Come to order. I want to welcome our witnesses, i appreciate your time and testimony, i look forward to your oral testimony and answering what will be some pretty interesting questions. I frequently say from the podium that the general Inspector Generals, your are go to agencies and government. Youre doing so much to root out and identify and eliminate waste fraud, abuse, dictated programs which is what this hearing is about. The reports by the gao that really started with a Pretty Simple. [inaudible] offering 2010 by senator colborne in the. [inaudible] something we all hate to do but if were going to do it its nice to get some measure of control and a Pretty Simple concept is asking the gao to issue reports and inspections on different programs as resulted in 75 billion of savings over seven years. This is pretty remarkable. Based on the amount of Budget Authority that the gao has, 3. 8 billion over that timeframe that a 20 one investment. Put the microphone on for this. 112 to one. They have a good return to rate as well. I have unanimous consent that might written remarks, written statement were get written in the record. I want to start with a couple i prepared for the hearing. Just to put things in context. We got a recent Congressional Budget Office report on longterm then deficit. They always report these things as percentage of gdp and we go through a fair amount of effort to convert those dollars because that makes us meaningful. The last number of years, its been a couple of years since they updated their production. Ive said theres a 30 year projected deficit is a hundred trillion dollars. We move forward in time and we havent solved the problem and now, fourthly, the projected deficit is 129 trillion. Thats 10 trillion over the next decade, 37 in the second decade, 82 quintillion in the third decade and put that in perspective the entire net private acid all assets held by businesses and households is equal to a hundred 28 trillion. This is by the way 62000 for every man woman and child in america. What is unfortunate is it seems that nobody is really paying attention to this. Were not addressing it in congress, obviously, from a change from 103 for the next 30 years. I want to put that in congress under context. This also puts in 75 in context , to a no way shape or form want this distracting from your efforts which i think are laudatory but just so everyone understands that same sevenyear period where the gao was doing great work, 20 one save 75 million we spent 25 trillion, we borrowed 6. 6 trillion of that and 26 . Twentysix cents for every dollar we spent, we borrowed. Again, showing the magnitude of the problem here. I want to thank all the witnesses. I think well have a pretty good discussion with the Inspector General for tax and ministration talking about the refundable tax credits and improper Payments Fraud abuse of that program. Obviously, one of our Favorite Institution is universities and one dear to my heart, all three of my kids went to the university of wisconsin in madison. We have the chancellor talking about the duplication of different regulations imposed on researcher universities, in general, the overregulation of the difficult time the universities have to dealing with federal regulation on their operation and then we have mr. Keith repko from the Va Health Systems talking about the problems dealing with the regulations and constructing Healthcare Facilities for the finest among us. Again, this will be a good discussion. Again, all laid before us because of a Pretty Simple amendment by senator Thanh Coleman seven years ago and the excellent work of jean darlow and his good people working at the Government Accountability office. With that ill turn it over to my Ranking Member. I want to echo many of the comments of the chairman. I am continue to be frustrated along with my colleague and former Ranking Member, senator karp who has carved on improper payments for as long as i can remember. I think gao is an important ally to this committee and i want to think this opportunity as i take to make sure all the people in that building that their work does matter even though it is too often ignored or set aside what you all do is important and you are tremendous Public Servants and i love associating with the auditors a gao is a former auditor. Your annual duplication report sets out some important work that you have done in investigating how the federal government has been spent tax dollars. You consistently concrete steps that we can take and the executive branch can take to eliminate wasteful spending. You all have saved so much money for this country but there is obviously a lot more work to do. Id like to welcome the other witnesses to the hearing. I especially want to welcome keith repko who is here as the leader of the va facilities in st. Louis and i dont think any of the members of the committee can appreciate how nice it is to have this roll off my tongue since we struggled in st. Louis trying to fill this position for literally years on end. I think people need to realize some of the management problems in the va can be bared out by the fact that we would open the head of the va 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 managers are getting or what were paying them but when you open a job that has that kind of responsibility and no one wants it, it means that we have a lot of work to do in figuring out so, thank you. Thank you for filling this position, its been badly needed. Were thrilled to have you today. The reason youre here today is one of the things pointed out in this