Transcripts For CSPAN Capitol Hill Hearings 20120713

and you want to look towards tax reform, you vote for the next bill. straight up or down. there have been enough discussion, enough hearings in this -- in the ways and means committee as well as the budget committee. these issues were central to our budget. you are a member on a budget committee as well as ours, had a full, open hearing on that budget document and markup, we believe now is not the time to raise taxes on working people, small businesses, and large. the onomy is anemic. we don't have enough job growth. why do we want to take more people's hard earned money? that's why we are bringing this bill forward. this bill is straight up or down. stop the tax hike or not. i yield back. . mr. hoyer: i take it the answer is no that there won't be a markup on a bill that will have consequences to all americans and extraordinary consequences to the deficit and debt and to our economy. is that -- am i correct in interpreting your answer is, no, there will not be a markup of this very important bill, yobring it straight to the floor without committee consideration, is that an accurate interpretation? mr. cantor: madam speaker. mr. hoyer: i yield to the gentleman. mr. cantor: madam speaker, i think the gentleman has heard my response. mr. hoyer: well, i heard your response and i accurately characterized it. i think that's a shame, mr. majority leader. mr. boehner said we were going to be an open house, that we were going to consider matters and that everybody would have their opportunity to have their input. usually tax bills are brought to the floor not subject to amendment. you have just said, as i understand what you said, this bill, our way or the highway. you couldn't like the bill the way we brought it to the floor, you're out of luck. you won't have an option. you can't put any of your ideas in the bill. if that's the way you intend to consider this bill, mr. leader, i think that's unfortunate. and i yield to my friend. mr. cantor: i thank the gentleman. madam speaker, the gentleman knows that his side of the aisle will have an opportunity to deposit their position on taxes through the regular process of a motion to recommit. and as i have said publicly yesterday when asked, are the democrats in the house going to be able to offer the president tax proposals? i said, absolutely they will. so we'll see. we'll see, madam speaker, if the gentleman decides to put forward the psident's tax proposal, calling for a tax hike on american small businesses. we'll see if that happens, madam speaker. but we'll see and that will be the week it will happen. you're either for stopping tax hikes or you're not. i yield back. mr. hoyer: my way or the highway, that's what you said, mr. leader. very frankly in my view we have agreement. we have agreement on something that you won't bring to the floor and it is that all middle-class working americans will not get a tax hike. all of them. and everybody up to $250,000 of income will have no tax increase. but we have a big deficit and a big debt. and we need to pay our bills. we have a debt limit vote coming up at the end of this year. very frankly we took the country to the brink of default, and very adversely affected our economy by undermining confidence. you talked a lot about confidence in the last campaign, mr. leader. i agreed with you. i think we need to instill confidence, not undermine confidence, but i will tell my friend, if you wanted to work together as you've said on a number of occasions now, as much as we did with the export-import bank, thbills that you sent over there, we didn't work together on. they were passed on a partisan vote for the most part. not all of them. and some votes were overwhelmingly bipartisan. and guess what happened? they became law. the president signed them. export-import bank, the jobs bank that you were -- not the jobs bank -- the jobs bill tt you proted and which i voted for, you said you want to work together. now, it's inresting when you say work together because what you say you're going to give is a motion to recommit,and what you wl instruct is for all of your members to vote no. it is a purely procedural vote. and as you have for the last 18 months, your members will vote no on motions to recommit. notwithstanding the fact that they may agree with the substance. and the fact of the matter is, mr.eader, we can have a vote that passed with 435 votes. 435 votes. everybody in this congress says that we ought to not have a tax increase on working americans, on working americans making less than $250,000 in taxable income. as you know that's more income. but we won't get that vote except on an m.t.r. vote no. it's a procedural vote only. it's not a substantive vote. i say not only to my friend, will you not allow us an amendment on the floor, it appears, but you won't allow an amendment to be offered in committee so we can vote on that. yes, we have about disagreement, but you're prepared to hold hostage working americans by saying, if the richest people in america might have a little bit of a ta increase, then the everybody else is going to get a tax increase. you said it a different way. i understand it. but the -- but the reality and the ramifications of the actions that you are proposing to follow will mean that we will not get a vote, which i think there's overwhelming support of and making sure that workg americans and, yes, small -- 97% of small businesses don't get any tax increase at all. we have agreement on that, mr. leader. why don't we bring that to the floor and show the american public that, yes, we can come together as you have suggested, yes, we can agree and yes, we can make sure they don't get a tax increase. and, yes, we can have a debate on the balance and you will take one position. i may take another position and the american public will see that and they can make a judgment on -- with whom they agree. now, my view is an overwhelming majority of the public would agree with me and you will think the overwhelming majority of the american public will agree with you. that's what democracy is about. let us have this debate. let us have this vote. let us make sure that working americans aren't held hostage to the wealthiest in our country. i yield if the gentleman wants to respond. mr. cantor: madam speaker, what i say to the gentleman is holding hostage working families is denying them a job. it's about jobs. and, you know, the gentleman can play with the statistics all he wants and claimed that 97% of the small businesses will get a tax break this way and let's leave the others for later. but the significant fact is it's the others -- it's the others is where the significant job growth can be. why would we want to go and tax job creators. we know that 50% of the people that will get a tax hike under the president's proposal get at least a quter of their income from small business. and the more their income the more the percentage. that means the jobs. so why would we want to stop job creators from hiring people because washington takes more of their money? why would we want tax rates to go up on anybody in this anemic economy? and why would we want to go and raise taxes when we haven't put an end to the out-ocontrol spending in washington because what you're doing is digging the hole deeper? that's our position, madam speaker. and so i would ask the gentleman straight up, is the gentleman going to bring to the floor a motion to recommit for his proposal, the president's proposal? is that going to be the motion to recommit? will the gentleman actually put his words to work and have that be their motion to recommit? i yield back. mr. hoyer: i thank the gentleman for yielding. if the gentleman is asking if i will bring forward the president's proposal e answer is absolutely yes. i don't want the gentleman confused in any way. if the motion to recommit is the only option we have available, we are certainly going to discuss that option. but we don't -- we're not going to pretend either to ourselves or to the american people that's a real vote. you want to put it on the floor as an amendment. you want to have a real debate on it, not five minutes on one side and five minutes on the other side which the motion to recommit is limited to, you're shuttings down, you're gagging us and, yes, you are putting middle class taxpars at risk because you know, i know and the american people know the president of the united states has said he will veto your bill. he has said he will sign a bill that together we could pass making sure tha 98% of americans do not get a tax increase. but what u will -- are proposing to do, mr. leader, is to bring to the floor a bill which simply protects the 2%. 2% should not pay more and the gentleman says, oh, they're great job creators. i understand what the gentleman is saying but, by the way, the program you're going to offer, it was in place it was in place from 2001, 2003 to 2009, and and i both know what happened is not solely because it was in place, of course, but -- i'll stimulate to that. but the fact is we had the deepest recession in year lifetime and my lifetime and the lifetime of anybody who is younger than 90 years of age under the program that you're proposing we'll continue with. i tell you, mr. leader, i don't think that's a great way to proceed. at least we ought to have opportunity to debate. at least we ought to have five minutes more. it's a procedural vote, don't vote for it. i will tell the gentleman with all clarity that the consequences of your act and you do it knowledgeablely, it will be that middle class taxpayers will be put at risk. why? whether you agree with it or not, the president will veto it. the senate i don't think will pass it. and the fact of the matter is we can do for 98% of america that which we agree on. you don't want them to have a tax increase. i don't want them to have a tax increase. we agree on that. the americans can't understand, can't understand when we agree on that why we can't at least pass something on which we agree which will help 98% of america. in this struggling economy, as you clearly point out. now, you point out that -- you didn't use the term, we only had 80,000 jobs last month. i was disappointed by that. that was unfortunate. but in the last month of the previous administration, we lost 818,000 jobs in one month with your program in place. that's 189,000, almost 900,000 turn-around from 818,000 to 80 ,000 minus. not enough. not enough by far. and i want to work with the gentleman to create many more, work with them on jobs legislation, economic growth legislation, make it in america legislation. if we could get some of that legislation to the floor, we think it would be helpful. so i say to my friend that i feel very strongly as you can tell that if we're going to have this vote, with is an extraordinarily consequential vote, at least we ought to have a substitute, not just an m.t.r., not just a procedural vote, not just a five-minute debate on my side, five-minute debate on your side. don't you think americans expkt more in terms of a very -- expect more in terms of a very substantive vote in a legislative policy form, and i ask the gentleman to consider that objective. does the gentleman have >> this weekend -- >> it is 100,000 objects. from the beginning of our nation up to the present. that is important for us. we're trying to show this tradition, full and documented, and reflect the history of american democracy. >> american artifacts, a look at the smithsonian presidential campaign memorabilia collection. also on sunday, more from "the contenders," about key figures who ran for president and lost the changed political history. this week, wendell willkie. he would never hold office. he would become an unlikely ally to fdr. american history tv, this weekend on c-span 3. >> in a few moments, a hearing on the homeland security priorities. in a little more than two hours, a justice department briefing on a settlement with wells fargo. live events to tell you about on c-span. the center for strategic and international studies has a program on of violence in syria and the assad regime at 10:30 a.m. eastern. at 1:15 p.m., the national governors -- governors association opening session. also, president obama is in a virginia tomorrow at a campaign event in roanoke. just after 7:00 p.m. eastern. >> hitler had no plan. these armies or remnants of armies. [no audio] >> now, a hearing on the homeland security department's challenges and priorities. former house intelligence committee ranking member jane harman, former dhs inspector and admiral thad allen. this is a little more than two hours. [no audio] >> good morning. the hearing is convened. thank you for being here. this is the second in a series of hearings the committee is holding on the past, present and future of homeland security. also senator collins has been kind enough to support my desire as i and my service in the senate to take a look back at where we have been in home runs security over the last 10 years. more important, to look forward and try to discuss some of the unfinished business and anticipate how we can meet evolving threats. i hope to create a record which will be of help to this committee and its new leadership next year. we had a good hearing yesterday with a panel that was describing the revolving homeland security threat. today, but will focus on the department itself, how it is done over the almost 10 years now and what it should be doing in the years ahead. the department of homeland security does not include all the federal government's major homeland agencies. the department of state, defense, justice, health, and human services along with key intelligence agencies of our government all play important roles in protecting our homeland security. state and local partners as well as the private sector and as we discussed yesterday, the american people themselves, all have significant responsibilities. the center of homeland security was intended to be the department of homeland security. it was intended to be not only the center point but the coordinating point of the agencies that were brought within it. and also to make sure we were interacting with a lot of other agencies over the federal state and local governments that have the irresponsibility and some opportunity to contribute to our homeland defense. as i look back, i would say that the department has, and awful long way in its first decade. this is a mission in a sense has the final destination. it has to continue to get better. there are ways to meet the evolving threat. there are ways