congressional leaders met to begin negotiations on federal spending and the national debt. meanwhile, house budget committee chairman paul ryan spoke about those negotiations and raising the debt ceiling at an event hosted by the american council for capital formation of business oriented think tank in washington. this is 45 minutes. >> my name is mark come and chairman ryan just arrived. he's going to get some coffee. while he's doing is out, let me welcome you to our special forum with chairman ryan on behalf of margaux, my colleague and chief economist we are so pleased the you could join us. would you like to -- you've got some coffee? okay. let me get the preliminary is all the way because obviously we are here to hear paul ryan. as i said it is a real pleasure to welcome chairman ryan come and i welcome chairman ryan with a little bit of an trepidation -- sevier. [laughter] and i am not talking about my tax expenditures. i say that because i refer to him as chairman and ryan because as many of you know, i was taught to have respect for the office. and the problem is i have respect for the office but the people that hold the office still have something over you and one of the remarkable things about chairman ryan, he doesn't want to be called chairman. he doesn't want to be called congressmen, he doesn't want to be called anything but ryan. azar indifference to that welcome paul ryan. i just want to say paul, it isn't the critic who counts. another is the man who is actually in the arena who if he fails at least he feels will daring greatly so the police will never be with those holes and timid souls who knew neither victory or defeat, and i can think of no better description of paul ryan. welcome, and we are grateful. [applause] >> i would put alongside the quote that i already have on my wall. [laughter] i've had that on my wall for years. i can always use another one. thank you very much. i appreciate you would like me to talk for a little bit and then just answer questions, does that some like a good use of a peace time? all right, let's start off with where we are right now. we have a soft economy. typically in this country when we have a deep recession we come out of it with a big recovery. usually the deeper the drop the bigger the balance. that is not the case today. so why is that not the case today? why is our economy fledgling? why did we just have a gdp quarter with a one on the front of it? i would argue it's because of our policy, our government policy. there is a growing body of evidence that the government activism and our economy is what is holding the economy back. so not only do we have differences of opinion with the president on his domestic policy with respect to health care and things like that, we have a big differences with the president on economic policy, what it's going to get jobs created in this country and i would say there's basically four foundations for economic growth that are not only being ignored before being turned upside down. and the four foundations, and i am simplifying, are what are the necessary basic building block condition ingredients to get the economy growing again to beat number one, and this is a bigger threat is our debt, our spending is out of control. there were spending has been growing at an unsustainable rates. our spending is about to take off based upon the current law and there's no sign this is getting under control. so, when you take a look at the facts but today's big deficit means nothing more than tomorrow's big tax increase or interest rate increase and inflation problem, that injects a lot of uncertainty in the economy. the threat of a debt crisis and of a bond problem is holding back investment. number two, the regulatory state is just pittard to reality. so much more regulation, with its financial service regulation with thousands of pages of new regulatory agency dictates we don't even know what you're going to do is also putting a chilling effect on investments, on capitol. the environmental protection agency didn't get the law they wanted the last two years so they will try to do it through the regulatory body. these are putting a chilling effect on investments. and so we have regulatory agencies the are out there really not looking at a cost benefit analysis. going don't have political corporate welfare capitalism picking winners and losers in the marketplace making everybody guess who's going to be the winner and loser, we need a regulatory system that is transparent, fair to everybody that doesn't take winners and losers and that is predictable and reasonable and we don't have that. for reduced taxes. yes, this is an area we have enormous uncertainty. remember the word on certainty. enormous government activism and uncertainty. the president has given a budget and he did get a budget in february. the criticism he didn't do anything is he did give a budgeted just didn't tackle the problems we had, was spending problems come it didn't address our unsustainable entitlements. but it did something on taxes. the president on taxes said he wants the top individual tax rates to go up to 44.8%. then he gave a speech a couple of few weeks ago that said he wants to do more tax increases on top of that. and so we are getting from the administration, the signal sent to investors to job creators, families is you're going to pay more in. as i would say if you take a look at our tax issues, the idea we can tax a few other people that we don't know they're disconnected from us and that will take care of all of our problems is this a false concept is not an accurate idea. we can confiscate commit tax all the problems of the fortune 500 run the government suffers something like 40 days so we have to look at the fact even if the president's tax rates ochre and go up in his budget, the ten year revenue we would get from that would help us get 50% of this year's deficit down. the point is spending is on a tear. a growing at an unsustainable path if we tax our way of the problem we will shut down our economy. so what we have is a signal sent to the marketplace is that there's going to be tax increase after tax increase and here's the problem. this is in the 20th century anymore. america is not just the undisputed economic superpower of the world. we have to compete and be competitive. i did my 18 town hall meetings and i was at a small town in southern wisconsin and western kenosha county. only myself, and michael barone know where this is. [laughter] and ensure you know where the leak is, michael. excuse me, i did john might know where it is as well. that's right. so this gentleman was talking to me. he has a small business, he has a small business. he just paid his taxes and paid 35%. but his competitors are in canada. what is canada doing crew? his competitive fer pays about 16% on their taxes. and they are lowering their taxes. the vindicated this approach with the last election. we can't compete when we tax our producers, our job creators a whole lot more than our foreign competitor tax payers so it's not just the large companies in the global competition. every eddy is and global competition. so we have to be mindful of the tuck fact when we tax more than the tax there's we can't do anything about that. so we are talking about it's not necessarily cutting taxes we're talking about reforming the tax system, not dropping tax revenue would reforming the code to raise the revenue coming into the government more efficiently, more effectively, fairly and with an eye towards economic growth. if we are going to get ourselves might have to prosperity it is because we get spending under control and grow the economy. we create prosperity. the way we create prosperity is we don't pick of the phone and call somebody at a bureaucrat downtown and say regulate more jobs. we create prosperity by unleashing the entrepreneur by getting american businesses more competitive so that they can go out and create jobs. and when we tax the capitol more, we get less capital. when we tax capital more we extinguish the see corn that creates a, japan or abandonment. we want more production, more achievement and when we penalize those with our tax policies, however we do it, whether it is through the class warfare or just some innocuous revenue raising exercise we get less job creation. so fundamental tax reform is critical. that's why in the budget we say let's clean up the tax system and lower the tax rate across the board to make ourselves more internationally competitive to get jobs created. a lot of people tell me that is a tax cut for the rich when you clean up the tax code and look at the fact people in the highest income brackets, the largest corporations enjoy the tax deductions. they are the ones that itemize deductions and in the tax shelters. for every dollar in a tax shelter that is at zero. if we clean up the tax code and will work in everybody's tax rate more of that income is subject to taxation but it's subject to taxation that is more internationally competitive. so it isn't washington sitting in the ways and means committee at the irs and the treasury department picking who wins and loses and gets extra benefit and who doesn't. it's the entrepreneur deciding that, the economy deciding that. so we need to make the economy more competitive and our tax code is one of the ways right now we have a system that is basically designed to penalize all the qualities that make us a great. saving, investing, thrift, investment, those are the things that make us grow and i would simply say that preying on people's emotions of fear, envy, anxiety, that might make for good polis six but it's partly inspirational. it's hard the whole and it makes for really bad economics. so the fourth foundation i think it is essential to growing a stable economy is sound money. we want our money to maintain a reliable store of value. it is nothing more in city is the government can do to its people and to decrease its currency. i said in the 19 taha meetings i carry this around because i had some constituents come up to me one leedy in burlington, one over in twin lakes and devine sure michael barone knows where this is. i've received these over the years and it is astounding to me. this is a -- i asked because we can't accept gifts and a lady tried to give me this note and i said i can't accept anything of value. she said this is a from the volume of the republic. it has no value. so i accepted it. [laughter] when you keep printing money whether it's a 50 billion-dollar note, $100 million zimbabwe not given by constituents or 100 trillion-dollar zimbabwe note or something from the republic that came from somebody's wheel barrow back in the day talks we have to be mindful. we are a world reserve currency and we should act like we're the keeper of the world reserve and we are not acting like we are the keeper of the world reserve policy. what do i mean by that? yes, we had a shock and federal reserve needed to intervene to stop the panic. the need to intervene in credit facilities to make things work, the paper market work, money markets work. those happen, those things needed to happen. but i think we've gone down the path of excessively losing money which i fear will end up being a big problem and that means we ought to have our one institution of government in charge of making the money to focus on sound money so focusing on stable prices. maintaining the value of the currency and not often all these other tensions. i think the federal reserve has a schizophrenic agenda or schizophrenic charter. on the one hand they have an employment mandate and the other hand a price stability mandate. we should focus on price stability alone. they should govern themselves by a transparent rule that takes all the guessing game out so that we know that the focus on the federal reserve is transparency. it is price stability, sound money. we can't mess this up. deval said being the keeper of the world reserve currency is an exorbitant privilege. it is. it gives tremendous of dandridge. let's make sure we can keep that. and let's make sure that as we conduct ourselves, our money, that we don't play with people's retirement funds. the person that takes it worse is the person that needs help the most people retire and live on fixed incomes, people living on the social safety net who was off their dollars we don't want to wipe out their purchasing power and i fear the way the fed measures these things using this output model they will see inflation after it set itself in stone and the over compensation correct and will be even more severe. in the credit crunch since the late on the banks on the money velocity and interest rates on what it will shut us down and will be all for naught because we were not focusing on the price and the foundations of economic growth are to get spending under control so you can do your borrowing under control and live within our means and stop spending money we don't have. have a regulatory state that is fair, transparent, stop trying to pick winners and losers from this reasonable and predictable. having tax systems that raises the proper amount of revenue for the federal government as efficiently as possible so we can maximize economic growth and job creation and prosperity. and have a monitoring system that honors our place as the world's reserve currency, doesn't the base the value, doesn't try to create a new big fine neighbor standard by which we all lose at the end of the day but keeps and manages the currency as a reliable store of value so that we can take all the guessing out of the investment so that we can be sure and sound with our investment. there's a growing body of evidence of this economic or government activism is hurting sidey economy. greenspan put out interesting paper with a vigorous regression analysis. others have done the same. government activism is injecting so much uncertainty we are getting with what people call meal investment. we don't grow the economy organically by reflecting a new bubble. we grow the economy by helping the entrepreneur is become entrepreneurs and we have a society characterized by equal opportunity, upward mobility and prosperity and those characteristics are here because we have been true to the country's principles, founding principles and they will be just as true tomorrow. i'm quite optimistic because i do believe from having just done all of these town hall meetings and talking to the constituents i did a telephone town hall at the kenosha county yesterday. people get this. the country knows we are in trouble. and they know our government is not being strict. they know that politicians from the republican party and democratic party have been making legions and decades of unfunded promises to them and things are changing for the better and they're going to stop rewarding the politician he keeps making the promise to the voter to get reelected and stop reporting the political leader who tells what is going on in this country and what it's going to take to get us back on track in fix our problems. i'm a huge fan of winston churchill. he said two things i saw were pretty interesting. number one was democracy the worst possible form of government except for all other forms of government? its sloppy. we have lots of head lines that go this way or that we at the end of the day it works pretty well. the second thing he said was the americans can be counted upon to do the right thing only after they've exhausted all other possibilities. [laughter] i think we're kind of getting to that point right now. there is nothing that can stop us from growing this economy from getting getting property back and leading world to the goal of limited government and economic freedom to be the role of government is to promote equal opportunity and upward mobility not to equalize the result our allies. and so an agenda that is hopeful, inspirational, that helps people get back on their feet instead of being on a path to dependency is the american past, the american idea that can be restored. and i have every reason to believe we will do that and that is exactly what we are trying to do in the house of representatives. thank you very much. i would be happy to take your questions. [applause] [inaudible] [laughter] >> there was a little confusion over night about where things stand with negotiations over reducing spending and where the entitlements are in the equation. and if you would come a related question you made certain assumptions about how in the future we would hold down cost so that under your plan for medicare things wouldn't get of control and people wouldn't dare to much of a burden. what has been discussed this is the assumption the president made about how to hold down the cost would you compare the assumptions hold down the cost? >> i'd be glad to. stan garate kantor and i spoke about this last night. our starting point of the house budget the house passed a budget and actual budget and the budget certified by the congressional budget office now only get our deficit under control but it's our deficit on the path of balance and we paid on the debt and to get economic growth restored. sweep it out a plan to fix the problem, and the only way to fix the problem is to address and time of reform, particularly health care and health reforms. the president put out a budget in february that didn't do this. he gave a speech a couple of weeks ago that gave us one additional not a new idea which is to double the cutting targets and i will get into that in the second but it doesn't come close to fixing the problem or getting the deficit ever paid off. we have yet to see anything from the senate, so our starting point is the house budget. knowing that we are very far apart between the president, the senate and where we are, we are not under any delusion we are going to get a grand slam of agreement. for instance we