years report is the problem the va has managing construction. It is clearly we put a lot of capital in the va. Ive been somebody banging on the table to get that done. I want to make our facilities are firstrate and adequate. I want to make sure that it is a lack of facilities that is causing undue delay or problem with our veterans getting healthcare. Clearly this report points out that this is not always being managed well. In terms of how these projects are being undertaken and how theyre being executed. We want to spend a little bit of time on the management of those Construction Projects. I also want to echo about the tax credits. It is particularly im glad youre here, doctor blank to talk about grants and the problems in terms of Administrative Burden on grant recipients and also, Administrative Burdens on reporting Crime Statistics that are difficult for our universities right now. But i am also glad you are here because 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 Opportunity tax credit. It may not be as large as the other refundable tax credits but it doesnt mean that it wont be we the notion that its as simple as double checking with universities and seeing how many hours someone is going to college is pretty jawdropping that we are allowing a billion dollars to go out the door every year without the rudimentary checks and balances as to whether those tax credits have actually been earned by students attending higher education. Thank you all for being here. Thank you chairman for having us at this hearing and i look forward to questions and comments as we move forward. It is the square in witnesses so if you will all raise on the rise and raise her right hand. Do you swear the testimony you get before this committee will be the truth, the whole truth, and nothing but the truth, so help you god. I do. Our first witness is eugene darrow. Hes been the comptroller general of the United StatesGovernment Accountability office since you 2010 and has more than 40 years of experience at the agency including as acting comptroller junior, chief operating officer in the accounting division. Thank you. Good morning to you. Its a pleasure to be here and i appreciate very much the words that you said complementing gao. I will make sure to pass it along to all the people in the agency. We had such a dedicated talented workforce and they deserve to hear such complement. I also want to assure this committee before i get into talking about duplication report that i am worried about the overall physical health of the federal government. The issue special report this past january basically saying that the federal government is on a longterm unsustainable fiscal path. I call for an action plan by the congress to deal with fiscal policy changes that are needed to be made. While there need to be changes made in fiscal policy, both on spending and revenue side, particularly, there are some things to be done. Addressing overlap duplication, improper payments and the tax gap are among those areas. This year this is our seventh report on overlap duplication fragmentation. We report on what happened over the last six years with the 645 recommendations that we made to date in the first six years. 51 of those have been implemented by the congress and executive branch. 31 had been partially addressed and 18 have not been addressed at all. As you pointed out, mr. Chairman , 75 billion is artie 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 saving is a hundred 36 million so far. This years report has 79 new actions and 29 different areas that range across the federal government from the Defense Department that could save millions of dollars by better managing their Virtual Training programs, integrating them in 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 can be saved in implementing the recommendations on medicare and medicaid. Dealing with such things as providing not adequate compensation for uncompensated care that hospitals give. We think the formula is outdated and doesnt really reflect the true amount of uncompensated care particularly since its going down with the expansion medicaid, for example. Other areas where they could reduce proper payments and medicare and medicaid we have a number of recommendations in that regard. Most of the improper payments of the 144 billion come from medicare, medicaid and the earned income tax credits. Im glad were addressing that today and im glad russell is here to talk about that issue as well. The new areas were adding, 395 open areas of gaos recommendation. I recently met with director mulvaney and i mentioned to him that we would be sending letters to each of the departments in the agencies outlining our open recommendations and giving priority attention to those i think the head of the agency needs personal attention to over the coming months. As ive done in last two years, this will breed particularly helpful as they go through their exercise of looking at reorganizing, streamlining and gaining some more efficiencies. Most of our open recommendations are addressed to the executive branch. But i also have what i call senator langford a tent appendix where he asks every year, what can the congress do. Give us a list. We have 61 open matters for the congress to consider. I would comment that most of the savings that have occurred would have come from Congress Taking action and most of our savings, theres tens of billions of dollars that are still on the table that could be implemented and successfully achieved by implementing our recommendations i look forward to working with congress and continuing to work with the executive branch which im committed to do and in the process now to meet all new cabinet officials and talk about a working relationship and recommendations that gao ao has to make their operations more effective and efficient. Thank you for the opportunity to be here today and i look forward to answering questions at the appropriate time be back thank you very much. I have a couple charts. Lets put up the first and proper payment charts. To lay the groundwork in terms of improper payments on refundable tax credits, just in these three programs. This is 2015, correct . 