FROM THE OFFICE OF PUBLIC AFFAIRS

March 16, 2005
JS-2319

Remarks of U.S. Treasurer Anna Escobedo Cabral
Go Direct Partnership Recognition Event
Chicago, Illinois

Good morning and welcome to all of you. It's a pleasure to be here. It is such an honor to join in thanking you for all you have done to help us launch the Go Direct campaign here in Chicago. I applaud the efforts of each and every one of you.

Before I get into that further, I'd like to talk for just a minute about another event going on here in Chicago today – a meeting of the President's Tax Reform Panel at the University of Chicago's Graduate School of Business Gleacher Center. In recognition of the need to change our tax system, to make it fairer, simpler, and more pro-growth, the President earlier this year, created an Advisory Panel on Federal Tax Reform.

Given the fact that it's tax filing season, this may not surprise many of you, but consider this: there are over one million words in our tax code and the number of pages has doubled over the last 20 years; in 1940, it took only two pages of instructions to explain how to fill out the regular Form 1040; today, there are 36 pages of instructions accompanying the 1040 EZ or "short" form, and it takes the average taxpayer 11 hours to complete it. All in all, Americans spend upwards of $125 billion each year just to comply with their tax obligations.

Our current tax code is a complex and cluttered mess that discourages economic growth and vitality. Our tax laws penalize hard work, discourage savings and investment, and hinder the competitiveness of American businesses abroad. Compliance with the tax code is complicated and burdensome. Nobody likes paying taxes. But instead of making it as easy as possible, our tax code is an obstacle for those who want to pay their fair share.

The Panel's mandate is to propose options to reform our cumbersome tax code into something that is simpler, fairer, and more conducive to economic growth.

After holding a few meetings in Washington, the panel is now beginning to travel around the country. They intend to take a comprehensive look at our current system - making sure that we understand all of the headaches, burden, and distortions in it. They will hear from academics, economists, lawyers, accountants, individual taxpayers, and business owners.

This morning, the panel is meeting here in Chicago to get additional perspectives on the impact of the tax laws on important taxpayer decisions and how the tax system treats investment alternatives.

The Panel is in the early stages of their work - but we are confident that by July 31, 2005, they will accomplish their goal of delivering options to reform this outdated and overly complex system. Taxpayers everywhere deserve a tax code that is fair, easy to understand, and allows them to grow and flourish.

Now let me turn back to why I'm here today. I was confirmed by the Senate as the Treasurer of the United States in November of last year, and the Go Direct campaign was one of the first projects in which I became involved, shortly after being sworn in. And it has been, without question, a very positive experience. I look forward to continuing to work to convert people to direct deposit in the future.

As you all well know at this point, moving from checks to direct deposit has been a focus of the Treasury for many years. As the federal government's money manager, the Treasury Department has worked hard to increase the efficiency with which payments are made and improve the service we provide to benefit recipients.

Treasury issues almost one billion payments a year, including Social Security, veterans' benefits, federal government salaries and retirement, and tax refunds. While the vast majority of these payments are already issued electronically, almost 250 million, including about 160 million benefit payments, are paid with checks – at no small cost to the taxpayer.

That is why we started down this road, and it is why we reached out to the Federal Reserve and to you for your support. The Federal Reserve's strong support and the expertise they bring to the table as well as your contributions have been absolutely critical. In my view, the success of this campaign is that it is locally driven and locally supported. The idea may have been hatched by Treasury and the Fed, but it's people like you who have brought it home.

We know that direct deposit is better for benefit recipients and you have helped us get that message out to thousands of people. That's the key. We need to make sure people are aware that direct deposit is safe, secure, fast and reliable – while it also enables Treasury to be a better, more efficient steward of taxpayer money today and for future generations – a factor that is very important as the first wave of "Baby Boomers" reaches retirement age in the next few years.

We have learned that despite all the merits, the growth rate for direct deposit has fallen in recent years, down to less than one percent annually – even while many people who receive checks are elderly, disabled, or low-income individuals who would benefit greatly from direct deposit.

That is why your support has been so important. Working side-by-side with you, we've been able to test outreach strategies, and the work we've done together over the last several months is really beginning to reveal which approaches work the best.

As you know, before we started working together, we at Treasury and the Fed realized that we needed to better understand why the direct deposit growth rate wasn't more robust. We needed some insight into why some benefit recipients are so resistant to switching. And we needed to determine how we might be able to overcome this resistance. The results of the research we did, which I'll speak to in a moment, are guiding the Go Direct marketing campaign.

One of the things the research indicated was that a sizable percentage of check recipients do see the appeal of direct deposit. In fact, about 31 percent were inclined to move to direct deposit, if properly motivated.

In addition, the research found that many individuals will react more positively to direct deposit if its benefits are presented to them by entities that they know and trust – such as community organizations, faith-based groups and local financial institutions. And, of course, that's where you came in.

We recognize that day in and day out, you work with exactly the people we are trying to reach. You work tirelessly to make the lives of these individuals better. You play such an important role in your communities.

With your help, we have already made great strides. We have reached literally thousands of benefit recipients.

And let there be no doubt - your involvement has been pivotal. Your contributions of time, access, expertise and enthusiasm truly have been invaluable. This has been a uniquely collaborative effort. And I am pleased to say that the response we have received to this effort in the communities you serve has been very positive.

The Chicago pilot was the first to be launched and really, the outpouring of support has been tremendous. Participation has been extraordinary. We have 80 partner organizations in the Illinois pilot area, including several hundred volunteers working on the ground. And there have been close to 100 events relating to the Go Direct campaign. Close to 14,000 people have attended these events.

You and your fellow Chicagoans have made remarkable progress.

Speaking on behalf of the Treasury Department and the entire Go Direct team, I want everyone in this room to know that we truly appreciate what you have done these last few months. We couldn't be more pleased that you were willing to give so much of your time and energy to this effort. Your participation and help have already made a very important difference. Thank you.