Transcripts For CSPAN3 Politics And Public Policy Today 20161117

And International Partners in mission hosted this event at the happy dog bar in cleveland. Its an hour. Good evening. Im steveny jansky, director of programming for the city club of cleveland. Its my pleasure to welcome you to the happy dog takes on the World Special Edition Event where were discussing the Foreign Policy issues facing our 45th president. These events are presented in collaboration with cleveland counsel and world affairs, International Partners in mission, the northeast Ohio Consortium of middle Eastern Studies and our primary media partner, wcp and 90. 3 and pbs idea stream. Id like to introduce our moderator, wcpn hoster tony ganzer who will introduce our panelists this evening. Thank you. I am tony ganzer from 90. 3. The most exciting part of evenings like this are when you get up and get to ask questions or share comments or what have you after a discussion. So well talk for a while and try to cover as much ground on the Foreign Policy challenges facing our next president. But then if we miss something or you want to focus in, feel free to coming up and well try to address that. Ooud like to start by letting our panelists say a few words about themselves. Im katie lavell, a professor at Case Western Reserve University here in cleveland, ohio. I always like to point out that i grew up in cleveland on the west side, so i was very happy to get a job here and come back home. I teach u. S. Foreign policy, and, of course, as an International Relations and political economy at case, so a lot of my expertise comes in that particular area. But its also kind of derived from experience because i worked in the u. S. Embassy in tanzania for a summer and did some other jobs that i really try to bring a focus on the practice of politics as well as the study of it academically. Thanks. Im an author and journalist. I cover the middle east. These days mostly iraq and syria. I wrote a book about afghanistan where i lived for four years. Its called no good men among the living. And it follows the lives of three afghans. One is a taliban fighter. One is a u. S. Backed warlord and one say housewife. And describes their experiences over the last 15 years and how their lives intersect. In addition to that, im also finishing my ph. D. And defending my dissertation in a few days. Hi. Good evening. My name is forest khan. Im professor of Political Science at Cleveland State university. Cleveland has been my second hometown, and being here probably the second longest. The longest, of course, i grew up in china and turned 27 before i left it for the United States. So as you can see that my teaching and Research Areas will be in asian and Political Economic development of developing countries. And my research mostly focus on east asian politics, crossstrait relations. U. S. china relations and the chinese political development. So i look forward to tonights discussions. Thank you. So as you see, we have a broad range of expertise here and well need every souounce ot to coverage this. My graduate degree was in International Relations in world order. And if i all of the things that i have read in the last two days tell me that my education may not apply anymore because the global system will collapse with the results of the election. Katie, do you think that is true . Do i think the Global Citizen will no, i dont think the global system will collapse but the pressures on the global system come both from whats hand here in the United States with the election of president elect trump, but also from whats going on in other parts of the world. Not just the conflict regions in some parts of the world, but also with respect to democratic movements and the frustration that a lot of democratic constituencies feel with the old postwar order. The United Nations, the world bank, the International Monetary fund and the democratic pressures bubbling up from below and the International Tension up above on top. Any thoughts on it . Is the world as we know it, do you think, has it fundamentally changed just because of the election result tuesday . Youre still asking me . No. The world has fundamentally changed. I dont think the world is going to end, probably. But i think its important to look at what the ruling elite in this country actually is, which its not just one person. Theres actually a set of institutions that run this country and any president has to answer to those institutions. And theres a give and take in that process. And so if you look over the last 50 or 60 years of American Power overseas, theres been a set of imperatives that have underguarded American Power, which is that the United States will act in a way that it deems in its interest and reorder societies and countries in what it perceives to be its interest. Thats a basic uniting factor between the democrats and republicans. Will the new president up end that . Probably not. So the real question is strategic and tactical. Is he going to change the way in which america pursues its power overseas. And we can talk about whether that will be the case, but ultimately at the end of the day, going to what youre saying if you look at the point of view from syrians and iraqis they see American Power as something that is ultimately there to effect american interests and lead american interests. Forrest, how do you read the results tuesday . Well, i think whether the world is going to really be different or remain the same, it really depends, of course. But one thing i think is that the world is entering a very uncertain period. In fact, froiends from asia sen me all kinds of texts and emails asking whether the United States is going to relinquish its leadership in the world. And by going back to america, to the socalled isolation phase that america has experienced, of course, in the two centuries ago. But i think china has a tremendous interest in this. And, in fact, some people even speculated if the United States withdraws from the rest of the world, probably china is going to take it over. I dont really think that is the case, but certain ly there are lot of actions waiting to be taken by the president elect, and well wait and see what will happen. There was a lot of talk from president elect trump about how hard he would deal with china, that he would just get better deals, and he would, you know, strong arm china into doing what he wanted. What was the reaction from china to his actually winning the election . I assume its not worry. Actually, you can see from president xi jinpings congratulations to donald trump. Usually china does two things when theres a new president elect. First, theyll send a telegraph congratulating the election. Then theyll follow with a call. And that happened when george w. Bush got elected. And president obama got elected. Both times the chinese president picked up the phone and, you know, and talk ed awhile. But this time, theres no call. Just a telegram. Now that reflects the cautious, the attitude that china is having towards donald trump because, you know, obviously, he said a lot of things about china. And the Chinese Government doesnt really know how to communicate with him yet. But i think they will eventually extend the invitation to him to talk it over. Katie, i want to talk about nato for a second because something donald trump has said is that he would want the members of nato to pay up before we would abide by our responsibilities as allies of these countries. How plausible do you think it is that we would renege on our nato commitment . I think if we stop and think about this in realistic terms, we wont really know whether or not were reneging until something happens. We can tell people they have to pay up, but its not until an army crosses a border and we see whether or not nato reacts or doesnt react and were actually in the moment going to say oh, you didnt pay up which seems to me pretty unlikely. One of the rules we say in Foreign Policy or Political Studies is just that you dont leave american troops out there in the heat of the battle or the heat of the moment. It seems President Trump is or president elect trump would be someone who would tend to overreact than pull back and underreact by what we know about him now. I think hell probably modify what he says because its another pattern he seems to have with respect to nato that he will want to renegotiate the alliance and the Financial System associated with it. But its really unclear how far we will actually take that statement once hes actually in office. I think the only time article five, collective security of nato, was used was for the benefit of the United States on the war on terror. Thats absolutely correct, in afghanistan. So we used to say nato was to keep the americans in, the russians out and the germans down. No one ever said that publicly, but behind the scenes, thats what people always said about nato. The thing no one expected was that would be the one time it would be enacted. So spending time in afghanistan, what do you think . Is there any reaction that you can tell yet to trump winning or his rhetoric that weve heard . Absolutely none. I have no idea actually. To be honest, i dont think even he does. You know, i heard recently that during the campaign, he his people reached out to a number of gulf states and said, listen, whatever you hear right now, thats just for the campaign. Dont worry. And, you know, trump is an operator. And hes been in this business his whole life and i would not be surprised. In fact, i expect him to sort of be a lot more practical from his elite point of view in dealing with a lot of these relationships once he comes into power. For example, he criticized a number of times the Obama Administrations dealing with the war against isis, even though the United States and its allies are defeating isis. Its lost a number of cities. Its being defeated in mosul right now in iraq. Theres plans under way for a major operation in raqqah, which is in syria, which is the isis capital. And isis is losing. So the strategy of defeating isis, at least militarily is working just fine. And he was saying all sorts of things in the campaign. I would do things differently. Whats happening in mosul is a disaster. But i would be shocked if anything changed in iraq in terms of american policy. Id be shocked if anything changed in afghanistan. The Obama Administrations policy is war in perpetuity. Theyve rejected peace talks, avoided peace talks, they are propping up the afghan state and afghan army. And the afghan state and army are not Strong Enough to defeat the taliban. Taliban arent Strong Enough to defeat the afghan government. Were just having a war in perpetuity. And thats fine for the u. S. Because thats ace war not taking up a lot of american resources. There arent a lot of people on the streets protesting against that war. As long as the government stays in place and doesnt collapse and become a new safe haven for al qaeda. I see no reason why trump would change that policy. Well, because he said that he would. He said a lot of things. Thats the point. He said all sorts ever things on the campaign trail. Now hes in the oval office and its a different story. Thats why i wasnt surprised although its interesting to hear when a number of embassies from the gulf states were saying they heard from the Campaign People in the campaign saying hes saying all sorts of things in the campaign, but dont take it seriously, or literally. I think one challenge facing the president elect is in syria. You know, is he going to further extend u. S. Involvement or be more friendly towards asaud. Assad is a friend of russia, and so whether the United States is going to, you know, withdraw from that part or whether it will continue to get involved, or find a middle way to move the opposition and the assad more closer to reconcile with each other. So i think thats a challenge hes facing. There have been a number of contradictory statements from the president elect. But you can add a few of them up when it comes to the middle east, if you choose to. And i wonder if we choose to. You say that were going to selectively deal with our nato allies. Were only going to do things which directly influence our interests very selfishly focused on america, and some analysts have said this opens the door for russia, particularly in syria. Maybe we just step away and say, well, our partners russia, theyre going to help deal with this mess now. Do you not think that thats plausible . Absolutely. Let me talk about syria because its a good example. On the surface, american policy has been to overthrow the assad regime but in practice it actually hasnt been that at all. The United States blocked antiaircraft weaponry and antitank weaponry until 2013 to the rebels. I was in syria talking to people resisting against the assad regime at the time, and theyre desperate for weapons to defend themselves against the genocidal onslaught from bashar al assad. And what changed the calculus in 2013 was the rise of isis. Then the u. S. Started to, in fits and starts, to send weapons or allow weapons from qatar and saudi to the syrian rebels. But to fight isis mostly. And even to this day, in fact today, president obama it was in the Washington Post today, i believe, that obama directed the pentagon to increase the targeting against one of the the al qaeda franchise in syria whom is an integral in the rebel movement. Its also a major opponent to assad. Objectively whats happened is that the United States has given a few weapons to the rebels but mostly tent really important gamechanging weapons away from rebels and attacked its enemies which is isis and al qaeda franchise. Now what trump, i think, will have there will be a shift with trump on this but it will be that hell basically drop the pretense of supporting the other side. Perhaps cut off even the weapons that are coming and allow russia to come in and finish the job. That probably was going to happen any way under obama. A colleague of mine, katie, a German Television executive said that america has officially lost its moral authority in the world and that somebody else is going to step in. I think syria is a perfect example of a situation where on humanitarian grounds there is a disaster occurring, and it has been occurring for years. But in terms of direct american interest, things thats we get in that sense, there isnt any. Its a humanitarian crisis. So how do we square the circle, do you think, of what weve heard from the president elect, this America First approach that we keep hearing and situations like syria and many parts of the world. Well, i think one thing thats important to remember is in the moment, we think about the change in the administration in washington. But when we look at the grand sweep of u. S. Foreign policy that goes back to the grounding of this country, we see more continuity in most parts of the world, more continuity than change. With respect to what the other panelists have said, no matter who the president is or what they said on the campaign trail or what Political Party is in office, we have seen alliances with russia, for example, at the major moments in both of our histories. So its, like you alluded to, looking for the United States and russia to agree on the syrian question is actually not a surprise. Along the same lines, there has been this argument made in the postwar era that were this moral authority. Its ease to be the moral authority when you just beat nazi germany. When you make yourself the moral authority, the minute youre the moral authority you leave yourself open to charges so the whole moral question, in my lifetime, has always been wide open. So i would be very welcoming and inclusive of countries that would like to step up to the plate and play a moral humanitarian role. Most americans would welcome that involvement and not feel we have to go it alone when theres a humanitarian crisis. I think wed like that. I hope that happens. Forrest, in asia, china has been acting as a regional hegemon really and the United States has tried to coalesce allies around china to counterbalance in the pacific. But americas withdrawal or americas focus on itself, would that just open up things for china, and must other asian nations hedge against what america may or may not do . Yeah, i think the challenge for the president elect trump is that, is he going to continue obamas rebalancing towards asia . And getting the u. S. Military forces, particularly navy, into the South China Sea and strike alliances with the surrounding countries like philippines, japan, south korea . Or is he going to, you know, start the trade war with china . And engage in china in a more negative way rather than positive way. I think thats the challenge. And the if he is interested in the business relations with china, then he might also would have to think whether hes going to continue this rebalancing policy towards asia. Already that some of the Obama Initiative has been backfiring, for example. The philippine president , duterte, has openly attacked obama and the u. S. Policy, and he just turned 180 degrees now to seek help from china. So whether the United States is wise to really play some unfriendly Asian Countries against china, that kind of t t tact tactic, is wise or not, it could backfire. But the most important thing is that a lot of Asian Countries do not want to see america believe. Countries like singapore, for example. Always takes a stance that it want the military Political Alliance with the United States and Economic Alliance with china. Malaysia is doing the same thing. So youre talking about asia, who is going to really be the leader in asia. Im not sure china is ready for it. Even the United States decides to withdraw, china will be happy, of course, to see tremendous influence in South China Sea, but whether he can take the moral leadership, you know, its i think its a long way for china to go that way. China is a driving force economically. Theres no question about that. That may be the route that china will take to continuously bring this economic benefits through trade with the Asian Countries. But, militarily, china would be happy to see that the United States or donald trump to move away from this rebalancing and making a more extended military influence and presence. I may be trying to thread a needle here, but tying some of these issues together, i guess one of the points i want to emphasize is that words matter in Foreign Policy. And even if there is ambiguity in what president elect trump has said at one time or another, sometimes in the same interview about what he would do in a region of the world, it seems like theres this presumption were still in a unipolar moment that the United States is the superpower that matters and we can do what we want, but the rest of the world doesnt necessarily have to deal with that. They can form their own regional alliances or hedge with other powe powers. How do we deal with this uncertainty when there is ambiguity in whats going to happen but other countries may be preparing for the worst . You want to kick it off, katie . Absolutely, words matter but its also important to remember the world we live in now and not the diplomatic world that used to exist. So the words dont just come through the embassies anymore and they dont just come through business. Now they come through twitter, facebook, and we worry about president elect trumps twitter account sometimes. I think we also understand that the apparatus of the United States government in its diplomatic function is quite wide and deep and Foreign Policy professionals also understand this and they have to deal with leaders of other countries sending out twitter messages and making statements that can be contradictory or confusing. As consumers of this information, we have to deal with all this conflicting information. While words matter, they just come from so many difference sources now that they take a different role the same way all of our different media does. Absolutely, words matter. Thats why youll see a different tenor to the words that come out of the white house versus what happened on the campaign trail from here on out. Also the debate or question of america retreating to itself and focussing on its interests being a global actor or moral leader, i would argue that america has always only focused on its interest. All states only folk ous their own interest. America is no different. The most powerful state probably in the history of the world. Tonal focuses on its interest and the debate isnt whether to do that or not but how to focus on its interest and do we actualize our interest not our interest but this is for the point of view for the american elite. Is this done through active military campaigns . This is done through diplomacy . This is done through various other ways . And thats always been the question. Thats a tactsical, strategic debate. Theres no debate in the Public Discourse about americas role in the world in terms of a moral role. Theres been no debate about that. Its been from trump to Hillary Clinton, its been united that we need to defend american interests. How do we do that . If you ask iraqis or syrians or