Mr. Chairman, members of the Committee, thank you for the invitation to share my views with you. I do so as a senior member of this committee, as a senior member and active participant of the National Commission on Restructuring the IRS, as a chief sponsor of Taxpayer Bill of Rights I and II, as a senator representing millions of taxpaying constituents, and as a taxpaying citizen myself.

In a sense, I represent both sides of the equation. As a member of the United States Senate, I am part of the functioning of government. And part of that functioning is the raising of revenues to finance the goods and services provided for the public. Yet, I also pay taxes, and I represent millions in my state who also pay or should pay their fair share.

The issue is one of balance, in my view. The Federal Government needs to collect its revenue, which taxpayers are obliged to pay. But taxpayers have certain rights that should not be abused. All of us should support a proper balance between these two needs. Yet, over the years, it appears such a proper balance has been lacking.

It is for this reason that some of us seem to be advocates for the taxpayers, without being mindful of the importance of the revenue-collection function of the IRS. Any serious, objective observer should acknowledge the necessity of balance. But when evidence mounts of IRS abuses and mismanagement, it's time to look beneath the surface and search for systemic, cultural problems. We did that and we found them. Both on the Commission, and, I believe, on this Committee as we will see later this week. A "we vs. they" mentality seems to exist. And that is not a healthy situation.

Having said that, this is not an indictment of the dedicated, front-line IRS employees in the field. Typically, they do an outstanding yet thankless job in the service of the public. It is not they who should be the targets of scorn. Rather, it is a management culture mindless of the fact that they are servants of the people. If allowed to persist, such a mindset often leads to arrogance, unresponsiveness, disregard for one's rights, and the very kinds of things we have been hearing from constituents for decades.

When we in the Congress attempt to investigate, we're often derailed. A cloak of secrecy goes up. It's more veiled than even the most elaborate secrecy arrangements at Langley. In the language of the federal government, it's called "6103." That's the Section of the Tax Code that prevents disclosure of taxpayer-related information. Designed to protect taxpayers' privacy, it does much more. It also protects the privacy of those who abuse taxpayers' rights, who mislead Congress, and who might use collection quotas in tax enforcement despite their illegality.

In my experience, Mr. Chairman, such abuses occur when independent oversight is lacking. Oversight has a rather antiseptic quality about it. That is the concept behind the Commission's recommendation for an independent oversight board over the IRS. This board would set appropriate performance standards, would measure performance, and then reward or discipline managers according to their performance.

An important part of oversight is more general openness. The Commission found that the IRS is a very closed and insular organization. As a result, we have put forward a first step to make the IRS more open to Congress and to the press. If we are to be successful in changing the culture of the IRS, a key ingredient is greater openness.

I think my colleague and Chairman of the Commission, Senator Bob Kerrey, was absolutely right when he noted at one of our hearings a point about the media. He said the media and press are one of the key ways in which Congress finds out what is going on at government agencies.

And so the Commission, to encourage more openness, as well as more accountability, proscribed the following three remedies in the IRS Restructuring and Reform Act (S.1096):

1) The IRS must be more timely and responsive in Freedom of Information (FOIA) requests;

2) The IRS must not abuse its authority under Section 6103. The Commission found that the IRS did abuse this authority in hiding from the press the fact that the agency had provided false information to Congress. We would call on a panel of experts to recommend changes to prevent such abuses;

3) The IRS must maintain and preserve records. It has not. Many requests by the Commission for documents and data were met with a statement that such data no longer existed, or the documents could not be found.

Addressing these three areas of openness may not be headline grabbing. But in my experience, together with other measures, these will help bring more accountability to the IRS. The IRS should be held to the same high standards that the agency itself applies to the American taxpayer.

I am also pleased that the Commission did not call for the easy solution -- more money. The IRS, until two years ago, had seen continual increases in its budget for 40 years. Indeed, the Commission uncovered that hundreds of millions of taxpayer dollars have been wasted. Clearly, the problem at the IRS is management, not money.

One Treasury official admitted privately that the IRS wouldn't be serious about reform if Congress kept throwing more money at them. This has been my experience as well in overseeing federal agencies over the years.

S. 1096 is designed to address many of the management failures we detected. I urge the Committee and my colleagues to look favorably upon it. Meanwhile, the Commission did not conduct serious oversight investigations to root out cultural pathologies within the IRS. That is where the Commission's job ended, and the job of this Committee begins, with this week's hearings.

Understandably, these are controversial hearings. The IRS is not used to being overseen. Untoward motives are assigned to the oversight efforts. Like partisanship. But that's a tired argument. I intend to be an active participant in these hearings. In the 1980s, I was hardly partisan when I clashed with a Republican Administration over defense issues. The same with the Chairman of this Committee. And I've been overseeing IRS abuses as far back as the Reagan and Bush Administrations as well.

In addition, when I launched my efforts to oversee the IRS, I was joined by my close friend David Pryor, a Democrat and a close friend of the President's. We chose to make our critiques responsible instead of partisan. I believe the record reflects that.

The charge of partisanship has no credibility with respect to this oversight effort. It will be a fair airing of questionable practices by an agency abusing its trust.

I have learned over the years that oversight of the IRS is a step-by-step process, and a long-term commitment. We learned of the agency's quota system back in the 1980s and we outlawed it. Suddenly, we find there might be an unofficial, back-door quota system still in place. It seems like you put out a brush fire here, and it pops up somewhere else. The moral of the story is, there's a need for constant vigilance over the IRS. History teaches us so.

Mr. Chairman, let me conclude by commending you for your leadership in holding these much needed hearings. I would also like to say publicly how much I appreciated working on the Commission with my colleague, Senator Kerrey. His guidance and leadership produced a solid, credible effort. and I am pleased to have served with him.

Again, Mr. Chairman, thank you for the opportunity to express my views. I look forward to any questions you may have.