Transcripts For CSPAN Washington This Week 20111106

money out of our economy at a time we can least afford it. as a result, businesses will have less money to hire and pay , workers. the cost of enforcing it would be higher than the revenue it raises by almost eight to one. it is a job killer. the bill was passed by the house last week with an overwhelming 405 votes. now it is coming to the senate. the decision rests with majority owner harry reid. are we going to do something for the american people, or let politics play out again? i am always willing to consider its bills. i am asking the same of my colleague, the majority leader. this comes at the right time for the right reasons. this needs to happen without gimmicks that will jeopardize its passage, so the president can sign it into law right away. i am still fairly new to the senate, but i have been here long enough to notice something. one show of good will has a way of spreading good will. this jobs bill, if we move it forward, can do even greater good. let us start here. let us get this economy creating jobs once again. come together when we need it most. remember, we are americans first. we need to put our country if interest before a partisan political interests. thank you very much. >> if this is the formal part of filling out the declaration of candidacy. it has been completed. except for your signature -- >> all it needs is a signature on there. i can do that. >> this is a filing fee. >> you got that. >> deal need a slogan? or see if you might want to leave. we do this every four years. >> we have a great secretary of state. we appreciate your leadership. we will make sure new hampshire remains first in the nation. it is a responsibility and an honor which in hampshire richly deserves. i am happy to be part of that process. i will hope that this time it will take and i will be able to become the nominee for the party, and hopefully the next president. >> in new hampshire primary is now set for january 10. you can follow on mine from the c-span video library. click on the campaign 2012 tab to access the candidates and the events, all searchable, cheryl, and free. it is washington, your way. >> next, remarks from the head of the transportation security administration on aviation security. he testifies that airport screeners find four to five guns in bags daily. this hearing is about two hours. >> good morning. the hearing will come to order. senator lieberman, the committee chairman, has been unavoidably delayed. he will be joining us shortly, but he has asked me to convene the hearing and deliver my opening statement. he suggested i give a very lengthy opening statement in order to allow him to proceed with his before we call on our first witness. nevertheless, we will proceed as normal. by targeting our airplanes, al qaeda succeeded in killing nearly 3000 people a decade ago. aviation security is clearly critical to homeland security. we americans have demonstrated our willingness to indoor enhanced security measures at our airports, if those measures appear to be reasonable and related to real risk. but travelers become frustrated when security measures inconvenience them, apparently without cause, or when they appear to be focused on those who pose little or no threat. next month, it will be 10 years since the shoe bomber failed to take down his flight from paris- bound for miami, yet we still take our shoes off. in 2006, british and american intelligence thwarted an effort to see -- to conceal explosives in liquid bottles. we still cannot carry on a regular-sized tube of toothpaste onto an airplane. the christmas day bomber his explosives in his underwear, and media reports indicate that terrorists have shown interest in having explosive devices surgically implanted in their bodies. these threats have led to more intrusive pat down searches, and one wonders what more will be required of airline passengers in the future. we see tsa put in the very young and the very old through intrusive, and in most cases unnecessary, screenings. at the same time, it troubles many americans to learn that a young man was able to fly cross- country without a valid government id, and with an expired boarding packs -- pass that was not even issued in his name. if we continue to give extra screening to individuals who appear to pose no threat, yet others who should arrest suspicion can get past checkpoints without being questioned, our system still are not as finely calibrated as they need to be. since our june hearing, the administration has implemented a risk analysis to the screening process, a welcome change. this should provide a more efficient use of the government pay for all of the to the screening resources. -- of the government's screening resources. i believe this risk-based approach is to let the tsa learn more about travellers through information they choose to provide. they will respond to several of our most common airport screening complaints. secretary of policy, said in september that frequent fliers who opt into a known traveler program will often be able to keep their shoes on. in their laptops, and their backs. tsa, to their credit, and administrator pistole deserves credit, has changed screening procedures for children under 12, a common-sense decision that was overdue. nevertheless, questions remain regarding how some security procedures affect privacy, health, and whether the procedures are as effective as they should be. in august, tsa began installing new software and passenger screening machines designed to enhance traveler privacy. using a generic outline of passengers, automated target recognition detect items that could pose a potential threat. i first saw this less invasive technology in amsterdam in 2010, and i repeatedly raised this issue with the minister pistole and secretary napolitano. this technology was implemented in the wake of the christmas a bomber being able to go through that airport with his explosives undetected. i will note that i assumed this was some cutting-edge technology that had been developed in germany. i asked where it had been developed, and found out it was from massachusetts. clearly, there are opportunities to take advantage of new technology. i urge consideration of this software, which better respect privacy, eliminates the need for a separate screener in a booth, relies less on human judgment, and eliminates the inconsistencies associated with human reviewers. i am very pleased that tsa is rolling out and testing this technology. while the atr technologies with millimeter wave machines, which use radio frequency to generate images, i would note that other advanced imaging technology screening machines use the backscatter x-ray radiation, which has continued to raise health concerns. this is an issue i hear about from my colleagues all of the time, because most of us travel every single week. i also hear about it from pregnant passengers who are concerned about the exposure to the babies they're carrying. dhs, in my view, should independently evaluate the health effects of that technology, and establish a goal of using radiation free screening technology. let me underscore my appreciation of the fact that no single screening technology can assure our safety. there is no magic bullet. there is no perfect system. that is why a leered system of security is so essential, involving watch lists, intelligence, and all the tools at our disposal. the fact is that we face a determined, innovative foe. no machines can substitute for good intelligence, well-trained screeners, and an observant public. the passenger screening process has received both attention and sometimes anger from the traveling public. it became clear last year, however, from the printer cartridge plot, that cargo security is also a threat that terrorists are investigating. that is why senator lieberman and i continue -- intend to introduce an air cargo screening security bill later this year. our success has -- our success with maritime cargo should provide a road map for air cargo. that is what our legislation is intended to do. and of course, just in the past 24 hours, we have learned of gaps in our security related to certain catering operations in the airport in atlanta. those are very serious concerns, because obviously the catering personnel have direct access to materials that are put on airplanes. i am sure that is an issue will be talking about this morning. our first priority is to protect against terrorism, and the public will accept a certain level of intrusion and inconvenience at our airports, as long as we are convinced it is enhancing our safety. but dhs should continue expand the use of risk-based approaches to a screening with technology that are safer, more effective, and minimize privacy and health concerns. at this point, i would usually say thank you, mr. chairman. in this case, i would be thinking myself. we're going to move to our first witness today. we are very pleased to have with us the honorable john pistole. he is the administrator of the transportation security administration, better known as tsa, within the department of homeland security. we welcome you back to the committee. i want to commend you for your hard work, and for being very open to our suggestions and the recommendations of the public as you seek to protect the travelling public. please proceed with your testimony. >> thank you, senator. and thank you, for the committee, for your support of our risk-based security initiative and how we tried to work to provide the most effective security in the most efficient way. when i last appeared, as you noted, our plans to deploy aspect of this initiative were still being formulated. i am pleased to report we have begun implementing several aspects of risk-based security in some airports, and testing other aspects in other airports around the country, with the goal of providing effective security in the most efficient way. as this progresses, -- progresses, we must make sure each step informs an ongoing interest by terrorists in attacking aviation. because most air travelers commit little risk, the goal is to focus on those who present the greatest risk. the anecdotally, we still find four to five guns at security checkpoints every day. yesterday, we found six, including one in bradley, a loaded gun with seven rounds in a checked bag there were trying to get through. our success at discovering other non-metallic items is significantly enhanced through imaging technology. because these machines give us the best opportunity to find threats such as we saw on christmas day, and have successfully detected items as small as a coin or individual piece of gum that is wrapped, we continue working with the manufacturers to include the detection capability, noting it does give us the best available opportunity, from a technology perspective, of detecting those types of bombs. we recently deployed eight voluntary passenger pre- screening initiative with a small population in 40 efforts. prescreening individuals who volunteer information about themselves -- because we know more about them, they may move more swiftly through the screening process, and be able to the vest fewer items, such as leaving their shoes on, they're built, and a light jacket, along with keeping the laptop and liquids in their carry-on bag. we will always incorporate random security measures throughout the airport. at no point is a traveler guaranteed expedited screening. initial feedback has been very favorable, with approximately 40,000 travelers having gone through this process so far. american and delta have successfully demonstrated the required technical capabilities. we are working with other airlines and airports to expand the program. they become operationally ready, and more people find out about the successful program. efforts also help identify airline pilots. tens of thousands have been processed through this expedited screening, with very positive feedback. we're also evaluating an expanded behavior detection initiatives at logan airport and detroit have metropolitan wayne county. these are used by specially trained officers to determine if a traveler should be referred to additional screening, and interaction used by security agencies worldwide to confirm or dispel suspicious behavior and anomalies. there is an increase in detecting high-risk customers, but additional data is required to see if the trend is statistically significant and to measure against our return on investment. in august, we implemented a new procedure for children 12 and under, a less intrusive security screening, recognizing intelligence indicates these travelers pose no risk to aviation security, although of course the candy used by those who might want to cause harm. this gives officers an opportunity to resolve any alarms that may occur. there is a sharp production, although not elimination, of the need for a physical putdown for children. families have responded positively. these new processes help us free up resources to focus on higher risk travelers. in essence, it helps us strengthen security by reducing the size of the haystack in which a terrorist might be hiding. i am dedicated to identifying further groups as part of this initiative, and look forward to updating this committee as these efforts progress. in closing, innovation, partnerships, and commitment to pursuit of excellence are our watch words in 2012. i look forward to is answering your questions. thank you. >> thank you very much. as we have seen over the years, terrorists continue to look for? in our aviation security procedures. that is why i was particularly disturbed to read of a local tv report in atlanta, georgia, where wax airline catering security procedures were identified through an investigative report and an undercover video. specifically, press reports indicate that the video showed catering employees piggybacking through security checkpoints, but there were unsealed catering parts, which obviously would allow explosives or weapons to be concealed among the food in those parts, the were in the staging area before they were being loaded onto the plane. my question to you is what is tsa doing in response to this report. have we identified yet another vulnerability? or do you believe this is an isolated incident? >> thank you, senator. clearly, this is something we take seriously. there is a concern of an insider threat, those who have special access through their work, employment, and background. it allows them access the general public does not have. it is something we focus on. we set standards for catering companies in airports around the country. when we get a report such as this, that there has been some type of a breach or vulnerability identified, we moved very quickly. since this was brought to our attention last month, we immediately sent a team to atlanta to work with the airport in the catering company to assess what vulnerability there may be. we are continuing investigating what actually happened. that is ongoing. the bottom line is i do not have all the facts to what may have happened and what vulnerabilities may need to be addressed, but we are moving forward with the catering company and the airport on that. >> could you explain to the committee what kind of vetting of the tsa does of airport employees and others who have access to their plans, but are not passengers? >> yes. there is a series of background checks, a fairly robust system in place to assess whether anybody who wants access to either the sterile area of the airport, or even the vendors who work in the non-sterile area. one of the first trucks, obviously, is make sure they are not on a terrorist watch list. criminal background check is also done. then we do vetting that is recurrent for all those, especially those who have additional access to the sterile area. we worked closely with the companies and the airports. we working 50 airports around the country to determine, from a risk-mitigation perspective, do they see any vulnerabilities in their employees. based on what the u.s. government knows, there are tsa and fbi background checks. are there those who may pose a problem? the challenge becomes, frankly, for the clean scans, those who have no criminal background. they have not come up on a terrorist watch list in any way. that is determined we are presented. we also include random and unpredictable security checks, both for the catering companies and for the employed, random, surprise checks on an unpredictable basis, so terrorists cannot game that system. it is something we focus on. >> i would like to announce which to the issue of cargo security in the final time i have left, now that the true chairman has joined us. as you may recall, at a hearing held in november of last year, i asked you the question that if our government had not received the intelligence test about explosives hidden in air cargo that was shipped from yemen, would our current security system have detected those package bombs? you very candidly required -- replied that in your professional opinion we have not. could you bring us up to date on what has been done since that time so that we have a better screening in place for cargo decks we are always going to need intelligence information. that is absolutely critical, and it is part of the layered approach to security. but it does worry me that but for the intelligence tip these explosives would have made it to their destination, most likely. >> thank you. a great deal has been done, both the u.s. government, foreign governments, foreign characters -- carriers, cargo carriers, and the international maritime organization, customs organization, and postal union. all of those groups work together. i was in yemen five days after this took place, to work with their authorities. the day the intelligence came in, i immediately issued a ground stop on any cargo coming out of yemen. but we have done, i believe very collaborative lee, is work with industry to assess, from a pragmatic standpoint, what can you do in the short-term, mid term, and long term? we can issue regulations stay in, day out. the question is what can practically do it does not put a halt on the global supply chain. we did have a significant impact when i issued those security amendments. "we have done is work with industry to establish standards well beyond, much more rigorous than ours, that addresses risk mitigation from a business perspective, in addition to the government of perspective. all cargo coming from passenger planes overseas is now screamed. all high-risk cargo is screened. we are working with industry. we work closely with custom/border protection to say there are categories of known shippers and non-shipments. for those in the unknown category, we need to apply additional screening before it comes to the u.s. that is what we are working toward with carriers around the world. there are 20 countries that account for 80% of cargo coming into the u.s. we are working with those programs. we have recognized several of those, and look to recognize another handful in the not too distant future. the number of steps have been taken. >> that is good to hear. -- gao hasn't been critical has been critical that there are still problems with cargo in pilots. i want to turn the hearing back over to the chairman, but tell the chairman that mr. kristol -- pistole brought out that the tsa is still capturing four to five guns per day as part of its screening of carry-on luggage and passengers. he mentioned that just yesterday the total was six, and one of those guns was at bradley international airport, and it was a fully-loaded gun. i think it is a very good reminder to us that there still is the need for screening. >> thanks, senator collins. first, apologies to you, mr. pesto -- pistle. i had to be on the floor. it has been a real pleasure to work with senator collins, and i said before that all that would change in this session would be the titles we had. i appreciate her holding the gavel and bringing this hearing to order. i agree with what she just said. i know a lot of people taking their shoes off, taking their coats off, they say, "this is a nuisance, for what?" when you say an average of four or five weapons are found every day in airports around the country, it reminds us why. i hasten to say that a traveler can carry a weapon in a checked bag, so long as it is declared and check. but these are people who are boarding the plane with a weapon in their luggage, four or five every day. so thanks for what you and your folks are doing. the rule of our committee is that the first to arrive goes first, and i think the chair will apply that rule to himself. i am going to call on senator paul. >> does the tsa exam and light manifest stacks >> yes. >> so you have already looked at whoever is flying that day? >> yes, under our secure flight program. >> there are specific searches targeted toward someone you have looked at a flight manifest to determine they may need extra scrutiny? >> our watch list is predicated upon knowing who is coming either to the u.s. are flying from the u.s. i start every day with an intelligence briefing that looks 72 hours in the vans to say who are those individuals known as selective on the terrorist watch list, or the no-flys. >> i was thinking more of people who have been to yemen three times and somalia twice, who you might want to spend more time with. that kind of screening is occurring? >> yes. i would be glad to go into more detail in terms of some of the work we do with the intelligence community. >> i just want to know it is occurring in general terms. if you fly from islamabad to laguardia and are going to fly to chicago, do you go back to any screening,? >> you go back through additional screening. >> to go back out of the secure area and come back through the screening? >> if you are talking about transit from one point in the u.s. to another? clearly, legislation requires us to screen every passenger. >> with regard to setting up a frequent traveler program, you say there are a couple of airports which are doing it in now? what is the plan for expanding that program? >> we are working closely with the airlines and airports. i have met with and talked to two airline ceo's in the last two weeks who are very interested. right now, we are working with american and delta in four of their key airports. the goal is to, as quickly as we can do it in an efficient way, to expand that with airlines and other airports. clearly, there will be more airports and added in the next several months, but more so as we get into 2012. >> national airport is not one of those, is it? i have noticed the pilots are going through a separate line now. >> as part of the non-crew member program -- >> that is a separate program? >> separate from passengers, we have the pilots. we are doing that at seven airports. we have had 80,000 pilots go through this expedited screening process. >> it will be on an airport by airport bases? >> simply because of the checkpoint configuration way out. is there an area for a dedicated line, or an exit line that we can configure? it is in close association with flight associations and ata, at no taxpayer expense, i might add. >> this is long overdue. the smaller we make the haystack of what we are looking in, the easier your job is to find people. that involves making a priority and targeting folks who are more of a risk to us. anything we can do to have less putdowns of six-year-old girls -- i do not think there is any reason we should be doing that. we need to get to that point. when an adult goes through and the image is blurred, can the adult request to go back through again? >> the policy has not been there. >> i would change it with our votes. 