6/22/11: A funding measure marked up by an important House subcommittee late last week fails   fails to recognize the need for sufficient funding for the Securities and Exchange Commission (SEC), the Federal Communications Commission (FCC), and the Internal Revenue Service (IRS) according to NTEU National  President Colleen Kelley, who was sharply critical of the fiscal 2012 financial services appropriations bill.

Under the proposal, the SEC budget would be frozen at $1.185 billion, some $222 million below the president’s request. The Union fought hard for an increase. While we were pleased that no further cuts were proposed for the SEC, a fate that many other agencies will not avoid in the coming budget discussions, the proposed budget still flies in the face of the reality of the new and complex responsibilities for the agency, particularly under the Dodd-Frank financial regulatory reform measure. Furthermore, the SEC is fee-funded, so its budget does not contribute to the deficit, and reductions in its budget simply will not reduce the deficit. 

Already, Kelley pointed out, the SEC is unable to improve its technology to police highly sophisticated market participants who currently trade virtually at the speed of light and spend billions on their own information technology. Among other issues, Kelley said, insufficient resources are delaying the agency’s “ongoing effort to make market data contained in filings with it more interactive, thus improving financial transparency.” Further, she said, the resource gap is preventing the agency from “completing its digital forensics laboratory and procuring the equipment necessary to recreate data from a variety of electronic equipment, which would help it catch those involved in sophisticated frauds.”

The NTEU leader added: "The financial meltdown taught us some important and painful lessons. One should be that this is indeed a penny-wise, pound-foolish approach to significant law enforcement and consumer protection issues.”

The FCC also is a fee-funded agency that, like the SEC, does not contribute to the deficit, Kelley said, pointing out the subcommittee’s proposal to fund the FCC at nearly $40 million below the president’s request would harm its ability to encourage important telecommunications innovations.

Kelley also slammed the bill because it could result in the loss of more than 8,000 jobs at the IRS, seriously impacting the ability of this key agency to collect the critical revenue the government needs to serve the public. The bill calls for a cut of more than $606 million in the IRS budget for the coming fiscal year.  

“IRS staffing already is down significantly,” said the NTEU leader. “It simply makes no sense to slash the budget of the agency that generates 93 percent of the government’s revenue at a time when reducing the deficit is a national priority,” resulting in a loss of $4 billion annually.  

The subcommittee budget would leave the IRS in the position of having fewer resources than it had in fiscal 2009, with Kelley noting that the proposed funding level of $11.5 billion would be some $1.7 billion less than the amount sought by the White House for fiscal 2012. The cuts are deeper than those proposed in H.R. 1.

 “In fiscal year 2010, the IRS collected 93 percent of all government receipts, making it one of the most critical elements in addressing the nation’s financial deficit,” she added. “Cutting your top revenue producer is nonsensical since every dollar invested in the IRS returns additional revenue to the Treasury.”

In Senate testimony earlier this month, the NTEU leader supported the White House fiscal 2012 budget for the IRS as one that recognizes the importance of both taxpayer service and tax enforcement efforts in bringing revenues to the treasury.

She emphasized that IRS staffing is down more than 20 percent from the early 1990s, despite significant growth in both numbers and complexity of tax returns, and pointed to a recent report from the Treasury Inspector General for Tax Administration (TIGTA) reviewing a hiring initiative by one of the agency’s major divisions. Under that program, TIGTA said the hiring of Revenue Officers, a key enforcement position, has not kept up with attrition, thus impeding IRS enforcement efforts.

 While the draft bill contains unacceptable cuts to key NTEU-represented agencies, the Union is also opposed to inclusion in the bill of language requiring mandatory reductions to the federal workforce, as proposed in recently introduced stand-alone legislation. With the possibility that such proposals could be offered as amendments during subcommittee consideration of the bill, NTEU wrote this letter to every member of the committee urging rejection of any such proposals. 

Action turns to the full Appropriations Committee this week. In advance of the full committee’s consideration of the bill, NTEU will continue working with supporters to make known the detrimental impact that these funding reductions would have on NTEU-represented agencies and their ability to accomplish their missions.

“The American people rightfully have expectations of their government,” she said. “It is both unrealistic and unfair to expect federal agencies to do more with less, especially when the ‘more’ part of their missions continues to grow in complexity.”