Taxes, Roads, and Bridges

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Taxes, Roads, and Bridges

The Golden Gate Bridge. (Photo: Rich Niewiroski Jr./Wikimedia/cc)

You can’t use tact with a Congressman! A Congressman is a hog! You must take a stick and hit him on the snout.

— Quoted by Henry Adams, The Education of Henry Adams

It is not uncommon to see legislation introduced in Congress that, as soon as it is introduced, finds itself encumbered with seemingly irrelevant provisions. It is not uncommon to see a Senator with an axe to grind, sharpen it by attaching those provisions to a piece of legislation that, to anyone but the Senator, would seem to be a peculiar place for it. The Highway Trust Fund Bill is a good example of the first and Senator Charles Grassley of Iowa, a good example of the second.

The Highway Trust Fund Bill being considered in Congress has given Senator Grassley an opportunity to let everyone see how tenacious he can be. Surprisingly, his persistence has nothing to do with highways or bridges although the uninformed might think that was what a bill with such a name was concerned. The Bill includes a provision that would provide for using private collection agencies known as PCAs to help collect delinquent taxes. In order to fully appreciate Senator Grassley’s obsession with private debt collection, a brief history lesson is in order. It goes back to the late 1990s.

In 1996 and 1997 Congress came up with the idea of permitting the IRS to turn delinquent IRS accounts over to PCAs. The program lasted one year and by the time it had ended had cost the government $17 million instead of generating the additional revenue that proponents of the legislation were confident would be realized. Not only was no additional revenue generated. The PCAs were found to have regularly violated the terms of the Fair Debt Collection Practices Act. Notwithstanding that failure, Republicans, who support anything that has the word “private” in it, were determined to give it a second chance.

In 2004 Congress “passed”: the American Jobs Creation Act. Among the jobs created by that Act were those created by handing out IRS debt collection to PCAs, the same kind of PCAs the IRS had been authorized to hire eight years earlier and was told to fire seven years earlier. As in 1996, proponents of the procedure anticipated great results from the activities of the PCAs. Projections in 2004 were that the PCAs would be able to collect $1.3 billion. Out of those collections they would receive commissions of $350 million or eight times more than it would cost the IRS to collect the same amount. In 2008 the House Ways and Means Committee held hearings to determine how well the program was working. The committee learned that 85 per cent of people contacted by PCAs did not owe back taxes. In addition it learned that whereas it cost the IRS $.07 for every dollar collected, it cost the PCAs $.24 to collect the same amount. The IRS had an 11 per cent success rate whereas the PCAs had a 4% success rate. Instead of collecting the anticipated $1.3 billion, it turned out the IRS only received an additional $4.5 million from the efforts of the PCAs.

Confronted with those facts, in 2009 President Obama decided to eliminate the program. Senator Grassley, a big supporter of PCAs, was outraged. He said: “The administration has decided that after spending nearly a trillion dollars in the stimulus bill to keep people working across the country, they are going to cut a program that provides jobs to hundreds of people during the middle of a recession, including 60 in Iowa. It’s hard to believe that after worrying so much about keeping people employed, the administration has chosen this route,” a cave in he attributed to union pressure. He did not care about the failure of the program to generate additional revenue. It created jobs in the private sector.

Now, thanks to the need for repairs to highways and bridges, the PCAs may again be back. As this is written Congress is considering the Highway Trust Fund Bill and an unresolved question is whether or not to turn over some IRS debt collection activities to PCAs. Support for the proposal is again being heard from Senator Grassley who continues to think it is a good idea even though it has been proven not to work. Commenting on the need for private debt collection he said: “The IRS just had one of the worst filing seasons for customer service on record. The IRS hung up on callers because it couldn’t handle the calls. “ The projection is that the PCAs will collect $2.4 billion, twice as much as was projected in 2004. If the results this time are the same as they were the last time, the IRS will receive an addition $9 million rather than $2.4 billion..

Senator Grassley ignores the fact that the PCA program has been a failure twice in the last twenty years. He ignores the fact that the reason the IRS offers poor service is that it is understaffed and it is understaffed because it is underfunded. Its funding has been slashed by $1.2 billion since 2010. This year Congress is considering funding it at $2.8 billion less than the administration has requested. Someone should explain to Senator Grassley that the need for principal trumps the need for principle when it comes to governing. He wouldn’t understand.

Christopher Brauchli

Christopher Brauchli is a columnist and lawyer known nationally for his work. He is a graduate of Harvard University and the University of Colorado School of Law where he served on the Board of Editors of the Rocky Mountain Law Review. He can be emailed at For political commentary see his web page at

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