don't like the president's health care law. big difference of opinion there. so, our goal and our hope as we go through this summer because the debt limit is something that is going to move through the house and senate in the white house is we may not get the grand slam the agreement but let's get a single or double, let's get down payment on spending and actually cutting spending in discretionary or what we call mandatory spending and let's get some really good tough fiscal discipline and stuff like that to lock spending control to get the debt under control. and we are under no illusion we are going to get everything we've always wanted in this one bill but let's get a good down payment and let's get this spending situation headed in the right direction. that's all that is happening right now. to the second point is medicare. medicare is in the biggest program today but it is tomorrow. and medicare is growing at enormous rates for a few reasons. beavers when it was created, they are now retiring so we go from 40 million down to 77 million. the are living longer than was ever measure were anticipated. it is a good thing. [laughter] health inflation is growing so much faster than the economy or the regular inflation. so under anybody's plan to address medicare and the president does have one thing that addresses medicare is slow the rate of growth because the current is currently unsustainable and has trillions of dollars of unfunded liability going bankrupt. so we say don't change the benefit for the current seniors or people ten years away from retiring 55 and above, but to keep the promise made of people who already retired and organize their lives are not of the promises you have to reform the next generation. those of us under 54 and we want more a personal best medicare system that does work like the plan we have in congress or federal land we used it would work like the prescription drug benefit to the senior would look like medicare and and khator like your supplemental insurance, so it's not -- we aren't used to have increases in medicare but we want a choice system where the power goes to seniors and they choose among competing providers for their benefit choice and competition is our half towards getting price competition and lowering prices. the president disagrees with that. he wants to do my seniors choices, and for the current generation of seniors, he has selected a different path in its path many countries have taken. it's to create a board of 15 people he will appoint next year. the board is called the independent payment advisory board. it's in the law, part of the health care law and he gives arbitrary targets to cut spending in medicare. they've already got target's over half a trillion from the presidents wall in the speech he basically had another half a trillion. i think 480 billion. and he is board of people, go cut medicare prices, cut medicare reimbursement. price control medicare which leads to rationing. and this board makes the decisions and it doesn't go through congress to read it just goes in the action, goes into the wall. if congress doesn't like it they have to replace them somewhere else and medicare to meet this week basically given this unelected board of bureaucrats no matter how smart they are, the power to basically decide how medicare spending will be lowered and this starts now with the current senior population and it is my opinion backed up from the analysis of the medicare chief actuary that this would lead to more and more providers dropping medicare. this will lead to medicare reimbursement providers lower than a decade. and we're on a come from, more and more doctors won't even take medicare because for every person that walks in the door the just lose money and what its ends up doing is it actually tools health inflation because providers that get under reimbursed by medicare and medicaid on the one hand have to go overcharge everybody else with private insurance under 65 on the other hand and that tools health inflation so not only do one thing this is going to fail to reduce the inflation i think a will exacerbate and dramatically lower the quality of medicare for the current seniors and i don't think it's necessary to do that to create some kind of price control board. i think the choice and competition wherever it's been applied has worked very well and there are many areas we can improve the bill deals with this issue for the under 65 population. i think that's the way to go. we believe don't break the promise of the current seniors, fix it for the next generation and don't have a board of an elected bureaucrats make these decisions. and that is the big difference in our approach and philosophy. the point we are making here is also we are not a debt crisis stage yet, we are and where europe is where the bond market turned and we have to do surgery right away we are cutting across the board and raising taxes. shared sacrifice is what you do after the debt crisis has hit and it's nothing more than shared scarcity in my opinion. well we are trying to do is preempt that so by going now fixing the problems today, you can keep that promise to those who already retired and organized their lives and prevent that kind of thing from happening. but if we keep kicking the can down the road will be able to keep that promise. we won't be able to have the debt consolidation plan done on our own terms and now for a long way and there will be the ugly across-the-board disruptive thing. the point of the budget is the government has to reorient its policies so the citizens don't have to dramatically reorganize their lives. and if we have a debt crisis because we don't do anything to fix the problem now, they have to reorganize their lives and will be short, swift and sudden and people will not have time to repair. i promise i won't give as long an answer on of these. how about the dalia the classes. tell us who you are if you don't mind. islamic and eisel and with reuters news. this is an idea that is circulating around the capitol hill. that you might not be able to agree on the specifics of how to overall but that of congress commits to certain deficit targets and we don't reach the targets in the coming years ago that the, automatic trigger is what can and stop spending or raise tax revenue. would this be enough republicans as -- >> i don't think so, no. as i mentioned before, our -- what we are working off of is our budget and what our budget is cut $6.2 trillion of the president's budget or 5.8 baseline so we have lots to choose from because we think actual spending cuts right up front or important but we do three kinds of what i call budget process reforms or budget caps. we propose what we call statutory caps in law and discretionary spending, we propose corker mccaskill in the senate, the cap on the overall government spending as a share of gdp than a week of the debt cap which is we kept the debt as a percentage of the economy which is the course we put in the budget and reinforced with triggers so it sequesters what we use in the past so we put out three kinds of spending caps in the budget so we see the budget as a option for which to select from to try to advance the dialogue in an agreement but in and of themselves alone i don't think the conference would accept >> you talked about the budget caps. some of the press accounts talked about triggers that would trigger tax increases. >> spending is our problem, michael. look, even keeping the bush tax cut permanent, our revenue still go back to where the stokely have been. we go back to where the historical revenue linus spending goes from 20% of the economy of to 40% of the economy and then it goes up from there. spending is a problem and we want to keep focused on spending. the other thing is if we say we're going to keep raising tax rates you're going to slow down the economy and don't get more revenue to slide on the economy. i'm not saying every tax cut as before. that's not the case. i am saying tax increases slow down economic growth and it is essential and critical to getting revenue. so i don't want to get into the my menus of what we are for and aren't for because i don't think it is constructive to negotiate to the media, no offense -- [laughter] , but at the same time we don't think, just to give clarity i don't think the tax increase triggers work and i think the offering called out for politicians to not cut spending because they get an automatic tax increase. and that, i think, was like a leader among the four foundations of growth which is predictable that the uncertainty tax rates are going to be low and stable so you can make your investment. .. >> we put a dozen or so ideas in our budget, and the fiscal commission, supported by a majority of democrats said the same thing we're saying. broaden the tax base so you can lower tax rates to get economic growth international competitiveness. the president isn't saying that. he is saying broaden the tax base, raise tax rates which i think hurts economic growth, so even though we have democrats who agree with us on the general nature of tax reforms, the president doesn't, and so i have a hard time seeing a really good tax reform agreement. we're still pushing forward nonetheless. i'm not sure what he exactly means and he's being extremely vague. the problem we have is we're negotiating with ourselves right now. the president put out a budget in february that didn't do anything to fix the problem and gave us $13 trillion in more debt. we put out a budget to fix the problem and literally pay off the date, and then he gave a speech, and you can't score speeches, we tried. cbo can't do it. [laughter] we don't have an offer. there's no other plan p on the table. people in the media say the president has a plan, but he doesn't. the numbers he gave aren't close to what we proposed, so there's a fiscal commission plan that achieves fiscal metrics similar to ours. we exceed the metrics, but we have seen nothing that meets the moment from the white house or from the senate. maybe we will see something from the senate, and that can be done any day now. now, we're out there alone with a plan to fix the problem, so it's tough to see where this is all going to go on the other issues outside the debt limit like tax reformment i think at the end of the day hopefully what we'll do, and i use baseball analogies because we're in the season, wait until the fall, and i'll use football terms relating to the green bay packers. [laughter] let's get a single or a double, let's get a down payment and spending controls as a part of that. at the end of the day, 2012 makes the decision. if we do our job right, which i think so far we have, we will give the country a choice of two futures, and, you know, the way we see it is do we want to reignite the american idea and have the prosperous society with a safety net designed to get people on their feet, or go down the path of debt laiden manage decline, of having more and more people dependent upon the government for their livelihoods, cradle the grave welfare state, shared scarcity, and that is how i see the fork in the road we're at right now. that's the trajectory we're on right now, and if we do our job right, we owe our fellow countrymen at least a choice. how we do with it going into it will completely determine what kind of country we are coming out of it for the 21st century. instead of having a back room deal cut by six people, this has to be a choice that is involved, transparent, that every citizen in this country gets to choose, and i think ultimately that choice is made in 2012. >> chairman ryan, i want to ask you a specific question with the debt limit. do you see the debt limit being raised, and if so, when and under what process? >> just give you michael's answer. we -- i don't think the votes are there. i wouldn't support a vote for a limit increase. the president 79 -- ments nothing but a increase. that would hurt the markets. that shows there's no will in washington to do anything about the cows of the debt limit hit in the first place. secretary geithner's numbers are probably accurate. we have the tax receipt data in now. there's certain cash management things, and let's assume it's august 2 -- august 2, so i think that's probably pretty accurate. these numbers move a little bit every day, so i think that our point is we need something serious to address the debt in the future. the reason the debt limit is hit is because of spending in the past. we don't want to rubber stamp an increase, but get a down payment on fiscal control in the future. i think that's what ends up happening. that gentleman, sorry. try to get to you earlier. >> mr. chairman, do you have any information on the progress that the senate gang of six is making? >> i don't, and i shouldn't even speculate. i talked to conrad at dinner about it. i don't know. i think they slowed down a little bit more. i don't know the answer to that. yeah. >> michael warn from the weekly standards. i want to ask about public support for the medicare part of the budget. i know there's been a bunch of polls all representing the medical part differently showing varying results. >> that's the key, how to phrase the questions. >> sure, sure. there was a poll that i think pretty welfarely represents the medicare part asking if you want to keep the status quo, a or b, or make the changes you talk about the seniors joining in 2022. it's a pretty fair representation of your plan, and 60% say they want to keep the status quo. what i want to know is, you know, is there a need for a national campaign to talk about this? >> i think that underscores it is the status quo, it's gone. first of all, the president changed the status quo already with his health care law. you take $682 billion to spend on another entitlement, we don't do that. it goes towards medicare solvency. he puts this in charge of cutting the quo and reducing prices. a lot of people think the status quo can keep going. it can't. medicare, medicaid, and social security consume all, all federal revenues by the time my kids are my age. gosh, have interest on that, by 2025, they consume every federal revenue. there's a required federal education campaign as to how dire our fiscal situation is as to how unsustainable the programs are and how they are going bankrupt, and i mean, look, the fiscal gap, this gao calculation, in 2009 it was 62.9 trillion, and in 2010, it was $76.4 trillion. today, it's $99.4 trillion. what's the fiscal gap? this is the amount of unfunded promises the government is making to today's americans. promises that are made to seniors, workers, and their children that the government has no means of paying and goes up over $10 trillion a year. what this tells us is the sooner we act, the better off we are because every year we delay, we go that much deeper into the hole. there is a sense of urgency here. we call up bill gross and bond traders and economists and have them come into the committee and ask how much time we have. they all say 2-5 years. that's the answer i get from every one of the people who seem to be the ones monitoring the credit market. there is a sense of urgency. it's not extremely immediate, but it's in the near future, and i think people just have to understand -- that's why i've done over 500 town hall meetings in southern wisconsin on this topic over my -- >> do you need to be doing more around the country? >> i've done 19 in southern wisconsin, so i think i did a pretty good job there. across the country -- we need to be doing more across the country. we just deployed 243 house republicans over the last two weeks who went out and did the town hall meetings. for our side of it, house republicans, and i talked to dozens of members yesterday who were excited about their town hall meetings, delivered the message to their constituents, came back energized like i did. the people are ahead of the political class, and i really believe that people, when think -- they see the circumstances and the numbers, they're ready to embrace the reforms we talk about because the alternative is really quite ugly. jerry? >> vice president biden is convening today a small group to talk about -- >> the commission. >> exactly. what place does it have on the road to resolving the debt ceiling question, and mori browedly, -- more broadly, how do you explain the tenor of your dialogue with the administration through all of this right now in >> i'll take the easier question first. so the president as a condition of the debt ceiling in the last session created the fiscal commission, the fiscal commission by a majority of the democrats and then there was a budget that didn't do anything to fix the problem, and then he gave a speech that said more ipab and have the new commission figure this out. what i make is leader can't keep delegates the decisions to other people. you know, leaders have to get in and fix the proke, and we if we keep delegating to others, nothing gets done. what is the biden commission? what are our hopes of the biden commission? i guess i would say the place in which discussions occur with respect to the debt limit. a budget agreement occurs between members of congress, between budget committees and leadership, in conferences after budget resolutions are passed. i don't know if we're going down that path or if senate can and will pass a budget resolution. i think the biden commission as i suppose the place in which the talks reinvolving around the debt limit occur. with respect to the administration, the one i talk to the most is secretary geithner. he's the one i talk to more often than anybody else. i like jack lou. i want a lot of respect for jack. we talk not very often, but we have mutual respect for one another, but i pretty much talk to the fiscal people and that's it, and i suppose tim is probably the one i talk to the most. yeah? >> hi, from