afghans, they would look at you very strangely if you said america say moral leader in the world. Theyd find this very odd. Afghanistan today, its a divided country. Half the country wants the u. S. Troops to be there. Half the country, very roughly, wants u. S. Troops to leave. Even those who want the troops to stay there, the very pragmatic, understanding of why they want the troops to stay there. Well, thats the only force keeping sort of the civil war from happening. But they dont think the americans are a moral actor. Nobody in that part of the world thinks that americans are a moral actor. Thats something said here and we have to come to terms with that. I think its difficult to imagine that this World Without the u. S. Leadership. I think the u. S. Leadership role has, you know, since after world war ii, has played such an important function in maintaining generally the absence of global war. And if we look at the 19 is it 1993 when the United States first invaded kuwait, i mean iraq . And you imagine if the United States did not go in there to drive Saddam Hussein from kuwait. Who is going to do that . And i actually often ask this question when i give lectures in china. Would chinese come and do it . Would russia do it . I dont think so. This world is, despite the United Nations and all these regional regimens, still is in need of a leadership. This leadership not only in terms of playing a police role but also, you know, in other areas, whether its military, humanitarian or, you know, the role of economic growth. I think the u. S. Is still the largest market in the world, and without u. S. Market, a lot of countries, including china, will not necessarily see what theyve achieved so far. And certainly, democracy is another way that, again, that the United States is championing for. I dont think europe will take up that role in championing for the promotion of democracy throughout the world. So all of these, i think, points towards this important, i think, role that the United States is going to play. I think if donald trump really wants to withdraw the United States into this cocoon of isolation, that will cause tremendous anxiety and worry from all over the world. And particularly, i think the Asian Countries. I think the Asian Countries are looking forward to this continuous involvement of the United States, both militarily, security wise and economically in that part of the world. Another refrain that weve heard from trump has been hes going to rip up some of president obamas accomplishments. You look at the iran deal, which trump has lambasted the entire time. The climate agreement, which china would probably pull out of, if the u. S. Is wavering at all. Trade pacts all over the world. I mean, there are a lot of things that are on paper that can be undone or can be started to disappear very quickly. How do we come to terms these are very different topics, of course, but kate . I think the two things that are going to be different in Going Forward, and i dont think its just president elect trump. This is american politics when we think about u. S. Foreign policy and the role that the United States is going to play in the world. Our trade and immigration. When we look at those two issues within Foreign Policy. Like i tell my students, immigration isnt even in the books. Its not on the map. When you poll republicans and you poll americans about their critical concerns to this country right now, they will register immigration and i dont think its just the american people. I think from the war in syria, the same concerns about immigration thats spread across europe. And all democracies are going to have to ask fundamental questions when we provide Welfare Benefits to people who come in. Who is going to be the recipient thieves benefits and who is not. Thats a fair question to ask. The second thing has to do with trade and whether or not well continue tong of trade as a universal good. That is not just President Trump. Those are very serious questions that were not addressed by either Political Party up until this election and really need to be rethought, regardless of who is talking about a specific agreement because weve not really paid attention to people who have suffered and not been beneficiaries of globalization. All industrialized democracies have to think about all of their citizens. Anand . I totally agree. You look at the issue of immigration, its interesting because the trump empire, the Business Empire of donald trump relies on undocumented labor, of course. Like all other like american capitalism relies on undocumented labor. Where i live in new york city, there isnt a single restaurant that you can go to where the kitchen staff arent undocumented. I single one. And this is sort of a bedrock of the economy. And these are captains of industry and people who run these businesses who hire undocumented workers who know this. And donald trump im sure knows that hes not going to start paying 9, 10, 11 for someone to wash dishes. Hes going to get someone you can pay them 1 an hour and if they complain, he can threaten to call i. C. E. On them and have them deported. Employers need that leverage to turn the profits they have to turn. So then why is he doing this . Why is he doing something that seems to be against his very interests as an employer . I think that actually speaks to the core of what it means, this rhetoric, what it does. Does whipping up this xenophobia and racism, is it something that enables people like him and the Business Community to continue to hire undocumented laborerers and to keep them marginalized because theres always a threat of having them expelled from the country. But that also means that trump is not a real hes no champion of ordinary working people. He uses this rhetoric but it means id be shocked if he actually did something to actually make it i would be shocked if he built a wall. I wouldnt understand how hed run his businesses. I would be interested to see how that would happen. Whats more likely and plausible is this is useful rhetoric to get people themselves dispossessed, and cleveland is a perfect example of whats happened in this country over the last 30, 40 years and to scapegoat people and say thats where your problems are. Vote for me and well solve them. If i havent solved them in four years, i just need another four years. Were renaissance city. I want to put that out there. Were coming back. I want to open it up for questions or comments. If you have a question, please come up here and line up at the microphone and well get to them one by one. Dont be afraid. Well address them politely. I did want to ask a question about businesses. I was reading a piece in the new yorker today from evan osnos. He said that president s are n bound by the same conflict of interest statutes as cabinet and white house staffers which means technically, he could remain control of the Trump Organization, even though he said he would give it to his siblings. I thought that was very interesting because the Trump Organization has had fascinating deals in turkey and azerbaijan. Katie, with your experience, im going to give you this easy question. It is easy. How do you deal with that with a president who controls a corporation, as he does, with conflicts of interest . Its not just any corporation because he cant just divest or turn control over like other people have done in good faith to try to turn it over to a blind trust when your name is on things. When thats what youre selling is your name and your brand, its impossible. Journalists raised these questions consistently. Ill be shocked and very happily and pleased when his audit is finished and we see his tax returns and we can see where the Trump Organization business dealings, whats Foreign Countries would pose the most conflict of interest questions. We would welcome that. This is the great unknown what the future holds. But absolutely, it he couldnt do it, even if he wanted to. He would have to take the Company Apart for the years that hes president to really do what other president s have done in terms of conflict of interest. Is this is true, though, are there any safeguards to prevent a commander in chief from enriching himself personally while in the office . In fairness to president elect, i think those charges have been leveled at previous government officials and their connections to Companies Involved in the war in iraq, for example. Vice president s who had interests in blind trusts that were presumed to have profited greatly. I think, and correct me if im wrong, but in iraq, we were the number one country, Great Britain was the number two in contractors in the current war in iraq thats winding down. So there have been other government officials where there have been these questionable relationships with businesses. This one happens to be particularly egregious but hopefully because its egregious, people of good faith who have the ability to vote will ask these questions and keep pressing our officials and do something about it next time we have an opportunity to vote. We have four years of things to ask about. Thank you for sparking this super interesting conversation. And thank you for raising the issue of American Leadership. So im wondering, one, how do you think we should the next president should define American Leadership in the world . Two, what should be his top three Foreign Policy agenda items when he takes office and this is a complete throwaway, who do you think he should appoint as secretary of state . You want to start for , forr . Well, i think for the leadership question, the american Foreign Policy we often say is the product of bipartisanship. So since world war ii, the american Foreign Policy has consistently, you know, reflect some of these leadership qualities, whether it is leading to free trade, whether it is promoting democracy or engaging humanitarian or even security. Donald trump doesnt have to create even more leadership positions. All he needs to do is to continue some of those bipartisan Foreign Policy. But what is the area i would like him to see, although i think that could be a challenge for him is the leadership in promoting more environmental, you know, protection throughout the world. Fight against Global Warming. Im not sure you he could have done that because, obviously, hes for the coal, energy and all of this. He promised all these coal miners in West Virginia about their jobs and all that. But thats certainly, with regard to this pressing Global Warming issue, thats really requires American Leadership in th that. So, you know, i think would be a good secretary of state. Her articulation, and i just hope she could be more involved in the Foreign Policy issues. Anand, thoughts on American Leadership . I think the model of American Leadership is one in which the United States acts according to the ideals it holds itself up to. You mentioned democracy. Thousands of protesters came out to the streets in ba rahrain as part of the arab spring. I can be here for hours and give other examples. Right now as we speak, saudi arabia is bombing yemen, killing thousands of civilians. Saudi arabias targeting hospitals. Targeting hospitals. And u. S. Planes are refueling saudi planes and are sharing intelligence, and this is happening not just with american acquiescence but american approval. So a division of leadership id like to see is the United States actually upholding democracy around the globe and just picking and choosing which democracies it likes to uphold because it suits its interests. Thank you. Thank you. Actually, i have two questions. Ill pass on the trade economic fair trade question and ask you the nastier question, the military question. First with europe, mr. Trump has said he was wanting to defund, pull out of nato, but hes also prodded nato to take up terrorism, which they have done. What has been his effect on nato. And the uglier one deals with chinas influence over north korea and threatening to pull back. President elect trump has been talking about providing antimissile missiles to japan, south korea and possibly taiwan as a way to force china to rein in north korea. Id like you to comment on my belief if he retreats from that area, will there be an effect of japan, south korea and australia getting together to form a nuclear arms Protection Group . Thank you. Thank you. You want to take nato first, katie . Yeah, the easy one. Yeah, i know. Lets think about this, though, again. Were in a transition, and i cant read president elect trumps mind. But i do know what the Obama Administration has just finished after the last eight years. One of the stunning differences weve seen in the Obama Administration is president obama introducing the notion of restraint and that actually restraining ourselves in some Foreign Policy situations can be its own form of action. Choosing not to intervene in the war in syria, he defends with the idea that restraint is its own is its own policy goal there. By the same token, president obama has introduced this whole notion of leading from behind, of being a force but not always being the force out front. Its hard for me to believe that just what i know about donald trump that he is not going to want to have more of a leadership role than president obama has taken. Now we all hope that his advisers and he modify some of the language and some of the direction that he has spoken about in the campaign, but i think that sometimes people forget what the world might look like when the United States does step back. And you do earlier when you said we dont have any interest in syria, i disagree with that on the grounds theyre not just humanitarian. The humanitarian crisis has spread throughout europe and our allies are under an awful lot of strain. Its threatened the European Union, nato, its threatened our allies in europe that we care about and have Business Trading relationships with. So resolving these problems is going to be an issue, and its hard for me to believe that President Trump isnt going to just want to be the first one out there leading them any more than president obama. Forrest, can you talk about the influence on the north korea situation . Obviously, the current north korean policy, whether its from china or from the United States, doesnt work. And the koreans continuous ly explore its Nuclear Programs. The Chinese Concern about north korea, obviously, is if the west presses so hard so that the regime collapse, then this millions of refugees coming to chinese borders. Thats why the Chinese Government recently sent more humanitarian aid due to the flood and et cetera. There is a really concern that in china, in north korea that United States unilaterally take actions against north korea because they are concerned that the United States is not going to see actually north korea develop nuclear bombs. Im not sure that the president elect has a north korean policy, but from the Obama Administration, im sure there is a plan to either engage in some kind of nuclear surgery or try to further press the north korean for giving up Nuclear Weapons. So that will be a challenge for the president elect. How hes going to deal with north korea. I think he probably most likely will press more on china to do more. And because he said several times that the cheese should take care of north korea because thats and i think if he does that, it probably is the better approach. The question is to what extent can you press the chinese. The question is whether a failed north korean policy, would that affect the japan south korea or other Asian Countries . I think the impact will be serious. And most likely, japan will just go alone in developing its Nuclear Weapons because, obviously, japan can literally develop a Nuclear Program overnight, and south korea might also seek some security measures. So that means this socalled, you know, the northeastern asian alliances will break down. So thats very serious. I dont know if donald trump has thought about it. He probably needs good advice on that. I did read that trump had said maybe it would be a good idea for japan and north korea to have nukes, which was kind of going against what weve seen for decades. I want to thank the citadel, the city club for offering this because weve prabrought up som amazing topics that restore my faith in democracy because these conversations are so important. You brought up some disparate points. You know, talking about america is the moral authority versus the vulnerable populations in syria. You have also talked about promotion of democracy. When im not even 100 sure democracy as it stands is the form of government that i think protects the people. Because i dont know how were protecting the minorities. Any minority. Even white men, if thats the minority you want to talk about because they are, obviously, super angry, and they voted for donald trump. So that being said, right, with all these pressures youre talking about. Religion, vulnerable populations, economics, many countries with many views on how this goes, and this guy who is ready to go off the wall on twitter at any minute with whatever hes thinking at 3 00 a. M. , right, my question is, weve got a really vulnerable crisis thats not only occurring in syria but thats been occurring for generations in palestine. You have got israel and palestine as nations that are religious basis democracies. And not how we believe democracy should be where theres a breakdown of the religion and state. So i wonder how you think donald will deal with that hot button issue. Thank you. Anand . Well, i think actually, if im not mistaken, trumps first call was to netanyahu in israel today. So thats an indication of how hell deal with that issue. Somebody in the Israeli Government said the idea of a palestinian state is finished now with trump in power. So thats, i think, how hes going to deal with that issue most likely. Ironically enough, just because he actually has antisemites in his movement as well, just to show what this trump phenomenon actually is. So i think but whether youre talking about trump or its going to intensify whats happening inside israel is interesting because theres a right wing in israel over the last 10 or 15 years and i fear that trump is going to bolster that sentiment and i think its very dark times or palestinians or israelis as well because really the only solution i believe ultimately is a democracy and its a very simple thing which is everybody gets one vote and they decide how they want to run their country. That doesnt exist in israel right now. You have to be a particular background to have rights in israel and its a very dark time unfortunately and i think trump is making that worse. Yeah. Im glad you actually raised this issue. I really wanted to use this to clarify my position i think when i said American Leadership a democracy, i didnt mean that the United States would go around imposing the system on a lot of the countries because we dont need a more Electoral College system, right . What do i mean . By promoting democracy i really meant by promoting democratic principles of freedom, equality, will of law, now these are the principles i think a lot of developing countries need. With that principle they can come up with their own systems but it is very important that we uphold the principles. Thank you. Thank you. Thank you for joining us tonight and presenting your views and thoughts. Its been a great conversation. I want to talk about trumps comments about putin and russia and we seem to get this idea that sure the existing Alliance Structure that america has is great but were not getting enough from our allies and wed like to see more and if we go back to 2003 we even saw president bush is a lot of frustration with his European Partners and try to find new alliances and try to work with russia and try to work more with china and in the end i think he found that well, you know, theres reasons that we havent worked very well with them in the past. Its because theres not a lot there that we agree on. So i would like to take the president elects idea seriously for a moment and ask all of you, where are there opportunities for establishing new or better strategic alliances around the globe. Where are there possibilities for a new or improved relationship where we could take this idea and grow something. Any thoughts. One thing i would say that i dont know if its a direct answer to your question is we think about these elections and all but what drives Foreign Policy is very reactive and for americans one of the at the fining moments after the end of the cold war was 9 11 and what i think changed for the United States after 911 we are a country that lived with two oceans on either side and secure borders on the north and the south and for the first time in our history we were in an unprovoked attack. Our whole sense of security and our wellbeing and our own place was threatened in a way that americans had had never been threatened before and when we think about european history its the exact opposite. At the end of the cold war around the same year, around 9 11 its a moment where europe for the first time was secure and europeans were feeling like they wesrent worried about a european country invading. So