explore what the U.S. Government is doing to improve our trade stance in Russia/CIS. We wanted to know whether our laws impede trade, and we want to know whether cold war laws still make sense. We also wanted to know the status of laws which prevent trade in certain high-tech goods between U.S. firms and entities in the former Soviet Union. Russia/CIS is obviously a potentially lucrative area for U.S. trade and investment, but it is full of risks. Business interests require stability above all else, and it remains to be seen whether Russia will enjoy a more or less stable environment. This investigation also explores whether it is the risks inherent in doing business in Russia/CIS, or the barriers placed by U.S. law, that prevents a greater expansion of trade and investment by U.S. entities in Russia/CIS. b. Benefits. The benefits from increased trade with Russia are largely political, but increased trade and investment is estimated by the Commerce Department to increase jobs in the United States by 19,100 for every $1 billion of exports. It is anticipated that jobs in the domestic economy will increase as trade and investment in Russia and the CIS increases. c. Hearings.-A hearing was held on November 5, 1993, entitled, "Trade and Investment Between the United States and Russia/ Commonwealth of Independent States [CIS]." 5. Reorganization of the Internal Revenue Service. a. Summary. In July 1991, the subcommittee began a series of hearings and prepared a number of reports, approved by the full committee, which relate to various facets of the massive undertaking to modernize the Internal Revenue Service. In the committee report, "IRS' Tax Systems Modernization: Progress and Prospects," House Report No. 102-1058, October 29, 1992, the Service was urged to develop a plan for reorganizing itself along lines that would be more compatible with the technology of a modernized system. The committee also recommended that the Service develop an approach promising cost savings due to more effective use of that technology. The IRS responded by appointing a number of internal task forces and review boards, with participation by outside contractors, to study the committee's views. During the spring and summer of 1993, the IRS began releasing their various findings. Sweeping changes in the Service's organization were proposed by these groups. The Service began formally adopting many of them during the summer of 1993. On November 17, 1993, the subcommittee held a hearing with the IRS and the General Accounting Office testifying, to review the reorganization effort. During the hearing, the Service was able to provide specific responses to most inquiries of the subcommittee. Basically, the GAO testified in strong support of the Service's direction and results. Generally, the Service is: 1. Consolidating offices; 2. Moving toward a system that relies heavily on electronic filing as opposed to paper returns; 3. Greatly upgrading the training level of its staff for better taxpayer service so that problems can be handled early in the returns process instead of languishing until the end of that process; and 4. Installing a highly sophisticated, menu-driven telephone system to assist taxpayers across the board for most of their routine requests, including some of the more common types of inquiries about tax law. However, both the IRS and GAO testified that efforts to complete the task of modernization are being impeded by the failure to alter a number of tax law provisions which were adopted many years prior to the advent of many new technologies. For instance, they both felt strongly that taxes should be payable by credit card which is not currently possible under provisions of the Tax Code. Additionally, the hearing briefly reviewed whether the IRS books could be certified by the GAO as meeting the standards of the Chief Financial Officers Act of 1990, which GAO has, so far, refused to do. The GAO testified it did not believe it could certify the IRS records for fiscal year 1993, but that some progress had been made. b. Benefits.-The Service was able to estimate that the net cost of Tax Systems Modernization, which was slated to be $8 billion, will be reduced to $7.5 billion due to the reorganization. Additionally, the Service stated it believed the reorganization would allow it to better handle some of the disturbing trends emerging in tax administration. For instance, in the past 5 years, the overall tax gap between income taxes paid and income taxes due has increased from roughly $88 billion to $119 billion while overall compliance rates have continued at the low level of 82.7 percent of a fully filing taxpayer population. Overall, the hearing allowed the subcommittee to continue to closely monitor Tax Systems Modernization in the committee's ongoing effort to assure that the taxpayer is treated fairly while, at the same time, the government collects the revenue due it. A report is being prepared on the reorganization. c. Hearings.-A hearing was held on November 17, 1993, entitled "Reorganization of the Internal Revenue Service." 