the financial times. >> oh, yeah. >> could you explain, perhaps remind us why house republicans also felt to support the comitionz proposals and why that -- commission proposes and why that is not a possible compromise or solution as to a way out? >> i don't think we failed to support it, but we just didn't support it. [laughter] i was on the simpson -- there was a lot of the parts of the plan i like, and the reason people like me didn't support it is because it didn't address the problem, and the problem is health care. i worry that we're giving the country is false sense of security if we put out a fiscal plan that addresses everything but the primary issue which is the primary driver of our debt, and the primary driver of the debt are the health care programs. you cannot structurally address the debt crisis if you don't address health care entitlements, and so not only did it ignore medicare and medicaid, the -- i don't think it was the intention, duh it was the consequence to be accelerating obamacare, so what that commission does with respect to health care is more harm than good. it accelerates the imposition of obamacare. if you take away the tax exclusion for individuals, we believe that more and more employers dump their people into the health exchange and have subsidies go up far more than we estimated today. if you take away the tax exclusion, that exacerbates that effect. we believe that the sumpson makes it worse because it accelerates obamacare, increase exchange subsidies, driving up the deficit. i got a letter from the cbo two months ago saying they under more realistic assumptions they believe that the president's health care law will exacerbate the debt and deficit, actually add to it under more realistic assumptions they believe are more likely to occur, and it didn't do anything to address medicare or medicaid. it added a third to the eligibility standards, and it didn't really do anything fundamentally to fix medicare, and i don't see it as the fix to medicare. i think that's more shared scarcity, price controlling. price controlling doesn't work. it was a good bipartisan agreement, but it was a price agreement. what happened? congress in two successive agreements pulled back those savings, restored those savings except for the sdr, and then we pass that every single year, and so i don't think those things hold, and so what was aless -- less son taken from that is take it out of the hands of congress and have a board do it to stand political scrutiny and just do it. that, to me, is not the path to take, and that's why people like me didn't support it. >> does that mean in your view no compromise is going to work that does not dismantle health care reform? >> this is why i think 2012 is the ultimate decider of these things. there are other things that can be done to make improve. -- improvements. it's on other areas of government spending in both the discretionary and mandatory side, there's a lot of things we can do to save money and put controls on debt and spending to commit us to spending down, but i don't think you can fundamentally fix the problem unless you fundamentally fix health care, and that is where we have a gulf that separates us, and that gulf, i think, will be largely determined, the outcome of which will be determined in 2012 in my opinion. it is what it is. >> final point. >> okay, sure. this is your watch? >> this is my watch. i'm high-tech. as you know, one of our big missions is tax reform, and what's interesting about your proposal, it not only lowers the rate, but it doesn't pay for it by increasing taxes on savings investments. >> that's right. >> that's unique about the ryan program, and i want to commend you for that. >> the house republican program. >> yes, with some bipartisan support, and we commend you for that. secondly, i'll continue to give you the man in the arena as long as you are the man in the arena. thank you for joining us, paul ryan. >> thank you very much. appreciate it. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> senate minority leader, mitch mcconnell talked about federal spending on the deficit on the senate floor today. this is five minutes. >> mr. president, normally in opening the majority leader goes first, but he and i have never viewed this as a con tense, process, so because he's not here yet, i'll go ahead with my statement. >> the republican leader is recognized. >> the american people have seen enough rallies on factory floors and speeches that sound good, but lead to nothing. after two years of exronnic job -- chronic job lessness, they want results, and that's why there's a growing consensus in washington over the past few weeks that something serious must be done about our nation's debt. democrats admit failing to bring down the debt is more damaging to the nation's economy in the long run than failing to raise the debt ceiling. the situation has been described as the most predictable crisis in american history. people on both sides of the aisle now realize that the warning belling are too loud to ignore, and last month, president obama, himself, made a crucial admission in a sign that he too is worrying about the prospects of inaction. he says failing to produce a serious plan for tackling the deficit and debt could be a bigger drag on the economy than anything else, so more and more people see the problem. now the challenge is achieving a resolve. that's why i've proposed a few basic principles yesterday that i believe could guide us to success. this morning i want to reiterate the principles ahead of the meeting at the blare house. by setting out clear principles up front, we are far more likely to get somewhere and prevent the crisis before it strikes. first, it's time for our friends on the other side to talk -- stop hitting one group of americans against another. solving the crisis requires all of us working together, so why don't we start acting like it? second, the level of spending that democrats want to maintain just isn't possible without raising taxes on the middle class, which we know isn't going to happen. we're only going to solve the crisis by admitting up front we have a spending problem. third, entitlements need to be a part of the discussion. let's drop the scare tactics and work together on reform. nobody is talking about taking anyone's medicare. fourth, raising taxes is the last thing we should be doing in the middle of a recession. what's more? a bipartisan majority here in the senate opposed raising taxes, so let's set that idea aside and find commonground instead. if we recognize these things, we can avert the crisis. if we don't, we won't, and i assure you we'll all answer for it. very few people saw the last crisis coming. this one, on the other hand, is clear as day. failing to work together on good faith on a solution is completely indefensible. everyone agrees this is a crisis. more people including the president agree that failing to address it is disastrous for jobs and the economy, and everyone knows the upcoming debt limit vote is the best opportunity we have to do something about it, so what are we waiting for? doing something meaningful about the debt is the centerpiece of any serious job's agenda in washington. other things will help on that front, and the president made a small important step in that direction yesterday announcing he was red gi to begin talks on a free trade agreement with colombia, something we've called for for years. ratifying this agreement with others like south korea and panama opens markets to u.s. goods and creates thousands of jobs. it was one the ideas republicans included in a comprehensive job agenda we released this week and expands opportunities, lowers costs, and clear bar yeahs to growth. we need to bring down the debt. if we can't get spending under control, we'll never get the economy moving. if the economy doesn't grow, we won't be able to reduce the deficits and our debt, and if we don't reduce our massive federal debt, we face a crisis that makes the financial panic of 2008 look like a slow day on wall street. this debate couldn't be more important to our near term and long term fiscal health. everyone has a stake in the debate. if we face up to it like adults, we'll not only prevent the crisis, but help preserve our way of life, and the best part is no one side is able to claim the credit. this is the moment we cannot let it pass. mr. president, i yield the floor. >> majority leader is recognized. >> i understand -- [inaudible] >> clerk will report. >> hr1213 an act to repeal mandatory funding provided to states in the patient protection and affordable care act to establish american house benefit exchanges. >> mr. president, i object any further proceedings in relation to this matter. >> objection is heard. it will be placed on the calendar. >> mr. president, following the remarks to morning business until 5 p.m. today, the republicans controlling the first 30 minutes and majority controlling the second 30 minutes. next role call vote is at 5:30 p.m. with regard to a nomination. mr. president, in regard to the comments made by my friend, the republican leader, as i listen to him, i picked up about three or four points that i think are fairly obvious. one is don't touch the tax cuts for the rich. number two, don't touch tax cuts for the rich. number three is that they want to go after entitlements. >> vice president biden will be hosting a series of deficit reduction talks with congressional leader holding the first of the talks at blare house in washington. before and after the meeting, the vice president spoke to reporters. [no audio] no audio] [audio] [no audio] [no audio] >> then a hearing about how social media can be used to assist in responding to disasters and congressional leader in the white house begin negotiations on deficit reduction. >> housing and urban development secretary talked about his department's budget ask for 2012. the administration is asking for $48 billion, 1% less than in 2010. it includes funding for foreclosure programs, rental housing assistance, and homeless assistance programs, but reduces funding for community block grants for $300 million. this hearing is an hour. >> for the committee to discuss administrations budget request and the legislative agenda. secretary donovan, you come to us at a challenging time. our challenges understate and local government partners continue to struggle during this economic downturn. our administer's programs aim to provide access to quality and safe housing for homeowners and representers. these programs often provide a needed lifeline to our most vulnerable citizens and in today's economy, there are more important than ever. far too many americans in communities still face the threat of foreclosure and many have seen their property values fall in a fragile housing market, and although it may seem kind of intuitive, housing has become less affordable for lower income families even as housing prices plummeted. recent cities by your department have shown dramatic increases in worst case housing needs among very low income representers and even homelessness among families. as you know, as you saw in south dakota last year, many tribal communities continue to circle with a shortage of economic opportunities and a lack of housing choices. as our need for affordable housing rises, local providers keep increasing difficulties in preserving the resources we have. due to aging buildings and other contracts. meanwhile, states and local governments are slashing services and job creating investments. as the country faces these daunting challenges, the federal government must ensure that we make wise investments and preserve important programs that help those most in need, and that at the same time, we must also be mindful fft budget constraint -- of the budget constraints and be certain we get the most value for our dollar. .. citizens. but in your budget also contains a number of proposals intended to increase the effectiveness including those to improve the administration and oversight party, strengthen the management standings of the fha programs as they provide countercyclical financing through record and provide new tools to help create and preserve public and assisted housing and streamline the public housing programs to make them more effective for guarantees. for the millions of americans whose goal to meet the most basic needs a safe place to live. as we continue to debate the budget and tackle the deficit we cannot afford to leave americans out in the cold. i look forward to the discussion of the proposals during today's hearing. i will now turn to senator shelby for in the opening remarks we have. senator shelby. >> thank you. welcome to the committee again mr. donovan. you have a tough job. we all know that. our nation's debt as puts the nation on a path to live within our means. i wish that were true. unfortunately, while the president talks of living within our means, his budget produces a different result. the budget is a good illustration. secretary donovan states in his prepared testimony that the administration budget, quote, reflects the need to ensure we are taking responsibility for our country's deficit. yet hud's summary of the budget states that the department's growth spending will increase by 900 million for 2012. hud's net level it's called a spending will apparently fall by 1.1 billion. very interesting. it appears hud our lives of this figure by offsetting the total spending numbers with 6 billion in fees that are to be collected by the fha and ginnie mae. it was my understanding always that the fees were supposed to be used to insure the safety and soundness of the two entities. it appears they are being used to offset the cost of programs elsewhere in the budget. i hope i'm wrong. one of this is a new concept in government accounting, this is not a new concept and government accounting we are going to be honest with the american people and ourselves about what we are actually spending if we are serious here in the congress about getting our debt under control. i think we must find a way to curtail our spending if we can ever hope to restore the nation's long-term health. i look forward to hearing from secretary donovan today on how hud can tighten the belt while contributing to essentials services we need in the housing area. thank you, mr. chairman. >> secretary donovan, please proceed. >> thank you, chairman johnston, ranking member shall be and members of the committee for the opportunity and for your partnership which i was reminded of this past weekend as i join other members of president obama's cabinet to tour the devastation wrought by the recent tornadoes. as i prepare to return to the region next week i want to assure you, senator shelby and the four other members of the committee from affected states i will do everything in my power as the secretary to ensure this administration makes the lives of displaced families whole again. today i come before the committee to discuss the investment of this fiscal year 2012 budget proposal calls for to help america with the future by of educating, innovating and outbuilding our competitors. i will also highlight the steps the proposal seeks to improve how we operate the programs and the tough choices it makes to ensure we take responsibility for the deficits. obviously our fiscal year 2012 proposal was developed before the continuing resolution for the fiscal year passed by congress signed into law by president obama. although the cuts in the agreement were necessary to ensure we live within our means and keep the government running the president noted that the sea are contained real cuts that would have an impact on services and people who rely on them. indeed i believe the president's 2012 budget strikes an appropriate balance between the need to reduce spending and preserve critical services for americans. mr. chairman and sold in the 2012 proposal, we follow the three principles to help us strike this balance. the first is to continue support for the housing market while bringing private capital back. two years ago with the housing market collapsing and private capital in retreat the administration had no trace but to take action. the critical support provided is to help over 2 million families buy homes since that time and nearly 1.5 million homeowners refinance into stable, affordable products with average monthly savings exceeding 100 billion. and while fha continue supporting the housing recovery in the year ahead, we also must help private capital return to the market. this is a process hud began many months ago and i want to thank congress for passing legislation the last session to reform the mortgage insurance premium structure. with this authority, feg increase premiums to 25 basis points last month. because of these reforms and others, fha has projected to generate $9.8 billion proceeds for the tax payer in a fiscal year 2011. indeed the reforms generating the receipts today set the stage for more private capital to return in the years to come weigel insuring fha remains a vital source of financing for underserved borrowers and communities. one of the fiscal year 2012 request is $4,738,000,000,000 in the riss budget authority because of the fha and ginnie mae received a cost of the taxpayer for the budget is only 41.7 billion. this is consistent with the president's proposal to bring non-security discretionary spending to the lowest share of the economy since president eisenhower. the second principle we use to develop the budget is to protect current residents and improve the crow programs that serve them. will the median income of american households today is over $50,000 for households who live in the assisted housing its $10,200 per year. and more than half our elderly or disabled. at the same time, having seen from 2007 to 2009 the largest increase in the