tv Today in Washington CSPAN May 24, 2013 6:00am-9:01am EDT
>> that would make this a crime for anyone in the irs to target someone based on their religion please are political police. we have over 80 cosponsors. i think this is an important step to say this will never happen again because no one should have a supervisor walked in the office and tell them, based on a political belief and have that employee do it without understand that not only are they violating someone's
to take political action against people it was not within your responsibility as it actually was, and we're going to get to the bottom of this and i certainly hope that in future this is criminal and no one at the irs is -- >> human stated what i said. >> mr. wallen, when did you learn of the internal investigation the irs was conducting? >> i learn through whatever testimony. >> you do know about this early.
>> thank you, mr. chairman. mr. shulman, i want to go back over your testimony before congress. on march 27, 2012 you testify before the committee on ways and means. you have a chance to talk to mr. miller prior to your testimony? >> on march 22? >> march 22, 2012. in the time prior to that the show chance to talk pashtuns are testifying before congress. you prepare for that. did you speak to mr. miller before your testimony? >> to the best of my knowledge i did. >> okay. how about ms. lerner. did you speak to ms. lerner prior to your testimony? >> i don't know mistaken to ms. lerner before my testimony. >> okay. i want to just describe what the chairman said to you in a dialogue. you said we have seen some recent press allegations that
the irs is targeting certain and tea party groups across the country. question was been described as onerous document requests, delaying approval for tax exempt status, and that kind of thing. can you elaborate, this question is do. can you elaborate on what is going on with that? can you give us assurances the irs is not targeting particular groups based on political leanings? in response to the question you answered, this is ago, there is absolutely no targeting. now, what was the basis of your answer? >> so, i had received letters from members of congress i believe -- >> i know that. you received quite a few. >> on this issue i believe i received two but i'm not sure of the number before that testimony. and i said no targeting in the
sense, and you race the full testimony, that there's two ways for a social welfare group or a 501(c)(4) to start operating -- >> i'm not going to let you use my time on the. your answer was the operative language was there's absolutely no target. what was the basis of that statement? >> so -- >> obviously you are -- >> i can give you my explanation and to the best of my recollection what is in my mind, if you would like me to. >> yes. >> so, i said there was no targeting in the sense that there's -- >> you said there's absolutely no targeting. it was more than that. what i'm getting at is, you definitely give congress the impression there was absolutely no target, absolute no target, that's what you said. >> if you give me and i can actually explain it. it. >> i only have a short amount of time. if you can explain it quickly. >> let me first say i answered
truthfully based on information i had at the time. >> that's what i'm getting a. that's what i'm getting a. what was the basis of the information you had at the time? how could you sit there under oath, testified before congress and say there's absolutely no targeting going on? and put congress in a position to believe you're telling the truth. what was the basis of your understanding when you let congress to believe that there was absolutely no targeting going on? >> that's what i'm actually trying to say. >> okay. >> so, i said there was no targeting in the sense that a 501(c)(4) two options to operate. they could apply or they could start operating. there's no need to go through this application process. you can be a 501(c)(4), do your business and file a tax return at the end of the year. i said there's no targeting in the sense that from conversations that i have had
that these people have voluntarily com come in. so the question that even post to me was why are they getting all these questions, and i have said that it's normal to have this kind of back and forth. so that was one piece of my understanding. the second is my understanding at the time was that conservative groups, and this is to the best of my recollection -- >> i want to take back my time. i understand. >> conservative groups were not the only one getting these questions. that was my memory. >> progressive groups are also being targeted? >> and finally, i certainly -- >> wait a minute. now you are saying that they weren't being targeted because of the groups are also being targeted. is that what you're saying? >> no, that's not what -- >> that's interesting because that's what i just heard. >> i would love to explain it to you, congressman. >> please.
>> my understand at the time was complaints that come in about letters. i had a conversation about, are these questions normal, are these questions legitimate, are these things we should be asking? at no time, the best of my memory, was i ever given the impression that these were only -- >> okay, you've gobbled up most of my time. i just want to close with this. so after leading congress to believe it was actually no targeting going on, you learn later on that there's a list, there's a list of people being targeted. after telling congress that absolutely no one is being targeted, you learn that there's a list, a list of people being targeted, tea party, patriots, people who are critical of how the government is being run.
and what did you do after that point? you did nothing. you did nothing, by your testimony before congress. server, you misled congress. you misled congress. make no question about it. you told us one thing, when you learned, when you learned that our suspicions were true, when you learned that there was a list, you did nothing. you did nothing. you abdicate your responsibility to allowed congress to proceed under your prior information that was false, that was untrue. and you never came back. you never notified congress to say, sir, i give you the wrong information. i misled you. you never came back to congress to straighten out that impression. that's inexcusable, it really is. i yield really does. i yield back the balance of my time. >> the gentleman from -- >> thank you, mr. chairman. it was primarily conservative groups that were targeted, but
people all all political persuasions are very upset about this. president obama's said on may 15, he said inexcusable. and americans are right to be angry about and i'm angry about it. i will not tolerate this kind of behavior in any agency but especially in irs can the power it has and reach it has and all of our lives but as i said earlier it should not matter what political strife you are from. the highest official of the aclu here in the city said that even the appearance quote even the appearance of playing partisan politics is about as constitutionally troubling as it gets. with the recent push to advance federal agencies demanded donor exclusion for groups on both the left and right, there must be -- to prevent this from ever happening again. mr. george, will you promise us are committed to us at this time that you make it a high priority to make sure that something like this never happens again?
>> sir, i make a commitment to you t to do for, all of us to wk with the internal revenue service and others involved to help establish procedures to help identify and avoid this from occurring. i cannot obviously, sir, control what happens within the, approximately hundred -- >> thank you. mr. sharma, on march 26, 2 22, u testified there was absolutely no targeting when asked this by congressman standing at the ways and means hearing, and that's been covered several times already this morning. but there was an end to the irs review that was complete in early may just a little over a month later. you said that when you met with mr. miller you are assured that the site could have stopped. was that, so you took no further action. did you ever discuss this with anybody at the department of
treasury? any treasury official at all? >> i have definitely had no substantive conversations with anyone at treasury, and did not report that there was a list in that kind of thing. >> mr. wolin, when you learned that this has gone on, could you discuss this with at the department? >> well, i learned the details, congressman, when the report was made public a week or 10 days ago, and, obviously, at the department at that point we discussed it with the secretary and general counsel and others to make sure that we began to put in place the accountability, and also to make sure we put in policy and procedures that would make sure this wouldn't happen again, not just implementation of the recommendations that the ig concluded within his audit report but also to charge as the sector of the treasury has done the new acting commissioner of
the irs with a broader agenda to make sure that this was looked at carefully and to make sure he had a broader review to make sure this didn't happen again. >> let me ask you this. apparently one of these groups called coalition for life was asked, was asked by a irs officials about prayer meetings at the health and how much of their time was spent on further meetings and what went on at those prayer meetings. do you think a question like that is proper? >> know, congressman. i think the conduct that is outlined in the ig's report obviously is inexcusable, deplorable. i can't be more clear than that. it's obsolete outrageous. >> mr. shulman, do you think those types of questions should be asked in this situation? >> certainly -- >> about people, about religious beliefs? >> no, i don't. it sounds inappropriate to me spent a few minutes ago you said
there was another method, there's the 501(c)(3) and then the 501(c)(4). and you said there are situations where people don't have to apply. what we yo talking about there? >> my best understanding is that none of these groups of the 300 that are talked about or the 298 in the report actually have to apply for 501(c)(4) status. fatty 501(c)(4) can start operating -- that a 501(c)(4) can start opera and, can do all of its business and then can file what's called a form 990 which is the equivalent of a tax return for a tax exempt organization. and so i think that's an option that organizations have. >> that's what i thought you meant but i wanted to be clear on that. thank you very much. i yield back. >> now recognize potential to from the district of columbia. >> thank you very much.
