“It is the proper duty of
a representative body to look diligently into every affair of government and to
talk much about what it sees. It is meant to be the eyes and the voice, and to
embody the wisdom and will of its constituents.…” — Woodrow Wilson
Congress has the
Constitutional responsibility to perform oversight of the Executive Branch and
matters of public interest. This report summarizes highlights from each week’s
Senate oversight hearings.
Tuesday,
May 1, 2007: Senate Select Committee on Intelligence
“Hearing to Receive
Testimony on the Foreign Intelligence Surveillance Act (FISA)”
- The Bush Administration
has failed to provide the Intelligence Committee with requested
information on its proposal to revise the Foreign Intelligence
Surveillance Act.
- Senators voiced concern
that the current proposal would not preclude the Administration from
conducting electronic surveillance outside of the FISA process.
- Senators called for a law
that strikes the right balance between fighting terrorism and protecting
privacy rights and civil liberties.
Wednesday,
May 2, 2007: Senate Finance Committee
“The Medicare
Prescription Drug Benefit: Monitoring Early Experiences”
- While most seniors are
pleased with the Medicare prescription drug program, Senators and
witnesses described the need to address certain problems with the program.
- Pharmacies are having
difficulty obtaining fair and timely compensation from drug plans.
- Some seniors continue to
have difficulty navigating the complexities of the Medicare prescription
drug program.
Wednesday,
May 2, 2007: Special Committee on Aging
“The Nursing Home Reform
Act Turns Twenty: What Has Been Accomplished, and What Challenges Remain”
- While much progress has been
made in the twenty years since passage of the Nursing Home Reform Act,
too many nursing homes still fail to meet the needs of their residents.
- The regulatory system that
governs nursing homes does not measure patients’ quality of care and
quality of life because it focuses on providers instead of consumers.
- Senator Kohl promised
continued, vigilant oversight of the nursing home industry and offered
concrete steps to improve our nation’s nursing homes.
Wednesday,
May 2, 2007: Senate Committee on the Judiciary, Subcommittee on Terrorism,
Technology and Homeland Security
“Interrupting Terrorist Travel: Strengthening the
Security of International Travel Documents”
- After six years of
diminishing resources, weak enforcement, misguided policies, stagnant standards,
and no comprehensive oversight by the Republican-lead Congress, the
Occupation Safety and Health Act (OSHA) is falling short of its mission to
‘assure safe and healthful working conditions for working men and women.’
- Inadequate recordkeeping
masks the problem, making it difficult to ascertain the exact number of
work-related injuries and deaths.
- The Bush Administration
has not been vigilant in enforcing OSHA.
Thursday,
May 3, 2007: Senate Armed Services Committee
“Hearing to Receive
Testimony on United States Central Command in Review of the Defense
Authorization Request for Fiscal Year 2008 and the Future Years Defense
Program”
- Admiral Fallon agreed that
political compromise is critical to success in Iraq.
- The Iraqi government is
falling behind on critical benchmarks.
- Admiral Fallon testified
that we must be “steadfast in our messages” to push the Iraqi government
to make the necessary political compromises.
Thursday,
May 3, 2007: Senate Committee on Homeland Security and Governmental Affairs
“The Internet: A Portal
to Violent Islamist Extremism”
- The Internet has become a
key tool that terrorists use for recruiting and planning, allowing the
rapid and cheap dissemination of terrorist ideology.
- Military strategies alone
are not sufficient in our efforts against terrorism.
- Terrorists use the
Internet to involve more and more people in their cause by creating
virtual networks that are difficult to track.
Thursday,
May 4, 2007: Senate Finance Committee
“Offshore Tax Evasion:
Stashing Cash Overseas”
·
The abuse of overseas tax havens contributes significantly to the
tax gap.
·
Witnesses agreed that international cooperation to ensure transparency
and information exchange is the best approach to combating overseas tax fraud.
·
Chairman Baucus urged the Treasury Department to do more to
reduce offshore tax evasion.
Tuesday,
May 1, 2007: Senate Select Committee on Intelligence
“Hearing to Receive Testimony
on the Foreign Intelligence Surveillance Act (FISA)”
The Bush Administration
has failed to provide the Intelligence Committee with requested information on
its proposal to revise the Foreign Intelligence Surveillance Act.
SEN.
ROCKEFELLER: [T]here are key pieces of requested information that the committee
needs and has not yet received. These include the President’s authorizations
for the program and the Department of Justice’s opinion on the legality of the
program. My request for these documents is over a year in length. And Vice
Chairman Bond and I restated the importance of receiving these documents in our
March letter, that – and in fact, called this hearing. The Administration delay
in providing these basic documents is incomprehensible, I think, inexcusable,
and serves only to hamper the committee’s ability to consider the liability
defense proposal before it…. There is simply no excuse for not providing to
this committee all the legal opinions on the President’s program. The
Administration’s proposal to modernize FISA, if enacted, would be the most
significant change to the statute since its enactment in 1978. It will be our
duty to carefully scrutinize these proposed changes and ask many questions.
Senators voiced concern that
the current proposal would not preclude the Administration from conducting
electronic surveillance outside of the FISA process.
SEN.
FEINGOLD: Well, here’s the problem. If we’re going to pass this statute –
whether it’s a good idea or a bad idea – it sounds like it won’t be the only
basis on which the Administration thinks it can operate. So, in other words, if
they don’t like what we come up with, they can just go back to Article II. That
obviously troubles me.
…
SEN.
FEINSTEIN: Does the President still believe he has the inherent authority to
wiretap outside of FISA? It’s really a yes-or-no question.
MIKE
MCCONNELL, DIRECTOR OF NATIONAL INTELLIGENCE: No, ma’am, it’s not a yes-or-no
question. I’m sorry to differ with you. But if you’re asking me if the
President is abrogating his Article II responsibilities, the answer is no. What
we’re trying to frame is there was an operational necessity for TSP [Terrorist
Spying Program] that existed in a critical period in our history, and he choose
to exercise that through his Article II responsibility. We’re now on the other
side of that crisis, and we’re attempting to put it consistent with law, so
it’s appropriately managed and subjected to the appropriate oversight.
SEN.
FEINSTEIN: Well, the way I read the bill, very specifically the President
reserves his authority to operate outside of FISA. That’s how I read this bill.
I think that’s the defining point of this bill. Not only that, in Section 402,
Section 102(a), notwithstanding any other law, the President, acting through
the Attorney General, may authorize electronic surveillance without a court
order under this title, to acquire foreign intelligence information for periods
of up to one year – and then it goes on to say, if the Attorney General does certain
things. I mean, clearly, this carves out another space.
Senators called for a law
that will effectively check executive power.
SEN.