what does concern me is the whole idea, the fact that the European Union is thinking about rearming a common Defense Budget and thinking about the threat that russia poses but i think its important to remember the insecurity thats reforming there at the sail time the insecurity is forming here so rather than answering your question in terms of a direct country i guess what im saying is looking at these as the Disturbing Trends and then trying to understand how we are going to live in a world where we will be subject to unprovoked attacks, the world has changed. Thank you. Its a great honor to have events like this in an unusual context. We talked about the moral authority to lead the world and trumps business interests but sort of an interesting situation now is president elect that has two pending trials against him and im not trying to prejudge but theyll say we have 30 solid cases here. If we have president elect or an elected president or president in power that is convicted as opposed to, think back to clinton years when we had a Big Conversation within the congress and so on about do we lose the moral authority to lead if we have someone that is being sensors or impeached or if we have a convicted felon, he could potentially pardon himself and so on but if you could speak to i mean thats a fact. He could actually pardon himself. You cant get out of impeachment but the idea of thinking about having a convicted felon as a president is an interesting thing. Cant exactly be brought to trial but of course we take them down a peg or two in term of what they can be thought to exist. The charges are against him regardless of whether or not they prove to be anything with content there. I guess the example i would look to when i thought about it is president nixon and what happened is that the Republican Party went to the president and said, youre not behind you if you go through this impeachment trial. That was very different than what happened to president clinton. The Democratic Party didnt react the sail way so we can talk about the Party Differences all along. What we wont know is what president elect trumps relationship is going to be with the Republican Party Going Forward. It looks like its going to be bad to me. When we were talking i think the Republican Party has a lot more to worry about in the next couple of months than the Democratic Party that have reasons for nothing more than what were talking about tonight and i dont want to rule out the possibility that there arent still good republicans of principle and would not play the same role. I do think that people have those kind of concerns and if they dont, we at midterm elections are still a democracy and thats what we should throw out if they dont stand up for that. Thats just my view. I got word from friends overseas. And laughed at him when he heard about the election results. A friend of mine from germany and another from morocco asked me what happened. They couldnt understand what happened in the election. They were very confused but i think what we heard tonight is the world does continue to turn and we need to stay informed. We need to stay engaged and keep an eye on the process and hope for the best so thank you for coming out and thank you for the panel. Have a good night. Follow the transition of government on cspan as donald trump becomes the 45th president of the United States and republicans maintain control of the u. S. House and senate. Well take you to key events without an eruption. Watch live on cspan. Watch on demand on cspan. Org or listen on our fee cspan radio app. Thank you very much. Welcome to congress. Over the next couple of hours executives in the Auto Industry talk about how theyre working to protect motorists from car related Cyber Threats. This is the first ever automotive Cyber Security summit held in detroit. Its a little more than two hours. So before now it is my privilege and honor to introduce to you mary barat chairman and ceo of General Motors. Mary and her leadership are transforming the automotive sector. Consider that under her leadership in the last year alone gm launched the sharing service and purchase Cruise Automation and invested 500 million and announced the upcoming launch of the chevy bolt in our hall today and a particular relevance on gm was the first major car manufacturer to form a Disclosure Program. That marys the ceo would open todays conference. Ladies and gentlemen, please welcome to the stage. The chairman and ceo of General Motors mary bara. Good morning, everyone. I also want to thank senator peters, and commissioner mcsweeney and academic leaders that are here or will be spending time with us today for this very important topic. This event underscores the importance of bringing together leaders to examine the state of automotive Cyber Security and explore ways to strengthen our mutual cyber defenses. It points to solutions facing Society Today around the World Consumers increasingly expect to have constant and seemless connectivity. There will be 50 billion and child on the planet. Its now a global phenomenon even high end clothing and jewelry and the trend toward Sustainable Living and environmentally friendly policies are as important now as in the growth of urban population centers. By 2020 projections are there will be 41 local mega cities with populations above 10 million thats up from 28 today. I believe the Auto Industry will change more in the next five years than it has in the last 550. And at gm we are excited to be in the leadership role. In the area of connectivity gms on star service responded to 1. 3 billion consumer requests since we launched the service 20 years ago. We expect to have our global volume connected. This is the beginning of where connectivity will take us in the future as we work to expand and improve the Customer Experience both inside and outside of the vehicle. Around the world car and Ride Sharing Services are also expanding. Locally theres shared and today. And at gm we combined a number earlier this year under a single brand maven. We now have half a dozen programs as well as germany and china and brazil and more launches on the way we believe connectivity and ride sharing and Autonomous Vehicles will shape the future of personal mobility. The trend toward sustainability is veered in the industrys drive toward alternative propulsion. Especially we electric vehicles and later this year well start the production of the all electric chevy bolt that is available for you to check out in the lobby and this will be the First Electric vehicle that cracks the code of affordability and a 200 mile plus range. Traditional and nontraditional Automotive Companies are making substantial investments in autonomous driving and parts of the industry and this promises customers greater con veebs, lower cost and ill proved safety. Taken together these trends are allowing gm and the Auto Industry to stretch the boundaries of what is possible for consumers. Theyre giving us unprecedented opportunities to develop vehicles that are more environmentally friendly. Smarter and safer for our customers. It also creates challenges and one of the challenges is the issue of Cyber Security and make no mistake. Cyber security is the foundation to each of the technologies i have discussed. In addition to the rapid growth there are two additional factors that are contributing to Cyber Security risk for todays Auto Industry. And are stored and transmitted through the network. The other is complexity that opens up opportunities for those that want to do harm through cyberattacks. Consider that cars on average have about 1 million lines of code. The volt introduced in late 2010 had about 10 million lines of code. Thats more than an f35 fighter jet. Today the average car has more than 100 million lines of code and it wont be long before it surpasses 200 million. Now we all want customers to take advantage of the technology that is changing the automobile and opening up new experiences that onewere unimaginable but w want our customers and data to be safe and secure while theyre using all of these new features it protects not only for physical safety of the customer but also their privacy and their data. And we used it not as an area for competitive advantage but as a concern in which the Auto Industry collective customers and the society at large are best served with an industry wide collaboration and sharing of best practices at gm we recognize that the Threat Landscape is continually evolving and sophisticated attacks are specifically designed to circumvent even the most robust system designs whether its fishing or spy ware or malware or ransomware. Protect against the attacks and mitigate the consequences when and if they occur. It is a problem for every auto maker around the world. Its a matter of Public Safety and this is why General Motors strongly supports the collaborative approach championed by secretary fox. The alliance of automobile manufacturers and the association of global auto makers and members of the auto w. Mae Cyber Security a top priority. And we have a Senior Executive running their Cyber Security team. And we have also taken a leadership position serving as vice chair. And we have made a very deliberate decision to embrace the relationship with the white hat Research Community. We launched a program that puts out a welcome back to researchers and Cyber Security experts inviting them to identify vulnerabilities in our systems this is an approach practiced for years and theyre good at but few companies have embraced within the industry. But we are committed to working with the Research Community to improve our Cyber Security posture. But while all the actions are important the single most significant commitment we have to make to Cyber Security at gm is to commit to collaborate with everyone here and to address our shared Cyber Security issues and concerns. Yesterday they identified Cyber Security best practices for the industry. Issued by secretary fox in january. I want to applaud these effects and the members of it. All of whom and get us where we are today. Im extremely pleased to say and all recommendations. And implementing the actions and best practices out tps lined in this document tomorrow. And call for a commitment and Work Together to mitigate Cyber Threats that present potential risks to our customers and society at large. And enhancing the atmosphere for everyone. And as we move forward. A very important point is its seriously effected and the Auto Industry has the opportunity to address Cyber Concerns before we experience a serious incident. We can Work Together today within the Auto Industry and tomorrow and we can learn from companies and industries that have already addressed Cyber Threats on a large scale. I believe we can learn a lot from experience that can help the Auto Industry in front of Cyber Security before we face a fielded threat. So i believe we have an opportunity to Work Together today and in the months to come to move the Industry Forward many are disrupted. I believe it is essential that leaders from a wide Cross Section of industries from automotive to defense to aerospace Work Together with Government Law enforcement, researchers and Cyber Security community to develop Proactive Solutions to the challenges that we all face and i believe we have a real opportunity to do that here today for the safety and security of our customers and of society in general. We need to make it an industry priority this summit is what we need more of. All of us working together to achieve what none of us can do on our own. I want to thank billington Cyber Security for their role in bringing us here today and i want to thank each of you for your commitment to being a critical part of this solution. Lets Work Together to leverage our collective strengths and knowledge to protect our customers their privacy every time they get in a car. Thank you. Now id like to introduce to you our next panel. The principle and the acting executive director. Each of the panelists can please come up now. Appreciate it. While theyre coming up john allen was the Program Manager for the effort to form the first Automotive Industry cyber threat and vulnerability and information sharing. As mrs. Bara mentioned you may have seen again that just yesterday the members released a very important overview of the comprehensive automotive Cyber Security best practices. On this panel our top executives from General Motors and toyota and honda as well as the founder. Im amazed. And be on this stage. And were going to have a conversation. How youre going to mature as an industry. And Security Best practices but its definitely a time and hopefully it will get something out of it. This isnt just about that its about you all in the room and how we really protect the ecosystem as one team. Many of you know who is on the industry. And its great to have you. Thank you for flying in to be with us. Our friendly on the panel. Many of you know josh but you may not know that hes now come to d. C. To the dark side with s us. Another board member at the end has really helped us develop it and then jeff that you heard mary talk about a minute ago. Chief Information Security officer for General Motors but also the vice chairman thats been a huge advocate and leader out there. But for just a minute, everybody gets up the speed of where were at. For those that dont know the automotive isac, the abbreviation because we love abbreviations in washington defendant c. Is the information sharing and Analysis Center and theres a law that allowed it. They said you know what it kale together after a cyberattack. Lets get together before something happens and lets start working together as an industry. And that took a year and it was one year ago this week that it was announced and it took awhile to get the organization up and running and we became fully operational capable in january of this year and started sharing cyber threat vulnerabilities in what has happened in the environment. Every company is doing Amazing Things and it really came down to how do we share best practices about what were doing. You heard this is a competitive discipline and we came together as an industry and yesterday released the executive summary of what the best practices will look like and what the main play books will be. And 98 were about that. It is very critical to this entire endeavor so we expanded it and invited the supplier community. You may have seen press releases on that. If i try to name them i will miss one and get in trouble. Especially baseline across the entire industry. We did an exercise on how to share cyber threat intelligence. Could never have imagined doing this two years ago and getting everybody in the room to share. So i dont want to go down the whole line. How is it going . Have you seen the transition occur with information sharing over the past year . I think what you were talking about in organizing and coming together as an industry, the trust started there. Just the fact that we could come together and understand what the common goal was and then transitioning that into this was not a competitive space for the industry. This was a collaborative space and so then taking that on to actu actually formalizing it and sharing information and then yet another step of sharing best practices. So those best practices came from a lot of different places. Came from outside the industry and came from within each member and that ability to share increased the trust and thats really key to anything we do and also to start bringing other folks into the fold. That trust and building that trust and that respect within the companies is important. Can we declare success . Can we spike the ball . We did it. Almost. Never done and you dont know what you dont know. Its a pair dock in all of this and fierce competitors. So to share is a new thing were organized and communicating and working together and you used the line and the attack on one is an attack on all of us an thats the way we stand united. Its great. So jeff is the vice chairman, how do you see the maturity levels . How do we Work Together as an industry to bring everybody up . We had some large oems that have a lot of resources. That are able to do this. Dispersed geographically and complex supply systems. How do you really open up what youre doing in gm or share it across the industry with that culture . Yeah i think thats the best part of the isac is we talked about being fierce competitors and we are. We compete for everything and its not a competitive advantage so its all the groups of people coming together and bringing the best to the table what they have and you see this, right . You see it in the best practices development. Best practices arent becoming the least common denominator. What the Auto Industry can do. We are sitting around the table and all of us stronger in some areas and weaker in other areas but challenging each other to figure out what is the best thing that we can do for the safety and security of our customers. Josh. What is the perception of this . How do you see the research in the future . It was our belief that it was almost exactly two years agatha we launched a cyber safety frame work and in that open letter to the auto ceos we said your masters and your domaine have been perfecting safety for 100 years. And as a nice compliment youre seeing more collaboration among the suppliers but even if we capture all the best practices 100 of the fortune 100 companies have lost intellectual property and trade secrets. Its critical. That promise of saving the 100 plus souls we lose every day due to human era. We want to see that happening soon. We collaborated with Consumer Electronics and lets talk about disclosure. And im not going to dive into it too strong. And the Lessons Learned. Were experts in the Automotive Industry. Those feeds coming in, consumer electronic areas and they all have Lessons Learned that we can benefit from and thats the premis of today. Bring everybody together from all the different facets of industry and learn from each other to do what is best for our customers . We have the deployed fleet thats overwhelming and less attackable. We have the fleet that were doing a good job of best practices on with the available supply chain of built in and after market security and i. T. I hate the term best practice. We have good practices and were looking for better and what im doing and future ind. And while its important those are failures on current fleet. With the five star since all systems fail the basic things were tell your customers how you avoid failure. Its in your best practice. Tell your researchers you wont sue them for helping you avoid failure. How do you capture, study and learn from failure really poorly instrumented for evidence on cyber tampering. And its going to take to 2025 before we can get those that we outlined and that wont be enough. What you guys are doing is amazing and we need to keep another eye on what we still need to do rnd build and pull into this ecosystem. I want to go to that point too. A little bit about the future best practices are looking on in a minute to make sure that we baseline, youre a japanese headquatered company. What is different about some of the organizations that you all work with that might be different you have supply bases all over the world and deals all over the world. Organizations all over the world. And places and developed automatically and you mentioned information. Thats the other one. And academia can you give me some insight . Typically its the u. S. And we think we need to engage and are engaging. And the challenges and all of that and to steves point is how you pulled all the information in and then sort through. Step outside the Automotive Industry and security as a whole. Its a challenge because theres not a lot of people doing it. Theres so much information and so many people doing this research either coordinated traditionally through a university or someone like that or independently. Thats where you have seen a growth in coordinated schools or programs because theres people out there that can do this research. They dont know where to go so to coordinate that helps to bring it in and vet some of it. Pulling that in is a challenge. And we leverage the organizations to help do the research or commission the research down the road and that ultimately improves. Go now. Is it different now . Do you know who to go to . I think we have some of that. And if you look at this headlights in night. Somebody has an accident. And recall and research your still reacting. And a vulnerability disclosure. You might get 3 months, six months, nine months, four years before this becomes a public thing so it really becomes if you want to get ahead of it you use this welcome mat. And i think high trust teammates now. Jeff and ill go to you steven. How do you disseminate the information . How do you avoid the noise. You have to be able to take in all of that information and you have to figure out what is important. But there was a reference made for the isac and you have partners on Different Levels of maturity and what is happening is even if someone doesnt have a Disclosure