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Chairman Hensarling Questions Secretary Lew on IRS Scandal, FSOC Report

"I don’t know the level of responsibility that you and the president bear for this scandal, but I know it’s not zero."

Washington, May 22 -

Chairman Hensarling (Hensarling): Mr. Secretary, I’m personally not going to spend a whole lot of time with you on discussing who knew what, when, with respect to the IRS scandal but I would like to say this:  I don’t know the level of responsibility that you and the president bear for this scandal, but I know it’s not zero.  I think the American people would like to hear a little bit more from you and the president that the buck stops here, as opposed to “hear no evil, see no evil, and I know nothing, nothing nothing.”  And that may just be a little bit of unsolicited advice. So I’m not going to look retrospectively, I’m going to look prospectively.  I know you’ve seen the forms that the IRS has sent American citizens.  The IRS now reports to you, Mr. Secretary, and has for the last two and a half months.  So I look through these forms and I find out where the IRS is asking American citizens for all of their activity on Facebook and Twitter, including hard copies of all advertising on social media.  Under your watch, will it be appropriate for IRS agents to ask for this information?

Secretary Lew (Lew): Mr. Chairman, I take responsibility for the management of the Treasury Department and for the management oversight of the IRS. There is a difference between general management oversight and the very important line that exists between policy roles and and the administration of the tax system. For decades we’ve had appropriate lines….

Hensarling: Mr. Secretary, the administration just fired someone.  That would seem to indicate there is some control over the policies of the IRS.   So to the extent that you have the ability, and the administration has the ability, to hire and fire the head of the IRS, will it be appropriate for the IRS going forward to ask for this information from American citizens?

Lew: Mr. Chairman, if I could just finish the thought that I was on. There is a very important distinction between hiring a commissioner of the IRS and there is one other political appointee at the IRS – that is the General Counsel….

Hensarling:  OK, are you positing an inability to impact the policies…


Lew: …and there is involvement on policy matters, but on administration of the tax……

Hensarling: So are you unable to impact the policy?

Lew: On policy, I will continue as secretaries of Treasury have, and should, to express views on tax policy…


Hensarling: Ok, in your view is it appropriate…


Hensarling:  Mr Secretary, in your opinion, is it appropriate to ask American citizens about their prayer life, how often they attend prayer meetings, and what percentage of time organizations spend in prayer groups?

Lew: Mr. Chairman, I’m not familiar with the specific document that you are looking at. As a general matter, there is the highest regard for the personal privacy…

Hensarling:  It’s been released by the IRS so I hope you do look at it.

Lew:  …of individuals is a very high priority.  Protecting individuals from the kind of questions that invade their privacy. This is a very high priority.

Hensarling:  You have some ability to impact who heads the IRS, so in your personal opinion, is it appropriate for the IRS to be asking about the prayer life of American citizens?

Lew: Mr. Chairman, it’s a hypothetical question, since I’m not familiar with…..

Hensarling: It’s not hypothetical, Mr. Secretary, to the people who received this application on penalty of perjury if they didn’t disclose their prayer lives to the IRS.

Lew: Mr. Chairman, I cannot respond to a form that I haven’t had a chance to see.  I’m happy to get back to you.

Hensarling: Okay, if you would, Mr. Secretary.  And after being on the job for two and a half months, and it’s one of the biggest scandals that has rocked Washington in years, I would hope in the matter of priorities of the Secretary of Treasury that you would undertake to review this material going forward.

Lew: Mr. Chairman, I have made clear that it is an extraordinarily high priority, my highest priority to restore confidence in the IRS. That’s why we have a new acting commission who is taking over today. His first job is to find out who is accountable and make sure people are held accountable for any actions that were wrongful.  Secondly…

Hensarling: Mr. Secretary, regrettably my time is running out.  I assume you will have ample opportunity to to speak more about the IRS.  I’m going to change subjects which may be more pleasant for you.  In the FSOC report, on page 13, it states “the counsel recommends that the Treasury, HUD and the FHFA continue to work with Congress and other stakeholders to develop housing reform system.” Mr. Secretary, I have been either the Chairman or the Vice Chairman of this committee for the last two and a half years and I am unaware of any activities of either HUD or Treasury to work with Congress. I’m aware of the white paper that was released that has now gathered dust for over two years. So I’m not sure who Treasury and HUD have been working with but it hasn’t been this committee.  And I see my time has expired.  I would like to have the opportunity to speak to you about this later to find out if the administration intends on doing anything with their white paper besides allowing it to gather dust on housing reform.