Apr 20 2004

SHELBY CHAIRS HEARING WITH TREASURY SECRETARY JOHN SNOW

Senator Questions Snow on the Economy, Tax Cuts, IRS Management, and Terrorist Financing

U.S. Senator Richard C. Shelby (R-Ala), Chairman of the Appropriations Subcommittee on Transportation, Treasury, and General Government, chaired a hearing today to discuss the budget overview for the Department of Treasury. Senator Shelby also addressed the economy, tax cuts, IRS management and terrorist financing. The Honorable John Snow, Secretary, Department of Treasury, was the scheduled witnesses. The following is Senator Shelby's opening statement:

“Good Morning. I would like to welcome Secretary John Snow to this morning's hearing. I look forward to hearing about your vision for the future of the Treasury Department as well as the challenges you will face during the upcoming fiscal year.”

“In your first year on the job, you presided over the divestiture of 30,000 Treasury employees pursuant to the Homeland Security Act of 2002. You also oversaw the establishment of the new Alcohol and Tobacco Tax and Trade Bureau. Such significant realignment of the Department is no small task and you are to be commended, Mr. Secretary, for the fine job you have done in completing this transition.”

“Now that the transition is complete, I would like to hear how the department is refocusing its resources on its core missions of economic policy maker, financial manager, revenue collector and leader in tracking terrorist financiers. All of these missions are critical to the continued success of the economy.”

“There is no economic stimulus that can equal the power of allowing taxpayers to retain more of their hard-earned paychecks and, thereby, spend their money as they best see fit for themselves and their families. I can think of no better way to stunt the present economic growth than a sudden increase in taxes. Such an action would dry up the additional capital that has flowed into our private markets and would set the nation's economy back on the downward course of recession.”

“Even if those who propose to raise taxes during the recovery are prevented from doing so, we still face the specter of numerous expiring tax cuts over the coming years. Without permanent tax cuts, there is no way to provide the certainty and stability necessary to sustain our current economic recovery.”

“Even as our economy recovers, the threat of terrorism still hangs over us. Given its longstanding relationships with financial institutions throughout the world and its existing intelligence-gathering and law enforcement infrastructure, the Department is ideally suited to lead the Federal government in our nation's fight against terrorist financing. I believe it is time for the Treasury to step up to the task.”

“Along those lines, I am keenly interested in the proposal to create the Office of Terrorism and Financial Intelligence. All of us share the Administration's goal to thwart financial support for terrorists. We look forward to working with you to establish and fund this office. I believe it is critical that we work together to ensure that we get the right structure and the necessary funding in place.”

“As you know, the Banking Committee and the Select Committee on Intelligence combined their efforts to give Treasury a platform to reposition itself as the lynchpin in the nation's efforts to identify and track movements of funds and commodities which would support those who seek to destroy our way of life.”

“The Intelligence Authorization Act of 2004 included a new Assistant Secretary for Intelligence and Analysis. You committed to creating an office that would ‘enhance the Department's access to Intelligence Community information and permit a reorganization and upgrading of the scope and capacities of Treasury's intelligence functions in light of the nation's counter-terrorist and economic sanctions programs.’”

“In previous hearings last year in the Banking Committee, we heard from various experts who noted a need for the Treasury to recapture enforcement capabilities. Given the unique status of Treasury with the financial services industry, I believe only you have full responsibility for insuring the integrity of the financial services industry.”

“I am, therefore, disappointed that your vision for the revitalized role of Treasury has not been as robust as I would have liked. I see no plans for reorganization or the growth that we anticipated, especially in the enforcement area.”

“Your letter of April 16, 2004 merely reiterates the agreements our staffs reached in November 2003. You propose no real increase in staff and request no new funding in the budget submission.”

“I expected more, but I trust that you will take this task as a priority. No task of this size can be accomplished without your direction and vision. We on this Committee and on the Banking Committee stand ready to assist.”

“We have prioritized and will continue to prioritize our oversight function to ensure that the American people are safe and the integrity of our Financial Services Industry is secure.”

“Mr. Secretary, I would be remiss if we did not discuss the Department of Treasury's $11.6 billion budget request for fiscal year 2005, and particularly the $10.7 billion request for the Internal Revenue Service (IRS). The IRS faces enormous problems, and I am especially concerned about the continuing failures in computer modernization.”

“As you know, Mr. Secretary, the IRS has spent $2.7 billion on the Business System Modernization (BSM) program and has yet to produce any real benefit to the taxpayer. In fact, the IRS is running late and is over budget in all seven core projects related to BSM.”

“I am interested in hearing what oversight the Department is performing to help the IRS put this program on track. Without modernization, the IRS will never be able to achieve meaningful improvements to taxpayer customer service or compliance.”

“Mr. Secretary, I listened with interest to your statements in the news on April 15th about simplifying the federal tax code. I believe that the complexity of the tax code is a large part of the problem at the IRS.”

“Our tax code and its regulations total a staggering 54,000 pages long, and they are too complex, too confusing and too costly to comply with.”

“Comprehensive reform of the tax code itself would go a long way to reducing tax fraud by making the process more simple and the system fairer for all taxpayers.”

“A less complex tax code would provide fewer opportunities for cheaters and reduce the paperwork burden for all Americans. I look forward to working with you to reach this goal.”

"Mr. Secretary, I look forward to hearing your thoughts on the economy and on Treasury's budget request, and I look forward to working with you on the other important issues facing our Nation.”