crisis that was not caused specifically by alzheimer's disease but because they didn't have the proper care. we think that the alzheimer's association there's great value in knowing your status and your diagnosis. >> yes? >> mike stack from pennsylvania, thank you all. we have the -- one of the lilly subsidiaries in philadelphia working on -- what's the drug?
>> avid pharmaceuticals. >> yeah. i visited with those folks, really unbelievably compassionate people. has there ever been a disease like alzheimer's that this is this difficult? that fits into that paradigm where literally -- how many people are affected but it's impossible to find out how many people are affected doing it the old fashioned way. you know, we always solve the problem, don't we? with great scientists like you, is there another illness that fits that category so that folks -- we always like to sort of build on the foundation. >> so if you look at funding -- federal funding for other diseases you can see where their success has gone. let's take hiv/aids. we remember when that was an unsolvable problem. you know, nobody could really effectively treat a viral disease and nobody really knew
how to do it. but with the proper level of funding, that's a manageable disease. it's a chronic disease, but it's manageable. people are not dying at the rates they were in the '80s. i worked in pharma before coming to the alzheimer's association as a researcher and there was a joke in the hallway all the easy diseases had been cured and only the hard ones were left, but if you went back 20 years you would have heard the same thing. whatever problem is the hardest is not solved and once you solve it the answers become obvious. we just need better research and the funding i think falls in line. when you see success you often see the money has been put into it, the investments we made and the great brains are drawn to that. they need funding to support their labs. >> i noticed you had omega 3 up there with different products or
drugs to use in dealing with alzheimer's. how does that exactly work? because i take omega 3 because everybody says take omega 3. so i want to say to my wife, why are you taking omega 3 i'll say i'm fighting alzheimer's and she might say it's too late. >> those are potential therapies that are being tested so it's a hypothesis that it was omega 3 that will be useful for treating alzheimer's disease. but we don't know yet. we need to let those -- to let those trials go forth. the difference with omega 3 it's classed as a newtry suit cal so you can get it over the counter now, and it's considered safe. but we don't have proof of that. so we're waiting for that. >> not that we have time but we'll take the time. one more question. >> thank you very much. and i appreciate the panel's discussion. i'm getting -- i'll continue with you, mr. hendrix. you mentioned that the
anticipated growth that we'll see of people who have alzheimer's in the future, is there some sort of a dollar figure on what that's going to cost us when we get down to the next 30 or 40 years and this occurs? >> so i have seen estimates that one disease -- alzheimer's disease will eat up about one-quarter or more of all medicare spending. one disease. so we believe that if we invested as a country $2 billion a year over the next ten years in alzheimer's disease research and that yielded a treatment that could delay the onset of the disease by five years, it would save the country $245 billion over about a five-year period.
okay? so that seems like a pretty good investment to me. i was never that good in math. that goes back to the comment before about if we -- if we put the funding into it and put the research into it, no guarantee that, you know, you'll solve every problem. but history shows that when we -- when we have worked hard to solve these difficult medical problems we have made great strides. >> thank you. >> can i add -- >> okay. >> i'll use lilly as an example because it's a great example. lilly over the past 16 years has continually done research on alzheimer's. and they have brought zero alzheimer's drugs to market. if you disincentivize companies like lilly from doing research on the diseases that we have no sort of quality treatment for right now, then you run the risk of the research stopping on those types of diseases and i think we're at a point now where
the discussions are going in the direction where it scares me that's the direction that people take. you don't want a company like lilly who is on the verge of coming one something to treat a disease that will be perhaps the bay to solve some of your long term care costs in your states. we want to be thoughtful about how we approach this. we have an 88% fail rate. only 12% getting venture capitalists and getting funding to continue to do this, it's very difficult you don't want the disinvent size companies who are doing research on these type of diseases and you asked if there are other diseases. we have treatment for a very, very, very small percentage of mental health disease. there are so many types of mental health disease that are being masked with the treatments that are out there, better treatments are needed. we have a lot of orphan diseases where the money doesn't go into it because it's not treating the same types of populations of people. but people with significant,
significant illness. so there are so many diseases that still need better medicines, better treatments, better hopefully cures at some point. where we need to keep the money going into the research. >> with that, join me in thanking or speakers. thank you for your time. our c-span campaign 2016 bus continues to make stops around the country, visiting winners from this year's student camp competition. recently we visited the metropolitan arts institute in phoenix, arizona, to present awards to the west division. for their first prize video rethinking reform, prisons in america. their classmates katherine menard, christian payne and alexander walter won second prize for their video on gender wage inequality in the workplace. then we stopped in los angeles for a ceremony for a third prize winner jeremy sun.
before we presented winners with awards in the other areas. c-span extends a special thanks to cox, time warner cable and comcast for coordinating the student visits in the community. be sure to watch one of the top 21 winning entries at 6:50 a.m. eastern before "washington journal." two prospectives on the tpp agreement and the potential impact on the economy. they were discussed at the governors meeting and they were signed by 12 pacific rim nations including the united states. its currently awaits congressional approval. this discussion is about half an hour. >> the next panel is going to talk about the tpp, the transpacific partnership which is -- i don't want to say mired in controversy, but both parties have been -- there's been a lot of discussion about it.
so we thought we'd get pros and cons on the issue and to our speakers since we are behind on time, i would ask you to follow the lights and normally the moderator sits up here but i like to look at who's speaking. but i'm going to go down there and i'll go like that. with that, tami overby, is it overby or overbuy? >> overby. >> she will be first. >> thank you so much for inviting me. as he said, i'm -- are you awake now? i'm tami overby, i'm the chamber chief vice president for asia. and i'm pleased to be here to share a few observations about what we think about the transpacific partnership. i'm here today on behalf of 3 million small and medium sized companies. also our state and local
chambers of commerce as well as large companies that are members of the chamber and our national federation. the u.s. chamber of commerce is a strong supporter of the transpacific partnership. we believe that it's vital to america's commercial and economic interests as well as our geostrategic interests. tpp is critical because economic growth and job creation at home depend upon our ability to be able to sell american goods and services abroad. after all, 95% of the world's consumers live outside the borders of america. the 12 tpp countries created a high standard, comprehensive, economic trading zone that makes up about 800 million consumers and represents nearly 40% of global gpd. why does trade matter to our country? we believe it's simply because it comes down to jobs, american jobs.
already one in four manufacturing jobs depends on exports. one in three acres of american farms are planted for consumers overseas. all told, nearly 40 million american jobs depend on exports. now, these numbers could be even higher, but unfortunately if playing field for trade is not always level. and as somebody who spent 20 years of my career working in asia, it's really not level in asia. while our market -- the us market is generally open, our exports face high tariffs and often a thicket of nontariff barriers in other markets. nobody wants to go into the basketball game during march madness down from the -- by a dozen points from the starting tip-off, but there's what our farmers, businesses and service providers face every day. and these barriers are particularly burdensome for our small and medium sized members.
