He was going to be tough and it was a terrible downfall. For more of this schedule go to booktv. Org. A Senate Committee now looks at waste and fraud in areas of the federal government including improper refundable tax credits by the irs. I gao official and the treasury inspector recommended savings during the hearing. Good morning. This hearing will come to order. I want to welcome our witnesses, appreciate your time, your testimony and look forward to your oral testimony and answering what will be some pretty interesting questions. I frequently say from this podium that the inspectoray generals, you are go to agencies in government. Doing so much to root out and identify and eliminate waste, fraud, abuse, duplicative programs which is what this hearing is about, is the reports by the gao that really started with the Pretty Simple amendment offering 2010 by senator coburn in the debate over increased, something will hate to do but if are going to do it its kind of nice to get some measure of control and a Pretty Simple concept asking the gao to start issuing reports, do inspections on different duplicative programs, has resulted in 75 billion worth of savings over seven years, which is pretty remarkable. Based on the amount of Budget Authority that gao has com, 3. 8 billion over the same timeframe, thats a 20 to one return investment. I know your overall return of investment is what mr. Comptroller general . Put the microphone offices. 112 to one. I know you have a pretty good rate of return as well. I do ask unanimous consent that my written remarks, written Opening Statement get it into the record. I do want to start with a couple of charts i have prepared her for the hearing. Just to put things in context. We g we got a recent Congressional Budget Office report on longterm debt and deficit. They always report these things as of gdp and we go through percent for the last number of years because up in a cup of your senses updated theirr projection, ive been saying the 30 year projected deficit isit 103 trillion. Well, weve moved forward in time and we havent solved the problem, and now unfortunately the projected deficit over the next 30 years is 129 trillion. Thats about almost 10 trillion over the next decade, 37 total dollars total dollars in the second decade, 82 trillion ina, the third decade. And to put that in perspective, the entire net private assetec base of the United States, in othe, inother words, all assetsy businesses and households is equal to 128 trillion. This would be tacked on top of our 20 trillion of debt, 62,500 for every man woman hundred dollars for every man, woman and child in america. What is unfortunate it seems like nobody is paying attention to the spirit we are not addressing it here in congress. Obviously from the change of 103 over the next 30 years that i i want to put that in context of one other chart. Also puts in context 75 billion, mr. Darrah, and no way, shape, or form do i want this detracting from aperture which i think richard o darrow. Just so everybody understand, same sevenyear period the gao with her great work, 20 to one return investment safe certified billion dollars. We spent 25 trillion. We borrowed 6. 6 trillion of that come about 26 . In other words, . 26 in other words, 26 cents of every dollar we spent, we borrowed. Just showing the magnitude of the problem. Again i want to thank all the witnesses. I think well have a pretty good discussion with the Inspector General for Tax Administration talking about refundable tax a credits and the improper payments come fraud and abuse of the program. One of our favorite institutions, our universities and wondered my heart compulsory by kids wen went to the universy of wisconsin in madison. We have chancellor Rebecca Blake will be talking about duplication of different regulations posed on different universes to th. The overregulation, difficult time universities have dealing with federal regulations on their operations and then we have mr. Kief repko from Va Health System to talk about the problems dealing withro duplicative regulations in constructing healthcareor the fn facilities for the finest amongst her again this is i think going to be a really good discussion. I will they be forced because Pretty Simple amendment by senator tom coburn seven years ago and excellent work of gene dodaro and all is good people working at the government accountable to office. Witwithout ill turn over to my Ranking Member, senator mccaskill. I want to echo many of the comment of the chairman, and i continue be frustrate along with my colleague and former Ranking Member, senator carper who has carped on improper payment for his long as speed is one of my favorite verbs, carped. I think that gao is such an important ally to this committee, and do what take this opportunity as a trait of the time you here to make sure you tell all of the people that big building that their work does matter even though it is too often ignored or set aside what you all do is really important,l and you are tremendous public servants, and i love associatinc with the auditors at gao as a former auditor. Your annual duplication report sets out some important work that you have done investigating how the federal government spends tax dollars. You consistently identifycons concrete steps that we can take and executive branch can take to eliminate a lot of wasteful spending. You all have saved so much money for this country, but there is a lot more work that we have toe o do. I want to welcome the other witnesses to the hearing also today. I especially want to welcome keith repko who is here as the leader of the va facilities in st. Louis, and i dont think probably any of the members of this committee can appreciate how nice it is to have that roll off my tongue since we struggle in st. Louis trying to fill this position for literally years on and. I think people