May 20 2003

SHELBY HOLDS HEARING WITH TREASURY SECRETARY JOHN SNOW TO DISCUSS FY 2004 DEPARTMENT OF TREASURY BUDGET

U.S. Senator Richard C. Shelby (R-Ala), Chairman of the Appropriations Subcommittee on Transportation, Treasury, and General Government, chaired a hearing today with Treasury Secretary John Snow. The hearing focused on the Department of the Treasury’s budget for FY 2004 and other issues. The following is Senator Shelby’s opening statement:

“Good Morning, the subcommittee will come to order. I would like to welcome John Snow, Secretary of the Treasury. Thank you for appearing before the Subcommittee today to discuss the fiscal year 2004 budget request for the Department of the Treasury.

I look forward to learning about the new leadership you bring to the Department as well as the resources necessary to carry out the responsibilities at the Department.

The Department of the Treasury has undergone significant changes since the transfer of the majority of its law enforcement bureaus and related functions to the newly created Department of Homeland Security and the Department of Justice.

In the midst of those changes, the Department still maintains the key role in Government as economic policy maker, financial manager, and revenue collector. That is no small task, especially now as the country seeks economic recovery, job creation, and comprehensive tax reform and relief.

The Department has also created a new bureau -- the Alcohol and Tobacco Tax and Trade Bureau -- and also anticipates consolidating the Office of Inspector General (OIG) and the Inspector General for Tax Administration (TIGTA). I am interested in learning more about those plans.

As the threat of terrorism continues, finding ways to combat money laundering and other terrorist financing tools is an important role for the Department. It is vital to our ongoing counterterrorism efforts that we know what resources the Department will need to combat such nefarious activities.

Treasury's budget request for fiscal year 2004 is $11.408 billion, which includes $21.9 million for the activities of the Office of Foreign Asset Control (OFAC), $57.5 million for the Financial Crimes Enforcement Network (FinCEN), and $5.3 million to increase the counterterrorism activities of the Internal Revenue Services Criminal Investigations Unit (IRS-CIU). These three bureaus within Treasury form part of the backbone of our ongoing fight against terrorist financing.

Recent attacks in Saudi Arabia, Morocco, and Israel have shown it is important that we maintain a coordinated focus and provide the necessary resources to ensure that our combined efforts to disrupt terrorism financing are persistent and effective.

Turning an eye toward the more traditional functions of government, I want to briefly touch on the $10.4 billion request for the IRS that was discussed at length at a prior subcommittee hearing.

The IRS's ongoing Business System Modernization efforts will require $429 million in fiscal year 2004. The subcommittee appreciates the efforts that continue to go into this massive upgrade that we hope, will improve the speed, timeliness and accuracy of IRS's administration of the tax system.

I am aware that last year's efforts encountered a hiccup of sorts, however, and I am interested in hearing how the Department is working with the IRS to get back on track and ensure that schedule and cost setbacks do not become common occurrences.

While the IRS' traditional role is to implement and enforce our tax laws, it has also been charged with administering the Earned Income Tax Credit (EITC). The budget proposes a number of changes to that program because of the high level of fraud associated with the program's administration.

Each year, the IRS makes approximately $9 billion in erroneous EITC payments. This is a direct and permanent loss to American taxpayers because it is virtually impossible to recapture these payments once they have been made.

To implement the EITC task force recommendations, the Department is requesting $100 million to address the problems associated with current program administration that results in overpayments. Eliminating erroneous payments and ensuring the proper administration of this program are certainly goals with which I completely agree.

In conclusion, I believe this is a straight forward budget that includes a number of important reforms and efforts at modernization. I appreciate that it will take time for the Department to adjust to the realignment of offices to the Department of Homeland Security and the Department of Justice. But I am confident that you have the opportunity to emerge stronger and more focused than ever.

Again, I want to thank you for being here today. I am looking forward to hearing your thoughts on this budget request and what, in your opinion, are the highlights and significant changes from the fiscal year 2003 enacted budget.”