in which in the first decade, there were things that happened that were not as good as we wanted. as i go back to in years ago, the vision that congress have for the department of homeless security was recreated it was to have a department that would be more intent -- more than the sum of its parts. a department that would integrate key, and security functions such as border prepared ness and infrastructure protection. and the department that would help ensure that we would never again fail to connect the dots so that we would prevent the next 9-11 from happening. the department has made tremendous strides forward in the nearly 10 years since the passage of the homeland security act. achieving some of the goals we talked about and that we had in mind ten years ago. al qaeda, because they claimed credit for 9-11, and its affiliates have not carried out a successful attack. not one anywhere near the catastrophic dimensions of 9-11 since 9-11, which i think is a credit to our offensive forces and to the tremendous work that the homeland security department has done. let me talk about areas where i think there has been significant progress. we have a screening system now at points of entry to the united states that is integrated with information from the intelligence community. it has become very affective at detecting bad actors trying to enter our country. our aviation screening system is vastly improved from what we have before 9-11. we also now have much more robust two-way information sharing. not only within the federal government but with state and local governments. that is in large measure due to the leadership of dhs. in a different aspect of the dhs' responsibilities, our nations prepared as a response efforts led by fema have improved since the seven years since hurricane katrina which obviously showed how inadequate fema was at that point. the response to just about every natural disaster that has occurred in our country since then has been significantly better and on very positive reviews. these are important achievements. we should not forget them in the occasional griping from people who do not like to take their shoes off or go through screeners at airports. the department still has a ways to go. let me mention a few areas where i think there is more to be done. most of these have to do with the administration department with process. the process is important. for example, the department operational components i think are still not adequately integrated with its headquarters and with each other. that causes problems. in least less than optimal use of the department's resources. the department of homeland security continues to have work force morale challenges. these have improved over the years but no where near to the extent needed. the department also struggles with setting requirements and effectively carrying them out for major acquisitions. and ensuring that these acquisitions and track while they are under way. the department of homeland security is that unique among federal agencies in this problem. but this is the department that we helped create and we have oversight responsibilities for it. their performance has not been adequate. in the years ahead, the department in a different way will need to take actions to anticipate and respond to involving home and security threats, including to increase its improving capabilities with respect to cyber security in response to cyber attacks on our country. the greater challenge of course is that the department of homeland security will have to find a way to do this in flat or declining budgets. in a budget environment like the one we have now, the tendency is to focus on preserving and protecting current capabilities but the risk of doing only that is that we will be under investing in system needed to meet evolving and new threats of tomorrow. i think in its second decade, the department will have to be as agile as our enemies. that may mean the department will have to cut back in some of its nontraditional areas of responsibility. if they seem less relevant to the threat, take that money and invest it in programs to meet new threats that come along. the three witnesses we have, jane harman, admiral thad allen and richard skinner, are uniquely prepared by experience and capability to contribute to our discussion and build exactly the kind of record i hope this committee will build to hand over to the leadership in the next session. i cannot thank you enough for being with us this morning. we look forward to your testimony. senator collins. >> thank you, mr. chairman. >> nearly 10 years ago, the creation of the department of homeland security brought together 22 different agencies into a single department to focus on protecting our country and its citizens. yesterday, we explored the emerging security threats our nation is likely to confront. in my judgment, the largest threat is a cyber attack. today, we will examine whether dhs is well-positioned to address these as well as other, longer-standing threats. the changing threat landscape at home and abroad requires the department to be nimble and imaginative, effective and efficient, qualities not often associated with large bureaucracies. yet the men and women of dhs can take pride in the absence of a successful large-scale attack on our country during the past decade and in the department's contributions to thwarting numerous terrorist plots. there have been successes and failures over the last 10 years. information sharing has improved, but remains a work in progress. ten years ago, we envisioned that dhs would be a clearinghouse for intelligence. although incidents like the failed christmas day "underwear bomber" make clear that information sharing is still imperfect, numerous public and classified counterterrorism successes since 9/11 demonstrate that information sharing has indeed improved. this is also true with respect to information sharing between dhs and the private sector an essential partner in the protection of the homeland, as 85 percent of our critical infrastructure is privately owned. the growing network of state and local fusion centers also presents opportunities not only for the improved dissemination of information, but also for the collection and analysis of intelligence from the local level. as we discussed yesterday, however, these centers have yet to achieve their full value in aggregating and analyzing local threat information. tsa, the agency within dhs that is most familiar to the public, has strengthened airline passenger risk analysis, but it troubles many americans to see tsa screeners putting the very young and the very elderly through intrusive, and in most cases unnecessary, pat downs. tsa is making progress toward implementing more intelligence focused, risk-based screening through such efforts as pre- check, but many challenges remain for tsa. dhs has bolstered the security of our borders and identification documents, but two iraqi refugees associated with al qaeda in iraq were arrested in kentucky last year. when a bomb maker, whose fingerprints we had had for some time, is able to enter our country on humanitarian grounds, it is an understatement to say that "work remains" -- as dhs's self assessment report states. in order to meet and overcome current and future threats, dhs must support its components with stronger management. since 2003, gao has designated the department as "high risk" because of the management and integration challenges inherent with such a large undertaking. what people often don't realize is the high risk designation refers not just to being at risk for abuse but program failure. dhs must implement changes that will hasten the day when the department is no longer included on gao's high-risk list. the roles of the department's components have evolved over time. as a positive example, i would note the adaptability and "can do" attitude of the coast guard. i don't believe there is another agency within the department that has done a better job of adapting to new challenges and its expanding post 9-11 mission. this was never more clear then after hurricane katrina. as this committee noted in its report on katrina, the coast guard demonstrated strength, flexibility, and dedication to the mission it was asked to perform, and saved more than half of the 60,000 survivors stranded by the storm. many experts have predicted a disaster in the cyber realm that would compare to katrina or pearl harbor. compared to 10 years ago, the cyber threat has grown exponentially. clearly, this requires an evolution of the department's mission to secure critical systems controlling critical infrastructure, a goal we hope to accomplish through the legislation chairman lieberman and i have championed. despite the fact that dhs has made considerable strides over the past decade, it still has a long way to go. to understand what changes are needed for the future, and to prioritize our limited resources, we must learn from past mistakes and be able to better measure what has worked and what has not. to do so requires metrics and accountability, an area where the department has been challenged. i appreciate the outstanding experts who are here today to assist us in evaluating the department's progress and future. thank you, mr. chairman. >> thank you very much, senator collins. our first witness is congresswoman jane harman. we have three of what we used to call the gang of four. the big four. much better. you can say the final four. no. [laughter] what i am referring to in this inside conversation is we were privileged to constitute a bipartisan leadership on the ultimate adoption of the 9-11 legislation which followed the creation of the department of homeland security. i really got to know jane well. i greatly admire her. even like her. [laughter] she comes to us today as the president of the woodrow wilson center. her tenure in the house includes services as chair of the house committee on homeland security subcommittee, as intelligence and information sharing and terrorists and risk assessment and as a ranking member of the house permanent committee on intelligence. i am delighted you could make it and we welcome your testimony now. >> thank you, senator lieberman and senator collins, for the opportunity to join dear friends and to return to capitol hill to testify on a topic i'm passionate about: the security of our homeland. i am honored to be testifying with admiral allen who is here and mr. skinner. they have far more hands on experience with this topic than i did. our collaboration over many years shows that bipartisanship -- indeed tripartisanship -- is possible. we had a good gig going and our legislative efforts yielded significant results and many special times. well over 10 years ago, i joined the chairman in a hardy little band of legislators who thought a homeland security function made sense in the aftermath of 9-11. as you know, i joined the hardy little band of legislators who thought a homeland security function made sense in the aftermath of 9-11 -- something something far less ambitious than the plan ultimately sketched out by then white house chief of staff andy card. we envisioned a cross-agency "jointness" similar to the 2004 intelligence reform act structure, which the three of us, and former rep. pete hoekstra, negotiated. two of the big four happen to be females so of course we did 98% of the work and that's why the bill passed. >> i want to note that the women left at that. [laughter] i always thought of you as the fab four. >> back to the homeland bill, i remember once the white house proposal was announced, we decided to embrace it because that would insure presidential support. and so it was. but i clearly recall our decision to embrace a much bigger concept -- which the white house proposed -- because that would ensure presidential support. though dhs comprised of 22 departments and agencies, congress legislated four main directorates: border & transportation security, emergency preparedness, science & technology and information analysis & infrastructure protection. the information analysis directorate was supposed to analyze intelligence and information from other agencies, inlcuding cia and nsa, involving threats to the homeland and evaluate vulnerabilities in the nation's infrastructure. something we definitely need to be doing. emergency preparedness would oversee domestic disaster response and training. border security would streamline all port-of-entry operations and the s&t directorate would acquire scientific and technological tools to secure the homeland. the initial strategy has clearly morphed into something different. we all learned that merging government functions is difficult, and the threats against us have not been static. dhs has evolved. but so have our enemies. while dhs has experienced real success, there have also been some hiccups and significant growing pains along the way. it's certainly not the first department to run into a few problems. to fix those problems, we should not rearrange the chairs. what we should do is make a clear assessment of what works and what does not. here are some of the functions that execute well -- last year as he said, customs and border protection stop more than 3100 individuals from boarding u.s. bound aircraft at foreign airports. cpb processed more than 50 million travelers at 15 pre- clarence locations in the same year. tsa now fully implements secure flight, the program screening passengers from or with in the u.s.. extending our borders by using real-time thread based intelligence in addition to multiple layers of security is working. to remind: the department of defense faced so much inter- service rivalry nearly four decades after its creation that it needed major legislative reform to rework the command structure. my bottom line is we don't need to rearrange the deck chairs, again. we do need a clear-eyed assessment of what works and what doesn't. there are homeland functions that execute well. last year, customs & border protection stopped more than 3,100 individuals from boarding u.s.bound aircraft at foreign airports for national security reasons. and cbp was able to process more than 15 million travelers at 15 pre-clearance locations in the same year. that's like picking needles from a haystack. the transportation security administration now fully implements "secure flight," the program screening all passengers on flights from, within, or bound for the us against government terror watch lists. extending our "borders" by using real-time, threat-based intelligence in addition to multiple layers of security