history of the hud's worst case housing survey it's clear the recession hit these families hard. that's why the 80% of the proposed budget keeps the residents in their homes and provides basic opportunities to public housing while also continuing to serve the most vulnerable populations through the homeless programs. because the cost of serving the same families grows each year, protecting the existing families and programs require us to make tough choices with the remaining 20% of the budget and putting the decision to reduce funding from 2010 levels for the canada development block grant, home investment partnerships and new construction for the hud supported housing programs for the elderly and disabled. eyes of our myself as a local housing officials the difference these funds can make supporting senior housing, boys and girls clubs, ymca and other providers of critical community services. these cuts are significant but with american families tightening their belts, we need to do the same. i would note this budget provides $80 million for the housing counseling program which was eliminated in the continuing resolution. there was particularly painful to the responsible homeowners and neighborhoods around the country struggling to keep their homes and restoring it reflect the president's call to make tough cuts to reduce the deficit without sacrificing the core investments we need to grow the economy. at the same time this budget makes a strong commitment to do more of what works and stop doing what doesn't. by including provisions of the section 8 felker reform act and the budget we will simplify and streamline the voucher program and save $1 billion for the taxpayer over the next five years while supporting the ability of the housing authority in small towns and rural areas to better serve the working poor. indeed thinks the senator reid and the committee leadership passing the act is a new housing stability program reflects the unique and growing need in those communities. the budget also calls partners accountable for the funding they received from hud to fund the public-housing operating fund we require public housing authorities with excess reserves to contribute $1 billion. these resources were set aside so our ph a could continue operating during a rainy day and i think we would all agree that rainy day is here. these efforts point to the commitment expressed through the transformation initiative to improving the programs. the funds are replacing the the systems of the largest programs housing choice vouchers that date from the early 1990's so we can hold the to the could accountable for managing the budgets just like families and businesses are doing across the country. the flexibility tian provides allows us for the first time to offer technical assistance across all of our community planning development programs and watch a new initiative to improve the financial management accountability of troubled housing authorities. bye supporting research evaluation and program demonstrations cotillon in paris the hud accountability by identifying what we do well and we need to do better. these needed reforms allow us to propose increased investment in programs we know work like the hud program for homeless veterans. this is built on a solid body of evidence that determine a supportive housing was going to end homelessness and save money for the taxpayer by putting an end to the revolving door of emergency rooms, shelters and jails. as such, the budget would increase funding for homeless programs by more than 25% over 2011 to keep the president's commitment to opening doors. the first federal strategic plan to end homelessness which the administration unveiled last june to end chronic veteran homelessness by 2015 and homelessness among families and children by 2020. our firm and final principal for developing the budget is to develop initiatives that have been part of a wedge of the last 20 years but in this fiscal climate proposed no new initiatives. the president made clear when the rooster and educating our children but that's not possible if we live in a whole generation of people behind in the poorest neighborhoods. that's why i'd like to thank senator menendez working with us on the terrace neighborhood initiative which was founded in the sea are and we again propose funding in fiscal year 2012. tweeze neighborhoods allow the communities to use the mixed use financed was pioneered by secretary jack kemp and henry cisneros with the program to transform all federally assisted housing neighborhoods. similarly ensuring america out builds our competitors, requires for the future right now we're losing 10,000 units from the public housing stock every year. the sinking is billions of dollars of private capital sitting on the sidelines that could put tens of thousands of construction workers to work rebuilding this housing. that's up to 255,000 public housing units using long-term project priest rental assistance opening new funding to affordable housing but also a new sense of discipline that extends from the way the properties are financed to the way they are managed. lastly, jimmy johnson, american business large and small cannot out in avaya their competitors wonder workers spend 52 cents of every dollar they you're on housing and transportation combined and of a project some roads cost five times as much we stand fuel and time as it did 25 years ago. that's why we request another $150 million for the sustainable community initiatives building and funding provided in 2010 and in 2011. instead of federal one-size-fits-all rules that tell the community is what to do, this initiative is helping regions and communities to build comprehensive housing and transportation plans to create jobs and economic growth. with help from its record 7 million-dollar grant from hud, austin texas estimates it will create more than 7,000 permanent jobs generating an additional $1.1 billion of economic growth over the next five years and saving the taxpayer one in a quarter billion dollars. the potential of these innovations explain why the extraordinary demand for the grant program wasn't just coming from the largest metro areas. indeed over half of the regional grants were awarded to the rural regions and small towns and so mr. chairman come stifel's fiscal 2012 proposal to the proposal isn't just spending was it's also about investing smarter and more effectively. it's about an hour to the crowd of educating and out in a feeding our competitors and making hard choices to reduce the deficit and put in place much needed reforms to hold ourselves to a high standard of performance. but most of what about the results we deliver for the people and places to depend on us the most. for mortgage-backed securities in the future starts at home and with the budget i respectfully submit targeted investments and tough choices we aim to prove it. thank you. >> thank you, mr. secretary. would the clerk please five minutes on clockworks and as mentioned earlier, you visited south dakota with me and saw firsthand the dillinger and facing the country to really appreciate the visit on these needs. i would like to ask about the speed of the hudna distribution. mortgage-backed securities issued in fy 11 on january 27, 2011 compound and at present many have not received their full fy 11 funding. some have held housing development and others have started to eliminate the staff. what is the department dillinger to speed the provision process to ensure the tribes will receive their full allocation of fy 11 ai hbp funding program that the very earliest possible moment? >> senator, obviously the delay in approving the 2011 budget about half the way into the fiscal year has had a significant impact not only on the tribes, but on recipients of the funding across all of our programs. we have moved now that the budget is in place to accelerate the we that we are awarding that funding, in fact one of the things we have learned with the new process we put in place under the recovery act where we are five months ahead of the targets we set for distributing the money as you know tribes across the country used quite effectively and quickly a witness to grants in the past. we've taken the team that developed of the implementation around the recovery act and assigned them to accelerate our regular funding process he's so we expect to be able to distribute much more quickly this year the american block grants and we'd be happy to sit down with you and your staff to give you details of exactly when we expect that to happen based on the last few weeks of work we've done since the budget was resolved. >> good. mr. secretary, your request includes $88 million for hud's counseling program. as you know, this program was not funded and fy e. 11th. is hud's program still an important use of federal dollars? >> absolutely. and i mentioned this specifically in my testimony. what we have seen is housing counseling has always had a benefit to homeowners, but particularly through this crisis we have seen the importance of housing counseling has increased substantially. urban institute recently did a study that showed homeowners that are in difficult times with their mortgages are 70% less likely to be foreclosed on if they receive counseling. we've also seen from other studies homeowners to purchase homes with counseling are more likely to be successful in being able to stay in those homes if caught so given the impact the housing crisis had on the economy more broadly, given the number of families still struggling to make the payment of unemployment, we think this is an absolutely the wrong time to eliminate funding for the counseling. i would also note some have said there is a program for the neighbor works in the budget as well that continue to get funding in 2011. i think the key point here is that only meets a portion of the needs of their. for example, beyond just the families struggling to pay their mortgages, seniors who are interested in using our reverse mortgage program are required to have counseling. that counseling was paid for through hud's appropriation. there's no other source of funding and now that will fall on the seniors. so we expect as of october 1st with a fist cut there are many agencies around the country no longer able to provide funding there are approximately 70,000 homeowners who we will not be able to reach without the funding and even we were hoping for. and so it is absolutely critical that in 2012 we restart this funding. >> has it been a justifiable focus on the fhe single-family volume is often overlooked that the multifamily loan volume is in the recent years. can you describe some of the actions taken to ensure the ongoing integrity of the multi family programs also would is the growth in the volume say about the multifamily housing access to capital? >> i appreciate you asking this question because it is often overlooked given the crisis we had in a single-family how important the fha programs have been to the continuation of the multifamily market and you're exactly right in terms of the increases we've seen in our multi family program to the we have applied many of the same tools in the multifamily programs we have on the single-family program. the fact we appointed our fha first-ever chief riss officer created a whole set tools to track and monitor the default in the fha portfolio, the delinquencies and half as a result of that made a number of changes in the underwriting criteria for these programs and changing many components of the underwriting terms such as the loan-to-value ratio and range of other things that have improved the performance of the programs. what i would note, however, is unlike the single family side, multi family programs have performed relatively well through the crisis at the gse the multi family programs did not contribute to their collapse. and we continue to see even through our most recent numbers the multi family programs that hud deemed profitable. while they are much smaller and don't contribute nearly as much as a single-family side to the mowing .8 billion in receipts that we expect this year the have continued to be profitable and they are a critical source as we have seen iran to rise, vacancy decline in the rental stock is an absolutely critical we continue to have a source of financing available as we work our way through this crisis. >> senator shall be? >> thank you mr. chairman. >> secretary donovan, we have had these conversations before getting the private access and private capital because there's a lot more out there. anytime we can access capital including prime in the pump, putting some money to say access and two-thirds more on something like that i think we are making good progress and i think you do, too. would you expand a little bit on what you're talking about the program did into the private capital tell you were doing this? i guess in many ways. estimate absolutely. public housing is the single most important example of this. public housing is the only form of affordable housing in the entire country today that has these very difficult barriers to access and private capital. is really only indy 500 hope six program and very limited other examples to the choice neighborhoods where public housing is able to access low-income tax credits for other private capital and other public capital as well. the result of that is set in my testimony isn't just that we are losing 10,000 units of public housing a year, but what we also see is that too often public housing is cut off from the neighborhoods that surround it and cut off from opportunity. to give you an example from my prior life, we try to bring grocery stores and public housing. we try to bring new development on to public housing land, mixed income housing, senior housing that would help those raise their kids in public housing and now need more support in smaller units and it was like banging our heads against the wall too often, senator, to try to bring those tools to public housing. so it's time the federal government got out of the way and allowed many of the entrepreneurs and the communities that have despite some of these pressure actions done creative things to look into that. that's why we have a proposal, demonstration of allow over to under 50,000 units through some fairly simple legislative changes to change the way that that land is zoned to allow the deeds of trust to change and change the way we fund public housing. right now we supply capital funding and operating funding and we are really the only source of funding that can support those units by changing it to in operating subsidies similar to the way section 8 works with all of the other owners. we would allow public housing authorities to be able to access all of these sources. we estimate is $25 billion of private capital sitting on the sidelines that can create hundreds of thousands of jobs in construction. starting today, if we could unlock that capital. >> do you need a statutory change? >> we have a very limited authority to do this, and we are expanding ways of the we can do this with existing authority -- >> this committee? >> absolutely but we are proposing a demonstration which will be legislative the would increase buy roughly ten times the number of units we could reach >> would you crystallize that and get it to the committee to have already indicated at least to me and the chairman? >> i'd be happy to do that. estimate of one to get into something else if i could come cost savings trying to do more. >> according to the cato institute the amount of money we currently spent on subsidizing affordable housing is enough to pay 100% of the rent by every family in the country earning less than $22,000 a year. some changes could be made to ensure we are holding the greatest number of families in the most efficient cost savings manner possible. what steps has hud taken to reduce the cost while increasing the efficiency of the housing programs? >> that is a tough job to term. >> very important. but look, this is as a former customer of hud if i could put it that way, i would say we have too many programs with conflicting rules. there's too many places where we require housing authorities or owners to comply with or u.s systems or other things that frankly are not efficient and so i would point to the two things that were critical. one is we have proposed and worked with this committee on the bill would call the section 8 vouchers reform act. and just to give you one specific it simple, we have as a sudden my testimony, over half of our residents are elderly or people with disabilities. they tend to be on fixed incomes. 