Program today the people that do are sharing it within the isac we had a board of director meetings yesterday and ran our table top exercise. And were learning that more effectively as an industry. So bentleys point is very poignant. Here is the big paradigm shift. In this business the information that youre receiving is old. You got a lot of information about what broke sifting through that and determining what went wrong and what do you do to change that . This is information about what might be broken, what might go wrong and that takes an entirely different way of thinking and an entirely different organization. There are people that stay up all night and intellectually energized by finding these kind of problems. Why not welcome them in. Thats great. Thats true. To that point, how, the cultur cultural. And when no one really talked. What has enabled the culture shift. Its the commonality. We all share decades of experience in the same business and over time i mention this sometimes. Dont talk to him. Dont talk to him. Youre going to get in trouble. Youre not going to get in trouble by talking to someone you have enormous things in common with. Things change very quickly. And you were there too. Yeah. Yeah. The conversation. It is it is changing in the mind shift it has changed because i think theres from all of those things that you said, right . But i think one of the core things whether its government or researchers or whatever it is that really spawned this off is building and understanding and educating really everyone that yes this is a problem that might have been in the future, right . To steves point were good as an industry at knowing what has happened and then addressing that. Now were shifting to how do we know that something might happen and getting people to understand that that might happen . What has really done that is some of the research. Some of the demonstrations that made it real. Unfortunately its made it real prior to this happening. Given the conversation hi this week this just occurred to me. If we want to have even more information and get even smarter faster if you watch recent events we had the first fatality with the selfdriving Car Technology and one of the things that really piqued my interest is theyre doing an investigation but so is ntsb. One of our five stars is do you have evidence capture . Our car is instrumented to facilitate and aid in a Safety Investigation and thats one of the topics that is hard to do as an entire industry so we have a real gap in a vakcum to deal with privacy preserving but safety investigating supporting set of Meaningful Evidence capture. That might be after cash or data and tampering for months and hacking attempts across large fleets of vehicles and if we want to get across the current information sharing or proactive its going to have to become a priority for us to get past all the historical reasons we he havent done this but that might be the next turn of the crank. Not just sharing the information that we have. But ensuring that we have information to be best equipped as possible to detect and response to and avoid it. Were getting to a point with the information. Thats an interesting discussi discussion. And you think about this. It started a year ago and we sat down as a board and said we cant let this implode. It cant implode on itself. So its been operational how we have gone about this. Now Strategic Partners and suppliers and owl of these things. If you talk to the department of transportation. So i think its really important that we go take our time. The intent by us is to show as an industry how are we coming together and how are we going to write best practices we havent completed them all yet the executive summary is informing how deep and how wide theyll cover so in releasing that document theres a lot of questions out there but well release our best practice guides. A couple of things have to happen first and we need the help to do that. The standards organizations announced theyll release the best practice document and we want to be informed by that document as well and its really important. Its actually very quick in my opinion how fast were moving in this case but were doing it intentionally and being careful in how were approaching this. So its great. Josh what parallels have you seen . You get a chance to play over in other areas. Cyber physical systems and safety and more progress working with the medical device field and public infrastructure. And its amazing how in this industry and health care and medical devices between even aviation a little bit older. And things is a really diverse set of categories into that but theres all in some ways theres things this group can learn from what we have done with the food and strug administration. They put out their guidance and medical devices in january and in it theyre very im here to see what they to with the pending recommendations. In it theyre almost requiring quarterly Disclosure Programs and if you can do a mitigation in 30 days or so you dont have to go through the painful process and its a carrot shaped stick. Theyre trying to make sure that you dont need the heavy hand regulation and we should create more opportunities to take the best and brightest from the medical manufacturers like phillips and Johnson Johnson and do the best and brightest from this community and we can learn from each other more overtly. Thats great. You mentioned your meetings. Sometimes youre in d. C. Visiting. See you often. But what is the perception that what were doing as an industry now with the isac and best practice what is your feeling of the perception of what we have done here . Its changed 180 degrees in the last year. The regulators seeing the industry coming together and seeing concrete results. I welcome their comments about the release of the executive summary this week rand i think, you know, they lit the fire and the fire is taking off on its observe and thats a good thing. What do you think . Its been positive and maybe theres doubt as to how fast and how much it would be able to do. Its pretty impressive. How deep are they going to go . Are we going to talk about giving the electrical architecture that every car should have . Where is the line on this thing . Are we going to go down to ecu diagrams . What does it look like right now i think thats very important. Needs to be updatable and adaptable. Were all competitors and fierce competitors. What does that mean . We do things differently. Thats important that we do things differently. At the same time the best practices have to be adaptable to what we do and how we do things in our companies but one thing to hit hard on that one and its been something that has energized me is our activities and best practices. The idea of least common denominator is not what were talking about in the isac. These are going to be hard to meet and thats important. In fact i would even argue, josh you talked about data capturing. Ill relate that back to detection systems in the Cyber Security sense. We may put something in the technology that doesnt exist today to solve and what does that mean . Thats great. It challenges us and challenges our partners out there to help us create the technology to solve the problem so that we can improve the Security Posture of our vehicles so all of the things put together is an ene y energizing activity. You can confirm this, were not just looking at the seekels that have been on the road for ten years. Were looking at the next 20 as well. The uios arent the problem really. Its Going Forward and the features that the market wants. And with that level of connectivity, disruption is not acceptable. If we wrote best practices that we could all meet we would have failed and then we would just have to write more, right . So thats why theres more aspirational than they are achievable necessarily right now. You should all be commended for this because in other sectors and im on record saying about payment card industry. Multiyear attack on them saying it was essentially the no child left behind act for Information Security. What they did is by focussing on specific controls with technology and threats that move so fast it was outdated and obsolete before the ink dried so i like that youre focussing on objectives instead of the specific controls that might meet themful that youre focused on something aspirational versus something in the Rearview Mirror and i think that youre going to be helped and i agree with you that there arent even available technologies for these. The sad news is they are very connected. Millions of lines of code. They are prone today and it will take us easily five to ten years to even touch some of these best practices. And its all the way to architecture. You might at best get them so i like the aspirational approach. Also its important here and ill take off the moderator roll is its not a compliance checklist. This isnt a compliance model and thats the mind set we have gone into this. We should commend our regulator talked about a couple of times here around theyre taking the same approach. Its the best practice approach. Its aspirational and adaptable best practices and very collaborative to work with the best practices. See if anybody wants to raise their hands. No cards. Say that again tom. So if anyone could please write the questions on note cards. How do we pull them in and be a part of the conversation . Whats a good way to be connected . The awe motive isac. Com website. Ask. Whats the way to get involved in the conversation if youre not already, steve. Certainly go to the web site and contact us. Go to the companies that you work with, Vehicle Manufacturers and get involved. Okay. Thank you. Thank you. You know, partial answer is the very first we had about 35 phone calls in the first week after we published, two augusts ago and the first several were two one spirals. Some of these hacked things were not built by them, but were having it fumble it is often complicated to introduce them and supply chain. I think we need to push pass that very quickly. Im working with many of the tear one suppliers and help them get a vuner ability technically or privately. This is an ecosystem, i dont want tous to have dropped ball. I high encourt and jury you to work out permission to participate in the program theyre launching, but to maybe launch your own. If the future concept to be kind of vuner ability disclose sure program for the entire industry, is it going to be, coordinate disclose sure for everyone. Your thoughts . I knew that. Sure. I dont think thats ever going to be the only place we get it from. I think its going to be broader than that. We have to look at that as a really good source, certainly not the only source. Well, and really, you know, talk about vuner ability disclose sure, the best relationship that can happen is between the researcher and the company theyre working with. This is the place where everyone should learn what that oem and supplier is seeing based on that research an analyzing and sharing it with the industry. You talk about this, information sharing and analysis. We like to share information but it takes the person who is knowledgeable about the design to analyze it and really provide actual i think how it can play a role until everybody has a program. I think in the end the program that each individual company is really important. Yeah, i think it has to be back to high trust these companies are so different. In having disclose sure program is not enough. You have to have the team that can field it, triage it, analyze it to process it to fix it. Youll want to set those terms. One will get the panel, youre getting to set the terms, the scope, the mechanisms in a way that you know you can handle. I would discourage over use as the point of contact. Even coordinated disclose sure program. Its a great way and important way. But back to jeffs point, youll have relationships and you need to have relationships directly with research as well. You need to do it soon, they make it so its no longer a crime to research your own vehicles or medical devices as of october, ern if you dont want to have one, building muscles in capacity now with your own program before a spike in the surge of bugs come in when the line is softened is probably a good idea. Great question we didnt hit on, building the best practices, what standards are we looking at, what sae standards, was this done in a vacuum or did we look a t the standards to map them . But, steve . Theyre all in there if you read through the executive summary it will reference in each area some of the details that theyre built upon. Thats great. How did that go, i mean, why did we pick what standards, jeff, do you recall the and youre like in the room, too, as well. What standards did we look at. Well give you a chance. You had any conversation with them. It was to get things that were out there, as an example in this framework. It was there was a lot of work that was put in that. It was vetted out quite a bit over a couple of years and so that was a good one to look at and incorporating the other ones as well. We didnt want to say here are the best practices of what the members of the isac do. Its what else is there out there. Any time youre building any kind of Security Platform or strategy or anything like that, youre not just looking at what you got, youre looking at Everything Else theres a lot of people that does a lot of work, they can kind of do the work for you in that sense when youre leveraging what theyre doing. Certainly it wasnt done in a vacuum, never was intended to. Some great questions. Were not going to get them all, ive got more baseball cards. These are great questions. One thing i will answer, where do we go to get the executive summary today, if you can go to Automotive Executive summary is posted there. Its actually facs there. But what whats the what do the oems, what do yall expect them from the supplier on Cyber Security, sharing information. I mean, the suppliers have information about threats and vulnerabilities, whats the expectation . Steve. Were working closely with our partners to put various requirements in place to have a strong Security Posture for our connected and safety Critical Systems that exist in our vehicles and the partnership with the supplier is extremely important there. Its required to provide the right Security Posture. You know, secure Life Cycle Development throughout the development of the product. And even when its launched, its out there for many years. That partnership is very important and i cant begin to talk about different ways. But its absolutely important. I mean, the suppliers and the partners theyre becoming members just like the oem, if you see things in your environment, you should be reporting it and sharing that intelligence and may not eflkt the manufacturer today. That doesnt mean it shouldnt be reported such that if youre in the future development of seasoning, that might be tangible to us as well. You mentioned life cycle and i think thats one of the Biggest Challenges because most things that are automobile over the life cycle, theres no intervention. Youve got systems in the cars now and the cars last 20 years these days. Things are going to require changing and improvement and the Development Teams have to have that kind of history and experience. Typically what happens is you have a Development Team they launch and move on. Once you get past three and four years. Its hard to go through the organization to see who did what when you have to go back and fix something. With these technologies its probably more so. You know, im not trying to put anybody on the spot. It strikes me beyond the oems for potential sources of threat and risks and harm and the people youre inviting in, one of the reasons we have the star number five is isolation are very Critical Systems or nonCritical Systems, one of your threat makers that may not be in your circle already, i call a government mandated back door, because a lot of these after market devices whether its verizon, these things you can buy kick starter size companies, once theyre on tlar canvas and most of these vehicles, they have unbettered access to erg else, that may also be a source of vulnerability, threat, we might if you havent already, we might want to factor in someway to factor it. First, weve been working with suppliers for a long time, right, we do that through safety requirements. Through quality requirements and performance requirements, right . Now, were bringing that into security requirements and how do we test that and insure that. Were bringing in a new sort of nontraditional supplier, automotively traditional supplier of folks that are doing connectivity. There are people who have the pipe between the human, customer and the vehicle. So those are folks who are not typically thought of as automotive suppliers, bringing them into the fold is also important. Will we ever have a truly secure and safe car, 100 cyber secure. No. In our time . No. We focus on failure readiness, all systems fail. Are you able to notice them, avoid them, work with others, respond to them, contain them, all systems fail. Tooef . At any moment in time, yes. Thats a second, millisecond, beyond that, no. No, i agree with josh, no such thing as 100 secure. I would go to a . Strong security. Cant engineer yourself way out of this. No discipline. Great. We had the privacy play. Theres so much data on the vehicle coming on about our own personal lives, is that going to be considered as part of the best practices, have you looked at it in your world, josh, steve, you first. I was going to say that yes it is part of it. Its very important. I think there are two aspects to it. Its what you collect and what you do with it. Thats the important part. Because theres all kind of diagnostic information thats collected about the car. Its collected at the car level, what you do with it is important. All right. Go ahead. I was going to say, what we did with the best practices was specific around protecting privacy, it is included in there. Privacy is a component. Its information, specific types of information. Im going to Say Something controversial on purpose. But im getting very frustrated. I love my privacy and id like to be alive to enjoy it. And a concern i had in the preriff ri is becoming a more important concern. If were not careful, well have corpses with the privacy intact. There are times when some of the desire to not share data, to not do intrusion detection, to avoid evidence capture and things like black box and ntsb for airplane, we need to be very mature and have very hard conversations and figure out the right balance because its entirely possible that the the privacy advocates may delay the necessary architectural choice that is we have. I dont think it has to be a fight. If we arent really aggressive and pushing through it we have to talk about what we want. I have a slogan for you, you cant embarrass a corpse. If none of whey said discounts the importance of privacy. If you want a piece of contrast, on monday or tuesday, germany, probably the most privacy conscious country on earth is now puts out mandates for a black box for vehicles. It doesnt have to be identical to airplanes. If the most privacy conscious on earth realizes the importance on this. We have to have the conversation too, im willing to start helping that conversation. Ill relay it back to the best practices and Cyber Security posture. Skbrosh, i think you talked about the privacy aspect, ill leave that asaid. Cyber Security Best practices is not just to provide safety for the customer, but also to keep their data private. Its the same what keeps you safe and those are all encompassing the best practices. Not easy to attain, but absolutely covered in the best practices so that we can learn from each or on how to do better. I think a private part is unsafe, we might get it right. Sir, previous speaker said many times shes seen. Well see more disruption in the next five areas than weve seen in the last 50 years. Ive seen more disruchgs that you all have created in the last two years. Thank you for your leadership. Thank you for a great conversation and being part of it and continue to push the Industry Forward. I look forward to coming back and seeing how far weve gotten. Thank you very much. Welcome everyone. We look to continue that kind of informative session and to really make this into a learning experience for everybody. We have an esteemed panel here. Just to set the stage on Cyber Security and as we wrote about say 18 months ago, Cyber Security really hit our radar when a driver going 70 Miles Per Hour in downtown experienced, despite not having touched a button on the dashboard, radio switched to hiphop station and windshield wipers were going wiper fluid, Everybody Knows now about the two hackers involved with the jeep cherokee. And as wired magazine wrote at the time, the regulators can no longer count on the idea that exploit that exploit code wont be in the wild. Theyve been thinking it wasnt imminent danger, that implicit assumption is now dead. That sets the scene for the next hour for dc that meets detroit. Whoever named who named that