WYDEN: The director of the FBI has admitted that there was widespread abuse of
the national security letter authority, that there were instances when agents
claimed emergency powers despite the lack of actual emergency. What is going to
change now with this new effort so that we don’t have Administration officials
coming, as the Attorney General recently did, to say, “Made a mistake,
widespread abuse?”
…
SEN.
NELSON: The trick is we want to go after the bad guys, we want to get the
information that we need, but we’re a nation of laws, and we want to prevent
the buildup of a dictator who takes the law into his own hands, saying, “I
don’t like that.” So now we have to find the balance, and that’s what we need
to craft.
Senators called for a law
that strikes the right balance between fighting terrorism and protecting
privacy rights and civil liberties.
SEN.
ROCKEFELLER: [W]hat safeguards are there in the Administration’s bill for the
communications of Americans who are not a target but whose communications would
be otherwise legally intercepted under a bill?
…
SEN.
NELSON: In the case where there is a foreign national in a foreign land,
calling into the United States, if you do not know the recipient’s nationality
– and, therefore, it is possible it is a U.S. citizen – do you have to, in your
interpretation of the current law, go and get a FISA order?
An Administration witness
agreed that oversight is critical to ensuring transparency in the FISA program.
SEN.
WHITEHOUSE: And so, to me, it’s very concerning, as we take these next steps,
for you to be saying, impliedly, “Trust us, we need this authority, we’ll use
it well,” when we’re coming off the record of the national security letters;
we’re coming off terrible damage done to the Department of Justice by this
Attorney General; we’re coming off a continuing stonewall from the White House
on documents that I cannot, for the life of me, imagine merit confidentiality
at this stage. And in the context of all of that, you’ve got some uphill
sledding with me…. We’ve been talking a lot about transparency and all that
kind of stuff. Where’s the transparency as to the presidential authorizations
for this closed program? Where’s the transparency as to the Attorney General
opinions as to this closed program? That’s a pretty big, “We’re not going to
tell you,” in this new atmosphere of trust we’re trying to build. If you have a
response, sir...
(WITNESS
- UNKNOWN): I do have a response. I think that the appropriate processes were
created as a result of abuses of the 1970s. They were inappropriate. We got
oversight committees in both the Senate and the House. They were subjected to
the appropriate oversight, rigorous, as it should be. Laws were passed to
govern our activities. Those are inspected. We have inspectors general. And the
processes worked well. I’ve made a recommendation based on just coming back to
the Administration with what we should do with regard to disclosing additional
information to this committee. And that recommendation is being considered as
we speak. Certainly, it’s easier for me to share that information with you and
to have a dialogue about what it said and how it worked and did it work well
and should we change it? But until I get working through the process, I don’t
have an answer for you yet. But oversight is the appropriate way to conduct our
activities going forward, consistent with the law.
Wednesday,
May 2, 2007: Senate Finance Committee
“The Medicare Prescription
Drug Benefit: Monitoring Early Experiences”
While most seniors are
pleased with the Medicare prescription drug program, Senators and witnesses
described the need to address certain problems with the program.
SEN. BAUCUS: I have heard from many seniors in
Montana and across the country about how pleased they are with the drug
benefit. They are getting real help buying their medicines. Eighty percent of
seniors are satisfied with the new benefit. That’s good. But it’s not good
enough. I have also heard from the seniors who are not satisfied. One out of
every five seniors who enrolled in the benefit is not satisfied. Many were
overwhelmed by the number of plans. Many were perplexed by the formularies. Or
worse yet, many are still not able to afford medicines….
We are here today to identify the problems. And we
are here today to begin solving them. The Finance Committee has an ongoing
obligation to do oversight. And we have an obligation to ensure that the
Medicare drug program works well for everyone. I have heard disconcerting
reports from people involved in the program. I have heard concerns about the
program from seniors, from people who advocate for them, and from providers. We
have representatives from each of those groups here today. We need to hear from
folks who can share views from the front lines.
Pharmacies are having
difficulty obtaining fair and timely compensation from drug plans.
SEN. BAUCUS: Pharmacists are on the front lines in
delivering prescription drugs to our seniors. When the benefit was rolled out
last year, pharmacists made sure that seniors got the drugs that they needed,
despite all the system’s glitches. For that, we owe them a debt of gratitude.
It is troubling to me that many pharmacies are still having difficulty getting
fair and timely compensation from drug plans. And I’m particularly concerned
about smaller pharmacies in rural areas.
…
TIMOTHY L. TUCKER,
PRESIDENT-ELECT, AMERICAN PHARMACISTS ASSOCIATION: Medicare Part D has had a dramatic impact on the business of pharmacy.
Contracting and reimbursement issues continue to plague pharmacy. These issues
include unfair negotiation tactics, delayed updates of pricing metrics, low
reimbursement levels, delayed payments, and a lack of pricing transparency.
Some of these issues are amplified for the pharmacies serving low-income or
uninsured patients….
Because of the lack of opportunity for pharmacies to
negotiate their contracts with Part D plans, pharmacies have been forced into
contracts that do not cover their costs. To ensure that Medicare beneficiaries
continue to have access to community pharmacies, additional oversight of
pharmacy reimbursement must be established. This oversight would provide
greater assurances that a pharmacy’s costs associated with acquiring a drug
product are covered, and that Part D plans provide pharmacies a “reasonable”
dispensing fee to cover the pharmacy’s costs associated with dispensing the
product. The fee would cover salaries, overhead, and a reasonable profit and
would be based on data from relevant “cost to dispense” studies. Reimbursement
rates must include a fair return to the community pharmacy that has elected to
participate in the program. Absent these assurances, pharmacies will continue
to be asked by plans to dispense Part D drugs at a financial loss.
Some Part D plans have also challenged the financial
viability of pharmacies by unnecessarily delaying their payments. While we have
seen some improvements in the program, some pharmacies continue to endure
lengthy payment delays for medications dispensed to patients. Pharmacies cannot
sustain long delays in payment particularly since those with whom pharmacy
contracts, such as wholesalers, are enforcing penalties for any delayed
payments from pharmacies.
Some seniors continue to have difficulty navigating the complexities of
the Medicare prescription drug program.
SEN. BAUCUS: [C]hoosing the best plan has proven to
be a daunting task. The Centers for Medicare and Medicaid Services approved
more plans than we anticipated. Some plans are using marketing tactics to
attract seniors that may be inappropriate. And I’ve heard how difficult it is
to analyze plans and compare premiums, copayments, deductibles, and formularies.
Let’s make it easier. Seniors and those who counsel them have told me that they
need tools to cut through the chaos to pick the best plan.
…
VICKI
GOTTLICH, SENIOR POLICY ATTORNEY, CENTER FOR MEDICARE ADVOCACY: In our
conversations with Medicare beneficiaries, their advocates, and policy-makers,
we hear repeatedly about beneficiaries’ having insufficient information to make
sound decisions about which plan to choose, to understand what should be
covered, and to know how they will fare during Part D’s various coverage gaps.