80% of them have exactly the same income year after year, and yet we have required recertification of 100% of the residents each year. it will allow was on a risk basis to say these are residents much more likely to have an income change. we would target them for the annual certification but others come seniors for example, we learn that it's less likely. if we do every two years we've done the analysis. the impact of that is a savings of a couple hundred million dollars alone in one year. >> that makes sense. >> so svra come if we could get it passed as either part of cogent process -- budget process or support a bill i'm hoping that we could get is a billion dollars in savings over five years. simply by making it easier for folks to run the programs and it would also in the rural areas helpless surf more families working. >> who would be against that? do you know? >> we became very close to getting it done at the end of last year and they're seem to be very broad support. there's an argument but very minor provisions but i would be hopeful we could get that done. it sickened example we hoped for and got flexibility from the appropriations committee to invest more in what we call transformation initiatives. it is investing in the systems and control systems, fraud detection systems, public housing that will also allow us to save significant dollars in think as well. >> that's good. one more question. one of the criticisms of the current housing finance system is that it increases borrowing and accumulation of debt rather than the building of equity. i know that's what we need is equity. some scholars have proposed a better way to encourage the responsible homeownership is for the federal government to stop subsidizing mortgage rates and instead held potential homeowners build their finances for a downpayment. i don't know how that would work. what is your view of shifting subsidies away from encouraging borrowing in the programs that help them build equity in their homes? i have to see the mechanics myself of that concept. >> i think it is clear from the crisis that we have been through and we need this very clear in our white paper that we did with the treasury on the finance reform that we have spent too much money subsidizing what often didn't get to the borrowers because what we did is to have an indirect implicit threat of an explicit guarantee and didn't have a system with feeney and friday that made sure the benefits made it to the taxpayer. and we support limiting the risk to the taxpayers in the future system. we do think there is a role for the fha for a targeted guarantee. we have a number of proposals and the reason given he might be used to ensure that in a crisis we have adequate financing and the rates remain stable and affordable but i do think is more we can do to shift funding towards building equity. one proposal we have come and i know senator reed has been a champion of this is that rather than having the next incentive of goals which did not accomplish what they were intended to do under fannie and freddie in too many cases we have an explicit funding source that would support downpayment assistance and rental housing through a dedicated stream of financing the the national housing trust fund is one way to do that under the prior system we think their needs to be much more explicit targeted source of support the doesn't mix incentives the way the goals did in the prior system >> senator reid. >> thank you mr. secretary for your great leadership. let me ask about the family self-sufficiency program. that's something i know that you have included in your budget. it's something that my local housing advocates is a very strong and you have one of the greatest vintages in the job of having been as you describe both the consumer of the higher the services now provider and many perspectives we are working on a proposal together with your colleagues to help improve this program and your views of where we should go. of the family self-sufficiency and the reason is it is a smart approach. too often we focus on the short term and don't think about how our programs can help support self-sufficiency and reach the ultimate goal of families who can work getting jobs, becoming independent and graduating from the program, if you will, and making space for those that are on the waiting list elsewhere. it makes sense for everyone to do more of that. the problems as you fight and fight for that right now it works in our housing program, our felker program to those programs are completely separate and we think it makes perfect sense and this goes to senator shelby's point to combine the programs, reduce the cost of them and be able to expand the number of the families it reaches. we also think it's a terrific idea to have this reach hour multifamily program as well. right now the residents of the project based section 8 are not eligible to participate in fss to we think it makes perfect sense to this. we also think that this is one of the things the transformation initiative is funding as well that we have a very good anecdotal evidence, and some limited studies of the success of fss. beah torian new york city invested substantially raised a lot of profit foundation money to expand but also to study it more closely and that we are doing the transportation initiative to look at this in detail the impacts with greater studies we could demonstrate this program pays for itself and we ought to be doing much more of expanding it substantially so the proposal was absolutely going in the right direction. >> i think also to your emphasis on analyzing and ensuring that this is funds knorr the cost and if it makes sense that we are investing but also getting much more return that is the key part of what we want to do. let me turn my attention and commend you for your increase in the proposed budget for the homeless assistance programs. we have some success in the country throughout getting people off the streets and into some type of structure. but would you take a moment from your perspective of how, why it's important to invest in these programs? >> well, to go back to the point that you just made, we demonstrated that it is more expensive for somebody to live on the street particularly chronically homeless person than it is housing. it's simply that. and this recognition i think is growing broadly. your leadership and the bipartisan passage of the act showed that there is a growing recognition that investing in our homeless program is not only saving lives, it saves money. and the fact that and as difficult a budget environment we have that there is an increase in our homeless programs and the 2011 cr and we are proposing difficult cuts to many programs the significant increase in the homeland program in 2012 demonstrates that we have shown that these programs work. now the issue i would point to there's a small increase. it will not allow us to implement the harth act fully. we will implement one portion of it but to give you an example, there was a very important new role homelessness programs created in the act. there is not adequate funding to find that in 2011. and so making sure that after all of the work that was done over the decade as you know very directly to create the act it's critical that we find ways to ensure that we can find the pieces of it because it makes sense it, consolidates and will lower administrative costs for hud but tens of thousands of families, and i would just last lease a as you know what the veterans in the country 50% more likely to be homeless than average americans, the commitment president made in the veterans homelessness by 2015 we think is absolutely critical and the vouchers are an important part of that as well. >> one of the examples that help work on this effort is the testimony senator byrd and i took in the hearing in north carolina housing why the two or three veterans were living basically behind a bicycle rack in durham and one of the communities, one of the rural communities, that is where the university is also, but it's not a big mitropoulos and it should be effective. we can't lose sight of the role homelessness. let me turn to another topic and that is we all work on legislation that ultimately produced one aspect of what was in national housing trust fund. we originally thought we would fund the proceeds. that is not an option at this moment. so, we are working to try to tap into some of the profits that have been generated through the war and could again working together on this committee we insisted be part of the legislation which supported the banks over the last several years, and we've actually recouped about $9 billion in pure profit. in addition to the preferred dividends were paid when we sold the war and we picked up $9 billion just as i think they would have done if they were lending the money to us. that's one source. but to the larger issue of why it's important to get this trust fund off the ground from your perspective. >> i think many people missed this has been have seen the housing crisis to fill in many communities we have excess vacant units overbuilding in some areas. at the same time, throughout the entire crisis, for the low and moderate-income renters the burden increased. rent went above the low end of the scale. between 2007 to 2009 we saw a 20% increase in just two years in worst case housing needs. the biggest increase the we recorded in the history of the survey. and so there is no question that while the trust fund was critical before the housing crisis it is absolutely essentials now given what we have seen. in a very difficult budget the president proposed a billion dollars to initially capitalized the trust fund and in the long term we believe as i said earlier that one critical part of housing finance reform is that we find a long-term source. we set up a trust fund locally thousands of communities have done the serve the country in the the key is by having a dedicated stream of funding that's not dependent on appropriations as the original would have been it assures a consistent source of that funding that can really be generated year after year. >> thank you. again, let me just had our experience from rhode island is that in these low to moderate rentals the price of the last has gone up 45%. as one of the terrible ironies of the last few years is in the worst housing collapse where residential homes were falling rental property prices because people need someplace to stay and this housing trust fund would provide affordable rental housing and do it in a consistent way as you pointed out. this goes to the issue that has been plaguing all the fuss for two plus years now and there is the foreclosure. to take effective comprehensive action, and i am encouraged servicing guidelines have been released, updated and the services have invested more resources but what is still absolutely difficult to explain and for the average person deliberately provocative and disruptive of their whole lives is the dual tracking of the foreclosure modification. and i would point out that the south carolina supreme court justice ruled two days ago suspended all foreclosure in south carolina in the reason of the dual track and that is the and also by new york and connecticut. so this is not a localized problem and it's not one of the classic problems of well it's a blue problem, read problem, etc.. when you have the eminent justices of south carolina court saying this is so offensive to the basic legal rights of our citizens we are going to tell order banks not to foreclose until they clean this up we have to do something nationally. and i must say i was frustrated by the settlement agreed to by a federal banking. i know you were participating in those discussions. in the whole topic of the foreclosure individual track modification i would like your comments and opinions of what we can do. >> let me start by saying broadly we've taken a broad set of steps that have made a difference. the fact is that the number of people entering the foreclosure today is down about 40% from where it was a year ago. we think there probably would have been twice as many foreclosures over the last two years if we hadn't acted in the way the we did. but i will also be honest we have been frustrated, too in terms of the steps not going as far as we had expected or would have liked and part of the reason for that has been the difficulties in the servicers actually implementing and being able to help folks that by all means in the programs could have been helped. just specifically on the settlement that you described, we have been and continue to coordinate with the regulators. to be clear, their decision requires plans from the individual institution within 60 days. there is nothing in those requirements that conflicts with the ongoing discussions we are having with the banks especially on the issue of dual track and other surfacing standards, we are very much agreed that there needs to be stronger consistent standards including on the dual track and if i may do will track that we are pursuing on that in the short term for the institutions that would be participating there to make sure that the fix those prophecies. but in the long term as we sit in our housing finance reform proposal having clear consistent servicing standards that cover everyone whose servicing is absolutely critical and that is something that we've begun to work on longer-term establishing principles around that and then beginning to work out the details. i would just say it is in everyone's interest to do this. there are homeowners in communities that have suffered, financial institutions that have suffered because they haven't taken common sense steps where it makes sense and it's in everyone's financial support to modify loans. that hasn't happened because of all of the conflicting and confusing morass of issues a writ of the way that the securitized loans have been serviced so standards about pulling the service agreements and all the other steps here will benefit everyone if we can get their. thank you mr. chairman. >> cementer merkley. >> thank you mr. chair and mr. secretary for your testimony today. and i certainly echo the thoughts of my colleague from ruda island that it has been extremely disappointing to see how incredibly slow the action has been to even address the fundamental issues of process, the single point of contact with the dual track and the recent settlement was along the lines of continuing to cheerleader and say this is the right thing to do, please, please do it as opposed to anything that actually takes us down the path. we have been cheerleading for a year-and-a-half and see virtually no results on the ground. people coming in the door today are not telling you different story than they had a year ago in terms of the complete insanity of reaching a different person the may contract still having their files lost repeatedly so on and so forth. for a long time we've been hearing results around the corner. we haven't seen them. >> to turn to the qualified residential mortgage process and the proposed 20% down payment requirement, there's a lot of concern in the house and the world but this will create a two-tiered system. i would suspect you could survey my entire community of working class families where i live or any similar communities around the country into would be hard pressed to find a single family that bought their first house with a 20% down payment unless they have inherited money or win the lottery or something and the would be one of 100 at best. the you have any sense right now what the point spread is on the difference between other things equal between somebody putting down 5% and putting down 20%? >> i'm sorry. the point spread you mean -- >> in terms of the 30 year advertising mortgage. >> given that the fha continues to operate and provide low-cost financing for the low down payment, we continue to be yet to have a relative affordable low down payment option available, but i think outside of the fha, that spread has been pretty substantial. i haven't looked at it the last day or two but it's white and dramatically as we have come through the crisis and would be in excess of the point my expectation would be. >> i have had a lot of conversations with people on the ground who's worked with families and i'm adding to that my own experience working for habitat humanity and developing affordable housing and the collective impression is that a small down payment of really drove the risk of foreclosure, and for a couple reasons one is simply that -- and talking about pretty 2003 mortgage market before the failure to regulate the teaser rate mortgages, believe interest rates mortgages, before that set the foundation for this entire meltdown there was a steady appreciation in housing prices, and folks who renting if they could come up with a down payment in a few years they had some significant equity and found themselves far better off in terms of stability in the financial foundation than those who continue to rent and the huge incentives to hold onto their house as a point of great pride and stability for their family and the primary wealth building aspect of their life. things become quite different when you introduce the predatory mortgages and the balloon in the housing value the was driven by the teaser rate mortgages. but take that away because we aren't going back on the path. we have thankfully outlawed the undocumented loans and the prepayment penalties and the steering payments that drove the originators to steer people into the sub primes. all of that so we are trying to reclaim the standard amortizing mortgages as a wealth building instrument that it has been since it was invented all been the great depression. the 20% down payment requirement driving a two-tiered market to the disadvantage in no provision to buy 20% down payment. i would try to get your thoughts on that. >> it's a very important question, and i think in my mind it's important to state up front there is no question that down payment is one piece of what helps predict the performance of loans and the risk and we certainly saw through the crisis has i think that you acknowledged we went too far. could we have seen in the portfolio there is down payments or other loans that were effectively 100 per cent ltv that the performance was significantly worse even controlling other factors but i think the issue here is both the one you raised which is important which is access. we have to balance thinking about the importance of making sure a range of middle class families, low-income families continue if they can afford to be homeowners and prepare to be homeowners of the continue to have access because down payment is the single most important barrier. we need to balance that against safety and soundness. but i think the other point i would make is that we shouldn't lose sight of the fact that down payment is only one element of the felipe risk and what really got us into trouble is the leader in the press between down payment and a whole range of other factors. so