panel is fantastic, we love d. C. Coming to detroit and seeing all the croak thats going on here, dont we mark royce. Legal versus state laws, obviously, some National Security issues. Well take questions from the audience and feel free to just bring those cards up as theyre available, well mix that into the general dialogue here and each panelist is going to provide a two minute overview on their point of view for the subject. Well start with add my rabble, who is kpelk tif and Vice President , that is a leader of the First Department of justice and Homeland Security business. He leads the development on the future direction of Law Enforcement and Homeland Security, bringing together government and nongovernment entities. Admiral allen in 2010 served as National Incident commander of the deep Water Horizon Oil spill in the gulf of mexico. Thank you very much. I had a discussion with some folks from the Automotive Industry last night, my comments were this was a very very important time to be talking about connected vehicles and Cyber Threats associated with aton mouse vehicles. Some of the events that ive worked in my career have led me believe there are two things we have to address moving forwar, what were seeing operational technology. We had issues with industrial control systems. Anything thats connected to the internet to get anywhere on the internet, as we know. I believe its really important that we start to understand complexity is a risk aggravator. Technology enables us to do a lot of things, it creates a larger attack surface, we move into new areas and we need to understand the convergent of computation mobility access to the internet are providing challenges that are you nik to each particular type of industry but need to be addressed wholistically if were going to reduce the threat from Cyber Attacks and attack surface thats made available. And this is not restricted automobile, folks. Off sure drilling units operate on Dynamic Positioning and industrial control systems, transportation systems, interview sector. So this is a very pressing, at times, to have this conversation and applaud everybody here thats being involved in it. Round of applause for mr. Alan being here . [ applause ] and i apologize for the sandals, i had some work done on my feet last week. Shes been out spoken about the consequences for Data Security as it pertains to consumer protection. Serve as chief council for intergovernmental relations for the u. S. Department of justice, antitrust division, commissioner, welcome. Thank you so much for having me here today. Its such an honor to be on this incredible panel to discuss such an important issue. I think billing ton Global Automotive for pulling together this Cyber Security summit. Its a timely conversation as adam just alluded to. Im from the federal trade commission and im here to help you. So, you know, its im going to start with the usual disclaimer, i have some colleagues that are also federal trade commissioner, today im speaking my views and not the views of the federal trade commission. Were consumer protector enforcer, our relationship to it has been advertising claims, issues around marketing to consumers and maybe pricing and things lieb that, warranty claims, et cetera, but over the last 25 years, as consumers have moved from blik and mortal world to, weve become preimminent Data Protection private and security enforce. Im here also on behalf of consumers to say look, were at this incredibly critical moment where the security of these vehicles is going to be really prominent Consumer Trust issue we just need to avoid some of the pitfall that is weve learned in other industries. We need to have avoid things like criminalizing hacking. We need to work with Security Researchers and we need to think about what some of the best practices are that are associated with good Cyber Security hygiene. At the ftc we talk about starting with security and security by design, its a process, as we think about how to take our Lessons Learned from over 500 security and privacy cases and apply them as guidance, we have eif generate add document thats relevant, i think for the internet industry, for the mobile and app space that really articulates a set of ten relatively easy principals in the start with Security Initiative. Im looking forward to this discussion today. Wonderful. Round of applause, please. U. S. Senator, gary peters was first elected to the u. S. House of representatives. Worked on the survival of the Auto Industry during the darkest economic days. Detroit michigan is his backyard, obviously. Senator peters. Thank you for the yo r im a a michigan gander. I say im youre familiar life lessons the first plane out of washington. I do my job there, obviously, during the week and take it very seriously. Im home very weekend and very excited about whats happening in the Auto Industry being through a lot of changes in these last few years. The fact that were now on the cusp of incredible new technologies and vehicle to vehicle, aton mouse vehicle that iss going to transform how we get from point a to point b this is the most Disruptive Technology since henry ford come off the assembly line. Certainly, im going to be focused on making sure most all of that stays here in michigan, we want you all to be part of whats happening here as we work through this from congress perspective and as we work with our regulators. There are some as this is very Disruptive Technology, we have gig and serious policy issue that is we need to think about. Its clear the technology is moving at just an unprecedented rate and the excitement that i get from engineers, other engineers working on this they say the cars coming out, just a matter of a few years, certainly were seeing incredible advances now thats available now and available in the marketplace. This is happening a whole lot quicker. Im a believer and whats doing to happen here, i think its going to be incredible for safety where we can eliminate perhaps up to 80 of aton mouse may be 100 we get to. Its going to be incredible to see that happen. If we dont get it right, theres going to be a big set back. I think about Cyber Security, in particular, and how really failure is not an option. Theres the highest bar. The Auto Industry is going to have the highest bar of anybody in cyber. I was in the earlier panel and they talked about breaches and how ever Financial Company has a breach, even though they adopt best practices. When i talk to the public, i get that. If someone drives your car into the wall thats catastrophic. If that happens all of the incredible things that are happening with the industry and technology will come to a halt pretty quick. You can imagine congress will get involved. You dont want that, obviously, thats not something anybody in this room wants to have hearings whats happening with that. Technology will go backwards, we will not realize as quick as we should and need to in order to see the benefits happen. Were expecting really big things from all of you in this room. Weve got to be able to deal with the Cyber Attacks and at a time when this technology is going so rapidly, particularly, in the area of Artificial Intelligence and deep Machine Learning, which is why as policy maker i personally have real problem with setting standard, i think as soon as we set standard theyll be exceeded and could be accelerating rate, as ai really takes place. How do we keep up with that, is it just best practices how do we make sure that everybody in the system is doing that and its been clear, from what ive seen in the Financial Sector and i do a lot of work on the financial side as well, we know that the bad guys take the path of least resistance and its not that main company. Some of the financial breachers have been air conditioners contractors that get through to the Financial System and credit card. Youve got to seal all of that and the same thing is going to occur through the Auto Industry. Together well be in a position to see this technology and move forward and help this country grow and transform society as we know it and very positive ways, but failure is not an option, its got to be zero tolerance for any type of failure and i look forward to working closely with you. Thank you. Gary peters. Finally, was sworn in as the 50 administrator of 2014, a passionate safety proponent dedicated to enhancing transportation safety. Hes been a member of the ntsb and founded alertness solution Scientific Consulting firm that specialized in fatigue management. He was also 2015 Automotive News all star, marking the first time our publication has picked a regulator as the Industry Leader of the year. Thanks, jason. I think im going to step right into my role, which is the larger context. Its always in the contract that i start with 35,200, that would be the number of lives we lost on our roadways many in 2015. 94 of those were due to human error. Thats why its leading in automated and connected vehicles. With all of that great technology, comes the vulnerabilities. We know there are bad actors who are looking for ways to compromise life saving potential thats out there with automated and connected vehicles, thats the spot were focused on for the moment. I think this is an issue where government and industry are lined up 100 . This is a place where there are no conflicts. We have to be complimentary in everything were done. This is one where the traveling Public Safety is specific. We have to find ways to make sure and make sure that we are as akbres zif as possible in this arena. Were here to be look cooperative. In this case, really collaborative and trying to find ways to protect the traveling public. For us, its all about that safety. Wonderful. Please welcome. By saying this is one of the most serious challenges that we face. When we look at a billion devices by 20 20, she said seven per household. The connectivity of the vehicle. What do you feel is the biggest obstacle that needs to be addressed here Going Forward. The first thing is the volume. I think thats the biggest so i thought that gave us a couple of lessons, one was within days we had a recall. For everybody who was asking for regulations, we had tools, actually, to go after it. It guesses to what everybody is concerned about if you put a regulation in place, how do we go after the speed, the flexible approach that we need to do. I remember making a comment about that, that targets in everybody garage, we have the volume of what were trying to protect. Given the pace of change thats going to add to where all of those vun abilities are going to be. Its not going to be the big hardened. Its going to find where those vulnerabilities are and there will be many many more because of the volume were dealing with. You mentioned the government and speed in that issue right there. They lined up 100 . How does that work, how do those two things, lining up government and industry as well as the speed factor related to regulations, how do you equalize those two. I think it picks up collaboration to come together is a different pair dime than you look at general regulations. I think in the economy standards are different than what youre going to have in the cyber space. However they do it, the technology to get there, thats great, just hit that bar. I dont know where that bar is set on cyber because its constantly changing because of the changes i mentioned in my opening comments with ai and deep learning. We need to collaborate with regulators. I think there are also tremendous opportunities and one that is ill explore. We recognize that cyber is number one National Security threat as well. We have to take incredibly serious. There are within the department. Things that i stay up at night, the hacker in the basement, im concerned about them and the impact they have in the example you gave. Im concerned about state actors that are engaged in highly sofisticated Cyber Attacks on us that we have to defend against. When you consider a connected fleet of cars, this is a true National Security that we need to lose some sleep over and we have to work collaboratively together. I think the federal government and government can work in a collaborative way and work with the expertise that we have for National Defense to work with our partners in the private industry. How do you address that. One of the things that we have really learned in the ft clrks after bringing a decade worth of security involving whole different kind of industry. Is that security is highly dynamic space, which is why weve really been adopting a very process base approach to what is reasonable security. Starting with security means building from the beginning the security values in mind and youre right, it is a highly dynamic space as the senators just mentioned, im thinking right now as Senate Report from a couple of years ago, that said by and large the Auto Industry had an adopted pin testing, necessarily, there wasnt a lot of detection software, this is changing very rapidly. I think now one would represent the best practices that have been involved very rapidly. We are actually in a really good position, i think, because there are so much learning that has gone on around security from the Information Technology industry. Lessons that need to be learned very rapidly by the Automobile Industry, but i think the capacity is there, which is ive been out spoken advocate for making sure that we think about working collaborative and white hat researchers. One of the things that we do have in this country is a really valuable resource, we have really good hackers not trauking about the irresponsible ones, the black hats, we have the ability to work with people who have excellent techniques and are really skilled and can be valuable resource in making sure that we can make our products safe as possible. We think we have to think about responsible disclose sure frameworks, other mechanisms for crowd sources some of this work thats how were going to get our best most secured environment. Tell us about what youve been able to learn. Regulation is not necessarily the answer. I use to tell the folk that is work for me in the coast grd, its the sum of all wrael and perceived market failures. I tried for years. Of the Technology Cycle now and what you need to do collaborative and produce out comes, so this notion of the out comes theyre going to make these systems safe i think is what weve got to focus on. Thats the complexity as risk litigator and its everywhere. Offshore drilling units use Dynamic Positioning, theres a blurring of lines between the government can and should do and what the private sector can do. This needs to be negotiated. Youll get quicker, better and youre going to avoid some of the pitfalls when you have to go to regulatory process, i dont think theres any doubt youre on the right path here. For the auto space, when you look at that is not flexible. As you know from his time in the 60s and 70s was really the forefront of getting safety measures. He said, theres no International Treaty and no treaty equals an arky, can you talk about that International Aspect of it . And so we are constantly trying to defend our systems, we have to be aggressive to do that. You have to stop the folks that are engaged in activities that are really in my mind often times can be act of war to break in and steal secrets, private information, activities we have to say enough is enough. The World Community has to come together and identify. There are a its handful we really know theyre engaged. There will be significant actions taken gechbs those countries that engage in these types of activities on a systemic way and that would be sanctions if we have increased vulnerabilities we have to be prepared to punish those who are trying to penetrate into that system. Whats your reaction . They sound similar to the types of best practices that weve been really under scoring in our start with Security Initiative and this is under scored in critical framework. Again, i think what is important here is technology neutral. The tech is moving fast and theyre process oriented. The ftc which is not a regulator but enforcer, can bring cases when we decide consumer data is not securely help. Then were bringing cases under a standard that is reasonable security. Its not perfect security, but we are trained to articulate what we think the best practices are particularly for the internet of increases the vulnerability of consumers and devices like cars that will be connecting into those things. What were trying to do, there are a set of best practices here. They involve a serious commission from the highest levels to make sure that others being built in and theyre being resourced properly and that responsible decisions are made. We know a lot about how to do this really well we need to make sure that we make good choices and then avoid i would say, making like errors not understanding best practices and security or not understanding the technology. I would hold the government to that same standard as well. We need to make sure that we dont pass laws that really make the security process harder for achieving it here in the auto pace. On the government side of thing, mark, theres been increased collaboration involving academia, right. And government all on board. One of those pillars were Cyber Security, two aspects of that, one was an openness to engage in the Research Community and weve been seeing that. The last few weeks, new bounty programs and stuff. Its trance litted from an agreement to concrete things that are going on. The auto isac has started. And the secretary well talk about that later this afternoon. But id also like to give credit to nifta, all of this stuff falls in his office. Weve got to get into the Safety Control system to figure out whats going on. Weve been there for a long time and have done a lot of stuff to push people, et cetera. Having said that. Though, for all the meetings in progress, ill say the other part is not enough, thats one of the challenges we had, for the number, 265 million vehicles that are out there light now that will change as we get to other kind of mobility models, if theyre connected and there are all kind of automation thats in there, each one of those is a vulnerability, i want to make sure we have credit for all the work thats been going on. Weve got to do more. I want to give a lot of credit to everybody, well need some new models thats the challenge, finish with this part, that is, for its usually swinging a big stick. This is not an arena for those bad actors. But what more can you do from your side to make that more collaborative environment from the industry. With whatever the industry is doing. We dont want to repeat stuff, interfere with stuff, we have to find ways theyre complimentary. In a lot of direct conversations, again, that night were just meeting with some industry auto makers last week saying, this is not a trick. We dont want you to report stuff, we want you to report stuff so you can get them fixed. We need to be part of that conversation. I think, again, thats new for the industry, which is built around a lot of competition, this is more about cooperation. Again, i think this is one were all on the same side and everybody has got to be comfortable knowing this is one for one channel of good rather than thinking, again, were after other pieces around the edges. We have collaboratively or the american will suffer. Admiral, you mentioned you were with auto makers last night. Youve lived on both sides of the fence, now. Youve been in government where you are now, how do both groups come together. Whats the best way to make that happen, that collaborative instinct. As i said earlier, its becoming a blurred line, what its capable of doing and what means production line in private sector. The government doesnt do offshore and gas exploration, we had the problem with the oil well, we had to rely with government oversight over the private sector doing its job. I think were overlooking a positive thats happened here over the last few months thats the process by which the industry came together and start working in advance of dealing with regulators to come up with the best solution they could. It may be more important, it will have to become more agile. I think thats not just in the Automobile Industry, its probably everything had to do with the government private sector moving forward. Theres asemitri. But in the conversation between industry and government everybody is meeting their requirements. I think we need to go back and look at whats already there. Some things address, are iso standards and if you dont have to create a new regs lags and theres something out there you can leverage, i think you ought to be doing that as well. I want to under score the points that have been made. I think there have been rapid progress. Theres also some voluntary privacy guidelines promising, we need to not build in professional security infrastructure in our and in our supply chains. These are also issues and it was highly, a little bit at the end of the last panel of privacy and data ethics as well. What were seeing real and building now with data afflicts in line as well. I think there are whole new lines