99.9% of us are not terrorists. let me go back through the machine instead of get a pat down. you would get rid of a lot of the animosity and gives us a little more dignity when we travel. just let us go back through the screen again. people do not want to have a cut down. we are made to feel like criminals, and we do not want to be made to feel like criminals on the fly on a claim. >> the only downside is it slows down , and people want moving along. >> i am not sure it slows it down that much if they walked back through. i think when you ask any questions, you are treated like you are guilty of some crime. you are treated roughly. it is like to ask any questions and we will be more invasive. that is what you get some times as you go through the airport. i think we need to try to continue to do what we can to isolate and target who can attack us, and to try to make it easier on those who are not going to attack us, which is 99.999% of us. we need to figure out how to expedite this in the most of dignified way. >> that is what this initiative is designed to do, so thank you. >> thanks, senator paul. thank you, director pistole. i am so struck by the example of the four to five examples of weapons seized in the lines. i think it is very important, to the extent you are able without jeopardize and security, to regularly announced to the public, generally speaking, what you are finding. people have resigned themselves to it, but the average person going through the line does not see somebody get stocked with a weapon. it is fair important to remind people why we ask them to go through this, which is for their own security. you mentioned the ability of the body imaging machines to find in the correct in somebody's back pocket -- the nicorette in somebody's back pocket. you found things concealed on a person which would not show up in a metallic scanner that could be very dangerous to the other people on the plan. i do not know if you want to respond to that. >> it is a good reminder. we do post some things on our website. we have a fairly active log people interact with us on. we do not provide too much detail, so ^ -- so tourists can go to school on what are the detection capabilities. but clearly, we are getting four to five guns every day. people are not focused on the security protocols. >> thank you. yesterday, as you probably know, "pro publica," in conjunction with public broadcasting, published an investigative report on? the machines,. the article summarizes health concerns raised by exports over the past 15 years about these machines. i know this has been in the news the last 24 hours. do you wish to respond to these concerns at this time? >> i did see the article yesterday. it does contain a lot of information. i am not sure all of it is accurate, from the standpoint of documenting all the perspectives. clearly, it is an issue we have looked at and continue to look at, and work with safety and health officials to ensure these backscatter invasive technology machines are as safe as can be. all the independent studies we have had done indicate they are well within -- well below the minimum doses recommended. take senator collins' recommendation to heart to do an independent study. we will do that. obviously, there are concerns. there are those who are concerned about any additional exposure. the scientific studies we have seen indicate it is the same amount of radiation as approximately three minutes of flight at elevation, one 1,000th of the time of a chest x-ray. that being said, i am concerned that there is a perception that they are not as safe as they could be. because we are using different technologies that does not have that some perspective, i will take that back and we will conduct an independent study to address that. >> thank you. let me ask you about another matter that has been in the news. i am sure you know that over the weekend during the winter storm alfred, the was a nightmarish series of events at bradley airport. to make a long story short, i and others have been asking questions of jet blew -- jet blue and the faa. plans were running out of fuel and being diverted to three airports, one of which was bradley, which became very crowded. all the gates were full. they were making judgments about keeping the runways open. in the worst case, as you know, passengers on the jet flew -- jet blue plane had several hours of no food, no water, the bathrooms not working. finally, they were able to take the passengers off. the airline may be subject to considerable fines. that is not directly a tsa responsibility. but i did want to ask whether you might have contingency plans, or should, for dealing with an unexpected influx of passengers in maintaining security at an airport when flights are unexpectedly diverted from another airport. >> thank you, chairman. we do have contingency plans, obviously, with a little bit more heads up. if there is a hurricane, we have a national deployment force and can move individuals within hours to an affected area that may need additional security, either for passengers or pilots, or the workers. we have that capability and we used that in hurricane irene. it is something that started going back to katrina. we do that. >> that prefaces the answer to my next question. it happened in one of the diverted flights to bradley that it was an international flight. it raised an interesting question. i want to ask customs and border patrol about whether the passengers on an international flight, if they were forced to stay on a plane so long that it was just humanely impossible, and they had to be brought into bradley -- bradley has a sizable contingent of tsa personnel. is there any way the tsa and customs can work together in an unusual circumstance to process passengers more quickly, so they are not forced to stay on the plan for an enormous amount of time, simply because they happen to be on an international flight? >> there are some provisions. i do not know the details, so i would have to get back with you. in a situation where international travelers are trying to get out of the country, if it is a matter of reprocessing them because their flight is not going to depart, there are some options, but they are somewhat limited if there is not a good customs presence there. >> bradley is an international airport, but all the scheduled international arrivals currently originates from countries with pre-clearance stations, so there is not adequate -- it may be a rare circumstance. on the other hand, we have had extreme weather lately. i just ask you to think about it. >> i will follow up on that. >> thank you. my time is up. >> thank you, mr. chairman, for holding this hearing on the next wave in aviation security. mr. chairman, because hawaii is located 2,500 miles from the mainland, we have unique transportation needs. hawaii residents and our many visitors rely heavily on air transportation when traveling between islands, to the mainland, or abroad. although protecting the public is our primary goal, we must ensure that security procedures and technologies safeguard privacy rights and are not so burdensome that they discouraged air travel. i applaud the federal employees who of worked tirelessly to secure our commercial aviation system since september 11, 2001. as we approach the busy holiday travel season, i hope this hearing will allow us to review whether the work force has the tools they need to meet today's security charges. administrator pistole, your testimony mentioned that tsa is in the first phase of the expedited passenger screening pilot. i understand that honolulu airport is being considered for the second phase of the pilot. in hawaii, many people who take frequent short flights between our islands could benefit from the expedited security proceedings. my question to you is how our the decisions being made about which additional airports and airlines will be selected for the second phase of the pilot, and when will those selections be announced? >> thank you, senator akaka, and thank you for your support of federal employees. clearly, the goal is to move out as quickly and efficiently as possible. there are a number of variables we are working through. those include things such as the theires' capability, information technology systems. because of the way this works, we take information that is on the bar code of the boarding pass, which the airlines produce. it shows up in that bar code as the person is a known or trusted traveler, if you will. several airlines are going through mergers right now, and their systems -- they are waiting until those systems are merged, as opposed to having different systems that do not talk. those will be after the first year. that is one criteria. is the airline ready and capable? the second is the airports themselves, and the configuration of the checkpoint is a key aspect. one goal is to have a dedicated line for non-, a trusted frequent travelers, and others we will look at down the road. they can go through a dedicated line. the can be identified to the bar code on the boarding pass. we can have a separate screening line for them, where they keep a light jacket on, their belt, their shoes, their laptop, their briefcase, and there aerosol's and gels in their carry-on bag. keeping it random and unpredictable as part of that. directly to the question, there are a number of airports and airlines we are working with to try to get to that point. i want to manage the expectations as best i can. there have been no decisions made. i am waiting for the presentation of that second round, if you will. i have met with the ceo of one of the major airlines in a week before last. they are doing it in the first quarter of 2012. we will use one of the largest airports in the country as the basis for the merged airline, probably in the february-march timeframe. as soon as i get additional information, i will get back with you on that. >> i applaud tsa's increased use of automated target recognition software. the whole body scanner no longer generate sensitive images of passengers bodies. i am concerned the backs of the machines, which are not currently compatible with atr, are still not used -- are still used in many airports, including in hawaii. will there be that privacy feature for all whole body scanners? what is the time and for doing so? >> yes. we were just approved to acquire three or more machines, and all of those will have the automatic target recognition. no new acquisitions will be without that privacy feature built in. i should note that some time this month, the manufacturer of the backscatter -- a will know whether the technology of crates are successful in terms of the depiction through the atr rather than the traditional means. but any new acquisition will have the privacy filter. >> as you know, the asia- pacific economic cooperation summit will be held in honolulu, hawaii next week. the high-profile event will feature president obama and his fellow apec leaders from the asian region. i recently met with the security steering committee. i toured the command center and events sites. i was very impressed by the planning. my question to you is would you please discuss tsa's role in securing the safe travel of 2010 isn't dignitaries and guests flying to hawaii. >> the security service and the state department have the lead as far as the dignitaries themselves, and their entourage. it is our responsibility to insure everybody traveling, other passengers and attendees, whether they are coming from the mainland or elsewhere, have been screened to meet our standards. that is our responsibility. on departure, those people will go through the security screening. >> , thank you very much. >> thank you, mr. chairman, and thank you for being here. i want to ask about a contract and make some recommendations. i am curious about your agency, about whether you feel you have made the changes and are not complying with recommendations in that report. >> on the specifics of that particular report? >> it talks about including a review of inherently governmental contract -- excuse me. inherently governmental functions as part of the contract and ministration. this is identified in the statements of work. >> we have eliminated a number of positions, and number of other positions that were deemed essential to government services, converted to federal employees. the idea is to achieve greater efficiencies in our use of contractor dollars and services. >> savings. >> do you have a dollar figure? >> we have come up with a number of opportunities to create efficiencies and savings. we can provide the some security services. it is largely headquarters focused. for example, i put a freeze on hiring in those positions. a required additional information about anybody who is at a mid where senior level supervisor position to make sure they are supervised. that will merge some i.t. functions and to some other things internally. additionally, from a field perspective, we recently implemented a decision to change our overall structure, where we had 12 directors that oversaw the work. there will be regional efficiencies. the next question would be -- in the past, tsa has invested in technology such as copper machines that did not yield the expected results. i am curious what criteria you all use as you are evaluating a technology. how do you measure whether the technology is going to achieve the anticipated goals you are trying to achieve? >> the first criteria is what is intelligence telling us about the terrorists trying to hurt us. if that is a starting point, we work with industry to see what protection capabilities they have currently, since that is a valuable and important commodity. we always push industry to improve technology capabilities. we keep the building of the machine with covert tested. we are always trying to make that distinction. it has to be intelligence-driven risk-based, and make sure it is properly tested and validated. we are creating a facility. i know some staffers have been to it. it is on the south side of reagan airport. we test each new piece of technology in an airport environment to make sure it works not only properly, but rigorously, in all those standards, not just in the lab 7. >> the lot of that also has to do with training, and to make sure you have people properly trained on the machines. let me ask you another question that does relate to training. you are expanding your behavior detection pilot program. i would like to know more about that. that seems common sense, with the behavior being a strong indicator. but does it occur when the cultural differences, language barriers, physical disabilities, mental disabilities? how do you balance that, as compared to trying to single out erroneous folks, for whatever reason? >> clearly, training is a key aspect of this expanded behavior. it is an initiative we are trying. there is a pilot in boston and fort right now. i want to see how that works in those airports before i make the decision of whether to expand it. we have core detection officers we have been using for several years now. we have taken those individuals who have shown the most aptitude have given them additional training, based on some foreign behavior-detection models. those individuals engaged in a simple question and answer with passengers at these two airports to make assessments and judgments as to whether that person poses additional risk. in boston, we have had over 150,000 people to go through and answer these basic questions. we are probably had a dozen or so people referred to law enforcement because of their response, and it turned up some of these individuals have outstanding warrants. some were illegal immigrants. the are not necessarily tsa security issues, but there was something about the person we needed to resolve. why are they acting nervously are strangely? as we get further information, i will report to the committee and say here is what would be the best thing to do, recognizing it is simply one layer of security. i do not want to have a point of failure in any of our lawyers. if this helps us find one terrorist, i want to use that. >> senator moran, i was going to compliment you on your good timing. thank you. [laughter] >> i would not either. i was in the armed services committee, and we had a rule of first-come, first call. the chairman would come and then disappear. he was maximizing his time. you're doing a great job. all the effort we are making continues to be necessary on a daily basis. i cannot stress enough that your people are finding four too 5 weapons every day, not in checked bags, where they are legal, but people going on the plains. just think about what could be done to the other passengers. what tsa officers are doing is for the protection of the general public, obviously. we want you, and i know you want to do, your mission in the most effective way you possibly can, and the most technologically progressive and imaginative way you can. we thank you for what you were doing. it has point-blank made the american people safer than we would otherwise be. some of us may have questions which we did not get a chance to ask today. thank you very much. >> we will call the second panel. this is the president and chief executive officer of the u.s. travel association. there is the global director of security and trouble facilitation of the international air transport association, and the president of the association of airport executives. thank you for being here. we look forward to your testimony. each one has a unique experience to add to this discussion. i am grateful for the work that tsa does. as somebody said, and this is a journey without a destination. we are going to have to keep getting better and better. let's begin with mr. down. . >> thank you for this opportunity. >> hit the button if you would. >> i want to thank you for your dedication as you are about to retire. you have shown support for security. we will miss you. u.s. travel is an nonprofit organization that represents every sector of the travel industry which employs one in nine americans. as you all know, travel is a powerful engine for ireasing economic growth and improving our economy. 