when we put out the proposal and i would emphasize its proposed we've made no final decisions we are very interested in comments. we did put in the preamble alternative to the 20% that was at 10% that is really inviting comment of exactly the time that you're making of what should that balance be coming and what other factors should we take into account should mortgages aren't or other types of risk retention be able to compensate for that, how exactly do we make these pieces work because it isn't as simple as saying we should look at the loan-to-value and ignore the other components of leering of risk. >> everything i've seen shows a very small discrepancy before we allow the predatory mortgages in 2003 and within the fully amortizing certainly amounting to less than the basis point, and i just want to reemphasize this point taking the wrong lesson out of the crisis the lesson was you don't allow kickbacks to the loan originators or undocumented loans, you don't allow teaser rates with deutsch prepayment penalties to lock people into them because in that setting you will drive people in need of that balloon bricks and will matter how much a downpayment to have severe needs to be scanned in the game but putting a large premium would be a misreading of the experience that we have had the last 20 years in the mortgages. so i would just want to emphasize that fought. there was a study that cannot because the new census of northeast portland which was a poor area and used to work in it were a message out migration of impoverished families, and the main finding was that it was a failure of the city to work and i say this city because it was kind of related to the city policy but it does reverberate in the broad housing world the failure to tackle the down payment problem. while i was working there we created an organization called project downpayment specifically to try to tackle this fifth by raising the money to assist was very slow and difficult and a few families work civilized. those who were stabilized their housing went, their homes went from joost to 60,000. so they participated in the american dream and the way we can never get through to minting. >> i would love to call a one-shot program, the so-called opportunity program. it's been moved into the budget online and it's not clear what that means for its future and i think it's been a substantial factor in encouraging the type of fundamental -- fundamentally fair strategies that have in power a tremendous number of families who never otherwise would have been homeowners. >> thank you, cementer merkley. thank you, mr. secretary, for your testimony. i look forward to working with you and the committee to ensure hud programs can effectively meet the needs of our families and communities. this hearing is adjourned. >> thank you, centers. [inaudible conversations] .. >> seem not to administrator, craig fugate talked about twitter to talk about disaster response. he spoke at the subway and committee on disaster recovery. other witnesses include shona brown, google.org senior vice president as most medications officers from the american red cross and the arkansas department of emergency management. arkansas senator, mark prior chairs the committee. this is an hour and 45 minutes. >> i want to welcome everyone to the subcommittee. i went to thank you all for being here envelop her witness is. i also want to thank senator brown for being here today service in the slot. it may be temporary, but we certainly appreciate you and all your doing. it's been a pleasure working junior staff on this hearing. let me start by just saying that we have two panels today, very qualified witnesses. they certainly want to thank direct your fugate for being here. his time is very precious and he's been generous with his time and always helpful to this committee and said he may be helpful to the senate. thank you two other witnesses as well, although once involved in various disasters around the country. we really appreciate all the while attending appreciate you being here today. last week a series of severe storms swept across the southern united states causing immense damage in historic loss of life for the storm system spread powerful thunderstorms, tornadoes and flooding and it was the second deadliest day of dramatic act dvd in u.s. history and killing 341 people in seven states, including an unimaginable 249 in alabama. at least those are the latest figures i have. 14 people lost their lives as a result of the storm in the state of arkansas and i want to offer my most sincere condolences to the families of those impacted were killed during the storms. i hope your families are comforted through this very difficult time. today the fed to many husband joined by very insightful guest to talk about the increasingly important role that social media networks play during disaster response and recovery efforts from search and rescue to family reunification to safety at dates to communicating vital shelter information to other critical or life-saving information into other on situational awareness, social media is becoming a tool that people are coming to rely on him to use heavily during emergencies. in july of 2010, the american red cross conducted a survey and they are here today and will probably talk about this in more detail. they cannot did a survey over a thousand people about the use of social media sites in emergency situations. the results of the survey were striking. 82% of the participants use some form of social media at least once a day in nearly half of those use it every day or nearly every day. the survey found that if they needed help and couldn't reach 9-1-1, one in five would try to contact responders through digital means such as e-mail, websites or social media. if web users new or someone else knew who needed help, 44% would ask other people in their social network to contact authorities. three out of four respondents would expect hope to arrive in an hour is called for help was delivered over the internet. 35% would post a request for help directly on a response agency facebook page and 20% would send a direct twitter message to responders. more than half of the fund and said they would use social media to let loved ones know they were safe. their survey also said the respondents with children in households are more likely to use social media, 81% versus 67% with those who do not have a child in the house. as we work continuously to improve our efforts to respond to them to recover from disasters, it is important that we find new and creative ways to communicate information to those facing the often chaotic circumstances that surround emergencies and disasters. i want to thank all of our witnesses for appearing today and contributing to an important conversation that i am certain will lead to more effective tools will save lives and make delivery of the systems more efficient in the future. senator brown. >> thank you, mr. chairman. i appreciate the opportunity to serve with you on the subcommittee today. and as a reference, my thoughts and prayers go out to those in alabama in the southeast dealing with the loss of their loved ones and homes this past week. there is no better time to discuss what we are discussing today. i know our witnesses will provide useful insight into the tools and technology finance system better respond to the recoveries and future disasters that may be forthcoming. i had an opportunity to go to google and other places of social media companies to understand what they do and how they do it and we've met here on capitol hill with facebook folks and others and having kids, i enders and how they have adjusted and adapt it and really learned a lot quicker than me or other members of my family and using social media or innovative technology and i've used it quite a bit myself in the last couple years. i think it's important to understand how it is being used and what the opportunities for future starter, how we can actually use this when we have natural disasters and other types of situation we need to get reliable important, sometimes life-saving information. i think it is another tool in the toolbox so to speak and i'm looking forward to the testimony of everyone and i appreciate everybody appearing today. thank you. >> thank you. our first witness of the honorable w. craig fugate, also known as fema appointed on may 13, 2 dozen and to serve as administrator on a fairly famous career in emergency management, help discuss fema's short-term and long-term goals for social media tools and i know that correct her fugate has just come off the road. he's been in many places and he may tell us about some of it as well. we do have a timing system today and will do five minutes on your opening and all of your written testimony we put in the record. mr. fugate. >> well, thank you, mr. chairman. i think senator brown said it best. when we talk about social media, we need to understand it's another tool in our toolbox, but by no means the way we need to communicate with the public both in morning and learning situations but as well as communicating with them. i think social media offers a new challenge to ice. previously we've had the ability to communicate at the pulpit, whether it is radio tv, webpages, even billboards going up across much of the south who used for these tornadoes struck. our ability to communicate with the public can have to a conversations has always been limited and as we have seen in numerous areas in recent years, we oftentimes have taken the approach of government is creating systems that people have to adapt to how we communicate. we don't always adapt to how they are communicating. as we've seen people begin using these tools differently, many of which are almost everything we use what was social media was never designed with disasters in mind, but they became increasingly tools that help people are communicating day today and sharing information with families and loved ones that began providing a role in the disaster in ways that for us in government we didn't innovate this. we didn't create it. we didn't direct it, but we begin observing it. connecting for us at the federal emergency management agency as well as other state and local levels and voluntary agencies and other groups that even disaster response, we began to see a whole new group of volunteers emerge with skill set of being able to apply this technology and real-time situations without necessarily a direction from a central location, but more of a term that is often typed crowd sourcing, and many people working on problems, sharing information, oftentimes getting better solutions. mr. chairman, and this caused me to realize that in some ways social media and particularly volunteers and groups in the industry involved in this at night to put it this way. we need to innovate faster than the speed of government and they're doing it. so instead of trying to make systems that i come and make the public said how we communicate, we have fema are trained to meet that need in figuring out how to apply this. at this point if someone says craig, what is the performance metrics? how are you doing this? i would say, we are still experimenting. we are still really trying to understand how these tools could be applied. mr. chairman, most of the time the country these minutes in the first thing you do is turn off your cell phones, but i'm going to bring rainout because here's what i want to communicate with a short time i have. in most disasters, when you are displaced from their home camino a good access to your computer. you may not have wi-fi access, but in many disasters including being on the ground in haiti where we had folks there within a day of the earthquake, i was down there week later. the one thing that was working for mobile devices. and it is this that i think we in the federal government need to understand that we are moving more and more away from a web based capacity to a mobile environment. so one of the things he did could have fema was disturbed to read our information into mobile format. we have a mobile webpage and fema.gov because when you're a disaster survivor, you don't need pretty pictures and you certainly don't need all of our programs. you need information that will be low bandwidth that you can get to a phone and get things you need. we designed a registration so you could access it are your smartphone. we are also learning that the public has tremendous information in disaster areas that often we have taken the approach that it was not official or not usable because it did not come from the traditional forms of communication. mr. chairman, i would suggest that we look at the izvestia points points, as sensors, the individually may not provide the best information but collectively oftentimes are the earliest and best reports of the severity of an impact in italic and stories faster to manifest them or inability to get into an area. we seen this in haiti, japan, christchurch and even in the tornadoes across the south pictures has dorms, giving us permission. i think we need to take the approach that the public as a resource and not a liability and learned how to listen, but we also need to recognize we are in a global environment and the federal government is to focus more upon developing data to support our citizens in a way they can use in a disaster rather than making them fit our conditional models. thank you, mr. chairman. >> i think those are points very well made well taken. you now because arkansas has had so many tornadoes storm events, floods and the last couple weeks then again you guys have been great about being on their anonymous but, being on site and helping people. i've been giving out the website you're talking about coming to disaster assistance.gov website in your toll-free number and pretty much everything i've done this week when i talk to her at the media have been encouraging them to do that because i ink people just communicate that way today and you guys can provide such great tools for people to access immediately and it just is really a game changer, so i appreciate you will be on top of that. at fema, do you all have people in office that are doing your social media focus here or is this just part of your overall effort? do you have to focus on this? >> we do have dedicated staff that are working on her digital engagement. initially when i got to fema, the webpage using things like youtube to post updates videos and beginning to do disaster with the state for information that the public. when i got there, one of the things i asked early on was to begin tweaking, which i attended the state of florida, so i now tweet of florida. i don't tweet about me. i tweet about things that are interesting. a lot of people i communicate with our tears and practitioners it's interesting that not only is it useful and disasters, but it's helping build the community and emergency management that traditionally had to go to courses or conferences to see and hear across the nation ideas. there's things that are coming you know, when you get into the nomenclature of all of these concepts of what a hash tag is and twitter. what it is this something that you build into a message that you can link on, that everybody uses that tag and you can link everyone else's message together. so very early emergency management community are asking these very questions about social media application is a pound sign social media emergency management, not led by female, but we have staff that participate. as a conversation taking place this state, volunteers, research, the dirt and we've never had this kind of tools. we never saw that interaction outside the settings or courses which was limited. so we have essentially directed at her, but it also is underlying the key principles. give information all the way from high bandwidth low bandwidth to in person. we cannot forget they're people who don't use social media. communicate and provide tools the way people are communicating in using those tools, not limit them to what is easy for us to administer. >> you may have this available, but do you have examples about social media that has saved lives? >> better examples than i think you'll have people in the next hearing that will talk about this. some of the examples in haiti, where the wireless infrastructure came back home rather quickly. as people were trapped in debris and rubble and you did not have a centralized government system to receive those calls because of the extreme damages to both the government in haiti at the u.n. people were able to get out text messages that were being received by people outside the area. they were able to figure out where those people were and approximately based upon the towers and worked with the cell providers. i think you hear stories about how a lot of volunteers and people with technology x or x were able to start mapping and providing data in a way that allowed the u.n. and other forces friend usaid and other resources were needed. and that was just one example in a country that many of us were kind of taken aback on the devastation, but also the resiliency of the haitians themselves and how much mobile technology had actually been integrated into their country prior to the earthquake. and i think that to katrina and think about all those folks in the superdome and other places and i guess, was the wireless network up and running at that point? you may not know this. was it up and running in those early days? >> mr. chairman, i really don't know, but it is something one of the things we've learned in my experience in 04 and 05 and i don't know if we have any of the wireless operators that could provide this information, but it has been my observation that the industry learned from this event and now works hard to get an additional resources to both bring backup wireless, but