of kind of professions in the Automobile Industry that are really going to emerge and they need to emerge relatively quickly, tremendous transformation is taking place. At the end of the day, you know, the regulators are here and the government is here, but mostly this is about consumers trusting the products and wanting to buy them. I think thats the biggest stick in the room. One of the things were hearing is going to be challenge coming up is the increase in the number of resources available. The best practices and guidances and all the Different Things that are coming out. Work force shortage, as well. Theres liability issues, the insurance industry, how is this going to change insurance, will companies be on the line for all areas of aton mouse vehicle, and there are whole host of issues that are out there that have to be resolved if we expect the technology to be utilitized Going Forward. People get injured theyre going to be cost related to that. When i mention in the my initial comments consumer acceptance wont be there. It will be dead in its tracks if you have some of these accidents. I saw a recent report or survey that said 50 i think its over a majority of people that dont want anything to do with aton mouse vehicles and even bigger want to have the Steering Wheel and take human contact of it. Theres already that he is ten si about th hesitant si about that. The whole industry is going to be a problem. Youre the experts here. Its not competitive advantage. If you have to Work Together in order to protect the entire industry or youre going to get in trouble. I told my folks, we actually by computers with a ship attack. Last year when it was hacked, defect was called within days. If its an unreasonable risk to safety, we dont just regulate, we enforce. Those tools are already there. We also enforce. Yeah. You dont enforce. You use to, yeah. Should we expect partisan politics to obstruct the pace of Cyber Security changes in the Auto Industry, and if so, what issues. Lets say, i hope not. Hopefully we can rise above that. I dont know im always amazed. Sometimes it just does. It just does. Sometimes logic doesnt factor into this process, it shouldnt. Its a basic safety issue well be able to save lives and shaving 80 in the short run is a big big deal not to mention the hundreds of thousands folks that are injured, on a continuing basis, hopefully thats something we can rally behind it and understand how important that is. It will mean we change our infrastructure. Save money which is usually, that should be a bipartisan, to save federal money if we can put more automobiles on any given amount of pavement, that because of the safety features you dont have to build extra lanes. You can do that in safe way. There are all sorts of advantages that will approve to the government that will hopefully bring us together. Everyone knows the details of model s, no one incident will stop from promoting highly driving development. But the question is, do we need to slow the adoption of vehicle technology. Thank you for that question, phrased, just right because i will not make any comments about open investigations. But it was on wednesday and it was we had been relatively silent on the issue generally, and aappreciate actually highlighting it here as well. Whether theres Cyber Security issues, the secretary, d. O. T. They have been very clear about our leading forward because of the safety opportunities here and we look to we cannot wait for perfect. Well lose too many more lives while were waiting for perfect. 5 million crashes. This is what were talking about and the toll it takes in lives, money, our society is just tremendous. And so weve got to be able to move forward to do everything we can. I keep bringing this up, last year, 2015, number of fatalities went up about 8 . Thats the first time in decade. It went down 25 . We cannot keep it flat. We cant even double down. Were in a bad place. We should be desperate for anything we can find that can save more of those lives. You want to talk a little bit about that. Thank you for that opportunity. Its something im certainly focusing a lot. Weve been partners in that as well as in the industry. And thats the important of having a National Testing and validation facility where we can put these new technologies through the paces before they get out on the road and do simulations. We also have the track where they can work and its a new pa paradigm for how we test these applications. In the past, currently, every company represented here, you have test tracks where you test your vehicles, youre testing them for competitive advantage and you hide them in camouflage. And have the next great product thats going to give you competitive advantage over your competitors. In this area, you dont have to talk each other. Toyota has to talk to gm and gm has to talk to nissan, et cetera. So you all have to be in one place where that is occurring. Were hoping that place will be here in michigan, center for mobility is one were working on in addition to inner city which currently at the university of michigan. It was part of arsenal democracy that turned out b 24 bombers to win the Second World War and now it can be the place to usher in this incredible new technology. Were asking the secretary of transportation, department of transportation to put out competition for that National Testing and validation site. I personally believe, no surprise, that michigan should be the place. It has the most competitive. All of the Auto Companies are here, the foreign manufacturers. Weve got toyota and nissan and farming ton hills, honda over in Northern Ohio thats located here plus the suppliers. We have a vibrant Defense Sector here with land systems all of that is located here. Were hoping to get that competition and designation by the end of the year. Is there anything that defense can learn from auto makers in this how do you feel. Could there be some sharing . Aton mouse vehicles and efficiency, obviously reducing the threat of Everything Else you can move supplies and achieve your operational objectives of that human lies being involved. Beyond that, we focused on safety, that should be the most important thing we talk about. Theres probably a chance to do a little bit of leap fog related on the insfra structure how we want this world to work. The Highway Trust Fund cannot support. Well get off fossil fuels. Faa is looking at next general. Leapfrog and generation of technology if we can integrate this technology in and look at the safety aspects regarding saving lives how we actually make more efficient environmentally friendly and lower cost world. This falls in the category of government should do no harm. It could be harmful to the evolution of good security being wrapped around all of this Amazing Technology that had an automotive space. One of the things that we learned after decades of fighting hackers is that, you know, hackers are going to hack. In fact, some of the best most Efficient Investments in Security Research can be made by crowd sourcing and taking advantage of that incentive. We see already i think it was discussed quite well and we see Prominent Companies and even the pentagon embracing this kind of model. Its sufficient security investment as well. I think we want to make sure that we dont pass state laws and we dont pass federal laws that make that kind of e research and work impossible to do. They should be responsible disclose sure. There shouldnt be bad actors that are doing bad things. Totally dont want to facilitate that. But theres such a thing as really drawing too broad of restriction and so thats what im talking about. You know, i think its firmly established that cars are huge target. Theyll continue to be a target. Its not going to really matter what kind of laws we pass at the state level or federal level. What we need to be focused on is maximizing the work that we can do with the Research Community and bringing it into the security processes that we have and taking advantage of it. Given the push for collaboration. What do you see enforcement going, will there be a to on rather than failure, what do you think. As you know over the last year and a half, theres been a push to move the Auto Industry to proactive safety culture. And Cyber Security is perfect example of the challenge there. Theres vulnerability, its penetrated and then its reactive. The challenge is how do you harden those at least where you know. So i think from a proactive standpoint well want to do everything we can on the front end. It needs to be balanced when people do violate, youve got to be there and make sure Everybody Knows that will not be tolerated. It is very process oriented. As the processes around security have become more established, we are looking have become more established, were looking at whether you have responsible disclosure problems, whether youre responding to bombs when theyre disclosed in a tombly way and these kinds of processes have starting to be important in our assessment of whether data practices practical. I was around a lot of the early anonymous reporting systems basically with limited immunity. In a panel earlier today, that came up. Those are the kind of collaborative conversations we have to have to make sure that proactive safety, we find a way to get them reported in a way to help. The vulnerabilities, not just whack them with a stick. If someone is doing something in a malicious way we have to make sure they dont repeat the activity. Should there be Liability Protections for Companies Working on a disclosed vulnerability. Should there be civil or criminal protection for researchers who coordinate their disclosure. We need to learn a lot more about how to set up mechanisms that are going to facilitate that kind of relationship top just to pick up on the administrators point, what we want to do is be able to conduct the research and have a mechanism whereby companies can have time to assess that research, test the research, make sure its valid and notify the customers if its brief situation. These are complicated areas and i think we can clek tyly come up with a good solution that really protects the First Principles here, facilitating the collaboration and facilitating the responsible disclosure and making sure that one side is responsive but has time to make sure that the response is adequate and sensible. Kind of a general question for the panel. How do you square the protection of intel leg churl Property Rights with the sharing of best practices . How do you feel . Theres a process and content dimension to this. If you have the communication lines open and youre having the conversations thaz resulted in the best practices that was issued here, youve basically done the equivalent of removing the attribution of things that might be proprietary and focusing on the ways to attack the problem. Thats the way to think about it. It will play itself out differently in the specific situation youre talking about but i dont think thats a bar and i dont think thats a reason why this cant move forward and this conversation cant be as robust as it has been. Ill head in the four active safety principles, one of the pillars had to do with data sharing. We have two examples to look once is this area, theres a huge amount of data that can be shared anonymously. And second, there are things this are out there that are relatively unique that everybody can benefit from. No issue about confidential business. But the thing that everybody having been fortunate to know the captain, one of his favorite things to say is im never going to live long enough to make all of the mistakes that can kill me. Its like learn from everyone elses mistakes so you dont have to make them yourself. Those are perfect examples of where you could establish anonymous data sharing. This is on the larger shi of cybersecurity. You want the effect to happen out there. You need to tell them what to do to protect themselves. You dont have sources and methods of how to obtain the information. You can separate the two. Senator peters, how do you avoid a patch work of state laws that may inhibit advancement or adoption of certain technologies. Its significant in the Technology Moving forward, youll have state forward. Michigan passed one, very forward thinking. There are others coming out. Its incumbent on the federal government and congress to come forward and put federal guidelines out there or federal law that preempts state laws thats similar to fuel economy standards. You cant have every state having its own fuel economy standards. Thats something we have to work on and pass. In my experience with the coast guard, the best premise you had is when somebody would come along saying we want 50. And we have 47 different data breach laws and 37 data laws. Its an area where you see a myriad of states taking action relatively quickly. So jason in january the secretary announced that d. O. T. Would be putting out guidance in this area. There were four elements, one was operational guy dance, how to get the vehicle ons the road safely. The second is model state pol y policy. Weve been working with the administrator to come up with what a model state policy would look like. Whatever that ends up being, the question remains, how do you take that model and see it enacted in a we that see it as consistent instead of patch work. When can we expect to see that in. You can ask the secretary that this afternoon. Good answer. That model is a good temp plate. Its the template for the National Template that we execute. The admirals point is well taken. Its incumbent on the industry to come forward and say this is where we have agreements, dont have the partisan issues that was brought up so we can get that done. Back to my main point, the policy has to be moving in a parallel track with the technology or it can come to a halt fairly quick. Senator peters, let me stay with you. We have just a few more minutes left with the panel. Will cybersecurity be the new top uk of trade agreements . It will be a topic of grade agreements . Yeah. I think it should be. It has to be a topic of conversation. You have state actors who engage in cyber activities to steal secrets and use industrial espionage to leapfrog their effort. We would consider those an act of war in the past. We need to consider that as well. I certainly think we have to strengthen that International Framework to protect what we worked so hard to create and put in sanctions against those countries. Now of course theres issues, we have to be able to identify that and know whos behind it, not easy to do. But if were able to do that we have to have a tougher approach. International governance, it has to be addressed soon ore or late. The recent issue with microsoft and the data storage, this is a virtual industry and if youre connected to the internet, youre connected around the world. And thats probably the next coming conversation, how do you square what were doing domestically in the United States with international. What specific action should the u. S. Take to punish state actors that hack the dod or private industry . I dont have that framework as to where we should go but some of the normal tools you can could have would be sanctions that could be brought against a country. Thats a traditional framework thats used in agreements. Something along those lines. You would have to balance the severity of the attack, have a better understanding of knowing exactly who was behind it and some evidence to prove that obviously. You have all of those kinds of issues because youre deal with diplomatic issues in addition to just strictly Law Enforcement. But there are tools that are available in the area of sanctions that would then be escalated. Following the sony hack, there was an executive order issue that identified something called malicious cyber activity. Ive asked the government to define that and theyre going to know it when they see it. But it allows for the state department and treasury to issue angsts against companies or people that engage in malicious cyber activities. I want to give in the final two minutes i want to give each of you sort of a closing comment. Lets give the group here in the room something to think about over the next year or two. Administrator, ill start with you. What would you view be or your question to the room be when you think about cybersecurity over the next couple of years in the Auto Industry . In this particular area i think our Biggest Issue is going to be what we dont know. You know, were already trying to plan were already considering the concerns and vulnerabilities are. The volume is so large and the vulnerability is great, the biggest concern is what arent we thinking about now that could really be dangerous in the future. Sounds like a scary notion. If were thinking about it now and running the scenarios and starting to come up with it, then were going to be in better positions. But its changing too fast for us to know all of those things. And so i think weve got to have a different mindset to go after in in a proactive way so its not always fixing stuff thats already happening. Senator peters. My thought is related to the comments i made in regard to Artificial Intelligence and Machine Learning. Its clear because of the volume of data thats out there, just the volume of things and internet, in order to identify a cyberattack is difficult. Its particularly difficult in an Operational Area less so in a financial area. I think the initial feeling for an operator if you see something going wrong with a car, it might be a glitch with the software in the car rather than a s cyberattack. Because of all of the items connected on the cars, youre going to me Machine Learning and ai to defend. So as the ai encries we know the bad folks are going to use ai to fight ai systems. This is where the scary part starts and the Science Fiction that soon is going to be scientific reality. How do cybersecurity folks defend use ai to defend but understand theyre going to be fighting ai systems in that are going to be very sophisticated against your ai system. I am not to worried about the robots taking over the world. I think its a really important concern and im glad youre flagging it. Im hopeful. I cant wait for the day when i can send my car to take may parents to their doctors appointments and have it pick up my kids from school. I already need it now. So i guess my message would be, this is a c sweet issue and it has become one over the last year. Cybersecurity isnt just a chief Security Officer sitting with programming geeks thinking about security anymore. It is the core of this business, so is privacy and data ethics. There are a lot of resources and in this country we have fantastic leadership on thuz issues and i think the auto stli is wellpositioned to take advantage of them. Im quite hopeful were going to get there. But iftheres one message, consumers are the heart of it and their trust is essential for adoption and we need this to be paid attention to and resourced appropriately at every level. Admiral alan, the last word is yours. We need to compliment the discussion that weve had today. My grandson who is glued to the couch playing video games. He was reasoning around in the back yard the other day, i asked my wife what he was chasing and we us one of those pokemon characters. He was getting exercise. Im not sure we really understand it. John hold ner the science and technology adviser, president says the way you adapt to Climate Change is you suffer, adapt ore manage. U think were in between suffer and trying to figure out what manage means. How about a round of applause for your panel. Thank you very much. [ applause ] ive always been a great admirer of america, particularly the history of its african descended people. Sunday night on q a, this author talks about his memoir never look at an american in the eye. My uncle formed this impression from watching cinema, westerns specifically where this cowboy gathered together in a bar and exchange a few words and we never understood what they were saying. But then at one point they would stare each other down and start shooting. So my uncle formed that impression that thats what americans would do to you, shoot you if you looked them in the eye. On cspans q a sunday at 8 00 eastern. Federal reserve chair janet yellen heads to capitol hill to testify before the joint economy committee. Economists are looking for an indication of whether the central bank is likely to raise Interest Rates at its december 13th and 14th meeting. Live coverage at 10 00 a. M. Eastern here on cspan3. State med kads professionals from florida and hawaii along with health care featurist and author ian morrison spoke about the future of medicaid from the medicaid directors conference. This is about two hours. All right. Good morning, everybody. How are we doing . Again, again . Thank you. Thank you. Welcome. Good morning. And im thrilled to see on day two of the Public Session or day three for the state folks or technically day four for the people on the namd board, its been a long couple of days. Its been a long conference, a fantastic conference, an extremely wellattended conference, extremely