about 300,000 of which actually export. now, the good news is that america's trade agreements do a great job leveling the playing field and the results include significantly higher exports and new -- for new and better jobs. the chamber analyzed these benefits in a recent report entitled the open door for trade. i'll be passing out copies at the end. but some of the highlights from our study said that for america's 20 trade agreement partners right now, it's only making up 6% of the world's population. but those 20 trade agreement partners they buy nearly half of all our exports. by tearing down foreign barriers to u.s. export, these agreements have a proven ability to make big markets even out of small economies. so u.s. exports to new trade partners have grown by an average annual 18% in the first five-year period the agreement
is entered into force. and that's much faster than we see typically for u.s. export growth. the increased trade brought about these agreements supports more than 5 million american jobs, jobs in your states according to our study. the jobs pay well. they average 18% higher than those that are not. now, the trade balance is a poor measure of whether or not a trade agreement is working. but we often hear opponents say that trade agreements cause deficits. i could -- i don't -- from my perspective, nothing could be further from the truth. the transpacific partnership will open asia-pacific's dynamic markets to goods and services. in particular, five of the 11 tpp partners that we negotiated with, we don't already have ftas with. this will be a bilateral trade
agreement with japan. one of the third largest economy in the world and one that we have not had an agreement with. also vietnam, malaysia, new zealand and brunei, we don't have agreements with these countries. it is critical that we open these markets because nations across and around the asia-pacific have not been standing still while we have been negotiating. they have been clenching their own free trade agreements and trade agreements by their definition are preferential which means only the parties in the agreement benefit. and i just want to give you one example. on january 15th, 2015, the australia/japan fta went into force and the australians are taking full advantage of it. in the single year that agreement's been enforced, australian exports of table
grapes had increased ten fold. shelled almond sales have increased nine fold. and frozen shrimp exports up 90%. rolled oats up 40%. these are just a few examples. and this is because australian products and services now have a competitive advantage in japan. for example, the japan beef tariff is 38.5%. that's what our cattlemen face every day. but as part of the australia fta -- japan fta agreement they agreed to the 19.5% tariff. suddenly australian beef looks a lot more competitive. and i can tell you they are in that market every day signing multiyear contracts. our cattlemen are losing every day. tpp also addresses some 21st century generation issues. for the first time in any trade agreement, the sanitary chapter
includes enforceable obligations that go beyond the chapters. for first time in any agreement there's a chapter dedicated to small and medium sized companies. for first time there's binding provisions which help ensure the free flow of trade. also for the first time in any u.s. agreement, that's a chapter -- there's a chapter specifically designed for state owned enterprises. also for the first time in the agreement, a provision that requires the countries to criminalize trade secret theft. so we see that tpp also provides manufacturers with new opportunities to increase sales and exports in the growing asia-pacific area. they're eliminating or reducing nontariff barriers across the tpp countries with small outcongreouexport tax, nontransparent and
discriminatory and regulatory barriers. something i hear about every day from american companies. tpp sets the strongest rules to date on prohibiting government restrictions on movement of data and on localization of i.t. infrastructures. many of the companies who are using the cloud to sell globally through internet store fronts. tpp also sets strong i.t. rules when compared to the status quo with the first ever provision, again, which requires countries to criminalize trade secret theft. and that's important to our members, to help against foreign theft and counterfeiting. tpp also sets stronger than the current status quo rules on customs operations. transparency and anti-corruption. one of the things i learned living and working in asia for
20-plus years is that america, we trend to have free trade and fair trade in our dna and the rest of the world does not. our companies are playing by rules that other countries don't follow. critically important, we must enforce the rules. tpp provides new transparency and nondiscriminatory rules and competition policy in state owned enterprise which expands our opportunities. it provides binding time limited transparent state to state dispute settlement for most of our key obligations in the tpp. to ensure that the commitments can be enforced. with a growing middle class and an increased spending power in asia, there are clearly export opportunities for our farmers and ranchers, small, medium and
large. 28% of u.s. goods and 25% of u.s. services already go to asia today. there is so much more opportunity. the pie in asia has been exponentially growing, but america's slice of that pie has been shrinking. tpp will address that from our perspective. across america, 68% of district's -- congressional districts exported goods valued at $500 million or moe go to asia. 39 american states sent at least a quarter of their exports to asia. put another way, 32% of export dependent jobs owe their living to asia. tpp is going to reduce 18,000 tariffs in a dynamic part of the world where things are moving quickly. tpp gives the u.s. a strong hand in helping to write the rules for trade in this important area of the world. it makes us an active player, not a bystander.
tpp will affirm and deepen american's ties in asia at a time when many of our trade partners perceive us as pulling back. many of our friends have made very clear they will judge america's commitment to asia by whether or not we ratify tpp. so in conclusion, from our perspective, the u.s. cannot afford to sit on the sidelines while others set the rules for trade. to create jobs, growth and prosperity that our children need, we must set the agenda. to open the market to american goods and services we need to ratify tpp. with all of our trade agreements we must ensure they're fully enforced. the chamber looks forward to working with your association and i'm happy to answer any questions. and i will be passing out a book later and there will be a test. thank you for your patience. >> man, she's a yellow light
lady. she was done on the lady. you were fast. we were a lot -- we have a lot to be concerned about. now i have a new issue -- australia is beating us in selling table grapes. i never heard that phrase before. >> i lose sleep over it every night. >> there we go. roger johnson is the president of the national farmer's union. can farmers pay you in crops or does it have to be money for the dues? can it be either one? you have a different view or maybe another view of the tpp. so roger, all yours. she was at yellow. >> all right. >> no pressure. >> very good. thank you. so all right this is up -- now i'm assuming i point it this way. look at that, it works. okay. yes. indeed, we do have a different view. i spent most of my life as a farmer in north dakota.
i was an elected official in north dakota for a dozen years as the state agriculture commissioner so my focus is going to be on more agriculture. and i'm also now the president of national farmers union and we have a long standing view about supporting trade, but being smart about it. i'm going to give you a few pieces of data that might be something to think about. so this is just a map of the countries that are in tpp. you have undoubtedly seen that before. well, tami didn't talk specifically about exports to korea, it's instructive for us to look at korea because korea was the last major trade agreement that the u.s. entered into with about four years ago. if you listen to those who support trade agreements, they always talk about exports. you rarely hear the word imports.
i'm going to talk about both. because the difference between exports and imports is like the difference between money going into your bank account or writing a check out of your bank account. it's a big deal. exports to korea, yes, they went up. that's passenger vehicles on the left, pharmaceuticals, machinery on the right. from 2011 to '15. ag exports to korea also up. beef is the big one there. lemons. a few other things that doesn't really matter. they're randomly chosen items that are chosen by folks who promote free trade and in fact that's where these two charts came from. what they don't often talk about is the deficit. now, the deficit is the
difference between exports and imports. so if in fact -- as i have showed you all of our exports to korea are going up, up, up, but if the imports from korea are going up faster, you have a problem. that's exactly what's happened with korea. the deficit has doubled in the last four years. if you look very specifically at about 10 or 11 years i think we have in this time line, the export is sort of that ugly dark green color. the tall bar is imports. you want to focus on the red bar on the bottom because that's the difference between the two. the deficit. the dashed line is when the korean agreement was
implemented. what you can take from the chart very clearly, our export -- our deficit in fact with korea had been declining. you see sort of an upslope until it hit that line and now a pretty deep downslope following the implementation of the agreement. the fact of the matter this is what the data shows has happened. but what we were promised in advance of the korean agreement that that deficit was going to continue to shrink and it was going to create 70,000 new jobs. what we got was up 5 to 90,000 jobs lost because of the increasing deficit. i don't want to talk about this one because it's just designed to show how small agriculture is of the total and i do that on the next slide as well. because i mostly talk to agricultural audiences, we mostly focus on the good things from trade agreements relative to agriculture.
agriculture by the way is a really good thing. we as a rule, year over year, we have a surpluses that we produce relative to trade. we sell more stuff to the rest of the world than we buy from the rest of the world relative to agriculture. that's a good thing, but it's a very small thing. because agriculture's a relatively small part of the overall economy. the rest of the economy is just hemorrhaging in trade deficits. that's what this chart shows. this goes back about 30 years or thereabouts. maybe not quite 30 years. and you can see where some of the trade agreements were entered. that spike up is the great recession. one of the things that happens in recessions is you trade less and actually when when trade less the deficit improved. because -- this is a fundamental point that i want to make.