62,000 americans work in the industry. $8.8 billion. 30,000 in maine work in our industry. $2.4 billion. in every city, as you look around, these are the salaries of policemen, firemen, teachers. it attracts private sector investment, airports, convention centers, these help the community is built. while we talk about the security, we often talk in terms of terrorism, personal privacy and technology. less attention to the economic damage inflicted by the inefficiency in our passenger screening process. for the travel community, inefficient screenings, as a staggering cost on the economy. hampering growth. the data suggests the problem is getting worse. a survey of air travelers showed that people take more than one flight to year, 28 percent avoided a fight because of the hassle of getting through the airport and delays. that resulted in 41 million flights not taken. compare that loss with the 2010 survey conducted by consumer research, if you knew you had a predictable screening system, which you take more flights index that is 85 billion in revenue. the costs are blooming at a time when we're trying to find ways of cutting costs. in 2004, 618 million people went through an airport. there was a 1% improvement in numbers but the budget increased 68%. this trend cannot continue. in 10 years, we will have 1 billion travelers. think of the cost to keep going. beyond the empirical numbers, there is other evidence. you travel every week. you see the inefficiencies and the need for reform in the security system. it could stimulate economic growth. our current system has also been an efficient. we published a report recently called a better way. a panelought together of the people cheered by the home and security to review the process and recommend reforms in creating more efficient and secure systems. they had over 20 meetings and issued a report. it represents a comprehensive review of what could be done. there could be a road map for creating a secure system. i will focus on three recommendations. first is a program. the second is to take steps to decrease the number of carry-on bags and reconstitute the aviation's a advisory committee. the blue-ribbon panel said the that we want to work with congress to create a risk-based system. the need for that is clear. the current one-size-fits-all screening does not fit the needs of the traveling public. travelers have had no impact or tories in how the system works. -- or voice in how the system works. they could provide background information in qualify for a predictable system. as long as they meet certain criteria that are established for these low risk passengers. the panel recommends three elements of a trusted traveler program. first, a security accessible program that encourages a large number of enrollees. a dedicated screening land for travelers and a confirmation process to ensure that they are able to use those lines. a screening process that provides efficiency, security, and an acceptable level of productivity. we believe those elements can take place. not long after, our team met with the secretary's team to review these recommendations and get their feedback. we learned of several initiatives that are under way to have a risk-based system and to create a program. i applaud him for his vision and leadership and effort to launch this which is an important first step. when you look at that, that is one of the reforms that are important. i applaud all of you for taking an interest. i hope we can work with you to oversee the implementation of a process that is efficient and provide security. as the administrator mentioned, the program is going forward putting passengers in that program who qualify through their airline or the other program. it allows people to share information from their frequent traveler program. we would like to see more people to get into the program and allow people to take their information from multiple airlines. and also use other ways such as the private registered programs and enroll those people in the program. the secondary is to have dedicated security lanes. and also, random security which is very important. you should be able to be expedited and half predictability. the next area we want is to have passengers check one man and no cap -- cost. the airlines should be able to put in their standard fee a cost for that back. if we could reduce the number of pacs, we could reduce the hassle and the ability. 59 million more bags came on in the past year. tsa estimates 87 million. 29 million more next year. if we could get one back passenger, it would improve the system. the lasting is a reinstatement of the security advisor commission. this has been in place for two decades. it brought a broad base of people. unfortunately, as we have seen, this committee has not met. it cuts off input from the private sector and the travel community. in july, 2011, we think that is great. we would hope we would have the travel community involved so we can have input of travelers. renown -- to not believe that having great security and customer service and an efficient system are mutually exclusive. we ask your support to allow us to have a system that is a secure, has a way we can reduce the number of bags, and reinstate the broad spectrum of people ford vice. thank you for what you do. >> thanks for that opening statement. next will be kenneth on behalf of the international air transport association. plus pictures. >> distinguished members of the committee, and thank you for this opportunity to testify. the international association appreciates the leadership of the senate in addressing this issue. it is our hope that the hearing accelerates the dialogue in the future of passengers screening in united states. our airlines have a vision of future passenger screening is based on a paradigm shift. we believed next checkpoint is a must focus on looking for bad people and not that things. i would ask you consider our vision of airport checkpoints. security is enhanced with higher probability, babies and children with names similar to adults pass-through screenings uneventfully. harmless objects such as now clippers do not trigger alarms. in this scenario, the security checkpoint is no longer a stand- alone line of defense. but rather part of an integrated system that uses risk based analysis as well as a screening technology to improve security and the travel experience for the passenger. we call this vision the checkpoint of the future. let me stress this is a vision, not the vision of moving forward. we want to encourage a dialogue on what the future checkpoints should look like. the obvious question is, why develop the checkpoint? aviation remains a target. this was demonstrated by the december attempted bombing of a northwest airlines flight for detroit. air travel is forecast to continue to grow. we expect an additional 90 million passengers will travel with in north america between now and 2014. a long-range projection is that as many as 16 billion people will fly annually. the evidence shows that it is disc -- decreasing. our systems cannot handle the traffic. in some places, we have bent -- have seen a drop as much as 50%. the aviation security system needs to maintain the confidence of the traveling public. signs of discontent are growing. passengers are growing vocal about the inconvenience of security measures. let me be clear about one things, we have good systems. we also need them to trust the authorities. if you have good systems and distrustful passengers you create a less secure system. what lessons have we learned concerning passenger screening ? drop in new technology into walled checkpoints doesn't work. that is like placing a new radio in an old car. you still have the same old car. second, it does not represent the future. if we have learned anything, a passenger was toenail clippers is not a threat to aviation. if you find tonneau clippers, you have not necessarily found a terrorist. one size fits all screenings has outlived its usefulness. 2.8 billion passengers are screened per year. we cannot continue at this pace without using risc based screening measures. we support secretary nicole itano -- napolitano's efforts in this. let me spend the last few minutes discussing the principles and explain how we propose turning these into a check point. the checkpoint describes and relies on basic concepts. the first is the introduction of risk-based screens using data from airline tickets that is already being used by the u.s. government for customs and immigration. let me emphasize this does not involve profiling of passengers. we are proposing that rather than using this data at the end of the journey for border control and immigration, we should use it at the beginning for security purposes. the second concept is screening technology to enable a seamless tourney without removing clothing or unpacking luggage. what does look like an airport? passengers arriving at a checkpoint, he will identify himself or herself and have a brief encounter with a behavior analyst. the passenger is assigned to elaine -- proceeds through the lane and is the screen while in motion. passengers who bought into a traveler program and agreed to provide additional information would proceed through this line. those randomly selected would go through an enhanced to blame. let me emphasize, all passengers are screened. no one gets a free pass. where are we and what have we done? we have developed a blueprint and road map working with like- minded associations and academics to refine this concept. this needs to be a global effort. we have endorsed the need for a global effort to steady a checkpoint. we're headed in the right direction. we expect all the necessary components for a walk through screening process will be available. we can repurchase existing technology into an intermediate checkpoint within the next two- three years. this checkpoint uses existing hardware and several elements of the checkpoint of the future including passenger data, behavior analysis and the creation of new screening lanes. we're committed to making air travel safe and secure and more enjoyable. we believe the foundation of the checkpoint should be based on the lessons learned since 9/11. the next checkpoint should use passenger data, behavior detection, risk, provide for an uninterrupted attorney and preserve our investment in the existing checkpoints. we will not settle for anything less than a revolution in new ways are passengers are treated. >> thank you. that was fascinating. i have some questions. finally, charles on behalf of the american association of executives. thank you for being here. >> thank you. it is always a privilege to be here. i'm going to take time to make general points from my testimony. airport executives support risk- based security. we congratulate the minister and his team for bringing that concept forward. it is something we have to have for the future. we support pre-check and expect -- in courage expansion. they want to be sponsors of that program. we would encourage the committee to encourage tsa to move as quickly as they can from a pilot program into further deployment. the rationale behind risc a security is simple. you have to look for dangerous people. we have to identify them -- those who are not a threat to the system so we can focus our resources on the people we do not get to vet in advance. the resources and facilities, if we continue the current system, are going to be overwhelmed by growth. we have to make changes and modernize. risc based security is not a compromise in our point of view. when you think about the philosophy, and a dangerous person with nothing on them that we all look for or screen for is a danger to the system. people with a lot of dangerous things are not a threatening the system. we need a future system that implements that understanding. my second point is that airports are unique partners of tsa. they are all branches of local government. they all have local police powers. they'll have branches or special units that have people with the same incentives as the agents of the federal law enforcement. my point for emphasizing that it is that we have a division of responsibilities. local governments, airports and law-enforcement are responsible for things like perimeter security, the front line of employee of vetting, incident response, and other areas that we mentioned in our testimony. we believe those things should stay with local law enforcement. tsa should not take over those areas. you do have a partnership between federal law enforcement and local law enforcement in these areas. we need both of them not focused on each other. you do not want the good guys spending a lot of time and energy watching each other as a regulator. you want them both pointed out for, looking for back ties. we think that is a key element of having a partnership on security as opposed to having them takeover more areas in. tsa has its hands full with vetting and screening passengers and cargo. we want to see them doing that. it keeps things moving. we look forward to assisting in being partners with tsa and hope to carry out that mission as well as we can. both groups will make mistakes. we will have to learn from those mistakes as time goes on. local law enforcement and airports are there to be of help. there is no higher priority than the safety of the local citizens. glad to answer'm any questions i can. >> thank you very much. very interesting testimony. all of you have used the term risc-based security. this is everybody agree that what we're saying is that it tends to for dangerous people as opposed to dangerous things? i presume that none of you would say we should stop looking for dangerous things. is that correct? >> personally, we have to have -- look for dangerous things. there are ways to do that. if you take trusted travelers, that is fine. and to make the system much more efficient to focus on dangerous people. >> this is a real challenge. this goes to the point of his testimony. you have an average of 04-5 i presume most of those are not terrorists for one reason or the other. if you did not have those screenings, i would be able to carry them on. what i am getting at is -- and i support risk-based, we are not at a point where we can ignore looking for dangerous things. >> i think the presumption is everybody screams. in the new paradigm, some will be screened more. if you have the opportunity to do things, you can screen a population of people more thoroughly. if we start with the baseline, to address your point, those objects are going to be found as well. they will not be the focus of the experience. if you spend your resources on looking for clippers and scissors, you're not looking for ied components. >> that is a good point. this is on top of a more efficient application of the existing system. i noticed you have even known and travelers who have been pre- checked go through a metal detector. go back a little bit. it is intriguing to look at your vision of the future. how close are we to that? it looks attractive. three lines. how close are we technologically to that? >> if you look at the checkpoint that was the last slide, we are within a few years. everything we need to deploy a more effective security system, using existing equipment is there today. we think within two years, we can have that the ploy to any airport. we will use behavior detection, screening passengers based on risk, then if you push out the future and look out the technology we are developing, we need explosives detection is that is performed why a person is in motion. that is 7-10 years on the horizon. what -- to the manufacturers are telling us that vision is closer to what we realized. obviously technology grows exponentially. if we have a plan that preserves the current investment, rearranges it better, when the time comes for the tsa to make a decision, what will we spend money on? all of the technology and pieces will be there. we think is realistic. it is science fact. >> is there a lot of work going on to develop these new technologies? this is a new market. i would think people would be investing. >> absolutely. we know and that all of these advanced technologies are under study. the problem we have globally is that every regulator has different standards. something certified in the united states might not be accepted in the european community. there is an effort to and i would like to pay credit to tsa for working with countries to come up with a global standard. if we have standards of detection, that would accelerate an incentive by manufacturers to invest in the technologies we need. having a common vision, what does the future look like? that can also incentivize dollars to be directed into a more predictable vision and a more compact vision of what we need to have. >> let me ask you this question, has leds pilot program to a separate line for trusted travelers. at this point, it is managed by delta or american airlines. do you think this format will be successful at the expense to incorporate more passengers or should tsa be looking for another administrative means and to expedite the screening? >> the airports -- you have different facilities. airports have been concerned about having the ability to manage headlines if you have been through denver. they have a big hall and the airport needs to manage those lines because of them. that is going to be true of other airports. we will have to have a partnership to figure out how to make a lean available. our members support the idea of pre-check. there is going to be a queue management. airports are going to out to be central to that. >> having an airline frequency program is not enough. through the registered traveler programs, the criminal records, we can build a much broader base. that is what we are saying must be done. we need to get travelers that are trusted. if you have a long line, that produces a problem. when their truck -- trying to push people through. if you eliminate that, you have a much better chance. >> my time is up. senator collins. >> i am very intrigued by your proposal for the security screenings based on risk. i think we need to move toward a more risk-based system. tsa is doing that. i am somewhat worried about the proposal. it is for this reason. if there is anything we know about al qaeda, its members have demonstrated extraordinary patience over the years. i am wondering, if we move to this system, what would prevent an al qaeda operative, like the times square bomber, who was an american citizen, from traveling a lot, registering for the program, passing the background check which he would have from everything we know. and just biding his time. if he is only going through a lane that x-rays his carry-on, he could be lining his arms and legs with petn which would not show up. that is my worry. we know the patients. think of the number of years that elapsed before -- between the first attack on the trade center and the second. we know the careful planning. what is your response to that? >> we are aware of the patience of our adversary. that is why we believe that regardless of the concept, every passenger needs to be screened for explosives and weapons. we establish a high baseline within our concepts to make sure that no one gets a free pass. everyone is going to get screened. one of the interesting things about the proposal, and all that incorporates processes that have been demonstrated to work. we have been known a traveler land. we have the pre-check plan. we have global intrigue. -- entry. on the other hand, if you look at the high-security lane, that occurs in every airport. within the glass booth he will have a passenger getting some security measures. our concept may look a little bit far forward but that is what happens when you try to integrate things happening today. we do not want anybody to get a free pass or not get screened. everybody needs that. >> although the known traveler gets a screened, assuming i am reading your passport, it is -- the baggage is screened through the x-ray. the passenger goes through a metal detector. there would not be the kind of screening that is done with an a.t.r. or you would see non- metallic explosives concealed on the body. >> if you look at our concept, it is to develop walk-through explosive screenings. walk through imaging so that can be done with that a person having to spend 45 seconds with their hands in a position like this. if you take a look at what we're proposing, we're talking