is working to mitigate terror threats. the department expanded the "if you see something, say something" campaign to dozens of states, cities, transit systems, fusion centers, federal buildings, shopping malls, sports arenas, and retail outlets to boost public awareness and reporting of potential threats. fusion centers around the country work together to share tips to arrest and convict the 2010 times square bomber. there are problems that we can discuss but some are terrific. the office of the infrastructure protection conducted more than 1900 security surveys, 2500 vulnerability assessments on the nation's most critical infrastructure. but the challenges are significant. i do not want to abuse my time so i will wash through them. the intel function has never fully developed. part of the reason is that president bush stood off the terrorist threat integration center which is now the national counter-terrorism center, outside of the department of homeland security. a significant portion of the jurisdiction moved out. intelligence reports are meant to be consumed by state and local law enforcement but many into this -- many entities consider dhs information as spam. the new strategic plan for fiscal years 12-16 said that intelligence is an area needing enhancement. we can discuss that if you want. >> if you want to take a few extra minutes, you should go ahead and do that. >> thank you. >> one of the enhancements necessary in my view is writing reports that are actually useful local law enforcement. that was the point of establishing the interagency threat assessment and coordinating group. in which i understand may suffer some funding problems and i want to thank you, mr. chairman for fighting to restore the funds that may be taken away. the homeland mission is so large the the department must assess where it can be most effective and where it cannot. i believe that dhs will never be the leader in preventing cyber attacks but i do think it can perform the mission that you and your legislation suggest and i think it is absolutely crucial that the legislation congress enacts include parts that protect critical infrastructure. i support your bill. over the one that the house has been considering. i hope that congress will move forward on legislation promptly. i think congress has been a very disappointing player in this process. not this committee but congress has failed to reorganize its committee structure and the homeland jurisdiction here but more significant in the house is anemic. the department has a report to more than 80 committees and subcommittees. we have simplified that somewhat but not enough. the one recommendation of the 9- 11 commission that remains unimplemented basically is the recommendation to reorganize congress. what are the biggest opportunities? while the department should be praised for overhauling its privacy and civil liberties office, it should not stop there. you and i urge the white house -- which is mandated in the 2004 law. in the bush administration, that board barely functioned. i think that would be fair. in this administration, all the membership has been reported but they're not confirmed. we do not have the function yet. dhs should do more to reduce over classification of intelligence. your committee work for a year to help pass the act of 2010 but little has happened to implement it. it should be a high priority. the secretary must continue to be the face of common security. janet deval, happens to be an old friend and before she took office, i suggested she be the everett of threat warnings. just as he was. this reminds me of a silly thing. there was a color-coded system for homeland security warnings. i remember the department saying that we were moving from pale yellow to dark yellow. i commented that the homeland secretary should not be an interior designer. the point of this is, there are some home and functions that only the secretary can carry out in one of them is being the respective voice to what the rest of us of the threats we face. in conclusion, but -- no major attack has occurred on u.s. soil since 9-11. dhs and this committee deserve credit. soon he would join the ranks of grandparents like me who work outside the congress. this week, the ranking member collins -- did you break cal ripken's record? >> today. >> 5000. can we all applaud you? [applause] both of you bring such skill and dedication to this work. i strongly doubt your new roles will diminish your passion and mine remains as strong as ever. i really salute you, dear friends. thank you, mr. chairman for the opportunity to testify. >> take you very much for your testimony. i was watching tv today that cal ripken broke the previous record. my wife was befuddled by my behavior. i began to cry. she did not understand that but i will try to control my tears today. you said something i want to draw attention to. you stated some statistics about border security and counterterrorism prevention. almost nobody in the country knows this but people ought to have a greater sense of confidence. i believe they do when they get on the plane. last year, customs and border protection stopped more than 3100 individuals from boarding the westbound aircraft at foreign airports for national- security reasons. that, out of 15 million travelers at 15 pre-clearance locations. we are all safer as a result of it. thank you very much for your thoughtful testimony. next, admiral thad allen, of the coast guard. as we remember, he led the federal government's response to hurricane katrina and the deep water horizon oil spill and in both, distinguished himself. in katrina, he was the singular source of real storage -- reassurance to the american people that somebody was in charge and was effectively coordinating air -- corresponds efforts to the people who needed help. it was a great moment for our country. admiral alan, i believe he may be undercover as a result of your facial hair but i know better that you are not currently a senior vice presidents at hamilton inc. thank you for being with us this morning. >> mr. chairman, ranking member collins, members of the committee. i have sat before these hearings cal was times and i am delighted to be here this morning. i really mean it. [laughter] it is an honor to be here with my colleagues. jane harman has been a tremendous leader and richard and i worked closely in the last 10 years of the evolution of the department of homeland security. the perspective i bring to morning we did this morning is someone who is work this problem inside out. i was the commander on 9-11. we closed new york harbour and boston harbor and the tremendous challenge of evacuating people. we marked a sea change for the coast guard. in the fall of 2011 and 2012, there was much discussion about how to aggregate these types of functions and increased security for the united states. i consulted with admiral james lloyd and there was some kind of feeling there would be an abrogation of functions as the records -- as representative harman said. the bill was placed in 2012. i want to settle a context. i think it is important to have it on the record. there was a push to have this bill passed by the first anniversary of 9-11. that did not happen for a lot of reasons. when the bill passed, the president was in a position where it had to be passed right away. it was signed on the 25th of november, 2002. it required the department be established in 60 days. that means from the time the bill went on the hill and the department was created was basically about a year. from the time of the enactment of the bill of the first component had to move over was little over three months. when you do it that fast, you lack the elements of the liver planning and analysis of alternatives on how you want to execute the legislation correctly. i have talked for years about how the conditions under which the department were formed are some of the issues we have had to deal with. the legislation was passed between sessions of congress. there was no ability for the senate to be in panel and confirm appointees. although secretary ridge was done at a before he was required to be secretary. it took up to a year to get some of the other senior leaders confirmed. we were in the middle of a fiscal year. there was no appropriation. some of the new entity's we had to basically reprogram funds from across government. it was a chaotic time to try to stand up the organic organization of the department and put together a headquarters. the nebraska avenue complex and the situation we are now where we are at st. elizabeth's complex. because of that, what happened was we have the migration of 20 to agencies with legacy appropriation structures, internal support structures, different shared services and different mission support structures in the departments where they came from. because of that, and a lot of the resources associated with how you run the components or the department rest in the components and still do today. in things like human resource management, property management and so forth. over the past 10 years, there have been repeated attempts in the department to try to tackle some of these problems -- consolidation of financial management systems and an ability to create a corps accounting system. and these are emblematic in my view of the difficulty at which you encounter when you try to do things without them being bought out. this that was a transition planning office under an executive order but they were barred from sharing that because the law had not been enacted and nobody was able to make a handoff. i will not dwell on the past zero when i talk to people about how the department was formed, we need to understand that was a difficult time. we still carry the legacy of that moving forward. that said, as we look forward, we need to understand the challenges about the way we think about the department. we have to have a systems approach moving forward. i think that is a challenge trying to find the missions that. once you do that, you know the things they need to have a discussion. there has been talked about secure borders and protecting our borders. when you think about it, our borders are not a monolithic line drawn in the land. it is a combination of authorities. the ocean extends from the sea to the economic zone. we also do analysis of data that facilitates trade. as we move forward, many to understand that we need to take the collective threat environment out there and look at the consolidated authorities in jurisdictions and whether or not that is a mess. we have had the first homeland security review. that invalidated the budget priorities established with the administration came in in 2009. after 10 years, we need to take a look at the fact of whether or not we got the legislation right to begin with. what do the aggregate authorities of the components that have not technically changed since the the problem was created produce the right base for the department to move forward and meet these emerging threats. there is an opportunity to do that as we move to the second qhsr. i know the department is working on that. we need to look at things like the cyber threat. resiliency involves not only natural disaster but the interface of the human built environment with the ever changing natural environment and take any strategic view on how we approach the emissions. i see my time is up. >> thank you very much. richard skinner, welcome back. i am sure it has always been a pleasure for you to testify before the committee. he served as inspector general of the department of homeland security from 2005-2011 and was deputy from the department's inception in 2003. in both of those capacities, he was helpful to this committee in caring out its oversight responsibilities. he comes to us today as an independent consultant and we welcome you. >> thank you. it is good to be back and see everyone again. ranking member collins and members of the committee, it is truly an honor to be here. i was excited about the opportunity to testify today. i am especially honored to be with such a distinguished panel. i have worked with admiral allen over the years and i commend him for the service he has had with the coast guard and all he has done. we talked about homeland security and its failings and successes, we tend to want to talk about the operational side of the house -- border security, transportation security, intelligence capabilities. what is often overlooked is that those functions that are supporting all of that, behind- the-scenes so the speak, particularly financial management and grants management, these are the functions that cost the platform which the department's platforms must operate and are critical to the successful accomplishment of the mission. some of the challenges that were inherited -- the management support functions were short chains. and we bought over the operational aspects and we did not bring the managements of core functions --when we stood's worth short changed. -- demands were short-changed. we did not bring support functions. now you think we would have made more progress than we should have. there are a variety of issues, but the department is not where it should be. we support its real mission. this has been a problem since 2003. in 2011, lahood there has been progress. -- since 2011 there has been progress. there is a significant accomplishment. it is also unfortunate because we are not investing with the next of for work. the department decided to change its strategy for financial management, rather than implement a solution. if we know we are going to try it twice and failed. now i think we have a very wise approach to modernization of the component level. you will see that these initiatives have been curtailed. it is not clear whether they will implement the strategy or whether they can generate who useful information that can be used to make informed decisions with limited resources. with regard sioux who modernizations, they are struck willingham -- struggling with infrastructure. if the does 12 months just to do an inventory. -- it took us 12 months to do an inventory. we reduced our systems to 700, and it has been reduced further, so there has been progress, somebody mentioned how important is that we can communicate and exchange information. that we can communicate on a that remains one of the department also biggest challenges. development approach. systems and not integrated and not meet user requirements and not provide information technology capabilities agency personnel and partners need to carry out critical operations in a timely