Statement of Senator Charles Grassley
Remarks before the House of Representatives Committee on Ways and Means
Executive Branch and Congressional Governance of the Internal Revenue Service
September 16, 1997

Mr. Chairman, members of the Committee, thank you for the invitation to speak here today with my House and Senate Cosponsors. When it comes to IRS governance and management, my colleagues mostly divide their comments into two areas. The first is the new management board. The second is all other issues. We need to be careful to not miss some important points among those other issues, despite the importance of the board.

The matter of the board is actually a simple concept. Will it to be a real board with real independence, authority, and teeth? Or, will it to be another reshuffling of the deck chairs down at the Treasury and IRS? I summarized the Treasury Department's position two months ago before this Committee's Subcommittee on IRS Oversight. I said then, "Treasury officials who two years ago couldn't find the IRS if they were standing at 11th and Constitution are suddenly in fits about losing some control over part of their budget and bureaucracy." In short, they have been out of touch with the troubles and concerns of our citizens. The American people deserve better from the Executive Branch. I am glad that my cosponsors and I are presenting real options for real change at the IRS.

This brings me to another important issue that has been lost among the others. That is, the role the President should play in our efforts to reform the IRS. And that begs the question: Where is the President, as the true, constitutional leader of the IRS? The Constitution provides that Congress makes the laws and the President enforces the laws. The IRS is a law enforcement, Executive Branch agency. So where is the Chief Executive regarding reform of his own agency? Does he intend to personally enter the reform debate? Or is he satisfied to sit this one out? He certainly and traditionally gets involved with legislation. This is the same President, after all, who recently demanded that Congress enter into a pre-certified agreement on federal budget and tax legislation. He later insisted that Congress provide "his" full legislative commitment on tax subsidies for education.

Where is the President on an expression of support for major and real legislative reform of the IRS? If he remains silent on IRS reform, can we interpret that as President Clinton being in favor of the status quo at the IRS? The people have a right to know.

The President should not take my remarks as a partisan criticism. Some of the problems at the IRS predate him. Simply, if the President can be so outspoken about budget legislation, which is not his Constitutional responsibility, then he should also find something to say about the IRS, which is his Constitutional responsibility. IRS reform is much too important for the President to use surrogates, like Secretary Rubin and Deputy Secretary Summers. The President himself must demonstrate leadership. He needs to stand up and be heard himself. If not, he risks being perceived as running from the problems at the IRS. That's not the kind of leadership that inspires confidence among the people.

However, if the President intends to continue to hide behind Secretary Rubin and Deputy Secretary Summers, then there is something that we can do as legislators. We can simply send the President this completed reform legislation for his signature. Then, he can perform his only true legislative role. He can make real IRS reform the law.

On a related matter, I want to say a few words about the "Personnel Flexibilities" section of our bill. This section is so important that we need to discuss its now, even if it is not the direct jurisdiction of this Committee.

To me, the most important provision, among the personnel provisions, is the statutory ability for a new IRS Commissioner to hire his or her own team of senior managers. The IRS has a pyramidal structure. Every few years we replace the Commissioner at the top, but the next highest block of managers remain unchanged. What is happening in this legislation is similar to what happens to private sector companies when they are taken over by new management. First, a new CEO comes in. That new CEO usually culls out the remaining failed management team. We can't do that at IRS because of the executive service laws. If a new business-type IRS Commissioner is to succeed, that person will need the tools to succeed. Therefore, he or she will need to bring in his or her own people. There is no point in recruiting a new quarterback for the IRS if we are going to keep the same problem wide receivers. A new IRS Commissioner will need someone to throw to. I caution my colleagues to not overlook the importance of the personnel flexibility legislation.

On the matter of the next IRS Commissioner, I have much to say, but I will say only two things. First, it's encouraging to hear that the Commissioner nominee, Mr. Rosotti, is not a tax lawyer, with all due respect to members of that noble profession. I have not interviewed him, but Mr. Rosotti's strength is supposed to be his experience in leading a large and diverse organization, much like the IRS. Second, if he had to commit to defending the status quo at the IRS, in exchange for his nomination, then he might have "a tough row to hoe" in the Senate.

The American people are ready for real changes and real leadership at the IRS. Congress is stepping into the leadership void. But, ultimately, it is the place of the Chief Executive to lead the IRS. It's his agency. The American people look to their President to deliver.