about taking existing equipment and reordering it and making it more efficient. efficiency is to be gained by not having shouts and the checkpoints saying take this passenger and move them aside. i believe in s -- we can establish a high enough baseline to ensure security but also to do something, take the level of detection we have right now, whatever that number is, we can raise it even higher because we can direct our resources and those people we know the least about or those who appear on watchlist and other types of security lists. >> if i could add one point, one of the things that all security people tell us that deters these planning is randomness. when you have randomness in the system, that enables that in a big way. to be able to go through this, when you have a random traveler, make sure you are able to get them through efficiently. >> my last question, and earlier this year, the administrator decided not to approve an expansion of the screen partnership program. that allows private screeners to operate at 16 airports. what is your assessment of that decision? >> are members support a voluntary program. we would like to see revisiting that decision. most of the airports are not. there are a few others interested. having it out there as an option is something that our members to support. >> thank you. you indicated that peak times is when there are problems. i wanted you to tell me what the problems are. someone who is a security risk will make it through security or is that more related to the public? >> the problem is both. the traveling public creates an unpredictable system. you take the efficiency and approach of the american workforce away because you left to go through dca. what happens during the peak times is the crowds get bigger and you can see the urgency began among the tsa people. if you're a bad person, you will want to go during that area. let's get an efficient system of ours. >> thank you. are there countries that we need to have concerns about the standards when passengers are screen to and security procedures occur? they're traveling around the globe? how uniform are the standards and by which the travelers have to comply? >> let me start with a positive story that needs to be discussed. though level of the security across the board has been increased immeasurably because of the investments in their efforts to raise standards. individually, countries have looked at united states and other regulators and have increased to their own level. in terms of, are we safer globally than what we were after 9/11? an unequivocal yes. what i would say is if there are countries that are of lori, the best source of who they are would be with the intelligence community. we trusted that the men and women of the tsa have identified those countries and put in place procedures to deal with those additional threats. >> thank you. i want to follow upon the question that he raised with you about american and delta. i think your answer was, and we would like to have authority on those decisions had we man is to the program. you worked out the public- private relationship with regard to airport employees and their passage through security. has that worked well? is that what you're referring to when you're answering the question? >> they are separate. they are related to the extent that airports are experienced and you know how to do employee vetting. they would like to be sponsors of a pre-check programs. frequent-flier programs, and the airports could have an opportunity to have passengers show up and help people get enrolled who are not part of the frequent-flier program. airports have the experience and had to give that information into tsa. we have your members, after 9/11, there was a privately run registered travel program that was sponsored by airports. over 20 airports sign up for that. airports would like to be part of the pre-check. the item you mentioned on the clearing house is one that we have -- only 10% of employees had to get records checks from the fbi. it was a nightmare. it took over 50 days to get a background check through the process. opm was not set up to do with outside entities. there were losing a county records. we had research to the bankers association for employees -- they had a clearing house to make them work smoothly. that is what we set up in cooperation with faa and the airports. we have the sense that it eighth million backgrounds. we have reduced vat 50 days two minutes which is important to an industry that is 24/7 these to get employees out on the front lines. and do it in a safe fashion. that has been a model of public and private partnerships that have worked very well. faa originally ran security back then. the administrator and selected us to do that because it was a co-op model. we had the customers of the clearing house who were also the owners. airport executives make the decisions about operations. they are also the customers on the other end. that was the reason we got into that program to begin with. >> that program has worked well? tsa unsatisfied? >> -- tsa is satisfied? >> airports will have a choice of other vendors that can also do those services. we want to complement tsa for moving on that to make sure you did not undo a program that was working will you introduce more competition. aviation workers, unlike the truckers or port authority workers who only have one program, aviation workers continue to have a variety of options to go through. they are in a program accosts a third for the employee of what it costs a hazmat tracker to get their debt down. it is a very efficient system and one that we would like to see tsa continue. >> thank you. >> i think this is an important hearing. i wanted to highlight five items that are in the homeland security appropriations bill that will help expedite some of what the testimony is. we added $10 million of 4 tsa to begin to implement the program. not in the house bill. a requirement for tsa to improve its response to passenger complaints along with procedures is in the senate bill. report language directing tsa to improve training of passengers with mental and physical disabilities like autism. 11 million and above the 11 level to add 175 new behavior detection officers. and a requirement that tsa the requested documents resource allocation on the idea of risk. this is a short list i had my staff but together. the authorization is important. if it is not funded, it does not get down. i want to thank mr. dunlap for the input that tour organizations have given us that this committee and in our appropriations process. i believe your associations can help us lead the way to the future or we can have a secure system but also a system that is much less intrusive than the one we have now. and much less -- a lowering of the inconvenience and the frustration associated with traveling today. for the record, i want to put into the record, according to a 2010 survey, american travellers would take an additional two- three flights at the hassles of screening and were eliminated. that would translate into an additional 85 billion in consumer spending and 900,000 jobs created in the united states. this is an area of interest to us all from a variety of perspectives to prevent against attacks, for the state high represent that is dependent on the traveling public, we are a destination. as many communities throughout the united states rely on the traveler for business, it is imperative we get to this next future check point. i want to thank you all and i look forward to working with you. my question is on checked baggage. and intends to file a bill to require the airlines, for every ticket purchase, in your seat comes with the privilege to check one bag without cost. if the airlines want to write it into the ticket cost, that is fine. his is pushing so many bankgs into carry-on. i and stand lacoste -- i it costsnd tehe cost, million because of the bags not being checked. do you have independent that? -- data? >> that is an interesting question. we look at global trends. if you take a look at what is happening, the fact of checkpoints are slowing down and you're getting passengers more inconvenienced, that is happening regardless of the local business model includes a pricing which is being blamed for driving more bags. if you look at what is happening, as far back as august 2005, we sounded the alarm that our checkpoints were slowing down. as you recall, any kind of pricing models discussed it did not exist in any major model. the last thing to consider, what has been happening at security checkpoints? shoes have been coming off. liquids are being set aside. now you have the body scanners were passengers have to take everything out of their pockets. in all deference to the report, i think there are a how large many other factors responsible for what is happening at the checkpoint rather than if the passenger plus the bag in the cabin or into the belly of the aircraft. >> you made two important point. one was on the checked bags. if people knew they could check a bag, two-thirds would do so. your point is right. you cannot dictate pricing to an airline. but they should include that in the price. the second point is the thing on customer service. we need to measure not only security but customer satisfaction and efficiency. and have those measurements so we can know that we are satisfying customers while improving security. >> i am focused on this issue. i think it is pressing the public's anxiety and dissatisfaction. mr. chairman, i know it is not the purview of this committee, but if we do not do something, the airlines are going to sell a ticket and you will not get a seat. you're going to stand on the airplane and have to pay extra for the question. i have had it. you do not to get anything to eat. nothing to drink. everything else costs. i think the american people deserve, when they purchase a ticket, you get one bag that you can check and you get a seat and a glass of water. that should be the minimum federal requirements. i am going to push to see that is done. in addition, let me ask one question to the airlines, i flew in from israel last week and got to the newark airport. i was unable to use my cell phone from the time i exited the plane until i got outside. is that a rule of each airport or a tsa rule? word that will come from? >> i will check on that and get back to you. i presume it was just a cell usage problem. >> it was a restriction. no one could use a cell phone from the time they got off the plane until they got their luggage through customs and into the daylight. to me, when you are trying to manage business travel, the first thing people want to do when they have been traveling for 13 hours is checking with the office, see what a mess. -- see what they missed. i do not know what the cellphone requirement is. we waited an hour and 10 minutes for our luggage. after a 13 hour flight. the airports are going to be getting letters from me about this issue. it is very disappointing. as much as we can make the travel experience safe and convenient, it passed to do with the way they check in and their exit. this exit is getting worse and worse. we have a long way to go. exceeded my time. >> i am told that is a cbp rule. >> we will take that up. if we are in the same flights together, i will give you my seat. i will not let you stand. and the commission. -- cushion. >> thank you for what you're doing to help improve the visa process. it will make a huge difference. >> thank you for joining us today. senator lieberman and myself has a press conference in five minutes on the postal service. i'm going to be brief. i will ask a couple of questions and ask you to respond. i was intrigued by your discussion and images of the check point of the future. the concept seems simple enough. driven by information that we already collect from passengers. the use of advanced technology, separate claims for different types of passengers, this could save travelers countless hours and increase the travel industry and our local economy. given the financial challenges we face, what would the checkpoint of the future cost to taxpayers? where are technologies in place right now that can be integrated into your vision? >> maybe one more for the record. this is for all the witnesses. in your testimony is, you discovered how the current one- size-fits-all screening process does not meet the need of the travelling public. he also noted we need to move to a system that detects dangerous people instead of dangerous things. this committee has challenged officials to work with federal dollars to try to find efficiencies without compromising security. without sacrificing security. i >> tsa has expedited -- there is discussion of that here today, but there is room for growth and improvement. can you discuss the challenges that tsa faces as it looks to expand the pilot and out industry can help find solutions to these issues? and i will have one more, another question or two for the record as well. if he could respond, i am most grateful. everis the briefest i've been. >> i agree. i agree. >> thank you, sir. >> senator, i appreciate that very much. hear testimony has been very helpful. we have come a long way. we are in and new-age. it is no fun, but as we've said the enemy is out there and is persistent and they continue to be attracted to air travel as a way to attack us and hurt us. and we are trying very hard to protect the american people when they travel, because the worst thing of all for airline business would be if people felt unsafe. increasingly, under administrator -- and we are trying to leverage new technologies but also move into, on top of the basics, a more risk-based approach. that is exactly what i think all three of you are asking. your statements are in the record in full. we are going to keep the record open for another 15 days for additional questions on either side of the bench. i thank you very much for what you do every day in the effort that you put into your testimony this morning. with that, the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> well done. very well done. >> good to see you. >> [inaudible conversations] >> today on "newsmakers", house minority whip steny hoyer on the deficit committee's efforts to reduce the deficit at 10:00 a.m. and 6:00 p.m. eastern on c-span. next, testimony from the special advisor to the treasury secretary for the consumer financial protection bureau. he detailed the agency's accomplishments and its first 100 days. appearing before the house financial services subcommittee on financial institutions, this is about two hours and 30 minutes. >> [gavel pounds] otday, we are joined predicted it we are about joined by autism. dodd-frank. and i would like to welcome him -- we are joined by raj date. i would like to thank him for his willingness t. creators of the dodd-frank has been operational for over 100 days. the cfpb does not have their full powers per the phone as of that -- the focus of this morning's hearing will give the members of this hearing -- this panel an opportunity to learn more. these types of hearings are critical as the drafters of dodd-frank allowed for little oversight of the cfpb. the cfpb is funded through a unique mechanism that allows them to draw a percentage of the federal reserve's operating expenses each year. they do have the ability to draw on $200 million if they exhaust federal reserve funds, which they have not. however, they have not drawn on these funds, it is very difficult for the u.s. congress to have oversight of how they are spending taxpayer dollars. britney cfpb on to the process is onetion of the aspects to make it a more comfortable and transparent agency. earlier this year, the house enacted common-sense reforms to convert the bishops structure of cfpb to a 5% committee, which is reflected in several other committees throughout the government. and allow for greater balance between consumer protection and safe and sound operation of the u.s. financial institutions. the u.s. senate should adopt these reforms so we can afford with ensuring consumers are protected by a balanced and transparent agency. i look forward to hearing from mr. raj date about the operations of the cfpb. i thank for his visit to my office. i know that members will have many questions for him, so i will save my time for further questions and statements. in case members do not have sufficient time for their questions, i encourage them to submit them in writing. there are many important issues to discuss and we may not have enough time to cover them all today. on the issue of consumer protection, i would like to say the republicans and democrats agree that consumer protection is an extremely important aspect of, as we make sure that our fellow americans have access to credit, have fair and transparent disclosures when signing agreements and securing credit, and that the oversight of the consumer products is an extremely tempore aspect. again, i would like to thank mr. raj date for appearing before the subcommittee. i yield to the gentle lady from new york for the purpose of making an opening statement. >> thank you so much. today, i applaud the cfpb for a remarkable string of achievements in its first 100 days of existence. it has already formed two special offices to help advise an advocate segments of the market that have been especially vulnerable to predatory practices. the bureau is already helping seniors out through the office of older americans, headed by skip humphrey, a former minnesota state a.g. and chair of the aarp. the bureau is already looking out for members of our military services and through the office of service affairs headed by petraeus. holly thanks for responding to complaints that mortgage servicers were illegally foreclosing on the homes of service members while they were deployed. she reached out to the ceo's of 25 companies and got them to stop these abusive practices. the bureau is already working to help students. drafted a new financial aid form that breaks down the real cost of student loans into an easy to understand sheet. it features a total tuition costs, projected monthly payments, and the loan default rate from each university. yesterday, the financial- services roundtable issued a statement strongly supporting the know before you kowe. "it will help strengthen student knowledge about student loans." i request unanimous consent to place their letter and the record. the bureau is making some regulations simpler. it will also begin a targeted review of regulations inherited from seven different agencies to eliminate unnecessary rules. it has proposed two versions of a new simplified mortgage disclosure form as part of their programefore you owe and posted them for comment. and the bureau combined two federal mortgage disclosure forms and made it simpler. and these are the forms that you can literally go on the internet and vote for the when you think would work the best for you. the bureau and its nominee have strong support by the attorney general from all around the country. the senate tod approve him as the first director. they described him as a brilliant, well qualified leader who has defended consumers while working to find fair and reasonable solutions for the financial industry. and i ask unanimous consent to place in the record the statement by 37 different attorneys general. >> without objection. >> and also the statement from treasury secretary timothy geithner youthat of the talks about all of the areas that will be on regulated that cost the financial crisis if the cfpb is not up and running. they have been with us for 100 days, and look at the difference they have made. i wish it had been 100 years. my time is expired. thank you for what you have achieved under remarkably difficult circumstances. many seniors and members of the military and students are better served, and mortgages are simpler. thank you for your efforts. >> thank you. i would like to recognize the chairman of the full committee, mr. bachus for two minutes for an opening statement. >> thank you, chairman. all of us, republicans and democrats, support strong consumer protection. after all, we are all consumers. our family members are all consumers. our constituents are all consumers. and they all deserve consumer protection. in fact, i proposed a subprime lending bill back in 2005 and credit card reform in 2007, and we sponsored the fact act. and i think then ranking member frank and i, i think agreed on many things, but one thing we disagree with, i think across the aisle, is the structure of the cfpb. my fear is that there are simply no checks and balances. it could easily become a loose cannon. that would be the worst case scenario, and it may not. but it is headed by single director who answers to no one. the director exorcises