and efficient manner. earlier this week, the oig reported the environment and the aging infrastructure does not fully support cbp's missions. the infrastructure has not been sufficient to support the missions and activities fully. as a result, employees were out on the field and creating a work around us and employed alternative solutions that could hinder their ability to accomplish the mission. technical and cost barriers, aging infrastructure, outdated it plan to guide investment decisions, have and continue to impede the department's efforts to modernize the i.t. systems. those around here in 2003 know we inherited a large organization. we had a skeleton staff to provide the oversight to manage those contracts. as a result, a lot of things went south on us. as we know from the hiring program. a coast guard deepwater program, which has since seen corrected, but the department has recognized this, and i would like to point out the secretary and deputy secretary showed a commitment to improve its functions and has been working hard to do that. much remains to implement those plans and address those challenges. the department needs to identify the resources to implement those policies. the complexity in the mission will continue to demand rapid pursuit of major investment programs. the department will continue to rely heavily on contractors to accomplish its mission, and we continue to improve high risk programs to reflect large dollar procurements that will show a sustained commitment to improving function, increased resources, and manage those contracts if the progress is to oversee the work. finally, management, because this is something we spent millions of dollars on, and since 2003 through 2011, we have distributed over $18 billion through the woman security grant program. putting through a report but was just released on last monday, there was a system in place to prevent, deter, respond to, and recover from major disasters and other emergencies. according to the report released earlier this week, we need to make important improvements to performance measures and oversight. many states cannot demonstrate what improvements have occurred as a result of these programs, and fema cannot demonstrate how safe we are as a result of spending billions of dollars over the years. that needs to change. i think the department has to develop performance metrics and start holding the states accountable. it is impossible to determine whether annual investments without of posture. fema lacks the tools necessary, and it is critical they focus resources. it is evident the senior management is well aware of these challenges, and they have made some headway. of the question is does the department have the resolve to sustain these efforts? the ability to do so is fragile, not only because the early stage of development is in, but also because of budget constraints and current lack of resources to implement. in today's environment of large government deficits, the new challenge will be to sustain the progress already made and to continue to make necessary improvements. unless the department and congress stay focused, and it will be harder than ever to facilitate solutions for critical management functions and ultimately to insure the success of homeland security. and that is my statement. i am happy to answer any questions you may have. >> thank you, you were very helpful, and i are appreciate it a lot. we will start with a seven- minute round of questions for each senator. it is striking and not surprising that each of you is focused on the unfinished work, the deficiencies, and the management operations of the department, and there is an actual tendency to focus on operations, and operations are going pretty well, and unless management is carried out of efficiently, the operation of the department is going to suffer, and i thought you were helpful in reminding us of the circumstances in which the departments were shaped, which were quite hurry because of the sense of threat of remain very much in the air after 9-11 but also because of the time it took us to get it going, and i have fallen into the habit of saying this is the most significant change in our national security apparatus since the end of the second world war, certainly together with the intelligence community, but we did it very quickly, so let me give you a chance to get a quick answer. what are the most important things apartment ought to do to improve management functions? is it money? is it personnel? is it a lack of will to focus on management, but what needs to be done? you want to start first? >> it is a variety of issues that are holding us back. one is the resource issue. we could have done a better job with the resources we were given. we could have made the changes, but we did not take it vantage of opportunities. it is also a cultural issue. the department and its components need to come together and realize we need to, for the good of the department and for the good of the country and for the good of the mission, that they are going to have to start working better together. they are going to have to give up some of their turf and work in a more integrated fashion, and i think that is one of the things things that is really holding everyone back. this is particularly when we are talking about the integration of our i.t. systems. when we get to the grass roots, they are going to start to see push back, and i do not want to give up my system to do this -- we have to overcome that. >> it is not surprising we were watching that have been over the decades. what you are saying is that a lot of agencies have still maintained too much of an independent management structure, including something as critical as it. >> when we talk about reports, and i have testified on this -- needs to be given the authority to ensure compliance and that people are entering into the departments wanting to maintain their it enterprise. >> that is what people should do? >> that is what the department needs to do internally. i think admiral allen stated there are three alternatives. the least feasible would be an external-driven, but unless they do something -- now we are 10 years old. now we can comprehend what is right and what is wrong, so unless we start doing something to ensure we are going to start moving in the right direction so we can support our operations and may be an external forces would have to be put into play. >> you focus on the need for improved unity of efforts and operational coordination, and there is no no question that was the main objective we had in mind for the creation of the department, so i wonder if you would talk about what you think if anything we in congress should be doing to promote or facilitate those efforts in the years ahead. >> in regards to operational coordination and execution, there have been several attempts to establish a robust execution system that takes place through the system. one of the problems was it was kind of, as you are, and a lot of people stayed in the facilities. there are a lot of command centers around town that are independent of the department. fema runs a headquarters. i am not proposing we go to a joint structure. to create unity of effort, you have to have a way to do unified planning and coordinated averages and to basically a kind of create a data processor across the federal government. it comes down to two things. they talked about analysis and sharing that is necessary. all of this is done to create a unity of efforts. there was a head wind, but i think that needs to move forward, and i think they have to do something to work the problems every day to create that effort. >> they you want to add anything to that? >> you cannot legislate leadership, but they need to articulate what the focus of the department is, and presumably congress should participate and making that, but the department cannot do anything. i think there is a huge role to collect information and use that information, but i do not think they need to compete. i think as part of this and other structure, a more targeted way would-be accomplished better. >> if i could add a comment. there has been a discussion that there needs to be an intelligence function, and i think that really needs to be put in place. >> it would be a coordinating function. >> that is possible to do without statutory authority. >> you have had extensive experience not just on the homeland security, but on the intelligence community, and i know you have continued at the wilson center. our committee has held a variety of hearings to try to highlight possible vulnerabilities and how we respond. you said that dhs has evolved. one of the problems is figuring out what is the greatest threat and what resources should be concentrated on which threat. if a weapon of mass destruction is smuggled into the cargo? is it an act of bioterrorism? is it homegrown terrorism, which we have done a great deal of work on? is it the cyber attack? if you were the secretary of the department, what would be your priority? what do you believe the chief focus should be? that is a hard question, and the first answer would be that it should not be the department's responsibility. i think part of the answer to your question has to come from dhs possible role. dhs is not in the prevention business, certainly not in cyber prevention, but it is much more in consequence management business, so i think we have to keep in mind that our enemies are attacking us asymmetrically. if we announce we are looking at three things, they will attack us for their regard, so i do not think that is a great idea. i think we have to keep looking. today's "the washington post" as an article about cyber risk, and that makes richer targets out of us, and i actually believe it, and there is a case that they should beef up managability. i think the bigger attacks are harder to pull off, because we have been quite effective, and they might have been using ingredients from our country, not always a border problem, so something i always worry about is the radiation material in machines in hospitals, which could be compromised and made into dirty bombs, so it is a huge problem, but we have to keep eye gel and understand how those people are coming at us. >> i was interested when you describe the gains made by the department does fragile, greeted by the department as fragile, and i think that is a good note. when i think back to the last decade at the department, i can come up with numerous examples of failures in procurement. the problems with improper payments in the wake of hurricane katrina, which approached a billion dollars and your office spent so much work on, i.t. projects throughout the department that have failed, and you talked about the importance of having a robust acquisitions staff, but the an important safeguard was having aig, and you are an effective watchdog that brought to light a lot of problems. right now the department is without an acting ig. could you share what qualities you think this committee should be looking for in a new inspector general? if you could also describe the scope of the office. this is not only a huge department. isn't the office one of the you just saw? >> it is. it is the third, fourth, or fifth largest in the federal government. in my opinion, it is going to acquire expensive executive experience with demonstrated leadership skills. this is not a place for training of leader. this is somebody who should have already demonstrated leadership abilities and someone who should have some background or appreciation for audits and inspections that can provide the leadership and the vision for the office. the ig, within itself does have multiple editions with regards to missions and financial audits. in the 1950's and the 1960's, it was strictly financial, but now we have learned we have to recruit and motivates a wide range of people who are confident about doing policies, people with engineering backgrounds, people with policy backgrounds, way beyond audit and management, but the organization should have demonstrated management skills and should have extensive executive experience. >> thank you. >> let me reiterate our thanks to each of you not just being here today but for your willingness to serve our country in many ways. i want to follow up on a point senator collins was making the record we play executive branch swiss cheese from administration to administration. it is getting worse and not better. we have had a gaping holes and major leadership problems because we could not agree. the administration could not figure out who to nominate. in the bush administration we saw it again, and when you see major weapon systems cost overruns of $4 billion, and after 18 months, having a vacancy, it is unthinkable, but i want to go back to the point with respect to filling a position you once had, i do not know the administration is going to come back to us and say this is the right kind of person to fulfill this role. you give an idea of what the administration should do, but this has got to be a priority. we need to work together to make sure we can get it done. it is real important. these are great hearings. i think it is unfortunate our colleagues are not here, but i want to thank you for providing these for us and our staff. at a hearing we had a couple days ago, we focused on cyber security and looking for a to do list. what we are looking for is common ground to see if the panel could give us some ideas to find the 70% we agree on and to do that and not to waste more time. when you look at different approaches, 22 major bills during the senate and legislation senator mccain and others have looked at, when we find common ground, give us some ideas to meld this together in ways that makes sense. >> this debate, we keep having about the role of government, i think the argument now the bill's sponsors make is that infrastructure has to be in the bill. we are not protecting the country. i am there. i think that is right. i do not think it is a republican or democratic argument. i think it is a proper role of government to provide for the common defense. if we are going to provide for the common defense, we need to protect our critical infrastructure. if i were doing that, i would find any possible way to keep that in the bill, and i would negotiate other stuff like how information is shared. one thing groups are concerned about is a violation of privacy, but if we have a privacy and civil liberties board that was functioning, we could help the board now implement regulations. with no cyber bill, our country is extremely vulnerable, and