Acting Internal Revenue Service Commissioner Danny Werfel testified Thursday at a hearing before the House Committee on Oversight and Government Reform about conference spending. The tax-collection agency flew 2,600 managers in the small-business and self-employed division to Anaheim, Calif., for a training event that cost $4.1 million. Also testifying were J. Russell George, Treasury inspector general for tax administration, Gregory Kutz, an assistant to George, and Faris Fink, commissioner of the IRS's small business and self-employed division. The IRS officials were also quizzed about the decision to place two managers on administrative leave Wednesday for accepting free food and other gifts in violation of government ethics rules.
In an earlier exchange during the hearing, Rep. Jerrold Nadler, D-N.Y., quizzed Muller extensively about what the law allowed the FBI to use from the surveillance programs without obtaining a new warrant. Nadler specifically wanted to know whether information about the phone subscriber's name could be acquired.
"You need at least a national security letter," to get subscriber information, Mueller answered. "All you have is a telephone number. You do not have subscriber information. So you need the subscriber information. You would have to get probably a national security letter to get that subscriber information."
But Nadler said he heard precisely the opposite in an earlier briefing, "that you could get the specific information from that telephone simply based on an analyst deciding that, and you didn't need a new warrant. In other words, what you just said is incorrect. So there's a conflict..."
Here is the full exchange:
NADLER: Now, secondly, under Section 215, if you've gotten information from metadata and you as a result of that think that, "gee, this phone number, 873 whatever, looks suspicious and we ought to actually get the contents of that phone" -- of that phone, do you -- do you need a new specific warrant?
MUELLER: You need at least a national security letter. All you have is a telephone number. You do not have subscriber information. So you need the subscriber information. You would have to get probably a national security letter to get that subscriber information.
NADLER: And to...
MUELLER: And then, if you wanted to do more...
NADLER: You wanted to listen to the phone?
MUELLER: Then you have to get a special -- a particularized order from...
MUELLER: ... the FISA court directed at that particular phone of that particular individual.
NADLER: Now is the answer you just gave me classified...
MUELLER: Is what?
NADLER: The answer you just gave me classified in any way?
MUELLER: I don't think so.
NADLER: OK, then I can ask the -- then I can say the following: We heard precisely the opposite at the briefing the other day. We heard precisely that you could get the specific information from that telephone simply based on an analyst deciding that, and you didn't need a new warrant. In other words, what you just said is incorrect. So there's a conflict... MUELLER: I'm not certain that it's the same answer to the same question. I'm sorry, I didn't mean to...
NADLER: Well, I asked the question both times, and I think it's the same question. So maybe you'd better go back and check, because someone was incorrect.
MUELLER: I will -- I will do that. That -- that is my understanding of the process.
Gen. Keith Alexander, chief of both the National Security Agency and the U.S. Cyber Command, is testifying before the Senate Appropriations Committee on Wednesday. Though the hearing is ostensibly about cybersecurity and workforce training, it is the first time an official from the super-secret agency has been scheduled to appear before a congressional committee since news broke of the NSA's sweeping Internet surveillance program. Several members of Congress have called for hearings on the constitutionality of the program, so members of the committee were expected to use the hearing to pose questions to Alexander about the surveillance.
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Chairman Darrell Issa (R-Calif.) adjourned the hearing, but not before thanking IRS acting commissioner for his testimony. "No doubt something bad happened," Issa said. "It didn't happen on your watch, but you're the person we're looking to to take immediate and decisive action."
Ranking member Elijah Cummings (D-Md.) also thanked Werfel and said the commissioner should use the recent IRS controversies as an opportunity to improve the agency.
"There are moments in life that are placed there to actually become a movement — a moment to a movement," Cummings said. "I think we've had a moment here where we see so much that needs to be corrected."
"I'm encouraged to see that you're determined to turn [the IRS issues] into a movement where all Americans can feel that trust … that people on the other side are going to treat them fairly," Cummings said.
Rep. Jason Chaffetz (R-Utah) asked IRS acting commissioner Daniel Werfel how many times he met former IRS acting commissioner Douglas Shulman at the White House.
Werfel said he and Shulman visited the White House and the Eisenhower Executive Office Building at the same time for two events, both centered around improper payments from the federal government.
Werfel said the White House event was a signing ceremony, while the visit to the Eisenhower building focused on improper payments authorized through the Social Security Administration.
In previous hearings, lawmakers raised the point that Shulman had visited the White House more than 150 times, and they asked whether the former commissioner had ever discussed the IRS targeting campaign with White House officials. Shulman said he had not talked about that matter during his visits.
In questioning IRS acting commissioner Daniel Werfel, ranking member Elijah Cummings (D-Md.) mentioned allegations that the agency leaked one conservative organization's private information to an opposition group.
Cummings said Americans are feeling increasingly vulnerable about their information being distributed over the internet by the IRS. "Do you have a plan in place -- where are we on that?" the congressman asked.
Werfel said the leak issue is one of three primary risks that he has identified within the agency, with the others including lack of impartiality and inappropriate expenditures.
"Part of our improvement plan, part of our efforts to restore trust are to put stronger practices in place to make sure we're hitting it out of the park on those issues," Werfel said.
New acting IRS commissioner Daniel Werfel, who was appointed after the IRS targeting scandal became public knowledge, is testifying about steps he has and will take to correct wrongdoing at the agency.
Werfel said he is reviewing the full range of IRS policies and practices. "In that way, we will develop a better understanding of risks where they exist," he said, adding that the agency must ensure controls are in place to prevent wasteful spending.