a subtle 30 over the agency and its staff. and the president's budget says that staff will be over 1,200 individuals. the director has unprecedented powers to ban products and services based on whether or not he deems them unfair or deceptive or abusive under are really highly subjective standard that is no legally defined content. i have looked at the 800 page document that was released, and there are still a lot of loose sand. the director has singular authority to spend hundreds of millions of dollars with no congressional oversight. for all of these reasons, and the fact that actually it was originally designed by elizabeth ward who first opposed it as a commission, republicans have supported a commission and will continue to do so and urge the senate to take it up and have a commission. thank you. madam chair? >> thank you. i would like to recognize the ranking member of mr. frank for three minutes for an opening statement. >> first, i want to comment on the incongruity of people at an oversight hearing lamenting the lack of oversight. this is an oversight hearing. apparently this is a figment of some people's imagination. i guess i am wasting the morning. we are also told it is unprecedented. well, that comes from people who bet on this committee for many years and never heard of control of the currency. of it is structured very much like the control of the currency. a a single individual with greater powers over the banking system of america than this agency has. we are also then told, well, there is no oversight here because it gives us money from the federal reserve. that is the case, if there is no oversight because it gives money from the federal reserve, there must not be any oversight in the federal reserve, because the federal reserve is not subject to preparations. the federal deposit insurance corporation is not subject to operations. the office of the currency is not subject to appropriation. my republican colleagues did not object to a financial institution regulators being upset -- exempt from the appropriations process until the consumer part came up. it is ok to control the currency, ok for the federal reserve. i have never heard we did not have oversight over the fdic or the currency. my colleagues, two of them have said republicans are all for consumer protection. if consumers could be protected by that kind of rhetoric, they would be in great shape, but they cannot be. among the major changes republicans are insisting upon before they can confirm people, a total, wrenching reshape of the constitution. because republicans did not have the power to get the legislation through, they are using the confirmation power inappropriately to coerce us into adopting legislation, and the commission is a small part of it. the big thing they want to do is this -- they want to put the bank regulators in charge of some consumer protection. my colleague said that for consumer protection, but they seemed to have forgotten how to do that when they were in power. i do not remember a single effort to do anything about consumer protection when there were in power. yes, the gentleman from alabama proposed a subprime bill. we tried to work with them. anit wasn't until we took the majority that we were able to take it up, first in this committee, although the wall to "the wall street journal" denounced it -- sarbanes-oxley is worse than hacking people's phones. the argument is that we need better balance. my colleagues in this committee may be only the few people in america who think that the danger is that we will over protect consumers. the history of the relationship of consumers to the financial institutions and regulators hardly supports the argument that there was a danger that consumers will be overprotective. this is the one chance we have to give them the protection they ought to have. >> thank you. i'd like to recognize mr. royce for 1.5 minutes. >> thank you. the distinction is that the danger in this process is that we will not protect in terms of safety and soundness. our distinction is that the prudential regulator does not have the seat at that table that the credential regulator needs in order to offer the advice on safety and soundness. the reason we are concerned about this is because we have gone down this road before. the reason we are concerned about this is because this committee has heard time after time after time from fannie and freddy's regulators past and current on this subject. they have said that the bifurcated regulation contributed to the failure of fannie and freddy. and the cfpb expands this problem throughout the financial system. so what we have suggested, which is not some radical to me, is that we go back to the original house legislation introduced by mr. frank that had a commission and allowed tfor the input of the provincial regulators. we are trying to make certain that at least in the process we do not go down the road again that we had, that we faced with respect to the gse regulation. i think that the notion that an independent regulator with no oversight or opportunity for dissent is a good for consumers is simply flawed. at the end of the day, the likely result will be higher costs and less access to credit. the way this is structured, less input from the provincial regulator. >> i would like to recognize mr. gutierrez. >> do you yield for 10 seconds? >> i would be happy to yield. >> i would say this. the gentleman talked about my objection to my original bill. yes, it was a commission. the biggest difference is not the commission. it is the republican bill to put the bank regulators back in charge. overrule the bureau. that was never in my bill. the power to overrule in any case was the heart of my objection to their approach. >> will the gentleman yield? >> it is time for the johnson and of illinois to make his opening statement. >> -- it is time for the gentleman from illinois to make his opening statement. >> i hope they received warmly in the senate for your confirmation hearing. i know that at least on this side we are receiving warmly. it's -- it astonishes me what can happen a year later after we pass the bill. i do not remember a single one of my colleagues on the other side of the aisle voting for the bill that created the consumer protection. i remember being there working day in and day out, and i do not remember anybody saying, we are for the consumer. as a matter of fact, i like my colleague from california -- the per day to regulator. we are concerned about the credential regulator - -the prudential regulator. i'm sure that makes an everybody in america feel so warm and fuzzy because the prudential regulator is being defended in this committee hearing. let me tell you why i think it is a great hearing to have. i do not know about the credential regulator, because bank of america had to cancel the $5 fear. e. it will save the american people millions of dollars. safety and soundness of your debit card and your debit card and your account each and every month so that you will have extra dollars in your account in order to access your money. why? because we passed this legislation that says, guess what? you have to tell everybody, because you know what? it is dangerous that banks. it is dangerous out there when people take a gun and stick somebody up. but you know what you are doing? you are making sure that the electronic stickups of the banks on american consumers are stopped in america. and how'd you do that? by telling people about these mysterious fees are. and everybody in america may not know what the credential regulator is, but let me tell you what they do know. they know about the mysterious fees that show up on their checking and banking accounts. and i am excited that you are going to have the opportunity to get confirmed by the senate. >> the chairman from georgia, mr. westmoreland for a minute and a half. >> thank you. mr. date, hopefully you know that georgia banks have been hit very hard for failures. most of these banks could not be directly supervised by the cfpb but would still have to comply with cfpb rules and regulations. recently, a banker gave me this 10-page document of forms that had to be filled out to -- if somebody was trying to purchase a home. and i would like to ask unanimous consent that these be submitted for the record. >> without objection. >> they must be selling houses to first graders. with all of the different things that have to be given to the purchaser. is committedcfpb to reducing paperwork, but it failed to reduce paperwork. it must be mindful not to increase regulatory burdens on community banks and credit unions. the cfpb must make sure that consumers and businesses get the benefits of streamlined disclosures. finally, i have serious concerns that the cfpb will use its unchecked authority to create a back door plain vanilla products. cfpb must not steered borrowers to certain approved products. if a person is responsible enough to buy a house, they must be responsible enough to decide which mortgage works best for them and not the one that the government tells them is best for them. i yield back. >> thank you. i would like to recognize mr. scott for two minutes for an opening statement. >> thank you very much. let me just say how important this hearing is because of the timing is of it. i was one of the co-sponsors that created the cfpb through dodd-frank and was proud to do so. what we have to ask ourselves at this time is what is in the best interest of the consumer and our financial institutions. and the cfpb is designed at this time to do both. but most important right now, i think we have to look at the plight that the consumer is in. we started this about two years ago. and the plight of the consumer is in a worse situation today than even then. we have staggering unemployment and joblessness in my state of georges is a 10.2%. in many parts of my district, it is 15%. you combine that with the loss of mortgages. never have we needed a more significant time then to offer the consumer what the cfpb has to offer, to give them the education that is needed, to give them the protective armor that they need as they go and they battled these twin hurricanes that are hitting them simultaneously -- loss of jobs and their homes. in the midst of this, you still have credit terms about their -- creditors out there that are willing to take advantage of this double whammy the consumer is in. no, in no, we are arguing here, but as the old saying goes, while we are arguing rome is burning. consumers often look at us up here trading back and forth, back and forth. we have the cfpb. it is in place. it is an excellent foundation. is it perfect? what is perfect? but it is certainly the best vehicle to go about what we need to do at this time, to do the essential good of providing our consumers with the information and the protections that they need to be able to deal in this whirlwind of the economic downturn that they find themselves in. thank you. >> thank you. i would like to recognize mr. luftmayerr. . >> i believe it is important that congress examine the cfpb at every opportunity, given that there is no oversight. that concern that authorities are given it to the cfpb are too broad. the cfpb will change the way the private sector will offer financial products to consumers. before the july 21 transfer date, the cfpb examiners were participating in examinations and collecting information. they have undertaken major role making's that will change the with the private sector operates. we understand the regulations are meant to protect consumers. in a faster years, we have seen numerous examples of overly burdensome regulations that will hurt consumers. in some ways, we are missing the goal of consumer protection. in doing so, we are compromising the safety and soundness of our financial institution. people in the industry are very apprehensive about the cfpb. from the rules proposed, it gives us all pause -- cause for great concern. i thank mr. date for testifying today. i appreciate he has requested feedback from the private sector. i encourage him to continue to engage with the industry and consumer groups. i yield back the balance of my time. >> thank you. i would like to recognize mr. canseco for an opening statement. >> thank you. the 2300 page dodd-frank rhett legislation created the consumer financial protection bureau, an incredibly powerful agency given sweeping powers to carry out as well intended mission of consumer protection. like many other members of the financial services committee, i of serious concerns with the cfpb. nonetheless, it is the law of the land. as members of congress, we have a duty to ensure the new agency is operating correctly. the cfpb reach the milestone earlier this year when on july 21, it stood up and officially acquired consumer protection rules and authorities from seven other agencies. given the best mandate and power of the cfpb, the decision it makes it will have an enormous impact on our nation's financial institutions and the consumers they serve as well as our economy. and i look forward hearing from mr. date. and i thank madam chair for holding this important hearing. >> that concludes our opening statement. i would like to introduce our witness for the purpose of giving a five minute opening statement. mr. raj date, the special adviser for the consumer financial protection bureau. welcome, mr. date. >> thank you. >> pull it close to you. i know how fast you talk >> get ready. thank you. chairman bachus, ranking member frank. i am eager to testify about the consumer federal protection bureau. i serve as the special advisor to the secretary of the treasury. we're our mission is to help consumer financial markets work by making rules were affected, by consistently and fairly and forcing those rules and by empowering consumers to take more control over their economic lives. before the dodd-frank act responsibility for administering and enforcing the various federal laws was scattered across seven agencies. but not one of those agencies was solely focused on consumer financial protection. the cfpb is the first agency whose mission is making sure consumer financial markets work for american families. and our first 100 days, we have been hard at work to promote a consumer financial markets or consumers know what they are getting into, where firms follow the rules, and more specific populations are empowered and protected. the bureau is creating more transparent financial markets starting with mortgages and student loans. with our know before you owe we are creating a single, shorter and more useful mortgage disclosure form to replace two documents that congress asked us to combine. our work in this area will not only reduce the regulatory burden but will make the cost and risk of alone more clear and allow consumers to comparison shop for the best loan. before we began the regulatory process, we displayed as prototype forms on our website. and we invited comments from the public, from industry, participants, and market experts. we conducted five rounds of testing, and we receive more than 22,000 comments to date. just last week, we announced another initiative, this time on student loans. we partnered with the department of education to develop a draft one page financial aid shopping sheet that would improve the way schools communicate loan and retain information to students. the bureau is also working to create a market where firms follow the rules. one thing made clear in dodd- frank was that the bureau is to make mortgage markets work for all consumers irrespective of the charter the business happens to fall under. to this end, we released our supervision and examination menu. our examination procedures for mortgage servicing as well. both of those documents are meant to provide direction to our examiners on how to determine providers of financial services are following the law. we welcome feedback. over the coming months, we will release more guys like these that explain examination procedures for different projects and lines of business. we have been hard at work building up the bureau to protect and and power specific groups of consumers. dodd-frank direct the bureau to create offices and positions focus on the needs of service members, seniors, and students. our office of service member affairs has been travelling across the country hearing from service members about the unique challenges they face. with that on the ground information, holly petraeus has brought attention to aggressive marketing. she brought attention to the difficulties of service members who are under water but not delinquent on their mortgages and receive military orders to move. we recently brought on skip humphrey to have our office of older americans. that office will help seniors navigate financial challenges by educating them about their options in areas like long-term savings and planning for retirement and long-term care. the beer will work with senior groups, financial institutions, law enforcement, and other federal and state agencies to identify and prevent scams targeting seniors. we also recently named a private education loan ombudsman. the bureau will work with the department of education to receive an attempt to resolve complaints of borrowers for private student loans. in july, the department of education will provide a report on protestant long complained to congress. at the same time, we are working with several other physicians like the head of our office of minority and women inclusion. finally, and most importantly, the cfpb will tackle our mission knowing that we are singularly accountable for it. consumer protection and financial services is a hard job. and by enacting dodd-frank, congress recognize that if you do not make someone sing other responsible for our hard job, you cannot expect it to get done well. you can count on us to make sure that consumer financial markets actually work for families, for the firms that serve them and for the economy as a whole. thank you for this opportunity. i look forward to your questions. >> we will start the question portion, and i begin with the first question. you mentioned at the end of your statement about your agency been singularly responsible for consumer protection. in the dodd-frank bill section 1064 requires that the provincial regulators -- prudential regulators cede that authority to the cfpb. in talking with you and others, it seems as though the provincial regulators have held on to consumer protection staff and responsibilities. so are you really singularly responsible ? and what are you doing to make sure that those silos that mrs. warren talked about are still not erected as serve as barriers? >> in very important ways that authority has been consolidated from the seven different agencies. for example, we have rulemaking authority across the federal consumer laws that transferred to us on july 21. you point out an important point, our supervisory authority extends only to those of banks and credit unions with more than $10 billion in assets. so that translates to about 100 of the largest banks and credit unions. there are 15,000 depositories in the country. so supervision authority with respect to those, everyone else, remains with the provincial regulators. that is important for us and at least two ways. one is to make sure that we are coordinated with the other regulators. to me, that is common sense. but also it means that we lacked the critical feedback loop between community banks and the policy apparatus. we have to make sure that we get out in the field and we talk to community banks and credit unions about issues they are sitting on the ground. >> let me follow up. because we were just in wisconsin. we have been in georgia. i live in west virginia. as you know, there is a great concern of most small financial institutions. you said you are going to have -- if i'm interpreting correctly -- you have the real maker and authority but you do not have the supervisory role over these institutions. so the carve out does not exist. there is a lot of banks to out there. even though, even though you have been out talking with them. there is still a lot of angst as to what kind of role the cfpb will be playing over the institutions we know were not the ones doing the subprime loans. and there is a lot. and these institutions are hiring new compliance officers because they are not sure where they are going to fall in this spectrum of authority, including your agencies. what do you say to that? >> it is certain to the community bankers are not subject to a different set of roles as the rest of the market place. community bankers are not looking for a special hand up. community bankers are looking for everybody to play by the same rules. in other words, if i run a small bank in time in the business of providing