we believe in trade. we think we ought to be a whole lot smarter about how we do trade. as a country, the goal that the congress gives to our trade negotiators is pretty simple. it's pretty straightforward. it just says we want more trade. that's our goal. that's our official goal that we tell ustr to go and negotiate -- get us more trade. we don't specify net trade which we ought to. we don't differentiate between exports and imports which we ought to. and the fact of the matter is is that -- as you look at our performance in recent time, it's actually about 40 years of consistent, persistent trade deficits we've got a real problem. we haven't really taken any action to deal with this. now, the difference between the red line and the dark line it
looks black there is the red line is the trade balance without agriculture. so that's the rest -- that's the total economy and if you add agriculture in, you'll see the deficit nudges up just a little bit. that's the surplus that i was talking about that agriculture contributes overall to our economic performance relative to trade. we've got about a 500-plus billion dollar deficit. half a trillion dollars every year that we import more stuff relative to export. and so we believe that we ought to have a different charge given to usdr and the charge ought to be we want you to bring back agreements that are going to result in us approaching a balanced trade. why is that important? that 500-plus billion dollar
deficit converts to a 3% drag on gpd. now you know what happened to gpd since the great recession. we're hair over 2% growth over the last ten years. fairly long expansionary period. most economic metrics pretty poor. in fact, that growth is the lowest since well before world war ii. and a significant reason for that growth being so low is that 3% net drag on gdp a direct consequence of having the trade deficit. so what would happen -- what shouldn't we do to try and deal with this issue? most economists will argue that the single biggest reason for the deficit is currency manipulation.
the predominant currency manipulators in the world are in asia. china by far the biggest. studies have suggested that the chinese are responsible for 350 to 370 billion of those 500-plus billion dollars in deficit and the single largest reason for currency manipulation -- or for the trade deficit is currency manipulation. currency manipulation very simply defined is when countries intervene in other countries' currency markets for the specific purpose of cheapening their currency and increasing the value of ours to gain a competitive advantage. it's happened frequently as a part of -- immediately following the conclusion of trade agreements. we saw it with nafta.
in fact, when not only -- as soon as the nafta agreement was negotiated, the following year the peso dropped by guys remember this ross perot guy with the big ears talking about the giant sucking sound created by nafta. well it happened. now whether he knew why it was going to happen, who knows. but the fact of the matter is it did happen. their currency devalued significantly. and instead of us buying all of these things -- or us selling all these things to mexico we in fact purchased a bunch of them. now there is a direct relationship that is worth you doing a little math over. our trade negotiators tell us, and most economists will come up with a number around this number that every billion dollars in
exports is worth 5800 to 6,000 jobs. so the corollary of that is if instead of a billion in exports you increase imports by a billion dollars, you lose that many jobs. and that is why this country and sort of the politics of this country are kind of mixed up in my view right now. a lot of folks are seeing exactly this impact on lost jobs. i already talked about the korean trade agreement. this is really the final slide i want to show because my light just turned yellow. and this is a different source of data, but what we're looking at here is like this is a measure of wages. so what's happened in real terms is americans, especially the
lower economic rungs, wage values are in fact in real terms declining. that's a problem. and that's when you guys all start hearing about the impacts of trade agreements. and that is my concluding slide. and i am prepared to take questions. [ applause ] . >> yellow is the new red. [ laughter ] well obviously donald trump has seen this presentation from you before somewhere, i think. a bit interesting. couldn't resist. i'm sorry. do we have -- because this is really a very serious issue and why there's so much controversy over it. i won't give my opinion. dan. >> thank you. mentioned that you would like to be smart about trade agreements. could you tell me in your mind what that looks like and then i
would like to hear the counter point in terms of whether that, you know, that's a feeling that, you know, is supported and not supported. >> the number one thing we ought to be smart about is being really serious about currency manipulati manipulation. every economist in the country talks about the fact that china has been a huge currency manipulator and yes we do nothing about it. nothing. the tpp, for all of its 6,000-plus pages have zero enforcement authority relative to currently manipulation. we know this is the single biggest cause of the trade deficit. and yet all that really happened was sort of a little side piece that was negotiated at the last minute that said all of the participating countries finance folks are going to sit down once in a while and talk about currently manipulation.
but no, no ability to do anything affirmatively to stop a country or to sanction a country for using currently manipulation. this is no small deal, because historically japan has been a major currency manipulator. vietnam, just last summer after china again reduced the value of its currency, vietnam followed in pursuit, malaysia did as well. and these are members of tpp. so we -- if there's one message you ought to get from this, it's we need to do something about that. >> could i quickly follow up because there's a response. so what does a sanction look like? i'm still kind of confused about -- say there's a manipulation. what was a sanction look like that makes you feel more comfortable with a trade agreement? >> all you to do is put an
import tariff against that country's goods. that's exactly what the wto provides as the sanction when countries lose a case in front of the wto. that's what they do. they say, okay, here's the amount of the loss caused by the air rent behavior. they're giving the ability to extract those tariffs over whatever part of the offending country's economies they choose. that's what we ought top. >> i'm curious about this issue. so when our glar devalues, would the reciprocal be true? so you know, when i travel to ireland a number of years ago my dollar -- our dollar was weaker than and i ended up spending a lot more money over there. >> absolutely. don't mistake changing values of currencies for currency
manipulation. currencies, in a free trade environment, currencies ought to move just like commodities or other imports and exports. any kind of things that move in trade, currency ought to do the same thing. it ought to be three-folding. what happens when countries choose to manipulate currency, they deliberately go into our financial markets and buy up dollars to drive the dollar higher relative to their currency which drops down and then you get the artificial imbalance. that's what economies around the world have been arguing relative to chinese behavior is what needs to be disciplined. okay? >> thank you. no surprise we have a little bit of a difference of opinion here. we do agree that currency is a real issue. the chamber doesn't believe a trade agreement is the right vehicle to address it. in a trade negotiation you have
ministers of trade. you don't have the finance people. this is the first time, to my knowledge, that in a multilateral trade deal they did bring in the treasury secretary and the finance folks to come up with a currency commission. but my colleague is absolutely right. it is not legally binding or enforceable. all 12 countries agreed that they would not manipulate their currency for competitive advantage. but it is not in -- it's not covered under defut resolution. one point i should make is right now the u.s. treasury department can determine and can call out a country for manipulating currency but they haven't. and there are reasons for that. one other issue we should note is that in tpp, this is a reciprocal agreement. so whatever we ask them to do, we are agreeing to do the same.
and when we had very long discussions about how to make currency -- put currency in there and make it bindi ingbind treasury guys were frustrated because from they view they didn't want to give up the policy space. could you allow congress allowing foreign countries to sanction orifice call policy in that's what putting the binding policies in a trade agreement would do. we would like to see it, whether it's a g 20, g 7, the imf, a financial body, not a trade body. >> any other questions? >> just a comment. we will eliminate foreign governments from lobbying our congress. it's a good thing to do for a foreign country. we should do it for the right reason, not because of the lobbyists in washington.