In addition to having insufficient information, some beneficiaries are given
incorrect information by plan marketing agents, and find themselves in a drug
or other health plan in which they did not intend to enroll.
Beneficiaries
who are dually eligible for Medicare and Medicaid are too often unable to
obtain their medications due in large part to data-sharing problems among
states, the Centers for Medicare & Medicaid Services (CMS), the Social
Security Administration (SSA) and Part D plans. Beneficiaries also report
difficulty obtaining exceptions for drugs not on a plan’s formulary, for drugs
with quantity limits, and for the off-label use of certain drugs. Similarly, we
hear many complaints that the exceptions process is both complicated and vague.
CMS,
the agency that administers Medicare, continues to tout Part D as a resounding
success, while characterizing what are persistent and systemic issues as small
glitches in the system. Our experience over the past year and half continues to
show otherwise. Some of the most glaring and continuing problems are:
·
As designed, the Part D program
is immensely complicated. The program’s complexities affect the ability of
beneficiaries to understand the program, choose plans, pay premiums, benefit
appropriately from the low-income subsidy, and utilize the exceptions and
appeals process.
·
The complexity of the Part D
program also makes the program ripe for marketing abuses; beneficiaries who do
not understand the nuanced differences among plans and plan types easily fall
prey to unscrupulous sales agents.
·
CMS’s administration of the
Low-Income Subsidy (LIS) lacks clarity and uniformity so that the subsidy too
often fails to reach eligible beneficiaries.
·
CMS, SSA, and Part D plans still
have not developed a quick, efficient, and accurate system for transferring
information about enrollment and premium payments. As a result, beneficiaries
continue to have premiums withheld inappropriately from their Social Security
checks, continue to be owed money for premiums inappropriately paid or
withheld, and sometimes are threatened with involuntary disenrollment from
their drug plan for failure to pay premiums they believed were paid.
·
The Part D exceptions and appeals
process is too complex and too varied from plan to plan to be adequately
accessible to Medicare beneficiaries. Further, the standards for appeals are
too vague and do not give adequate credence to the opinion of beneficiaries’
attending physician.
…
KRIS
GROSS, DIRECTOR, SENIOR HEALTH INSURANCE INFORMATION PROGRAM, IOWA INSURANCE
DIVISION: The Medicare Modernization Act created a drug program that allows
beneficiaries a choice in how they receive the benefit and who provides the
benefit. However, choice becomes a burden when it is overwhelming. As I have
already mentioned, we have 84 drug plan options in Iowa and many states have
even more. Beneficiaries are overwhelmed by the process of comparing and
evaluating these plans. The Plan Finder Tool on www.medicare.gov is an
important resource in sorting through the plans, but the vast majority of
beneficiaries do not use computers. In addition, plans can change benefits,
formularies and premiums each year so every year beneficiaries have to make a
choice. This too is a great burden, especially for those who are ill, disabled,
illiterate, or facing other barriers in getting information.
A number of Medicare Part
D beneficiaries have experienced problems related to the withholding of their
Part D premium payments from their Social Security checks.
SEN. GRASSLEY: Now one area that remains of
particular concern to me is the Social Security withhold option. This option
was supposed to be a convenient way for beneficiaries to pay their monthly
premium. For many beneficiaries, that’s been exactly the case. The withhold has
worked like clockwork. Unfortunately, for far too many beneficiaries, it
hasn’t. Just in the few past few weeks, I’ve heard from beneficiaries in Iowa
who haven’t had anything withheld or have yet to receive a refund of premiums
withheld in error. Those who owe money are anxious because they’re concerned
they’ll be dropped from their drug plans. Those who are owed money, well, they
want it back, and I don’t blame them. Beneficiaries have contacted my office
because they’ve gotten a large bill from their plans or because they see
amounts withheld from their check, but it doesn’t seem to be reaching their
plan….
From what I’ve heard, no one seems to want to own
this problem. A beneficiary that calls a plan is told to call Medicare. When the
beneficiary calls Medicare, they’re told to call Social Security. That’s simply
not acceptable. I know that CMS and SSA have worked to resolve these problems,
and they’ve made progress on the cases they have. But the bottom line is, they
need to make more progress and they need to do so quickly.
…
MR.
GROSS: One of the options offered to beneficiaries for paying their Part D
premiums is to have monthly premiums automatically withheld from their monthly
Social Security checks. This seemed to be an efficient and effective way to pay
premiums, assuring timely payments to their Part D plans. Most of our clients
whom we enrolled in the Initial Enrollment Period for Part D chose this option.
Over the past year this is one of the areas of the program which has caused the
greatest number of client problems. For some clients the premium was not
withheld as requested, for others a change in their plan choice was not
accurately processed and reflected. The premium errors have resulted in
beneficiaries being disenrolled from plans, excess premiums being withheld, and
premium refunds not reimbursed. Some problems have been unresolved after nearly
a year of working with CMS, Social Security and the plans…. These erroneous
premium withhold situations are very frustrating for beneficiaries and those
assisting them. Resolving the withholding and payment problems would allow
beneficiaries to use this payment method as it was initially intended.
Wednesday,
May 2, 2007: Special Committee on Aging
“The Nursing Home Reform Act
Turns Twenty: What Has Been Accomplished, and What Challenges Remain”
While much progress has
been made in the twenty years since passage of the Nursing Home Reform Act,
too many nursing homes still fail to meet the needs of their residents.
SEN.
KOHL: In January, I promised that this committee would take a close look at
nursing homes to see if our seniors are getting the safest, highest-quality
care. Today we are going to do exactly that. We know that the vast majority of
nursing home providers care deeply about their residents and are doing their
best to provide the best possible care. But as we will hear today, too many
problems still exist in some of our nation’s nursing homes.
The
Nursing Home Reform Act became law twenty years ago. Better known as
OBRA ‘87, this law set federal standards for the quality of services, for
staffing, and for inspection and oversight of long-term care facilities.
Without question, it has improved nursing home care. For example, OBRA ‘87 led
to a sharp drop in unnecessary physical and chemical restraints of residents.
Other accomplishments and events are on the posters on this podium.
We
will hear today from the GAO [Government Accountability Office] that in 2006,
nearly one in five nursing homes nationwide was cited for poor care that causes
actual harm to residents. Among a group of facilities studied in 1998 and 1999
that provided poor care, the agency found that nearly half have made no
progress between that time and now. This is unacceptable, and raises questions
about how and why our enforcement system is failing.