trendy even granted that the seed was planted for something bad to happen, when somehow the interpretation of a law was changed from exclusively to primarily terrible, that's a terrible thing to have to take the words of the statute that has now been changed in a way that i'm not sure how people are going to enforce that, but one thing that is clear, that we see or something at least terrible in the absence of the normal kind of managerial oversight with respect to any federal agency, certain within the irs. i'm particularly troubled that the problems persisted for looks like a year and a half. because of what seems to have
been very little oversight from management at the headquarters. civil servants are doing their incompetent best i suppose. but i want to make sure that's what it was. i'd like to ask mr. george, because i saw something of your testimony in the senate when you testified that your audit did not uncover any evidence that the treasury suggested the use of screening criteria or oppose other screening criteria that was used. is that the case? would you indicate whether you asked that question? >> we did pose that question, congresswoman, and again in the response was that there was no direction from the department itself to those in the determination shoot it in
cincinnati, nor their affiliate office in washington. >> i ask these questions because it's the incompetence and the terrible handling of this has shaken confidence in the irs is bad enough, but it would be far worse if there were any evidence that there was outside influence outside the irs. and did you find any evidence that anyone in the white house in particular suggested that the irs target conservative organizations, or that they played any role whatsoever in selecting the criteria? >> no. but in all honesty we didn't look at the white house. we didn't question anyone as to
whether not they received any direction from the white house, and -- >> that specific question was not asked? >> that's correct. >> and the investigation which continues, do you intend to ask that question? >> again, this may seem like semantics, i want to be clear at this phase it's an audit steel, and so -- >> it wasn't audit them. but you ask questions. >> yes, yes. and even there it was -- >> i'm asking you in the continuing audit, do you intend to ask that question? >> at this stage i'm not in a position to say whether or not, because as it's going to be continued, we will do whatever the facts lead us, congresswoman, but i have to say that i just have to leave it at that. we will go wherever the facts speak that may suggest, mr. george, it would be appropriate to ask whether anyone outside of the irs without fingering any particular agency or any particular individual, anyone outside of
the irs, i want to be clear on the. >> mackler from a answer then? we did ask anyone outside the irs -- >> so you take that to comply the white house anybody else? >> at this stage, yes, we do. >> i guess it's mr. wolin to ask, the deputy secretary. did you yourself ever suggest, or did you yourself ever propose that irs personnel use of screening criteria of any kind to target conservative organizations? >> absolutely not. >> or other organizations of? >> absolutely not. >> did you order, indeed, or did
you approve the inappropriate screening criteria used by irs personnel in cincinnati oh how? >> i did not personally. >> well, trying to i've been much think the committee is pursuing the appropriate investigation and i believe the board is all of if we get direct answers from all those involved we will know it needs to be done next and i do want to say, mr. chairman, that whatever we do, the difference between exclusively and primarily has to be clarified so that i think there is proper direction from the congress so that the irs can in turn give the proper direction. thank you very much. >> mr. shulman, you testified yesterday and today and you said last ringgit a partial set of facts, he didn't have the full story, didn't fully understand what took place until you read the inspector general's report, is that accurate?
>> that sounds accurate. >> in the two years since this targeting was taking place, did any member of congress contact you, write you about this particular subject? did you get any letters from congress? >> yes. >> you know how many? >> i do not. >> we got some information yesterday, a list of correspondents regarding bibles once he force and we count them up, 100 through two different members of congress contacted you on the appropriate time for you. did you read any of those letters? >> the letters that i remember about this set of faqs -- >> did you read any of them? >> started coming in february of 2012. this is from the irs, 102 members of congress contact you about 501(c)(4) status. did you ever read any newspaper articles about this issue in the time period that is in question, mr. sheldon? >> to the best of my knowledge,
yes. >> do you know how many news stories, hazard a guess, to place in the country we are focused on? >> i wouldn't guess. >> in our office with a google alert pick my name comes up, they find out what the press is saying about me to let me know. do you have that much of a google alert when stories about the irs come up, the day, but, you know, about those to? >> idriss has a press clippings that is on the record basis when -- >> would you hazard a guess about how many major news stories took place in this time period when the targeting was going on? >> i wouldn't. >> forty-two. we just did a quick search. 42 major news stores. here's what everyone wants to know. you have 132 members of the united states congress contacting you about this issue. 42 major news stories about this issue in the time period in question, and you never checked it out. you never researched it. i mean, are you sure you're
being square with us today, transport? >> i'm actually telling you the truth today. >> that's interesting because mr. lynch just cited your testimony from a year ago and you used similar language. went in front of the ways and means committee. can you give us assurances that the irs is not targeting particular groups? tanks are bringing this up because i think there's been a lot of press about this. there was he found out. had a lot of moving information so i appreciate the opportunity to clarify. first, let me start by saying yes, i can give you assurances. i don't think you can say any stronger. we pride ourselves on being nonpolitical, non-partisan organization. that's why people are wondering if you're being square with us today because you said you could sure everyone, the american people and the congress than that nothing was going on. and the gentleman sitting beside you just issued a report last week that said what you told the congress, what you told the american people a year ago is absolutely wrong. and you are sure you're being square with us?
>> excuse me? >> do you ever talk to anyone at the white house about this, mr. shulman? >> about this issue? not that i remember spent do you ever go to the white house? >> i -- >> do you ever go to the white house to go to meeting? >> i had occasion to go to the white house spent how many times? >> many times around budget and policy matters of tax and other things like -- >> got a number? any idea? we just looked at the white house logs. we couldn't get 2012, but in 2010 and 2011, 118 times you were at the white house. that's a lot. i bet these democrat members of congress and this administration hasn't been the close to that many times. 118 times are at the white house, 103 tumors of congress contacted you about this, 42 major news stories about this
very subject, and you told congress a year ago, i can give you assurances nothing is going on, everything is wonderful, we are not targeting conservative groups. i mean, that's why the american people are like, this is unbelievable. are you sure you didn't talk to anyone at the white house about this issue, mr. shulman? >> about singling out conservative groups for special screening? >> that's what we're talking about, isn't? >> absolute assure i did not talk -- >> it didn't come up in a casual conversation after 132 members of congress contacted you about it? are you sure you didn't bring up to anybody at the white house? >> not in my memory, and it wouldn't be appropriate, and so i certainly believe i did not have any conversation. >> recognize mr. lynch i think
is, excuse me, mr. connolly is up next the questions. >> thank you, mr. chairman. mr. shulman, you were appointed by president bush when? >> i was nominated in 2007, confirmed in 2008. spent and you served until -- >> november 2012. >> scissor both in the last of the bush administration and through the first term of the obama administration, is that correct? >> correct. >> there might be any reason she would be at the white house. what would be some of the reasons you might be at the white house? >> the easter egg roll with my kids -- >> well -- >> questions about the administer building of tax policies they were thinking of, our budget, something the department of education
streamline application processes for financial aid. >> i just want to be clear, you're very aware of the fact that you under oath to a? >> very aware of that spent and are testimony to be very clear, in response to mr. george's question, is that you've never have any conversation with respect to the subject of the subject of this hearing, with anybody at the white house although you at the white house on many occasions? >> just so i'm clear, i have no memory, would've been appropriate, would not have been appropriate to have a conversation with anyone at the white house about the subject of discriminating against conservative groups in any part of our -- >> let me be real clear about that, because you answered a series of interrogatories, and listen to your answers i want to be clear, no one from the bush white house and the one from the obama administration white house
have called you and said, there's a list of groups, an umbrella of titles, want you to be particular sensitive about if they apply for status speak with no. no one ever talk to me about speed that never happened, correct? >> right. >> thank you. mr. george, i'm looking at your report and i want to make sure i understand. we are talking about this like it happened in a vacuum, you know, some sinister plot was hatched by normally kind of, you know, colorless bureaucrats in cincinnati, to get somebody for their political beliefs. now, was there a triggering of this that flooded the irs with new applications between 2010 and 2012? >> we have had some difficulty, congressman, hitting a definitive answer as to exactly
how this began, the genesis of this program. >> can i just hope you a little bit? i'm looking at your own report, and what seems to be the triggering event is the supreme court rulings citizens united. the number of applications between 2009-2012 for 501(c)(4) come even though mr. shulman points out actually it's sort of redundant, but several, from 1751, to 3003 and 57. that's in your report. >> there's no question that that event, the ruling of the supreme court came down. >> data irs resources expand its did congress rushed to irs aid and say centura flooded with new responsibilities, here's some more resources? because you cited bad training so you can handle this, if that happens because i would have to defer to mr. shulman.
>> could you repeat the question? >> were you flooded after citizens united to do with of audience to get where we given resources? no, no. >> all right, mr. george, again i'm looking at your report and its the pie chart i want to make sure i understand. here's the pie chart, and we are focused particularly on conservative groups. of course, i think all of us feel as americans irrespective of your political beliefs nobody should be targeted. you know, and the proper exercise of the rights to express themselves politically. you have a pie chart with 298, is that 298 cases you looked at? >> that is correct. >> if i'm reading this right, 72 of those quirky party, happening tea party in them, is that right? >> that is correct. >> and 11 had 912, is that right? >> that is correct.