69. 8 billion in additional Child Tax Credit is 28. 5 million and the American Opportunity tax is 4. 4 billion. Those are the refundable tax credits, improper payments are 25. 1 billion about 24 . The next chart shows how this has been a problem for the seven years of the duplication report as i was telling the respect Inspector General i had of time its been going on for 20 years. In spite of all the good efforts in publicizing this year after year after year, it doesnt look like were making a whole lot of progress. As you can see, how much money is being sent on the tax expenditure and how the improper payment rates is still above 20 just a really stuck there. Again, this is the backdrop for our next witness. Mr. J russell george. Since becoming nominated by president george w. Bush in 2005 mr. George has served as the treasury secretary protect the ministration. Prior to assuming this role he served as the Inspector General of the corporate and in addition to his work is Inspector General he served as a member of the Integrity Committee of the council for integrity and intensity. Mr. George. Thank you, chairman johnson and members of the committee. I appreciate the opportunity to testify on tax related improper payments. Since weve conducted a number of views that evaluate the irs to eradicate erroneous backs tax credits. This will highlight our ongoing work. Refundable credits are designed to help lower income individuals reduce their tax burden or to provide incentives for other activities. Because these tax credits are refundable they are vulnerable to unscrupulous individuals who file fraudulent claims. Todays earned him remains the only refundable credit the irs has designated as high risk for improper payments. However, this has continued to report that the irs Risk Assessment with the additional Child Tax Credit in the American Opportunity tax credit also known as the education credit, substantially understate the risk of improper payments for these credits. These credits collectively count for more of 100 million claim during tax year 2015. For fiscal year 2016, the irs issued an estimated 25 billion and potentially erroneous payments for these credits. This represents a significant loss to the federal government. In addition, the assessment to the risk related to premium tax credits improper payments continues to prevent challenges for the irs. This credit created by the Affordable Care act assist individuals in paying for their health insurance. Unlike other refundable credits the irs is not solely responsible for administrating 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 effectively measure improper payments relating to this credit. To reduce certain fraudulent and improper payments, congress enacted the protecting americans from tax hike act. Among other positions it moves up the deadline for forms w2 and 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. This is based on income individuals report on their tax returns. According to the House Committee the integrity provisions are projected to save roughly 7 billion over ten years by reducing fraud abuse and improper payments and refundable tax credit programs. To date our work related to this legislation has found the irs has properly withheld refunds for returns with earned income in additional tax credit claims and released those returns that were not identified for additional review. Irs management informs that these claims are being verified solely against w2 data to identify claims that have unsupported income. Irs management indicated that for the 27 team season they do not plan to use other income supporting documents to systematically verify income reported on tax returns with refundable credit claims. The irs has cited a number of technical challenges in timing issues that need to be addressed in order to use this information to verify income at the time tax returns are processed. In addition, the irs was unable to implement processes to identify erroneous claims for the 2016 season for taxpayers following prior years to claim certain refundable credits referred to as retroactive planes. Our review of tax 2014, tax returns filed and processed during the 2016 Filing Season identified 35 million in refundable credits that were erroneously paid to taxpayers following retroactive planes. Finally, the irs does not have the authority. [inaudible] in which the information provided by the taxpayer does not match Information Available to the irs. As a result, the irs must have an audit to address the erroneous claims but without correctable authority the irs cannot address those erroneous refundable credit claims that it identifies remains limited. Mr. Chairman, members of the committee, we attempt to remain serious in our mandate to provide independent oversight of the irs and its administration of the nations tax system. As such, we plan to provide continuing coverage of the irss effort to identify and reduce improper refundable tax credit payments. Tha