those who have been briefed understand the capability of this tool now, and 10 years ago when we were setting up this department, i do not think any of us was talking about this. i do not think what capabilities this was. it was cyber, and we were in some prehistoric age that is my age, and as it evolves, and we have to evolve, and it is overdue but some strong legislation should pass. >> thank you. >> this is really a question of what is the role of government. good when we are going to do a complex regulatory environment, these questions are raised. we face of the same problems and challenges looking to port security after 9-11. we used to say if you have seen one port, you have seen all ports, and if you go between the sectors, there is a different varying ability to protect their assets. in other cases there is not a market-driven reason to do that. i think we need to understand what are the standards we are trying to achieve to secure infrastructure and to apply those to each sector and to produce a different outcome for each one and there is a way to think about it and to move ahead. if there is a role in government it becomes a matter of execution as far as personal information. we need a bill. i cannot urge you strong enough to get a bill out this year. as far as development of assets or information sharing or industry-led organizations, i think that is something the needs to be worked out in congress as it will works through your good -- in congress as the bill works through. we should build on what has already been done. the progress has not been as significant as we think, but we should move forward with the bill. >> i do not know if you are keeping a to do list of things you want to check off before the end of the year. house representatives continue to delay legislation. in the gov actually passing, they continue to delay until it is $25 million a day. i do not want to come back and have to deal with that you're a good i may be back next year, but i hope i have a chance to serve a bit longer, but the other thing that is trying to get done is cyber. one concluding thought, a lot of times we focus on the stuff we have not done well. they have high integration on their list. now there are maybe tens of thousands of people, and there is still a lot that have a life and families because of the protections in place, and no small part because of the work that has been done 10 years ago. i think that is important to keep in mind. i am a person who cares a lot about trying to figure out what works and to make sure we are spending taxpayer money in the most cost-effective way weekend. we are looking at a split of the end of this year. we are looking at ways to spend money more cost effectively, and one encouraging thing for me was the creation. the c.f.o. said they have to have financials, and they have to be audible. i think you cannot manage would you cannot lecture. there is a lot of work to be done, and we need not lose sight of it. >> i do have a bucket list. i try to engage in the formation of a bucket list caucus, and i think it is cyber security. there was a bipartisan effort to reach a meaningful compromise. the priorities for the committee are cyber security. i think all the witnesses and no, but it cannot be said too much about the need to have a cyber security bill adopted this year, it is noteworthy there seems to be somewhat of a divided on this question here in congress among those who have had responsibility for our national and homeland security across the last two administrations. there is real unanimity of opinion but we have to adopt the bill, and i am not saying they support a bill like the one that came out of our committee. admiral o'connell, i believe was your attorney and secured baker, so i hope it will have an impact in helping us get over 60 votes in the senate. >> the only way we are ever going to finish most of them is to get the bill on the floor debated and amended, and i think the same is probably true with the cyber bill. we have to get it on the floor. i hope before august we will actually do that. >> i would say you are the rookie with the most cal ripkin-like record, and i appreciate that. >> thank you, and thank you for holding these hearings. these are extremely helpful, and i am learning a lot. i would like to thank you for your service to the country. i would like to ask each one of you what was the primary reason for establishing the department. i want to go down the list, and if the previous answer is yours you can tell me, but i want to acknowledge that with the reason. i smiled when you said 90% of the work was done by women. >> i remember the time vividly. and we were all here on 9-11 walking to the dome of the capital, which most believe was the intended target of the plane that went down in pennsylvania, so we have no evacuation plan. we close these buildings, reopen them during the day, a huge mistake, but it was terrifying, which was the point of a terror attack, but i felt our government organization was completely inadequate to the new set of threats, and we needed something different. we missed clues. two hijackers were living in plain sight in san diego, and the fbi did not talk to the fbi internally or the cia, or we might have been able to unravel the plot. we might have somehow found a better way to put government agencies together. many thought there was a simpler way to do this, but we embraced what president bush proposed. >> the concept of a border security agency actually predates 9-11. there were discussions about trying to do this by in the nixon administration, so the concept is not novel. as someone who has worked with these agencies for nearly 40 years, the relationship between the coast guard, fema, emigration, and customs have never been better. fema is a better organization because they are in coordination with the coast guard. i was also asked one time what was the best part about leaving and moving to homeland security. i said we were appropriations. there was a bureaucratic war. it was ugly. that does not happen, and while there are overlaps and ways to talk about how we can coordinate more effort, some of the bureaucratic struggles i saw throughout my career have gone away. >> out of those agencies, it was five you were originally thinking of? >> that has been a discussion that has gone on for years. >> out of the 22, how many of those? but the organization has already had a physical presence, but it has been discussed for quite awhile. >> whole concept of homeland security predates 9-11. there was a bill that got introduced for a couple of years prior to 9-11. it was brought in and dusted off and started the ball rolling. quite frankly, vol concept was to have unity of effort to bring together the different functions within government so they can work together to not only protect or prevent another terrorist attack but also to develop a resilience to recover from a terrorist attack, so it brought together these different elements that would sit under and one roof with one common mission to respond and mitigates against not just a terrorist attack but also a natural disaster. >> here is my concern. i have gone through that merging process. i also understand when you go through a large organization, so much of the effort is directed toward feeding the beast. we are trying to do all of these things for integration. have we created something too big to manage? we have $60 billion in overhead. should we maybe split some of these into different areas? i was talking about information sharing and maybe taking it back to the national intelligence. is there an intelligent way of taking a look at this? we have made something even larger, and we made it less effective. >> on the front end, we bit off too much, but we made a tactical decision that going along with the president's proposal was the fastest, easiest way to get something to happen. there have been huge growing pains. it has been 10 years. i would recommend narrowing some of the functions, but i would be against my view of rearranging deck chairs, because that is extremely painful, and this one is becoming a cohesive organization. more leadership to integrate some functions that are not integrated would be good. sustained leadership would be excellent, and i think it has come a long way, and it would really serve the function of protecting our country. if i had to pick something, it would be congress. this country would have a lot more jurisdiction, and that is true as well. >> as far as the issues of management and so forth, we are going to have to get over the first part. it has been 10 years. they expect the department will start functioning better. i think there is a leadership management imperative that has not been exhausted yet, and i would support those comments. i think we have an opportunity to have a leadership management agenda that is focused on the department takes care of blocking and tackling, and until we have done that we have not exhausted the department. >> i agree wholeheartedly. this is not the time to do readjust the deck chairs. if you study the history, you have to understand the environment in which it was created. this was an emotional environment. they were very upset by the results of 9-11. the spill was pushed through very quickly -- the bill was pushed through very quickly at a historic pace. we were not given the opportunity to think it through so we could prepare ourselves. we saw the screeners at record time, and we had to go and read do a lot of that. that environment created a lot of problems. when we did not think it through, we short changed those when we stood up. we brought all of the operations without management's support to back these operations. >> let me close with an interesting article i read in newsweek secretary gates was talking about. secretary rumsfeld said there were 17 layers between implementation and the military. that is not moving in the right direction in terms of efficiency. >> the department has reduced layers, because when it was originally set up, the department had the opportunity to reorganize, which they did, and they have removed layers. nouw they need to be empowered. the progress we have made is substantial. i do not think the department has a good way of marketing itself. it has a long way to go. the biggest threat the department has right now is budget constraints, the ability to sustain what they have already started and the ability to make the improvements they need to move forward and address evolving threats. >> thank you very much. >> that was a constructive and. senator, welcome, another member who was involved on committees to priorities like the cyber bill. it is your turn for questions. >> thank you very much, and i thank senator collins for her efforts and for holding this hearing to examine what has happened to dhs, and also to try to come about with some reform that can improve the efficiency and delivery of services of this department for the country, so i want to thank you for this opportunity. i also want to take the time to thank the federal workers. i have always been concerned about our human capital, and here is one of those situations where federal workers responded, and i want to thank them for their response, so here we are now examining what has happened and how we can improve it. i would like to ask the congresswoman, your written testimony notes improvements of the privacy office and the urgent need to stand up for privacy and civil liberties oversight board. i strongly agree. dramatic technical advances in the past decade allowed dhs to obtain and use americans personal information in new ways, so my question to you is what are the key privacy challenges dhs will face in the future, and is the department equipped to face those challenges? >> thank you, and life outside of congress is quite sweet. i want to assure you i am really ok and enjoying my life. i watched carefully as the department developed, and i have seen progress and good effort in the privacy protection area, so i do not want to be critical. what bothers me as a more general matter is the absence of people inside the executive branch and policies formulated their as regulations develop and new actions are contemplated to say cut there is another way to think about this, because as i have often said, and ben franklin said it first, security and liberty are not a zero sum game. you have to give more or if both or less of both. if you think about that, we are going to basically shred our constitution, and none of us wants to do that, and if you punt after we are attacked, we are definitely going to shred our constitution, so my basic point is we need advocates over in the right rooms and the right time as the executive branch contemplates security actions. what the dhs is doing is pretty good. i have seen problems that relate to what information is collected, how long it can stay there, who has access to it, the usual stuff, and i think mr. skinner more than any of us can answer why the systems are working. your there were things i was able to stop. in one of them is they were going to test satellites to accomplish certain homeland security missions over the continental united states, and that worries me because i did not think the guidelines were specific enough. the office was discontinued, which i thought was a very good outcome. >> thank you, congresswoman harman. this week the national journal poll released information that almost two-thirds of respondents said the government and businesses should not be allowed to share cyber security information because it would hurt liberties. you said the need to protect personal information in the event of a cyber attacked. could we please discuss the importance of including robust privacy and civil liberty as safeguards in any legislation considered on the senate floor? >> i think it is very important. what the final legislation should look at, i do not know, but it is the same point the security of liberty were not a zero sum game, and we have to think about how to protect information because we also are blocking access by business interests or government interests but pose a grave threat to the .com, .gov space. these are serious tools, and the point of legislation is to protect our personal information but also our government secrets. that is the point of the legislation, but individuals should not be forced to share information that is unnecessary to share, so it is complicated. i have to look at the information, but the bill offered is closer to what i think would keep our country save and protect our critical