Paul Ryan: We're going to bring some transparency and accountability to the IRS and the rest of government

This is a rush transcript from "On the Record," June 27, 2013. This copy may not be in its final form and may be updated.


REP. PAUL RYAN, R-WIS.: Why would we representing the taxpayers we represent, give you all this extra money, you are asking for if this is what the IRS is doing with hard-earned taxpayer dollars? We are seeing in two months waste, fraud, abuse and taxpayer targeting, and you are saying give us another billion dollars. Why should we do that?

DANNY WERFEL, ACTING IRS COMMISSIONER: If we underfund other critical priorities that we need to improve taxpayer service and improve enforcement on the tax code, then we're leaving dollars on the table for the American people because every dollar --

RYAN: Just don't forget, you work for the American taxpayers, not the other way around.


GRETA VAN SUSTEREN, FOX NEWS HOST: Paul Ryan going head to head with IRS chief Danny Werfel. We spoke to Congressman Ryan right after that contentious hearing.


VAN SUSTEREN: Congressman, nice to see you, sir.

RYAN: Great to be back with you, Greta.

VAN SUSTEREN: Big day today, hearing and the head of the IRS was there testifying before House ways and means. What is the takeaway?

RYAN: A couple of things. Number one, we know that some progressive words or names were on the filter, but their applications were approved. And they were not singled out for the kind of harassment and intimidation and delays that IRS placed against the conservative groups. So we got to the bottom of that one.

The other thing we learned is they don't have answers to all these questions.

And the other part was, we had the IRS coming here to Congress asking for an additional billion dollars, about a 10 percent increase. They're asking us to give them money to hire another 4,500 people after we've just uncovered in just about two months all of this waste, all of this fraud, and all of this abuse.

VAN SUSTEREN: If you are the IRS now, how do you not know how it happened? It's just not that complicated. I've been in Washington and you can learn things pretty quickly if you really want to. Secondly, how in the world do you come after all this stuff that has come out about the IRS, the targeting and all the parties, how do you have the gall to ask for a billion dollars more from the taxpayers?

RYAN: First of all, the first question is a good question. How do they not know what happened and who was responsible and who asked for it? They won't answer those questions. They claim they don't know the answer to those questions.

VAN SUSTEREN: How can they not know them?

RYAN: Right. So the point is we're going to get to the bottom of it. We're not going to accept these answers. It's not good enough. That's why our investigators are interviewing IRS employees up and down the food chain and we're getting emails and we're getting data, and we're going to go through this very thoroughly.

Second point -- take a look at the $49 they spent over two years on these conferences, on these parties and the catering and the videos. I just ran the quick numbers. A town of Sturdivan, Wisconsin, a little less than 7,000 people, people working at factories, people working in farm fields, these working families work all year long to pay their taxes and it wasn't enough to even cover these conferences.

So what I try to impress on these people of the IRS, in a town where you talk about millions, billions, trillions, it's actually hardworking taxpayer dollars. And around here they seem to think money grows on tree. They waste and spend with reckless abandon and they're losing sight of the fact that this money comes from a person's paycheck. It comes from a family that is struggling to put bread on the table, get vacation for their kids, get their family growing. Then they're paying their taxes to the IRS, and then the IRS wastes it. And I don't think that they think about that when they spend all this money.

VAN SUSTEREN: I sometimes wonder if the media is complicit in the whole poisoned culture, because the media refers to waste of $50 million over a two-year period, they call that chump change, because I suppose in the grand scheme of things when we're talking billions and trillions, it's chump change. But it really isn't.

RYAN: Yes.

VAN SUSTEREN: The media sort of is dismissive sometimes about that.

RYAN: I live in Rock County, Wisconsin. We have two towns, Janesville and Beloit, about 160,000 people in that county. The increase in the money they're asking for, our taxpayers, all the working taxpayers in that county that I come from wouldn't be enough to cover the increase in spending they're asking for. So that's basically saying we're asking everybody in Rock County, Wisconsin, 160,000 people, these working families to pay all their federal taxes so we can spend it on an increase in the IRS.

What they are not looking at is the hardworking taxpayers are actually paying this money, working for this money. And that's what we are trying to impress on these folks. And I've got to tell you, we are not going to give them this spending increase and we're not going to give them all of these additional IRS employees that they are asking for, especially since they continually waste this money.

VAN SUSTEREN: What I don't understand, and with all due respect to Congress, is that Congress does have the job of oversight, and we're talking about years and years and years of just unbelievable spending by the IRS on these conferences. They are really parties. If you work here in this town, you know they are parties. Where is the oversight in Congress?

