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 i think what will be some interesting questions. I frequently say from this podium that the General Accounting Office and Inspector Generals are, youre our go to agencies in government doing so much to root out and identify and eliminate waste, fraud prosecutor abruce bus, duplicate prod grams which is what this hearing is about is the reports by the gao that really started with the Pretty Simple amendment offered in 2010 by senator cole burn in the debyte bait over increase in debt sooelg ceiling. Something we all hate do, but it were 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 duplicated 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, 3. 8 billion over that same time frame, thats a 20 two one u one return orn investment and your overall return of investment is what mr. General. Put the microphone on for this. 112 to one. And i know the Inspector Generals have pretty good rate of return as well. So i do ask unanimous consent that my written remarks or written Opening Statement get entered into the record. I do want to start with a couple charts ive prepared here for the hearing just to put things in context. We got a recent Congressional Budget Office report on longterm debt and deficit and thez they always report these things as percentage gdp and we go through fair amount of effort to convert those to dollars because its a little bit more meaningful if the for the last number of years because its been a couple years since theyve updated their projection ive been saying that the 30year projected deficit is 103 trillion . Well, weve moved forward in time and we havent solved the problem and now unfortunately the projected deficits over the next 30 years is 129 trillion. Thats about 10 trillion over the next decade, 37 trillion in the second decade, 82 trillion in the thishd decade. And to put that in perspective approximately all assets held by businesses an households is equal to 128 trillion. This would be tact on top or 20 trillion of debt, 62,500 for every man, woman, and child in america was unfortunate it seems like nobody is paying attention to this. Were certainly not addressing here in congress obviously from the change to 103 to 129 trillion over the next 30 years. I want to put that in context and ive got one other chart here which also puts in context the 75 billion in, you know, mr. Doe dare row in no way, shape, or form i do want this to detract from you your efforts here which i think are great. But just so everybody understands that same sevenyear period where the gao with their great work, 20 to one return investment saved 70 2350i6 billion dollars, we spent 25,000,000,000,000, we borrowed 6. 6 trillion of that, about 26 . So in other words 26 cents of ever dollar we spent we borrowed. Just showing the magnitude of the problem here. I want to thank all the witnesses i think were go to have a good discussion with the Inspector General talking about refundable tax credits ant improper payments, fraud and abuse of that program. Obviously one of our favorite institutions or universities and one deer to my heart, all three of my kids went to the university of wisconsin in madison. We have chancellor Rebecca Blank and shes going to be fwaukt duplication of different regulations imposed on Research Universities and just in general the overregulation, the difficult time that universities have to deal with federal regulations on their operations. Then we have mr. Keith repko from the v. A. s Health System to talk about the problems dealing with duplicated regulations in constructing Healthcare Facilities for the finest among us in the is is going to be a really good discussion. Again, all laid before us because of a Pretty Simple amendment by senator tom colonel burn receiver years ago and then the extent work of gene dodaro. With that, ill turn it be over to my Ranking Member senator mccaskill. I want to echo many of the comments of the chairman and i continue to be frustrated along with my colleague and former Ranking Member senator carper who has carped on improper payments for as long as i can one of my favorite veshz, the carp. There you go. I think that gao is such an important ally to this committee and i want to take this opportunity as i try every time youre here to make sure you tell all of the people in 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 and you are tremendous public servants. And i love associating 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 identify concrete steps that we can take and the vek executive branch can take to eliminate a lot of wasteful spending. You all have saved so much money for this country, but theres obviously a lot more work that we have to 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 v. A. Facilities in st. Louis and i dont think probably the other members of this committee can appreciate how nice it is to have that roll off my tongue since we struggled in st. Louis trying to fill this position for literally years on end. And i think people need to realize some of the management problems in the v. A. Can be baird out by t beared out by the fact that we would open the head of the v. A. 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 nobody wants it, it means that we still have a lot more work to do in figuring out how so thank you for filling this position. It has been badly needed, the stability there has been badly needed and were thrilled to have you today. The reason youre here today is one of the things pointed out in this years report is the problems v. A. Has managing construction. And finance is clearly weve put a lot of capital into v. A. Ive been somebody banging the table to get that gun. I want to make sure our facilities are first rate, adequate, and there isnt a lack of facilities that did 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 of how these projects are being undertaken and executed and 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, dr. Blank, to talk about grants and the problems in terms of administrative burdens on grant recipients and also administrative burdens on reporting Crime Statistics that are difficult for our universities right now. But im also glad youre here because i think we need to talk about the growth in improper payments and 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 the other refundable tax credits. Doesnt mean temperature wont be if we dont get a handle on this. And the notion that its just as simple as double checking with universities and seeing how many hours someone is actually going to college is pretty jaw dropping that we are allowing a billion dollars to go out the door every year without just the rudimentary checks and balances as to whether or not those tax credits have been earned by students attending higher education. So thank you all for being here. Thank you, chairman, for having this hearing and ill look forward to questions and comments as we move forward. Thank you senator mccaskill. It is the tradition of this committee to swear in swoitz if youd all rise and raise your right hand. Do you swear the testimony youll give 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 mr. Eugene doe dare row. Mr. Doe dare row has been the comptroller since 2010 and has more than 40 Years Experience at the agency. Including