infrastructure. >> thank you. >> thank you very much. i have one more line of questions a little bit different than what we focus on, and it builds on yesterday's hearing when we discussed with the experts and interesting and unsettling range of future homeland security efforts. i want to ask what is your assessment of the current capabilities to assess and identify future threats and to take actions to address them, and if it is not adequate, i want to go down the road, and the coast guard has a plan called project evergreen, and i would like to talk to you about that and how it might relate to dhs if it does. is there the capability to adequately anticipate changing threats and response? >> i think i am least qualified to answer that, because i have not been in the operating mechanism of the department, but i think it is on leave and would be my answer. i think some threats are better understood than others. if we give an answer to that, the bad guys will somehow planned around us. we cannot do that. we have to be agile in reassessing that all the time, but i do not think most of the planning mechanisms are that good. the ones i have seen death network does have to do with airplanes security, which worked very well, and port security, which involves pushing borders out and layers of protection, but i do not know how to answer a threat across the range of threats. >> but let me say this about the oil and gas industry. there is a very strong -- and i would almost call it a passion, to do things right. because when the industry gets it wrong, we see the disasters that occur. and so when it comes to regulations, the oil and gas industry is looking for clarity and continuity. because clarity and continuity you can manage. you can engineer toward it. you can make things happen with cement or casing or other nogses or technology to control leaks or to stop them altogether. so i think clarity is important. when that clarity becomes politicized and it's this program this year and another program another year and all this becomes frustrating, and that's when the industry pushes back. but if there's a tendency towards best practices and regulation using best practices, then it has a positive on the environment. >> there's a lot of shale elsewhere in the world. in china and india and argentina. people thought in poland. but we estimate it takes about 1,500 wells to prove up a play. and with the exception of canada, there's no place in the world where they drill more than 100 wells. and what happened in the united states. it was a good, perfect storm in the sense that we had a huge service sector and transparent markets and high prices were driving it. there was a gas market. there was a gathering of gas transmission. if these guys could figure it out. if you go to places like china, and we've done work there, their system is all wrong. and the point i made i think frankly some renewables may have much more applications there than in the united states and should be encouraged. >> so we have had a very patient audience. i want to give you a chance to jump in with your questions. so if you could keep your questions to actual questions, that would be great. ma'am, we'll go ahead and start off with you. >> stephanie kenny, maxwell school. what you are positiving today is important but not very well known or understood. what kinds of actions do you see as important in the next year or so to get the public more broadly educated and in particular, university students? i have students coming out with tremendous debt who think they want to be n.g.o.'s which will pay them nothing, and they won't get their debts paid. energy is not something they do that. they take my sustainability and public politics course yet the one area where you could both combine earning a real living, a real job and doing something worthwhile if you have the sustainability frame would be energy. what suggestions do you have to attract the students coming out now into the areas that you need? >> john, seems to go to your point. >> this is a critical factor as a public matter of national well-being. the lack of information that permeates our society on all matters relating to energy and the environment is a very serious problem. and as i used to say in a.p.i. meetings, american petroleum institute meetings, if you don't have the public on your side, then the public is against you. and the way to get the public on your side is information. i found citizens for affordable energy specifically for that reason and spent seven days a week trying to engage people at all social and economic levels just to get my information out. citizens at reportible energy.org. it's basic information what about it is, what's possible, what's not. what's important. we can't count on media. because media have a different job to do which is about exposing not educating. there is, i think an outcome of some form of education. so i welcome media all the time and embrace media as an outlet, but it's not the media's job to educate the public on our energy system. oklahoma is the only state in the nation that's part of a state curricula mandate, energy education at all levels of the school system. so we have this huge undertaking that we have to have this success actually occur. so i think it's not helpful when politicians vill phi the very source of economic value creation that comes from all sources of energy. whether it's right-wing politicians bad mouthing renewable energy or the left-wing politicians bad mouthing the -- i know why they do it, but it's not good. but i think we have to undertake this as parents and leaders in society and leaders of those coming after us and o'it to our citizens to do it on a sustained basis. >> well, i do come from the energy information administration. >> it's your job. [laughter] >> yes. he has been trying very hard to help in this regard. if you do an energy search and type in energy information, we come up first. there's interestingly to me, because i did this the other day. the third hit you get in google or bing if you type in energy information is the eia kids page. very, very popular. it's got a lot of really good basic information on where energy comes from, how it's transformed, how it's used, and i think it's extremely popular, and i hope that that kind of thing filters down. the e.i.a. website has been resigned. it gets hundreds of thousands of hits daily, and it's a very, very, i think, useful tool not just for kids, but for everybody in the analytical community looking for answers to basic questions. >> all right. more questions here. sir? can you wait for the microphone? >> the department of energy. a two-part question. mr. west, your firm puts out, i don't know the exact title but the top 50 energy companies every year. i wonder first how this might shake up that list in the sense that much of the revolution is in the western hemisphere. what does this mean for previous national champions like total and b.p. and the otherwise traditional gas and oil plays still under state control in places like saudi arabia and second lip, going back to the geopolitical implications, mr. chow mentioned a shared responsibility, but we talked about the u.s. verse vrs our engagement with india and china. what about our traditional relationships with the gulf producers and south korea and japan and europe? what does it mean for them if the u.s. is potentially more secure? >> good question. >> in terms of the industry, what's happening in north america isn't going to change the list very much of the top 50 companies. one of the interesting things is -- it's important to understand that the north american unconventional plays tends to be -- it's a different process. you drill thousands of wells. with the exxons and chef rons and totals of the world, they develop enormous offshore projects in the gulf of mexico or shell, and that's their business. this north american business is largely independents. some of the majors are looking at this and wondering if they can come into this. but independents run their business for growth and the majors run it for returns. it's a different model and a real challenge to them although the majors are trying to figure out how the come into this. ed, do you want to touch on the second part of the question? >> i guess my feeling is that it doesn't change things as much as people would like to -- or maybe as quickly as people would like to. susan pointed out correctly that the somali piracy problem hasn't been resolved. but think of what it would be like if we didn't air is that responsibility. this is the beginning of our experiment. we have not done this thing much before. and it would be interesting to see how that goes. it is a shared responsibility with our allies as well, but at a time of plenty allows you to think more about the shared protection of the global commons with people we were once concerned about as their power inevitably, i would submit, increases in places like india and china. but the traditional ally relationship will be in place, and i assume they will continue to want us to continue to play a fair share of that. how do you define that fair share? i think, is the interesting question. >> to pick up on this one, quickly, i think there's a bigger gap on the -- on the oil side the biggest immediate benefit would be somewhat lower oil prices which would -- everybody. the biggest potential downside is the u.s. misreads the situation and scales back its investment and security around the world, which will affect everyone. but in natural gas we're already seeing, the fact that the u.s. is not buying up from saudi arabia, europe is buying that. and we're obviously having a conversation in this country about potential natural gas exports. i don't see them by themselves being revolutionary, but they are an important piece of the puzzle that gives particularly north korea and japan more leverage to take some of the politics out of natural -- the natural gas trade. >> ok. we've had a patient gentleman in the front and then we'll try to get to as many of you as we can. >> probt, president of the international investor. if you'll forgive me, but from what i've heard so far, i think you have missed the biggest story. that's from the one single market, we are starting to see a did very janice between what i call western he must feerick pricing and the brent price for example. we saw as much as a 20% divergens between brent, per barrel, oil prices at one point this year. and is that spread seems to be continuing. we believe, at least from our analysis and talking to a lot of experts, that this is something big that's happening here in terms of independence. and it's going to put us in a position where suddenly, let me bring this to a question for you. suddenly, we're going to see a world in which not only is the united states capable of operating on its own, the pricing index will be different for the western hemisphere than the rest of the world, and we will be less concerned in terms of what happens in crises overseas and the pressure comes with the federal deficits, do people start turning and say, we should price or at least tax the barrels that go into our domestic economy differently than those that are exported abroad? we've seen other nations do this. norway, the russian federation, and they actually bring in a lot of tax revenue by putting heavier, larger taxes on the energy that's consumed outside of their country. do you see the possibilities of this? >> that's a word we haven't heard until now. >> well, it would vy threat constitution of the united states to place a tax like that on anything. that's just a basic rule that's been reaffirmed repeatedly by the supreme court. so it makes it less likely. >> ok. [laughter] >> i think i disagree with the premise fundamentally. it is true that the differential between brent and w.t.i. has reversed itself. and that is for a lot of technical reasons that we probably shouldn't get into on this panel. but they still track each other. it's not like consistently brent rises and w.t.i. falls. it's true the differential have slipped, but that doesn't mean that the world pricing relationships, in terms of a global market has changed at all. the norwegians were not insulated from the effects of hurricane katrina or hurricane rita. even though it has nothing to do with them and they are net exporters, their net prices still went up. so i don't agree with the premise of the question. >> ok. sir? >> you go ahead and then we'll get the other gentleman. >> sorry. we basically had a longer -- about our display shock abundance, new sources, how about dementia? your forecasting to grow but a lot of people are discussing china experience much faster oil consumption grow if their -- industry if they assume driving patterns similar to the united states and all that stuff. so i'll be interested in your opinion around that issue. >> ok. >> if it's a little bit of controversy over what we think we know about supply, there's significantly more controversy about what we know or think we know about demand. the important issues are what are the share of world -- that goes into energy costs? when brent prices were moving towards $130 three months ago, the percentage of global g.d.p. going into energy was at its record level. you had to do a lot of arith ma tick to get there, but i'm pretty sure that was the case. which may be one reason why there is really a cap on prices. because the impact on the global economy at a certain level is really very high. the other observation i would make, and this goes to issues about what we think about china in particular, along india, is that demand doesn't slow down. it comes to a tipping point. and on the history of european union of the original -- or japan in 1973-1974 or malaysia and taiwan is they had double-digit growth. and then a wall was hit all of a sudden, and that level of product hasn't been repeated. japan's record year of product demand was 1974. the record year of petroleum product demand was 1974. double-digit acceleration. china's not had double-digit acceleration. it's had power generation requirements. if you look at china, and there's a lot of controversy about the data. a lot of controversy about what might be going on. but two years ago, june or july, the analyzed growth in china was 20%. a year ago, 10%. today, 2% or 3%. the product deand in china has grown 1% year after year. there's something going on. it may be that the structure of the economy is going on. or commoodty-intensive infrastructure has come to an end or maybe the economy is really in a slump. time