automobile finance, it does not feel fair oftentimes that someone who is a financial company, not a depository, is not subject to supervision on the laws i am subject to supervision on. to my mind, that is a fair complaint. one of the beauties -- >> i only have the consent -- the concern and i share this concern is that small institutions are face-to-face with the consumer every single day. they know their families, they know their backgrounds, they know their businesses. they are able to make some, on the face of it, kind of calls. their concern is that flexibility, because it could be a one size fits all consumer financial products that will exclude them from being able to offer that to their customer. but at the same time, i think what they are worried about is their margins are so thin they do not have -- if that have to hire at 3 compliance officers to make sure they are complying with a lot of the things they comply with any way, that takes money out of their ability to loan to a small business, to make car student loans. and this is a the concern we are hearing, especially with the downturn of the economy. high unemployment. the jobs that are being created art even said in a study of the bureau of labor statistics that increasing financial regulations will spur employment growth of financial examiners and compliance officers -- let me get my glasses -- by 31% over 10 years. i think that is what is happening in wisconsin and west virginia. that is a source of concern. my time is up. i am going to ask the ranking member -- five minutes for questions. thank you. >> thank you. mr. date, do you think that there is anyone out there in the consumer finance world that has studied the regulatory structure of the last decade and thinks that works. let's keep doing that. >> well, congresswoman, i know a great many people within business. i have yet to find a person who says, yes, what we were doing it seems to work. let's stick to that. the status quo to any reasonable person is untenable. > and then why o ddo you think there is still such resistance to the creation of a bureau that is so clearly needed, and everyone says they want to protect consumers but we have a beer that is doing just that, as a prime responsibility in focus? why is there still such resistance? >> my sense is that there it -- talk is cheap. when it comes time that the bureau talks about how it is we are focused on making regulation more effective, how in the case of the mortgage disclosure forms we are trying to make things cheaper to comply with and simpler for management teams at the same time it is more effective for consumers. when we talk about that, well, sometimes people are skeptical because they have heard thing that sounds like that before. for me, i view it this way. at some level, if you do not believe what we say, look what we do. because that which we have done is very much in the spirit of reducing burdens. >> you have been reducing the burden and making the financial markets work better and the economy improved. in addition to helping our consumers. i really would like to ask the question of whose side do you think the opponents of the cfpb are on? we know from your testimony and reports that holly petraeus a jumped right in defending service members. our men and women serving overseas were being evicted, foreclosed. this side are they on when they say they do not want a cfpb or such an outstanding advocates to help our men and women in services? whose side you think they are on when they are not supporting the work of the bureau to protect our seniors? and i must say i was very pleased to see the support of the business community for your efforts on the student loans. so who's side are they on when they are objecting and fighting what you are obviously doing to help our seniors, are members of the military, and now our students? >> congresswoman, of course i would not speculate on anything like that. all i know is that congress has given us the authority to make this market better and make sure that somebody is on the side of american families in this very important marketplace. we have the tools. we have a team that we have assembled that is smart, because we are dealing with tough problems -- energetic because we work very hard. that has cut because it takes guts to stand up for ordinary people. it is a sacrifice where they work for the public good. >> i have been told that i cannot place into the record editorials in support of the cfpb at this hearing. i hope many of my colleagues on the panel will join me on the floor for a special order tonight where we can read editorials and support. >> if i can interrupt, if you can ask for unanimous consent. i do not recall -- i am chairman. i do not know. >> i was told he could not put them in. let's put into the record a statement from the consumer federation of america that outlines all of the areas that there is oversight of the cfpb. >> without objection. >> mr. date, in your own finances, would you like to put the protection of your assets and your finances in a committee to decide how to handle your finances? or would you like to have one person like mr. kodray whose in charge, who has to respond to congress, the present, and consumers? would you put your finances -- i would not. i do not think other members of the panel would. could you comment on that? >> congresswoman, i have been a regulator for 102 days, so most of my career has been spent in the private sector, investing shareholder money and my money over time, and i will confess i typically look for management teams that are headed by a person who knows they are on the hook so that you know who to credit and who to blame so that you know who to help or who to try to influence. somebody has to be on the hook for hard jobs. >> my time is expired. thank you for your 102 days of service. >> in terms of the mortgage firm -- for, i would welcome all one page or to pay to workers form, having just refinanced our house. we know the other 50 pages will still be there. and i think that in order to -- i am not being critical so much of the way you are stating it to say, one page on top of the 50 pages you will still have to. >> his time is this coming out of? >> i am the chairwoman. i took 30 seconds, because was modeling after you. >> no, i always ask for unanimous -- >> unanimous consent. previous, post-unanimous consent, i recognize the chairman of the full committee for five minutes. >> thank you. congressman gutierrez said he hoped you would get approved by the senate, but now you have not even been nominated. i think he was talking about richard corduroy. >> yes. >> you were the number 2 person at the agency. do you know why you were not nominated? >> mr. chairman, i would not presume to have any opinions about something that is solely in the discretion of the president of the united states. >> ok. let me ask you this -- the commission form? do you see an advantage to a bipartisan commission as opposed to a single director? >> my perspective on governance of the bureau is that it seemed to meet very much as an outsider at the time that the congress the liberated and debated various different governments mechanisms, various means by which to provide accountability and leadership in its important task and came to a conclusion. and my job as the special adviser to the secretary is to take that structure and make it work and make it work in every dimension. and that is what i am doing. >> but could you do that under a commission? >> as i mentioned today congresswoman a moment ago, it has been my experience -- and i have been mostly on the private sector side of this business -- if you want something hard done, you should have someone sing love your accountable. that is the experience. i would not presume to tell the congress what to do. >> the term abusive, that is a new term and consumer protection as far as financial products. how would you define that? if it is unfair, if it is not unfair or deceptive according to you, could still be abusive? could you give me some examples? >> in the way, the advantage that we all have is that the congress set out the definition for peace in the statute. it seems to me to be one that makes sense and one that over time we will be able to a value against actual fact patterns that we see in the marketplace. one of our commitments at the bureau is to make sure that which we do is evidence based and precipitation -- it is a tory and transparent. and the evidence based part of that means nothing if we prejudge facts before we see them. but i look forward to being able -- >> let's say you go in and you start an enforcement action, will there be a regulation or a guideline that someone will have violated before they are found to have committed abuse? >> well, the statute provides contours' for the terms of use of, among our other responsibilities. >> so the statute defines abusive? >> yes, the statute defines abuse. >> do you know with that definition is? >> there are two prongs. one has to do with -- i'll paraphrase. materially interfering with the consumer's ability to understand something that goes back to what i was saying earlier about substance the transparency. the market works of consumers and providers -- >> if they don't understand, it could be abusive because they did not understand it? >> the words relate to a provider materially interfering with the consumer's ability to understand. and that is one prong. >> what's the other prong? >> the other prong is about -- and again, these are my paraphrases. it talks about unreasonably taking advantage of consumer lack of understanding. there are various sub-prongs within that definition. hopefully i have been giving some credit to that in my paraphrase. >> you keep getting back to that term that the consumer does not understand. would a financial institution be liable if the consumer simply did not understand the agreement, if it was not unfair or deceptive? >> what i think the experience of the past painful few years is that it is in financial institutions interest to have consumers to understand what they are getting into. when we look at the explosion in the most troubling credit performance in mortgages in the u.s., it is quite disproportionately those structures that realistically consumers at the time, not an retrospective, but even at that time probably had difficulty appreciating. >> i understand that. do you determine that on a case by case basis? >> the gentleman has the time is expired. questions for mr. frank, five minutes? >> thank you. thank you for being clear that the gentleman from new york was able to put that into the record. i said before that i thought it was interesting we were having an oversight hearing to denounce the lack of oversight. i misspoke. this is the second oversight hearing we have had this week to denounce the lack of oversight, because there was a field hearing. i look forward to many more hearings in which we denounce the lack of oversight, where we are overseeing this agency. i am also struck a ban by the fact that two of my colleagues have. to have heard of the comptroller of the currencies. individual appointee, independent of any other check and self financed. it is only when consumers are the beneficiary of that independence that it upsets some of my colleagues. then i should also have the procedure -- is hearing comes two days too late. it should have been hollow ring. we have conjured up a series of spooks and ghosts and goblins -- it should of been on halloween. my colleague from georgia said that this will be a backdoor way for them to do a plain vanilla products. in fact, the ability of this agency's to order a financial institutions to produce a plain vanilla product was proposed by the obama administration and explicitly rejected. there is no such power. that was a conscious decision by this committee. they are talking about banning. there will not be a lot of things band. as a matter of fact, the model we have -- bank of america. the model of this agency assumes the competitive nature of the american financial systems, because most of what they will do will be to give the people information. there is no use getting information if it -- unless you have options. the credit-card bill, which we passed, did not set rate limits. one of my colleagues wanted to put rate numbers. you cannot retroactively raised the interest rate on people. they should have the benefit of the bargain they made at that time. you have to give them notice of any future rate increase. the notice of a future rate increase would not do any good if he did not have options. i stress again that that is essential our model. as to abusive, let me say to the gentleman from alabama, no. the fact the consumer cannot understand is not in itself the reason to be abusive. an abuser can ford and the gentleman from texas and i had a colloquy about that. it was unfair and deceptive to have a history. we did define abuse it. there are things that could be on a fair nor deceptive that could be abusive. it is not just that the consumer did not understand it, but there were two categories. first of all, not quite deceptive, but framed in a way that made it hard for the consumer to understand and it was not the consumer's fall. materially interferes with the ability of the consumer to understand the term. secondly, it says that you should not take unreasonable advantage of lack of understanding. is it case by case? yes. there are more good products that are suitable for some people and not suitable for an 89-year-old woman who has never had her own experience and economic affairs. there are things that are reasonable for some people and not others. we make that distinction. we are about to pass legislation today that says you can offer to qualified investors but you cannot offer them to on qualified investors. what makes you qualified investor? apparently if you have $1 million. that is less of a guarantee of wisdom than people seem to think. but this distinction, and the products offered by financial communities would be subject to different roles depending on the personality of the individual is already in law. we do say, yes, particularly in the mortgage areas. let me ask a couple of quick questions. you have moved in the bureau to deal with the congressional problem of a split between the real a state settlement procedure act and truth in lending. talk briefly about what you did there and what the reaction was in the lending community. >> sure. >> again, and at the disclosure forms associated with the truth in lending act are actually quite similar in content but almost confusingly similar, but they are separate requirements to date before dodd-frank. we have the mandate before congress to be able to figure out how to combine that into a single document, one that therefore will not be confusingly similar and therefore, less confusing. >> what is the process? where are you in that process? >> we have taken what i believe to be a unique approach in terms of really developing, before proposing a rule, a prototype in getting public feedback. >> what is the feedback you have gotten from the lending community so far? >> it has been quite helpful. >> my time is up. the gentleman of georgia mentioned in the forms. the one case where you have done anything about forms, you are in the process of consolidating two different forms. my feedback from the lending community is they are quite happy with it. >> your time is expired. >> thank you for being here. the cfpb has taken over responsibility for the secure and fair enforcement for workers licensee, including determining whether state laws are consistent with safe. you have been asked to provide it views as to whether traditional licensing would be acceptable. such a proposal will allow state regulators to hire and put to work well qualified, experienced, registered loan originators employed by institutions or by out of state lenders while they compete - - - complete state education and testing for melodies. this is an important issue for many state regulators. i understand there is a legal opinion that found it within the state's authority to enact transitional licensing provisions. when does the cfpb expected to provide its views on this important issue? >>. thank you. this is not the first time i heard of the issue. it has been forced in a number of different ways. it is one of these issues that touches on all lots of the things that are core to the structure. the competitiveness on an even playing field between depositories and non- depositories, the mobility and a lack there of of talent from one kind of institution to be another, the efficiency of front-line sales staff. complicated financial products have to be explained and sold by someone. so they are all very important issues in a very important market that appeared to be dysfunctional for some period of time. we will take seriously the issues that were raised and the team is aware of it. >> ok. thank you. you stated many times that the cfpb will be making decisions based on data. we both know the data can be manipulated in favor of a point of view. what quality control measures are you putting in place to ensure that the data collected is done so objective way and that the subsequent decisions made based on that data are also done in an objective manner? >> it is a great question, because it gets not just to the commitment to be able to use fact based analytics to inform policy, but the process by which your hardware that into the decision making of the bureau. we approached it to structural means and to process means. by structural i mean, there is a single person who is the assistant director for research, markets, and regulations whose job it is to integrate the points of view generated by empirical research, by market-based pragmatism -- understanding how money is made in the marketplace -- and by technical, legal, regulatory expertise. a single person is responsible. that integrative point of view in which different views can and should be aired its core to the structure of what we are doing there is a government process of by which internally, even before the various right minded administrative procedures we have to undertake to publish a rule, before those kick in we have decisionmaking processes to make sure they are sensible, fact is, pragmatic, and effective. -- and fact-based. >> in your testimony, you said that the bureau has a unique opportunity to streamline and simplify the rules. you also indicated your beliefs in manuals and guidance already. my question is -- and i am hearing is already -- that there is a lot of duplication. . . >> michael mckee with bloomberg television. many americans wonder what the fed has actually accomplished with its monetary policy actions since about qe2. fed officials like to talk about the effect they've had on interest rates but the economy seems insensitive to interest rates these days. can you explain what you have managed to accomplish? can you tell us whether you feel your mandate requires you to do anything you can think of on an ongoing basis until some targets are met? and can you explain to the average american why you're doing what you're doing? and do you think that you risk credibility if the average american doesn't see some sort of improvement in the economy? >> no, it's a fair question. i would first say that our monetary policy is having effects on the economy and we've talked about the effects on asset prices but we have continued to analyze the effects of changes in interest rates for example on decisions like investment or car purchases. one area where monetary policy has been blunted, the effects have been blunted, has been the mortgage market where very tight credit standards have prevented many people from purchasing or refinancing their homes and therefore the low mortgage rates that we've achieved have not been as effective as we had hoped. so, monetary policy maybe is somewhat less powerful in the current context than it has been in the past but nevertheless it is affecting economic growth and job creation. if you ask about the accomplishments, i would first of all mention a very important one which is that we have kept inflation close to 2% on average, which both has avoided the problems of high inflation but also very importantly has avoided the risk of deflation. and we have seen in other countries, in other contexts that deflation can be a very pernicious problem and very youicult to get out of once are there. have been able to achieve on average stable prices. with respect to growth, i think that our policies including the cutting rates to zero in december 2008 and the, the first round of -- of asset purchases in the fall of 2008 and in the spring of 2009 were very important for helping to explain why the economy stopped contracting