…
Kathryn Allen, Director of Health Care, Government
Accountability Office: Despite the
reforms of OBRA ‘87 and subsequent efforts by CMS and the nursing home industry
to improve the quality of nursing home care, a small but significant share of
nursing homes nationwide continues to experience quality-of-care problems. In
2006, one in five nursing homes nationwide was cited for serious deficiencies –
those deficiencies that cause actual harm or place residents in immediate
jeopardy. While this rate has fluctuated over the last seven years, we have
regularly found (1) significant variation across states in their citation of
serious deficiencies, indicating inconsistencies in states’ assessments of quality
of care and (2) understatement of these deficiencies – when deficiencies are
found on federal comparative surveys but not cited on corresponding state
surveys.
Nursing homes, which
provide services to millions of Americans each year, are becoming all the more
important as the baby boom generation ages and retires.
James Randolph Farris, M.D., Regional Administrator,
Centers for Medicare and Medicaid Services, Dallas, TX: In 2007, about 3 million elderly and disabled
Americans will receive care in nearly 16,000 Medicare- and Medicaid-certified
nursing homes. About 1.4 million Americans reside in the nation’s 16,000
nursing homes on any given day. And, more than 3 million Americans rely on
services provided by a nursing home at some point during the year.
Our
nation is aging. This reality shapes the public discourse, looms large in our
public imagination, and affects our everyday lives—as families struggle to care
for aging parents and other relatives who are living longer, but often with
co-existing and chronic health conditions and increasingly complex medical
needs. As increasing numbers of our nation’s baby boom generation retire, the
need for high-quality nursing home care will grow precipitously.
The regulatory system
that governs nursing homes does not measure patients’ quality of care and
quality of life because it focuses on providers instead of consumers.
Alice Hedt, Executive Director, National Citizen’s
Coalition for Nursing Home Reform (NCCNHR): As the Government Accountability Office has reported today in another of
its series of devastating reports on weak enforcement of the NHRL [Nursing Home
Reform Law], the law is not being fulfilled for far too many residents due to
the failures of our enforcement system that is too often provider rather than
consumer focused. Residents and families are not allowed the opportunity to be
a part of the dispute resolution process, even though the findings are about
their complaints and their care in the facility. Our members tell us that
facilities do not pay fines that are imposed for many years, and that in many
cases, there are no fines imposed even when care has been neglectful and in
some cases had horrific results. Residents tell us that they are frightened to
raise their concerns because they are vulnerable and dependent, and family
members tell us about retaliation, such as restrictions on their right to visit
their loved one, when they attempt to get good care. These pervasive consumer
problems are too often not addressed by the enforcement system.
…
Mary Ousley, President, Ousley & Associates;
Former Chair of the American Health Care Association: In the final analysis, the resident-centered,
outcome-oriented, consistent system of oversight that was originally intended
bears little resemblance to the reality we have today. What we have is a system
that defines success and quality in a regulatory context that is often measured
by the level of fines levied and the violations tallied – not by the quality of
care, or quality of life, as was the original goal of OBRA ‘87. We must be
mindful here today of the important lessons we have learned since 1987, and be
open to the new ideas that will help improve care quality through 2027, and
make it better, still, by 2047. Today, we know far more about promoting
quality, and we have better tools with which to measure it than we did twenty
years ago. We need to intelligently change the regulatory process to allow and
encourage us to use what we have learned – to place quality over process, care
over procedure, and most importantly, put patients at the forefront.
Witnesses testified that
the addressing the shortage in nursing staff is key to improving nursing home
care.
Charlene Harrington, Professor of Sociology and
Nursing, University of California, San Francisco: The most important measure of quality of care is the amount of nursing
staff available to provide care. In nursing homes, the decline in registered
nurses and the failure to improve staffing shows the need for greater
regulatory standards and incentive systems. Turnover rates, wages, and benefits
must be improved to address nursing home quality. Greater financial
accountability is needed to ensure that Medicare and Medicaid funds are spent
on direct and indirect care and not diverted to paying for real estate,
administration, and profits. We must invest in our long term care workforce so
that high quality providers will be available to provide care for our family
members, friends and ourselves when we need such care.
…
MS. Hedt:
Sadly, I cannot report to you today that the expectations and requirements of
the NHRL have been fulfilled in the 20 years since its passage. In fact, for
many residents, the quality of their day-to-day care is minimal because of
inadequate nurse staffing. A congressionally authorized study released by the
Department of Health and Human Services in two phases in 2000 and 20012
demonstrated what our members have told NCCNHR for more than 30 years – there
are insufficient numbers of nurses and nursing assistants in the vast majority
of America’s nursing homes.
Senator Kohl called for
more effective inspection of nursing homes.
SEN.
KOHL: We will hear about the challenges facing state inspection agencies in
overseeing nursing homes. Surveyors do the tough work of visiting facilities,
documenting the conditions and deficiencies they find, and recommending
sanctions. But it is troubling that fines and sanctions are often not levied –
even when inspectors find violations that leave residents suffering. For
facilities that continually slip in and out of compliance, regulators must take
swifter action. Bad apples give the nursing home industry a black eye, and they
have no business being in this business.
Senator Kohl promised
continued, vigilant oversight of the nursing home industry and offered concrete
steps to improve our nation’s nursing homes.
SEN.
KOHL: This committee has a long history of closely scrutinizing the quality of
nursing home care, and we intend to reaffirm that commitment. We need to
regularly monitor the nursing home industry, and the performance of federal and
state regulators, to make sure quality standards are met. As a first step, we
will follow this hearing with a written request to CMS to brief us every two
months on progress made to implement the recommendations in GAO’s testimony
that are coming out of this hearing. We will continue to press the
Administration to tighten up the enforcement system and make sanctions stick.
We will work with advocates, the industry, and regulators on proposals to
tighten the enforcement process so the bad actors no longer escape sanctions.
We
will also be requesting ideas for improving the public information about the
quality of nursing homes. When consumers look at CMS’s “Nursing Home Compare”
website, they should be able to tell immediately which facilities are providing
good care, and which are providing substandard care.
We
also want to make sure that the nursing home workforce is the best it can be,
by establishing a nationwide system of background checks for workers in
long-term care facilities…. The vast majority of long-term care workers do an
excellent job at taking care of our family members. But individuals who have a
record of criminal abuse should not care for the most vulnerable in our
society. To that end, I plan to introduce legislation that is modeled on
Michigan’s background check program.
In
the War on Terrorism, international travel is the frontline.
Sen.
Feinstein: For terrorists, international
travel documents are as important as weapons. Now, that's not my statement.
That's the conclusion of the authors of the 9/11 report over five years ago.
The 9/11 report pointed out that international travel presents great danger to
terrorists, because they must surface to pass through regulated channels. They
must present themselves to border security officials or attempt to circumvent
inspection points. The moment that the terrorist presents a false document to
Border Patrol inspectors is a critical moment in the protection of our borders.
