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Washington, D.C.—A proposal by a key House subcommittee to slash more than $606 million below current funding for the Internal Revenue Service (IRS) is a foolhardy idea that would increase the federal deficit, the leader of the National Treasury Employees Union (NTEU) said today.

President Colleen M. Kelley called the proposal by the House Appropriations Subcommittee on Financial Services and General Government “a dangerous step backward” that could result in the loss of more than 8,000 IRS jobs, seriously impacting the ability of the agency to collect the revenue needed to reduce our nation’s deficit.

She described the proposal as “even worse” than the failed effort by House Republicans earlier this year to cut the IRS budget by $600 million for the remainder of the current fiscal year, and said its proposal for fiscal 2012 funding of $11.515 billion would leave the IRS in the position of having less resources than it had in fiscal 2009.

Kelley added that the subcommittee’s funding level would be some $1.7 billion less than the $13.28 billion sought by the White House for fiscal 2012, an amount that recognizes the importance of both taxpayer service and tax enforcement efforts in bringing revenues to the treasury. NTEU strongly supported the administration’s proposal in Senate testimony last week.

The NTEU leader noted, as well, the concerns of IRS Commissioner Douglas Shulman at that Senate hearing. He said at that time the House-passed budget resolution calling for a substantial cut for the IRS “would actually increase the deficit by decreasing revenues.” The results, he said, would range from weakened customer service efforts to diminished enforcement programs against tax cheats.

“These cuts would seriously hinder IRS efforts to collect the revenue our country needs,” said President Kelley. “IRS staffing is already down more than 20 percent from the early 1990s, despite significant growth in both numbers and complexity of tax returns.”

For instance, a recent report from the Treasury Inspector General for Tax Administration (TIGTA) reviewing a hiring initiative by one of the agency’s major divisions, noted that under the program, the hiring of Revenue Officers, a key enforcement position, has not kept up with attrition, thus impeding IRS enforcement efforts.

The IRS is not the only agency the Financial Services subcommittee has in its sights. Among others, both the Securities and Exchange Commission (SEC) and the Federal Communications Commission (FCC) would end up with insufficient fiscal 2012 resources for their missions.

The subcommittee proposes to freeze the SEC budget at $1.185 billion and fund it $222 million below the president’s request—despite its expanded responsibilities to protect American consumers and investors in an increasingly complex marketplace.

Kelley noted that as a fee-funded agency, the SEC “does not contribute to the federal deficit.” Underfunding it, however, would effectively harm its ability to conduct examinations of high-risk securities registrants, thus increasing the risk of undetected violations.

Further, the NTEU leader said, the agency would be unable to hire the experts it needs to provide the specialized expertise in hedge funds, derivatives, high-frequency trading strategies, algorithmic trading and credit rating agencies that it needs to better protect investors.

“Shortchanging the SEC would be a grave error,” said Kelley. “For every $1 it spends, the SEC returns $2 to cheated investors in recovered funds.”

As to the FCC, which also is a fee-funded agency that does not contribute to the deficit, President Kelley said the subcommittee’s proposal would slash the agency’s personnel budget by almost $17 million—and nearly $40 million below the president’s request. That, she said, would harm the FCC’s vital work of helping our economic recovery by promoting telecommunications innovation, and impede its duties to enhance public safety and homeland security.

“Funding federal agencies at appropriate and necessary levels is a critical national priority,” Kelley said. “We cannot slash budgets without regard to accomplishment of the missions of federal agencies and the commitment of dedicated federal employees to serve the public well and effectively.”

NTEU is the nation’s largest independent federal union, representing 150,000 employees in 31 agencies and departments.