will tell. but to a degree we know that demand can come to a tipping point. >> so i promised we would end right on time. so i'm going to close this with a quick lightning round to all our panel. because i think this has been a terrific conversation. i'd like to ask everybody for a winner and a loser from the premise of our question which is this american energy boom has happened, in particular one we haven't talked about so far. michael, because you just looked at me, you're first. [laughter] >> that we haven't talked about yet? >> or you can resurface one. >> we've talked about every one as far as i can tell. winner, the united states. loser? thank you, for the suggestion. russia. >> the audience is going to get to vote on this afterwards. so adam. >> i think that the winner is the average american wage earner. i think wages go up when we develop more, and if we can manage the environmental issues, which i believe we can, everybody wins here. as far as losers are concerned, i don't really see it that way. i think positive development here doesn't mean that anybody has to lose whether here or overseas. >> what about those dictators in the middle east, ed? >> i'd like to believe in one globalized world in which everyone shares in a global pie. but the audience and michael pick on the obvious winners and losers being the u.s. and the losers not just russia because of the oil and gas but because it's a dependant country and looks like what's happening is happening across commodity land. but single crop countries which are in a commodities business really are -- that makes for a significant amount of political turmoil. it's not a gio politically positive issue. and i would note that as i think through the market consequences of what's unfolding just on the oil market with ripple effects on the gas market, this is going to be a significantly more volatile pricing environment than a less volatile pricing environment and the winners and losers are the same. a big producer in a volatile environment in which you're struggling to keep market share and revenue. it's not a pretty picture. >> i would take it a little differently. i think the potential big loser on this, frankly, is the environmental movement and green concerns. and i think that that could be a big mistake. and i come back to my point earlier that this is not the end of history. this is not a static situation. both technology and politics will continue to drive a lot of changes. and it ain't over. and i would urge people to keep pushing it. >> winner, i would say consumers around the world. not just in the united states. at a time of -- where you could have lower energy prices and different set of energy choices depending on how you value the environment. climate change and so on. you have a different men knew of options than you maybe previously thought you had. hugo chavez. i mean, someone who has -- [laughter] >> hasn't been called upon yet as a loser. out of this. and i agree with ed, obviously, whenever i can. and but -- absolutely the prudent thing to do. but for those same single commodity economies, it could also become a winning situation for them in the long run. in the sense that a very high energy prices have enabled an awful lot of economic policies in those countries, and the lower price of oil, in particular, may be -- may allow room for a different kind of economic thinking and reform that's necessary for those kins, so maybe in the long run they are winners, too. >> jon? >> i think the winner will be north americans. i think north americans broadly will win the most and we will start a multidecade new generation of prosperity in this part of the world. the biggest loser i think will be opec with the exception of saudi arabia which has enlightened global thinking than any of the other global nations. but i think opec will descend into chaos of an organization. and they don't know now how much they are hated by the entire world, but they will find out as things unfold. >> i'm not sure it's an upbeat note to end on, but certainly a provocative one. what a terrific discussion and thank you to the new american foundation and steve for hosting us and to all of you for coming today. thank you. [applause] >> when you think about cyberactors, let's put them into five groups. you have nation states. you have cybercriminals. you have hackers. you have hacktivists and not all of those are nation states. so you're not talking about nation-on-nation deterrents. you have other actors you have to consider. and in one of these attacks, you may not know who is doing it. who is attacking your systems? either way, the outcome could be the same. you lose the financial sector or the power grid or your systems capabilities for a period of time. doesn't matter who did it, you still lose that. souff got to come up with a defensive strategy that solves that. >> watch general keith alexander, assess current and future cyberthreats online at the c-span video library. >> several live events to tell you about today here on c-span. the center for strategic and international studies hosts a forum on violence in syria and the assad regime at 10:30 a.m. eastern. at 1:15 p.m. eastern we'll bring you openling session of the national governor's association meeting. and president obama is also in virginia today. we'll have live coverage of his campaign event in roanoke just after 7:00 p.m. eastern. republican senator susan collins from maine was honored on the senate floor yesterday by her colleagues for reaching a milestone. this is 5:00 minutes. consecutil call vote. a tenacious accomplishment indeed and represents the work ethic and dedication senator collins has for the people of maine and for the senate. we all know she's one of the hardest-working members of the united states senate. listen to this. since she was sworn in in january, january 3 of 1997, she's been present for every single roll call vote. that's over 15 consecutive years of never missing a vote. senator collins is actually in quite an elite company. recently she passed senator byrd and is now third all-time behind senator chuck grassleynd the late bill proxmire from wisconsin. i know she took great pride also to be in the company of her role model, a wom that pyed a major role in her decision to run for public office in the first place, fellow maine senator margaret chase smith, currently number five on the list. on behalf of the entire senate, i want to congratulate senator collins for this great achievement. mr. reid: it is a remarkable accomplishment. i hope i don't get in trouble, but i really like her. i appreciate her ability to work with us, work wit everybody. she is somebody who you never have to gss where she stands on an issue, and i admire and appreciate her so much for that. i've worked with her on issues going back for many, many years. i really, again, say i appreciate what she's doing. she has great genes. her mother and father each served as mayor of a small town in maine, a place called caribou. and i have really -- i don't have fond memories of caribou because in my, i think it was my 1998 race, we were, this great mailing that we did, one of my consultants from nevada, instead of having deer, they had caribou on my campaign literature. it took me awhile to figure that one out. i'm sure the town of caribou is bigger than my campaign spot. her family ran a lumber business. her father was also a state senator. i am confident that susan has learned to be the senator that she is because of bill cohen. i had the pleasure of serving with this good man from maine. i served as a junior member when he was chairman the aging committee, and he was such a wonderful man. i still talk to bill cohen. and she hasany of his traits. as we know, she worked for him. he has been a great secretary of defense. 's just been a good person, and i am confident that her ability to be the legislator she is, a lot of it is attributed to him. she's always been known for her ability to compromise, legislation the art of compromise. and she works with all lawmakers. i think that the tone that she has set working with joe lieberman is magnificent. they have run that committee with dignity and on a totally bipartisan basis. this is -- 5,000 votes, frankly, a number of us have cast 5,000 votes, but it is ridiculous the example she has set, never missed any votes. i wish her the very best in her many years to serve in the future of the senate. >> throughout july on c-span radio, historic supreme court oral arguments focusing on election issues. >> throughout briefs, they trofere us as being anomaly independent. professionally-run, that the candidate knows who helps them and why, we think these are all code words saying we are effective and because we are effective, our speech ought to be choked off. >> the national conservative political action committee at 6:00 p.m. eastern on c-span radio in washington, d.c. 91.9. >> on "washington journal" this morning our guests include james carvile and stan greenberg to talk about their new book" it's the middle class, stupid." >> and challenging the constitutionalty of the dodd-frank financial regulation ball, and you can call in with your questions on the child and family statistics. our guests are edward sondik and kristin moore from child trends. "washington journal" is live on c-span every day at 7:00 a.m. eastern. now, a senate homeland security and governmental affairs hearing on the nomination of stephen crawford to the u.s. postal service board of governors. this is a little less than an hour. >> we welcome our colleague and our nominee. and at least part of his family, i think. if you will lead us off. once he has presented, i think he has a lot of other things on his plate. but you're welcome to stay as long as you can. >> first, thank you very much for your courtesy allowing us to introduce a great marylander, steve crawford. and thank you for the courtesy and tell you, if i might to tell you how pleased i am that dr. crawford is allowing his name to come forward for this very important position. he has proven his leadership in the private and public sector and think he's well suited for the u.s. postal service board of governors. at this critical time in the history of our postal service. it confronts challenges of a multibillion dollar shortfall agency needs his intelligence, his expertise and his leadership skills. he has experience in this area. he's proposed a number of initiatives for changing the postal service business model in a commission including revenue streams and savings accounts and high bred electronic services and his ideas on collaborative innovations that's harnessing the creativity of employees and customer in building a better post office i think are particularly relevant to the needs of the reforms within the postal system. at the same time dr. crawford understands the importance of smaller reforms -- as we continue to build a 21st century post office, his row lines is critical for the future of our success. let me just point out some of dr. crawford's experiences. his leadership experience. he was successful in getting the maryland general assembly give adequate budget support for those which was not an easy task showing his political ability. he helped develop the national policy -- where he served in the c.f.l. and on social economic and workforce programs. again, showing his experience at all levels of government. deputy director of the metropolitan policy program at the brookings institution and today dr. crawford is a professor at the george washington university where he manages public policy projects. he has a wealth of experience in the public and private sector and experiences related directly to the challenges being faced by the u.s. postal service. dr. crawford holds a bachelor's degree from cornell and ph.d. from colombia and a degree if finance. quite impressive credentials. he has a strong history of critic engagements in the red cross and substance abuse advisory council and served our nation in the u.s. army where he earned six meddles including a bronze star in vietnam. postal service needs people like him who can deal with the crisises that's currently being confronted in a direct way. but always mindful of the responsibilities to the public. i am honored to present him to you. and i urge the committee the consider his fom nation as promptly as possible. >> i would just ask the witness, is there anything he said that you would dre with. >> i've been watching your wife and she's nodding her head. senator knows my husband pretty well. so mighty nice things to say about anybody, but especially our nominee. bin, thank you so much. take care. all right. well, today we're here to, as you said earlier, consider the nomination of stephen crawford to be a senator of the postal board of governors. and i think it's great whenever one of your senators, sometimes both of them are able to come by and introduce a witness. that says a lot about the regarded -- regard they have for you, and i think we have a whole lot of respect for ben, so it's good that he could come. as i know our nominee is aware the postal service has been facing a challenge, even dire financial troubles for some time. the trouble will come to a head in the coming months, and the postal service is reporting a record loss in each quarter and hemaging we're told $25 million each day. by the end of this fiscal year it's likely it won't have enough to meet its health and workers compensation and by 2013 we're told it won't have enough money to continue prayings at all. i'd like to say the situation is dire. it's not hopeless. this is a set of problems that we can fix. and the legislation we passed here in the senate will go a long way towards fixing them. or allowing the postal service to heal itself. we need our friends in the house to pass the bill. ly say this several times. we need the house to pass a bill so we can go to conference and hammer out an even better bill than we passed in the senate. but at the center is a $1 trillion mailing industry. puts as many as 8 million men and women to work every day. it's a key cog in our economy and its continued vy talentty is an important part of our efforts to get the economy moving again. we can't afford let the postal service collapse or even intimate that it might collapse. it's not helpful at all. they have passed legislation that it attempts to address the postal service and give it some of the tools it needs to address long-term challenges. not just by working on the cost side but also by making sure we do some good work on the revenue side or allow the -- but the