and began to grow again in the middle of 2009. i think there's a lot of evidence that that did promote growth and job creation. i would argue that we've also been successful with some of the later actions that we've taken, although it's early to say for things like the maturity extension program. but we always face the problem of asking the question of -- where we would be without these policies? and our best estimates are that absent the support of monetary policy that the economy would be in a much deeper ditch and that unemployment would be much higher than it is. that being said, you know, again people rightly recognize that we have not yet gotten the economy back to where we want it to be and their dissatisfaction is perfectly understandable. yes, i do think that with, you know, that we do need to do whatever we can to move the economy towards price stability and maximum employment. we'll continue to do that so long as the tools that we have are efficacious and that they don't have costs or risks or negative side effects that are worse than the benefits, we'll always be making that evaluation. >> greg ip with the economist. in response to pedro's question you said you would consider more mbs purchases when the conditions were appropriate. could you elaborate on what conditions would be appropriate to do additional large-scale asset purchases -- what your reaction function is right now? >> well, i don't think i can be as precise as you would -- you would like. i -- the mbs purchases and treasury securities purchases are one set of tools that we have. the other set of tools that we have are communication tools, which essentially tie interest rate decisions to economic conditions or to time. conditions or to time. those are with interest rates close to zero, those are basically the two tools that we have and we need to continue to work on how best to use them and what combination to use them to achieve our objectives. in terms of when we would use these, i think all i can say is that the committee will have to look at the outlook and if it judges that we are falling sufficiently far short of our objectives in terms of inflation, falling at or below its target and growth being insufficient and that we believe that monetary stimulus would be beneficial, you know, then the committee obviously would try to take corrective action. at i can't, you know, it's committee decision, we'll have to look at the outlook. but we remain prepared to take action as appropriate to make sure the recovery continues, to make sure that we have stable prices in the u.s. prices in the u.s. >> josh zumbrun from bloomberg. your colleague daniel tarullo phrased this as, "further action would be required in the absence of favorable developments." does that mean that looking at the forecast table as we have here today, that if we don't see improvement from what's in those tables that further action would be required? myagain, i can't speak for colleagues on the committee. i will say that, that forecast we have is satisfactory in one dimension in the sense that inflation remains low and stable but it is very unsatisfactory in terms of the rate of growth of the economy, the rate in which unemployment comes down. so i think the judgment we're going to have to make is -- do the tools we have, are those tools likely to be sufficiently effective? or do they bear costs and risks that would make them less effective or not worth using? so that's a judgment we're going to have to continue to make. we're going to have to continue to evaluate the outlook. but again, i really can't speak for my colleagues until we have looked at the entire array of data and made a decision about that. >> john berry, fiscal times, in the european debt deal that, may or may not come to pass, it's been said that the banks operating there, the big banks, have all agreed that a 9% tier one capital ratio is appropriate. a lot of u.s. banks have been arguing that they can't afford to do that, it will reduce lending but it would also put them at a competitive disadvantage internationally. with that happening in europe, do you think it's appropriate that the big banks in the u.s. should accept such a tier one capital requirement and how does that development stand at this point? >> well, we are committed to, and are in the process of, implementing basel iii which has a basic requirement including a buffer of 7% and then additional surcharges for the largest institutions. we think that's an appropriate framework. i'm not sure that the 9% that europeans are talking about is really comparable to this -- to the capital requirements that we are imposing or will be imposing on u.s. banks. for example the composition of their capital is not as far as i understand purely common equity. i do not know what risk weights are being applied to the assets. so there's a number of questions of comparability. my expectation and hope is that over the medium-term that the europeans who agreed to the basel iii conditions will ensure that their banks meet the basel iii standards over time. phasedse, that's being in over a number of years as so it's not to jeopardize in any way the recovery. but over the remainder of this decade, we anticipate implementing all of the key elements of basel iii in the united states. united states. >> luca dileo with dow jones. mr. chairman, you've partly addressed this but it's something i still fail to understand, given that your forecast is still so gloomy for employment through 2014 given that, you're not worried about inflation and given that you said that mbs is a viable option. why not act today? >> so as you point out our forecast is not a very satisfactory one in a sense that unemployment is very high and growth is very slow. we have taken a lot of actions, let me be very clear that the federal reserve's monetary policy is highly accommodative now. we brought rates close to zero. we have done $2 trillion worth of asset purchases. we have made commitments about rates. we've extended the maturity of our portfolio. so we have taken a lot of steps, including steps at the last two meetings, so we are being very aggressive in providing monetary accommodation. i was asked before about conditions for further accommodation. well, we are prepared to do that and we will continue to observe, you know, how the economy evolves. you know what we have is a projection and there is a lot of uncertainty there. and so it will be very important to see, you know, what actually happens in terms of financial market conditions and economic growth. so, but we are prepared to take further action. we've already taken quite a bit of action but we're prepared to do more and we have the tools to do more if that's appropriate. again, while i do not shirk the responsibility of the fed having to do what it can to meet its mandate, obviously a broad range of policies can affect growth and employment and i hope that there will be a range of actions that will complement and supplement the federal reserve's efforts. >> hi, jim puzzanghera from the la times, you mentioned before the streak of bad luck that struck the economy earlier this year. with the latest developments in europe this week where the debt deal seemingly was done and now the rug was pulled out, are you getting the sense that this economy just can't catch a break? and how would you advise average americans to deal with these continued shocks to the economy and to the financial markets? >> well, i don't want to make excuses. again, we did overestimate the pace of recovery for some fundamental reasons having to do with, as i mentioned, the time taken to achieve financial repair, the state of the housing market, and so on. but that being said as i indicated earlier, there has been a certain amount of bad luck and i think the volatility in financial markets associated with the european situation has been along with volatility associated with the u.s. fiscal conditions has been a drag on recovery. i think it's part of the reason why the second half of 2011 was less strong than we anticipated when i was here at the last press conference in june. so there has been that concern. americans'g up in confidence and sentiment. you can see that right now consumer confidence is about where it was in the depths of recession, that's very discouraging. to some extent at least it will be a drag on consumer's willingness to spend and to invest. my best advice to americans is to -- is to continue to live your lives though and to continue to think about your personal situation and try to make smart decisions based on your own financial position. clearly, americans are trying to improve their balance sheets. they're trying to pay down debt. that's of course important. that's of course important. same time, you want to make smart decisions, you want to make good investments, you want to budget properly. so financial literacy is a big part of this and lack of financial literacy was one of the things that got us into this mess in the first place. so i would advise people to try to be smart about their finances. unfortunately, we can't disassociate ourselves from europe, the things that are happening there do effect us and that's an unfortunate fact. i hope very much that europeans will find a set of solutions that will allow markets to calm down and take off some of the headwinds from the u.s. economy. >> robin harding from the financial times. mr. chairman, could you explain the menu of options that the committee has for improving its communication about when it might raise interest rates and what the conditions are in which it might do that. for example, might it make sense for the fed to publish a forecast of its own future interest rates and what are the advantages and disadvantages of that? thank you. >> well again, as i noted in my opening remarks, no decisions have been made so i want to be very clear that no final, you know, there is no final outcome here in this discussion. but clearly there's a range of things that we can do. we can provide more information about our objectives. for example, we can provide information about where we want inflation to be in the long- term, for example. we can also provide information about the future path of interest rates, which we've done to some extent via our mid- 2013 language in the statement. an alternative approach, which charlie evans and others have suggested, is to tie that to economic conditions and to provide more information about under what circumstances we would raise rates. that is certainly something that we have discussed, and i think it's an interesting alternative. there's a lot of interest in using the survey of economic projections in constructive ways as we have up 'til now to provide information to the public about our plans. and in particular, using the sep as a way of giving information about our future policy decisions is something that's on the table. there's no decision made about that but that's -- that's one direction that we might -- we might find productive. >> michelle fleury, bbc news. you mentioned obviously that europe and what's happening there has an impact here on the u.s. economy. to what degree can the fed do little more than react to events abroad? >> well, it is a bit frustrating. obviously, the key decisionmakers in europe are the european leaders and -- and economic policymakers there and ultimately it's their responsibility to find solutions to this very difficult problem. of course, i and treasury secretary, and other economic policymakers in united states do confer and meet with european policymakers on a regular basis and we give our advice for what it's worth, sometime they take it, sometimes they don't. but obviously they're the ones who have to make those decisions. so what we can do really is to -- only a couple of things, so one is that we can look at our own financial institutions and try to assess the exposures and the linkages between our institutions and those in europe and the sovereign debt in europe and we've been doing that on consistent basis. we've looked also, of course, with other regulators at money market mutual funds and other types of financial institutions that have connections to europe. so that's one thing that we can do. and the other thing that we can do is stand ready if necessary to provide whatever support, the broader economy needs and the financial system needs, should things worsen. i mean we -- we are hopeful that -- the latest measures vigorously implemented will indeed ultimately reduced these stresses, but in the case that things do get worse both monetary policy and our policies of lender of last resort are available to insulate the u.s. economy from -- from the effects. the effects. >> hi, katherine lewis for bankrate.com. can you talk about what impact you've seen from operation twist on longer-term cd rates and investment grade bond yields? and do you have any message for people who are relying on those kinds of instruments for income? >> sure. it's little bit early to fully assess the effects of what we call the maturity extension program. but it does seem to be -- it does seem to be having at least, in a preliminary sense, it does seem to be having the intended effect of lowering longer-term interest rates or and -- and twisting the yield curve as was anticipated. that in turn should lead to still-lower mortgage rates and other interest rates which are relevant to the economy. we are quite aware that very low interest rates, particularly for a protracted period do have costs for a lot of people. they have costs for savers. we have complaints from banks that complain that their net interest margins are affected by low interest rates. pension funds will be affected if that -- if low interest rates for a protracted period required them to make larger contributions. so we are aware of those concerns and we take them very seriously. i think the responses is though that there is a greater good here which is the health and recovery of the u.s. economy and for that purpose, we've been keeping monetary policy conditions accommodative trying to support the recovery, trying to support job creation. after all, savers are not going to get very good returns in an economy which is in a deep recession. and ultimately, if you want to earn money in your investments, you have to invest in an economy which is growing. and so, we believe that our policy will ultimately benefit not just workers and firms and households in general but will benefit savers as well as the returns that they can earn on their investments will improve with the improvement in the economy. >> darren gersh, nightly business report. given how hard it has been to bring down unemployment in the past, why are you confident you have the tools to bring it down in the future? >> well, we have the ability to provide more stimulus and accommodation. we believe that a good bit of the unemployment that we are seeing is what economists would call cyclical unemployment, that is unemployment arising because of inadequate demand in the economy. if that's the case, then a monetary policy by lowering interest rates making financial conditions more accommodative should stimulate demand, should stimulate spending and over a period of time that will help bring down cyclical unemployment. that is something that we know from a lot of experience and although it's been a very slow process here, there's no reason to think that the same basic effect will not work in this case as well. now, it's also possible that part of the increase in unemployment reflects so-called structural factors and mismatches between worker skills and job opportunities, loss of skills, geographical mismatch, et cetera, and to the extent that that's the case, then monetary policy is much less effective because only in -- in that case only other kinds of labor market policies really can make progress against that type of unemployment. but again, i do think that a considerable part of the unemployment we are seeing is cyclical and is thus amenable to monetary policy. final comment, cyclical unemployment left untreated, so to speak, for a long time can become structural unemployment as people lose skills, as they lose attachment to the labor force, as their -- as their work networks dry up and so on. so in that respect, it's important for us to -- to try to address the unemployment problem in a sense while it's still amenable to monetary policy. policy. >> braimoh odion-esene, market news international. you mentioned that the fed has the tools and stands ready to use it. but given that in the statement that says that the committee saw growth strengthened somewhat in the third quarter, is it fair to say that fomc is less aggressively considering more policy accommodation given the improvement they saw in the third quarter. >> we did see some improvement in the third quarter, a modest improvement. we saw, for example, stronger consumption spending, a reasonable amount of capital investment, lower inventories, therefore suggesting more production in the fourth quarter, so it looks like the fourth quarter as well will be a moderate growth quarter. so, there was some improvement -- some improvement at least early in the period in financial markets although some of that has been reversed. so that was part of the situation that we were acknowledging in our statement that's -- that's true, but as has been noted, the medium-term outlook relative to our june projections has been downgraded and the -- the outlook remains unsatisfactory over the next few years and we'll continue to ask ourselves whether or not additional stimulus or additional actions can provide a better outcome and that's certainly something that is -- remains on the table and we'll continue to evaluate as we go forward. