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Treasury and General Government Appropriations for Fiscal Year 2003

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Treasury and General Government Appropriations for Fiscal Year 2003 S. HRG. 107–682 TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2003 HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS SECOND SESSION ON H.R. 5120/S. 2740 AN ACT MAKING APPROPRIATIONS FOR THE TREASURY DEPARTMENT, THE UNITED STATES POSTAL SERVICE, THE EXECUTIVE OFFICE OF THE PRESIDENT, AND CERTAIN INDEPENDENT AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2003, AND FOR OTHER PUR- POSES Department of the Treasury Executive Office of the President Printed for the use of the Committee on Appropriations ( Available via the World Wide Web: http://www.access.gpo.gov/congress/senate U.S. GOVERNMENT PRINTING OFFICE 78–492 PDF WASHINGTON : 2002 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 COMMITTEE ON APPROPRIATIONS ROBERT C. BYRD, West Virginia, Chairman DANIEL K. INOUYE, Hawaii TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina THAD COCHRAN, Mississippi PATRICK J. LEAHY, Vermont ARLEN SPECTER, Pennsylvania TOM HARKIN, Iowa PETE V. DOMENICI, New Mexico BARBARA A. MIKULSKI, Maryland CHRISTOPHER S. BOND, Missouri HARRY REID, Nevada MITCH MCCONNELL, Kentucky HERB KOHL, Wisconsin CONRAD BURNS, Montana PATTY MURRAY, Washington RICHARD C. SHELBY, Alabama BYRON L. DORGAN, North Dakota JUDD GREGG, New Hampshire DIANNE FEINSTEIN, California ROBERT F. BENNETT, Utah RICHARD J. DURBIN, Illinois BEN NIGHTHORSE CAMPBELL, Colorado TIM JOHNSON, South Dakota LARRY CRAIG, Idaho MARY L. LANDRIEU, Louisiana KAY BAILEY HUTCHISON, Texas JACK REED, Rhode Island MIKE DEWINE, Ohio TERRENCE E. SAUVAIN, Staff Director CHARLES KIEFFER, Deputy Staff Director STEVEN J. CORTESE, Minority Staff Director LISA SUTHERLAND, Minority Deputy Staff Director SUBCOMMITTEE ON TREASURY AND GENERAL GOVERNMENT BYRON L. DORGAN, North Dakota, Chairman BARBARA A. MIKULSKI, Maryland BEN NIGHTHORSE CAMPBELL, Colorado MARY L. LANDRIEU, Louisiana RICHARD C. SHELBY, Alabama JACK REED, Rhode Island MIKE DEWINE, Ohio ROBERT C. BYRD, West Virginia TED STEVENS, Alaska (ex officio) (ex officio) Professional Staff CHIP WALGREN NICOLE RUTBERG PAT RAYMOND (Minority) LULA EDWARDS (Minority) (II) CONTENTS THURSDAY, MARCH 14, 2002 Page Department of the Treasury: Office of the Secretary ........................................... 1 WEDNESDAY, MARCH 20, 2002 Executive Office of the President: Office of Management and Budget ............... 53 WEDNESDAY, APRIL 17, 2002 Department of the Treasury: Office of Enforcement ............................................ 95 U.S. Secret Service ........................................................................................... 112 Bureau of Alcohol, Tobacco and Firearms ...................................................... 126 Financial Crimes Enforcement Network ........................................................ 143 Federal Law Enforcement Training Center ................................................... 152 THURSDAY, APRIL 18, 2002 Department of the Treasury: U.S. Customs Service ............................................. 193 WEDNESDAY, APRIL 24, 2002 Executive Office of the President: Office of National Drug Control Policy ......... 237 WEDNESDAY, MAY 15, 2002 Department of the Treasury: Internal Revenue Service ...................................... 293 (III) TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 2003 THURSDAY, MARCH 14, 2002 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 2:21 p.m., in room SD–138, Dirksen Senate Office Building, Hon. Byron L. Dorgan (chairman) pre- siding. Present: Senators Dorgan and Reed. DEPARTMENT OF THE TREASURY OFFICE OF THE SECRETARY STATEMENT OF HON. PAUL H. O’NEILL, SECRETARY ACCOMPANIED BY EDWARD KINGMAN, ASSISTANT SECRETARY FOR MANAGEMENT AND CHIEF FINANCIAL OFFICER OPENING REMARKS Senator DORGAN. The hearing will come to order. First, let me apologize to the Secretary. We had a vote that is still underway and we were delayed. Some of my colleagues will be here shortly, but I want to begin the hearing knowing that your time require- ments are tight. We thank you, Mr. Secretary, for joining us today. This is the hearing of the Subcommittee on Treasury and General Government Appropriations subcommittee to talk about funding for those functions that exist in your agency. Let me make just a couple of brief comments. I will put my en- tire statement in the record and then we will hear from you, Mr. Secretary, and have some questions. This hearing kickoff the sub- committee’s series of hearings on President Bush’s Fiscal Year 2003 budget request for the Treasury Department and other agen- cies under our jurisdiction. To no one’s surprise, this is going to be a very difficult budget year. The anticipated budget surpluses have vanished and our re- sources are stretched thin. We have had an economic slowdown, a