that's a big problem. get rid of the lobbyists lobbying in our country. >> we play by rules nobody else in the world does. and you know, our companies, our farmers, your constituents are disadvantaged. it is our belief that tpp -- it's not a perfect agreement but we think it moves to -- it makes it closer to a more level playing field. >> if i could just make a brief comment about currency. we've now put a real sharp point on the problem. and it is this. currency manipulation doesn't belong in trade agreements. it belongs with the finance ministers or with the imf or some are said with a world bank or the u.n. the problem is every one of those guys says no, it's not our problem. and what vehicle do we have in
this space to deal with it? a majority for the first time ever, a majority of both houses of congress, relative to tpp said they want currency dealt with in a trade agreement. is it perfect that it belongs -- who knows where the perfect place is. fact of the matter is if you don't have it some place and you don't have binding protocols that are in place, you're just -- we're going to talk about this for another 40 years while we continue to see deficits getting ever deeper. and that is a real problem in this country. >> any other questions? our panel is fascinating. thank you very much. [ applause ] nato secretary general jens stole ten berg is in washington to talk about the challenges the alliance is facing. live coverage of his remarks at
4:00 eastern. we will also be live here on c-span3 at 6:00 eastern when democratic presidential candidate hillary clinton holds a rally in pittsburgh. donald trump is campaigning today in new york. c-span 2 will be live with his rally in long island. new york's primary is april 19th. that rally scheduled to begin at 7:00 eastern. american history t on c-span3. this weekend. saturday night at 8:00 eastern on lectures in history. >> old kinds of on ska kls falling by the wayside with the result that by august, if not earlier of 1862, lincoln has decided that when the time is right he will announce a new aim for the war effort that would add to union human freedom. >> wheaton college history
professor tracy mckenzie. and then at 10:00 on reel america -- >> how was it for america to achieve such production and at the same time build an army. and the amazing reports came in from the agency the united states. 20% of american industrial manpower was woman power. legions of women were massing to stop my advance across the world. forsaking the round of liberty for the grim tasks of war. >> in 1944 war department film documents how women in world war ii helped the war effort, the american women working in war manufacturing are a main reason germany lost the war. sunday evening at 6:00 on american artifacts, we visit the daughters of the american revolution museum to learn about
an exhibit marking the 120 anniversary of the organization. >> one thing that stands out at this time period is this creation of this imagery of this apott yoefs. and the apoth yoefs is an old concept. it goes back to ancient times where a warrior is made god-like by lifting him up and celebrating him. on the presidency at 8:00 -- >> those washington and jefferson are the two prime examples of save owners, especially those who did so while they occupied the white house. james madison, who followed jefferson as the fourth president of the united states owned over 100 slaves, holding a large percentage while he occupied the white house. he is responsible for composing and expanding the three-fifths compromise which guaranteed the south held a disproportionate
influence on congress to preserve and uphold slave owning interests. professor at carolina state, on the 12 american presidents who were slave owners. eight of them while they were in office. go to c sprks.o-spac-span.org f complete schedule. john koskinen says public compliance rates could decline. commissioner koskinen spoke at the national press club here in waurnds where he talked about irs's mission to combat fraud and scams impacting taxpayers. this is about an hour. [ applause ] >> welcome to tax season. americans now have three weeks, 10 hours and 58 minutes to get their federal returns filed. but who's counting. for our seeker every day is tax
day. john kos din then is the commissioner of the irs. it seems that every tax season generates a headline or two. this year they include the irs's concerns about scammers who telephone or e-mail taxpayers asking for identifying information. something koskinen says the irs would never do. and a presidential nominee has claimed the irs has audited his returns for 12 years because he is quote a christian. last year a resolution for koskinen's impeachment was introduced to the house. the judiciary committee has taken no action on the resolution and the treasury secretary has vigorously defended koskinen. our guest is the 48th irs commission commissioner. he's been the president of the
u.s. soccer administration, acting ce oshs of freddie mack and chairman of the president's y 2 k council. he was in the private sector for two decades. no amount of irs trouble is going to put john koskinen in a bad mood this week. he's a super fan of the duke basketball team and the ncaa final four this weekend. please extend a warm national press club welcome to john koskinen. [ applause ] >> thanks very much for that warm welcome. after the description of what's going on at the irs and my job, i'd be thinking this is a good time to leave. but i am committed to being here until the end of my term which expires november of next year. it's fun to come. i appreciate being invited back to speak here in middle of tax season. you've heard our public service announcement that the end is
year. so we hope all of you have filed. i'm also intrigued with the desserts. i actually exchanged my cookie because i had the pig and i just didn't think that was appropriate. much more appropriate was i have the dollar. but i also appreciate being here during march madness because if i weren't speaking here today i would be spending a lot of money trying to figure out how to get to anaheim for a particular game tonight that shall remain otherwise nameless. but as a way of showing my gratitude i'll are try to keep down to a minimum the reminders that your taxes are due pretty soon. even my wife pat is tired of hearing about how close we are to april 18th. but she's a good trooper and is here with us on the podium this year. and getting through my fun-filled 27 months as the irs commissioner wouldn't have been possible without her strong support which i greatly
appreciate. so that's -- yes. [ applause ] and i never dispute the notion that she is indeed the better half of this partnership. [ laughter ] all right. that must be my daughter cheryl. that said, i'm delighted to be speaking once again to a room that includes a number of journalists. in fact there are enough reporters here that i began to wonder whether there was a presidential candidate lurking somewhere in the building. reporters ask me a lot of questions all of the time and believe it or not i enjoy answering them because it gives me an opportunity to explain to the press and the public what we're trying to accomplish at the irs and especially what we're doing to improve the tax system and tax fair service. one of my favorite questions so far was one i got last month during an interview when the public asked me what does the public not understand or appreciate about the irs that
you've learned while you've been here. it was a great question and at the time i had to give a quick answer. so i talked about our dedicated employees. and all of the work they do to help people to file their returns and to be on time with it. but that question caused me to wonder what i would say on that subject if i had a captive audience for an hour. now i'll pause for just a minute in case anybody would like to take the opportunity to leave before i continue. but now that i've been irs commissioner for a little more than two years i've come to recognize that there are a number of things that taxpayers don't know or focus on about the agency. i know the irs is not anyone's favorite government institution. and will probably never win a popularity contest, especially during an election year. and in fact in a recent poll that came out i think earlier this week, actually, i'd showed that 12% of taxpayers like vladimir putin better than the irs. [ laughter ] but don't look for a shot of me on cnn without a shirt riding a
horse. [ laughter ] obviously we're the nation's tax collector but that's not the whole picture. i believe the public needs to have a clearer idea of how important the irs is to the nation and to taxpayers. people also need to know the challenges we face in moving our agency into the future. in other words i wish everyone could see first hand the irs that i see and have come to know and appreciate over this time of my tenure. first let me begin where i was during the interview. focusing on our workforce. in all of my years of leading organizations in the public and private sectors i can honestly say that no group of people i've work with have been more dedicated to their mission than the employees of the internal revenue service. i'm amazed by the number of people spending their entire
public career serving the irs. i met a revenue agent who was retiring after 60 years with the agency. 60 years of service. i asked angela if the irs had violated child labor laws when we hired him and he assured me he was older than 10 years old when he started. but when i asked him why he didn't retire 20 years earlier and he said he liked his so job so much but he wanted to keep on working because he believed in public service. we sea this across the irs. when people come to work at the agency, they want to stay because their love their work and the opportunity to provide service to the nation. another employee i want to mention is sitting here at the head table. you heard him introduced. bill pressman who has been with the irs for 40 years. a good example of people we often see at the irs who come into the agency and then develop careers eventually doing something very different than
they did when they first started out. bill began by quote carrying the bag, which at the irs is shorthand for working in the field as a revenue officer. these are the people who actually collect past due taxes. bill's career path eventually led him into our communications area where he is a whiz now at putting technical tax information into plain english for taxpayers. he's scheduled to retire in june and i'm delighted to have the opportunity to thank him here and hon for him for his service to the irs and to the nation. [ applause ] angelo and bill are two terrific perfect servants and tip call of or workforce. without the dedicated employees the irs couldn't do its job every year, delivering a smooth filing system. for most people their own
interaction with the irs and possibly the government each year to file their tax returns and in most cases receive a tax return. to the average person the irs may seem like a vending machine, you put your return in, push a button and out comes a refund. what i've been trying to remind congress and the public for the last few years, it's a lot more complicated than that. processing $150 million individual tax returns and issuing refunds isn't automatic and it doesn't happen by accident. it happens because of the cometment, expertise and can do attitude of the irs workforce. i'm going to check up on people in the room here anonymously of course. but consider this your chance to engage in audience participation. by a show of hand, how many of you have already filed your tax return? very impressive. well you're in good company. we've already receive more than 80 million individual tax returns so far on the way to the 150 million total. now, of those of you who have
filed a return, how many are claiming a refund? also, pretty typical there. how many of you have gotten your refund already? very good. i won't ask whether you spent it all. [ laughter ] so far this year we've already issued more than $65 million refunds for a total of almost $190 billion. last question. if you receive a refund, does it come in less than 21 days or three weeks? if so you're like most people. because even with the increased efforts we put forth to stop identity left and refund fraud in the battle against the criminals around the world, the irs still issues 90% of its refunds in 21 days or less. now i should pause for a moment to think about that those are amazing numbers. and if we're doing our job right the average person won't really notice how much work it takes to