informative, insightful and hopefully educational and entertaining conversation. And on the last day, which is election day, we still have looks like pretty close to 1,000 people here, which is fantastic. Which means that the appetite to learn about medicaid and the opportunity to think about the future of medicaid and the Health Care System is still relevant and interesting and a priority for all of you. I am personally very very pleased and very very happy about that. So again thank you all for being here. Im going to not take up too much time here and really kind of tee up the next session, which im really excited about. And just as a preface, similar to the session that we kicked off with yesterday with the discussion about dreamland, the next session was kind of the brainchild of our board president of arizona who is pushing us to do something a little different. Do something a little more provocative, something a little more thaurthful and interesting and not just a panel of people talking about an issue. And so he said lets engage with thought leaders and think about the future. And so i really starting thinking, who might that be. And the name and the person who i kept kind of circling around to is dr. Ian morrison who is a noted author and futurist and prognosticator of all Things Health care. And when ive been kind of talking with him on and off for a number of months trying to find the right opportunity to do this. And fortunate lit ly he was abl be here on election day. This is not going to be the future of what happens on the election. This is not the kind of crystal ball were going to be doing today. But were really looking out to the near and somewhat distant future of a lot of very Important Health care issues. So hes going to come up here. He has a number of slides hes going to talk through. And i remember i was talking to actually the plenary speaker at the upcoming lunch today and i was kind of telling her what the agenda was going to look like. And i said yeah were going to start with mourning off with a health care futurist dr. Ian morrison and she said hes fantastic. Andy had him come over and talk to all of us and it was wonderful. This is great. This is wonderful. Im super excited. Dr. Morrison is going to come up here and prognosticate a little bit about the future of health care and then what were going to do is turn to two reactors. To be able to listen to what he said, take it all in, agree or disagree but ground what he has been saying about the future with the reality in state Medicaid Programs today. So our two reactors are going to be justin senior, medicaid director in florida and i guess the interim hhs or Health Secretary in florida and then judy Moore Peterson who is the medicaid director in hawaii and prior to that was the medicaid direct ner oregon. They are both long serving medicaid directors, both long serving members of the board. They bring a wealth and a breadth of experiences, not just blue state and red state, not just east coast and and west coast and Pacific Coast but also a debate about who has got the best beaches and who has the warmest states and who has the best state to move to. The two of them will take turns to speak and i am excited about this. I will get off the stage and out of the way and turn the microphone over to ian morrison and say, welcome, thanks for coming. Thank you very much. [ applause ] thank you, matt. What a pleasure and honor to be here on a momentous day. Im a professional futurist. Let me first of all say my definition of a futureist is an economist who couldnt handle the calculus, basically. Im in the sweeping generalization business. A lot of people ask me how exactly do you become a futurist. My undergraduate was geographic and economic change in scotland, 1580 to 1830, which is incredibly useful. As useful training, ive been a student of structural change in society for 40 years. I left scotland in the late 70s, moved to canada and they let me in partly because i had an urban planning degree. They didnt need them in vancouver where i moved to. They needed them in the yukon. I was not going to the yukon. I ended up getting a job with management engineering unit 13. 1, which is the canadian e give lent of the kgb. Spent seven years in an Academic Medical Center doing clinical reengineering before it was called that and working on my doctorate in Health Policy and health economics. I got an offer to join the institute for the future, the modestly entitled institute for the future to work on a project called looking ahead with American Health care. I basically have been doing that ever since. I have been looking ahead at American Health care at the institute for many years. I ran the Health Program there. I was ceo in the 90s. But for most of the last 20 years i have been what would be called a free floating radical. I come in for a day, insult people and leave. It is about like Newt Gingrich but at a lower price point. I dont consider myself a deep expert on medicaid. I work mostly with the private sector players, whether provider systems or health plans. It is an honor to be here. I care a lot about medicaid. I was on the board of the California Health Care Foundation for a decade. Obviously, we were very interested in that. I currently serve on the board of the Martin Luther King Hospital in los angeles. Medicaid is the gold card for us, mlk. I set on the Longrange Planning Committee at the stanford childrens hospital. I do care a lot about medicaid but i dont consider myself a deep expert. Let me share with you the basic rules for futurists. You should make forecasts for things that are far off so people cant tell if you are right or wrong. Make so many forecasts one of them has to be right. Never give people a number and a year in the same sentence. Thats a very important one. Whatever you do, dont talk about elections the day of an election. It is kind of a stupid thing to do. Im going to violate that by talking about the election. I want to give you a sense of what i think is going on in the field in health care, more generally. I think we are making progress. Im more excited now than i have ever been in my 30 years in the u. S. I will close by giving you my, as an outsider, the takeaways for medicaid and then we will hear from our distinguished colleagues. Elections matter. Im in a partnership with the harris poll and the Harvard School of Public Health for 30 years. Harvard always says that elections matter. By the end of the day, which is by the most overused phrase by the pundits at cnn. At the end of the day, we will know whether it is a blowout for Hillary Clinton or whether it is brexit. Brexit is particularly poignant for me as a scot, because you will recall that the scots voted overwhelmingly to remain in the European Union as did the londoners. It was the rest of britain, particularly england, that voted against it. I will remind you that donald trump visited turnberry not by accident, i would say, the day after the brexit vote just arrived in scotland. The place is going wild over the vote. About to take their country back, just like we will in america. No games. You have to remember that the scots voted overwhelmingly to remain. My scottish colleagues raised the bar in terms of profanity and creative use of the english language. If you go on twitter, i wouldnt read them all. They were not particularly impressed by that. It is instructive to look at what happened with brexit. A vote about the future and the people that overwhelmingly voted for this were old people. They are not going to be in the future very much longer. Yet, the vote was amongst young people disproportionately towards remain. What we saw in the brexit was the places with the most elderly people and fewest College Graduates and people identifying most as english, set a nationalism where the areas that went towards brexit. There may be a metaphor and mr. Trump has said brexit times five. We will find out by the end of the day. As i mentioned, ive had this partnership with the harris poll in harvard for a long time. My colleague, bob landon, who has this great new project he is doing with politico, did a survey a few weeks ago, which really captures the differences and the deep divide in the country with regard to how the electorate think about the Affordable Care act. Trump voters disproportionately think it is going very poorly. Clinton supporters are on the other side of that argument. It turns out according to bobs analysis that the fundamental dividing line is attitudes towards the role of government. If you believe that government should play a bigger role, you think the Affordable Act is doing okay. If you believe the government should play less of a role, you think it is doing horribly. It is not like you have made a systematic judgment based on evidence. It is more about the attitudes towards government and the role of government in health care. That spills over into what should happen to the Affordable Care act. People that are supporting trump generally want to repeal it or scale it back. People supporting clinton want to build on it or go even further. So those are the divides in the country. As bob caught, as all of those of us that had the opportunity to work with him over the years, the only time you see major changes in Health Policy is when you get one team running the table. The question is, is that going to happen this time around . Lets just play the extremes. If democrats were to win and win the senate, unlikely they will win the house, you would probably see an expansion of subsidies to shore up some of the affordability issues. You would probably see subsidy s to shore up the health issue. Perhaps expansions for groups previously not covered. More funds for prevention and attitudes naturally favor action on pharmaceutical pricing. The cadillac tax interview, the group i work with, basically, is not ever coming back, no matter who is running country. There may be a lot of talk about public options and single pare but they wouldnt do anything. The real question, i think the question for the country that will be decided by this election. Maybe more states will expand medicaid. We will hear from our good colleagues in a second as to whether that is real or not. If republicans were to win and run the table, i think they are going to get rid of obama care. They are certainly going to change the name. I cant imagine trump is going to talk about it. It will not be hugely popular to call it obamacare with trump in the white house. It is hard to know what they would do really if you want to go on my website, i did some fake interviews with donald trump i found amusing. Anyway, again, i think the mandates would be gone. It would be shifted to the state level. We are going to get rid of the lines and it is going to be beautiful, beautiful, beautiful. Im confident in that. The real question is, are rich people going to keep writing a check for poor people . Are we going to see coverage continue and subsidies exist Going Forward . If hillary wins and we have team a in the white house, coverage might be expanded by a further 9 million. If team b wins, we may lose 20 million uninsured. That would be sad. I think we have made significant progress. Like it or not, obamacare has reduced the uninsured across the country. I spend a lot of my time in board rooms with large provider system. You can see it, depending on which state you go to the impact this has had. It has been achieved through both exchanges which have had a rocky time in this third or our third year now. Mostly, through medicaid expansion. That is the big story. Very few hospitals will say, i have seen a huge number of Exchange People coming through. Not so much in florida. It is a big deal in florida and texas. Whoo what they really have seen is an expansion of medicaid. You have heard from the officials at cms and other experts, is this massive move toward payment reforms, which i think is irreversible and will continue under any political scenario. Partly because it has been reinforced by the behavior of people on the grown. The people i work with, the large integrated Delivery Systems are quite committed to a move away from unfettered fee for service. Let me give you two signal exceptions. The fact that dan malton runs memorial herman is retiring and was replaced by ben chu who ran kaiser. Joe allison, the great ceo of baylor, scott, and white, is retiring and they have recruited jim hinton, who ran presbyterian in albuquerque, one of the large integrated systems in the country. That is a signal that the boards of these major institutions see a future very different from the past. The other thing we are seeing is this massive consolidation going on across the country. I will say a little bit more about that, both at the plan level. More importantly, at the provider level. We sometimes forget that there is this enormous longterm secular shift away from inpatient to the ambulatory environment. This is very profound. My wife had knee surgery a couple of weeks ago. I dropped her off at 7 00 in the morning. I didnt just drop her off. I waited until she was out of the o. R. I had to go to another meeting and a friend picked her up. She was back home by 11 00. If you had knee surgery in scotland, when i was a kid, i would be in hospital for six weeks. So the world has changed significantly. The other big change we sometimes miss that was really generated by the Affordable Care act not the Affordable Care act but the stimulus bill on the hightech act was the ubiquitous deployment of Electronic Health record. We at least got into the 20th century, if not the 21st century. The work that needs to be done in my view is enhancing the consumer and Provider Experience in health care. What we have seen is a megatrend, particularly in the employersponsored insurance market, is the shift toward high deductible care, which is a very blunt instrument in my view and has not been particularly effective. It has been effective in containing employers cost but it has not necessarily been the best thing for the people who are receiving care. The other point to note is that we in health care, we dont exist in a vacuum. I live in menlo park, california, ground zero of google and facebook and venture capital. A massive amount of money has been put in consumer facing apps, partly because we in health care. Think about how you run your own life. Everything you consume or interact with your family or reservations for travel or restaurants is done through your phone. Yet, when you have to deal with health care, you have to step back into another century, deal with people who are writing things on white boards in babylonic cuniform and faxing things to each other. The fax machine should have been out of business 25 years ago. It is the life blood of American Health care. You have to show this in some states to prove that obamacare did work in terms of reducing the uninsured. The biggest reduction in the uninsured since lbj. The uninsured reduction was more significant in states that expanded medicaid than states that did not. That, i think, is the important back drop on this election day. So from my perspective, here are the stories im seeing and hearing in my travels across the country. Some of this is just based on what im hearing. This partnership, we survey every year doctors, consumers, employers and hospital leaders. I am going to give you greatest hits about those and spend a little bit of time on shallow pocketed consumers. The reason why i think it is different this time with all this Health Policy stuff is a Pretty Simple fact. The average American Family cannot afford the average Health Insurance premium. You think of that for eight nanosecond, thats a wee bit of a problem. The average French Family can afford the average family because it costs twice as much. Median Household Income is 18,142 in the employer market. Does not compute. What we have done is see this cumulative increase of unaffordability of premiums. The green line is workers contribution compared to the blue line, Health Insurance premiums generally. The green line being above the blue line means there is cost shift to the employees. The boston two lines are overall workers earnings and inflation and, of course, they are way, way, way less than the increase in premiums. Again, the average family, therefore, hasnt had a wage increase, any increment in compensation came in the form of Health Benefits. This is the point we are at now where the Kaiser Family foundation, up around 18, 142. That does not include out of pocket softs. If you use the millman numbers, you are up around 25,000. What is corporate americas idea . To shift the cost to consumers. 50 of the workers have a deductible of 1,000 or more, 29 of a deductible of the,000 or more, 20 deductible of 3,000 or more. Why is that significant . Median households dont have 3,000 . They dont have that in financial assets. Thats why what we have seen is that they forego care. This is not our data but data from the commonwealth fund. This is people who have jobs, who have Health Insurance, who are doing it right. They just happen in the case of the dark blue line to make less than 200 of the federal poverty level. If you are in that category, about half of folk in that category have foregone care of one type or another. Had a problem but didnt go to a clinic or fill out a prescription, skipped a test or treatment and didnt see a specialist. It would be lovely and convenient for economists if they were only foregoing unnecessary care. That is not what happens. When i was on the boar, we gave the Rand Organization 3 million to prove the obvious, which is when people have to pay out of pocket, they dont get stuff. Some of that matters to their health. Let me just say, when it comes to consumers, i hate satisfaction surveys. Just hate them. Why . Because they dont move. We waste acres of real estate doing these satisfaction surveys an they dont move over time. Why is that . Americans are nice people. You want to see dissatisfaction, go survey the french. Theyre pissed off about everything. The reason we do it, occasionally you see a movement. We did see a significant drop in the last couple of years in the percent of americans that say the insurance plans meets my familys needs very or extremely well. That was particularly acute for exchange folk. I would point out that people on medicaid are as happy as people on commerce plans with this. They are much more positive than people on exchanges. In fact, when we look what we like is not satisfaction surveys. We put together this emotional scale that we ask consumers about and the question is, how would you describe your feelings about the health care you received today, including how much you pay for it and the benefits you receive . Please select all that apply. This is going to come as a complete shock to the men in the room. You can have more than one emotion simultaneously. Women understand that. Men have a great deal of difficulty with that concept. They have trouble coming up with one emotion at a time, let alone more than one emotion. You see what you would expect as a social scientist. You see a normal distribution around the stuff in the middle accepting mutual resign. You dont see many saying they are empowered. A surprising number say they are powerless, depressed and angry. I put the california numbers to brag about as a californian. The reason the numbers skew more positively in california is we have kaiser. We have hmos, which are generally not high deductible and we have a much higher penetration than most other parts of the country and we have medicaid thats huge. A third of californians are on medicaid. All of those reduce the out of pocket cost burden which i think tracks to satisfaction and we know when we break this out in our survey by class of insurance, it is ironic that the people who skew more positively have public insurance, not private insurance. Fewer people with commercial insurance are hopeful and as many are powerless. The numbers for public insurance, rather, tend to be slightly better on the Positive Side and less negative on the negative side, which may be a function of expectations. One of the things we know from consumers. We have a very big sample in this survey. One thing we know about consumers that is sort of interesting. The role out of pocket costs play. 28 of americans have received a balanced bill for care they thought that was cover. If you are in that category, you have much less to say you are powerless, depressed and angry. A woman went to see her physician. He said, oh, yes, i can take care of that problem. She made sure. She had a ppo, went to choice, made absolutely sure the doctor was in network. She had this problem. He said, i can take care of that. Go to my Surgery Center on the second floor where he suddenly was out of network and sent her a bill for 18,000. Didnt resolve the problem clinically. She had to go to a hospital. This time, she is really making sure that the surgeon is in network and the hospital is in network only to find that the anesthesiologist and the second assistant surgeon were out of network. They sent her collective bills for 24,000, all perfectly legal. This has caused