Treasury Secretary Defends Bonuses for IRS Employees, Calls for Additional Funding

Senator to Lew: Is it appropriate that bonuses be paid to an organization that brazenly betrayed the public's trust?

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Treasury Secretary Jack Lew not only defended the granting of bonuses to IRS employees Wednesday before the Senate Finance committee, he said there was not a proper level of funding for the agency to "do everything that we really need them to do."

Under questioning from Sen. John Thune (R., S.D.) over the agency's targeting of conservative groups and concern that employees involved were still granted bonuses, Lew said there were no signs of political interference in any of his department's reviews.

"I think that the policy on compensation for the IRS broadly has to reflect the fact that we have an enormous number of people who are tireless, hardworking public servants who do a fine job under very difficult circumstances," Lew said. "And we're not seeing the level of funding for the IRS to make it possible for them to do everything that we really need them to do. In that world, making sure that we have proper compensation and fair compensation is an important thing."

"I just think it's awfully hard to justify to the American people an agency that has been so — whose credibility has been so badly damaged that somehow you can pay out bonuses," Thune said.

Full exchange:

JOHN THUNE: OK. I wanted to ask too — I know you've probably answered many questions on this already. But I get — from my constituents and I think people across the country too — the whole issue of the bonuses that went out to the IRS employees and whether or not it's appropriate that bonuses be paid out at an organization that's so brazenly betrayed the public trust. And even if you don't agree — and I don't think you probably do — that the targeting of conservative groups is politically motivated, you still — it's hard to deny that there wasn't gross incompetence there and negligence with regard to how the agency processed the applications of these social welfare organizations. And so do you think that these employees associated with that decision, whether it was politically motivated or not to target these tea party groups, deserve bonuses?

JACK LEW: Senator, I think it's really important not to describe such a large agency as the IRS as if everyone was involved in one activity. We've made clear that what happened in the (c)(4) experience was unacceptable. We believe it was bad judgment. You'll reach your own conclusion when you complete your investigation. We have seen no sign of political interference in any of the reviews we've done. I think that the policy on compensation for the IRS broadly has to reflect the fact that we have an enormous number of people who are tireless, hardworking public servants who do a fine job under very difficult circumstances. And we're not seeing the level of funding for the IRS to make it possible for them to do everything that we really need them to do. In that world, making sure that we have proper compensation and fair compensation is an important thing. And I would just note that there was a pause in those payments. There were some collective bargaining issues that arose. And in resolution of it, there's a new policy in place.

THUNE: Well — and I would just say, I mean, I know there's a lawsuit and the union issue that you referenced there — collective bargaining thing. But there were an awful lot of bonuses paid out to executives who weren't a part of that lawsuit, too. And I just think it's awfully hard to justify to the American people an agency that has been so — whose credibility has been so badly damaged that somehow you can pay out bonuses. I mean, I think it just flies in the face of everything that's logical to the American people to have them — to have the American people have to see what's happened with this whole episode, which has reflected, I think, very badly on the — on the IRS and then find out that they're being rewarded with bonuses. I mean, this is —

LEW: Senator, I guess I would point to some other things happening at the IRS that we, I think, on a bipartisan basis applaud over this same period of time. We've implemented FATCA, which is a law that passed with bipartisan support to make sure that we would have transparency across country lines so that illegal tax evasion could be stopped. The work done by our IRS on this has become the world standard. We now — I go to international meetings, and what I hear other finance ministers saying is we want FATCA for all. So we have done — we have people who have done fine work during this period, and I just think we have to recognize that it's a large agency doing a lot of things.

THUNE: And if that's true — and I don't — I mean, I'm sure there's — big mission, big agency. But we know for sure there are certain folks in certain offices who were associated with these actions that have, I think, reflected so unfavorably and so negatively upon the agency. And knowing — I guess, last comment I'll make and perhaps one follow-up question: Is there a way you can selectively figure out, though, how not to reward the people who are doing these sorts of things? Reward the people who are doing the good things that you just alluded to, but please don't reward the people who are responsible for this behavior.

LEW: Well, Senator, obviously, the IRS commissioner would be better equipped to address that than myself. But I would note that the senior managers who were anywhere in the chain of command who exercised bad judgment in running the program are no longer there. And I think that reflects the seriousness with which we took the bad judgment and the consequences of it and the fact that we had an acting commissioner who took quick and decisive action. So we very much share the view that anyone who was responsible for doing things that they shouldn't have done does have to be held accountable.