>> thirteen had -- >> correct. >> 202 are listed as other. were those all conservatives or could some of them have been -- >> were unable to make a determination, sir, because in many instances the names were neutral and that you couldn't necessarily attribute it to one particular affiliation or another. >> i know i have very little time left, but i know the chair has an indulgent with my colleagues, all of us as americans don't want the chilling effect of any government agency suppressing the expression of thought or the right of every american to express himself politically irrespective of those beliefs. two what do you attribute this, what seems to be a rogue element in cincinnati, it was told once to stop, and ignored it or returned. just a natural progression? in cincinnati. what were they doing that they
thought was proper a fairly? >> it was, the conclusion that i can give you today, pakistan, is that it was a lack of oversight from management, both in washington primarily, and the fact that they did not go back to ensure that the direction, instructions that were given to the determination janet within cincinnati were being complied with. once they found out that the initial and appropriate action that occurred, attempted to make corrective action and did direct a corrective action, they failed to go back to ensure, follow to make sure that it was being complied with. so mismanagement, a lack of fulfilling their responsibilities that they have. >> thank you very much, mr. george, your test will come and thank you, mr. chairman. >> real quick follow. the one at 18 times you in the white house, who were you
meeting with? >> first of on the familiar with the -- >> from the white house logs. >> i'm assuming that it counts when i go to omb which is budget office for resources, et cetera spent a count when you go to the white house. that's when it counts. who did you meet with? >> i met with the pride of people. >> what was the main subject you talked about? you talk about one of 18 different things? there was some themes and focused? >> the themes i would've talk to people at the white house about would have been our budget, within about tax policy, fiscal cliff, would have been about streamlining the financial aid application, would have been when the tax for airports speech did you talk about implication -- implementation of the affordable care act? >> implementation of the affordable care act would've been one of the themes and the could even more. i'm not prepared to give an
exhaustive -- >> which once consumed the most of your time of those subjects you just listed? >> probably budget, general tax policy and the affordable care act specs of the affordable care act was important to talk about it a lot. >> he irs has a major -- >> exactly and you started targeting the very groups they came into existence because they oppose what your document in the white house 118 different visits. you started targeting them the very month the affordable care act became law and legitimate any conversations about the subject matter at hand today on the 118 visits women of those visits were about implementation of the affordable care act and the groups you're talking or targeting were opposed to the affordable care act. that's a question spent on site. what is the question? >> you went to the white house 118 times. one of the key subject to talk about what the implementation and these horsemen of the affordable care act. going on in your administration, your time as commissioner,
targeting of groups they came into existence because they oppose the affordable care act and you never brought it up in any of those conversations when this was a major topic of conversation? >> no, i did not. >> that's all it wanted to know spent nonpartisan, non-vocal position tried to intimate the laws on the books, would've been inappropriate and nobody ever asked me nor did i eve ever -- >> that would always been well and good but mr. george issued a report that just had the opposite. that's all point while we are you. you said you give us assurances it wasn't happening. mr. george issued a report said it was. here at the white house talking by the affordable care act. you never any conversation. the american people are supposed to believe that. the gentleman from utah. >> mr. shulman, in your confirmation and on january 29, 2008, you were asked by senator wyden and he said what do you intend to do to make sure that the irs on your watch is not
used as a political tool? and your response was, that's a great question. i believe that is in club important the irs be fair, as seen as a nonpolitical nonpartisan, that really is a public service organization. i would be a public servant serving all americans taxpayers, and really the government. how would you, based on the stand, basin and the uk, will lead a great what you give yourself and your tenure and what you did there? >> look, i tried every day to be a good leader and public servant speed i'm asking you for a letter grade on your assessment of how you did. >> there was clearly a breakdown in our determination to -- >> i know you know a letter grades are. spent i'm not going to grade myself. >> these 118 visits to the white house, did you ever have a
discussion about 501(c)(4)s? >> first of all, you know, this is the first i've had an accounting of the -- >> did you ever go to the white house gate don't accept the premise that there were 118 visits to the white house. may or may not be true. so let me just outcome stability for the record broadly if there are more questions about that. >> did you ever talk about 501(c)(4)s at the white house, yes or no? >> our determination process or -- >> anything about 501(c)(4)s? together talk about the citizens united case? >> not that i remember. >> you never had a discussion? >> not that iran member. >> no, discussion around 501(c)(4)? >> not that i remember. >> you never had one conversation? >> not that i remember. >> you said he first heard about this problem in spring of 2012, correct? >> i heard that i first heard about the bolo list in the spring of 2012.
>> when did you first hear if there was a targeting of, based on political beliefs, when did you first hear that? >> icon to the best of my recollection, it was in the february-march timeframe of 2012. >> but let me -- >> also i -- >> you can't. on june 3, 2011, the chairman of the ways and means committee, dave camp, sent you a letter. june 2011, 2nd paragraph, now, with no warning the irs appears to selectively targeted certain taxpayers who engaged in political speech, and he goes on, how is it that he, the chairman of ways and means, as you, the head of the irs, a letter like this and you say you know nothing about it? >> so, that's where i was going to go. this is a very separate -- >> no you weren't.
>> this is a very separate meta. that's a gift tax matter that i'm aware of the. >> this is exactly about political speak and it continues to go on. then you hear from charles pisani, who sends a letter on october 6 requesting information about the tax exempt sector. how is it that it takes you so long and you say you don't know this? and mr. wolin, you said you took immediate actions. what happened with all of these letters? mr. shulman, when you get a letter from a member of congress, who else is copied onto? who else do you give it to? you're not the only one who sees the letter. >> letters is usually as far as i know the process going for congressional affairs office, they get farmed out to the appropriate staff who are subject matter experts to try to get the best answer. >> does mr. wolin get copied on the? >> not that i'm aware of. >> disney but at the treasury department get these outside the
irs? >> i really don't know. >> does anybody -- how could -- does anybody get these letters at the white house? >> at the white house and? >> at the white house. >> not that i'm aware of. >> so when you get a letter from the chairman of the ways and means committee, or the chairman of this committee, chairman of any, you're telling me you had no idea where it goes and what happens? >> to the best of my knowledge, he goes into our congressional affairs shop, someone within the or station answers it, comes up, if it's for my signature, the return, that would come up to me for review. most of the tactical and also just note of all the letters people are talking about, there's a lot of individual constituents mail that comes into the irs -- >> so you get a lot of mail. >> much of which i don't see. >> ducey all the letters are members of congress? >> to the best of my knowledge i do, the ones to me speaks a you got 132 members of congress -- >> let me repeat a good something at someone else will
take care of, i might not have seen it. but the ones you're referring to, mr. boustany, mr. camp -- >> mr. hatch, the 12 centers, -- 12 senators, did you see that letter speakers yes. >> when he said this is a lie by omission, how do you respond to that? >> my belief is that i'm first of all, the letter in question was not under my signature. >> you have made a dash that i want to know what you think of this idea of lie by omission and? >> i disagree with it. >> yield back. >> that will have to conclude. we now go to the gentlelady from california. >> mr. chairman, thank you. mr. shulman, you've been ahead of the irs for over five years. you are in charge of the internal revenue service, correct and? >> i was head of the irs for four years and about eight eight months. for years and eight months. you got 132 letters from members of congress concerned about
targeting, and you send them to affairs to do with. did you feel any responsibility to go to the cincinnati office and find out for yourself what was going on? did you ever make a visit to the cincinnati office? >> i guess i don't accept the premise that i got 132 letters about targeting. i certainly wasn't aware of that number until now. i knew about two questions -- >> regardless, when congress contacted you whether it's 12 senators or members of this committee, i mean, doesn't it alert you to the fact that if their smoke maybe there is fire? did you ever visit the cincinnati office? >> i visited early in my tenure the cincinnati office, which has many different operations, but i don't want to cincinnati during this 2012 timeframe. >> do you take responsibly for what happened in the cincinnati office? >> do i take responsibility for the last?
>> yes. >> being done? i to take personal responsibility for their being a list with criteria put on it. but i do accept the fact that this did happen on my watch. >> so you don't take responsibility but you recognize the fact that it happened under your watch? >> i recognize that this happened on my watch, and i'm very sorry that this happened while i was at the internal revenue service. >> one of the problems we have here is people are unwilling to take responsibility for actions that happened under the command. and yo judy duty as far as i'm concerned to find out what was going on in the cincinnati office when members of congress, 132 of them, or 50 of them, or 10 of them informed you that they think that there's some kind of targeting going on. and if that doesn't elevate your concern and interest, there's
something fundamentally wrong between the way congress interacts with the administration and the bureaucracy. now, mr. george, the law is that a 501(c)(4) must operate exclusively for the social welfare. that's what the law says. direct? >> yes, that's correct. >> exclusively for social welfare purposes? >> yes. >> and somewhere along the line the irs came out with a regulation that reduced it to primarily, is that correct? >> that's my understanding. >> so does the regulation trump the statute? >> while i'm not here to give legal advice -- >> but -- >> as an attorney, that is wednesday that a regulation does not trump a statute but a regulation can be used to elaborate on the intent of the statute. >> if we just look at those two
words, exclusively a primary, there's a dramatic difference, correct? >> yes, in my view. >> regulation can't trump statute, that everything has been going on a relative authorizing 501(c)(4)s if they're not exclusively being used for social service purposes is violating the law, correct? >> i would say yes, but you have to keep in mind there maven court interpretations that is between the passage of the legislation and the imitation of, passage of the statute and implementation of the regulation. and i don't have the history. >> in your view of this situation have you identified in cincinnati the individuals who have developed this bolo list? >> we have not yet. >> why not? >> we have had some difficulty in terms of getting clarity from some of the irs employs we've
interviewed. keep in mind this is an audit. the people we've been interacting with her not under oath, and so if this matter develops further and changes its character, that might change the willingness of people to be more forthcoming with information. >> no, the committee yesterday interviewed the manager of the ruling an agreement office in washington, d.c., and for at least part of the time period of question she oversaw approximate 300 employees in cincinnati unit that determines whether or positions qualify for tax-exempt status. she said that she was the first person in washington office to learn about the use of inappropriate criteria. do you agree with that? is that in your report? >> i've no information on that, but if you'll, if i can beg your indulgence for one minute.