need to relate some of the management problems in the va can be paired u out by the fact that we would open the head of the day facility st. Louis job position and no one would apply. Now, that tells you something. That tells you that there is a real problem in either the support these managements are getting are what we are paying them. But when you open a job but itr that kind of responsibility and nobody wants it, it means that we saw a lot more work to do is figure out. So thank you for filling this position that it has been badly needed, the stability there has been badly needed and wereyoha thrilled to have you today. The reason you here today is one of the things pointed out and issues report is the problems vh has managing construction. And it is clearly we put a lot of capital in the va. Ive been somebody banged the table to get that done. I want to make sure our facilities are first rate. I want to make sure theirba adequate, make your bid is ama lack of facilities that is causing any undue delay or problems with our veterans getting healthcare. But clearly this report points out that this is not always being managed well in terms ofna how these projects are beingg undertaken and how they being executed. We want to spend a little bit time on the management of those construction project. I also want to echo about the tax credits. It is particularly, im glad you are here, doctor blanck, to talk about grants and problems in terms of administered burdens on grant recipients and also administrative burdens on reporting Crime Statistics that are difficult for our universities right now, but im also glad you here because i think we need to talk about the growth and improper payments in a new form of tax credit, refundable tax credit, and that is the amount of easily determined overpayments in the american opportunities tax credit. It may not be as large as of the refundable tax credits, doesnt mean it wont be if we dont get a handle on this, and the notion that its just as simple and still checking with universities and seeing how many our summer is going to college is pretty jawdropping that we are allowing a billion dollars too out the door every year without just the rudimentary checks and balances as to whether or not those tax credits have actuallyt been earned by students attending higher education. So thank you all for being here. Thisk you, chairman, for havingg this hearing, and i look forward to questions and comments as we move forward. Thank you, senator mccaskill. It is the tradition of this committee to swear in the witness. If you would all rise and ratio right hand. [witnesses were sworn in]ole trt our first witness is mr. Gene dodaro, the comptroller general of United StatesGovernment Accountability office since 2010 and is more than four Years Experience at the agency. Including his acting comptroller general, chief operating officer and the management division. Thank you very much, mr. Cha. Good morning to you, Ranking Member senator mccaskill, senator peters because a pleasure to be here. I appreciate very much the words that you said, complement gao and i will be sure to pass it onto all the people in the agency. With such a dedicated, talented workforce. They deserve to hear such complement. I also want to assure this committee before i get into talking about issues duplication report that i am worried about the Overall Fiscal Health of this federal government. The ed a special report this past january, basically saying that the federal government is on a longterm unsustainable fiscal path. I called for an action plan by the congress to deal with fiscal policy changes that are needed to be made. Now, while there needs to be changes made in fiscal policy on the spin and revenue side, particularly with entitlement programs, there are some things that can be done. Addressing overlap and duplication, improper payments and the tax gap are among those areas. This year, this is our seventh report on overlap duplication and fragmentation. We report on whats happened over the last six years with the 645 recommendations that we have made to date in the first six years. Ar 51 of those have been implemented by the congress and the executive branch, 31 have been partially addressed, and 18 have not been addressed at all. As you point out, mr. Chairman, 75 billion is already accrued in savings but theres another 61 billion in the pipeline that will be accrued because of actions that have been taken, so the total amount of savings isin this yillion so far. This use report adds 79 new actions and 29 different areas that range across the federal government from the Defense Department that could save tens of millions of dollars by better managing their Virtual Training programs and integrating them, and simple things like advertising for recruitment purposes where there are seven different advertising programs competing in the same market, to hundreds of millions of dollars that could be saved in implementing our recommendations on medicare and medicaid. Dealing with such things as providing not adequate compensation for uncompensated care that hospitals give. We think the forma form is outdd and doesnt really reflect the true amount of uncompensated care, particularly sent its going down with expansion of medicaid, for example. Other areas with a could reduce improper payments in medicare and medicaid, have a number of recommendations in that regard. Most of the improper payments of the 144 billion come from medicare, medicaid and earned income tax credits, so im glad were guessing that today and im glad russell is here to talk about that issue as well. So with a new areas that were adding, there are 395 open areas yet of gaos recommended suggestions. I recently met with omb director mulvaney and i mentioned to him that we will be sending letters to each of the departments and agencies outlining open