TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1996

THURSDAY, MAY 18, 1995

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

U.S. SENATE,

Washington, DC.

The subcommittee met at 2:07 p.m., in room SD-192, Dirksen Senate Office Building, Hon. Richard C. Shelby (chairman) presiding.

Present: Senators Shelby and Kerrey.

DEPARTMENT OF THE TREASURY

OFFICE OF THE SECRETARY

STATEMENT OF ROBERT E. RUBIN, SECRETARY OF THE TREASURY ACCOMPANIED BY:

RONALD K. NOBLE, UNDER SECRETARY OF THE TREASURY, ENFORCEMENT

GEORGE MUÑOZ, ASSISTANT SECRETARY OF THE TREASURY, MANAGEMENT, AND CHIEF FINANCIAL OFFICER

OPENING REMARKS

Senator SHELBY. The subcommittee will come to order. Today marks the final hearing that the subcommittee has scheduled to review the fiscal year 1996 budget submission.

Our witnesses today will be the Honorable Robert Rubin, Secretary of the Treasury, with whom we will discuss the Treasury Department's request, and Federal Election Commissioners Danny McDonald, Lee Ann Elliott, and John McGarry, with whom we will review the budget request of the Federal Election Commission.

I will not take a lot of time here with a formal opening statement so we can get right into the statements.

Mr. Secretary, it is good to see you again. I want to take this opportunity to welcome you to your first visit to this subcommittee. We have had the opportunity to discuss issues with you in other venues, but his is the first time since your confirmation the subcommittee will have the opportunity to discuss issues facing the Department with you. As is the subcommittee's tradition, your entire written statement will be made part of the record. And you may proceed as you wish.

INTRODUCTION

Secretary RUBIN. Thank you, Mr. Chairman. What we would like to do, if we may, is for me to deliver an oral statement.

Senator SHELBY. Absolutely.

Secretary RUBIN. And then I have with me Ron Noble, who is Treasury Under Secretary for Enforcement, George Muñoz

Senator SHELBY. We have been seeing a lot of Secretary Noble. Secretary RUBIN. Hopefully, he will be welcome again. And our Assistant Secretary for Management and Chief Financial Officer, George Muñoz. After my statement, all three of us would be glad to respond to questions.

Senator SHELBY. Absolutely.

OPENING STATEMENT

Secretary RUBIN. Before beginning, let me just make a general comment, if I may. Having spent 26 years on Wall Street and interacting a lot with Treasury, I started with an enormously high regard for Treasury and for its staff.

The time that I have spent here as Secretary has just confirmed that it really is an elite institution. And it is an institution that functions the way government ought to function.

There is a tremendous commitment—a sense of trying to do things right, satisfying customers, satisfying the people who are relying upon it and treating them as customers, and functioning as efficiently as possible.

We also say, as you know, that like our sister departments in law enforcement, we are very involved with the Oklahoma situation. We lost eight Treasury employees, six in the Secret Service and two in Customs.

Beyond that, we had two children of an IRS employee and eight other members of what we view as our extended Treasury family that were killed in Oklahoma. And we shall not forget them.

And it is our commitment, particularly our law enforcement people, not to rest until those responsible are brought to justice.

As you are aware, we asked for a supplemental appropriation to cover the cost of Oklahoma, and we are very appreciative of the support that you provided us with respect to that appropriation. It was $43.7 million, most of which will go to BATF.

BUDGET REQUEST

In the 1996 budget we will be requesting $11.3 billion. In our current fiscal year the budget was $10.5 billion and, among other things, was used to collect $1.3 trillion in revenues.

In an overall sense, as you know, our function is to help develop policies in all areas of the economy, domestic and international. In addition, we have extensive responsibilities in law enforcement, revenue collection, managing the Nation's financing, minting coins, printing currency.

I think it would be fair to say, Mr. Chairman, that reinvention really has been institutionalized at Treasury. I think down through the bureaucracy it has been part of our culture.

We are very proud of what we have been accomplishing. Next Tuesday there is going to be a reinvention event that is being held

at Treasury as a recognition of the outstanding job the people of Treasury have done reinventing, functioning more efficiently, and serving their customers.