RYAN: Quite frankly we have kept their budget a bit flat in the last few years. We took over Congress in 2010. We started putting budgets down and started cutting spending. You have to remember Nancy Pelosi controlled Congress from 2008 to 2010 when they had bigger budgets. So we started cutting their spending and doing this oversight. The reason we know these things we all know is because Congress over the last two years has been doing oversight. The reason we know about the IRS scandal is because Congress had the inspector general do this study. The reason we know about these wasteful dollars is because Congress did this oversight and uncovered this. But we had to get the majority in 2010 to start doing that. And this is the result of two years of work that we have already put into this.

VAN SUSTEREN: One thing you can't do, and maybe I'm harsh about this, but it is gotten so out of control, because I think people knew they shouldn't have spent money this way. You don't need Wolfgang Puck chef at an IRS conference. And the record is replete with the way money is used. You can't present evidence to a grand jury to see whether there are criminal violations. The choice is either the attorney general of the United States does it or there's a special prosecutor. So far, I haven't seen a huge appetite on the part of the attorney general. But are you in favor of a special prosecutor. If so, when?

RYAN: Not yet. I think there may be a time for that. The reason I say not yet is because I want Congress to do its job, to do its oversight. We owe our constituents, the hardworking taxpayers who pay these taxes, that we'll get to the bottom of this, that we're going to hold these people accountable, and we're going to bring some transparency and accountability to this agency and rest of government.

Then after we have completed this investigation, which we're just in the beginning stages of, and we come up with evidence of criminal wrongdoing, that to me is the appropriate time to then turn it over to authorities and have a special prosecutor. We're going to take it to the criminal stage. But I don't want to preempt a Congressional investigation to get to the bottom of this so that we can show our constituents, the people of this country, just what happen, and so that they have transparency.

To me it would be premature to do it now because then you'd sweep it off the table and we would never get to the bottom of it for a long time. We want to get to the bottom of it. We don't want to delegate the constitutional authority we have to do oversight over the executive branch. Then if and when we find criminal activity, we hand it off to them.

VAN SUSTEREN: One quick question, give me a timetable. When is this going to happen and you're going to be done with it?

RYAN: We think it's going to be months. We are still getting data. We have gigabytes of information, of emails that our investigators are pouring through. I don't want to put time on it because we still haven't gotten all of the evidence and the data we're looking for.

VAN SUSTEREN: Meanwhile the American people are not happy with the IRS and they are getting notices from the IRS and their noses are out of joint quite justifiably about the IRS.

Let me switch to another question, tax reform. Senator Orrin Hatch and Senator Baucus, bipartisan Senate finance committee, bipartisan, I underline that, they just sent out a letter today to their colleagues about their ideas on bipartisan tax reform. Essentially as I understand it they're going to scrap the code essentially and then tell all their colleagues between now and the end of July to come up with and justify any credits or deductions or loopholes, anything they want to put in the code. Is that something that is attractive to the House?

RYAN: Yes.

VAN SUSTEREN: So this could happen?

RYAN: Yes. So we're going down the same process in the House ways and means committee. I serve on this committee as well. So we have bipartisan working groups on all areas of the tax code. And our operating assumption, we're starting with a blank white piece of paper and we have to justify through these bipartisan working groups what should go back into the tax code.

This does tie into the IRS issue. If you want the IRS to be this discriminatory, to be rife with this kind of waste, fraud, and abuse, you need a really complicated tax code. If you want to clean up the IRS, if you want to simplify this agency and make it work for us, the taxpayers again, you need to simplify the tax system. That's one of the great reasons why we need to do tax reform, in addition to creating jobs.

VAN SUSTEREN: The IRS wants to create jobs because they asked you for 4,500 jobs. I take it is not for party planners at this point.

RYAN: More private sector jobs.

VAN SUSTEREN: Did the commissioner tell you why he needs 4,500 new IRS employees?

RYAN: He did not. He did not justify it. And he did actually acknowledge that they can cut spending.

VAN SUSTEREN: How can he ask you for 4,500 people if he doesn't have a reason? At least he could say what he needs them for.

RYAN: That's my point. They don't have a good justification for all of the extra money they are asking for and all these extra people, because if you can't justify the way you are spending taxpayer dollars now, how on earth can you justify asking for more.

VAN SUSTEREN: What do you think about two IRS employees so far taking the Fifth?

RYAN: I guess that's their constitutional right. We'll still get to the bottom of it, nonetheless.

VAN SUSTEREN: Congressman, thank you, sir.

RYAN: You bet, thanks for having me.

VAN SUSTEREN: Always nice to have you.