In that short, brief interview at the border point, the officer must be able to
determine whether the person attempting to enter the United States intends to
harm the people of this country. Today, there are many tools that a border
inspector or the consular officer or other government agents can use to
identify real travelers from those with bad motives. The ongoing question, and
the reason we're here today, is whether United States government agencies are
taking advantage of all those tools.
…
ANDREW SIMKIN, DIRECTOR,
FRAUD PREVENTION PROGRAMS, BUREAU OF CONSULAR AFFAIRS, DEPARTMENT OF STATE: One
comparison that I heard was comparing terrorists to submarines, operating in
hiding most of the time but needing to surface at key moments, making them more
vulnerable to detection. When a terrorist applies for a visa to enter our
country, it is a key moment of opportunity for us to interrupt his travel.
Airline check-in and port of entry screening are other key moments.
There
are significant weaknesses in our ability to detect fraudulent travel documents
and prosecute offenders.
Sen.
Feinstein: The 9/11 terrorists devoted
extensive resources to acquiring and manipulating passports, all to avoid
detection of their nefarious activities and objectives. We know, for
example, that at least two of the 9/11 hijackers used passports that were
altered when they entered this country, and as many as 15 of the 19 had some
other irregularity with their travel document. In the five years since 9/11, of
the 353 individuals who the Department of Justice classified and prosecuted as
international terrorists, 24 were charged with document crimes. And just this
past December, United States Department of State's Diplomatic Security Service
charged 25 defendants in Los Angeles for attempting to obtain and actually
obtaining United States passports using fake identities.
Today, over five years
later, Interpol reports that they have records of more than 12 million stolen
and lost travel documents, from 113 different countries. Now, these are the
only ones we know about. But Interpol is a vast source of information and as
far as I know -- and I'm sure these witnesses will correct me if I'm wrong --
the government does not scan passports to pick up on the Interpol data, which I
think is a significant lapse if in fact it's true. Interpol estimates that 30
million to 40 million travel documents have been stolen worldwide…
Despite evidence that
these crimes are widespread, and that millions of travel documents are on the
black market, in '04 the State Department's Diplomatic Security Service reports
that it made about 500 arrests for passport fraud, with only 300 convictions.
For these reasons, I
believe that our job is not over.
Sen.
Feinstein: transcript from a hearing
held in this subcommittee on September 7th, 2006. And the Homeland Security
witness was a special counsel, Mr. Rosenzweig. And I asked some questions. And
I'd like to quickly go over them.
And I'm talking about a
GAO report here that's been done on the visa waiver program and says -- it also
recommends that DHS develop and implement a plan to make Interpol's stolen
travel document database automatically available to immigration officers at
primary inspection points.
And then we go on to
what four countries do not share lost or stolen passport information with
Interpol, and the countries at that time are Holland, Japan, Norway and Sweden.
And then I'd like to
quote to you Mr. Rosenzweig's testimony: "My goal would be to have the
operational difficulties resolved, at least in theory, by the end of this year
and then operational in the second or third quarter of next year. That's an
aspirational goal, I should add."
And then I say, "Of
2006? I'm writing it down and I'm going to get you to sign it afterwards."
"Rosenzweig:
Absolutely.
"Feinstein:
Operational when?
"Rosenzweig: My
goal is the second or third quarter of next year, 2007.
"Mr. Ahern:
Senator, if I might add a little more, give my colleague here a break for a
second. If I might" -- he goes on -- "it is reflected that we get a
considerable amount of lost and stolen passport information directly into our
system today through the State Department. We also get a direct feed from the
U.K. government to the State Department on lost and stolen passports. So we
have a considerable amount of lost and stolen passports in our system today.
"So that is fed in
through the Department of State's class system into our integrated border
inspection system. So we do have access to a considerable amount."
Now, I've been trying on
and on and on to get a time for a real- time Interpol connection. And here we
have testimony that it will be in place by the second or third quarter of this
year.
My question: Will DHS
meet this goal?
MORRIS:
I believe that we will, Senator...
FEINSTEIN: So your
answer is yes. "I believe" or "Yes"?
MORRIS:
We are currently designing the system with Interpol. We intend to test the
system in early fall of this year. And we will have a pilot test at a major
U.S. international airport in place shortly thereafter. Immediately after that
brief pilot test, we intend to have a rapid deployment to the balance of our
border control system.
FEINSTEIN:
Well, I'll be asking Mr. Noble these questions. But if I assume -- let me try
and extrapolate what I hear from that.
There will be a pilot
test by the second or third quarter of this year. That pilot test will go on
for how long?
MORRIS:
Approximately 30 days.
FEINSTEIN:
Thirty days. And then after the 30-day period, a full system will be put in
place. And that will take how long to put in place?
MORRIS:
If the pilot is successful, and we're able to address any issues or concerns
that may arise at that point, it should be a rapid deployment.
FEINSTEIN:
And what does that mean?
MORRIS:
That as soon as we can put the system in place, it will be in place.
FEINSTEIN:
Well, are we talking about one month? Six months? A year?
MORRIS:
Without knowing what the success of the pilot may be at this point, it's -- I
would say it would be much more rapid than that. We're hoping for immediate
implementation after the pilot, if the issues can be addressed.
FEINSTEIN:
I guess my problem always is, "hope" -- you know, "goal."
And generally no time deadline is ever kept. So I really hope this is an
exception. Because I really believe the security of our nation is at stake. And
I think this is a very worthwhile program.
MORRIS:
And we agree 100 percent, Senator. And perhaps I should correct my statement
and say that we expect that it will be a rapid implementation immediately after
the pilot is concluded.
FEINSTEIN:
OK. I'll have you back after the third quarter. And I will pull out this
transcript of today and read it back to you. And hopefully we will be there.
Thursday,
May 3, 2007: Senate Armed Services Committee
“Hearing to Receive Testimony
on United States Central Command in Review of the Defense Authorization Request
for Fiscal Year 2008 and the Future Years Defense Program”
Admiral Fallon agreed
that political compromise is critical to success in Iraq.
SEN.
LEVIN: Admiral, you said in your opening statement for the record that the most
important need in achieving our strategic goals would be good leadership by the
government of Iraq. Do you agree that the solution in Iraq has got to be a
political solution based on compromise among the Iraqis themselves, and that
that agreement is essential if we’re going to end the violence?
ADMIRAL
WILLIAM J. FALLON, COMMANDER, U.S. CENTRAL COMMAND: Senator, it’s very clear
that success in Iraq is going to be greatly dependent and, I believe, not
possible, without the firm commitment and demonstration by the political
leadership in that country that they are acting in the interests of the entire
population.
The Iraqi government is
falling behind on critical benchmarks.
SEN.
LEVIN: Here’s what Secretary Rice wrote to me in her letter of January 30. She
said that Iraq’s policy committee on national security has agreed upon a set of
political, security and economic benchmarks and an associated timeline, in
September of 2006. These were reaffirmed by the Presidency Council on October
16, 2006, and referenced by the Iraq Study Group. They also were posted on the
president of Iraq’s Web site.