>> the gentlelady's time has expired. >> we do not have any information on that. >> i thank the gentleman. we now go to the gentleman from michigan, mr. walberg. would you give me two seconds of yielding? to the gentlelady from california, the center for american progress and organized for american action, and others, are 501(c)(4)s, this is not new. president obama uses a 501(c)(4). >> would the gentleman yield? >> i took the gentleman's time. spent i will yield briefly. >> thank you. mr. chairman, regardless of whether it's a democratic, a progressive, a conservative or a republican organization, loss we have should be enforced. and the statute was trumped by a regulation. we should all be concerned about that. i yield spent if i can clarify
for all of us, is changed in 1959, there's a whole lot of water over the dam in 1959. and i think it's important today to realize that without congressional action, trumping a 1959 i the irs would be legislating without a doubt and i think the ig in concluding in his audit told all of us a century that the ways and means committee has infected has to deal with, which is do we really want it the way it is as it has evolved and been used but ultimately a decision since 1959 has caused organizations, and perhaps all of us have grown to like, i don't see trees like the american lung association endorses legislative initiatives as you know, in california. they promote initiatives and so on. they do it as a minority of what they do. so i think one of the challenges for this committee and i would
only ask us all to think about it in this term this ways and means has authority to change the law or to essentially trump a regulation. in our case we have primary responsibility to ask questions like should the ig have known sooner, should transport have been a better measure than he was, and if so, how do we ensure in the future that mr. wolin, for example, would, in fact, have known and known because of this and. i think that's our lane. and i would only say that as chair because our lane is not unlimited. the jurisdiction of the ways and means as the laws governing the irs does not belong in this committee. i do all of us on this committee are very proud, and we do a lot of work. the one thing we don't do is we don't ask tax law. although we all have opinions on it, for sure. the gentleman is recognized. >> thank you, mr. chairman and
ask in in this consent to have my full five minutes restored. i mean, it's been interesting listening to the accounts or 118 visits to the white house, mr. shulman. no talk about this specific issue, no talk about related issues during those 118 visits, 130 letters coming from members of congress, 42 articles in newspapers. and, frankly, we just had opportunity now having the press to get engaged with. but 42 over the course of time. i also look at a train of events, september 2010, senate finance committee chairman baucus wrote a letter to the irs asking the irs to serve a tax-exempt organizations to ensure that political campaign activity is not the organization's primary activity. october 2010, senator durbin wrote to the irs to review the purposes and activities of several tax-exempt organizations.
february 2012 senator franken, merkley, schumer, shaheen, udall and white house wrote to the irs about this issue. 32 democrats in march of 2012, house democrats wrote to the ins in the widest ask that political activity of tax-exempt organizations be investigated. july and august of 2012 senator levin sent letters to the irs and said that the irs appears to be passively standing by while organizations clearly ignore the tax code with no apparent consequences. now, this to me seems like a significant amount of requests for information, and concerns that private citizens, organizations seeking tax-exempt status who happened to be of the conservative side would be checked on and questions. i find it difficult, mr. wolin, to understand how that didn't come across your train of reference in response to me early on but did you ever
discuss congressional interest in the way the irs was handling local nonprofits with the president? >> i did not, congressman, never spent did you ever discuss with anyone at the white house or any agency outside the irs? >> i did not, congressman spent why didn't you discuss this when you knew it was such interested congress, and gene congress was apparently not satisfied with whatever action the agency had taken thus far on either side of -- >> frankly, competent, the correspondents to which you refer did not come to me that i did was in general as you suggested addressed to the irs, and i frankly was unaware of the concern until -- >> but treasury has intense responsibility and ought to intense scrutiny over the irs, correct? >> i think it's important for me to reiterate that with respect to the details of tax of administration and tax enforcement it's been a
long-standing practice of treasury department spending administrations of republican and democratic presidents not to get involved in those details specifically because we don't want to have political influence over those kinds of detailed activities with respect to taxation. i think this is a hearing and a subject matter that makes clear why that's not a good idea. >> not a good idea. mr. shulman, when did you learn about the second ball again and the failure of employees to follow explicit direction for this? >> about the fact that there was a bolo and the nascent entrant three and the employees didn't follow directions? that i didn't learn about until this last week when the report came out. >> well, were you involved in any discussions about the people who are being insubordinate in the cincinnati office? >> not that i remember. >> in politico today i see, this headline here, heads will roll
at the irs -- heads will not roll at the irs. labor rules give workers protection. the amount of an ineptitude in pursuing that a fifth amendment was requested by ms. lerner, who is not here, we have to assume that there is some concern about criminality as well. what, what does it take for someone to get this through the irs? >> you know, at the irs there is procedures that people follow, you know, workers -- >> and people don't follow i would guess. >> and there's a union, so depends if it's somebody in union or not pick the best of my knowledge, it's the kind of procedures you would think about in any organization. >> while you were commissioner
-- [talking over each other] >> while you were commissioner, for what reasons did you discipline some individuals at the irs while you were commissioner? >> inappropriate conduct, not doing their job, those kind of things. >> wow. and we missed all of that. i yield back. >> i thank the gentleman pic we now go to the gentleman from -- >> thank you, mr. chairman. gentlemen, i want to say i'm deeply troubled, and i speak for the entire panel. we are all deeply troubled by what has happened at the irs become perhaps the most troubling part is that the irs has been revealed to have targeted groups for their political beliefs, their political leanings. it's an outrage if this issue, and i want to drill down a little bit with you, mr. george, you are the inspector general.
last week you testified in front of the house ways and means committee to the effect that from your looking into this matter, what do you call an audit or an investigation, from your looking into this matter you saw no evidence that i was employees were politically motivated in their creation or use of the inappropriate screening criteria. was that essentially your testimony? >> that we received no evidence during the course of our audit to that effect, yes, sir. >> all right. that doesn't really square with a headline that the groups were targeted by the irs for their political beliefs and clinical leanings, and i want to ask you, i mean, isn't it true, people do things for a reason. people at the irs came up with improper ways of going about their business, improperly triaged groups with political
sounding names to the top of the list for extra scrutiny. if they did those things and it wasn't for political reason, why did they do that? >> congressman, there are reasons for the irs to issue, be on the look out type of directives, and without violating, i don't want to say secrets, without giving the bad guys away of avoiding detection. i will point out that in the case of terrorists, like terroristic activities both domestic and international, there may be a reason for the irs to be on the look out for a particular type of application or something of the like. >> well, one thing that mr. connolly mentioned earlier this morning was the doubling of the applications that we saw
after the supreme court's decision in january of 2010 in citizens united, and that's true. is that correct? >> it is correct but i want to make sure that we are clear about that. our audit did not say this was as a direct result of that. it was coincidentally. >> and you're anticipating my next question. whether or not we know there was a direct relation, we don't want to engage in -- whether or not we know what the cause was, we know that the applications doubled starting in 2010, right? >> that's my understanding. >> so we are the workload doubly. we've also established there were no additional resources given to the irs to do this work. is one of the possible explanations that the staffers who were not acting for political reasons were actually acting to streamline their own work to try to get through a
twice as high pile of work in a streamlined fashion so that they could actually get work done? >> congressman, there are certainly valid reasons for the internal revenue service to try to become more efficient in the way they identify these types of cases. however, it is entirely inappropriate for them to use certain categories in which to accomplish that. >> exactly. one thing i want to ask is, i think you testified you have a really zero in on individuals because you don't kind of, not an investigation is that right? >> that is correct, sir. >> why, mr. george, in your testimony you said you asked by several members of congress to do an investigation, why have you not done one so far? >> mini of our activities are covered by privacy rules and again in some instances, during the course of an audit if an investigation were initiated,
the audit would have to cease because of conflicts of -- >> to do an audit first and then move to an investigation. i hope you will do that and want to finish with this question. did the irs is improper priorities in of certain groups -- prioritizing a certain groups, did that lead to any actual incorrect determination of the tax-exempt eligibility of any groups? i'll open it up to all three of you gentlemen, do any of you know, it is proper -- improper conduct lead to improper decisions? >> i will say that this action led to the fact that not a single application for this status, his tax-exempt status was denied. they were delighted. they were delayed for years at times, but not a single one of the ones that we examined were
denied. so it does raise questions in that regard. >> mr. shulman? >> not, not that i'm aware of what i would defer to the inspector general who has done the review. >> mr. one? >> i have no knowledge of this to i, too, diverted inspector general is looked at this. >> i yield back. >> just to clarify what the gentleman was asking, none were denied but by definition not granting them is, in fact, not allowing them to happen. ..
>> there was not a marked increase, and they began targeting with just one tea party application and then expanded it? >> they did, yes, sir. >> thank you, i think that makes it -- oh, one more thing. there were 479 or so of these tea party groups that were targeted in total. were there any bolos issued for progressive groups? liberal groups? be i'm assuming that your investigation -- we can't see them -- your investigation showed liberal groups that were not stopped, is that correct? >> sir, this is a very important question. i beg your -- >> sure. >> the only cases were the ones that we described within our report. there were other bolos used for other purposes. for example, there were lookouts for indicators of known fraud
schemes so they could be referred to the group that handles those issues, for nationwide organizations there were notes to refer state and local chapters to the same reviewers, rather. as we continue our review of this matter, we have recently identified some other bolos that raise concerns about political factors. i can't get into more detail at this time as to the information that is there because it's still incomplete. we've uncovered, rather, because it's still incomplete. and there are 6103 issues here too -- >> so, clearly, it's fair to say, though, that there was a bolo for tea peat -- tea party but not for moveon or progressive. >> i'm not prepared to give you an answer at this time. >> so are you saying today there
were over 501c4s not previously identified during your ig audit that were, in fact, or targeted and held in a similar way? >> i cannot give you a definitive answer, sir, at this time, but i certainly will. >> i only ask if there's at least one. are you aware of at least one in which they were targeted politically but did not fall into this current report we have before us? i'm not asking for privileged information. >> no, no, no -- >> i'm asking for one. >> the purposes of the audit that we conducted which was to determine whether they were looked for in the context of political campaign intervention, there were no others. >> today a preview of next month's presidential elections in iran. the project on middle east democracy hosts a discussion on the candidates and the issues. watch live coverage at 10 a.m.