some states like new york to pass the no surprises law which tells you have to inform the patient in advance they are going to be screwed by the second assistant surgeon. I am sorry. Transparency is not a solution here. Thats wrong in my view. These hospitals are conspiring to defraud patients. So the other thing we found in our survey with regard to this out of pocket cost stuff, we found a group of patients, about 10 of the American Public who use the Health System and have trouble paying for it. Another word for them would be patients. Almost anyone admitted to a hospital or has a serious procedure done and makes less than 150,000 a year is going to be in this category. They are not all on medicaid. In fact, fewer than average are on medicaid. They are disproportionately uninsured to be true. Most of them have coverage. If you are in that category, you skew very heavily to the negative end of the spectrum of powerless, depressed and angry. What do Consumers Want . In a word,they want cheaper. We put them through a tradeoff exercise. Basically, you can have this or that. You cant have both. Which do you prefer . You do that over a big enough sample and you reveal relative preferences. What they tell us is give me low premiums, low deductibles, locopays an i will trade off choice for cost. One of these things we found is the one thing that seems to have bipartisan support amongst those that vote republican, democrat or much republican is reducing cost. That will be a focus if Hillary Clinton i elected president. I am not going to go into as much depth as the other stories. I want to hit on a few of the trends we think are important for the market to watch and have some implication for all of you and your roles. The first has to do with consolidation. We are seeing this at the health plan level, although i think one or two of these mergers might not be consummated because of resistance to the department of justice. I was talking to a liberal group of doctors a couple of months ago. I said, the good news for you liberals is, we are going to have a single payer system. The bad news is, it is United Health care. Im not really that worried. The d. O. J. Lawyers called me. I said, i dont have a problem with it. As long as there are three of them, its fine. What im much more concerned about is what i see in every market i go to. I go it a lot of board retreats with a lot of Hospital Systems across the country. What we are seeing here is the creation of 200 large, regional, integrated Delivery Systems that are coming to dominate the landscape. When i say dominate, it doesnt mean everybody is going to work for them. Certainly, we are seeing doctors running to hospitals to huddle for warmth. We are seeing hospitals consolidating regionally. We are seeing the role of forprofit and private equity money driving some of this. The bond market thinks it is a good idea. There is a positive up side from this integration, which is, if you think about a managerial success where you drive out inappropriate clinical variation and you improve quality and reduce cost, that would be a win for the world, a win for the Health System. Unfortunately, the data dont support that much the tendency is to use Pricing Power to raise prices rather than yield true efficiencies. By the way, this isnt going over well with the people who pay the bill. I dont just mean medicare and medicaid. The people that are the life blood, Financial Life blood of the American Health care Delivery System are private employers. Im an adviser to the Pacific Business group on health, which is a coalition of large employers. Pacific is a misnomer because it includes walmart and disney. Their view of the world is not Donald Trumps increase view. Their view is 4 , 2016, 4 increase. The good news about employers is that the good news is, they are not leaving. They are not abandoning the field. It has been surprising positive effect of the Affordable Care act that the number of people with commercial Health Insurance has remained relatively flat as the cbo predicted. What we track is the red line, the percent of american employers that say my company is actively exploring ways to get out of providing Health Insurance to our employees. You can see that red line. You dont have to read the numbers. It just went up and came down. The reason is that they took a look at private exchanges. They took a look at exiting the field. They made a determination that there was really fundamentally their responsibility to ensure their Health Employees needs were met. Thats the 87 number at the top. They are not leaving. Thats the good news. The bad news for the Delivery System is they are not leaving. They are going to be in the face of the Delivery System Going Forward. Thats what we have seen and hear anecdotally this year. Employers putting pressure on their health plans to get zero premium increases or zero price increases from these provider systems. There is a megatrend that is still troubling. I dont think obama should be blamed for this. This is the progressive unaffordability of health care which reflects this. Over time, were seeing fewer and fewer workers covered by Employee Health benefits. The reason that is true is because of the progressive unaffordability of health care. I live in silicon valley. A lot of people work at google. Not a lot of people work for google. The people cleaning the floors are contractors. They generally have less Health Benefits than the really sophisticated hightech folk. The other trend that relates to this is employers experience of price. Now, this is a sophisticated audience. You all know about the dartmouth atlas, the lefthand sideview on this chart where medicare spending per capita has been rigorously analyzed by the folks at dartmouth and the dark areas of the country are expansive. The light areas are cheap. What you dont always see is the chart on the righthand side, which is the smartalecks of harvard who did the same analysis but with selfemployed insurance data. This explains the mystery for those that travel around the country. You get states like wisconsin where hospitals are getting 300 of medicare in the private sector. There is huge variation across the country in the rates paid. Even in my state, california, Northern California has low utilization and very high prices. Southern california, the other way around. Thats why even in kaiser, there is a 100 price per member between northern and Southern California rates. This is the hardest data in america to get. So i just made it up. It is a little hard. The labels got squished. Let me talk you through it. On the lefthand side. If you do coronary bypass surgery on an uninsured patient in Northern California, you will get 7 cents back on the dollar. Medicaid in my state pays 69 of the cost and medicare pace 89 of costs. So you dont have to be a Rocket Scientist or a futureist to figure out, you are going to charge the private sector more if you are a provider. On average, around 150 of cost. The dream is to get the number on the righthand side, which i call the demented saudi prince price. What would a saudi prince pay at johns hopkins. Thats what cfos call the charge master. Again, it is tough to see the labels here. What we did with exchanges is inserted another player in the mix. So every hospital board, this is the story you hear. This is in an expansion state. We have windfall profits on the inpatient side because their bad debt went way down, 6 to 4 for hospitals like that. Its true in many, many states across the country. The problem is, you have now permanently impaired are mix, because you have way more medicaid patients. Thats why over time, we are going to see the slow deterioration of the finances in those hospitals, many of whom were doing spectacularly well in 2015. I didnt really just make the data up. The American Hospital association track this is stuff. We are seeing a widening gap between what medicare and medicaid pace relative to cost and what private payers pay. There is a little bit of wining going on here. When these cfos say to me, medicare doesnt pay the true cost of care. Medicare doesnt pay for the income aspirations for you and your people doing things exactly the same way, which doesnt sound so good. I know this is going to be painful. All of you in this room are feeling this sting. The pbgh board meeting, this is the number one issue for employers. I was with the ceo for care first. Maryland is an odd state because it is an all pair rate setting state. For the first time, specialty phrma now exceeds inpatient hospitals spent. Phrma per member per month exceeds inpatient hospital for all carriers i have talked to. It is going up dramatically. The entire pharmaceutical industry, including the old legacy players are pivoting to large molecular biology indices with very high prices. It has gotten kind of ridiculous. Hepc being the primary example. 84,000 in the u. S. And 900 in egypt. As we say in glasgow, half joking, full serious. It is cheaper for a selfinsured employer to send that patient for a threemonth luxury vacation to egypt, put them up at the ritzcarlton, give them a meal allowance and take their friend or partner, fly them Business Class and tack on the niles spa cruise where you will be pampered to death for ten days and you would still save 30,000. Thats nuts. Thats why when we do surveys, 72 of americans including a majority of republicans believe that price controls or caps on pharmaceuticals should be enacted. I think we will see action on this one way or the other. It is maybe the plot forming the Trump Administration too. The other thing we are seeing across the country is this migration to try and make volume to value real. The best estimate i can give you of how real this is, is from our survey of hospitals where we ask them, you know, you have to pick one of these options. On the lefthand side is the least invasive, which is, we have no plans to take risk beyond modest Share Savings and pay for performance, about a third. On the far righthand side are hospitals who say we are committed to removing the majority of revenue toss fully at risk within five years. Thats around 68 . The next to last is building an aco model that is capable of taking risk such as Medicare Advantage or employer direct contracting. I think thats about right. We ask another way. About 20 of Health Systems say they are going to have an insurance license within five years. I think this is a separation going on between the people who want no part of this, people in the middle who are sort of playing at it by doing a clinical Integration Strategy and people that are serious about migrating more towards risk over time. The other thing thats reinforcing this is payments reforms from cms and private payers, including both bundles and the shift towards Population Health. I want to make a distinction between bundles and Population Health for a second. A bundle, more is still better. It is not so alien to these providers. They are used to being in the growth business. It does encourage improvement across by putting an envelope further out around the continuum of care. Not everything is easily bundled. I worry a lot that the sum of the bundles is going to be more than the current payment. The reason i say that is my good friend, pat fry, who ran sutter for many years, has a tendency for profanity, which i appreciate, said to me about bundles, screw me on the bundle, ill screw you on the rest. You can grind me down on orthopedics but i will charge you more for stuff you cant bundle and come out the same. I think thats right. I think thats the way providers play the came. Im a big fan of capation risk, accountable care, Population Health. It makes you think about the frequency of which you do things and the appropriateness. It will cause you to go up the food chain to focus on the term of health. You will find a lot of the solutions. I am preaching to the converted. This is where you have been, looks more like social work than medical care. That epiphany is happening all over america with providers that are getting into the risk business. There is this mutual disrespect problem. Everybody in American Health care thinking everybody elses job is easy and anyone can do what an Insurance Company does. Thats just not true. So what happens when you get in the risk business. Well, what happens is you hire another smart alec consultant. They will run the numbers and you will find what is a law of physics that in any insurance poll, 5 of patients account for 50 of costs. 1 account for 20 . The bottom 50 utilizers use next to nothing. Whats in that 5 . Well, whats typically in that 5 are hondas, as one key category. Im a honda. I was denied coverage before obamacare saved my bacon in 2012 in the individual market in california. I was denied coverage not once, not twice but thrice. It was thrice denied, positively biblical. The reason blue shield denied me is they said you are a honda, hypertensive, obese, noncompliant, diabetic, alcoholic, right . None of which is true but kind of directionally correct. The other thing you will find is behavioral health. 20 of americans of behavioral health, super utilizers, it is more than 85 . Anyone who is in end of life care in the medicare population will be in that 5 . Anyone with active cancer will be in it, the frail elderly and the elderly population. Social work, not medicare may be the solution. For any clinicians, if you prescribe one biological, you will automatically be in the top 5 high cost cases in the commercial market. Let me just close by telling a couple of stories and make a couple of observations about what this means for medicare. The stories basically are what im hearing, how these provider systems are responding to this new future. The story of the trap is this young hospitalist who a latino kid who went to ucsf and did well. He came back, wanted to serve his community in phoenix in a very low Income Neighborhood with a horrible readmission rate. He told the ceo, i can cut this rate in half. He took his truck and he drove on his own time at night to see the family, took the discharge summary, gathered the family around, spoke to them in spanish about what grandma had done in the hospital, the meds she was on now and what should happen Going Forward. He did. He cut the rate in half. You dont need a Board Certified ucsf trained hospitalist doing it. You can have a kid with a check board who spoke spanish or better yet, a friend of the family. That is happening over in the country where Health Systems are getting on to this. The second example came from art gonzalez in Denver Health at the time. He told me the story of the number one frequent flyer patient they had. Mrs. Johnson, a brittle diabetic, constantly readmitted in the er, in the hospital, not in control, despite the fact she was in a patient centered medical home and the entire cast of greys anatomy came around her every friday. It wasnt until some smart young nurse asked the question, mrs. Johnson, why are you not taking your meds . She said, well, they have to be refrigerated. So . I dont have a frig. They bought her a frig. She never came back. In a good way she never came back, he was fine. Final story told to me by bernard from kaiser, from 300 medicaid to a million users. It has a fantastic group visit program for diabetics, multidisciplinary team, patients, its great. They were having this problem with the newly covered medicaid members not turning up for appointments. The doctor getting all judgey about it. Well thats what happens when you deal with medicaid. And then some smartaleck determined that the reason was because the bus schedule didnt work. Couldnt get there until 10 30. So they change the bus schedule. Lo and behold it worked out. So those are the kinds of interventions across the country, segmenting, using advanced analytics, patient registries and medical, upstream, understanding that they have to focus on the population and be more imaginative with the problems Going Forward by partnering with others and thats what were seeing. This group knows this. I think a lot of people have to be reminded of it. That this notion we overinvest in medical services and underinvest in social services. The work has really underscored this. I go to france. The french are number one in all these international measures. Exposure to the french Health System is bloody scruffy, i have to tell you. The reason they do well on every measure has nothing to do with medicare. Its because they walk, they drink red wine and get naked in the summer. Nothing will keep your bmi down better than getting naked in the summer. [ laughter ] one final point on Population Health. The single biggest determinate of Life Expectancy is income. This is what we call a straight line. Turns out a massive study by stanford and harvard researchers. Turns out, if youre going to be poor. Better to be poor in places that arent darwinian. There are lessons. Ill skip to the doctor stuff. Here is the punch line for you all. Medicaid is massive. Its bigger than france. 72. 6 million americans by last count, as far as im aware, that is unbelievable how big this program is. I think its a challenge for the country. Partly the churn in and out eligibility. Partly the question who is going to look after them, which providers. Its a huge lift. This your world. I dont mean to be preachy here but its covering kids, mums, expansion population. It supports dual eligible default for most middle class americans. I think your challenge, our challenge as a nation is design financially stable delivery models for the future. I made that point. I think the way you do that is so innovate that scale. The problem right now we do a lot of tinkering. Were great at pilots. Ceo, patient centered medical home its like scout badges when youre in the scouts. Ill get that. Accountable care organizations. Ive got three of them. Diabetes disease register. Absolutely. Then you ask the followup question, what percentage of patients get that on a percentage basis, square root of 0. We need to innovate that scale. Three going for managed medicaid, High Deductible Health care, Medicare Advantage aco risk. Thats the game. Its going to require the Delivery System to transform its self. The real question this election will decide is are rich people going to write a check for poor people. There really only three futures for health care, where we move to large integrated systems transform to meet the triple aim spurred by payment reform by public and private payers. Thats what im hoping for. Im worried about darwinian consumerism of subsidies taken out and we have to live in a world of high deductibles and economic rationing. I worry about the left of the political spectrum taking over and grinding down on budgets and prices, locking in all the inefficiencies that currently exist in the system. What that means for medicaid, i think innovation on the one hand, about thinking creatively of combining social spending and various social initiatives in a more creative way. If its darwinian consumerism, we have to put the arm to take fair share, geographically discriminate against people. I worry a bit about the price controls, how we maintain quality and appropriateness. You figure it out. These great colleagues here are going to tell us how its going to work. I salute you for what you do. Its incredibly important. The people of america who depend on you salute you for what you do and i thank you for your time and attention this morning. Thank you. [ applause ] all right. Thank you, ian. It is rare to see someone elicit so much laughter in a conversation around medicaid but we certainly appreciate that today. So you brought up a lot of points and images, some images especially around bmi comment i think well try to remove from our brains when this is over. But theres a lot to chew on there. So let me move immediately to experts who are grounded in the reality of the now and lets start with justin. In your experience in florida, whats your reaction to that . Are these scenarios that you see, or is he just way off for a variety of reasons . I agree with the scenario hes laid out. I think the payment streams in particular are probably the ones that are going to survive. Im optimistic. Just like him. Im very optimistic about how things will go. I was in a Doctors Office several years ago. The Doctors Office, like many Doctors Offices, never updated its magazine stack. I was reading an economist magazine from a couple years earlier that was talking about this new sony ereader that came out. They were poopooing whether it would take off because it was big an clunky. In between reading, the ipad came out. Every magazine, paper mill started to collapse as a result of an innovation. Theres certain things out there we dont know whats going to come down the pike. One odd thing about health care, innovation tends to make health care more expensive rather than cheaper in the short run. That poses challenge. We in florida have done our best to simplify our systems and focus on what were trying to accomplish. Coming up with shared definitions of success that go across the aisle and things were trying to achieve. Were trying to do it in a way we set the incentives