6. GAO Examination of the Office of Inspector General of the Resolution Trust Corporation and Its Investigative and Audit Work and Priorities. a. Summary.-As part of the subcommittee's continuing oversight of the Resolution Trust Corporation [RTC], the subcommittee conducted a preliminary inquiry and uncovered serious allegations concerning possible mismanagement and neglect within the OIG. At the subcommittee's request, the GAO is currently examining and evaluating the adequacy of the RTC OIG's manner of staffing and establishing priorities (in both its audit work and investigations) and the thoroughness of its audits and investigations. The subcommittee staff heard allegations involving numerous case studies that: (1) Efforts by OIG investigators to examine allegations of misconduct in a number of specific instances, which were brought to the attention of OIG officials, may have been undesirably circumscribed, never investigated, or otherwise deficiently handled; (2) OIG field offices may have been insufficiently staffed when compared to the number of serious allegations they received; (3) The OIG may have overemphasized investigations of such issues as unauthorized use of leave at the expense of examining allegations of much more serious misconduct; and (4) The IG may have either neglected to conduct important audits recommended by its Office of Quality Assurance or may have prevented audits from being completed, audits critical of RTC's procedures or documentation. To determine the accuracy of this preliminary information, the GAO has assembled a special team working out of the Office of General Counsel, which is in the process of examining OIG documentation and conducting numerous interviews of former and current OIG staff. b. Benefits.-The RTC has been charged with the disposition of defunct savings and loans with several hundred billion dollars in assets, relying on at least $90 billion of appropriated taxpayer dollars to pay off S&L depositors. There is a long documented record, as attested to by numerous GAO reports and by the Clinton administration, of serious deficiencies within the RTC, including a lack of internal controls and mismanagement and misconduct. To the extent that the evidence may show that the OIG has failed to carry out its responsibilities, its neglect may have contributed to serious waste within the RTC. Preventing such waste could conceivably save the Government tens of millions of dollars at the minimum. An exact figure is difficult to quantify. c. Hearings. As the GAO's investigation is now in its second stage, no hearings have been scheduled at this time, although it is anticipated that hearings would be during 1994. 7. Problems with the Future Merger of the Resolution Trust Corporation with the FDIC and the Implementation of this Transition. a. Summary. The subcommittee is examining the adequacy of the FDIC's and RTC's planning for the merger of the RTC into the FDIC and the transfer of RTC's responsibilities to the FDIC. The GAO and the subcommittee are focusing on (1) whether or not the FDIC and RTC have placed sufficient emphasis on transition planning, (2) how both will identify and transfer lessons learned, and (3) whether both agencies have considered some mergers now of functions and units (described below) to maintain RTC staff morale. The subcommittee and GAO are reviewing the difficulty which the RTC has faced in retaining and hiring staff to complete their work (including the liquidation of $85 billion of substandard assets). This difficulty is due to the agency's temporary existence and the uncertainty surrounding whether RTC employees will have jobs with the FDIC. The majority of RTC employees, who are on 1 year contracts with no right of return to the FDIC, are already starting to become demoralized and will begin to look for other work as the RTC gears to close down in December 1995 (the new closure date in the RTC funding legislation). This problem could result in greater costs to the taxpayer, because it is these employees who are charged with selling off the billions of dollars of substandard assets. GAO and the subcommittee are trying to determine how both agencies are going to resolve the dislocations arising from this situation. This uncertainty could be minimized with timely adequate planning and a transition strategy and possible special bonuses. This personnel problem has been already exemplified by the inability of the RTC to hire both investigators and attorneys (handling criminal referrals and negligence and D&O liability matters) to fill numerous vacancies caused by closing RTC field offices as part of a reorganization in 1992 and 1993. In a June 1993 report, the GAO found that hiring and retaining PLS (professional liability section) attorneys are very difficult because of RTC's temporary nature. While the RTC had 120 plus investigator positions a few months ago, 50 of those positions were vacant as of September 1993 and were difficult to fill. RTC investigators and PLS attorneys often refused to move across country to RTC regional offices, and now the RTC cannot