eastern on c-span2. today, the congressional internet caucus advisory committee debates online privacy issues. panelists examine whether the do not track law is yielded to protect -- needed to protect users and consumers. live coverage at noon eastern on c-span2. thursday, members of the house passed legislation to head off the doubling of student loan interest rates on july 1st. the bill would allow student loan rates to reset every year based on ten-year treasury notes plus 2.5% for stafford loans. this debate is just over an hour. >> we're here today to address e crisis of washington's own making. several years ago congressvera diseased politicians -- decided politicians, not the free
market, were better equipped to set student loan interest rates politicians set a fixed rate for all loans and then decided to advance legislation based on a campaign promise that would temporarily pause this rate for subsidized student loans. last summer with the expiration of the lower rate scheduled for july 1, 2012, debate reached a fever pitch. the president began calling on congress to prevent the increase that his own party set in motion back in 2007. wanted to see interest rates double, particularly at a timedb when one out of every twoever college graduates was strugglin to find a full-time job. but we need to move away from a system that allows washington politicians to use student loan bs as bargaining chips. when congress approved legislation to temporarily stave 5:the interest loan increase, my
colleagues led our support with the practice that we would use this time for a long-termth t solution. the smartest solutions for students act accomplishes this goal by simply moving all federal student loans, except perkins loans, to market-based, interest rate system. proposal that was actually put forth by the president earlier this year. the smartest solutions for students act is a narrow piece of legislation that'll provide a lasting solution to problem facg the student loan program. unfortunately, mr. speaker, som critics would rather kick the can down the road and simply extend the current arbitrary rates at a taxpayer cost of roughly $8 billion. they want to continue the failed status quo and leave politicians in charge of setting rates. earlier in this week "the washington post"es called it a, quote: weird fact, unquote, that student loan interest rates, quote: aren't pegged to anything
real, just to the whims of o congress which inevitably usesll student loans as political plays things, closed quote. students shouldn't have to watch as washington holds their interest rates hostage each election year, deal with the uncertainty that comes with waiting for politicians to cobble together another temporary fix to keep interest lates in -- rates in line with the market. we have anod opportunity to gett politicians out of the business, to provide students with more su stability in the long run but putting it into quick fixes, and we have an c opportunity to bui upon common ground with the administration and advance avanc bipartisan solution that's a win for both students and taxpayers. i urge my colleagues to promoment the act and reserve the balance of my time. >> chair recognizes the gentleman from california. gentleman's reek niced for --el recognized for five minutes.
[inaudible conversations] >> mr. speaker, in little more than a month, the interest rateo on loans to millions of the neediest students will double from 6.4% to -- 3.4% to 6.8%. with total student loan debt already surpassing a trillion dollars, this congress needs to stop that interest rate hike, that doubling of the interest rates. but rather than make it more affordable for students and families to pay for college,ch this congress in this chamber is debating a bill -- i know people won't believe this -- but we're debating a bill to make it more expensive for families and students to achieve a college education. at a time when college costs are rising and historic low interese
rates, the majority is asking us to accept the bill that would increase interest rates.d in and even though the student rate is scheduled on july 1st to double from 3.4 to 6.8, the bill presented on this floor today id worse than that for students ana their families. it increases the drag on the economy that the student debt in to families and to young people trying to seek a job and to seek to form a family. this bill so -- is so bad that it means more than the doubling of the interest rates.g of how do you think that that has anything to do with the market rate? according to the congressional research service, when they look at this bill, you can see that under current law interest rate they'd pay 4,000, under doubling to 6.8, they would pay $800 in
interest rates, and under the republican bill the, the families would pay more than $10,000. how could that possibly be happening in this economy when people are struggling with this interest rate? this cannot be allowed.er and you can seees here that theo parents who may have to contribute something and then would take out a loan to helpoud this child complete a college education, they're going to pay more than $35,000 over the life of those loans than under the current law, and that's what we've got to stop from happening. and so what you see is that when it's all said and done, this bill asks students over the next few years to pay more than 3.7 billion, almost $4 billion in4 i increased interest rates.ncre no wonder this poor student has a headache. no wonder this parent's pounding
on their head thinking what am i what am i going to do? what do they say? we have a market rate here. well, many in americans, certainly middle class families and low income families willmili remember the last time we had this kind of a market rate.ha they have a teaser rate for your first year. they'll have a lower interest rate. so you have a teaser rate. but next year that teaser rateat rate. next year youat get a new rate.y when you take out another loan, you get a higher rate. and when you're a junior, you take out a higher rate. h and when you graduate, they take all your loans together and give you a higher rate. does that sound familiar to people? marketplace. that's the marketplace when you choose to crush the people who are borrowing the money. the president has a market ratey he's said many times he's using the markets to set a realistic rate. but anyway, he sets the rate,
it's deficit neutral. as he sets the rate, the minimum we tried to offer was deficit neutral. he saves those students about $30 billion over the life of those loans. you get the difference? yes, the market's the market. but you can pick the worse of market, you can pick the best of the market. now, they have options. republicans last night in the rules committee had options. there was an amendment offered to keep rates at 3.4%, they rejected it. i offered the president's market approach, they rejected it. then mr. heck from the, mr republican side of the aisle from nevada offered to say let's provide incentive to make sure that student, in fact, continuei to pay on time as they should ay the market would do because youk want to incent good behavior because you get more of it. you they rejected that. mr. rice from south carolina went before them as a member of the republican caucus, very
concerned about the interest rates in this legislation, very concerned about what's going to happen to these families.mili he thought they could lower thee interest rate, stick with the market principles, they said no. so all you get today is whether you want a solution that is worse than the doubling oftee the interest rates on july 1st. that's not an answer for i yield back the balance of my time. >> thehe gentleman's time hass i expired. the gentleman from minnesota isr recognized. >> thank you, mr. speaker. i'm now pleased to yield to thee gentleman from wisconsin, two minutes. >> the gentleman fromeake wisconsin's recognized for two minutes.ed >> i rise today to support h.r. 1911 because it would put in place a long-term, market-basedo solution to federal student loan
h.r. be 1911 moves thedi discussion forward.sc to help students manage thef th repayment of their loans than t ever higher interest rates subsidies. income-based repayment, an idea that originated with milton friedman and was advocated by presidents reagan, clinton and obama, is better for students and taxpayers. tax well, we have an income-based repayment option now, it doesn'n do enough to protect students or taxpayers. therefore, i've introduced legislation to make neededi reforms. with today's bill we can break free from this debate over interest rates and focus on real reform to help studentsst struggling with student loan debt, so i'd urge passage of h.r. 1911 and yield back the balance of my time. >> gentleman yields back. the gentleman from california's recognized.
gentleman from texas., >> the gentleman from texas is recognized for two minutes. >> mr. speaker, i rise in stron opposition to h.r. 1911, the republican bill to make college more expensive. in america we often speak of the importance of expanding educational opportunity and supporting students in achieving the american dream.achi unfortunately, our student loan debt crisis is crushing the dreams and aspirations ofir students and college graduates.d as congressman miller said earlier, today student loan deba exceeds $1.1 trillion according to the consumer financial protection bureau. student loan debt surpassed total outstanding credit card debt for the first time in 2010. these staggering figures are a wake-up call for developing a long-term solution that helps,rs
not harms, current and future borrowers. as a result, it is shocking thar the majority party would bring a bait and switch scheme to the house floor. a bill that would force be students into loans with skyrocketing interest rates. i find it shameful that h.r. 1911 would reduce the federal deficit on the backs of students and parents by saddling them b with almost $4 billion in4 additional loan interest charges and leave students worse off than if congress simply allowed double on july the 1st. high levels of student loan debt can limit where college graduates and live and work, it can affect the kinds of careers that students can follow. high levels of debt can create
obstacles for young people who hope to start a family, to purchase a home and save for retirement. to be clear, students andfa families deserve more from u.s. congress, not less. for these reasons i urge my colleagues on both sides of the aisle -- i need ten seconds. >> additional ten seconds. >> gentleman's recognized for a. additional 15 seconds. >> i urge my colleagues to oppose h.r. 1911. i suggest you do two things. one is work to prevent interest 1st and, second, work to make college more affordable and accessible through thee re reauthorization of higher education act. >> gentleman's time's expired.fr the gentleman from minnesota is recognized. >> thank you, mr. chairman. i want to yield two minutes now to the chairman of the health subcommittee, the gentleman from tennessee, dr. roe.man >> the gentleman from
tennessee's recognized for two minutes. >> thank you, chairman. thank you, mr. speaker. i rise in support of the smartei solutions for students act. this is a student loan debt, as i agree with my colleagues on the other side of the aisle, iss a huge issue in this country. and how did we get to the current rate of 6.8%, i asked myself. in 200k 6 the congress decided that interest rates were toocide high, so they wanted to hoer the interest rate -- lower the interest rates, they found out they couldn't afford the cost of it.ing it created abu fiscal cliff for loan rates. so we voted to extend it more one year to give us time to havn a permanent solution for this. the permanent solution we're offering is to simply treat a student loan like any other loan and tie it to a treasury note. . now, what does that mean? and, certainly, mr. speaker,