bill would clean up the postal service books by re funding over $10 billion paid into the employee retirement system and setting up a less aggressive schedule. i think a more realistic i can -- realistic schedule. twropt prefunding retiree health obligations. but a portion of the pension refund that would come back to the postal service for me, federal employment retirement service refund would be used to encourage 100,000 postal employees to retire and we're told it will save up to 8 $8 billion a year. that's almost half of what they are losing. the bill would also push the postal service to streamline its processing and put it at a more gradual pace than it would like but appropriate billions of dollars in savings while promoting much they can rely on. the postal service will be permitted to move forward with more aggressive efforts. but our bill, as i said, doesn't just focus on cuts. it also frees the postal service and encourages the postal service to be more entrepreneurial. something i said our nominee has been more an advocate for by pushing the postal service to find innovate ways to bring in more mail volume and make the best use of the system it maintains in order to deliver the mail to every home and business six days a week. as i said before, the bill is not perfect. anything that large in a bill is unlikely to be perfect, and that doesn't going solve every single problem and challenge faced by the postal service, but i think it gets us most of the way there. and depending on how serious the general and his team are to make the effective use of the tools provided, the legislation has the potential to get us to your goal of financial stability. for the postal service, and that, given where we are today, would be a good day's work. the nominees for us today, mr. crawford, has significant academic and research and public policy experience and i'm interested in learning how that would impact the postal service during this difficult and trying time and how dr. crawford's background will confirm them to tackle the major management challenges that they face not just this year but in years to come. and if senator brown were here, he's real good about attendance at these kinds of hearings, but if mr. brown is able to join us, we'll recognize him and for whatever comments he wishes to make and if he just wants to submit a statement for the record later, we'll submit that. he's answered prehearings questions submitted by committee members and our staff, and he's had financial statements reviewed by the board of ethics. we made it part of the hearing record with the exception of data for public inspection in the committee office, and since i'm the only one here on the office on the committee i hear no objections and i'm certainly not going to object. may note that all witnesses at hearings give their testimony under oath. dr. crawford. and i'm going to ask you to please stand and raise your right hand. my script here says please stand and raise your right hands. plural. [laughter] we found this countless times and but i never had witness stand and raise two right hands, so if you do that, we'll go right to your confirmation. all right. dr. crawford, do you swear the testimony you will give before this committee will be the truth, the whole truth and nothing but the truth so, help you god? >> i do. >> all right. if there's anybody in the audience that you would like to witness, i -- [laughter] you'd like to introduce, you're more than welcome to do that. please go forward. >> thank you, mr. chairman. i'm pleased that my wife is here with me. she knife leave earl dwroy pick up our 12-year-old daughter who is at a camp performance, but we -- we'll see how that plays out. >> very nice to see you. thank you for coming. thank you for your willingness to share your husband with our country one more time. were y'all married when he was in the military? no? koch. all right. well, please proceed. you can talk as long as you want. usually we say 5:00 minutes but you can talk as long as you want. if it gets to be 6:00, we'll wrap it up. >> thank you for the opportunity to testify today. i'm truly honored to be nominated by the president, to serve on the board of governors of the u.s. postal service, and i am pleased to share with the committee that how if confirmed i would approach the responsibilities involved. as you know, the postal service faces enormous challenges. assessing them, i find it helpful to keep in mind the magnitude of what's at stake. in my view, the postal service remains a vital national asset. it directly employs about a half a million americans and makes possible a $1 trillion mailing industry that employs 8 million and others. although mail volume has declined from its peak, the postal service still delivered 168 billion pieces of mail last year. to more than 150 million house households and businesses. many of these households depend on those deliveries for essential services that they could not afford were it not for the postal services important commitment to universal service. similarly, many small businesses, non-profits, publishers and other mailers depend on the postal services's internationally-recognized efficiency and relyibility. amazingly, this vital institution now finds itself on the verge of insolvent as i. it is in these dire straits, i believe, for three main reasons. the growth of electronic communications and resulting diversion of first-class mail. >> the recent recession, and its lingering impact, and unique regulatory environment in which the postal service operates. while there seems to be broad agreement on these causes of the postal service deficit, there is considerable disagreement on how to fix it. some emphasize cutting costs by consolidating facilities, and by changing service standards. some emphasize increasing revenues by adding new products and services. some call for adjusting the price cap, and many call for changing the requirements for prefunding the benefits of future retirees. i believe that the challenges are so severe that the postal service should explore all the above, as in fact it has been doing aided by the senate's passage of 1789. i say that as somebody whose past experience has included privileged opportunities to exam the postal service's problems in broad terms. yet, if confirmed, my views might evolve as i heroin more. -- evolve as i learn more. as a board member, i would consider all reasonable options and make decisions based on what is best for the country and the long-term health of the postal service. i would approach these decisions as someone who listens carefully and communicates honestly. take seriously the interests of all involved parties, and yet believes strongly in innovation and leadership. i believe that my prior experience has prepared me well to serve on the board. and to make distincttive and significant contributions to its work. to be sure, i have never managed an organization of more than 50,000 employees. however, i have advised and worked closely with leaders of such organizations. especially state governors but also c.e.o.'s and presidents. i have also done research and designed a business model innovation needed to heroiness new technologies and adapt to changing markets. a recent colleague and i recently briefed, at her request, undersecretary of education and senior staff on our ideas for streamlining higher education. another industry where rising costs and online alternatives are calling into question the traditional business model. finally, as a member of the obama-biden transition team and later as a consultant to the postal service, i have had wonderful opportunities to assess the problems and potential solutions facing the postal service, the mailing industry, and such related government agencies as the p.r.c. and the office of the inspector general. in closing, i would like to thank the committee for its impressive efforts over many years to provide the policy framework needed to enable the postal service to accomplish its vital mission. it is clearly a difficult task in today's rapidly-changing environment. but i am optimistic that good solutions are within reach. i look forward, if confirmed, to working with the committee, with you, and all the postal services stake holders on crafting and implementing such solutions. i appreciate the opportunity to testify today and welcome your questions. >> great. thank you. very good statement. i'm sorry that more of our colleagues weren't here to hear it. i need to start our questioning today with three standard questions we ask of all nominees. and the first is, is there anything you are aware of in your background that might present a conflict of interest with the duties of the office to which you have been nominated? >> no, mr. chairman, there is not. >> number two, do you know of anything personal or otherwise that would prevent you from fully and honorably discharging the responsibilities to which you have been nominated? >> no, sir. >> and finally, number three. do you agree without reservation to respond to any summons to respond before any dualy constituted committee of congress if you are confirmed? >> i do. >> in that case, we can go on with these other questions. maybe a little harder to answer. but we'll give it a shot. legislation signed into law in 2006 by president bush. requires that by 2015, at least four members of the nine-member board of governors have experience managing large organizations, and as i said earlier, i co-authored that legislation. our goal with this particular provision was to encourage presidents to send us nominees with relevant experience, something that was sorely lacking at that time. we have some bot not as many as we had hoped when we were drafting the 2006 law. do take a couple of minutes and qualifications and what you think you would bring to that body if confirmed. >> i am happy to. to be sure i have never run an organization of 50,000 people or anything like it. i headed an independent agency which was an organization of -- the full state government was an organization of 80,000. but i headed a small agency. a small staff. we did oversee all the workforce development operations around the state. but that's not what the p.a.e.a. had in mind when they were talking about experience running a large, logistics firm or something. some sort of big enterprise like that. and i think that's a good. i applaud their thinking. 50,000 is a high bar in that the c.e.o.'s of some large companies would be disqualified. but putting aside the number, it seems to me the bigger issue here is the kind of experience in working with leaders in industry and the private sector , but also having some connection to the public policy side of these issues, because the postal service is not a purely private enterprise. and i think that my experience as an executive director of three organizations, as someone who has worked in state government and in the private sector. as common who has been in think tanks where we analyze public policy issues, especially of innovation and economic growth and the kind of new business models that are increasingly talked about as critical. and i would add one issue. technology has changed. quite honestly the old business models are not well suited to exploiting their full potential yet changing business model sincere tough once you've got an established pattern. so i've had the opportunity to dell into the literature and work with experts in that area and would hope that that will enable me to contribute in that respect. but i'm very serious about the innovation side. i think the great opportunities for the postal service and i think my background working on open source innovation and variance of that will be will be useful and different from what some of the other board members bring to it. >> ok. thank you for that. for those comments. when we met in my office earlier this week, you shared with us and mentioned again today your work on the transition team. obama-biden transition team. would you talk a little bit about that experience and how it relates to the postal service, please? >> i'm happy to. the -- it was an extraordinary experience for me. i think like most americans, i sort of took the postal service for granted. my mail is there every day. i go out and get it. sometimes my economist, if it didn't arrive saturday, i would have to wait until monday. that sort of annoyed me a little bit. but as soon as i plunged in as part of the transition team, i found myself interviewing members of the postal regulatory commission, members of the board of governors. all the senior management and managers in the postal service. the leaders of all the unions. the mailings, the mailers, and their associations. and so i had an extraordinary opportunity to get a look at the big picture for the mailing industry and the critical role of the postal service plays for that. but i also had my eyes open to the challenges that the postal service faces. because even then it was clear that the growth of email and declining volumes and the increase in the number of delivery points, so i wrote a paper for the transition team that is a private paper. but it's -- everybody knows that the number of delivery points goes up by more than a million a year. >> when do you think it peaked? what year? >> well, i've heard stories on this. 2007 is the -- is what i used in my opening statement. although i occasionally see other figures put out there. >> is it the tail end of -- >> 2008. 2009. but it was clear already that the deficits and the prefunding of retirees health benefits and all sorts of issues were -- they just didn't seem as serious as they do now. >> what conclusions did you and others -- i presume others were working with you on this. >> i was the head of the team. it was a very small team. and i had some assistants who helped out. >> what conclusions did you reach then that might be relevant? of what the kind of cataclysmic problems that occurred since? what conclusions did you reach that might be helpful for us today? >> i said many of the things that appear in s 1789. i was terribly pleased to see the bill shape up the way it did. because it seemed to me -- >> are you suggesting we may have plagiarized the work of your report, which no one's ever seen? >> i'd love to flatter myself. but i know better. >> all right. >> so i mean, the -- i took fairly -- i said the postal service has to do something to increase revenues, cut costs. maybe there would have to be some streamlining and right-sizing. right-sizing. i'm not sure

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