Now,
these benchmarks included the following. They were supposed to, by September of
2006, form a constitutional review committee, approve law and procedures to
form regions, agree on a political timetable, approve the law for independent
high electoral commission, approve provincial election laws and set date for
provincial elections, approve a de-Baathification law by November. The
constitutional review committee was supposed to complete its work by January of
‘07, and by March of ‘07, the constitutional amendments referendum was supposed
to have been held.
Were
any of those things accomplished as far as you know?
ADM.
FALLON: Senator, they’ve been working all of these issues. There’s been
progress made, at least from their reports to me and my understanding. They are
not moving, in my opinion, fast enough to support what we’re trying to do in
that country. And I think that, making sure that the leadership in Iraq
understands that we don’t have unlimited time, that we must move forward, that
they’re going to have to make these tough decisions, is important.
SEN.
LEVIN: Well, my question was, were those specific benchmarks met within the
timeline that they set for themselves?
ADM.
FALLON: Clearly, they have not been able to stay on their – what they
originally hoped to do here.
Senator Reed asked
Admiral Fallon about long-term planning for force levels in Iraq.
SEN.
REED: And what plan guidance are you giving your planners for force levels in
Iraq three years out?
ADM.
FALLON: I haven’t gotten to that level of detail. Right now we’re working very
hard to try to give General Petraeus the support he needs to complete the influx
of forces, but I’ve asked them to start taking a look at alternatives for where
we might want to be in the future. I envision that we will want to be – and we
will be asked to be – in Iraq for some period of time with some representation
of U.S. capability, just as we do in other countries. Now, what that’s going to
be, how soon we transition to what might be an enduring presence there to do
the kind of things we do in other countries, I think is something that we need
to be thinking about right now and start doing at least the initial planning
for.
SEN.
REED: In that context, are you developing plans for redeploying forces out of
Iraq – as a contingency at least?
ADM.
FALLON: I do not have plans right now to do that. But it’s certainly something
that we’re going to think about and take under advisement, as we should to
provide group peer counseling, training, coping mechanisms and strategies.
Admiral Fallon testified
that we must be “steadfast in our messages” to push the Iraqi government to
make the necessary political compromises.
SEN.
SESSIONS: We were there and [the Iraqi government] kept telling us, we want
more time for this and more time for that, and a sense that they just would not
understand the urgency of it. I understand that there’s a plan for a two-month
summer recess in the Iraqi parliament. Can you give us your impressions on that
summer recess – which I think is unacceptable – and your evaluation of the
sense in which this government is capable of making the decisions on oil and
reconciliation that really are important to us?
ADM.
FALLON: Senator, that’s the number one question, in my mind, is their ability,
as well as willingness, to do this. The heads are nodding affirmatively, “Yes,
we understand. Yes, we’re going to do this.” When these things come up like
this two-month holiday, immediately, I know Ambassador Crocker and General
Petraeus have pushed back on it. I think it was Dr. Rubai, the national
security adviser, the other day said, this will be addressed. They’re not going
to take a two-month vacation. We’re going to get them to work, which is clearly
necessary. How can we have our people out there fighting and dying, if they’re
off on vacation, instead of addressing the most pressing issue, which is
getting the kind of reconciliation sense in the minds of the people?
SEN.
SESSIONS: Well, that certainly worries me, I’ve got to tell you. This
government has got to be functional, if we’re going to support it.
ADM.
FALLON: I think we need to be steadfast in our messages from here and from all
of our coalition forces, that the only acceptable behavior here is going to be
them stepping up to take those tough decisions, however difficult they may be,
to give their people the confidence that they can trust and believe in their
government.
Thursday,
May 3, 2007: Senate Committee on Homeland Security and Governmental Affairs
“The Internet: A Portal to
Violent Islamist Extremism”
The Internet has become a
key tool that terrorists use for recruiting and planning, allowing the rapid and
cheap dissemination of terrorist ideology.
SEN.
LIEBERMAN: It is another irony of the digital age that the Internet – invented
by the Department of Defense as a way to ensure undisrupted communications in
the event of an enemy attack – is now being used to recruit and train the
terrorists who plot such lethal attacks against American and other western
targets. As we will hear today, Islamists who have made a global political
ideology out of a religion, use the Internet as a way to reach across national boundaries
to recruit new soldiers, sympathizers and financial supporters. It is a focused
campaign in which Islamist terrorists use the Internet to broadcast news,
propagandize, and conduct on-line classes in terrorist tactics and ideology.
They also use the Internet to transcend gaps in space and time, to research
potential targets and share information with each other about planned
operations….
…
Michael S. Doran, Deputy Assistant Secretary of
Defense for Support for Public Diplomacy, Department of Defense: While this struggle bears some comparison with past
ideological conflicts, it differs in that the Internet allows relatively small
organizations with limited resources, such as Al-Qaeda, to broadcast messages
across the globe instantaneously. In past conflicts, only nation states could
disseminate their messages so widely. Terrorists are using the Internet now
more than ever in an attempt to influence the global political environment.
Al-Qaeda and its associates, in particular, use the Internet to spread their
political ideology, disseminate the extremist interpretation of religion that
supports it, and coordinate their operations…..
Those
characteristics that turned the Internet virtually overnight into an
indispensable tool of our day-to-day life have also made it a boon to terrorist
organizations: using the Internet is cheap; it allows the rapid dissemination
of text, video, and audio files; and, importantly, it allows anonymous
communications to very large audiences. The benefits to terrorist groups of a
cheap and anonymous multi-media communications system are obvious.
…
Lieutenant Colonel Joseph H. Felter, Director, Combat
Terrorism Center (CTC), U.S. Military Academy: The real center of gravity of the violent movement that sustains
Al-Qaeda are the ideas of radical jihadist thought. It is these ideas, not
necessarily the individual leaders, which insulate Al-Qaeda against U.S.
pressure and enable the movement to spread even as its leaders are captured or
killed. The Internet facilitates the dissemination of these ideas and, perhaps
more importantly, offers like-minded would-be terrorists the ability to network
around these dangerous concepts.
It
is not possible to capture, kill, or incarcerate ideas. We should not think of
Al-Qaeda in terms of organizational charts and bureaucratic hierarchies that
typify a conventional military enemy. Al-Qaeda has become a brand name, a way
of seeing the world. This global movement would not be possible without the
pervasiveness of Internet accessibility and the capability it offers Al-Qaeda’s
thought-leaders to define the way disillusioned youth think about the world.
The Internet allows thousands of disenfranchised and displaced individuals to
build a virtual community of followers bound together only by a body of shared
ideas and digital relationships. We cannot prevent all of these relationships
from forming or stop the generation of these ideas, but we can do a better job
of understanding how the Internet facilitates these processes so we can monitor
and thwart those who join the jihadi movement.