make things go smoothly. another thing that's impressed me seasons i arrived at the irs is the amount of time and effort and resources redevote to assisting taxpayers. almost 40% of our budget goes to helping taxpayers comply with the law by providing critical services and investing in taxpayer friendly technology. for example this year we've had 248 million hits on our website irs.gov. and we've answered more than 8 million calls from taxpayers this filing season seeking help or answers to their questions. something else that i think gets overlooked along the lines of taxpayer service is the amount of effort we put into protecting taxpayer data and the security of our i.t. system. safeguarding taxpayers from the growing problem of identity theft is one of our top priorities. so much so that about a year ago we convened a security summit to together the private sector, the states and the irs to form a
real partnership, joining forces against the threat of identity theft and refound fraud. all of us understood, whether in the private sector, the state tax commissioners or the irs that each of us couldn't continue to deal with the problem on our own if we were going to be successful. since then this unprecedented partnership has focused joint efforts on making sure that the tax filing experience would be safer and more secure for taxpayers during this filing season and beyond. over the course of the year we put in place a number of new protections, including certifications when you actually log in to file your returns, which is a huge step for taxpayers and for tax administration. it's giving us a better defense against criminals trying to use stolen taxpayer information to file tax returns and claim a fraudulent refund. because of these new procedures, those of you who have filed with the tax software may have noticed there were new sign-in
requirement to access your account. many new safeguards we put in place are invisible to the taxpayers but they're invaluable to us because they help us do a better job of protecting everyone during the tax filing system. while the security summit group made progress, we came to realize we were missing an important partner in this. the tax paying public. last november we launched the taxes kurt together initiative to raise awareness about things people can do to protect themselves and avoids become victims of identity theft. many of the steps we talked about are basic, common sense. but i think we all know someone who may be technologically challenged. the chances are good that someone right now is clinking on link they shouldn't, skipping a computer security update leaving
them vulnerable to hackers. that's why having the public's help on this effort will greatly strengthen and improve the new tools we're putting in place to stop the crime of identity theft. another answer to the question of what people may not think about or appreciate is the irs's role in providing revenue for the nation. as i said a moment ago, people think of the irs simply as the tax collector but what does that really mean. the irs brings in 92% of all federal revenue that funds the operations of the government. we collect almost 50 to $60 billion a year through our enforcement activities but another $3.3 trillion comes in from people who voluntarily file returns and pay what they owe year in and year out. one of the most interesting things i learned about this organization is how efficient we are in collecting those revenues and i'll show you what i mean. all right. everyone, did you find the envelopes on your chair or plate that look like this? i'm assuming you all followed
the instructions that say please do not open until commissioner explains. so the commissioner is now about to explain. if you don't have one of these, ask your neighbor what he did with yours. [ laughter ] now, if this were in a television situation and you were the studio audience either for the ellen degeneres show or oprah, you could have hoped, expected or supposed that the envelope might hold something interesting like a key to a new car. well, you got to remember this is the irs we're talking about. nobody should get their hopes up. but if you've opened your envelope, everybody open the envelope, what did you see? 35 cents. that's not even enough to mail a letter today. my 35 cents shine. and by the way before anybody calls into the investigation of the use of taxpayer funds for this use of this 35 cents, let
me assure that the coins the come from our media staff and i want to thank all of them and their children -- [ laughter ] -- for emptying their cookie jars and looking behind all of the sofa cushions am home to allow us to collect the 35 cents for everybody. let me show you what the irs does with that money. suppose i said give the that 35 cents and i'll give you back this $100 bill. how many of you would take the deal. everybody right? that's the deal you get with the irs. it may sound like a magic trick but it's simply the result of good efficient tax administration. if you add up all of the work that we do for the tax system, issuing forms, helping taxpayers, send out notices, conducting audits and everything else, it now costs us about 35 cents to collect $100 in federal revenue. i think it's a pretty good deal for the american public. it's even a better deal when you
put it into context. another fact that often gets overlooked is that the u.s. is much more efficient as a tax collection agency than the agencies in virtually every other country in the world. according to statistics compiled by the organization for economic cooperation and development, the average rks ecd member company spends almost twice as much as the united states to collect a dollar of revenue. this includes countries like germany, france, the united kingdom, canada and australia. it costs the u.s. 35 cent to collect $100. if congress were to give aus $1 billion increase requested in the president's budget for fiscal year 2017, that means we would be able to do even more. if congress were able to fund the president's budget, we estimate that the additional enforcement actions that we would take and have planned would yield $64 billion over the ten-year budget window that is commonly used. that would average out to $6
billion a year. now keep in mind i'm not talking about new taxes. this is money that's already owed and not collecting due to our staffing shortages. so $6 billion. it's hard to picture that amount of money but let's try. my crack research staff in their spare time tell me that is stack of 100 dollar bills, $10,000 is a little less than half an inch high. you'll note we don't have a real-life example of what that half inch looks like. but if you multiply the $10,000 stack out, a stack of $6 billion of $100 bills would be higher than the length of 60 football fields. those don't go to the major programs that we hear about all of the time like social security or national defense, they fund many other activities and programs that many of us take for granted but would not want to lose. things like maintaining our beautiful national parks,
ensuring the safety of the food we eat, guarantees on loans to small businesses and home aerns, benefits for our military veterans and upkeep of the nation's highways and bridges. a quote from the supreme court justice holmes which is inscribed over the entrance to the irs headquarters build here in d.c. justice holmes said taxes are what we pay for a civilized society. which brings he to why i'm so concerned about the funding cuts that irs has had to absorb since 2010. our budget for this fiscal year is about $900 million below what it was six years ago in 2010. 70% of our budget is personnel, we've absorbed these cuts primarily by not replacing employees who leave for other jobs or who retired like angelo and bill. as a result we expect the irs workforce to shrink by another 2,000 to 3,000 employees this
year bringing us to 17,000 employees lost to attrition since the year 2010. those losses have been felt all across the irs. for example our compliance programs have suffered as a result of underfunding. a portion of our full-time workforce that have been lost since 2010 includes over 5,000 enforcement personnel. these are people who audit returns and perform collection activities as well as the special agents in our criminal investigation division who investigate stolen identity refund fraud and tax crimes. the staffing losses have translated into a steady decline in the number of individual audits over the past six years. last year in fact we completed the fewest audits in a decade. plus our audit coverage rate in 2015 was the lowest it's been since 2004. and that trend line of future audits because of the funding constraints will continue this year. not surprisingly, audit revenue has continued to decline as
well. in cutting the irs budget the government is foregoing more than 5 billion a year just so achieve those budget savings of a few hundred million dollars, it's costing us $5 billion a year. and weakening our compliance programs the cuts create risks for ou system of voluntary compliance. there's also a deeper issue here and it goes to the heart of the tax system. i believe the taxpayer service and enforcement must be seen as two sides of a compliance coin. i mentioned a minute ago that over $3 trillion comes in every year as a result of people meeting their tax obligations under the law without being asked further. even at the irs we don't delude ourselves into thinking that people enjoy paying taxes. in fact a recent poll, the one i just mentioned, showed that 27% or people would be willing to get an irs tattoo to avoid paying taxes. as an additional public service
announcement, i would like to advice -- advise you that my tattoo has been ineffective on that score. no mat whaer your tattoo says, you still owe us the money. people keep paying their taxes because they believe in the fairness of the system. if people begin to think that many other people are not paying their taxes and their fair share or that if they cheat they're not going to get caught or they're just frustrated because they can't get the help they need from us to file their taxes, our tax system will be put at risk. and when that happens, you're talking about losing real money. consider this a 1% drop in the compliance rate translate into a revenue loss of over $30 billion a year or $300 billion over the usual 10-year measuring period. when we do get funding i want to emphasize the irs will continue to put it to good use. congress back in december approved a $290 million
additional boost to irs funding for fiscal 2016, this fiscal year. the funds were designated for improving taxpayer service, protecting against identity theft and strengthening cybersecurity. all top priorities for the irs as well as for the congress. this was the first time in six years that the irs has received significant additional funding and it's a step in the right direction. to illustrate how helpful the additional funding has been, we used a portion of it to hire a little over 1,000 extra temporary employees to help improve our service on the phones. as a result, we're already seeing service improvements this fine season. so far the level of service on our toll free line is over 70%. and the average for the entire filing season will probably be at or above 65%, a vast improvement over the somewhat miserable level of service last year. once the seasonal employees are gone, however, we can expect the number to drop significantly
simply because we don't have funding to keep them on longer. and our average for the year will probably be in the 47% to 50% range which is fill a significant improvement over last year. but we want everybody to understand that this isn't where we think we ought to be or where the taxpayers would like us to be. if we receive again the president's fiscal 2017 budget request our phone level of service for the next year for the entire year would be 75% as i said, for the entire year. i should mention another critical challenge for our agency that has been made worse by our budget situation. last year when i spoke to the press club i said a large portion of our workforce would be eligible for retirement soon and the number of younger employees were dwindling to the point where the irs was facing its own version of a bib by bust. i'm here today to provide an update andly tell you the age demographics of the irs look no better than they did a year ago and some actually look worse.