also increase capacity. we solve this in tornadoes were they brought in additional equipment aboard to get soft. and because of that, we've seen and again i kind of like a dede is the lesson learned. we actually were assuming until he that wireless communications in areas of devastation would be unreliable and we really would need to plan for it. hades taught me that the industry has learned and is becoming more resilient and oftentimes will probably be for many people in the public the first communication that comes back would be the wireless services. we have a chart here if you don't mind to look at that initiative's internet usage after measure of events in haiti is one of those. you mention christchurch new zealand, chile and japan and the peaks, as i understand the chart are the top internet usage and the valleys are usually at night when folks are sleeping. do you see that they keep using the internet and it is a great way to communicate with folks. and like you said, a lot of folks are out of their homes at that point where they may not have electricity or may not have access to stationary device, but the mobile device they certainly can utilize. i am glad that fema is on top of the trend and is really leading the way in that trend to try to communicate in that way. you're hearing from people, but also you are communicating back to people what they know. in some ways it sounds like social media is the emergency managers dream because it is such a tool that is so wide spread in so many people's hands. is that fair to say? >> mr. chairman, some of my peers now equate wireless in social media as a revolution and emergency management as powerful as was the original public safety radio systems except now this is far more reaching than the ability to communicate with the public. so as we see this again, our role here at fema is to keep up with the public anonymous early fall back into wooded integrationist speed of government, let to the technology industry. i've had the opportunity to be the google, twitter and really looking at their insights of how we better utilize the private sector is part of the team and not try to re-create things they do better, but use those tools to better communicate and listen to the public as we deal with disasters. >> is that your impression during the disaster the public will find you using social media or do they know where to go? >> no, sir. again, those people that had disasters don't. this is why we work so hard and i appreciate every time and you pretty much know the drill is to get people to register, get the information out there so it is always first important to get people to know where they can get that information. part of working with the states of joint facebook pages, but i think i am large most people are thinking about fema and that's why trying to build systems that are government specific tend to fail. it is our ability to use the tools they are using interactive things they are used to using. when we tell people to go to a webpage that is their typical federal webpage, it's not easy to find the information. that's why we built the mobile page. it is strictly about disaster information that they need, not the traditional way we oftentimes put information on the webpage. >> great, hope is you're going through some of the next few weeks, i hope you keep the committee posted on how many folks are using your page and how that's going. >> we have that and i will provide that instead. you can see who is using the mobile page, he's using web ages versus traditional calling in the 1800 number. >> by decree. senator brown. >> thank you, mr. chairman. i appreciate the fact he had been trained to push up the homepage webpage when i was preparing for the hearing and seeing how we can help, we're going to actually do the same thing. we're going to put on her official site and in the event of emergencies or you can contact, how you can do it to various social media or traditional as well as the facebook. i think i have 250,000 without are going to do same thing may because it's so to get the information because when you have that natural disaster, you're not thinking. you want to just get in touch with somebody and you're going to use any mechanism, any phone, landline, shortwave, whatever to help your family and the people you care deeply about. so being here is the ranking member has triggered me to work with my office to develop a plan to how we can affect it the information and i encourage all of us and highly elected officials to do the same thing. i noted the "washington post" stated that people frantically text 9-1-1 and emergency apparently and they are unaware their text goes nowhere because in all but a few cases it hasn't been modernized to receive the messages and people have a lot of faith in 9-1-1. you hear the commercials. we hear regularly read on her young children regularly for calling 9-1-1, but now they text 9-1-1. but the biggest challenge is to bring of emergency services like 9-1-1 into a 21st century in your opinion quick >> as they project the federal communications commission has heavily engaged in called next-generation 9-1-1 and it is a recognition that has technology has continued to evolve, has evolved faster than the original 9-1-1 system design. when 9-1-1 was originally created, it was an analog technology. over time we've added the ability to get the address and location and phone number that people were calling from. but then cell phone started to occur and all of a sudden we realize all the phone lines were hard not. cell phones are not. so the industry and fcc work cannot cell phone or you could tell people where you were but you are calling for an emergency where they could find you. now we have as you point out people using text messages the red cross survey says that people taxer at date for tweet, they expect an answer. this is something that next-generation 9-1-1 is looking to address. most likely the first part of that will be text messaging because it would be very similar to a traditional 9-1-1 call from a cell phone. the other types of social media is going to take our time, but i think is a recognition the fcc that we need to do that to get that help you but also what it can provide to responders. this is, nothing was done in europe and other places, oftentimes they have the capability to take live video feeds from people on the scene and get it to responders as they are in route. part of our challenge is 9-1-1 is essentially the architecture and equipment investment was based upon rotary phones and push buttons on technology. and now is the fcc looks a next-generation 9-1-1, how to incorporate the new type ologies and not limit ourselves to just voice calls? >> chesty segue into my next question. approximately $9 billion price tag to implement this potential changes in a time where we are in a fiscal emergency and dealing with a lot of issues. with senator carper on the subcommittee that deals in fraud, waste and abuse, trying to zero in on all that stuff, is there a way not to reinvent the wheel can work with companies like google and facebook, the social media? i know the entity is not to not reinvent the wheel at the base level and have to spend a tremendous amount of money and maybe incorporate a lot of what dirty out there so we can just add on and potentially save dollars. is that possible? >> having served at the county level, where i was actually responsible for the 9-1-1 system and knowing that history of prey merely the wired telcos as both providers of technology and equipment, i think this'll be one of the challenges as we move forward to next-generation one is to incorporate the other technology players into that in a way that does a system that we can continue to enhance without necessarily limiting ourselves to just what we know now. we look at the architecture of the systems them up to where we were and where we are going. they actually call them public safety answering points. it's not a network. you dial a phone and it goes to a dispatch center and then they operate the call from there. i think a network-based approach like we are looking out with public radio for public safety in the kidnap network based radio systems is the direction the next-generation 9-1-1 and that will open up a lot more of the technology companies. i think you are correct in that this has to be done not just what the immediate needs are, but also building a system that we're going to be able to adapt to new technologies. nobody knew about twitter five years ago. so looking at systems that often times take decades of capitalization to build his how to rebuild a system to adapt to new technology? >> with historians and everything around the southeast, when telephones and sailor services interact in a couple federal government to set up like mobile cell towers, charging stations, hotspots and disaster zones and is this part of an sop in times of major event into a working partnerships with the mobile companies to do the sorts of things. >> yes, sir. this was something i've been pushing for a long time. our primary focus with the federal communication assets have been to get the public safety responders back on the air. that will continue to be the priority. i have also asked my staff to work with the industry that i agree with you is just as important to get connectivity back to the public. you produce something that i asked her team about and we're working with industry. we often times running phone banks into areas of devastation so people could start making phone calls. we have asked and are working on i believe i had to report this morning that verizon is starting this process is to get cell phone chargers out there so that people can charge their communications. and again, i think this is often times we tend to be reactive and again points out the need for looking at how the public communicates in recognizing that some executive, but also cell phone charges are the brightest cell phone for something just as much needed. >> just a final thought. i would think i would want to be part of siemens mobile response of the falls church units or whatever. >> we are definitely going to be adding that to the toolkit and it is being implemented as we speak now throughout many of these areas. >> thanks for what you're doing. we appreciate it. >> before you run, i have a quick follow-up. when daniel c. on site number one is great information, but 69% of the people out there think that emergency response agency should regularly monitor the websites and social media site so you all can respond promptly. i guess the question is, are we building an expectation here that we can't meet? and are we monitoring these as we should have some of those may be state-by-state or even city by city issues, but do you want to respond to that? >> yes, senator, this is one of the questions that in some cases people are saying should we be doing this because they may create a false expectation? again, as we do this, we are really trying to figure out how the best way to direct people to the best information, which often times is through local emergency managers and then state emergency managers about information would provide for fema. we do agree if you're going to post a blog, we do moderate our comments. we don't necessarily -- will we do is just make sure whatever comments are not offense, but we do not self censor any criticism. we post it. the only moderating would do is to make sure their son offensive material, but will post the good, bad and ugly. as svc stuff, we respond to it. but we also need to make it clear in many cases it's difficult to have one-on-one conversations geared in many cases, we listen to what the community is telling us we may not appeal to respond one-on-one. this is one of the reasons why we make it very clear this is an emergent, contact 9-1-1, contact local responders. if this is information or opinions or what you first team, we want to look at it, but we may not able to respond to each one of those postings. it is kind of a challenge as i said. we've got people to listen to the community, but we may not be able to have a conversation when i'm on. get in one event i actually did. we've a tropical cyclone and the central pacific bearing down on americans on the left. i was out dating, tweeting out the forecast and most people think we come to the national hurricane center come from the central fake center in hawaii. either person tweet that he was on the island and these were the conditions. i sent back inc. for the updates. can you keep sending them? we were using the hash tag, so he kept hitting the updates. so in real time, and a person that was down there keeping the updates about the tropical cyclone and that it was almost humorous, but it gave a good sense of what was going on. midway through the back end of the storm, he begins to team the chicago bears screen day came and i realize if he is getting information about the game and that was his new concern, but he beat the storm wasn't so bad and it turned out porch light was minimal damage. that is a rare example, but it's also very telling of the power of looking at the public as part of the team in resource in doing a better job of figuring out how to communicate with them. again, all i was doing was getting information out in the wild storm forecasts were coming from because this is not something people are familiar with. just one anecdotal example of how the public and oftentimes tell us more about what's going on and even artificial sources. >> that's great. thank you for that. director fugate, thank you for being here. i know you've got to hurry back to do your job, but thank you for being here. >> senator brown. >> as direct your fugate is leaving, will set the table for the next p&l. >> if you want to go first and ask questions. >> we will go ahead and set up the witness panel for the next panel and not go head into a general introduction of folks as we go through this, as they are getting squared away. our first witness will be remade pressler, public information officer for the ark department of emergency management and she has had her hands full the last couple of weeks and she has been a vital resource in managing communications of them apart as worst disasters. so thank you for being here today. secondly, we will have two z francis, chief public affairs officer at the american red cross. we appreciate you being here and you guys have been very, very busy around the nation can particularly in the south, but other places as well. we appreciate your time as well. next we have shona brown and thank you for being here. she is senior vice president of google.org and she has spearheaded googles people operations and business operations groups since 2003 and she will share some of her experiences with us today and we appreciate that. and then we will have had their blanchard, the cofounder of crisiscommons. she has helped establish crisiscommons, seeking to connect people and organizations using technology to innovate crisis management and global development. she will detail her experiences with recent disasters as well as emerging trends in the use of social media and emergency response. so again, i went to thank you all for being here. ms. blanchard, and are seeing your mother is in the audience as well. is that true? good. thank you, mom for being here. we appreciate that her image. what i would like to do his five-minute opening statement and try to keep those as best as possible and then we'll ask a few questions. renée, do it to go first? >> first about, thank you for letting us come. i know all i know all of us have been busy with the storms that have come through the nation. we feel like this was extremely important to kind of go through and explain what we do not only from the state's perspective, but also from a local active subic and hopefully move forward with the social media presence and is asked to. arkansas has played -- we've been using social media pretty much spent 2008 -- summer of 2008. we started with facebook, but it wasn't because it was something new and we thought this was amazing. it was because we physically stop documentation where our communities are coming together and social state in the wake of disasters and we were realizing that was immediate audience that the work beaching directly because we were using traditional sources, radio stations, but using the website as a media outlet and as a tool we just hadn't done yet, so we felt that was a vital resource. we begin with facebook and use it on a preparedness fans before disasters, talking about you can get a kick, get prepared. stay informed with all the information going on. we used it also is a mitigation aspect of disasters, too, simply to show people different projects they could do to protect themselves in weeks of disasters. and then, after the severe storms, tornadoes that came through the positions, we had tornadoes on february 5th and that we dealt with a lot of funding in may and march and april and december again and then we had more tornadoes. we saw there was a need for is tradition for that transparency over to response and recovery on the social site. so socially we began putting out messages on this vote and twitter are talking about the specific areas need to take cover. we work directly with the national weather service. they were done social sites of the information were received from them would pass on information to. in the state of arkansas, the way the locals can get their tornado sirens come to think that nature governed by the local individual jurisdictions. some jurisdictions whose tornado sirens. sunday's reverse 91 and said that nature, but we wanted to make sure people had an ability to get information from wherever they were going and that's what we started using because you might not be in your home listening to the