his acting comptroller general, chief operating officer, and head of the accounting and Information Management division. Thank you very much mr. Chairman, good morning to you Ranking Member senator mccaskill, senator peerts, its a pleasure to be here. I appreciate very much the words that you said complimenting gao and i will make sure to pass tai long to all the people in the agency. We have such a dedicated talented workforce and they deserve to hear such compliments. I also want to ensure this committee before i get into talking about this years duplication report that i am worried about the Fiscal Health of the federal government. I issued a special report this past january basically saying that the federal governments on a longterm unsustainable fiscal path and i call for an action plan by the congress to deal with fiscal policy changes that are needed to be made. Now, while there need to be changes made in fiscal policy both on the spending and revenue side, particularly with entitlement programs, there are some things that can be done. And addressing overlap and duplication, improper payments and the tax gap are among those areas. This year, in our this is our seventh report on overlap duplication and fragmentation. The we report on whats happened over the last six years with the 645 recommendations that weve made to date in the first six years. 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 has already accrued in savings, but theres another 61 billion in the pipeline that will be accrued because of acces that have been taken so the total amount of savings is 136 billion so far. Now, this years report adds 79 new actions and 29 different areas that range across the federal government from the Defense Department, could save tens of millions of dollars by better managing their Virtual Training program and integrating them and simple things like advertising for recruitment purposes where theres 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 formulas outdated and doesnt really reflect the true amount of uncompensated care, particularly since its going down with the expansion of medicaid, for example. Other areas where they could reduce improper payments in medicare or medicaid. We have a number of recommendations in that regard. Most of the improper payments of 144 billion in the federal government come from medicare, medicaid, and the earned income tax credit so im glad were addressing that today and im glad russells here to talk about that issue as well. So with the new areas that were adding, there are 395 open areas yet of gaos recommended suggestions. I recently met with o b director mulvaney and i mentioned to him that were going to be sending letters to each of the departments and agencies outlining our 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 ive done in the last two years. And i think this will be particularly helpful as they go through their exercise of looking at reorganizing, streamlining, and gaining some more efficiency in the federal government. Most of our open recommendations are addressed to the executive branch. But i also have what i call senator lankford appendix to the testimony this year where he asks every year what can the congress do, give us a list. So we have 61 open matters for the congress consider. I would comment that most of the savings that have occurred to date have come from Congress Taking action. And most of our savings, there are tens of billions of dollars that are still on the table that could be implemented and successfully achieved through implementing our recommendations. So i look forward to continuing the work with congress and i look forward to continuing work with the executive branch which im committed to do. Im in the process now of trying to meet all new cabinet officials, talk about a working relationship and the recommendations that gao has to make their operations more effective and efficient. So thank you again for the opportunity to be here today and i look forward to answering questions at the appropriate time. Well thank you very much. Our next witness i actually got a couple charts. Lets put the first and proper payment chart. Everybody has this in front. Just lay the groundwork in terms of improper payments on refundable tax credits just in this thee programs. Earned income tax credit and 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 or about 24 . And the next chart shows how this has been a problem certainly for the seven years of the duplication report but as i was talking to Inspector General ahead of time, this has been going on for 20 years and despite in spite of all the good efforts and publicized in this year after year after year, it doesnt look like were make a whole lot of progress as you can see how much money is being spent on the, you know, tax expenditure on the tax credits and how the improper payment rate still is above 20 . Just stubbornly stuck there. So, again, thats kind of the backdrop for our next witness, mr. J. Russell george. Mr. George, since becoming nominated by president or since being nom mated by george w. Bush in 2005, mr. George has served as a treasury Inspector General for tax administration. Prior to assuming this role, mr. George served as the Inspector General of the corporation for national and community service. In addition to his work as an Inspector General, he serchd adds a member of the Integrity Committee of the counsel inspectors general for integrity and efficiency. Mr. George. Thank you, chairman johnson, Ranking Member mccaskill, and members of the committee. I appreciate the opportunity to testify on taxrelated improper payments. Tick ta has conducted a number of reviews that evaluate the iras efforts for erroneous payments. I will highlight our ongoing work. Refundable credits are designed to help low income individuals to 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. To date, the earned income tax credit remains the only refundable credit the irs has designated as high risk for improper payments. However, tickta has continued to report that the irss child credit and the American Opportunity krp substantially understate the risk of improper payments for these credits. These credits collectively account for more than 100 billion claimed during tax year 2015. For fiscal year 2016, the irs issued an estimated 25 billion in potentially erroneous payments for these credits. This represents a significant 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. This credit created by the Affordable Care act assists individuals and families in paying for their health insurance. 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 emproper 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 hikes act. Among other provisions, 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 individuals report on their tax returns. According to 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 refunds for returns with earned income and additional tax credit claims and release dollars those returns that were not identified for additional review. Irs management informed 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 2017 Filing Season they do not plan to use other income reporting documents to systemically verify income reported on tax returns with refundable credit claims. The irs has cited a number of technical