we expect more than 40% of the irs workforce will be able to retire in 2019. looking at the other end of the age spectrum, i said last year the irs had only 650 employees under age 25. since then that number has dropped to about 200. and that's out of a workforce of 85,000. things have gotten so bad that we worry that our under 25 group may end upped on the endangered species list. but -- as especially for those on behalf of those for whom age 25 is a bit of a foggy memory, let me say that i know how important it is for any organization to have older workers where there is experience and institutional knowledge. so the fact that our agency skews a little older is not the problem. what i worry about is that we don't have enough young workers in the pipeline the irs will have great difficulty developing the next group of leaders it needs five or ten years down the
road. ultimately continued underfunding of the irs continues to affect its effectiveness. i don't want anyone to say after my term is over that they didn't understand the seriousness of the situation. they can continue to ignore it if they so choose. but at least they won't be able to say that they weren't warned. but i don't want to give anyone the impression that we're trying to go back in time. it's important for people to understand that our goal isn't to get enough funding to perform the way we did in 2010 with the same number of employees. we're not going to build the irs back to that stage, although it's clear we do need more staff. what we need to be doing and what we're doing is looking forward to a new improved way of doing business. if you attended last year's luncheon or tuned in to c-span, you heard me talk about our intention to move the irs forward into the future and to improve the taxpayer experience. this is driven in part by business needs. consider that it costs 40 to $60
to provide assistance to a taxpayer in person and less than $1 to provide that assistance online. so we have to take a fresh look at how we provide the best possible taxpayer experience in response to taxpayer expectations and demands while not losing site of providing one on one help for people who need it or desire it. what we're talking about is a new but natural outgrowth of modernization made to our business systems over many years. modernizations that i might add are mostly invisible to the average taxpayer and revolutionized their interactions with the internal revenue service. a great example is the customer data engine, the first phase of which was put in place a few years ago. k 2 allows us to process the information daily instead of on a weekly basis. we're generating faster refunds and account updates for better
customer service. we converted the master file data stored on our tape drives with 250 million individual taxpayer accounts and more than 1.2 billion individual tax modules to a modernized rational database for taxpayer accounts and data models. this is transforming tax administration and paving the way for new digital self services for taxpayers. but don't take my word on how important it is. the gao was so impressed that it removed our business systems modernization program from its high risk a couple of years ago citing c 2. we had been on that list since 1995 and many insider of the agency thought we would never be removed from it. another advancement is modern e file. we can accept a return, send out an acknowledgment much faster than we were able to do in the past.
and the numbers are amazing. to give you an idea, on our busiest day thus far early in the filing system, our system accepted 4.4 million tax returns with nearly 450,000,000 accepted at one hour at the peeng. that's 125 returns accepted every second. changes like this don't come about without the expertise and know how to make them happen. in our case we were fortunate to have the guiding hard of our chief fek nolg officer, terry mull holland who is here with us today. terry came to us in 2010 after a distinguished career in the private sector. in six years with the irs he's overseen not only k 2 ad and e-file but many other critical i.t. projects as well. terry, i'm delighted to be able to salute you and your team here today for you infi fight patience and dedication in
meeting the never ending challenge of improving our i.t. systems even in the face of ongoing funding costs. thank you, terry. [ applause ] terry is also symbolic of an important change at the irs. when congress reorganized the agency in 1998, lawmakers recognized the need to bring in the best minds from the private sector to help modernize the irs aging technology. so congress gave aus special tool called streamline critical pay authority. the most sig tant part of that authority is it lets us recruit and hire i.t. prospects as if we were a private company. otherwise we have to say if you'll sit still for six months, we can make this work. needless to say i.t. experts, particularly cyber experts and those interested in expert
online services have a lot of competing opportunities that don't come with those limitations or challenges. unfortunately the special hiring authority expired at the end of 2013. the loss of that authority seriously harms our ability to recruit the best i.t. and cybersecurity talent out there. more immediately ten of the last 14 people on this authority are senior executives that turn into pumpkins this year when their four-year terms under the authority run out. in fact terry himself, his term will expire in a little over three months if the authority is not renewed. and one of our key cybersecurity directors just accepted another position outside of the government rather than wait to see what happens. this has real world implications for the irs and the government. the irs has one of the largest and most sensitive data bases in the world. the congress wants to help taxpayers, one of the best thing they can do is renew the special
hiring authority. our next sten is to improve our operation to the point where taxpayers can do business with the irs in a manner that's fast, secure and convenient. however as we improve the online experience we understand the responsibility that we have to serve the needs of all taxpayer, whatever their age, income or station in life. we recognize there will always be taxpayers who do not have access to the digital economy or simply prefer not to conduct our transactions with the irs online. we remain committed and dedicated to providing the tax services that all need. for example, while we continue to offer more web-based services, taxpayers will always be able to call the toll free help lines or obtain in person assistance. for those who want to deal with us that way will free up resources to make it easier for those who want to call us or visit us in person to obtain
help. in building toward this improved online experience for taxpayers, one of our biggest challenges is making sure that taxpayers' online accounts are properly protected. our concern is that cyber criminals are becoming increasingly sophisticated and global in their activities. they continually find nub methods of stealing information and gain access to more sensitive data than in the past on a reck basis. for this reason we'll need to ensure our awe then occasion protocols become more sophisticated. we're moving beyond asking to information that used to be only known to individuals but now is in cases is readily available to criminal organizations. and i would note that those sources are outside of the internal revenue service. but there's a delicate balance. we need to provide the strongest awe then occasion process to protect the taxpayer data without making it impossible for the legitimate taxpayers to
safely access their own data. so as you can see there are interesting challenges but it's an exciting journey we're on, especially if you're someone in the tax business. we believe the end result will be a more practical effective and efficient approach to tax administration and the irs will be able to do a better job of helping people meet their obligations quickly and easily. that's our story. i know i speak for the entire irs workforce when i say look forward to continuing to improve our agency and the administration of the tax system. finally i'll leave you with one last public service announcement. if you haven't done your taxes yet, remember april 18th will be here before you know it. so i began by saying that i enjoy answering questions, so i'm happy to answer as many as i can in the time remaining. thank you. [ applause ] and i would like to announce the
chances of kerry lemons getting back the $100 bill are fairly slim. >> thank you, commissioner. i would like to thank you for the 35 cents as well. it's a great opportunity to mention the national press club journalism institute is a 501(c)(3) tax deductibility organization. >> if you make the contribution because it's under $250 you do not need an acknowledgement. >> i want the apologize for butchering your name as i was introducing you. i look forward to this year's audit. >> i always tell people it took me four years to learn. you've got more time. >> my first question with the -- you mentioned this. referenced it. with the numerous budget cuts, staff reductions and fewer audits, won't the compliance rate fall costing the federal government more and making it more expensive to collect taxes? >> it is our ultimate concern. our experience is -- we do a lot of research on this -- while we are a tax compliance society, as