recommendations and giving priority attention to those i think the head of the agency needs to pay personal attention to over the coming months. As a dent in the last two years. And i think this will be particularly helpful as they goi through their exercise of looking at reorganizing, streamlining and gaining more efficiencies in the federal government. Most of our open recommendations are addressed at the executive branch. But i also love what i call senator lankford appendix to the testimony this year where he asked everyone can congress to . Give us a list. We have 61 open matters for the congress to consider. I would comment most of the savings that have occurred to date have come from Congress Taking action, and most of our savings, theres tens of billions of dollars that areio still on the table that can be implemented and successfully achieved by implement as. Recommendation to i look for to continue to work with cogs andnd look for to continue to work with the executive branch, which have committed to do. Im in a process of trying ton meet all new cabinet officials, talk about our working relationship and recommendations that gao has to make their operations more effective and efficient. Op so thank you again for the opportunity to be here today, and i look forward to answering questions at the appropriate time. Thanthank you very much. Our next witness, i have a couple of charge. Lets put up the first improper payment chart. Desert would have this in frontb just lay the groundwork in terms of improper payments onn refundable tax credits. Just in these three programs, earned income tax credit. This is i believe 2015, correct . 69. 8 billion additional Child Tax Credit, 28. 5 billion. And the American Opportunity tax credit is 4. 4 billion. Those are the refundable tax credits, improper payments were 25. 1 billion, about 24 . The next chart shows how this has been a problem, certainly for the seven years of the duplication report as us talking to the Inspector General at a time. This is been going on for 20 years, and in spite of all the good efforts and publicizing this year after year after year, doesnt look like were making a whole lot of progress. As you can see how much money is being spent on the tax expenditure on the tax credits and other improper payment rates still is about 20 . Just stubbornly stuck there. So again thats kind of the backdrop for our next witness, mr. J. Russell george. Mr. George since becoming omitted by president george w. Bush in 2005, mr. George has served as the treasury Inspector General for Tax Administration. Prior to assuming this role he served as Inspector General of the corporation for national and community service. In addition to his work as Inspector General, he served as a member of Integrity Committee of the council of Inspector General for integrity and inefficiency. Mr. George. Thank you, chairman johnson, Ranking Member mccaskill, and members of the committee. I appreciate the opportunity to testify on tax related improper payments. Tigta is conducted a number of reviews that he by what the irs reduce erroneous and improper refundable tax credit payments. My, stay will highlight our ongoing work. Refundable credits are designed to upload income individuals reduce their tax burden or to provide incentives for other activities. Because of these tax credits are refundable, they are vulnerable to unscrupulous individuals who file fraudulent claims. To date the earned income tax credit remains the only refundable credit the irs has designated as high risk for improper payments. However, tigta has continued to report that the irs improper payment risk assessments for the additional Child Tax Credit and the American Opportunity tax credit, also known as the education credit, substantially understate the risk of impropert payments or these credits. These credits collectively are accounted for more than 100 billion claimed three taxbi year 2015. 2015. For fiscal year 2016 the irs issued an estimated 25 billion in potential erroneous payments for these credits. Thi. This represents a significat loss to the federal government. In addition the assessment of the risk related to premium tax credit improper payments continues to present challenges for the irs. Enges this created by the Affordable Care act insists individuals and fans pay for the health interest. Unlike other refundable credits the irs is not solely responsible for administering the premium tax credit. As a result the irs cannot effectively assess the risk of improper payments for this credit on its own. The irs and the department of health and Human Services continue to work on a methodology to effectivelyly measure improper payments relating to this credit. To reduce certain fraudulent and improper payments, congressr enacted the protecting americans from tax hike act. Among other provisions of the act moves up the deadlines for forms w2, wage and tax statements, and other income information related documents, and provides the irs additional time to verify earned income tax and additional tax credits that are based on income individualss report on their tax returns. According to the house ways and means committee, these integrity provisions are projected to save roughly 7 billion over ten years by reducing fraud, abuse and improper payments in refundable credit programs. To date our work related to this legislation has found that the irs has properly withheld refund for returns with earned income and additional tax credit claims, and release those returns that were not identified for additional review. Irs management informs us of these claims are being verified solely against form w2 data to identify claims that have unsupported income. Irs management indicated that for the 2017th Filing Season, they do not plan to use other income reporting documents toumo systematically verify income report on tax returns wi