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> today, steny hoyer on the deficit-reduction plans. the president's weekly address is delivered by vice-president biden. speaking from the university of pittsburgh, he comments on fridays report and the refusal of congress to pass the president's jobs plan. jobs are also the focus of the republican address from scott brown. he talks about a bill that would repeal the 3% withholding mandate on federal contractors. >> hi, this is joe biden. i'm speaking to you from the university of pittsburgh, where i just spoke to students here about what we've done to help ease the burden on them when it comes to the rising cost of tuition and the accumulating student debt and what we're going to do to help create jobs when they graduate. today we found out we've had the 20th month in a row where we've increased private sector jobs -- 104,000 this month, 104,000 private sector jobs. and as all you know, that's not nearly enough. we have to increase the pace. we have to act now to do everything in our power to keep this economy moving and to grow jobs. president obama is on his way back from france where he just met with the leaders of the 20 largest economies in the world, where he urged our european friends to step up and stabilize their own economies because if they fail, it will affect the whole world. too many americans are still struggling. too many college students here at the university of pittsburgh and elsewhere are worrying about the rising cost of their tuition, and the increasing accumulation of debt. and too many of their parents are in stagnant jobs or out of work, wondering if they're going to be able to send their child back to college next semester. my dad used to have a saying. he said, a job is about a lot more than a paycheck. it's about dignity. it's about respect. and too many americans have been stripped of their dignity through no fault of their own. so we can't wait to help them. the president and i believe we have to act now. that's why we've introduced the jobs bill which independent validators said would create 2 million new jobs. although 51 senators voted for that jobs bill, our republican colleagues in the senate used a procedural requirement that requires it to have 60 votes, so it failed. and since then we've taken every important piece of the jobs bill and demanded that we have a separate vote. but our republican colleagues in the senate have voted unanimously to vote down each and every part so far -- to restore 400,000 jobs for teachers, police officers, firefighters, putting them back in classrooms, on the streets and in the fire houses. and then on thursday, they unanimously voted down the second part of our program -- to rebuild our crumbling roads and bridges, which would have created more than 400,000 good- paying jobs. these are all programs that the republicans in the past have supported, but once again, every republican voted no -- blocking the majority will to put these folks back to work. i think the assumption is that they're voting no because of the way we would pay for these jobs, and we do pay for them. we think everybody should pay their fair share, so that's why we put a small surtax on the first dollar after a person has already made $1 million. that seems fair to us, and it pays for the bill. it's a small price to pay to put hundreds of thousands of people back to work. so, look, we can't wait. we can't wait for the congress to start acting responsibly, and that's why the president has used his executive power to announce that hundreds of thousands of people will be able to refinance their homes from 6 percent interest rates to 4 percent, saving them an average of $2,000 a year. that's why the president announced that beginning next year, no student will have to pay back more than 10 percent of their discretionary income toward their student debt. he also announced new regulations regarding prescription drugs to prevent price gouging. and there's more to come. if the republican congress won't join us, we're going to continue to act on our own to make the changes that we can to bring relief to middle-class families and those aspiring to get in the middle class. look, it's simple -- we refuse to take no for an answer. we know these steps taken alone are not going to solve all of our problems, but they will make a difference in the lives of millions of american families struggling to hold on. and you know and i know if the republicans would just let the congress do its job, let it step up and meet its responsibilities, we could do so much more, and we could do it immediately. that's why the president and i need your help to tell your republican congressmen and senators to step up. tell them to stop worrying about their jobs and start worrying about yours because we're all in this together, and together is the way we're going to bring america back even stronger than it was before. thank you. thank you. >> hello, i'm united states senator scott brown. when the citizens of massachusetts sent me to the united states senate last year, they expected me to work with anyone in any party for the good of our country. and that's what i do each and every day. with millions of americans looking for jobs -- it's no mystery what our priority should be here in washington. we should be doing all that we can to help this economy start creating jobs again -- and we should be doing it right now. working to create jobs is one of those challenges that tests us here in congress. it shows us who we really serve -- the party leadership on capitol hill, or the people who elected us in the first place, and my attitude is, i answer to my conscience and to my constituents, period. that's my focus. and with the clock running down on 2011, focus is exactly what congress needs to revive our nation's economy. with the holidays approaching, listen -- this should be a happy time spent with families. but, unfortunately too many americans have spent months looking for a job and still can't find one. the reality is that we should make a difference here and now, with legislation that could be passed immediately. now i know this can happen, because both parties have already found some common ground in economic policy for example. just a few weeks ago, we passed free trade agreements with south korea, colombia, and panama. these agreements show what bipartisanship can accomplish. they were negotiated by president bush, passed by a republican house and a democratic senate, and signed into law by president obama. yes, it took us a lot longer than it should have, but after some give and take, we finally got it done. and just like that, we set in motion a big change that is going to create thousands of jobs in massachusetts and all across america. meanwhile, another bipartisan opportunity is staring us right in the face. in the face. it's a jobs bill i introduced back in january. and far from being just my idea, it's the only jobs bill on the table that has the support of senate, and also has been endorsed by the president. endorsed by the president. this bill would repeal the 3% withholding mandate -- it's a stealth tax that will hit small businesses and contractors starting in 2013. if this mandate is not repealed, then all levels of government will suddenly start withholding 3% of payments to contractors that provide any product or service to the government. now, all the mandate will do is, is take more money out of our economy at a time when quite frankly we can least afford it. and as a result, businesses will have less money to hire and pay new workers. the costs of enforcing this unfunded mandate will actually be higher than the revenue it raises by almost eight to one. now only in washington does this make sense -- listen, it's a job killer. here's where we stand right now on the bill. it was passed by the house last week with an overwhelming 405 votes. now it's come to the senate. so the decision pretty much rests with majority leader harry reid. are we going to do something for the american people, or are we going to let politics win out again? leader reid has come to me a few times and asked me to consider bills on their merits, and i'm always willing to do so. and now i'm asking the same of my colleague, the majority leader. this jobs bill comes at the right time, for the right reasons, and it deserves a prompt vote on the senate floor, without any gimmicks that will delay or jeopardize passage, so the president can sign it into law right away. listen, i'm a still fairly new to the senate, but i've been here long enough to have noticed something. one breakthrough has a way of leading to other breakthroughs. one show of good will has a way of spreading good will. this jobs bill, if we move it forward, can be followed by many more that can do even greater good. so hey, let's start here. let's get this economy creating jobs once again, and show that we can come together when it's needed most. in closing, we must remember we're americans first and we need to put our country's interests before partisan political interests. thank you very much. >> this is the formal part, and filling out the debt correlation of canada saying, which accounted it completes except for the signature. >> all it needs is a signature on there. i can do that. >> this is the filing fee of $1. >> you have got that. >> and now, you might want to leave that, we do this every four years. >> you have a great secretary of state. i've been here every clutch are years and we appreciate that new hampshire remains the first in the nation. it is a responsibility an honor which new hampshire will richly deserves. i am proud to be a part of the process and put my name on this paper, hoping this time it will take. i hope [laughter] to become the nominee of my party and hopefully the next president. >> if the new hampshire's president drew primary is set for january 10. you can follow campaign 2012 online at the c-span video library. click on a campaign 2012 tab. it is all three. the c-span video library -- it is washington your way. >> now debate between republican presidential candidates herman cain and newt gingrich on current economic and social issues facing the u.s. the texas patriot pac posts at the events. this is one hour and 20 minutes. >> what our audience would like -- explain what happens to medicare and our nothing and explains what happens if we implement the ryan plan? you agreed? if not, what is your alternative? >> is this on? can you hear me? the microphone is not on. that is a disadvantage. can i go back to three minutes? let me start with part of the promise. if we're stupid enough to do nothing, we will resemble greece. we will go bankrupt. it is not complicated. paul ryan has some good ideas. one of them is he would change medicare by going only for younger americans into a premium supports model. i favor as a choice the model. i do not favor a a mandatory model. my reason is simple. i want us to get back into a habit of giving the people a range of choices so that you are empowered, not the bureaucrats or politicians. if you believe in the free market, we should be able to design a series of choices or the marketplace and beats out the bureaucratic system and people go to it because it is better for them. not because they have been compelled. i also think that give you are dealing with something the size of medicare, you cannot course people. they will defeat you. the american people are not going to let people impose on them. we have said you're not going to oppose us. my argument is, we have to come up with solutions that are better. walmart does not want people to come here by force. it is their job to offer better value so people decide because they're getting a better deal. we have to approach how we reshape the country. the scale of change is so large. it will not take defeating so many entrenched elements of the laughter. we have to have a strategy that starts with the american people deciding that we represent a better future. in medicare and medicaid, you have to get to a better health system in order to get to an affordable system. we published a book of several years ago called stop paying the crux. you would think that is a title that people would have figured out was interesting. medicare and medicaid pays between 7100 $20 billion a year. think about that. i mean the dentist to files 982 procedures a day. the super committee is not looking at this. by itself, this would get them over half the savings they're trying to get. it requires thinking about a government. getting people in washington to think is a big challenge. [applause] >> at this particular juncture, i am supposed to have a minute to disagree with something he said but i doubt. -- don't. [applause] i don't. give me three minutes to add a historical perspective. we can change the rules as we go. [laughter] i remember talking about medicare when i woke first went to godfather's pizza. that was when i realized that the things we can control inside the company were a lot easier to control than the things outside the company in order to stay profitable. medicare started in 1965. our government told us it was going to cost $6 billion. we were also told that by 1990, it was going to cost $12 billion. because of population growth and inflation. in 1990, they missed the target of $12 billion. it was $109 billion. how many businesses can survive missing a target like that to? that highlights another problem we have which is long term projections about what a program is going to cost has never been right. [applause] that being said, i believe and this gingrich believes, we cannot reshuffle medicare or social security. we must restructure. the guiding principle all embedded in the plan that i love -- i like the ryan plan. i never found anything in it and i disagree with but here is a fundamental principle. if you want to solve a problem, and go to the source closest to the problem. it is not washington, d.c. " to the states, the doctors, the patients. that is what the plan attempts to do by allowing those accounts for younger workers as an option to read that is the guiding principle that i look for in any of these ideas. another thing we have learned, we're talking about it seriously. people spend other people's money more reckless than they spend their own. they will spend it better. that is what they have to do. according to the clock, i have nine seconds. politicians have over promised for decades. as has been pointed out, we are headed off of a cliff. >> my first executive decision is -- from now on take as much time as you want to answer questions. phil free to pose questions. a jobs. what to do about rising health- care costs? the cost of hospitals and services, x-rays, everything. they appeared to be going up in respect of of economic conditions. they seem to have a market of their own. i have some suspicions as to why this happens but our audience wants to hear from you. can we solve the medicare problem until we solve the health-care cost problem? >> we have the best health care in the world. we have a health-care cost problem. you are right. in order to solve the health- care cost problem, we must use market-driven approaches. i have talked to to doctors. market-centered approach is. here again, you cannot micromanage health care costs out of washington. it is impossible. every program we have ended bureaucratized to make a decision that will impact a doctor has failed. what we have to do is unravel the system with market-german ideas such as those located in h.r. 3000. with the new congress introduced by representative price from georgia. a couple of years ago it opened a health savings accounts. it allowed a health plan. when i ran the national restaurant association, we had 14 million employees. we wanted a plan that would be able to customize. we are not like a bank. we're not like a manufacturing company. our workforce is different. the other things doctors would like to see, loser pay laws. the state level or federal level, losers pay. that is what is driving up the cost of malpractice insurance. doctors to practice defensive medicine. that would be a big step toward reform. >> insurance problem or a medical service provider cost increased problem? >> i think the mass of the health system is and everything probe -- problem. it is an insurance company problem. it is a hospital problem. all of us have a hand in making this a mess. you cannot go back to the 1943 decision that was rewarding workers to get around the wage price controls by allowing companies to offer insurance plans. it was done as a gimmick. nobody thought of the consequences of a third-party payment system. what happens is the person is not getting anything so they assume the other person is cheating. the person who is receiving does not value it. the person who is providing the service knows the person they're providing it to does not evaluate. any time you build a triangular system. we have no national hearings on fraud at mcdonald's. you show up and say i would like a quarter pounder with cheese. that is what they give you. you give them money. they are happy. you are happy. if there is no quarter pounder, you are unhappy. you say, where is my quarter pounder? there is a direct relationship. i want to thank the tea party and the whole thing. i appreciate steve coming down to be part of this. it is a chance for us to talk at a non-trivial way, and to reset -- [applause] -- are was an atlanta and i said if anybody predicted that the top candidates and would both be from georgia, it would have seen impossible. -- seemed implausible. we represent a willingness to talk about common sense without regard to whether the the establishment thinks is acceptable. that is radical. [applause] we are by any reasonable standard the most radical candidates because we are willing to say common sense. in washington, that is such a radical idea. i'm going to give you an example. i helped balance the budget. i am the only speaker to do that in modern history. we did it at a time when people thought it was impossible. we did it by insisting on profound change. we reform medicare which people tend to forget because we did it so carefully. we had aarp neutral. probably our most complicated experience. here is what i learned. if you're serious, abolished the budget office. it is a dishonest institution which does things the wrong way. let me give you an example. we have a new book coming out on end of life planning and families being involved. the campus -- opposite of debt panels. every hospital will tell you that if you get the family and patient involved, it is better emotionally, medicine, and in the long run it is less expensive. the congressional budget office scores it as a cost because they refuse to accept any evidence of savings. their answer is, bigger government, higher taxes, more bureaucracy. it makes it impossible to get the reforms we would bring in. [applause] >> i appreciate the discussion. if we cannot get there fast enough, the hardest questions i face is, what about giving people options to opt out? we have tens of thousands of people eligible. andd you get people off turn this into an equation where when you say to someone you're not going to make it, we want you if you have the wealth, we would like to put it in their life management accounts, those are the hardest decisions. >> if you go back to the ryan plan, if you are 55 years of age or older, you're not going to be affected. don't allow the liberals to use that scare tactic of throwing grandma off of the bridge. that is just to scare tactics. the way for the younger workers if they take that option of a medicare, they treat it like it is their money. their name is on that account. what i like about it is, if you -- it would be $11,000. you would have to beat them -- by a medicare-certified plan. if you spend $10,000, that money can go into your medical savings account. it can continue to build. when you treat it like it is your money, that is how you wait -- wean people off of it. that feature is already built in. >> let me a slightly disagree. because of the way you framed the question. i wrote a book called saving lives and saving money. i outlined what we could do. the answer was, since we can do any of the things that are smart, which of the stupid things should we do? i am serious about this. i will give you three examples. i put on the table money just by not paying crooks. before you impose penalties on honest people, stop paying crooks. ibm, the ceo went to the white house and said you can pay for all of obamacare by taking existing technology and applying it. american express pays 0.03 of its revenue. a 330 timesizen are to pay crook. why is this hard to say now how fast you could turn it around? 60 days. 60 days we will contract out to american express and ibm to create a consortium where they are going to eliminate the center for medicaid services which is a bureaucratic monstrosity. you would save a trillion dollars. two, i am happy to test the ryan plan. anybody who is in medicare who prefers on their round to go to a support system could do it next year. voluntarily. and i agree entirely with herman, tom price has a great bill. if you are successful in view of money, let's give you more freedom. the current medicare rule is so restrictive. why should bill gates's father be blocked from paying more if he wants to pay more. i would rather have him pay more than lecture us on raising taxes. >> i am going to turn us back. >> before we leave the discussion, a defined benefit plan or premium support? you go first. >> that is only fair. here is the core problem. here is why the mandate doesn't work. when you get the government to defining what you're allowed to have, the government has to define in detail. they just had a bureaucratic group say that you do not need to test prostate for malice. -- males. he had been the head of the national cancer institute and the commissioner of food and drug administration. he is an expert and he said this is an ignorant and dangerous decision. for 10% of the people who get prostate, it is a dangerous cancer and will kill them. if they had said it is not a good test and we ought to have research to get a better test, that allows us more discrimination, that would have been rational. the panel of the obama administration had nobody who was a urologist or cancer specialist. a bunch of people were reading papers averaging information and saying, in our judgment, that is what happens. what you want to do is move to a place where we say we will help people be able to buy insurance. they should be able to deal with their doctor and hospital and the family? should make the primary decisions. as you go through changes in health care, you don't want to bureaucracy stopping innovation. imagine if you have do have approval for the iphone or the computers. that 1970 -- 67 computer is fine. we don't need this new model. that is what happens when you allow bureaucrats to stop innovation. you have a much worse system. [applause] >> take as much time as you need. >> i will make this brief because if the private sector, they have making the transition from defined benefit plans to the contribution. the difference is the way companies used to do it. here is our retirement plan. here are the benefits. they made the conversion to this account has your name on it. we will put some of your own money on it. what the ryan plan does the, where it will actually have a name on it, it is moving toward a defined contribution plan. everybody will have their account. it is down to ownership of those dollars. people will spend it more responsibly. that is the direction we have to move. >> any questions on this subject? >> one question because it is something you dealt with at godfather's. godfather's. as you look

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