television or you might have satellite television solicitor whether the tv goes out and you need an additional outlet to get that information. we decided we would go to them and use them as a tool to go ahead and take care of them making sure they still got emergency information taken care of. the recovery process worked fantastically because in some areas all across state we are dependent upon locals to get our information. the local emergency managers when they are dealing with life-saving resources, we go to the local communities that are individuals on facebook and social media sites to get disaster information so we can again take it to emergency managers in communities to get resources they need. >> mr. francis. >> thank you, mr. chairman. as he said, the recent deadly storms across much of the south and midwest including your home estate -underscore timeliness and importance of this hearing. as you know, the mission of the american red cross is to help people prevent and prepare for and respond to disasters. today want to talk about how social media is enabling the public to play a much bigger role in helping with that mission. i want to draw your attention has been referenced to recap that exist between the public's use of social media in a church and the ability of your response organizations and relief agencies to act in a timely fashion. finally, i want to offer thoughts about how we can begin to close the gap. the american red cross is 130 years old organization and tools we use to respond have evolved over the years. perhaps the most exciting innovations are social type allergy because they allow us to listen and engage with the public as never before. we saw this with her fund-raising efforts during haiti. we ruled out our campaign, text td 290-9999, and his people and social media who took it by row. in the first 48 hours, there were 2.3 million retreat of our tax number of people sent into followers and before long we had raised $32 million the attacks, $10 at a time in 42% of our text donors were under the age of 34. we saw the same phenomenon with japan. the earthquake happened at 2:47 a.m. east coast time and before most of us even got into the office, our tax number was on twitter. social media communities were way ahead of us in trying to give out ways to help. they take elegies are not just helping a fundraiser. they are becoming part of our operational dna. in haiti, we sent out 4 million text messages about the symptoms of cholera and how to prevent it and treated. here at home we built a dynamic shelter map with the help of google to update or seltzer information. we not only have the signer website, but we built an iphone apps that people can find a shelter on their mobile phone. we are also helping families connect in the first hours after disaster strikes to our safe and well website where people can post whereabouts and update twitter status. we are treating red cross volunteers to deploy disasters to use their smartphones and social media to let people know where they can go to find shelter, food and other services. it really exciting, we are creating a new digital volunteer role, where volunteers help us monitor, authenticating route incoming disaster request without ever leaving their home. we know in a crisis and has been said people turn to the communication tools they are familiar with every day and disaster response and relief agencies must do the same thing. so as you referenced our survey, mr. chairman, we found more web users get emergency information from social media and a no weather radio, government website or emergency text message system. not only are they looking for is seeking information, they are sharing it. one in five social media users reports posting eyewitness account of emergency events and if someone else is in need, they are enlisting their social networks to help for using facebook and twitter to notify response agencies and they expect us to be listening. as the sad, 69% said the emergency responders should be monitoring social media site and 74% expect help to come less than an hour after they tweaked or put a post on facebook. these are extremely high expectations. they don't match reality. as disaster responders are still not stopped to monitor or respond to the flood of incoming requests during major events. at the red cross, we experienced a heartbreaking situation after the earthquake and 80. we began receiving tweets from people trapped under collapsed buildings. we had to go through the messages manually and try to route them through the state department and other place is and in some cases, we were too late. these are life or death situations that we must find ways to respond more quick he peered while we will solve these issues today, we are making progress in collaboration with partners as was demonstrated in alabama. people affected by the tornado were posting needs to an online gathering point in working with an organization called tweet the tweet as well as the not in crisis, and we were able to share that with the alabama emergency operations center. for the first time, we were able to connect crisis social data with decision-makers who cannot done it. i believe you can help us continue to find ways to link up social data with response. we also believe, as he discussed that the administrator that the federal government does have a role in helping with the next generation 9-1-1. and we agree the first and best choice for anyone in an emergency is to call 9-1-1. however, 9-1-1 should become possible with text and social media. if i can leave you with one thought, social media is enabling real citizens to play a role in helping their neighbors down the street, across the country or around the world. but we do to help that process will literally save lives and help ensure that our country is as prepared as possible to handle any disaster. thank you again for your leadership on this issue and am happy to answer any questions you may have. >> thank you. ms. brown, i understand you have a video you want to show. is that right? okay, that's fine if you want to start with a short video. are we queued up on that? go-ahead. [inaudible] >> panic, fear and misery have overwhelmed this corner in china. >> a racist a final at the hour stretch on where people are still trapped in rubble. ♪ ♪ ♪ >> the worst damage that distinguished with a cross shaped national before the earthquake and after the entire roof caved in. >> it looks like nothing. look at that. nothing is left. >> it is called google person finder app when they turn to some services are down. >> this has been used in the haiti and chile earthquake's and by organizations like the red cross. now it's helping in christchurch. ♪ >> senator pryor and senator brown, thank you for inviting me. [inaudible] >> it went on and off. >> sorry about that. >> i want to apologize for my voice as well. i am a picture of california health treating a knack for inviting me and your attention to this important issue. i received google's efforts can use the power and technology to deliver critical crisis related information and to slake google finder, which helps with once we connect to emergencies. our thoughts are with the communities in alabama and has been mentioned across the u.s., which took the lives of at least 300 people. a minor role in his organizations. i am here today because we believe technology can make their jobs easier. in the aftermath of last week's tornadoes are dimension. the writing maps to locate nearby shelters, we have they satellite imagery from first responders in direct good tornado or twister tube amounts to enhance search result. we are not experts in crisis responsibly play amount of stroke compared to the relief organizations and agencies, but her experience over the past few years has given us a unique vantage point. and alas for must be responded to more crises than we did in all of last year. a status experience all outside three reasons for simple standard open internet-based technology and critical tools for emergency responders and affected populations. also suggest that the government can support these tools. present i to tell you about a father use one of these tools to find his son in japan. tom storms was teaching when the earthquake struck. he was unable to reach his son at home because the networks were damaged, so we turned to google person finder and posted a picture of his son and asked what any parent would, if anyone has seen them, but enough is still okay. a few hours later someone responded that even taken refuge to the local elementary school. a few hours after that come the responded to alive and well and not long after that thomas able to use the internet skype application to video chat with his son. so what makes the internet useful following natural disasters and such a comfort? first, nothing remains available in other networks fail. in japan and other communication systems were unstable, the internet was uninterrupted. because of this we were able to get person finder up in japan in only 90 minutes. second, during emergencies, people tend to turn as has been mentioned to simple internet services they know well. after the earthquake in haiti, we sent teams to port-au-prince to better understand how relief workers nations were using google tools. our team was in a refugee camp in one of the officers explained the soldiers used google maps to plan controllers. finally the internet scales and the product hoping. after the earthquake in haiti we found there were 14 individual missing person databases. they were not integrated and they all ran on different infrastructures to meet thoughts an important opportunity to create one common database, pushing throughout databases the idea became person finder. the response has been overwhelming. person finder managed within 600,000 efforts following the earthquake in japan and more than 36 million in the first 48 hours alone. google has the infrastructure to handle that volume and the internet remained stable, allowing people to connect. before person finder, tom storms would've had to go to multiple websites and check and recheck to find news on assigned. long before the recent flooding in pakistan, two pakistani web developers noticed available maps of the country were incomplete and inadequate to the used google map to add in a day geographical information for millions of people to see in google maps and google earth. in 20% of pakistan was under water, we shared our data with unicef to not making agency to help them plan recovery efforts. similarly, our friends at open street have created the most complete maps ever made by getting haitians to volunteer knowledge. what can government do to support these kinds of tools? you can dub simple open and standard ways of publishing and disseminating emergency information. to purchase standards make it much but difficult to collaborate from responding quick in situations when speed is of the essence. for example, we've lost valuable time trying to gather into open standards information kept in arcane format on government websites. also, critical information is sometimes spread across multiple websites. in another case come important it is not a mind at all, but stuck in a spreadsheet stored on somebody's desktop computer. in particular, alerting systems that leverage the common alerting protocol standard and inform users of crises such as tornado circe maumee as well as everyday problems. if alerts are implemented in open fashion, government can provide trusted information and private actors with google and others can publish updates easily accessible to people when they search for information on their computers are smartphones. this can be coordinated with commercial mobile alert system so people have the same opportunity to receive alerts for telecommunications providers are internet providers. i'd like to end by thanking chairman prior and senator brown. we play a modest role that we are committed to workers instantly finding information for emergent teeth. >> good morning chairman pryor, my name is heather blanchard the founder of crisiscommons that uses open data and technologies renovate management appear before the position i spent seven years at the department of homeland security, including the position of deputy director of the ready campaign. on behalf of our communitycoming to feature one or to testify before you today. when a crisis occurs, does that emergency responders first on the scene. it's everyday people who use everyday resources like their mobile phone and social networks to share what they know. this could be a road by a tree in a storm or creating a map in e. wildfire. today there are many volunteers who leverage technology like crisiscommons the contract technical capacity, harness opened in collaborate tolls to help first responders make sense then the daily should information that occurs in a crisis. we believe information at the right time in right place can help response authorities and citizens make their decisions, especially in a crisis. since the spring of 2009, crisiscommons has been an open forum to explore how information, including social media can help in a crisis. our community has supported organizations and citizens in the response between tennessee floods and last week's historic turning those which impacted the southeast. just to share an example, during the blizzard which paralyze chicago this year, our volunteers in collaboration with community were as supportive "chicago tribune" snowmass to assure that publicly funded assistance would route 311 promote their local authorities. one challenge we often see today's government agencies simplify the use of social media at the public affairs function when a factor in a crisis access to citizen generated information is an operational necessity. as an example, this year during our support for the national level exercise, the situational group we participated in struggle to define how social media information would be coordinated from an operational at as there is not a resource function which connects open data, including social media and leverages potential search capacities for communities they crisis comments. we would like to recommend to the committee that government create an operational liaison function which connects volunteer tech elegy communities to our response systems that the federal, state and local levels and be a resource for support during crisis events. we recommend that current emergency management doctors be revised to include the capacity to harness technology volunteer expertise in collaborative systems. another challenge we have observed is that local emergency operations centers the connection between social media information operation is largely absent. we were shocked to find some centers like typing with internet technical skills or collaborative tools. we are also made to find stringent security policies producing social media tools for operational purposes. without this capability, emergency managers could be missing. the critical information in their operational picture. we recommend emergency management infrastructure be fully modernize. we also recommend a policy and management doctrine be modified to allow emergency management personnel to engage outside their own organizational networks and to take advantage of social media tools and capabilities. as you can see, emergency management may not be prepared to utilize social media tools and data to augment operations and to inform their mission priorities. when there is a crisis, which diminishment continuously find themselves overwhelmed with information. we recommend that resource be devoted toward helping emergency managers for data preparedness and increasing the level of digital literacy of emergency management workforce and empowering their ability to connect with technology support. in looking at the government's role in this ecosystem, the data pages is passively sitting on the social media sidelines for behind the firewall are over. the time has come to a false rumor open and participatory management model. we believe the federal government has a leadership role to play but again we feel institutional support is needed to move us to the next level. to emphasize, we recommend the following: creating operational liaison function with technology communities, revised policy management doctrines to incorporate social media and other technology capabilities. invest in modernization of emergency management infrastructure in collaborative tools that support data preparedness and filtering and increase the level of digital literacy of emergency management workforce and empowering their ability to connect the technology support. in spite of this challenge, we know many emergency managers who are pushing the envelope every day, sometimes at their own professional risk to apply social media tools and data to their work. we are supporters of the enlightened leadership and administrator fug fugate has evy day. today we are asking for your help to support the needs and enhance it than emergency management means to fully utilize social media information and provide conductivity to communities who can support their efforts despite comments. thank you for the opportunity to testify before you today and i look forward to answering any questions you may have veered >> thank you. i want to think the panelists. senator brown was about here a few minutes, but he wanted to ask a few questions before he goes. >> thank you. when introducing the first question, it should be noted that two of our four witnesses are actually public affairs officers and with that, my question is, how do we start utilizing the tools were talking about beyond simply public engagement but to actually informing them of operations and actually responders in fact
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