…
Frank J. Cilluffo, Associate Vice President for
Homeland Security, Director, Homeland Security Policy Institute, The George
Washington University: Internet chat
rooms are now supplementing and replacing mosques, community centers and coffee
shops as venues for recruitment and radicalization by terrorist groups like al
Qaeda. The real time, two-way dialogue of chat rooms has taken the fight
global, enabling extremist ideas to be shared, take root, be reaffirmed and
spread exponentially. Use of computer-mediated communication (CMC) has made a
range of terrorist operational activities cheaper, faster, and more secure.
Communications. Fundraising. Planning and coordination. Training. Information
gathering and data mining. Propaganda and spreading misinformation.
Radicalization and recruitment. The list is long, and not even complete.
Use
of the Internet by terrorists groups has evolved over time. Terrorists once
used the Internet primarily to support operations. Increasingly, however, the
World Wide Web is also used for another purpose: to spread radical ideologies
faster, wider, and more effectively than ever before possible. Radicalization,
whether facilitated by CMC, face-to-face interaction, or other means, can create
pools of like-minded believers who may go on to enlist into terrorist movements
and plan and commit acts of violence. Radicalization is the lifeblood of the
global extremist jihadi Salafist movement, generating new recruits for existing
groups or creating environments in which new groups arise.
Military strategies alone
are not sufficient in our efforts against terrorism.
MR.
CILLUFFO: Our adversaries comprise a global, transnational insurgency. To
prevail against it, we must win in the battle for hearts and minds, remove
terrorist masterminds, and offer hope and opportunity to those who might
otherwise be seduced by the jihadi ideology. We have entered a new phase of
this struggle and must rethink our strategy as a result. Military activities
and hunting down individual terrorists are alone insufficient.
Terrorists use the
Internet to involve more and more people in their cause by creating virtual
networks that are difficult to track.
SEN.
LIEBERMAN: The most macabre example of their exploitation of the Internet is
one we will hear today from Lieutenant Colonel Joseph Felter, director of the
Combating Terrorism Center at West Point. In an effort to raise its visibility
and recruit new members, an Iraqi insurgent group held a website design contest
open to anyone in the world with an Internet connection. First prize was the
opportunity to launch a rocket attack against American forces in Iraq, with
just the click of the mouse from the winner’s computer. These are not the
efforts of amateurs. Terrorist groups run their own professional media
production companies that produce video and audio for Internet broadcast, they
create websites, chat rooms, online forums, libraries and video games that
promote the Islamist agenda. They are a clear and present danger.
DEP.
ASST. SEC. DORAN: The anonymity of the web and the ready availability of a
virtual space for posting material in large quantities make it easy for
terrorist-related sites to pop up temporarily, publish new material, and then
move to another address when necessary. Once the material has been published,
it is immediately duplicated on a large number of sites located on servers
across the globe. The speed with which this dissemination occurs poses a
serious challenge to those in the U.S. government working to locate hostile
sites, and assess their content. In fact, the web has created conditions that
make it possible for us to imagine a wholly new type of terrorist network – one
that is almost entirely virtual – composed of individuals who are not personally
known to each other but who are animated by the same ideology and willing to
coordinate actions in pursuit of it.
…
LT.
COL. FELTER: Jihadi thinkers see themselves waging a series of insurgencies
that are linked intellectually by a shared ideology. The key to their victory,
they argue, is winning the hearts and minds of various Muslim constituencies.
The two primary ways in which jihadi thinkers have sought to do this is by: 1)
indoctrinating successive generations of Muslim youth with the jihadi value-system;
2) creating as many possible new avenues for Muslims to participate in the
jihadi movement.
The
terrorists are taking advantage of the web’s potential to greatly expand
opportunities for their followers and sympathizers to support this deadly
movement. For example, one book available online, entitled 39 Ways to
Participate in Jihad, spells out a variety of options to aid and abet the
terrorists’ cause short of overt participation in terrorist attacks and many
facilitated by the Internet. For example, the book urges supporters to spread
news about jihadis fighting in Afghanistan and Iraq. Today we see thousands of
websites springing up to distribute information created by terrorists and
insurgents in those countries. The book also encourages parents to teach their
children about the path of jihad. It urges mothers to socialize their children
with a jihadi mindset from an earlier age by reading them bedtime stories of
the great jihadi fighters or showing them videos of successful jihadi attacks against
American forces. Today we see video games distributed online that focus on
killing effigies of President Bush and teaching a distorted version of history
that emphasizes the role of terrorists.
Senators and witnesses
offered suggestions to counter the use of the Internet by terrorists.
SEN.
LIEBERMAN: The United States must take the challenge posed by these Internet
terrorists very seriously and launch an aggressive coordinated and effective
response. We cannot cede cyberspace to the Islamist terrorists. We must do
everything we can as quickly as we can to disrupt their websites and compete
with them for the attention of all who frequent them. We need to monitor these
sites constantly for information and use them to exploit divisions among
different sects and factions. We need to recruit “trolls” who can sow seeds of
doubt on the different extremist websites and chat rooms. And we must develop
the ability to shut these sites down when danger is imminent. It’s tragic that
the Internet – this marvelous 21st Century technology – has become a twisted
tool for those who seek to kill innocent people and try to sow fear and
division in the free world.
LT.
COL. FELTER: Given what we know about how radical Islamic extremists are
harnessing the power of the Internet, the CTC believes efforts to combat the
threats posed by these terrorists can be enhanced through 1) developing a more
comprehensive understanding of the ideology fueling Islamic radicalism which is
exported online; 2) better exploiting the terrorists organizational rifts and
network vulnerabilities that they expose online and 3) expanding opportunities
to support our collective efforts to combat the terrorist threat harnessing
more diverse communities of expertise that can contribute to the fight.
…
MR.
CILLUFFO: Drawing on the collective knowledge of recognized specialists in
religion, psychology, information technology, communications, law, intelligence
matters, and other fields, we offer a five-pronged plan that contains a range
of ideas to guide our response postures both online and offline, and heighten
their effectiveness. These proposals are informed by three key themes: how and
why individuals are influenced via CMC; the need to counter extremist speech
with an effective counter-narrative that challenges extremist ideology and
offers an alternative to those who feel alienated and marginalized; and the
importance of intelligence work to inform counterterrorism and the
counter-narrative.
1.
Craft a compelling
counter-narrative for worldwide delivery, in multimedia, at and by the
grassroots level….
2.
Foster intra- and cross-cultural
dialogue and understanding to strengthen the ties that bind together
communities at the local, national, and international levels….
3.
Recognize and address the need
for additional behavioral science research into the process of radicalization
both online and offline….
4.
Deny or disrupt extremist access
to, and extremist efforts through, the Internet via legal and technical means,
and covert action, where appropriate….