easily find replacements due to the temporary nature of the agency. This turmoil raises concerns about the ability of the RTC to investigate failed institutions, make timely criminal referrals, and then handle the most serious professional and D&O liability claims through civil litigation, before the expiration of pertinent statutes of limitation. The proposed early merger of the RTC's investigations and professional liability units is being reluctantly considered to address this problem. In its June 1993 report, the GAO stated, "[I]t is important for RTC and FDIC management to work together to explore ways to ensure that RTC maintains a viable PLS program and that the transfer to FDIC is smooth." It recommended that the RTC CEO and FDIC Chairman work together to stabilize the PLS organization and retain staffing by decreasing the level of uncertainty, a course urged by Treasury Secretary Bentsen, with particular attention to the merger into the FDIC. While these findings specifically apply to the PLS attorneys, they also apply with probably equal force to the RTC investigators, asset liquidators, and most other RTC employees. GAO has advised the subcommittee and stated publicly that delays by the FDIC and the RTC in undertaking this transition planning and beginning implementation could eventually become quite serious.. For example, the FDIC's information systems and ways of handling mergers, sales, and liquidations are very different from the RTC's (and not necessarily better) and that these incompatibilities will cause very serious problems during the transition, if not addressed soon. b. Benefits.-The RTC has been charged with the disposition of defunct savings and loans with several hundred billion dollars in assets, relying on over $100 billion of appropriated taxpayer dollars to pay off S&L depositors. If the transition is poorly handled, especially insofar as it affects personnel matters and results in vacancies or poor morale of RTC employees, costs to the taxpayer could be expected to significantly increase, perhaps costing tens of millions of additional dollars, if not more. Once again, an exact figure is difficult to quantify. c. Hearings. No hearing has yet been scheduled. 8. Review of Commerce Department Programs and Management. a. Summary.-The subcommittee has initiated a broad review of Commerce Department programs and management. Planning for this review is in the preliminary stages, and hence the specific focus has yet to be determined. It is anticipated, however, that particular attention will be devoted to financial management practices in the Department. b. Benefits. This investigation is in the preliminary stages and it would be premature to estimate benefits at this time. c. Hearings. Hearings may be held next year. 9. Improving Government Statistics for Budget and Economic Policy Planning. a. Summary. The reliability and accuracy of government economic statistics are questioned and challenged frequently by economists, statisticians, and policymakers. The Council of Economic Advisers devoted a chapter of its 1992 Economic Report of the President to weaknesses in the government's programs for gathering and compiling economic statistics. The government simply has not devoted enough resources in recent decades to keeping its statistical apparatus current with the major changes in the economy that have occurred. The subcommittee is particularly concerned with accuracy problems in the international trade statistics of the government compiled by the Bureau of Economic Analysis [BEA] in the Commerce Department. The subcommittee has therefore initiated a review of this area, with particular attention to the statistical programs of the BEA. The subcommittee also intends to review the adequacy of Census Bureau programs that involve economic statistics. b. Benefits. The investigation has been preliminary during this session and no direct benefits can yet be assessed. c. Hearings. Hearings may be held next year. INFORMATION, JUSTICE, TRANSPORTATION, AND AGRICULTURE 1. Oversight of U.S. Department of Agriculture [USDA] Reorganization and Downsizing. a. Summary. For the past several years, the Congress and the executive branch have debated the need to downsize and reorganize the USDA. This debate culminated with the issuance of a plan to close or consolidate over 1,200 offices and to reduce the number of individual USDA agencies from 43 to 30. The USDA has estimated that implementing the plan would save over $1.4 billion in the next 5 years. Additional proposals to end the wool, mohair, and honey subsidies (measures also contained in the USDA plan), would save an additional $938 million over 6 years. Pursuant to its oversight jurisdiction over the USDA, the subcommittee conducted a series of hearings on various aspects of the reorganization proposal and the effect the plan might have on the delivery of services. In the first hearing, the subcommittee reviewed the proposal to create a single "Farm Service Agency" [FSA] from the present configuration which consists of the Agricultural Stabilization and Con |