very eloquently mr. morris spoke just a moment ago about how rates can go variable means rates can change. that's absolutely true. but rates can also go down. it doesn't necessarily mean thal rates will go occupy. in acknowledging this, an 8.5% cap was put on those loans, andt i checked the student loan rate if you went to your local bank or credit uniwhereon to see what a -- union to see what a loan would be, it's about 7% right now. and i believe with my good friend who believes we shouldshu work for ways to make college for affordable. i could not agree more. the secretary of education just this past wednesday said he agreed and supported a permanent solution. the president said he supporteda market-based approach. this will give certainty to it,s and certainly i would urge my this very needed piece of legislation. i yield back the balance of my time. yes spank yields back. the gentleman --
>> the chair yields two minutes to -- >> [inaudible] >> without objection. >> thank you, mr. speaker. i thank my friend for yielding. the question before the house morning is whether we shoulde ho make college more affordable or less affordable.le whichge is better for the count? if we do nothing by july 1st, interest rates double on student loan ratestu from 3.4 to 6.8%. this bill makes it worse. it will actually increase the college cost for a typical student by $5 or $6,000 over a3 ten-year period. there's a better way. the better way -- government's borrowing money today at 1%. why don't we borrow the money at 1%, factor in the cost of administering the loans and setting aside a reserve for default, and charge that amount
to the students rather than runo a profit-making enterprise on student loans?en mr. tyranny and others have taken the lead on this, mr. courtney has, and that's the bill that i think is thenk i appropriate long-term solution. but i do know this: if youo kn listen to any corporate leader,e any business leader in america,i they tell you this, we will only grow and prosper with a skilled work force, and we will only have a skilled work force if higher education is affordable. the simple question before the education should be less affordable, vote yes.ould if you think it should be more i affordable, vote no. no is the right vote.s there's a better way. we should put that on the floor and proceed that's way. i yield back the balance of my l time. gentleman yields back. the gentleman from minnesota's recognized. >> mr. speaker, i now yield twoe minute toss a member of theis committee, the gentleman from pennsylvania, mr. thompson. >>ne gentleman from pennsylvanis recognized for two minutes. >> well, i thank the chairman
for yielding. you know, absent congressional action, interest rates on student loans will double from 3.4 to 6.8% on july 1st. that's not that far away. we need both parties and both chambers working on solutions now. we can't afford more last minute back room deals and politicalm brinksmanship. the smarter solutions for students act is a common sense approach. this bill prevents a rate hike from happening and ends what has become an annual debate within congress on how to set the ratew for studentit loans. set this bill puts in place a rate that is more predictable and affordable. it builds on a proposal put forward by president obama in his fiscal year 2014 budget request. both these proposals move to a market-based interest rate, nott one set by politicians in washington. we have a responsibility to put forward a long-term plan foram
college affordable. this bill is a good first step. it will offer students the lowest possible rates for highe education by insuring the solvency of these important loan programs. bill. and i yield back. >> gentleman yields back. recognized. two minutes to the gentleman from virginia, mr. scott. >> gentleman from virginia's recognized for two minutes. >> thank you, mr. speaker. and i thank the gentleman for yielding. i rise in opposition to the making college more expensive act. in 2007 congress cut the interest rate on student loanstn in half from 6.8% to 3.4% forent five years.m last year we, tended that benefit for one more year. in a few weeks, on january -- july 1st if congress chooses not to act, the interest rate is scheduled to double back to the rate of 6.8%. incredibly, this bill so badl is
congressional research service,e students will actually be bette off if congress will let the rate double to 6.8% than to adopt this legislation. this bill is also bad because it makes rates variable for the life of the loan, therefore, forcing students to sign for an interest rate that will s fluctuate over time so they don't even know what it's going to be from one time to the next. this proposal essentially asks students to sign up for a loan without knowing what they're signing up for. now, this is different from the democratic proposals on various, on variable interest rates,s because the president's proposal and the democratic alternative that is offered in committee has a variable rate, but once you signte the loan, that rate issin fixed for the duration, so youfe know what you've signed up for.y and with the historic rates now, you can sign up for a loan ratea that's probably much lower than any of the numbers that were but this rate, this rate is soes bad that when congressional research service estimates that we return to normal rate, thatrl
the student will actually be worse off than if we just let the rates double to 6.8%.le so i urge my colleagues to workt diligently to improve access to quality education by making higher education more affordable and insuring that the interest loan rates are reasonable, and that start ises with defeating that bill. i yield back the balance of my time. >> gentleman el yields back. gentleman from minnesota's recognized. >> mr. speaker, i now yield two minutes to the chairman of the work force protectiones subcommittee, the gentleman from michigan, mr. wahlberg. >> gentleman from michigan'seake recognized for two minutes. >> i thank the chairman. mr. speaker, recently i had the opportunity to meet with morehe than a dozen of michigan'sf private colleges and m universities. they're working hard, as you might guess, to address the rising costs of college education. with their institutions and other institutionings. with students who desire an
education. at the same time, this houseime, under the direction of this committee is working hard to is address student loan interest rates in a way that brings program. the interest rate for federally-subsidized stafford loans is currently set to rise to 6.8% on july 1, 2013. matching it to the currentrent -- stafford loan rate. any further temporary extension of the current rate only kicks the can down the road.th we've done this already. politicians versus markets. markets will always produce. better long-term results, and only those who refuse to deal with the truth of history and hs reality would say otherwise.uld congress has a unique opportunity to institute long-term, bipartisan reforms. why not? we know in our hearts it's the right thing to do.
both president obama and the house have favored market-based solutions to current rates. the secretary of education desires a long-term solutiondu like this asca well. instead of another short-term fix, the smarter solutions for students act provides a long-term solution to the student loan interest ratestud problem. it returns all federal student loans, except perkins loans, to a market-based interest rate and takes politics out of this partn of our children's education. the only way this plan won't work is if the liberal, progressive, central planners that control our government policy now are allowed to continue their failed approach, and can it is a failed approachd pass this bill. and i yield back. >> gentleman's time's expired. the gentleman from california is recognized. yield two minutes to the gentleman from presidents. mr. tierney. >> recognized for two .s. >> i thought the point that was mentioned earlier that the democrats made a promise to keep
these loans at 3.4%, and theit's this promise is being broken. bn we kept that promise through the higher reauthorization and twoin more years in addition. this is a proposal now, we saysh stay at 3.4%, republicans say, no, jack it up more than double on that basis. tha organizations that represent them in strong opposition toniza this making column more expensive act that's before us today. my republican friends talk about how this bill is simple and predictable. i predict that the rates are going to go right up, beyond the 6.8% rate.edic we've already seen that from the congressiona wl research servic, a nonpartisan group that says if we pass this republican bill, those rates will go up more than double on that basis. and it is not simple. they would have you believes no through this debate that the rates are going to go down tos e market rates which are lowerer. well, they would if you followed
our bill of 3.4 percent, but if you go with this bill, it sets it low for the first year, but it rely writes the second year and third year and fourth year. so at the end of the fourth year, you get the higher package.lmos the congressional budget officee said these interest rates woulda be almostnd $4 billion. we know that to be the case. these are the same people that tell us they don't want toe. burden our next generation with the debt, but they apparently have no problem burying them in student loan debt year after year after year. look, i have a hearing fromafte people all over my district. in fact, one woman wrote me and said when her son graduates from college, his loans will equal what her husband and she paid for their first home. with the interest rates he'll pay, it'll be even more.id f something is not right with theh system, she says, both college tuition costs and student loan interest rates are s wrong. she's right.st
this bill is wrong.wr 3.4% now in the interim, do a a higher -- [inaudible] i yield back the balance of my time. >> gentleman's time is recognized. >> in order to balance thel re speakers, i'll reserve. >> gentleman from california's recognized. one minute to the gentlewoman from new york, ms. mccarthy, member of themrs. committee. >> thank you, mr. chairman, and i appreciate that -- >> [inaudible]e sp >> mr. speaker, i stand today against making college more expensive act. and let me tell you why. i represent a pretty large minority area. and over the last several years, we've seen those scores in those students going up and up, and for the first time we're seeing a higher rate of young people going to college. this is not the time to be looking at making college more expensive. their loans, first-time
generation students going to college. this is wrong. this is sewed to be a -- this is supposed to be a friendly family bill? for whoco in certainly not for y constituents. i'm sorry also to saysa that wht we're going to be seeing aftert this bill -- and it will probably pass today -- it dies. the senate is not going to pick this up. so, again, we have wasted all our time instead of working together to comeof to a solutio. and again, as you heard, according to the cbo if congress did nothing and let student loan rates double on july 1st, students would be better off. this is not a good bill.lady i ask my colleagues to vote >> gentle lady's time has ask expired. >> i'll continue to reserve. >> ms. davis. >> gentle lady from california is recognized for one minute. >> thank you. mr. speaker, student interest rates are set to double in a little over a month unlessntle congress stops it, and that's dv
why i rise in opposition to the making college more expensive t act. we should be considering. legislation like the one my colleague, mr. courtney, introduced to extend lowe interest ratesmr for two years.e but instead we're debating ainst bill that makes students wrs off. worse off. worse off than if congress does nothing. that's because under this bill student interest rates would be subject to the whims of theould market. today interest rates are at an all-time low. but what about five years? what about ten years? what about fifteen years from now? this bill lures students in withts a i low variable rate only to tp them with a higher rate uponh repayment. well, mr. speaker, we've seen this bait and switch before. only usually it was by credit'v card companies setting shop events, not by the federal government. we are not subprime lenders.
