Making Continuing Appropriations for Fiscal Year 2013

Floor Speech

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Mr. GRASSLEY. Mr. President, as a matter of senatorial courtesy, since I am referring to some things that the majority leader has said previously, not recently but previously, I have informed him of what I was going to say.

On August 2, the majority leader decided that the valuable time of this body would be best employed by speculating on the contents of the tax returns of Presidential candidate Governor Mitt Romney. These remarks also touched on the vetting process of the Senate Finance Committee. It is that aspect of this to which I want to refer.

As a senior member of the Finance Committee as well as former chairman and ranking member, I have come to familiarize my colleagues with the committee's vetting process.

On Thursday, August 2, the majority leader exclaimed:

As we know, he has refused to release his tax returns. If a person coming before this body wanted to be a Cabinet officer, he couldn't be if he had the same refusal Mitt Romney does about tax returns.

This statement demonstrates a misunderstanding of the confirmation process for Cabinet officials and the Finance Committee vetting process in particular. The fact is, most prospective Cabinet officers do not need to disclose their tax returns. Actually, no prospective Cabinet officer is required to make their returns public in ordinary circumstances. To my knowledge, the Finance Committee is the only committee that asks nominees to provide copies of tax returns. Specifically, the Finance Committee asks that nominees provide copies of their last three Federal tax returns. The committee may request further returns if it is warranted by the circumstances of that particular time.

The committee asks for this information for a few reasons. To begin with, many nominees referred to the Finance Committee, such as the Secretary of Treasury and the Commissioner of the IRS, will be able to exercise significant influence over tax policy and administration. Additionally, the examination of a nominee's tax return sheds light on the nominee's character. Over the last few years, several high flyers in the Obama administration have come up short when measured by their tax returns. Therefore, the vetting process utilized by the Finance Committee has received a lot of attention.

Only two Cabinet officers and one position with the status of Cabinet rank are referred to the Finance Committee. These are the Secretaries of Treasury and the Department of Health and Human Services, as well as the U.S. Trade Representative. As I said before, to my knowledge, the Finance Committee is the only committee of the Senate to request copies of actual tax returns. This means that not counting the Vice President, there are 19 members of the Cabinet who do not release their tax returns during the Senate confirmation process.

As I said, no Cabinet official is required to make his or her tax returns public. This goes to the details of the Finance Committee's vetting process. All nominees referred to the committee are required to submit copies of their last three filed tax returns. These copies, along with other financial data, are shared with a very limited number of staff, specifically designated by the chairman and ranking member of the Senate Finance Committee.

While being reviewed, the returns themselves are kept under a very tight control. Most staff for the committee and ranking member do not have access to the tax returns. Neither the chairman nor the ranking member may unilaterally release the tax returns or information obtained from those tax returns. This means that even when I was chairman of the committee, rules prohibited me from unilaterally releasing a nominee's tax return or even making public that nominee's specific tax information.

When an issue is identified pertaining to a nominee's tax information, the chairman and the ranking member jointly determine how to proceed. Information is only released under bipartisan agreement and after consultation with the nominee.

For example, Secretary Geithner was given the opportunity to withdraw his nomination before the world learned of his failure to pay all his taxes. He was also provided an opportunity to review the bipartisan memo the committee eventually released.

In sum then, no nominee vetted by the Finance Committee needs to make their tax returns public, and in the majority of the cases no information is released. Additionally, the purpose of the vetting is not to damage the credibility of the nominee. I bet those seeking Governor Romney's tax returns are operating under a completely different standard. I especially find it interesting that the majority leader compared Governor Romney to Cabinet officials when speculating as to the contents of Governor Romney's returns. There seems to be an implication that a discovery of unsatisfied tax obligations would be problematic to the leader. While the majority leader may want to speculate as to whether Governor Romney has paid his taxes, there are nominees and officials of the current administration we know did not completely satisfy their tax obligations.

I will start this trip down memory lane with our current Treasury Secretary. Due in large part to his failure to pay self-employment taxes, irregularities in Mr. Geithner's returns added up to his owing a total of $48,268 in taxes and interest to the IRS. Those seeking a full accounting of the episode may read the bipartisan memorandum prepared by the Finance Committee, which is part of the record of his January 2009 nomination hearing. As I said, we don't need to speculate whether Secretary Geithner completely paid his taxes. We know as a fact he did not, to the tune of over $48,000.

Secretary Kathleen Sebelius disclosed that in preparation of her confirmation she filed amended tax returns for 2005, 2006, and 2007. She voluntarily made this information public in the form of a letter to Chairman Baucus and me. This letter was printed in the record of her nomination hearing. The result of those amended returns was that she paid a total of $7,040 in additional taxes and $878 in interest to the Internal Revenue Service.

Finally, I wish to mention former Senator Tom Daschle, who was the administration's nominee to be Secretary of HHS for a brief period of time in 2009. Although Mr. Daschle withdrew his nomination before the committee held a hearing on his nomination, it was widely reported, including in the New York Times and the Los Angeles Times, that he failed to pay more than $128,000 in taxes in the 3 years prior to his nomination.

In mentioning Secretaries Geithner and Sebelius and Mr. Daschle, I am not suggesting anything beyond the reported facts of their circumstances or that their tax errors were intentional. I just want to remind the majority leader of these situations where it is not necessary to speculate on whether taxes were owed.

While I appreciate the leader's newfound attention to the Finance Committee's vetting process, I wish to assure everyone has clear understanding of how this vetting process in the Senate Finance Committee works. I will be happy to discuss the committee's procedure with any interested colleague. I am sure Ranking Member Hatch and his staff would also be happy to discuss the process with anyone who was interested.

I suggest the absence of a quorum.

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