i say it's primarily because people think the system is fair. but it's also because they know we have a lot of information. our studies show -- if with have withholding we have the money already, our compliance rate is 9 %. if we don't have the withholdings and have to ask for the money but we have third party information the compliance rate is 92%. if we don't have money or the compliance the it's in 50%. it reminds you that it's important that why i say taxpayer enforcement is we need to insure the system is fair but we need to insure that people understand if you're trying to become compliant we want to work with you. if you're trying to cut corners or cheat, we'll bement copping after you. so if people feel that everybody is not paying their fair share,
or because they think this maybe they won't get caught either. when the compliance rate starts to drop, a 1% drop, it's 81% when you add everything together, a 1% drop costs you $30 billion a year. but we'll never notice that 1%. it will a little while before people suddenly say it doesn't appear that the revenues are tracking the way it used top. and when the drop is 2% or 3% you're talking $90 billion a year. once the psychology changes and people begin to think that the system is not fair, why should i be the only one paying my full share, you begin to look like greece, italy and other places where compliance rates plummet and the revenues trdrop. it's not an idle concern that we all have, and that is the integrity of the system has to be maintained. as noted in my talk, we fund basically the entire government. and if the revenues drop, the deficit is going to continue to go up or we're going to have more service cuts across the
board. >> thank you, sir. while the fbi found no criminal intent with the political targeting investigation, they did find many people did things wrong. did you find anything wrong and was anyone disciplined? >> working in reverse order, the chain of command around the c 4 issue is all gone and they were gone very promptly. so you can start -- commissioner had already left, the acting commissioner left and the people down to the senior executive level, five levels all left. so i think there has been accountability, people did leigh. i said from the start that it's clear and that's what all of the reviews found, that there was a significant management failure. applicants should not have to wait months or years to get a response from the internal revenue service. when there is that kind of baglog and problem, the problem should be identified early and it should be known, the larger the problem, the further up the chain of command it should go.
one of the things i've tried to the and with the sfrong support of the senior executives at the irs is as we created an enterprise risk management organization, get every employee to understand that they really should view themselves as a risk manager and that they should understand if they see a problem, if somebody makes a mistake, as i've said, fit's a problem, it's my problem. if somebody has made a mistake, it's my mistake. the critical thing is to make sure we know about it because the only problem we can't fix is one we don't know about. so as i said many my confirmation hearing two and a half years ago it would be terrific to say we'll never have problem, nobody will ever make a mistake. but you've heard about the 150 million taxpayers we deal with, we have 85,000 employees and we have the world's most complicated tax code. the better standard of performance is if we have a problem or someone makes a mistake, we'll find it quickly, fix it quickly and we'll be transparent about it. that's not what happened in the c4 situation.
we've accepted all of the ig's recommendations, all of the recommendations of the bipartisan report from the senate finance committee designed to ensure that that problem doesn't happen again. but a key factor going forward is for people to feel comfortable that bad news is good news. and that if they report a problem, report a mistake, our answer won't be who gets fired. our answer will be let's fix it and try to make sure it doesn't happen again. >> you mentioned the comp cased tax codes. do you think that tax reform could actually pass congress and what about the idea of a flat tax to make it easier for americans to pay taxes? >> i always preface my answer about the tax code by saying tax policy is the to do main of the congress and the white house and the treasury. we do tax amount. but as i tell people, you know i'm about to start talking about tax policy. it's not our do do maine. i have said from the start as an
individual taxpayer and the 20 years i spent in the private sector on corporate boards, if we could simplify the tax code it would be in everybody's interest. for taxpayers and the internal revenue service. i don't think anybody gains from the complexity of the tax codes. so while again the decisions of how you do it are the domain of other people, i've tried to make it clear that we'll do everything we can to provide the technical assistance to analyze if you were going to move the code one way or the other, what would the administrative impact be on the agency. but most important what would be the impact on taxpayers. i'm a strong believe in tax reform. i think there is interestingly enough a growing coalition of people in the congress and really around the country in favor of tax reform. some people are looking at i primarily from the standpoint of international tax policy for corporations. other people understand that you
can't deal with just corporations without dealing with so-called past sovereignties. a lot of businesses are run as partnerships or what are called sub chart s corporations where they don't pay a corporate tax. if you only fix the corporate system you're leaving everybody else in the same boat. but i'm intrigued in some extent optimistic about the fact that there is a growing consensus that something has to be done. with regard to flat taxes, doing away with various deductions one way or the other, those are policy issues that the congress and the administration now and the next administration need to deal with. we are prepared to be supportive from the tax administration standpoint in any direction people want to go. >> thank you, commissioner. as you referenced in your speech there are many cyberthreats and scams out there today. how many millions of dollars are lost in fraudulent tax returns or refunds toll stolen from taxpayers each year and what solutions is the irs looking
for? >> figuring out kpkt exactly how much got out the door is the famous what you don't know. gao did a review with us a couple of years ago and estim e estimated slightly $5 million was going out with fraudulent returns. ironically we've been making significant progress every year since the whole problem exploded in 2010 to 2012. the irony is at the same time we make more progress, at the same time it's a more visual problem. someone whose return is stolen this year remembers and talks about it next year. so we think that -- and we won't have if numbers for this year. we don't have the numbers for last year yet because we have to take a look at all of the returns filed, all of the issues going forward. we think the number is decreasing significantly. but even if it's in the billions still, whether it's 2, 3 or $4
billion. that's a significant problem we're more concerned about the ag vegas and angst created for a taxpayer who filed their return and then discover that somebody has stolen their identification and filed before them and we went accept their return until we work through the process. our goal is to protect the taxpayers and to protect the fiscal revenues of the government. they're equally important. what we put in place is, thanks to terry and the systems we've been developing, we have now depending on whom you ask, well over 200 filters in our systems that look at every return to see what are the anomalies, what is it that we are -- should stop. we stopped over 4 million suspicious returns last year as we good forward. one other reason i reached out to the ceos of all of the tax preparers, the tax software developers, the payroll providers and the state tax
commissioners was, as i said, it's become clear that we have to get our arms around the entire system. we don't see taxpayers when they're filing. they file with software, they file with return preparers. the return preparers have a line of sight into what computer is that coming from, how long were you on the computer, how many returns are coming from that commuter. there's a lot of important data we are now collecting from the private sector that we're sharing with states. but more importantly we're now in real time sharing information about suspicious patterns of activity. the private sector is just as concerned as we are about protecting tax prior identity. we here not sharing information about particular taxpayers. we're collecting information and sharing information about patterns of filing suspicious concerns that we have. and we do that regularly now in a way that we've never done before. so it is important for us to continue to improve our filters. it's important to build upon that partnership.