the federal government should not be profiting from students. it shouldn't be making -- b >> gentle lady's time has expired. >> i yield back. >> gentleman from minnesota.red >> thank you, mr. speaker.om i now yield one minute to a member of the committee, themitt gentleman from tennessee, dr. jayier lay. >> recognized for one minute. >> thank you, mr. chairman. mr. speaker, i rise in support of h.r. be 1911. this common sense bill, aptly named the smarter solution for students act, brings the student loan interest rate program backt to reality.prog instead of coming back each year to partake in the washington tradition of putting last year'l failures off to the next year, a this bill gives students and their families the certainty that their loan rates won't be subjected to the whims ofwh bureaucrats in washingtonim or legislators on capitol hill. this legislation ties student t loan interest rates to the ten-year treasury note. in fact, t the president's fiscl year 2014 budget requestyear included language very similar
h.r. 1911 goes even further towards protecting students andt environments by including caps on interest rates. i encourage my colleagues to support this will, and i thank chairman kline and virginia foxx and their staffs for tear hard work in bringing this common sense legislation to the floor. i yield back.n to >> gentleman from california. >> can i inquire of the chair on the time on both sides? >> gentleman from california has 15 minutes remaining.e ge gentleman from minnesota has 20a minutes remaining.mr >> i yield two minutes to mr. courtney, member of the committee. >> gentleman's recognized forpr two minutes.is r >> thank you, mr. speaker. the it is amazing at a time when we know student loan debt has skyrocketed above all over form of consumer debt, and students r are now graduating on average with over $25,000 of student loan debt a ticking clock 38 days away where the rates aret going to double, the bill thate the majorityma has come forward with makes the problem worse,
not better. again, the analysis from that we rely on to make decisions in this body, the congressional budget office and the congressional researchffic office, make it clear that if we do nothing, the interest costs for the average stafford loan will add $4,000 in interest payments. if we pass00 this bill, theif interest will rise by $5,000. so the notion that this is somehow a solution to the problem, the misnomer that this bill is given, the reverse is true. mr. speaker, b we know that the senate is not going to move over the next 38 days. they're doing 3 the farm bill, they're doing immigration reform. to protect studentstude by extending the 3.4% rate, a rate which i hasten to add was passed in 2007 with a large, bipartisan majority, signed into law by george bush, was extended again last year, signed by president obama. let's do a two-year extension, and then let's get to work with a five-year higher education
reauthorization act. the problem is not about stafford loans only. it's about pell grants, perkins loans, students not being given good information in high schools it's about allowing graduates to refinance their debt which they are now confronted with large barriers. that's the real work to solve the higher education challengehe and issue in this country. in theer meantime, let's extend the two-year rates and, mr. speaker, i have letters from 21m campus-based organizations representing real, live college students all across america who support the democratic measure to extend those rates, get a good authorization bill and totally, totally reject the bi measure that's on the floor today, the make college morege expensiv me act, and i yield ba. >> gentleman's time expired. >> [inaudible] >>ea gentleman from minnesotaomm reserves. gentleman from california. minutes to ms. bone mitch chi, member of the committee. >> thank you, mr. speaker. i rise in opposition to the making college more expensive act, a bill that will
potentially make college more be expensive for families across the country.mr across america, students and graduates are trapped under a trillion dollar mountain of student loan debt, and with this bill the problem's about to get worse. on july 1st, interest rates wiln double for millions of students entering college, but this bill is not a constructive solution. problem worse. rates are currently 3.4%, andth they will double to 6.8% if we do nothing. but under this bill the rates will be uncertain because as high as 8.5%. this legislation will forcees students tosi pay thousands more in interest than if congress simply does nothing and lets the rates double.s si it's just not fair. on average, middle class families haven't seen a raise ii years. many are working harder for less money.less they're struggling to buy everything from groceries to gas. they're relying more on the
federal student loan programs to finance the growing cost of college. but instead of debating how much we should lower rates, instead reforms to address college costs, we're actually would be worse if we did fog at all. mr. speaker, this is unproductive, unreasonable and unacceptable. i yield back. >> gentle lady from minnesota. >> thankpr you, mr. speaker. now i'd like to yield threeinne minutes to another member of the committee, the gentleman from indiana, mr. messer.lema >> gentleman from indiana'sker recognized for three minutes. >> thank you, mr. chairman. t i'd like to thank chairman klei for his hard work on this bill, also like to thank thed al subcommittee chair fox for herbm hard work. i rise today in support of h.r. 1911, the smarter solutions for, students act . this debate is about a fundamental question, who do you
trust more; the promises of big government or the private market setting rates in the marketplace? i believe we must return to a market-based policy rather thand keeping congress in the business of fixing interest rates by throwing dart darts at ara i'll make two simple points to m this chamber.his first, markets work. the president has recognizediden this. chairman -- or education secretary duncan has recognized this. they both have called for a market-based, return to market-based rates and policies on our student loan interests. families deserve the security of knowing that the marketplace will be setting their interestnt rate, not the results of the next mud wrestling match if congress.ng m heard a lot of rhetoric on the a other side of the aisle about how rates will rise if we changl this policy. lost in that rhetoric is the
fact that over the course of thh last decade, there are times where interest rates would have been much lower had we had a market-based approach toac interest rates. in the 2002 student groups lobbied congress to set rates at a fixed 6.8% beginning in the 2006 academic year. at that tame rates -- time rates on student loans were variable. however, student groups believed that a 6.8% rate would result in a better deal. had we stayed at that rate, the variable rate would have been 2.63%. i don't think it's fair that we had the government in the way. a second point i think that needs to be made in this debate is that while we need to have low interest rates for students and we're all concerned and wan to make sure they don't rise, the real threat to young people in this country is not a few dollars on their interest
loans -- >> [inaudible] >> another minute. >> the real threat is the explosive growth of debt in thii country. the fact that we are adding a trillion dollars of debt each year, $6800 of debt per taxpayer each year, and it's dragging down our economy and hurting our ability to create jobs. to let's return to common sense policy on interest rates. i urge my colleagues to support 19131, and i yield pack the11 a balance of my time. >> gentleman from indiana yield back. gentleman from california. >> i yield one minute to the gentleman from vermont, mr. welsh. >> gentleman is recognized forne one minute.re >> mr. speaker, i rise today ins opposition to the making collega more expensive act. mr. speaker, what we're doing ia just not right. we're borrowing, the federal government is borrowing money at 1.8%. then we're lending it now at 3.4%. be we to nothing -- if we do
nothing, it goes to 6.8%, and under this will it probably will hit up around 10%. we're ripping off kids. we're making money off of theseo kids. and a confident nation will invest in the dreams of our young people. it won't crush those dreams. and why are we doing it? you know what? we're borrowing money as ag government at 1.8%. the federal reserve is lending money to the big money center banks at .75%. but we're going to be charging up to 8 or 10% to our kids? families are sitting around the kitchen table having discussions if they have three kids which two can we send to college. parents who thought they had we equity in their home and were going to be able after working 30 years --gh >> i yield the gentleman ant additional 30af seconds. >> gentleman is yielded anond. additional 30 seconds.0 >> were going to be able to finally take that cruise, that
vacation, they're refinancing'r their home to help their kids.tt and despite that, their kids ar getting out of college in vermont with an average debt in the range of close to $30,000.ar it's tough on the kids, it's tough on the parents, and it's bad for our economy. and it's just not right. we borrow, the federal government at 1.8%, and we'regoe going to charge up to 8% to families who are lending to the banks at .75%? i yield back. >> gentleman yields back. gentleman from minnesota. >> mr. speaker, i don't know hoc there. i'll reserve -- >> a gentleman from minnesota reserves. >> i yield one minute to the gentleman from california. >> gentleman from california ist recognized for one minute. >> iia rise in opposition, mr. more expensive act. and how short are some of the memories of my friends on the other side, for it was market-based principles, unregulated market-based principles that led to the housing crisis that we are just
now getting out of. and doubling the student loan rate is an attack on students, and the increased debt that the will take on will build a great there's no better way to have a healthy, growing middle class than access to education. today our middle class is shrinking. if you're in the middle class, you're making about $5,000 less than ten years ago. the middle class, you have about $25,000 more in o debt than ten years ago. doubling the rate will increase the debt that our middle classeb has. i knowt a thing or two about student loans. i have thousands of dollars of them myself, and this is not just dollars on interest rates. we are talking thousands ofre t dollars that individual borrowers like myself and theowr people that grew up with me in a middle class town called dublins will take on. let's tear down this great wall that the gop and the housel leadership are trying to buildu around our middle class, andd let's not double the rates. >> the gentleman from minnesota. >> i'll continue to reserve.e ge
>> reserves. gentleman from california. >> i yield a minute and a half to the gentleman from rhodenia. island, mr. cicilline. thank you. >> gentleman from rhode island is recognized for a minute and a half. yielding. i rise innk strong opposition ti the republican making college more expensive act that we're considering today. market-based systems will drive up the costs for millions offor middle class families but will, obvious, also benefit some ofmeo our biggest banks and financiale institutions. if we want to get our country back on the right track, put men and women back to work and insure that we remain competitive in the global economy, we have to do more to make higher education more m accessible andor more affordabl, not more expensive. .. interest rate on federal subsidized stafford loans will increase from 3.4% to 6.8% for more than seven million students. we shouldn't be making a profit on student loans period. we have proposals that will end this practice and give students access to college at the lowest
cost possible. unlike this bill, the student lon relief act, the responsible solutions for students act, would have low interest rates for students. but the bill before us today is a bad republican idea that will make college more expensive for working families and will benefit some of america's largest financial institutions who will earn billions more on student loan interest. >> hidden within this bill as a blatant bait and switch scheme to allow students to borrow bo money at one rate before the interest rates skyrocket. let's reject the making college nd urse act and find a seriesterm long-term solution on student loans that will maket college af more affordable for millions and millions of american students. thank you and i yield back.bae e the gentleman fromller: i eln california.he gen >> i yield one minute to the gentleman from new york. >> the gentleman from new york is recognized for one minute. >> thank you, mr. speaker. i'm puzzled.t this is not the america that i know. will be.when wwere g
when we were going to make were ourselves a great nation, we tr were talking i tried to make sure that our young people had a free education.can't figure out i can't figure out what's going on. soar many americans that are do well now when i talk to them about when they're going to's, school back in the '40s or the '50s and '60s, it was a freeandn education. now we want to ask our young the people, the ones that are going to be the middle class, the ones that will strengthen this re cod we s ever.o our how could we say to our students when we are talking about financial literacy every place,o didn't we learn anything from a size limit to crisis what are homeowners are doing now. we sa our precious resources, our children, to say that you got
to pay these resources is ridiculous. the speaker pro tempore: the gentleman's time has expired. the gentleman from minnesota reserves. the gentleman from california. mr. miller: i have no further speakers. is the gentleman, the chairman, the last speaker? mr. kline: i'm prepared to close. mr. miller: thank you. mr. chairman, i want to thank all my colleagues who entered into debate here this morning on this legislation. i think it is clear this is' a very big -- there's a very big different between our positions on this legislation. there's a big difference between the presidents bill who is system, and this billan before us that uses a market system. fact is the presidents bill repus dollars. the republicans would not make president obama's bill in order for consideration.n. why not?