In fiscal 1996 we are going to be nearly 4,000 FTE's smaller than January 1993. If you figure an average cost of $40,000 per FTE, that is a savings of about $160 million. And that is done, in our judgment, without any sacrifice of service. Let me now focus on a few of our specific areas.

LAW ENFORCEMENT

We are the second largest law enforcement agency of the Federal Government. We protect the President, fight financial crimes such as smuggling, and focus on reducing firearms violence.

Last year's crime bill, as you know, bans the manufacture, transfer, and possession of 19 specific semi-automatic assault weapons, as well as the transferred possession of large capacity ammunition clips. Regulations are in place ensuring that the continued access to remaining inventories of these weapons by active duty police officers does not become an illegal conduit for new weapons and ammunition clips, as well as other regulations put in place relating to the crime bill. These were all published last month in the Federal Register. Enforcing the assault weapons ban is a very high priority for BATF.

One of our priorities this year is to use our legal authority aggressively under the 1994 crime bill to address the crimes of violence, fraud, and drug abuse that are so much a problem in our society today. Through our $30 million violence reduction alliance we will provide grants to States and localities and expand the already successful cooperative efforts between the BATF and State and local governments to deal with firearm crimes.

Fiscal 1996 crime control resources will also be used to expand the Secret Service's attack on overseas counterfeiting and to continue BATF's GREAT Program. It is a program that deals with gangs and gang resistance education and training. In general, we are asking not only for material support but for personal support of all concerned for law enforcement officers and the very difficult jobs that they have.

FINANCIAL MANAGEMENT

We have made significant progress in improving financial management, increasing the number of unqualified audits under the Chief Financial Officer's Act and removing departmental oversight of financial systems from OMB's high-risk list.

However, we recognize that more needs to be done. I am committed, and we are committed, to making Treasury a model of financial management. We need your support to have the requisite resources. Our current focus-we believe this to be a very important project at Treasury-is to develop a single integrated financial management system within the Department.

We have also made progress in implementing the Government Performance and Results Act of 1993, which requires us to measure the achievement of our programs. Treasury is a lead participant in the GPRA Program. We have included over 200 performance measures in this budget request.

This budget has several major initiatives in the areas I have already mentioned. And beyond those areas, I would like to spell out a few of our other top priorities for you.

IMPROVED CUSTOMER SERVICE AND REINVENTING GOVERNMENT

First, we plan to continue to aggressively and vigorously meet the challenges of the "National Performance Review."

We will downsize our personnel budget and procurement operations and reduce the number of supervisory and headquarters personnel. A total of $38 million and 854 FTE's will be saved in fiscal year 1996 by downsizing and, we expect, without sacrificing serv

ice.

Every Treasury bureau has developed customer service standards for the customers they serve. The Vice President has commended our two largest bureaus, the IRS and the Customs Service, for reengineering their operations.

MODERNIZING COMPUTER SYSTEMS

Second, and very much tied to our ability to downsize, we plan to continue to modernize our existing information systems. Most importantly—and I believe this is one of the most important projects in the entire Federal Government-we must continue to develop and fully implement tax systems modernization, which we call TSM.

TSM's success is absolutely essential, because taxpayer frustration with processes and services as outdated as those of the IRS will over time erode the voluntary nature of our tax system.

I can assure you, Mr. Chairman, having been in the financial services industry, that no private sector firm would engage in the types of activities performed by the IRS without modern systems capabilities.

And it is achieving those types of capabilities that TSM is all about. It is a very good, and I think critical, investment for American taxpayers.

Our combined challenge-Treasury, the IRS, and Congress-is to ensure that TSM is delivered in the most cost-effective manner possible.

The IRS has responded aggressively to the management issues raised by the General Accounting Office and by this subcommittee. We all recognize that managing large systems processes is very dif ficult. We are committed to doing the best job possible.

We at what we call Main Treasury, Headquarters Treasury, have established an oversight group specifically to ensure departmental participation in and support for the long-range policy and management decisions that affect IRS modernization.

What we call the modernization management partnership that we have created is intended to make certain that not only the management concerns regarding TSM are addressed but also that the core business processes of the IRS are realigned most efficiently.

The partnership will take part in and approve strategic decisions. It will monitor progress of IRS modernization and, in general, will oversee TSM program priorities, resource allocation, staffing levels, and implementation schedules.