recession of sorts. We are not sure how deep and whether we are completely out of that recession, but we also face a war against ter- rorism, both at home and abroad. So things have changed dramati- cally since the last time we met. The Treasury Department is a key player in all of these activi- ties. At a hearing 2 years ago I held up an orange rubber cone and talked about northern border security and the fact that at many (1) 2 ports of entry on the northern border that rubber cone represented America’s security after 10:00 at night. I proposed early last year a northern border initiative and included $25 million in the budget to deal with that. September 11, of course, intervened and we not only provided that $25 million but also additional funding. That was made avail- able for the Customs Service, the Border Patrol, and the INS. So we have had a lot to do with respect to the issue of border security. Mr. Secretary, you and I have had some meetings about the issue of the Customs Service and border security and the level of staffing that is required. I think that we on this subcommittee want to work with you to reach the right result in all of those areas. One of the things that concerns me about this budget request, and we will want to talk about at some length today, is the Cus- toms Service budget which relies in part, on a $250 million fee. That fee to deal with the issue of ACE and other related issues, in many ways, is a substitute for a tax increase. Congress has re- jected similar fees on previous occasions and will again this year likely reject it. So the question is, if that funding mechanism is not approved, what will be the method by which we fund these issues? I am going to talk a little today, Mr. Secretary, in my questions about the issue of tax shelter abuses and the amount of resources you believe we ought to provide to combat that because I fear that what we have is a proliferation of tax shelter abuses. Having chaired some of the Enron hearings and knowing that hundreds of their subsidiaries have been run out of one post office box in the Cayman Islands, I am very concerned about what has been hap- pening with respect to these tax shelter abuses. There have been some announcements by the Treasury Department that have con- cerned me so I want to talk about that. I think accounting firms, lawyers, and others have become very aggressive in trying to find ways for their clients to avoid taxes. In fact overly aggressive in my opinion that requires us to provide the resources necessary to try to thwart this kind of activity so that those big institutions can begin to pay their fair share of the cost of Government for America as well. So I want to talk a little about that today. I want to congratulate you, Mr. Secretary, on another matter, for your willingness to take a good look at the issue of debt relief and development in the Third World. Yesterday, Mr. Bono of U2 came by. He has met with many people in this town. He has a great pas- sion, of course, for these issues, and he spoke very highly of your focus and the discussions apparently you have had. He is a very articulate and interesting person. I understand that you are going to be in Africa in May taking a look at some of these issues dealing with the plague of AIDS in Africa, which is also something this country has to be greatly con- cerned about. PREPARED STATEMENT So with that as a brief introduction, let me ask Senator Reed if he has some introductory comments and then we will hear from the Secretary. [The statement follows:] 3 PREPARED STATEMENT OF SENATOR BYRON L. DORGAN Welcome Mr. Secretary. We are pleased that you are here today to kick-off this Subcommittee’s series of hearings on President Bush’s fiscal year 2003 budget re- quest for the Treasury Department and other agencies under our jurisdiction. To no one’s surprise this will be a difficult budget year. The anticipated budget surpluses have vanished and our resources are stretched thin by the war against terrorism both at home and abroad. The Treasury Department is a key player in this war. At a subcommittee hearing 2 years ago, I held up an orange rubber traffic cone and stated that the cone was our nighttime guardian at far too many ports of entry along our northern border. I used the orange cone to illustrate a chronic lack of at- tention to security resources on that 4,000 mile long border. The attempted incur- sion by Ressam—the so-called Millenium bomber—at a border crossing in Wash- ington State 2 years ago served as a wake-up call. The tragic events of September 11 brought the needs of our northern border into clear focus. I am pleased that the Administration has listened to the concerns of northern bor- der Members and others regarding the need for additional resources along this vast frontier. Indeed, page 21 of the President’s budget document has a color photo of a northern border point of entry patrolled by orange cones.
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