The commissioner also noted that he took action Wednesday against two IRS employees after learning of allegations that they were connected with unspecified misdeeds.
Ranking member Elijah Cummings (D-Md.) suggested that former IRS commissioner Douglas Shulman pulled a "rope-a-dope" in his various appearances before Congress to answer questions about the IRS targeting campaign. He described Shulman's testimonies as "shameful."
Cummings then thanked IRS official Faris Fink, who headed the division that held the Anaheim conference, for being earnest in his own testimony.
"You came and took some tough blows, and you laid it out as best you could," Cummings said. "I appreciate you doing that. The fact that you are remorseful means a lot to me."
The ranking member then put the conference-spending issue in perspective, pointing out the agency's efforts in recent years to stop inappropriate expenses.
"I don't think the IRS will ever be the same, but it will be a better organization," Cummings said. "We will be looking at it trough a microscope."
An exchange between Rep. Jason Chaffetz (R-Utah) and IRS official Faris Fink prompted concerns from some House Oversight Committee members that Fink may have perjured himself with his statements.
Fink had said at one point during questioning by Chaffetz that he did not know about the costs of the Anaheim conference until after the conference took place.
The assistant inspector general, Gregory Kutz, noted that Fink signed off on the conference plan before it took place. Fink then acknowledged that he learned of the estimated costs during a briefing before the conference was approved, begging the question.
Chairman Darrell Issa (R-Calif.) gave Fink a chance to correct his earlier statement for the record, and Fink took him up on that opportunity.
In a light-hearted moment, Del. Eleanor Holmes Norton (D-D.C.) took issue with earlier comments from Rep. Elijah Cummings (D-Md.), who said he could find nothing redeeming about two IRS conference videos that cost a combined $50,000 to produce.
Norton defended the line dancers who appeared in one of the videos. "I just want to stand up for the line dancers and say, 'hey, the IRS line dancers were't bad at all,'" Holmes said. "It's too bad they weren't doing it on their own dime."
Norton said she is a big proponent of dancing.
Rep. Jason Chaffetz (R-Utah) reconvened the hearing, recognizing Rep. Mike Turner (R-Ohio) for comments and questions. The dais is slowly filling back up as committee members return from taking votes on the House floor.
The committee has adjourned the hearing to deal with a series of votes on the House floor relating to the 2014 spending bill. finished. The liveblog will continue when the hearing resumes. The new acting commissioner of the IRS Danny Werfel, who has not spoken at the hearing yet, is expected to provide testimony during the second half.
Faris Fink, commissioner of the IRS small business and self-employed division, apologized for the two conference videos that cost a combined $50,000. He described them as "an attempt, in a well-intentioned way, to use humor to open the conference … and close the conference."
Fink added: "They would not be used today. The fact of the matter is that they're embarrassing ... they're embarrassing and I regret the fact that they were made."
Treasury inspector general J. Russell George said his office could not validate the accuracy of the estimated $4 million spent on the Anaheim conference "because the IRS did not have effective controls to track and report those costs."
However, he said more than $3 million of the conference cost was paid from unused funding originally intended for hiring enforcement employees.
George also pointed out that the IRS planners requested VIP suite upgrades instead of negotiating for lower room rates.
The inspector general noted that IRS conference spending over the three-year period covered in the audit dropped from a total of $38 million in 2010 to $5 million in 2012.
Rep. Elijah Cummings (D-Md.), ranking member of the House Oversight committee, said he cannot find the redeeming value of a training video that parodied "Star Trek." That video, combined with another that showed workers learning a line dance, cost the IRS $50,000.
"I live in a neighborhood where some people don't even make $50,000," Cummings said, raising his voice. "Yet we can produce a video that has no redeeming value, none, and spend taxpayers hard-working dollars."
Rep. Darrell Issa (R-Calif.), chairman of the House Oversight committee, said in his opening remarks that the IRS is 'effectively guilty of tax fraud' for having failed to disclose certain expenses from a conference.
That event served as the centerpiece of the recent inspector general's report detailing lavish spending on conferences for the agency.
"As taxpayers, we should be appalled that there are two standards -- one for us and a different one for the people who work for the IRS, in some cases," Issa said.
Prepared remarks from Rep. Gerald Connolly (D-Va.) suggest the congressman will offer a mixed bag of remarks about the issue of lavish spending on IRS conferences.
Connolly's opening statement, as it is written, will describe the conference spending as "outrageous and irresponsible," calling it "deplorable and inexcusable, plain and simple."
The congressman is also expected to say that some of the conference activities served legitimate purposes, even during the 2010 Anaheim, Calif., conference that served as the centerpiece of the inspector general's report.
Connolly's remarks will show that the Democratic lawmaker will defend the Obama administration by suggesting that the single largest increase came during the George W. Bush years. His statement defends President Obama, saying he "instituted strict procedures to reign in conference spending" through a 2011 executive order that came after the excessive spending in Anaheim -- which occurred on the current president's watch.
The inspector general's report shows that the IRS conference spending reached its peak under Obama, climbing to about $37.6 million in 2010 before plummeting to just $6 million in 2011.
Connolly's written remarks raise concerns about how the recent negative publicity surrounding the IRS could affect funding for the agency. "Unfortunately, the steady stream of negative headlines highlighting stunning mismanagement all but guarantees that the IRS will not receive the resources it truly needs to fairly enforce our tax laws and provide the American people with the high quality customer service they deserve," his statement says.