5.
Remedy resource and capability
gaps in government.
Thursday, May 4, 2007: Senate Finance Committee
“Offshore Tax Evasion: Stashing Cash Overseas”
The abuse of overseas tax
havens contributes significantly to the tax gap.
SEN.
BAUCUS: [A]s international trade becomes more complex, it is becoming more and
more difficult to track transactions legally subject to taxation. As a result,
offshore tax evasion has become a large and growing element of the tax gap,
that share of taxes legally owed that is not paid.
…
REUVEN
S. AVI-YONAH, IRWIN I. COHN PROFESSOR OF LAW, UNIVERSITY OF MICHIGAN LAW
SCHOOL: I believe that the international tax gap is a significant component of
the overall tax gap and may in fact be larger than some components that have
attracted more public and IRS attention, like corporate tax shelters or EITC
[Earned Income Tax Credit] fraud. I also believe that in order to maintain any
kind of tax system, the U.S. public needs to be confident that current law can
be enforced and that tax evasion will be caught and prosecuted. Thus, I hope
that bipartisan support can be found for taking the steps identified above to
close the international tax gap. These steps offer the potential of raising
additional revenue without raising taxes, and of leveling the playing field
between ordinary Americans who pay their fair share of taxes and others who do
not.
…
JEFFREY OWENS, DIRECTOR, CENTRE FOR TAX POLICY AND
ADMINISTRATION, ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT: The
debate over improving offshore compliance is part of the broader debate on how
to narrow the overall tax gap…. Offshore tax evasion has effects that go beyond
the lost revenue of the tax evaded. Offshore tax evasion undermines the
fairness and integrity of national tax systems and adversely affects the
willingness of the vast majority of law abiding taxpayers to voluntarily comply
with their tax obligations. Public attitudes to tax compliance are heavily
influenced by perception and the “voluntary” element of compliance can be badly
eroded if a minority of taxpayers, usually those with significant incomes, can
evade or are perceived to be evading their taxes by hiding assets offshore.
Furthermore, tax evasion by some restricts the ability of governments to lower
tax rates for all. As Treasury Secretary Paulson put it recently in testimony
before this Committee, “when people fail to pay their taxes, it serves as a de
facto tax increase on everyone else.”
…
SEN.
CONRAD: I think it really is important to the vast majority of taxpayers in
this country who are honest and are paying what they legitimately owe because
that burden is getting shifted to them by the growing number of people who
aren’t and the growing number of companies who aren’t.
The Government
Accountability Office recently examined the IRS’ offshore tax enforcement
program.
SEN.
BAUCUS: [T]he GAO explains that the IRS takes much longer to finish its
examination of an offshore tax evasion case than a domestic case. But the
return to the IRS from an offshore case is typically three times what is
recovered from a domestic case. This is a sure sign that the volume of offshore
tax evasion is huge.
And
GAO gives us some recommendations to consider: GAO recommends that Congress
should consider extending the statute of limitations for complicated offshore
tax evasion cases. GAO recommends that Qualified Intermediaries need to do a
better job of identifying and tracking the money that they handle. And GAO
recommends that the IRS needs to do a better job of tracking information about
foreign financial transactions.
...
MICHAEL
BROSTEK, DIRECTOR, TAX ISSUES, STRATEGIC ISSUES TEAM, GOVERNMENT ACCOUNTABILITY
OFFICE (GAO): IRS examinations involving offshore tax evasion take longer than
other examinations but also yield higher assessments.… Offshore examinations
are subject to the same three-year statute of limitations on assessments as
other types of cases. IRS officials told us that the need to complete an
examination and make an assessment no later than three years after the return
was filed sometimes means that IRS closes an examination before some work is
complete and sometimes chooses not to open an examination at all, despite
evidence of likely noncompliance.
Witnesses agreed that
international cooperation to ensure transparency and information exchange is
the best approach to combating overseas tax fraud.
SEN.
BAUCUS: The heart of the problem is that the Treasury, the IRS, and American
institutions know far less than they should. With international trade
increasingly flowing across national boundaries at the speed of light, it is
becoming more and more difficult to make sure that we are collecting the taxes
that are owed. And the honest American taxpayers who work hard, and do not have
the ability to engage in offshore activity, are left holding the bill.
MR.
OWENS: We know the offshore evasion problem is big but we do not have a precise
estimate of the amount of tax at risk. Given that the main reason that tax
evaders go offshore is the secrecy provided to enable them to hide their assets
and income from their tax authorities, this is not surprising
…
Without
vigorous and coordinated action by governments to ensure that the right
legislative framework is in place, that tax administrations have the necessary
information, tools and resources to address the problem, and without greater
bilateral and multilateral co-operation, offshore tax evasion will continue to
grow and undermine the integrity of national tax systems.
…
At
the end of the day, you can’t operate an effective tax system, in today’s
environment, without good information.
JOHN
HARRINGTON, ACTING INTERNATIONAL TAX COUNSEL, DEPARTMENT OF THE TREASURY: In
most cases… the problem of offshore tax abuse lies not with our tax rules but
with attempts to hide from them. Accordingly, to enforce our tax laws, we have
to exchange information with other countries. Information exchange is an area
in which the Treasury Department has been working assiduously for several
years, and our steady and persistent efforts are bearing fruit…. Access to
information from other countries is critically important to the full and fair
enforcement of the U.S. tax laws.
Chairman Baucus urged the
Treasury Department to do more to reduce offshore tax evasion.
SEN.
BAUCUS: Frankly, one job for the Federal government is just to nail down the
amount being transferred offshore. We need to learn what the total amount is.
And after that, we need to learn much more about how much tax is being avoided.
Within the $300 billion total, we are told that the IRS has no idea where $19
billion ends up, once the funds are transferred overseas. This is troubling…. I
just don’t get the sense of urgency from Treasury that I think is needed. This
is a huge problem.
…
MR.
HARRINGTON: [A] one-size-fits-all approach will not work to stop offshore tax
abuse while continuing to permit legitimate cross-border transactions, which
are vital to the United States’ participation in the global economy. This is
why the Treasury Department has undertaken a multi-faceted approach to deal
with the problem of offshore tax evasion. I would like to describe the actions
we have taken and continue to take, especially regarding information exchange,
to deal with this difficult but important issue. It is critical to bear in mind
that this has been a long-term problem, and we must continue to take a
long-term view in combating offshore tax evasion, while managing expectations
about the speed with which progress can be made in addressing it.
…
SEN.
BAUCUS: What’s Treasury’s estimate of U.S.-sourced income that goes
overseas?...I’m trying to determine whether Treasury has a handle on this. Does
Treasury have numbers?
MR.
HARRINGTON: We consider the international portion to be a part of the basic tax
gap number…. I don’t think we have a separate breakout.