they say it's like this. they're doing the same thing as the president. not.they're no they are adding $4 billion wort of debt onto the backsde of back of students over their programs.anw th you've heard my colleagues on this side of the i'll speak to the issues that we hear all of the time when we go home. stu the struggle of students, the struggle of families, be theync, get access a income, to get access and to be able to complete the college education to get access to aolle to g college, to get a certificate, to get a degree that will allow them to participate in the the n american society in the american that's the part of the americane dream. interest tes yes, we lowered the interest 3.a rate to 3.4%, and they've held over a period of years, and the held over those exact same yeare
when families were under thesion most stress because of this recession that was created on that wall street and the scandalsalst that took away 70% of the wealth of african-american and hispanic families in this country. that this destroy the equity in a good chunk of middle america because teaser rate loans,unks i subprime loans. and what's happening today in the private market? the banks are getting money frot and ing they are loaning it to families, private student loans. if you have good credit theyloan will let you for somewherefor around 7%. uto d bankers used to die and go to could get a 7% ad. spread. that's a you become a put billionaire. put it out, ma get it at .75, put it out at seven. if your credit rating is not so
good, you drift towards 13%. obviously, students of middle class can survive in that market the most part and that's why wed have a student loan program. that's why we took this program away from the baawnks a number o years ago. we tookk the $60 billion thats we're getting to the banks to loan the public money, totudent students. and we said why don't we put that to use for families. and we did. we lowered the interest rate and we increased participation in the pell grants, made it available. we increased, we gave people ad chance to manage their debt the morey,raduates of you earn, the more you pay but you don't get crushed when your first job doesn't have the bestr seller in the it's a career, it takes time to get that salary. we made more affordable foramer' america's f families. yes, we lowered the death to 3.4%. it was paid for and it's all wen couldd afford.
and congress will make thatcisi de made a decision to extend. this year they decided that they don't want to extend on the other side of the aisle. stem so fine, come up with a plan but the plan they came up with is worse than having, worse than having 3.4% double on july 1. how can you develop a plan thatp is worse for students? i guess i mean, i guess maybe if you go home and everybody is just working everybody is i participating, slow growing economy that is getting better, i don't know, families i represent, they are still stru. struggling. the recession hasn't leftion haf hundred the recession hasn't left the country. "the wall stre you pick t up "the wall street journal" today and there'sing in greater concern about what'sdowe happening in china driving downa the world economy. greater concern about europeans dragging down the world economy, and america is trying tostrugg,s st tryingru to struggle and will ce rate. we're going to give him a teaseg
rate.mber, effective september families go out and get a rate, probably somewhat lower than the current rate, but alone will be adjusted and they don't know what those rates are going to be and as. long as they're paying on thathn loan alone will continue to be adjusted. ne just saw that history in america. we saw what that did.that did. i don't have a problem going tow a market system. how about a fair one? number, t the numbers, the president went to market system, subsidize, he said in a market system will go to .9. they said they would go to 2.5.. 10 years plus 2.5 the president said 10 years plus .9. there's a lot of ways to go to a market system. you don't have to punish the american family. you don't have to punish the students in schools to go to a e market system. wish the p i wish the president had a cat. the gentleman has a cap.worked . this could be worked out.
but we don't do things bipartisan anymore in the training. th so because we can get the president and majority on education labor committee to siu down and work out the markett al system, because that's not allowed, we don't do bipartisan work. the victims are going e to the families and the students. tion and in long-term our nation.r os every member of congress has --o this ecation s important is educationys systemo to our future economic growth,le competing in a globalized world, to have innovation, to discover, job creation. we are now creating a drag onb crea job creation. we are now creatingti a drag ona the opportunity for families. we are creating a drag on the ability to achieve the american dream. and a college education as part of that dream but a collegeriti education is also critical to keeping the economy and themy society moving. and with that, i'm very close tm
getting back my time typing.ther i want to thank the chair for presiding.g, i would hope that my colleagues, whether they're permitted to am market rate or not would understand this is a very flawe. -- >> the gentleman's time has expired. the gentleman fromth minnesota.. >> thank you, mr. speaker. i yield myself the balance of our time. well, trying to it's always inpt these debates's there is a lot confusion, a lot of thise, t misinformation. we are using that old thingthint about figures lie and liarsfigue figures and you've got differen guesses for interest rates in reports and all those sorts of things. i want to get into some of that but some of us at the core ofs t our differences here.p of let's give a couple things straight. we've watched what's happen as congress tries to chase an interest rate and get and political battles year after you.put remember 620% that was put ind
law was considered a good deal. and then there was a plan to take it from 6.8% for all loans. didn't work. lot of cost a lot of money. added to the debt, which is a problem that is still nagging us te this day. intest ra so interest rates were taken 3. from 6.8, to 3.4% graduate over years, got down to the point where for one year the interest rate on subsidized stafford loans, not the and subsidized stafford loans, not, didn't haveok the money for that, took it down to 3.4% for one year and then it wasn't enough money. and so by law the interest rates on those loans went back up the 6.8%.r, we last year we had a big political fight and from which improved and from which improved his judgment is but apparently for ever asver politicians tried te inte over what the student loan can b interest rates ought to be and mrspeake what can be afforded. and mr. speaker, what can be
afforded counts. it counts because the problem as that i said that is continuing tonight this is with a mountain of debt in this country. we've been running deficits yeao after year veover a trillion we dollars.'v we got over $16 trillion in debt.. we have to face that this issue. here coming before us. and so, while we would like alle student loan interest rates are low and we want to get them as e well as we can, we don't want to do add to the mountain of debtin ot that's out there. thought so, we thought that would be ae good idea to let the free markee determine what those rates ought to be and we came forward with proposal and we talked about our proposal with our colleagues ono the other side of theth aisle,f staff, hour after hour out. trying to be this out. talng t staff to staff talking to the aw white house and the department g, education about what we'rehan doing and what they're doing ank what might work out.cretary i talk to the sector of education before this bill was ever introduced.
because i agreed, i agreed withy the president and the secretary that we need a long-term solution and get out of taking this can down the road withybe annual, o or maybe it's an somes annual, biennial, politicalemia battles.s. and so we move to a market, we used the 10 year treasury that the white house was proposing t use, senate republicans wanted to use the 10 year treasury and worked and worked to to get aset close to budget neutral as we could possibly get it. because we want to help ceainty, a we want tndo give them certaint, and we want them not to rely onw the whims ofhi politicians here, and we wanted also not to put a burden on the american people and the taxpayer, not add to so that debt. we tried to get as close w to zero. we seem charts down here, i lovu charts, particularly colored
charts, we seem charts down here down h that says that our bill, our bill is adding billions ofllars coun well, tea counterproposal over think the german from california offered it, the president'she proposal.t's president obama's plan, that additional debt to students, this $3.1 billion, ours was 3.7. over 10 years. we tried to come together on this, and mr. speaker, i think a we can continue to try to come together on this and we need to forward.are a l of th there are a lot of things we need to do to help students and certainly one of them is to help half of all college grudges now or underemplunderempl oyed or unemployed doing things, working in places, employing none of the skills that they learned ineed g college.omy we need to give economy going.
we're still asking where are th jobs. we need ckto get americans backc work. can't get americans back to work if you keep on islands or mountains and mountains and mountains of debt. regulations. but that's a fight for another day.ther d. income-based payment systems we didn't touch in our bill. there's some interesting proposals we want to look it. right now with this bill we're just going to determine who's going to set interest rates.t, politicians here or the market. so here' washington should be in charge of setting interest rates for student loans. washington should be in the business of creating c confusion and uncertainty for student loan borrowers. and washington cannot agree to long-term solution that was are the bestan interest of the afree students and taxpayers, i think we need otot keep working to that. it's pointed out that the senate will act. well, for many of us in this body that's not a lot of news. but july 1