interestingly enough the private sector members of the partnership went beyond requesting and demanded that we make it permanent because it's worked so well and we're going to do that. as i said, it's not a partnership where we're instruc partnership where we are jointly with the states trying to figure out what are the next steps. our biggest challenge and one of the discussions i'm having on the hill is a need for additional funding is we've gotten to be pretty good about responding and reacting to what the criminals are doing next. what we need to do, because they're not going away, is begin to be able to anticipate more where are they going next. so that's why last summer we began to talk with our private sector partners about as we get better at closing down our system, the logical -- one of the logical next places for them to go was to in fact go and hack into and attack preparers. because if they can't get data from us, if they could get the data from a preparer with 100 or 200 clients, they have all that information. and sure enough we've all been working together, they've been increasing their security, but
we've had incidents and examples of preparers being hacked. the great thing about the partnership is as soon as anyone discovers that, either the preparer or in one case we had a state that said this looks odd that we're getting strange refund requests from a single preparer. we were able to go back with the preparer and discover to their surprise and dismay they'd been hacked. but it meant we could protect all the other tax pay nepayers account. we could mark all of those accounts. so we need to be in a position where we can anticipate where people are going next. the reason criminals wanted to get into our -- get transcript application, wasn't to get more data. they already had all the data they needed about individuals. they wanted to get your copy of last year's returns so when they file a fraudulent return this year it would look more logical. it would track better because they know our filters are getting more and more sophisticated at picking out the anomalies. the reason they were interested in trying to attack our ip pin site was because as the ip pin
stopped returns, they discovered more and more returns were being stopped. so asked how do we get to the ip pins. so one of the things brought to our attention had nothing to do with us directly, but we've been warning for the past few months private sector companies that one of the most recent phishing expeditions for an e-mail to go to the human capital or payroll department looking like it's from the ceo saying i need the following data and information on the following employees or all of the employees, and a number of companies have discovered they've given away w-2 information and other information on their employees thinking it went to the ceo and instead it went to my pals in organized crime all around the world. so this has never been and is certainly not just an irs problem. it's not a tax problem only. it is in fact a problem of the digital economy with criminals well-funded, very sophisticated and as in some ways like a video game as you push it down here,
it comes up over there. and as i say we need to be more and more aggressive about anticipating how do we close them down at the next point of interface. >> thank you. the irs -- speaking of which, the irs has had some data breaches that have been publicly disclosed. have all the data breaches been publicly disclosed? >> as i've said one of the things we want to be as transparent as we can, particularly because if there is ever an issue we want to make sure individual taxpayers are aware of it. i would stress because we use the word breach in a lot of different ways. there's not been a breach of the irs data system. terry's done a great job protecting it although we knock on wood because we are attacked over a million times a day. if you got a flash of light every time somebody attacked our system, it would just be a beam of light. there would be no break in it. so it's a serious problem, which we are dealing with seriously. and we've gotten, as i say, more funding from the congress. and we need more funding.
what we've had is very sophisticated criminals masquerading as taxpayers and getting more and more sophisticated about how they masquerade as a taxpayer to get access to particular applications. it doesn't get them access into our data system. and the reason they're doing as i say is trying to figure out how to get around our filters. the good news about those is we were able to discover those. we had a bot attack on what we call e-file pins, where again, the systems we've been able to put in place and the software allowed us to determine that we had that attack and you could see it as we shut it down moving from country to country as the attacks continue to come on. so it's an important question. every time we've had one of those problems and in fact we've tried to respond to them quickly and publicly, sometimes we get yelled at because, well, get transcript for instance we saw the problem, we looked at it within last filing season and gave the numbers out. then it turned out if you did more analysis of the year
before, which the i.g. did, which we appreciated, there's another set of taxpayers affected. but our position has been we need to let people know as quickly as we can even though we may not know the final numbers. if we wait until we know the final numbers, that's several months down the road and we think we have an obligation to taxpayers as soon as we have the information to let them know. >> treasury secretary lew has said he wants to limit inversions. do you have any advice for him on how to do so? >> if we had any advice to him, we would have given it to him by now obviously. again, i think the secretary's made it clear there's a limit to what the irs and the treasury department can do under existing statutory authority. so the treasury and the secretary have made it clear that if we're going to deal with this problem effectively, we need legislation from the hill. ultimately, and it's one of the driving forces, if we're going to deal with a problem effectively, we really have to revise our tax code as it affects corporations who deal with internationally which increasingly includes virtually
everybody who's in business these days. they're either buying or selling or doing something internationally. so the treasury has done everything they can. we're still looking at another step or two we can take, but it actually -- to go further, we actually have to have legislation. >> this will be the final question, or two. >> oh. >> presidential candidate senator ted cruz has said he would like to abolish the irs. i know you probably don't want to weigh in on the presidential contest, but is that even possible? could one abolish the irs? and what repercussions would happen from that? >> well, that position has evolved, i've said, from the start. what that represents and there are other people talking about what can we do is a frustration with the complexity of the code and how difficult it is for individuals or corporations to work their way through. as i say most people want to be compliant, whether it's out of fear of being caught or basically feeling it's a fair system and it is the price of democracy. but the more difficult you make it the more complicated you make
it, the less sense it makes. i mean, the estimate last one i saw is we spend 6 billion hours with individuals filing their taxes. and you thought what construct i have use could those 6 billion hours be put to if they didn't fight their way through the tax code. it's stunning to think about. so clearly something needs to be done. we haven't revised the tax code in a significant way or simplified it in 30 years. so when you get to the point -- and there are proposals all over the place in the presidential primaries of what to do with the tax code and what to do with taxes. my sense has been that the idea of kind of abolishing it is shorthand for we got to fix the tax code. and then people talk about you can have flat taxes. the suggestion has been made, it would be nice if everybody could fill out their return on a postcard or one page. and the answer is that certainly would be, but somebody as i've said still got to read the numbers to make sure they're right and call people up or collect additional taxes if the numbers aren't quite right. and somebody's got to collect the $3.3 trillion.
so as i said in response to the question after my speech last year here, you know, if you want to call it something other than the irs and that makes you feel better, that's okay with me. but ultimately most of the people talking about let's abolish the irs or let's make it simpler all understand iing somebody somewhere who collects the information, audits it and makes sure it's accurate and valid and collects the funding. >> another presidential candidate, donald trump, you might have heard of him. >> i've heard of him. >> says he would like to release his tax returns but cannot during an irs audit. do presidential candidates have to wait for an audit to be completed to release their tax returns? >> well, as i've said on other occasions, and it's important for people, we take seriously our obligation to protect taxpayer information and their private information. whether it's their name, their activity, whatever they're doing with us is private. and it's protected by statute. so i can't comment on anybody's comments particularly about their own situation. what i have said is that even
when we're dealing with someone their tax return is their own possession. and they can do what they would like with it. and i would note general along the way presidents are audited every year. so, you know, anybody running for president who's going to be president can look forward to having their tax returns audited every year. >> what is the irs doing to remind those million or so people to file returns and claims that leave about $1 billion of refunds on the table every year? >> it's a problem we have every year that we try to give as much visibility to and the situation arises if you have a part-time job or don't get paid a lot, you may not have an obligation to file. but many people forget that they had withholding taxes paid, money was withheld from -- even if they were making a very small amount. and they're eligible to file and get a refund. and as you note there's a three-year statute of limitations. you got three years to catch up with that. and every year we publish the
amount that's not been collected. and we go by extent we can showing where all those people are trying to get people to understand that if they had had those funds withheld, they can file even three years later. but just as you all are going to file by april 18th or at least an extension, april 18th will be the end of the three-year statute of limitations for those people. and we're doing the best we can to alert them. i think back even if you didn't file, work somewhere they took taxes out of my pay. >> thank you, sir. before i ask the last question, i have a few announcements. quick reminder the national press club is the world's leading professional organization for journalists and we fight for a free press worldwide. for more information about the club please visit our website www.press.org. i would also like to remind you about some upcoming programs. on tuesday the club's international csp